Case Title: Atlantic Golf v. Maryland Economic

Citation: 377 Md. 115

Docket Number: 64/01

State: maryland

Court: Maryland Supreme Court

Date: 2003-09-11T00:00:00Z

Document:
IN THE COURT OF APPEALS OF MARYLAND
No. 64
September Term, 2001
_________________________________________
ATLA NTIC GOLF, LIMITED PARTNERSHIP
v.
MARYLAND ECON OMIC DEVELOPMENT
CORPORATION et al.
__________________________________________
Bell, C.J.
        Eldridge
       
Raker
Wilner
Cathell
Harrell
Battaglia, 
                                
         JJ.
__________________________________________
PER CURIAM ORDER.
_________________________________________
Filed: November 7, 2001
ATLA NTIC GOLF, LIMITED
*
In the 
PARTNERSHIP
*
Court of Appeals
v.
*
of Maryland
MARYLAND ECON OMIC
*
No. 64
DEVELOPMENT CORPORATION, et al
*
September Term 2001
PER CURIAM ORDER
For reasons to be stated in an opinion later to be filed, it is this 7th day of November ,
2001,
ORDERED, by the Court of Appeals of Maryland, that the judgment of the Circuit Court
for Montgom ery County be, and it is hereby, AFFIRMED.  Costs to be paid by the Appellant.
Mandate to issue forthwith.
       /s/ Robert M. Bell      
Chief Judge         
IN THE COURT OF APPEALS OF MARYLAND
No. 64
September Term, 2001
_________________________________________
ATLA NTIC GOLF, LIMITED PARTNERSHIP
v.
MARYLAND ECON OMIC DEVELOPMENT
CORPORATION et al.
__________________________________________
Bell, C.J.
        Eldridge
       
Raker
Wilner
Cathell
Harrell
Battaglia, 
                                
         JJ.
__________________________________________
Opinion by Eldridge, J.
_________________________________________
Filed:    September 11, 2003
1
This Court has defined and elaborated upon the concept of a public corporation in prior cases.
University of Maryland v. Murray, 169 Md. 478, 481, 182 A. 590, 591 (1936) (“‘When the corporation
is said, at the bar, to be public, it is not merely meant, that the whole community may be the proper
objects of the bounty, but that the government have the sole right, as trustees of the public interests,
to regulate, control and direct the corporation, and its funds and its franchises, at its own good will
and pleasure’”); Phillips v. Mayor, etc., of Baltimore, 110 Md. 431, 438, 72 A. 902, 905 (1909) (“‘a
public corporation, is one that is created for political purposes, with political powers, to be exercised
for purposes connected with the public good, in the administration of civil government; an instrument
of the government, subject to the control of the Legislature, and its members officers of the
government, for the administration or discharge of public duties, as the case of cities, towns* . . . .
‘Public corporations are synonymous with municipal or political corporations.* * * * ‘Public
corporations, commonly called municipal corporations, are not associations, but subdivisions of the
State*”) (emphasis in original).
On November 7, 2001, we issued an order affirming the judgment of the Circuit
Court for Montgom ery County in this case.  We shall now set forth the reasons for that
order.
The issue in this case is whether the provision in Article III, § 48, of the
Maryland Constitution, which revokes the tax-exempt status of previously tax-exempt
corporations that have availed themselves “of any rights, privileges or advantages”
granted by the Legislature, is applicable to a public corporation.  We hold that this
constitutional provision is not applicable to a public corporation.1
I.
In 1984, the Maryland General Assemb ly created the Maryland Econom ic
Development Corporation (“MED CO”), Maryland Code (1957, 1982 Repl. Vol., 1985
Supp.), Article 41, §§ 558 through 573, as a public corporation with the objective of
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2
See Code (1957, 1982 Repl. Vol., 1985 Supp.), Article 41, § 559 (discussing the intent of the
General Assembly in creating MEDCO):
“The General Assembly declares and finds that Maryland*s
economy continues to experience technological change and
restructuring. The General Assembly recognizes that, while
technological change sometimes results in economic contraction and
dislocation, it also affords opportunities to expand productive
employment and expand the State*s economy and tax base.
