Stanley v. Mayor of Baltimore

Pabice, J., delivered the opinion of the Court. By chapter 373 of the Acts of 1920 the General Assembly of Maryland authorized the Mayor and City Council of Baltimore to issue its stock to an .amount not exceeding twenty-six million dollars for various municipal activities, the submission of an ordinance for that purpose to' the legal voters of Baltimore City, and the enactment of an ordinance for the expenditure of the proceeds oí the sale of stock by a special commission, The special commission was first created, and then, pursuant to the terms of the act the ordinance was passed, submitted to the voters', and approved by a majority. The ordinance provided for and directed an issue and sale of regisr tetred stock to the amount of $26,000,000 in the sum of $100, or multiples thereof, redeemable in twenty-five years series, beginning with March 1st, 1922, and bearing, interest at the rate of five per centum per annum, payable semi-annually. The municipality issued $12,890,000 of this stock bearing the prescribed rate of five per centum per .annum; and in April, 1924, the suggestion was, made by the Finance Commission of Baltimore City that the unissued stock could he sold a.t not less than par, if the rate of interest were reduced to four and onet-half per centum per annum.

As a result of the suggestion, Ordinance No. 159 was passed and approved on April 22nd, 1924, authorizing .and directing the residue of stock of $13,110,000 to be issued and sold, bearing interest at the rate of four and one-half per centum per annum, pro ²⁹⁰ vided that none of it be disposed of for less than its par value. The city was about to offer for sale and sell, at not less than its par value, to the highest bidder, $6,571,000 of this stock, bearing] the reduced rate of interest. The appellant then intervened in behalf of himself and of all other taxpayers, who might become parties; and sought to enjoin the advertising or offering of said stock for sale, the expensive engraving of new certificates, and the sale of the stock as proposed, on the ground that the city had no authority to issue suoh .stock at a lower or other rate than five per centum per annum. The appellee denied that he was entitled to relief, on the principal ground that by a proper1 construction of the Constitution of Maryland, the act in question, and the charter of the appellee, it had full power to change, from time to time, the rate of interest on any of the authorized but unissued stock.

The cause was then submitted on an agreed statement of facts, and the court dismissed the bill of complaint. Except temporarily to borrow any amount of money to meet any deficiency in the city treasury, or to provide for any emergency arising from the necessity of maintaining the police, or preserving the safety and sanitary condition of the city, or to make due and proper arrangements for the renewal and extension, in whole or in part, of any and all debts and obligations created according to law before the adoption of the Constitution of 1867, section 7 of article 11 of the Maryland Constitution prohibits the creation of any debt, or the construction of works of internal improvement, involving the faith and credit of the city, unless suoh debt or credit be authorized by an act of the General Assembly of Maryland, .and by an ordinance of the Mayor and City Council of Baltimore, submitted to the legal voters of the City of Baltimore, at such time and place as may be fixed by said ordinance, and approved by a majority of the votes cast at such time and place. It is clear that, with only the exceptions above set forth, no debt can be created or credit involved, unless it have, first ²⁹¹ the authorization, of an act of the General Assembly of Maryland, and secondly, the approval of a majority of the legal voters, after a submission of the question pursuant to an ordinance. In addition to this constitutional requirement, the Legislature may prescribe the procedure for the submission of the question to the electors, and any other supplementary provisions.

