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had to live within the terms of that
charter, so that you may say that all the
exemptions granted to the B&O Railroad
by virtue of Chapter 112 of the Act of
1826 were irremovable.
Now, the State of Maryland in 1851,
when it wrote the 1851 Constitution, real-
ized that it could not continue to give these
charters which conferred special status
upon corporations, and here I should say
that at this time all the corporations of
the State were enacted by the charter
method through acts of the General Assem-
bly, but the state realized it would want to
keep a protection to itself so that it could
alter or repeal or amend charters. In 1851
the first two sentences that you see in this
section here were added as a part of the
1851 Constitution which in effect said that
any corporation charter granted by the
General Assembly from here on in shall
be subject to alteration, modification, and
repeal by the General Assembly.
Now, nobody knows exactly how many
state charters were conferred by the Gen-
eral Assembly prior to 1851, both in co-
lonial, governmental and national govern-
mental times, which contain these ex-
emptions.
We are aware of two and possibly three
— the B&O Railroad exemption from taxa-
tion, the Green Mountain Cemetery exemp-
tion from taxation, but that is now exempt
under another section of Article 81 of the
Code, and there is possibly a third which
we know exists but which a lawyer felt he
could not reveal to us because this was a
client's confidence that he had.
In any event, the State of Maryland be-
gan to work on the B&O Railroad to see
if it could not chip away at this exemption,
and the Court of Appeals of Maryland held
that despite all attempts to the contrary,
the charter exemption was irrevocable, and
that the B&O was entitled to continue it
and did not have to pay taxes upon its
real property, upon its gross receipts. In
effect it does not have to pay sales tax
and innumerable other kinds of taxes, and
it is probably worth many millions of dol-
lars to the Baltimore and Ohio Railroad.
Now, in 1891, the last sentence of what
you see before you was added by constitu-
tional amendment, and this was a specific
attempt to get at the B&O Railroad, and
nobody else, although in its language cer-
tainly it is broad enough to pick up others,
and undoubtedly would.
This is a grandfather clause which in
effect says that any time anyone who has
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a state charter seeks to take advantage of
the other corporate benefits of the state,
alter, repeal or modify their charter, they
will conclusively be presumed to have given
up any exemption they might enjoy.
Now, this 1891 third sentence that I
make reference to was passed after the
State and the B&O Railroad came to a
settlement agreement in 1878, but the set-
tlement agreement again appeared to be
unsatisfactory to the State of Maryland,
so that what you have through the history
of the State is a constant attempt to de-
limit this exemption, an attempt to make
the B&O Railroad uniform with other state-
chartered railroads and corporations, and
to generally classify it with all other cor-
porations of like character.
Now, the B&O Railroad from time to
time found it necessary to ask for charter
amendments because it had to build other
lines, it had to build the metropolitan line
in Baltimore, it had to build the Washing-
ton line, and it had to build the Philadel-
phia line. None of these particular grants
could be considered to have been conferred
by the 1826 original charter which only
allowed the B&O to build from Baltimore
to some point on the Ohio River.
Now, every time the B&O came back to
the General Assembly for this additional
corporate power, of course the General
Assembly did its best to see to it that the
exemption which originally applied to the
Baltimore to Ohio line did not apply to the
others, but there was constant bickering
and continued Court of Appeals cases, con-
tinued cases on many levels, continued
opinions of the attorney general.
The Committee on the Legislative Branch
realized that it would be possible to take
this entire section and to put it in the
transitional legislation, but at the same
time we realized that there was a risk in-
volved, that in the event the B&O Railroad
should challenge this particular mode of
operation it might be well that we lost any
of the benefits of the third sentence of the
section you have before you.
The reason that we are impelled to put
it in the constitution at this time is this,
that the Baltimore and Ohio Railroad has
agreed to merge with the Chesapeake and
Ohio Railroad. The very act of merger,
we believe, will be enough to force the
B&O Railroad to relinquish its tax exemp-
tion. Despite the fact that the B&O-C&O
have agreed to merge, they have not done
a thing, and the Maryland Port Authority
at the present time has petitioned the In-
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