Montgomery County v. Fields Road Corp.

Elbridge, J., delivered the opinion of the Court. This case presents a challenge to Montgomery County regulations requiring landlords with twenty-five or more rental units to report quarterly on minority tenants and applicants. The regulations are challenged on the grounds that: (1) they allegedly create an arbitrary classification in violation of the equal protection of the laws; (2) they represent an improper exercise of the police power, thereby depriving affected landlords of property interests without due process of law; and (3) they are unconstitutionally vague. On September 24, 1973, the Montgomery County Human Relations Commission, a county government agency charged with enforcing the Montgomery County Fair Housing Law, adopted the reporting regulations pursuant to the authority contained in Montgomery County Code (1972), § 27-14 (b).

In accordance with this section, which requires that regulations of the Human Relations Commission be approved by the Montgomery County Council, the County Council subsequently passed Resolution No. 7-1600, approving the reporting regulations. A public hearing on the need for the reporting regulations had been held prior to Commission action, on August 29, 1973. The regulations require all owners of twenty-five or more rental units to report, quarterly, on forms supplied by the Commission, the following information: “(A) The name and address of the building, the name and address of the owner, the total number of units in the building (excluding units rented or available for rent only to employees of the owner or of a managing agent), the total number of such units in the group (if any) of which the building is a part, the approximate rental range for a one-bedroom apartment (if the building contains such a unit) and ⁵⁷⁸ the number of units occupied on the last day of the three month period (or March 1,1974), for the initial report by (i) one or more Black (Negro) persons and by (ii) one or more Spanish-speaking persons. “(B) The total number of applicants for rental units in the building during the three month period, and the number of such applicants who were (i) Black persons, and (ii) Spanish-surnamed persons. For purposes hereof, an applicant means a person who personally appears before the owner or a managing agent, whether at the building involved or at an office of the owner or of a managing agent, for the purpose of renting a unit, whether or not such person submits a written application. “(C) The total number of units in the building (excluding units rented or available for rent only to employees of the owner or of a managing agent) which were rented during the period, and the number of such units which were rented to (i) one or more Black persons and to (ii) one or more Spanish-surnamed persons.

For purposes hereof, a unit is rented during the period if during the period it becomes occupied by a new tenant who had not previously resided in the building.” According to a statement on behalf of the Montgomery County Human Relations Commission, the purposes in adopting the regulations were to identify for the Commission probable areas for investigation, to make owners and managers of rental units aware of the composition of their buildings, and to provide a basis for statistical analysis of the problem of discrimination in housing. The Montgomery County Council, in approving the reporting regulations, referred to them as being “in the interest of ascertaining discrimination based on race or ancestry.” The first reports were due to be filed with the Commission on March 31, 1974. Following unsuccessful attempts at securing compliance by several landlords, Montgomery County filed in the Circuit Court for Montgomery County a ⁵⁷⁹ bill of complaint seeking an injunction against those landlords. A demurrer, on the ground that the regulations were unconstitutional, was sustained by the circuit court without leave to amend.

The circuit court first held that the distinction between owners of twenty-five or more units and owners of a lesser number of units was arbitrary and violated the Equal Protection Clause of the Fourteenth Amendment to the United States Constitution. The court also held that the regulations violated the Due Process Clause of the Fourteenth Amendment and Article 23 of the Maryland Declaration of Rights. Finally, the circuit court held that the provisions referring to “Spanish-speaking” and “Spanish-surnamed” persons were unconstitutionally vague. Montgomery County took an appeal to the Court of Special Appeals, and before any proceedings in that court we issued a writ of certiorari.

(1) Equal Protection The standard of review where a classification like the one here involved is attacked on equal protection grounds is the so-called “rational basis” test, that is whether “the classification challenged be rationally related to a legitimate state interest.” City of New Orleans v. Dukes, 427 U. S. 297, 303 , 96 S. Ct. 2513, 2517 , 49 L.Ed.2d 511 (1976). The basic rules which guide a court in applying this test were set down over sixty-five years ago by Mr. Justice Van Devanter for the Supreme Court in Lindsley v. Natural Carbonic Gas Co., 220 U. S. 61, 78-79 , 31 S. Ct. 337, 340 , 55 L. Ed. 369 (1911): “The rules by which this [equal protection] contention must be tested, as is shown by repeated decisions of this court, are these: 1. The equal protection clause of the Fourteenth Amendment does not take from the State the power to classify ... but admits of the exercise of a wide scope of discretion in that regard, and avoids what is done only when it is without any reasonable basis, and therefore is purely arbitrary. 2. A classification ⁵⁸⁰ having some reasonable basis does not offend against that clause merely because it is not made with mathematical nicety or because in practice it results in some inequality. 3.