An examination of the various enabling acts since 1908 will disclose that the Legislature has uniformly stipulated that the loan shall not be issued unless the ordinance of the Mayor and City Council of Baltimore providing for the issuance of the loan shall be submitted to the legal voters of the City of Baltimore, at such time and place as. may be fixed by said ordinance, and be approved by a majority of the votes east at such time and place., as. required by the Constitution. (Acts 1922, eh. 319; Acts. 1920, chs. 313, 314, 560; Acts 1916, chs. 584, 585, 189; Acts. 1914, chs. 323, 122; Acts 1912, ehs. 21, 428; Acts 1910, chs. 110, 92, 549, 510, 136, 630; Acts. 1908, chs, 165, 188, 202, 241, 214; Acts 1906, chs. 401, 461%, 128; Acts. 1904, chs. 214, 338, 349, 444, 468; Acts 1902, chs. 246, 333; Acts 1898, ch. 313.) The necessity, under these enabling acts., for the ordinance itself, providing for the terms of the issuance of the loan, to be submitted to the voters pursuant to the terms of the act, is illustrated by the case of Phila., B. & W. R. R. Co. v. Baltimore, 121 Md. 504, 506, 501 , where the Court stated with respect to- similar provisions in the Acts 1910, ch. 110, that “the approval of the voters having been given to the project in the manner contemplated by the act, and by section 1 of article 11 of the Constitution of the State,” the municipality had passed an ordinance to- condemn and open, the “Fallsway” over the course of Jones’ Falls. This quoted remark of the Court is a recognition of the obvious necessity to submit the question to the voters in such a manner as not only to gratify the mandate of the Constitution but also to conform to the method prescribed by the act authorizing the loan. Bond v. Baltimore, 116 Md. 683, 684, 686 . ²⁹² In the casé .at bar,. the enabling act declared that- “no stock stall be issued in whole or in part unless the ordinance of the Mayor and City Council of Baltimore providing* for the issuance thereof shall be submitted to the legal voters of Baltimore City at such time and place as may be fixed by said ordinance and be approved by a. majority of the votes cast at such time and place as required by section 7 of article 11 of the Constitution of Maryland.” Erom the ordinary meaning and grammatical construction of the language of this statute, it dearly and necessarily follows that, whatever its terms and its form, the whole ordinance as enacted must be submitted for the ratification or rejection of the electorate of the city; and, when adopted, became the law under which the debt is authorized and the credit of the city pledged.

The lower court held that the legislation embodied in this ordinance was subject to repeal and modification by the Mayor .and City Council, and sustained the validity of a repealing .and amending ordinance reducing the original rate of interest from five per centum per annum to four and one-half per centum, and adding the restriction that none of the stock should be sold for less than its par value. No opinion was filed, and the ground of the learned court’s action was not disclosed by the decree. The appellee, however, urged an affirmance on the threefold argument: (1) that the Acts of 1920, chapter 376, empowered the appellee to determine, from time to time, the amounts of stock to be issued, when payable, and what rate of interest they should respectively bear; (2) that article 4, section 6, sub-section 25, of the Public Local Laws relating to Baltimore City, authorizes the municipality to' issue its stock at a lower rate than five per centum, whenever it appears advisable and practicable so to do; and (3) that without express authority, and in the absence of any prohibition, the municipality may authorize the sale of its stock at a lower rate of interest than that fixed by an ordinance submitted to and approved by the voters, whenever it is to the benefit of the taxpayers. The number and antagonistic reasons advanced by the appellee afford a striking illustration that the source of the ²⁹³ power to enact tbe ordinance in question did not rest on a clear and satisfactory delegation. 1.

Tbe act of tbe Legislature may authorize the creation of tbe debt or the extension of tbe credit in general or particular terms. If the language of the act be specific and definite, tbe ordinance of the municipality authorizing the creation of the debt or credit must conform; hut, if the authority be conferred by the Legislature in general terms, tbe ordinance may authorize the: debt or credit in particular terms, provided these are within tbe contemplation of tbe act of the General Assembly. Tn the thirty-two enabling ads, which have been cited in this opinion, all but five provide that tbe loan shall bear snch rate of interest as tbe Mayor and City Council shall by ordinance prescribe. Of the five exceptions, two prescribe that tbe rate or rates of interest shall be snch as tbe ordinance shall specify (Acts 1906, ch. 401; Acts 1908, ch. 202); one, that the interest shall he at a rate not to exceed three and one-half per centum per annum (Acts. 1918, eh. 378) ; one, that the rate shall not be more than four per centum per annum (Acts 1910, ch. 549), and one, that the stock shall bear snch rate of interest, not exceeding five per centum per annum, as the ordinance shall designate.

Every act, however, has this in common, that the municipality is by ordinance to fix the interest rate within the1 scope indicated. These acts exemplify that if the municipality is to ho given a limited range in fixing the¡ rate of interest, the pro^ vision is made that the rate shall not exceed a certain per centum. Again, if the interest may be at one or more rates, the statute plainly confers the power by the phrase “rate or rates.” However, if the rate is not limited, hut is to be single and uniform on the whole issue of stock, the laws specify that the loan shall bear such rate of interest as the ordinance shall prescribe. Chapter 373 of the Acts of 1920, before the Court on this record, falls within the largest class.