“The General Assembly further declares and finds that the
establishment of a State public corporation to develop certain vacant
or underutilized industrial sites and facilities as well as other
economic resources in which the private sector has not demonstrated
serious and significant interest or development capability would serve
the public interest.  It would complement existing State marketing
programs administered by the Department of Economic and
Community Development through its Division of Economic
Development and through financial assistance programs such as those
of the Maryland Industrial Development Financing Authority and
those under the Maryland Industrial Land Act and the Maryland
Industrial and Commercial Redevelopment Fund Act.  The General
Assembly finds that the State lacks and needs direct property
development capability for economic development purposes.
“The General Assembly intends that the Maryland Economic
Development Corporation operate in areas of the State experiencing
significant economic dislocation or distress and that it exercise its
corporate powers to assist State and local economic development
agencies contribute in the expansion, modernization, and retention of
existing Maryland enterprises as well as the attraction of new
business to the State.  In furtherance of the purposes of this subtitle,
it is also intended that the Corporation structure its projects in a
manner which accelerates the transfer of facilities and sites into
productive use in the private sector and cooperate with private
industry councils, representatives of labor, and local governments in
maximizing new economic opportunities for the citizens of this
State.”
promoting economic development within the state.2  The Legislature granted MEDCO
various powers to carry out its statutory objective, including the power to “[b]orrow
money and issue bonds for the purpose of financing or refinancing” the cost of its
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3
Appellant Atlantic Golf decided not to submit a bid on the Pasadena golf course project.
economic development projects, Article 41, § 562(12), and an exemption from state
taxation “[w]ith the exception of [certain specified] State and local real estate taxes.”
Article 41, § 567.  The Legislature further provided in § 567 that “[t]he bonds of the
Corporation and the interest thereon are forever exempt from all State, municipal, and
local taxation.” 
In 1994, Anne Arundel County circulated a request for proposals to finance,
construct, and operate a public golf course in the Pasadena area of Anne Arundel
County.  In 1997, MEDCO responded to this request, along with several private golf
course developers.  Anne Arundel County selected MEDCO to develop the project, 3 and
accordingly the County entered into a “Golf Course System Agreem ent” with MEDCO
on December 1, 1997, whereby MEDCO would issue $17 million in tax-exempt
revenue bonds, would use the proceeds therefrom to construct a golf course, would
operate the course for the County, and would eventually turn the project over the
County when the bonds were paid off. 
In October 2000, on the eve of the issuance of the bonds, MEDCO received
notification from Atlantic Golf, a limited partnership and private entity that owned a
competing golf course in Anne Arundel County, that Atlantic Golf was challenging
MEDCO’s issuance of the bonds as an ultra vires act that was beyond the scope of
MEDCO’s enabling act.  Atlantic Golf claimed that the Pasadena golf course project
exceeded MEDCO’s then-existing statutory authorization on the grounds that: (1) the
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project was not located in an area of the state that was “experiencing significant
economic dislocation or distress,” as required by Maryland Code (1957, 1998 Repl.
Vol.), Article 83A, § 5-202(c); (2) the private sector had demonstrated significant
interest in the bid, and therefore MEDCO should not have bid on the project, pursuant
to § 5-202(b) (mission of corporation includes developing “econom ic resources in
which the private sector has not demonstrated serious and significant interest or
development capability [that] would serve the public interest”); and (3) the project was
structured under the Golf Course System Agreement to remain permanently as public
property, rather than to be turned over to the private sector following its completion as
required under § 5-202(c).  In response to Atlantic Golf’s claim that MEDCO had
violated statutory provisions, MEDCO cancelled the issuance of the tax-exempt bonds
for the golf course project and requested from the General Assemb ly relief from the
restrictions imposed by law, as well as expanded powers that would permit it to
complete the project.
