Opinion ID: 2681015
Heading Depth: 4
Heading Rank: 1

Heading: Whether laches applies to taxpayer suits?

Text: While neither party raised the contention that laches may not be applicable in taxpayer suits, we find it necessary to examine this issue prior to our further analysis of laches here. Some authority in other jurisdictions does not permit the doctrine of laches to bar a taxpayer’s right to invoke the powers of a court of equity to prevent the unlawful dissipation of public funds. For example, the Supreme Court of North Dakota reached such a conclusion in a Nineteenth Century case, explaining, In our judgment, no laches on the part of taxpayers or others can operate to confer authority upon the officials of a corporation in a case where such officials are wholly without power to act. . . . [L]aches does not ordinarily prevent the intervention of a taxpayer to enjoin a disbursement of public funds about to be made without the authority of law or in defiance of law. Nor (if this action should be dismissed without a decision upon the merits, and on account of the laches of this plaintiff) are we able to see any reason why another action for the same relief might not be instituted by some taxpayer and resident who has not been guilty of laches in the premises. If this be true, it would certainly not be in furtherance of justice to dismiss the present action without determining the merits. 130 Storey v. Murphy, 81 N.W. 23, 27 (N.D. 1899) (internal citations omitted); see also Dahl v. City of Grafton, 286 N.W.2d 774, 777 (N.D. 1979) (restating the court’s refusal to apply the doctrine of laches in class-action suits, such as taxpayer suits, and citing part of the language quoted above as the rationale). Moreover, this Court has stated that limitations is unavailable as a defense against the state, or its agency or subdivision, asserting public rights on behalf of all the people of the State. In Goldberg v. Howard Cnty. Welfare Bd., 260 Md. 351, 272 A.2d 397 (1971), the Court quoted favorably the following quotation from 51 Am. Jur. 2d, Limitation of Actions, s. 412, “s 412. Distinction between private or proprietary rights and public or governmental rights. ‘A distinction has been made in many jurisdictions, with respect to the application of the statute of limitations in actions by political subdivisions, between actions based upon ‘private’ or ‘proprietary’ rights and those based upon ‘public’ or ‘governmental’ rights. Where this distinction is recognized, the inquiry is whether the state, or its agency or subdivision, is asserting public rights on behalf of all the people of the state or merely private rights on behalf of a limited group. ‘The statute of limitations will bar the governmental unit where it is asserting a private or proprietary right, but will not apply where the right being asserted is public or governmental in nature. In other words, the governmental plaintiff, in seeking to enforce a contract right or some right belonging to it in a proprietary sense, may be defeated by the statute of limitations, but as to rights belonging to the public and pertaining purely to governmental affairs, and in respect of which the political subdivision represents the public at large or the state, the exemption in favor of sovereignty applies, and the statute of limitations does not operate as a bar.” 260 Md. at 358-59, 272 A.2d at 401. Because a taxpayer suit is analogized to such a governmental suit based upon public rights, it could be argued that laches, a defense 131 similar to a statute of limitations defense, should not be allowed as a defense in taxpayer suits. In Gloyd v. Talbott, 221 Md. 179, 156 A.2d 665 (1959), a taxpayer brought suit in equity, on behalf of himself and all other taxpayers, seeking a declaratory decree that certain payments of money from municipal funds to certain individuals were illegal and ultra vires. Appellants in that case answered contending that the payments were legal and asserting limitations and laches. Regarding the laches argument, this Court stated, On the point of laches, it has been said that an equity court will temper the relief according to the circumstances of the particular case. Cf. Konig v. Mayor & City Council of City of Baltimore, [128 Md. 465, 97 A. 837 (1916)]. It has also been said that laches should not be applied against a public body, or in a derivative suit with the same rigor as against an individual. See Thornton v. Willage of Ridgewood, 17 N.J. 499, 111 A.2d 899. The reasoning seems to be that laches is a special application of the doctrine of estoppel, which does not generally apply against a public body. See note 1 A.L.R.2d 338, 351. We see no reason for applying it in the instant case, at least as to payments made subsequent to April 1, 1954. Gloyd, 221 Md. at 186, 156 A.2d at 668-69. Even considering the foregoing, we conclude that it is inappropriate to adopt a bright line or per se rule that laches may not be asserted as a defense in a taxpayer suit. Rather, the application of the doctrine of laches should be determined by what equity demands in a given case. For example, where a taxpayer seeks an injunction prior to a state agency entering a contract, courts might be more inclined to finding that laches should not apply. In this case, however, due to the five-year period between the beginning of the official process for the development of the State Center Project and Appellees filing of their lawsuit (and due to the extensive, public communications 132 regarding both the visions and the process for the Project throughout the five-year period), it would be unequitable to foreclose consideration of the doctrine of laches in this case.