When the classification in such a law is called in question, if any state of facts reasonably can be conceived that would sustain it, the existence of that state of facts at the time the law was enacted must be assumed. 4. One who assails the classification in such a law must carry the burden of showing that it does not rest on any reasonable basis, but is essentially arbitrary.” See, in addition, Dandridge v. Williams, 397 U. S. 471, 485-486 , 90 S. Ct. 1153, 1161-1162 , 25 L.Ed.2d 491 (1970); McGowan v. State of Maryland, 366 U. S. 420, 425-428 , 81 S. Ct. 1101, 1104-1106 , 6 L.Ed.2d 393 (1961); Wheeler v. State, 281 Md. 593, 601-604 , 380 A. 2d 1052 (1977); O. C. Taxpayers v. Ocean City, 280 Md. 585, 594-595 , 375 A. 2d 541 (1977); Davidson v. Miller, 276 Md. 54, 68-79 , 344 A. 2d 422 (1975); Bowie Inn v. City of Bowie, 274 Md. 230, 241 , 335 A. 2d 679 (1975); Matter of Trader, 272 Md. 364 , 386, 325 A. 2d 398 (1974). The evidence in the instant case demonstrated that there was a “reasonable basis” for distinguishing between owners of twenty-five or more rental units and owners of a lesser number of rental units. The chairman of the Housing Committee of the Montgomery County Human Relations Commission testified at the public hearing held by the Commission that over ninety percent of the filed complaints concerning housing discrimination related to apartments and not houses, and that the regulation was therefore aimed at apartment rentals.

The chairman went on to testify that “regulations covering the owners of 25 or more units would in fact cover a very high percentage of the units in the county.” An additional reason for drawing the line at the ownership of twenty-five or more units, according to the chairman, was that the agency did not want to place a burden on the small property owner. Apart from the specific testimony in this case, it has long been held that “[classification based on numbers is not ⁵⁸¹ necessarily unreasonable.” People of State of New York v. Zimmerman, 278 U. S. 63, 77 , 49 S. Ct. 61 , 66 73 L. Ed. 184 (1928). A legislative body “may weigh relative needs and restrict the application of a legislative policy to less than the entire field.” Mabee v. White Plains Pub. Co., 327 U. S. 178, 184 , 66 S. Ct. 511, 514 , 90 L. Ed. 607 (1946).

The Supreme Court of Ohio, in upholding on equal protection grounds a local fair housing ordinance which exempted from its coverage owners of less than five dwelling units, stated that “a legislative body, when it chooses to act to correct a given evil, need not correct all the evil at once, but may proceed step by step,” and that “a legislative body is not unreasonable because it elects to proceed slowly in such an emotionally involved field as race relations.” Porter v. City of Oberlin, 1 Ohio St.2d 143 , 205 N.E.2d 363, 369 (1965). The Ohio court also pointed out that owners of larger numbers of dwelling units may be a greater threat to those who would be harmed by housing discrimination, 205 N.E.2d at 369-370 . We conclude that the defendant landlords failed to prove the absence of any rational basis for Montgomery County’s exempting owners of less than twenty-five rental units from the reporting requirements. The circuit court therefore erred in deciding that the regulations denied to the defendants the equal protection of the laws. 1 (2) Due Process After holding that the reporting regulations violated the Equal Protection Clause of the Fourteenth Amendment, the circuit court went on to hold that the regulations were invalid ⁵⁸² on so-called substantive due process grounds.

In reaching this conclusion, the court first noted that Montgomery County had three purposes or goals in adopting the reporting regulations: “[1] identifying possible areas of investigation, [2] providing a basis for statistical analysis of housing discrimination and [3] making owners ‘color conscious’ as to their tenants.” The court below next held that if these goals were constitutionally permissible, the reporting requirements would be valid, as they were not “unduly onerous” and were “rationally related” to such purposes. The circuit court went on to hold that “[c]ertainly the first two goals are proper objectives under the County’s police powers.” However, the court decided that the third goal, namely making owners of rental units cognizant of the percentage of minorities in their units, was improper. The court expressed the view that the only objective in making landlords aware of the racial composition of tenants was for landlords to take race into consideration, “presumably by renting to minorities in preference to others.” The court stated that such an objective could only be justified where there has been a specifically supported finding of past discrimination, in order to correct that past discrimination. And the court was not “willing to accept the Commission’s bald assertion that discrimination in apartment rentals is an overwhelming problem.” After deciding that one of the three goals of the reporting regulations was improper, the circuit court stated that this improper purpose was “inexorably intertwined” with the other two purposes.

The court concluded that the regulations in their entirety violated the Due Process Clause of the Fourteenth Amendment and Art. 23 of the Maryland Declaration of Rights. In this Court, the landlords advance essentially the