55 A.2d 491 | Md. | 1947
Herbert J. Herman and Charles H. Lessner, of Baltimore, trading as Ace Liquors, brought this suit against the Mayor and City Council of Baltimore, William F. Broening, City Collector, and James J. Lacy, State Comptroller, to obtain (1) a declaratory decree to declare void that part of an ordinance of the City of Baltimore which imposes a tax of 50 cents per gallon on certain alcoholic beverages in the hands of retail dealers on January 1, 1947, and (2) an injunction to restrain the enforcement of the ordinance.
The bill of complaint alleges that complainants conduct a store on the southeast corner of Baltimore and Eutaw Streets for the retail sale of alcoholic beverages, and that they paid a tax of $351.10 to the City of Baltimore and State of Maryland upon their stock in business, including alcoholic beverages, for the year 1946, and were liable for a similar tax of $342.72 for the year 1947. On December 23, 1946, the Mayor and City Council of Baltimore, pursuant to authority granted by the Legislature in 1945, enacted an ordinance imposing a tax of 50 cents per gallon on all distilled spirits and other alcoholic beverages, except beer and wine, sold or delivered by a manufacturer or wholesaler to any retail dealer in Baltimore City during the year 1947, and a like tax of 50 cents per gallon on such beverages in the hands of retailers on January 1, 1947. On December 31, 1946, City Collector Broening issued regulations requiring retail dealers subject to the tax to file an inventory of alcoholic beverages in their hands on January 1, 1947. Complainants had on hand alcoholic beverages ranging in value from $12.85 to $35.40 per gallon, upon which a tax of $1,087.01 was claimed to be due under the ordinance. *194 They were notified that, if they failed to pay the tax by January 15, they would be prohibited from dealing in alcoholic beverages. They alleged that the ordinance is invalid and refused to pay the tax, but they deposited with the clerk $1,087.01, subject to the order of the Court. William Diskin, trading as Ford's Liquors, intervened as a party complainant. Defendants demurred to the bill, and from a decree sustaining the demurrers and dismissing the bill, complainants appealed.
The Maryland Alcoholic Beverage Law, regulating the sale of alcoholic beverages in this State, declared: "No city or town shall be permitted to impose any additional license fees or taxes other than the usual property tax, upon alcoholic beverages, or upon the exercise of the privileges conferred by the licenses issued under the provisions of this Article." Laws of 1937, chs. 476, 493; Laws of 1939, ch. 642; Code, 1939, art. 2B, sec. 8. On October 29, 1945, when a grave situation existed in Baltimore on account of the urgent need for additional funds to meet the municipal budget requirements, and the authorization of the State was necessary to meet the needs, Governor O'Conor convened the Legislature in special session on November 5. He recommended in a letter to the Legislature that the City be granted "general taxing powers" to meet the emergency; and an Act was passed authorizing the Mayor and City Council to exercise "the power to tax to the same extent as the State has or could exercise said power within the limits of said City as part of its general taxing power." The Act expressly authorized the City to provide by ordinance for the imposition, assessment, levy and collection of any tax or taxes so authorized, the power so granted expiring on January 1, 1948. The Act was declared to be an emergency measure and took effect from the date of its passage. It was approved by the Governor on November 7. Laws of 1945, Sp. Sess., ch. 1. The City thereupon adopted the ordinance which is now before us.
Unquestionably the City had no power to impose excises on alcoholic beverages unless there was a repeal *195 of Section 8 of the Alcoholic Beverages Law. Appellants questioned whether the members of the Legislature actually intended to repeal Section 8 in any respect. While it is true that the Act of 1945 does not refer to Section 8 specifically, nevertheless it does declare that all laws or parts of laws inconsistent with the provisions of the Act are repealed to the extent of such inconsistency. Section 8 declared that the provisions of the Act with respect to Class F licenses "shall not be deemed as repealed by any local Act hereafter passed unless expressly referred to and expressly repealed in terms." But Class F licenses were issued only for the sale of alcoholic beverages on the railroads, whereas appellants have been selling under a Class A (Off Sale) license. In our opinion the Act of 1945 repealed Section 8 in so far as it had prohibited the City from taxing the holders of Class A licenses in Baltimore City. In 1947 the Legislature revised the Alcoholic Beverages Law by repealing and re-enacting Article 2B. Laws of 1947, ch. 501. We are not called upon in this case to decide what effect, if any, the Act of 1947 enacting Section 23 in place of Section 8 had upon the City's power to tax beverages sold or delivered by manufacturers and wholesalers in 1947. But certainly it did not wipe out the tax on beverages in the hands of retailers on January 1, 1947, since the Act did not take effect until April 16, 1947.
