Source: https://supreme.justia.com/cases/federal/us/289/36/
Timestamp: 2019-04-19 11:03:07+00:00

Document:
1. A municipal corporation, created by a state for the better ordering of government, has no privileges or immunities under the Federal Constitution which it may invoke in opposition to a statute of the state. P. 289 U. S. 40.
2. A special exemption of railroad property from state, county, and city taxation, granted by the Maryland Legislature for the period of two years as an aid to continuing in operation a financially crippled railroad (in the hands of a receiver) because of its peculiar public importance as a carrier of millions of passengers and as the only railroad serving the capital of the state, held consistent with the uniformity of taxation provision (Art. 15) of the Maryland Declaration of Rights. P. 289 U. S. 40.
3. Tax exemptions to promote the construction of railroads and tax exemptions to help keep constructed railroads in operation when they are failing rest on the same public policy. P. 289 U. S. 44.
4. The statute above described is not repugnant to Art. III, § 33, of the Maryland Constitution, which provides that "the General Assembly shall pass no special law for any case for which provision has been made by an existing general law." P. 289 U. S. 45.
5. This provision leaves the legislature a wide margin of discretion to enact special laws for special evils not met by the general laws, and only in cases of plain abuse may courts declare the special laws invalid. P. 289 U. S. 46.
6. An act of the legislature exempting a railroad from taxation is not a "local law" within the meaning of the Home Rule Article of the Maryland Constitution when so drawn as to apply to two "geographical subdivisions" of the state -- e.g., Baltimore and Annapolis. P. 289 U. S. 47.
7. Franchise payments due from a railroad to the Cities of Baltimore and Annapolis under city ordinance describing them as "taxes," held "charges in the nature of a tax" within the meaning of a state statute exempting the railroad. P. 289 U. S. 47.
8. The standing of a municipal corporation to assail a statute of its state as repugnant to the state constitution depends upon the state law. P. 289 U. S. 47.
Certiorari, 287 U.S. 594, to review decrees which reversed orders of the District Court disallowing claims for overdue taxes, filed with the receiver of the Washington, Baltimore & Annapolis Electric Railroad Company by the corporations of Baltimore and Annapolis.
"An Act to exempt the railroad property of the Washington, Baltimore, and Annapolis Electric Railroad Company, or so much thereof as may be used for railroad purposes by said company, its receiver, successors and assigns, from all state taxes and charges, including contributions to the cost of construction of railroad crossings made or to be made under the authority of the state Roads Commission, and from all county and city taxes and charges in the nature of a tax for the years during which the property is so used, but not exceeding two years beginning January 1, 1931."
"WHEREAS, The Washington, Baltimore and Annapolis Electric Railroad Company did not, in the year 1930, earn its operating charges, and it is of the utmost importance for the welfare of the state and particularly the communities served by said railroad that the operation of said railroad be continued, and"
"WHEREAS, It is in the judgment of the General Assembly of Maryland a wise and sound public policy to encourage the continued operation of said railroad by the exemption herein provided:"
"SECTION 1. Be it enacted by the General Assembly of Maryland, That the railroad property of the Washington, Baltimore and Annapolis Electric Railroad Company, or so much thereof as may be used for railroad purposes by said company, its receiver, successors and assigns, be exempt from all state taxes and charges, including contributions to the cost of construction of railroad crossings made or to be made under the authority of the State Roads Commission, and from all county and city taxes and charges in the nature of a tax for the years during which the property is so used, but not exceeding two years beginning January 1, 1931."
"SECTION 2. And be it further enacted, That this Act shall take effect June 1, 1931. "
A municipal corporation, created by a state for the better ordering of government, has no privileges or immunities under the Federal Constitution which it may invoke in opposition to the will of its creator. Trenton v. New Jersey, 262 U. S. 182; Newark v. New Jersey, 262 U. S. 192; Worcester v. Worcester Consolidated Street Ry. Co., 196 U. S. 539; Pawhuska v. Pawhuska Oil Co., 250 U. S. 394; Risty v. Chicago, R.I. & Pac. Ry. Co., 270 U. S. 378, 270 U. S. 390; Railroad Commission v. Los Angeles Ry. Corp., 280 U. S. 145, 280 U. S. 156.
may have directed to be subjected to the tax levy; yet fines, duties or taxes may properly and justly be imposed, or laid with a political view for the good government and benefit of the community."
The courts of Maryland hold that the rule of uniformity established by these provisions does not forbid the creation of reasonable exemptions in furtherance of the public good. Baltimore v. B. & O.R. Co., 6 Gill, 288; State v. B. & O. R. Co., 48 Md. 49; State v. B. & O. R. Co., 127 Md. 434, 96 A. 636; State v. N.C. R. Co., 44 Md. 131; State v. P., W. & B. R. Co., 45 Md. 361; Daly v. Morgan, 69 Md. 460, 467, 16 A. 287; B., C. & A. Ry. Co. v. Ocean City, 89 Md. 89, 42 A. 922; B., C. & A. Ry. Co. v. Wicomico County Comm'rs, 93 Md. 113, 48 A. 853; Havre De Grace v. Bridge Co., 145 Md. 491, 125 A. 704; In re Tax Cases, 12 Gill & J. 117; cf. 44 U. S. Appeal Tax Court, 3 How. 133; Picard v. East Tennessee V. & G. R. Co., 130 U. S. 637, 130 U. S. 641. It does not even prohibit an exemption in favor of an individual, as distinguished from one for the benefit of the members of a class. All that it exacts in respect of the narrower exemption is the presence of a relation, fairly discernible, between the good of the individual and the good of the community. There must be something more than an arbitrary preference of one among many. Baltimore City v. Starr Church, 106 Md. 281, 287, 288, 67 A. 261.