The General Assemb ly responded to MEDCO’s request for revisions to its
enabling legislation by thoroughly revising the statutes so as to permit MEDCO to
conduct the transactions incident to building and operating the Pasadena golf course.
On April 20, 2001, the Governor of Maryland signed these revisions into law as
Ch. 338 of the Acts of 2001.  This legislation authorized MEDCO to undertake projects
anywhere in Maryland and not solely in distressed areas (Article 83A, § 5-202(c)(1)),
authorized it to compete with private taxpaying enterprises (§ 5-202(c)(5)(i)-(ii)),
-5-
4
Article III, § 48, provides as follows:
“Corporations may be formed under general laws, but shall not be created by
special Act, except for municipal purposes and except in cases where no general laws
exist, providing for the creation of corporations of the same general character, as the
corporation proposed to be created; and any act of incorporation passed in violation
of this section shall be void. All charters granted, or adopted in pursuance of this
section, and all charters heretofore granted and created, subject to repeal or
modification, may be altered, from time to time, or be repealed; Provided, nothing
herein contained shall be construed to extend to Banks, or the incorporation thereof.
The General Assembly shall not alter or amend the Charter, of any Corporation
existing at the time of the adoption of this Article, or pass any other general or special
law for the benefit of such Corporation, except upon the condition that such
Corporation shall surrender all claim to exemption from taxation or from the repeal
or modification of its Charter, and that such Corporation shall thereafter hold its
Charter subject to the provisions of this Constitution; and any Corporation chartered
by this State which shall accept, use, enjoy, or in any wise avail itself of any rights,
privileges or advantages that may hereafter be granted or conferred by any general
or special Act, shall be conclusively presumed to have thereby surrendered any
exemption from taxation to which it may be entitled under its Charter, and shall be
thereafter subject to taxation as if no such exemption has been granted by its
Charter.”
(continued...)
authorized MEDCO to own for profit enterprises (§ 5-205(16)), removed the
requirement that MEDCO turn over its projects to private enterprises upon completion
(§ 5-202(c)(2)), and removed the requirement that MEDCO projects be located upon
land conveyed to MEDCO by the State (§ 5-201(h)-(i)).  
MEDCO subsequently announced that its first project under the new legislation
would be the Pasadena golf course.  In response to this announcement by MEDCO,
Atlantic Golf filed a complaint on May 1, 2001, in the Circuit Court for Montgom ery
County, seeking a declaratory judgment that MEDCO had surrendered its tax-exempt
status under Article III, § 48, of the Maryland Constitution, as a result of the
amendm ents to the statutory provisions governing MEDCO.4  Atlantic Golf further
-6-
4
(...continued)
The clause relating to the surrender of a tax exemption was proposed by Ch. 195 of the Acts of 1890,
and ratified by the voters on November 3, 1891.
alleged in its complaint that, because MEDCO had surrendered its tax exemption, all
of its activities and revenue, as well as the bonds that it had issued to finance the
Pasadena golf course (and any interest thereon), were subject to taxation as of April 20,
2001.  Atlantic Golf specifically relied upon the second clause of the third sentence in
Article III, § 48, which states:
“. . . and any Corporation chartered by this State which shall
accept, use, enjoy, or in any wise avail itself of any rights,
privileges or advantages that may hereafter be granted or conferred
by any general or special Act, shall be conclusively presumed to
have thereby surrendered any exemption from taxation to which it
may be entitled under its Charter, and shall be thereafter subject to
taxation as if no such exemption has been granted by its Charter.”
The State of Maryland filed a motion to intervene as “an additional party
defendant in support of the constitutionality and continuing validity” of the statutory
provision granting MEDCO a tax exemption.  The Circuit Court granted this motion.