Appellants then suggested that, even if the Legislature had intended to allow Baltimore City to impose excises, the ordinance did not effectuate that intention. It is a general principle that an ordinance passed in pursuance of express legislative authority is a law within the meaning of the Constitution, and has the same effect as a local law duly enacted by the Legislature. Gould v.City of Baltimore,
We now come to the question whether the tax imposed by the ordinance is a property tax, or violates Article 15 or Article 23 of the Maryland Declaration of Rights or the Fourteenth Amendment to the Constitution of the United States. Appellants argued that, since they are required to pay a tax on their stock in business, including the alcoholic beverages, the new tax creates double taxation. The distinction between a property tax and an excise may become important under Article 15; Article 23 and the Fourteenth Amendment permit discrimination, not arbitrary, in subjects or rates of taxation, including property taxes. Alcoholic beverages have been subjects *197
of the earliest excise taxes and of a great variety of special taxes and regulations. The reasonableness of discrimination between such beverages or some of them and other property, at least in the absence of constitutional limitations similar to Article 15, is beyond question. The broad power of the State to impose excises was explained by Chief Justice Hughes in the following words: "The State is not limited to ad valorem
taxation. It may impose different specific taxes upon different trades and professions and may vary the rates of excise upon various products. In levying such taxes, the State is not required to resort to close distinctions or to maintain a precise, scientific uniformity with reference to composition, use, or value. To hold otherwise would be to subject the essential taxing power of the State to an intolerable supervision, hostile to the basic principles of our government and wholly beyond the protection which the general clause of the Fourteenth Amendment was intended to assure." Ohio Oil Co. v.Conway,
A property tax is assessed on property by reason of ownership alone — or of the exercise of any one of substantially all the rights that constitute ownership. Excises have been defined as taxes laid upon the manufacture, sale or consumption of commodities within the country, upon licenses to pursue certain occupations, and upon corporate privileges. Cooley,Constitutional Limitations, 7th Ed., 680; 1 Cooley, Law ofTaxation, 4th Ed., sec. 42; Flint v. Stone Tracy Co.,
Among the earliest, and also among the latest, excise taxes have been various sales taxes. Of modern sales taxes, one of the oldest and most widespread is the gasoline tax. During the last 25 years or more, in an increasing number of states, the gasoline tax and other sales taxes have been complemented by a "compensating" use tax, usually including "storage" (i.e.,
possession) for future use, to prevent evasion by extra-state purchases and discrimination in favor of such purchases as against local purchases. Such use taxes have frequently been attacked under the Commerce Clause, U.S. Const., art. 1. sec. 8, cl. 3, and under the Fourteenth Amendment; they have been sustained by the Supreme Court when in operation they do not amount to a tax on interstate commerce or a discrimination against such commerce, but only prevent discrimination against local sales. Gregg Dyeing Co. v. Query, 1932,
Patton v. Brady,
In the case at bar we think the challenged tax is an excise. It is applicable only to beverages in the hands of retailers on January 1, 1947, i.e., then held for sale under a retail license. Appellants were not compelled to continue in business until January 1, 1947. Their license is not property and confers no property rights. Art. 2B, § 28, as in force on and before January 1, 1947. The tax on retailers, like the tax on manufacturers and wholesalers, is a tax on the privilege of continuing in business. It is quite evident that the purpose of the Mayor and City Council was to make the tax on the retailers complementary to that on the wholesalers, so that the tax would not be evaded by deliveries to retailers before January 1, 1947 and would not discriminate in favor of beverages delivered before January 1, 1947. Imposition of both an excise tax on an occupation and an ad valorem tax on property used in the business is not forbidden. Ohio River W.R. Co. v. Dittey,
Appellants rely on County Com'rs of Anne Arundel County v.English,
As the ordinance does not violate Article 15 or Article 23 of the Maryland Declaration of Rights or the Fourteenth Amendment to the Federal Constitution, the decree dismissing the bill of complaint will be affirmed.
Decree affirmed, with costs. *201