Court Opinion

ID: 9700721
Source: CourtListenerOpinion
Date Created: 2023-08-25 21:47:00.010319+00
Date Added: 2024-06-11T18:21:14.105233
License: Public Domain

*564Prescott, J.,
filed the following dissenting opinion:
In the previous majority opinion, it was assumed that the Legislature had the authority to grant partial exemptions from taxation of land; and it was held that the Act under attack was invalid as being discriminatory and not based upon public policy. The present majority opinion still holds the Act unconstitutional, but this time on the ground that the Legislature does not have the power to classify land in this State for tax purposes.
Having somewhat fully expressed my views in a previous dissent, I shall make one or two brief observations concerning the present majority opinion and re-file the former dissent.
The majority opinion points up some of the reasons for the dissent. It states: “Under these statutes [Baltimore City Annexation Statutes] and decisions [of this Court] there was in fact, as the Commission points out, partial exemption from taxation [of land] in the Annex for a period of about fifty years.” During this period, there were many cases dealing with these partial exemptions decided by this Court. In none of them was it ever held that the partial exemptions were invalid. I think these decisions and the statutes referred to, over this long period of time, are sufficient to create a sound basis upon which to determine that our Constitution does permit the Legislature to classify land for the purposes of taxation. As I read the opinion, it, in effect, holds that for a period of fifty years, or more, there were unconstitutional statutes among the laws of this State, and this Court enforced them [although it is accurately stated in the majority opinion that the statutes were not directly and specifically brought under constitutional attack].
The majority opinion also recognizes, and apparently places its blessing, upon the other quite numerous partial exemptions of land statutes in this State.
Some of these exemptions of land from taxation [all named in Code (1957), Article 81, Section 9] are: the first 15 acres of nonprofit organizations used for war memorials or commemorative parks; the first 100 acres of certain fraternal, civil and benevolent institutions; the first 100 acres (outside of any city) of certain literary and educational organizations; *565the first $6,000 of assessment of the land and dwelling of blind persons; the real property of any manufacturer [from county and local assessment for 10 years] employing more than 75 people, who locates in St. Mary’s County; the real property of the Habonim Camp Association Company, Inc.; the real property of certain salvage corps and fire companies; the ground for the Boys’ Village and Barrett School for Girls; the land of numerous veterans’ associations, historical societies and hospitals. Needless to say, I am in entire accord with the part of the majority opinion that suggests these exemptions and partial exemptions are valid; but it is extremely difficult for me to comprehend why some partial exemptions of land are constitutional in this State, yet the present Act is held unconstitutional upon the ground that the Legislature has no power to grant partial exemptions.
With this short preface, the former dissent follows:
As I am unable to concur in the majority opinion and the subject involved is one of general interest throughout the State, I shall set forth the reasons which prevent my agreeing with it, as fully as the limited time available will permit.
The facts are fully and accurately stated by the majority; so, they will not be repeated here.
The majority assume, without deciding, that under the Maryland constitution, the legislature may reasonably classify real estate for the purposes of taxation, and, also, may grant partial exemptions from the payment of taxes on real estate, provided they be reasonable or serve a public purpose; consequently, I shall proceed upon the same premise, after making two short observations concerning the same. Chief Justice Cooley states: “The legislature has power to exempt from taxation any person, corporation, or class of property according to its views of public policy or expediency, provided always that no constitutional provisions are violated. [Citing, among many other cases, William Wilkens Co. v. City of Baltimore, 103 Md. 293, 63 A. 562.] The right to make exemptions is involved in the right to select the subjects of taxation and apportion the public burdens among them, and must consequently be understood to exist in the law-making power wherever it has not in terms been taken away.” (Emphasis *566added.) 2 Cooley Taxation (4th Ed.), Section 659. See also Niles, Maryland Constitutional Law, 32. And it should be noted that the quotation in the majority opinion from 111 A.L.R. 1486 to the effect that in a majority of the cases from jurisdictions whose constitutions require taxes to be uniform hold that a classification of land for the purpose of property taxation “as agricultural and otherwise” (italics added) results in an unconstitutional discrimination is not cited as authority for holding that the partial exemption involved in the instant case is “unreasonable and serves no public purpose.” The note seems to deal principally with cases where the questions raised were whether or not, under the state constitutions being considered, there could be any classification or exemptions made [questions, which for the purposes of the case at bar, have been assumed].
Starting upon the assumptions made by the majority, I proceed to a discussion of that portion of the statute [hereafter referred to as “the act” or “the statute”] here under attack. The act provides that “Lands which are actively devoted to farm or agricultural use shall be assessed on the basis of such use, and shall not be assessed as if sub-divided or on any other basis.” The classification of property for tax purposes on the basis of use is entirely proper and has been recognized for so many years that little citation of authority is necessary to support this phase of the matter. Grossfield v. Baughman, 148 Md. 330, 336, 129 A. 370. In fact, most of the exemptions granted in Code (1957), Article 81, Section 9, are based upon the use to which the property is put.