The defendants, MEDCO and the State, each filed motions for summary
judgment, in which they argued that Article III, § 48, did not require MEDCO to forfeit
its tax-exempt status.  The defendants contended that the tax exemption surrender
provision was inapplicable to MEDCO because MEDCO was a public corporation.  The
defendants took the position that the purpose of Article III, § 48, was to affect the
status of private corporations, not public ones.  They further asserted that the
-7-
constitutional provision only applied to corporations chartered prior to 1851, whereas
MEDCO was created in 1984.  The defendants also claimed that the constitutional
provision covered only corporate entities that operated under a “charter,” and that, as
a public corporation, MEDCO was founded and governed by an act of the Legislature,
not a charter.
The Circuit Court granted both of the defendants’ motions for summary
judgment, and entered a declaratory judgment that Article III, § 48, did not apply to
either public corporations or to corporations that were formed after 1851.  Atlantic Golf
took an appeal and, prior to any proceedings in the Court of Special Appeals, filed in
this Court a petition for a writ of certiorari presenting the question of whether “the tax
exemption surrender provision . . . [is] limited to private corporations chartered prior
to 1851, or limited to private chartered corporations, and therefore, inapplicable to a
public corporation like MEDCO?”  We granted the petition, Atlantic Golf v. MEDCO,
365 Md. 472, 781 A.2d 778 (2001).
II.
Atlantic Golf argues before this Court that MEDCO is covered by the third
sentence of Article III, § 48, because the tax exemption surrender provision applies to
both public entities and to corporations chartered after 1851.  Atlantic Golf explains
that, for instance, the provision affects all corporations that operate under a “charter,”
and that MEDCO qualifies as operating under a “charter” in that it functions pursuant
to enabling legislation.  According to Atlantic Golf, MEDCO’s enabling act is
-8-
equivalent to a “charter” under Maryland law.  See Code (1975, 1999 Repl. Vol.), § 1-
101(e)(1)(i) of the Corporations and Associations Article (“‘Charter’ includes . . . [a]
charter granted by special act of the General Assembly”).
MEDCO and the State respond that public corporations are not covered under
the tax exemption surrender provision.  First, they argue that a public corporation such
as MEDCO does not fall within the provision based on the language of the provision.
The appellees explain that the provision involves “any exemption from taxation to
which [a corporation] may be entitled,” that public corporations are not covered under
this language because their “enabling act[s] . . . can always be repealed or modified,”
and that, therefore, they have no entitlements to tax exemptions or to any other right,
privilege, or power (State’s brief at 6-7, emphasis added).  MEDCO and the State also
claim that MEDCO is not covered as a public corporation because it does not operate
under a “charter.”  According to the appellees, a “charter” refers specifically to a
contract between the State and a private corporate entity, a contract that the State often
cannot change because of the prohibition in Article I, cl. 10, of the federal constitution
against the impairment of contracts.  MEDCO and the State explain that, in contrast to
a charter, MEDCO’s enabling act is subject to alteration at will by the Legislature.
They rely on Mayor & City Council of Hagerstown v. Sehner, 37 Md. 180, 193 (1872)
(stating that public corporations are “‘mere organizations for public purposes, liable
to have their public powers, rights and duties modified or abolished at any moment by
the Legislature. * * * [G]enerally, the doings between them and the Legislature are in
-9-
the nature of legislation rather than compact, and therefore to be considered as not
violated by subsequent legislative changes’”).
MEDCO and the State further argue that, based on the history of the
constitutional provision, the framers intended that it affect solely private corporations.
They state that the provision was intended to apply specifically to private railroad
companies that were chartered prior to 1851.  The appellees refer to an 1890 message
to the General Assemb ly by then Governor Elihu Jackson, who was instrumental in
proposing the constitutional amendment that included the tax exemption surrender
provision, in which Governor Jackson stated that the purpose of the amendment was
to limit the tax exemptions of the railroad companies.