"It is of the utmost importance for the welfare of the state, and particularly the communities served by said railroad, that the operation of said railroad be continued."
exemption is to be confined to that part of the property of the company which is used for railroad purposes, is to continue only so long as the property is so used, and is to expire, in any event, at the end of the two years beginning in January, 1931. It is not the function of a court to determine whether the public policy that finds expression in legislation of this order is well or ill conceived. Otis v. Parker, 187 U. S. 606, 187 U. S. 609; Missouri, Kansas & Texas Ry. Co. v. May, 194 U. S. 267; Sproles v. Binford, 286 U. S. 374, 286 U. S. 388-389. The judicial function is exhausted with the discovery that the relation between means and end is not wholly vain and fanciful, an illusory pretense. Within the field where men of reason may reasonably differ, the legislature must have its way. Otis v. Parker, supra. Nor, in marking out that field, will a court be forgetful of presumptions that help to fix the boundaries.
"As underlying questions of fact may condition the constitutionality of legislation of this character, the presumption of constitutionality must prevail in the absence of some factual foundation of record for overthrowing the statute."
O'Gorman & Young v. Hartford Fire Insurance Co., 282 U. S. 251, 282 U. S. 257. There has been no departure from that principle in the judgments of the highest court of Maryland. Wampler v. LeCompte, 159 Md. 222, 150 A. 455; 282 U. S. 282 U.S. 172, 282 U. S. 175.
the legislature to help this particular railroad and keep its business going may have failed altogether in respect of any other railroad, solvent or insolvent. Here was a line carrying millions of passengers, and supplying the only railroad service between the capital of the state and its most populous city. The rescue of such a road might be dictated by the public interest when a road in some other territory might wisely be abandoned to its fate.
and hence an arbitrary preference irrespective of its motive. But this is to misread the cases and misconceive the rationale back of them. The charter exemption to a railroad does not gain validity from the circumstance that a charter is a contract. If the exemption is a valid one, the contract may mean that there will be no power of revocation, though exemptions not contractual are terminable at will. Gordon v. Appeal Tax Court, 3 How. 133. Even this difference will be absent if there is a reservation by the state of the power to repeal or change. Northern Central Ry. Co. v. Maryland, 187 U. S. 258, aff'g Maryland v. Northern Central Ry. Co., 90 Md. 447, 45 A. 465. Revocable or irrevocable, the contract will not give validity to what would otherwise be void. Stearns v. Minnesota, 179 U. S. 223, 179 U. S. 254; Duluth & I. R. Co. v. St. Louis County, 179 U. S. 302, and cf. Hudson County Water Co. v. McCarter, 209 U. S. 349, 209 U. S. 357; Union Dry Goods Co. v. Georgia Public Service Corp., 248 U. S. 372, 248 U. S. 375-376. To see that this is so, we have only to inquire what the consequence would be if a charter exemption were to be given to a mere private corporation, conducted for profit solely like any other business enterprise. Charter or no charter, the exemption would not stand. City of Baltimore v. Starr Church, supra.
without more. There is room, indeed, for question whether even the duty is so absolute as the respondents' argument assumes. Railroad Commission v. Eastern Texas R. Co., 264 U. S. 79, 264 U. S. 85. Certain it is, in any event, that operation may end with the consent of the public service commission when the earnings are inadequate. Code of Public General Laws of Maryland Bagby's ed., 1929 supplement, Art. 23, § 380; Benson v. Public Service Comm'n, 141 Md. 398, 118 A. 852. Nor is there need to show a probability of utter cessation or abandonment. Service is likely to be inefficient and even dangerous if operation is continued in the face of an increasing deficit. The state has an interest in seeing to it that railroads shall be run, but an interest also in how they shall be run.
develop close distinctions. Our endeavor in what follows is to extract the essence of the decisions and to give effect to it as law.
including matrons. A matron was dismissed for physical disability after many years of service. The legislature, impressed by the hardship of her position, passed a special act for her relief. The court took the view that here was a special case not provided for or considered in an existing general law, and so upheld what had been done. See also O'Brian & Co. v. County Commissioners, Hodges v. Baltimore Union Pass Ry. Co., applying a like rule.
"SEC. 4. From and after the adoption of a charter under the provisions of this Article by the City of Baltimore or any County of this state, no public local law shall be enacted by the General Assembly for said City or County on any subject covered by express powers granted as above provided. Any law so drawn as to apply to two or more of the geographical subdivisions of this state shall not be deemed a Local Law within the meaning of this Act. The term 'geographical subdivision' herein used shall be taken to mean the City of Baltimore or any of the Counties of this state."
Their standing for that purpose, at least in the state courts, is a question of state practice (Columbus & Greenville Ry. Co. v. Miller, 283 U. S. 96, 283 U. S. 99; Braxton County Court v. West Virginia, 208 U. S. 192, 208 U. S. 197-198; Stewart v. Kansas City, 239 U. S. 14, 239 U. S. 16), as to which the federal courts do not exercise an independent judgment.
The Maryland decisions proceed on the assumption that municipal corporations assailing a statute of exemption or other special legislation have an interest in the controversy which entities them to be heard (Baltimore v. Starr Church, supra; Baltimore v. Allegany County Comm'rs, 99 Md. 1, 57 A. 632), though the reports do not show that their interest was questioned.

References: § 33
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