It is, also, well settled “that the legislature may, without contravening either the Federal or State Constitution, exempt certain species of property from taxation, when it does not amount to an arbitrary discrimination; * * * and * * * it may exempt certain classes of persons or corporations from the payment of taxes upon certain species of property where the discrimination is founded upon public policy or a reasonable distinction, and does not amount to an arbitrary discrimination.” (Italics added.) Mayor & C. C. v. German A. F. I. Co., 132 Md. 380, 386. The majority, however, have concluded that whatever discrimination would result from *567the act is not founded “upon public policy” or a “reasonable distinction.”
It is difficult for me to conceive of how a statute that affects so vital a part of this state’s economy as its agricultural industries, embracing its dairy farms, beef cattle raising, nurseries and general farming enterprises, etc., can be divorced from the State’s public interest and “public policy.” There can be little doubt that this act does not affect small isolated spots in the State, but quite a number of the whole areas of different counties where the actual value of the land is so high that, if assessed at its full value, it cannot sensibly and profitably be utilized for agricultural purposes. It is a matter of general knowledge that there are many places in the State where farmers, who have tilled their soil for many years and who, either by choice or because of disqualifications for other vocations, desire to continue to do so. They sell their produce in nearby markets and have been able to make reasonable returns for their labors and upon the investments involved. The march of time goes on and they find themselves engulfed, either because of nearby housing developments, business enterprises or country estates, in a situation where, if their land be assessed at its actual value, they can no longer farm their land and obtain a reasonable return. In many cases, it is the farmer’s home, and has been, for many years. His only recourse is to sell and retire, if he can do so or desires to do so, or to leave his home and go to a more remote location to continue his farming activities.
As the situation now stands, the housing developer has a distinct advantage over the agriculturist. If the developer can purchase and develop land near a farm and then the farm is assessed as of the value of subdivision property, the farmer is required to sell or operate at a loss or so small a gain that it does not pay him to continue.
The disruptive effect of these forced sales upon the farmer, his family and the public is apparent. There is an immediate dislocation not only of the farmer and his family, but also upon the laboring force formerly employed, with its resulting problems of unemployment, etc., and the land itself is withdrawn from the production of the necessities of life.
*568And the above is only, more or less, an illustration. In the large agricultural areas of this State, where the problems of the housing developments have not arisen but the value of land (which can be utilized for country estates, water-front property, etc.) has increased and the problems of the high cost of labor, fertilizer and machinery and the low price of their produce confronts the farmer, again shows, in my opinion, that the statute is reasonable and based upon a sound public policy of encouraging agriculture. There are many other apt illustrations that could be made, but I shall not labor the factual situation much further.
Of course, there are instances where some speculators would benefit from the statute, but the statement that seldom, if ever, does any tax fall uniformly and equally in all respects, upon every taxpayer, which is apposite here, has become so trite in the text-books and cases, no citation of authority to support the same will be made.
I turn now to the law with reference to whether the statute under consideration is “reasonable” and based upon “public policy.” All presumptions are strongly in favor of the constitutionality of a statute, which should not be held invalid unless it is clear, plain and palpable that such decision is required. Allied Stores of Ohio v. Bowers (1958), 358 U. S. 522. If there be a reasonable doubt as to validity, the act should be upheld. Hellmann v. Collier, 217 Md. 93, 141 A. 2d 908; Leonardo v. Board of County Commissioners, 214 Md. 287, 299, 134 A. 2d 284; Pressman v. State Tax Commission, 204 Md. 78, 94, 102 A. 2d 821.
In Dickinson v. Porter, 35 N. W. 2d 66 (Iowa, 1948), (Appeal dismissed 338 U. S. 843), referred to (but not followed) by the majority as the leading case that upholds the partial exemption of agricultural lands, the Supreme Court of Iowa went thoroughly into the subject and carefully treated and analyzed the constitutional questions involved, including those of “reasonableness” and “public policy.” That Court has expressed my views so thoroughly upon the law that I shall conclude by simply quoting therefrom:
“Both in her petition and in argument here plaintiff’s complaint is that the statute conflicts- with the *569above constitutional provisions in that the classifications in the law are unreasonable and arbitrary.
“The statute amounts to a legislative finding there are sufficient differences between property to which the act applies and other property to justify the classification. We will not interfere unless plaintiff has proven the classification does not rest on a reasonable basis but is essentially arbitrary and palpably discriminating.
“It is well recognized the legislature has a wide discretion in determining classifications to which its acts shall apply. * * * In tax matters even more than in other fields legislatures possess the greatest freedom in classification. Madden v. Kentucky, 309 U. S. 83, * * * It is not sufficient that the court may regard the reason for the classification a poor one. 16 C.J.S., Constitutional Law, § 520, page 1049; 1 Cooley on Taxation, 4th Ed., § 334, page 714. The differences upon which the classification is based need not be great or conspicuous. 1 Cooley, 4th Ed., § 334, page 714, and citations.
“We consider first the classification of lands used for agricultural purposes. We are not convinced our legislature may not separately classify such lands for taxation for school purposes. Nor have we ever held such a classification invalid.