III.
We hold that the tax exemption surrender provision is inapplicable to public
corporations such as MEDCO and that, therefore, MEDCO is not required to relinquish
its tax exemption as a result of the alterations to its enabling legislation.  We need not
and do not reach the issue of whether the provision applies only to corporations
chartered prior to 1851.
Preliminarily, we do not agree with MEDCO’s and the State’s argument that the
word “charter” acts to exclude public corporations.  The enabling act of a public
corporation fits within the Maryland statutory definition of a “charter.”  See § 1-
101(e)(1)(i) of the Corporations and Associations Article; Trailway Oil Co. v. City of
Mobile, 271 Ala. 218, 225, 122 So.2d 757, 764 (1960); Matthews v. Macon Water
-10-
Auth., 273 Ga. 436, 437, 542 S.E.2d 106, 107 (2001); McDonald v. Brooks, 215 Tenn.
535, 540, 387 S.W.2d 803, 805 (1965).  In addition, this Court has consistently
recognized that municipal corporations, home rule counties, and certain other
government entities operate under charters.  See, e.g., Mayor & Council of Rockville
v. Woodmont Country Club, 348 Md. 572, 575, 705 A.2d 301, 302 (1998).  Moreover,
the enabling act of MEDCO is similar in form and function to the charter of a private
corporation, in that  MEDCO’s enabling act lists an array of powers and operational
guidelines.  The fact that the enabling act is “ordinary legislation” which the legislature
may amend freely does not distinguish it from private charter.  The terms of a private
charter may also be altered or repealed under the second sentence of Article III, § 48,
of the Maryland Constitution, as long as there is no violation of other constitutional
prohibitions.  See State v. Good Samaritan Hospital, Inc., 299 Md. 310, 321-322, 473
A.2d 892, 898, appeal dismissed, 469 U.S. 802, 105 S.Ct. 56, 83 L.Ed.2d 7 (1984)
(“§ 48 of Article III of the Constitution of Maryland explicitly provides that corporate
charters are ‘subject to repeal or modification [and] may be altered, from time to time,
or be repealed.’ * * * These constitutional and statutory provisions are plain
manifestations of the well-settled principle that a corporation holds its charter subject
to the constitutional exercise of the State’s . . . power to legislate in the public interest.
See, e.g., Insurance Comm’r v. Blue Shield, 295 Md. 496, 456 A.2d 914 (1983); Blum
v. Engelman, 190 Md. 109, 57 A.2d 421 (1948)”).
Nevertheless, the language of § 48 as a whole indicates that the tax exemption
-11-
surrender clause does not apply to public corporations.  The first and second sentences
of § 48, adopted in 1851, suggest that § 48 is limited in its application to private
corporations.  The first sentence states that corporations “may be formed under general
laws” and need not be created by an act of the Legislature, and briefly refers to
municipal corporations as the exception to this rule.  The second sentence, which
provides that the State has the power to repeal or modify charters, is obviously limited
in its application to private corporations.  There is no need for such a provision with
regard to public corporations.  The authority granted by the second sentence is identical
to the authority that the Legislature already held in 1851 to amend at will the enabling
legislation of public corporations.  See Regents of University of Maryland v. Williams,
9 G. & J.,  365, 397 (1838) (“A public corporation, is one that is created for political
purposes, with political powers, to be exercised for purposes connected with the public
good in the administration of civil governm ent; an instrument of the government
subject to the control of the Legislature, and its members officers of the governm ent,
for the administration or discharge of public duties . . .”).  See also State v. Board of
Education, 346 Md. 633, 645, 697 A.2d 1334, 1340 (1997) (“‘[P]ublic corporations . . .
are instruments of government subject at all times to the control of the Legislature with
respect to their duration, powers, rights and property,’” quoting Mayor and Council of
Hagerstown v. Sehner, supra, 37 Md. at 193); Board v. Secretary of Personnel, 317
Md. 34, 44-45, 562 A.2d 700, 705 (1989); The State v. B. & O. R. R. Co., 12 G. & J.