The enactment in question authorized the issue of stock by the following paragraph : ²⁹⁴ “Section 1. Be it enacted by the General Assembly of Maryland, That the Mayor and City Council of Baltimore be, and it is hereby, authorized to issue the stock of said corporation" to an amount not exceeding- twenty-six million (26,000,000) dollars, said stock to be issued from time to time as the Mayor and City Council of Baltimore shall by ordinance provide, and to be issued for such amounts and to be payable at such times and to bear such rate of interest as the Mayor and City Council of Baltimore shall by ordinance provide; but no stock shall be issued in whole or in part unless the ordinance of the Mayor and City Council of Baltimore providing for the issuance thereof shall be submitted to the legal voters of Baltimore City at such time and place as may be feed by said ordinance and be approved by a -majority of the votes cast at such time and place as required by section 1 of article 11 of the Constitution of Maryland.” The primary purpose of this enabling statute was to authorize the issue of a maximum amount of city stock. The essential formal contractual elements of the municipal obligation known as city stock are: (a) The amount of the obligation represented by every certificate of stock issued; (b) the time of maturity, and (c) the rate of interest. These elements are basic characteristics and are invariably and inseparably associated in the creation and issue of city stock.

When, therefore, it is found that the authority to prescribe the maximum amount (“$26,000,000”); the denomination of every certificate (“issued for such amounts”) ; the maturities thereof (“payable at such times”), and the rate of interest (“to bear such rate of interest”), is conferred in a single sentence, and is to be exercised as the Mayor and City Council of Baltimore shall by ordinance provide, it is an inevitable conclusion that one ordinance, embracing these elements, was contemplated by the Legislature, and was the one intended by the statute to be submitted to the voters. The apt employment of the singular number with respect to “stock” and its “amount” of issue, at a “rate” of interest ²⁹⁵ to be oontainerl in an “ordinance’'" to be submitted at a “time” and “place” is only consistent with the passage of but a single ordinance, especially in view of the fact that the words used to express the denominations (“amounts”) of the stock, and of its different maturities (“payable at such times”) are plural. Furthermore, but one ordinance is to be submitted for approval or disapproval by the voters, and that ordinance is the one “providing for” the issuance of the stock. The act is fully as explicit in restricting the interest to be paid to one rate for the entire issue of stock.

It expressly enacts that the stock shall"“bear such rate of interest as the Mayor and City Council of Baltimore shall by ordinance provide.” Not only is “rate” singular in number, but s-o is “ordinance.” Moreover, rate is qualified by “such” which has here a selective and exclusive signification. It would be difficult to find a" clearer expression of the legislative will that the stock authorized should 'bear but one rate and not two or more different rates of interest. The clause “said stock to be issued from time to time as the Mayor and City Council of Baltimore shall by ordinance provide,” found in the fifth and sixth lines of section 1 of chapter 373 of the act, is set apart by commas and is parenthetical in nature, as it does not refer to the primary authorization of the stock, but is an auxiliary provision continuing in its nature, for the actual sale, at appropriate times and intervals, of the stock after1 its issue has been authorized. This is a subsidiary power, but it may be fully exercised in the original ordinance.providing for the issuance of the stock, and to be submitted to1 the electors (as was done in section 1 of Ordinance No. 379) ; or it may be reserved for when and as the occasions arise until all of the stock is issued.

This power is effective without a referendum. There is nothing in the Maryland cases to' the contrary. In Bond v. Baltimore, 118 Md. 159 , the statutes 'before this Court expressly authorized “such rate oi rates of interest as the municipality should by ordinance provide.” Acts 1906, ch. 401; Acts 1908, ch. 202. Under these acts it was held ²⁹⁶ that an ordinance was not unlawful in delegating to the commissioners of finance the power to fix the rate of interest at not more than four per centum per annum.

The question was not considered by this Court in Bond v. Baltimore, 111 Md. 364 and 116 Md. 683 . In these two cases the statutes were the Acts of 1908, ch. 165, and Acts of 1910, ch. 110, where the provisions as to the rate of interest were similar to those in this appeal, and the ordinance delegated the power to fix a rate which should not be more than four per cent., as may be determined by the commissioners of finance. In every one of these instances there was no attempt to justify more than one rate. It should be noted that this Court does not take judicial notice of the ordinances of Baltimore City, and on this appeal the Court is confined to the record.

The reference by this Court to the ordinances in the two eases last mentioned is only justified by the fact that the decisions were cited, and the records are in this Court, and so available in determining ■what was before the Court on these appeals. The Court is, therefore, of the opinion that chapter 373 of the