“The purpose for which property is kept or used has long been a recognized, if not a favorite, basis for distinction in taxation. * *
“It is true of course there are common characteristics between agricultural land and other realty in the matter of taxation for school purposes. But we cannot say there are not characteristics which differentiate it from other realty in relation to school taxes. We are not convinced the legislature could not with reason conclude that agricultural land derives less benefit, in enhanced value or otherwise, *570from the money raised by school taxes than other real estate. City or town residence property or real estate used for business purposes may well be affected by our school system in quite a different way than land used for agricultural purposes which consists of comparatively large tracts. The legislature could reasonably have concluded that agricultural lands are taxed excessively for school purposes as compared with property devoted to other uses and that such taxes should be equalized in accordance with benefits received.
“Very likely other reasons occurred to the legislature why a distinction should be made between agricultural lands and other realty. We have indicated enough to justify our unwillingness to hold there is no possible rational basis for such classification.”
After an exhaustive review of the cases sustaining similar exemptions, the Court took up the question of public purpose. It said:
“The classification of lands used for agricultural purposes may be upheld not only upon the considerations expressed * * * [above] but also as in furtherance of a public policy to aid or encourage agriculture. As stated, the burden rests on plaintiff to negative every conceivable basis upon which this statute may be upheld.
“A classification is not arbitrary which rests upon some reason of public policy. * * * 1 Cooley, 4th Ed., section 334, page 713; Id., section 335, page 719, where it is said, ‘Public policy may also warrant a particular classification.’
“As stated in Watson v. State Comptroller, 254 U. S. 122, 124, 125, 41 S. Ct. 43, 44, 65 L. Ed. 170, 175: ‘Any classification is permissible which has a reasonable relation to some permitted end of governmental action. * * * It is enough, for instance, if the classification is reasonably founded in “the purposes and policy of taxation.” * * *’
*571“The power of state legislatures to adjust their tax laws in order to encourage an industry or undertaking deemed vital to the welfare of the state or in furtherance of some related principle of public policy has frequently been upheld.
“Our state constitution makes no attempt to define what is a public purpose nor have the courts adopted any inflexible definition. Carroll v. City of Cedar Falls, 221 Iowa 277, 283, 261 N. W. 652. See also 61 C. J., Taxation, sections 20, 21. Plaintiff concedes ‘what constitutes a public purpose, as distinguished from a private purpose, is sometimes difficult of determination.’ Numerous decisions are to that effect. The term ‘public purpose’ is not to be construed narrowly. 1 Cooley, 4th Ed., section 175.
“Courts are extremely reluctant to hold a tax statute invalid on the ground a tax is laid, an exemption granted or an appropriation in connection therewith made, for a private purpose. ‘It has been quite uniformly held by the courts that the determination of such questions inheres largely in the legislative power. Within the zone of doubt that is ... a public purpose, which the Legislature deems to be such.’ * * *
“A law may serve the public interest although it benefits certain individuals or classes more than others. Carman v. Hickman County, supra, 185 Ky. 630, 215 S. W. 408, 411; State v. Dammann, supra, 228 Wis. 147, 277 N. W. 278, 280 N. W. 698, 707, and citations; 1 Cooley, 4th Ed., section 181, page 392.
“Carmichael v. Southern Coal & Coke Co., supra, 301 U. S. 495, 515 * * * states: ‘. . . whether the present expenditure serves a public purpose is a practical question addressed to the lawmaking department, and it would require a plain case of departure from every public purpose which could reason*572ably be conceived to justify the intervention of a court/ ”
Finally, the Court said:
“As previously indicated, the legislative policy of this state throughout its history has been to grant numerous tax exemptions. Perhaps such policy is of doubtful wisdom. But of course the question here is one of legislative power, not wisdom.
* *
“If we were to follow the argument of plaintiff, many of these exemptions of long standing could not be upheld although apparently they have never been questioned.
“If there is no rational basis for applying a different rate or granting a partial exemption from school taxes upon agricultural land, how can the total exemption be upheld of all agricultural produce harvested by or for the taxpayer within the previous year. This exemption has stood since the Code of 1851 and removes from tax liability property of enormous value. * * * Many other related questions might be asked.
“We conclude plaintiff has not demonstrated beyond a reasonable doubt the act in question violates, in the respects claimed, the constitutional provisions she has invoked.” (Emphasis added.)
See also the following cases which have upheld tax statutes granting partial exemptions to rural or agricultural lands within city limits. Daly v. Morgan, 69 Md. 460, 16 A. 287; Sindall v. City of Baltimore, 93 Md. 526, 49 A. 645; Sams v. Fisher, 106 Md. 155, 66 A. 711; Serrill v. Philadelphia, 38 Pa. St. 355; Brush v. Sixth Taxing Dist., 104 Conn. 192; Land, Log & Lumber Co. v. Brown, 73 Wisc. 294.
I think the statute grants a reasonable partial exemption from taxation to “lands which are actively devoted to farm or agricultural use,” and that it is based upon “public policy”; consequently, it should be upheld as a valid and constitutional legislative enactment.