399 (1842), affirmed, 3 How. 534, 11 L.Ed.2d 714 (1845).  To interpret the second
-12-
sentence of § 48 to apply to public corporations would therefore render that sentence
mere surplusage, and we do not construe enactmen ts so as to render “any portion . . .
superfluous or nugatory,” Facon v. State, 375 Md. 435, 446, 825 A.2d 1096, 1102
(2003), and cases there cited.
The historical background surrounding the enactment of the tax exemption
surrender provision also supports a construction that would exclude public
corporations.  As previously mentioned, the origin of the provision was an 1890
message of Governor Elihu Jackson to the General Assembly.  See 1890 House and
Senate Docum ents at 7-10.  The provision’s target were the tax exemptions that had
been given to private railroad companies during an earlier period of time.  As Governor
Jackson explained in his 1890 address, the State prior to 1851 had granted charters to
private railroad companies and had included in these charters tax exemptions so as to
promote the financial growth of these fledgling companies.  By 1890, however, the
railroad companies had long since become extremely profitable enterprises, and the
State Treasury was losing a great deal of revenue each year as a result of the previously
granted exemptions.  In response to this situation, Governor Jackson proposed a
constitutional amendm ent, the tax exemption surrender provision, to the then existing
version of § 48, so that the State would have access to the “wealth . . . these
corporations should pay to bring them upon an equality with the rest of the people.”
Id. at 7.
In his Message to the General Assemb ly in 1892, following the ratification of the
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constitutional amendm ent, Governor Jackson commented: “The State is under no
obligation to grant to the Baltimore and Ohio Railroad Company or to the Northern
Central Railway Com pany, any new privileges or concession and may justly and
reasonably withhold them, so long as they refuse to submit to the equal and uniform
rule of taxation applied to all other corporations and to every individual enjoying the
protection of its laws.”  Governor Jackson’s Message to the General Assemb ly of
January 6, 1892, 1892 House and Senate Docum ents at 19.
Further support for MEDCO’s and the State’s interpretation of § 48 is the
principle that enactmen ts are not construed as applying to the enacting authority unless
they expressly so provide.  See Baltimore v. State, 281 Md. 217, 223-224, 378 A.2d
1326, 1329-1330 (1977):
“In this regard, it is a basic and long-standing principle of statutory
construction that the State is not deemed to be bound by an
enactment of the General Assembly unless the enactment
specifically names the State or manifests a clear and indisputable
intention that the State is to be bound.  In State v. Milburn, 9 Gill
105, 118 (1850), this Court, quoting Mr. Justice Story, stated:
‘“General Acts of the Legislature are meant to regulate and
direct the acts and rights of citizens, and in most cases, the
reasoning applicable to them applies with very different, and
often contrary force, to the government itself.  It appears to
me, therefore, to be a safe rule, founded in the principles of
the common law, that the general words of a statute ought
not to include the governm ent, or affect its rights, unless
that construction be clear and indisputable upon the text of
the Act.”* 
Accord, Harden v. Mass Transit Administration, 277 Md. 399, 354
A.2d 817 (1976); Public Indemnity Co. v. Page, 161 Md. 239, 156
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A. 791 (1931); County Comm*rs of Balto. Co. v. Board, Etc., of
Md. Hospital, Etc., 62 Md. 127 (1884); State v. Balt. & Ohio R. R.
Co., 34 Md. 344 (1871).”
See also Glascock v. Baltimore County, 321 Md. 118, 121, 581 A.2d 822, 823-824
(1990); Nationwide Mut. Ins. Co. v. United States Fidelity & Guaranty Co., 314 Md.
131, 137, 550 A.2d 69, 72 (1988).
For the foregoing reasons, we hold that the tax exemption surrender provision
is inapplicable to MEDCO.