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.
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
consistent with the uniformity of taxation
provision (Art. 15) of the Maryland Declaration of Rights. P.
289 U. S.
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.
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.
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.
Page 289 U. S. 37
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.
7. Franchise payments due from a railroad to the Cities of
Baltimore and Annapolis under city ordinance describing them as
"charges in the nature of a tax" within the
meaning of a state statute exempting the railroad. P. 289 U. S.
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.
61 F.2d 374 reversed.
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.
MR. JUSTICE CARDOZO delivered the opinion of the Court.
The controversy in these cases hinges upon the validity of a
statute of Maryland, adopted by the General Assembly in June, 1931,
whereby the property of a particular railroad was made exempt from
taxation. Acts of 1931, c. 497.
For an understanding of the merits, there is need that the
statute be quoted in full.
Page 289 U. S. 38
"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
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
"SECTION 2. And be it further enacted, That this Act shall take
effect June 1, 1931. "
Page 289 U. S. 39
At the passage of this act, the Washington, Baltimore &
Annapolis Electric Railroad Company was in the hands of a receiver,
appointed in January, 1931, by the Federal District Court. For ten
years preceding the receivership, the gross receipts from its
business had progressively declined. In 1930, the total revenues
derived from the operation of its line were $1,347,967.03, and the
operating expenses $1,191,897.32. These expenses were exclusive of
taxes and fixed charges, such as interest on its debts. There was a
funded debt of more than nine million dollars and an unsecured debt
of nearly a million. In 1930, 3,247,534 passengers had traveled on
the road, which supplied the only rail service to Annapolis, the
capital of the state. Large public interests were involved in
keeping the service going.
The Mayor and City Council of Baltimore, and the Mayor,
Counselor, and Aldermen of the City of Annapolis, municipal
corporations, challenged the validity of the exemption, and filed
proofs of claim with the receiver for taxes overdue. The claim of
the City of Baltimore was for real property taxes on the terminals
and rights of way, for personal property taxes on the cars, and for
franchise taxes or charges under a municipal ordinance. The claim
of the City of Annapolis was for taxes on real property and for
local taxes or charges owing for the franchise. The District Court
upheld the validity of the statute, and disallowed the claims. Upon
appeal to the Circuit Court of Appeals for the Fourth Circuit, the
orders were reversed upon the ground that the statute was invalid
under the Fourteenth Amendment of the Federal Constitution and
under several provisions of the constitution of the state. 61 F.2d
374. Writs of certiorari were granted by this Court. The writ in
No. 513 brings up the claim filed with the receiver by the City of
Baltimore; the writ in No. 514 brings up the claim of the City of
Page 289 U. S. 40
1. There is error in the holding of the Circuit Court of Appeals
that the statute of Maryland creating this exemption is a denial to
the respondents of the equal protection of the laws in violation of
the Fourteenth Amendment of the Constitution of the United
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.
; Newark v. New Jersey, 262 U.
; Worcester v. Worcester Consolidated Street
Ry. Co., 196 U. S. 539
Pawhuska v. Pawhuska Oil Co., 250 U.
; 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.
, 280 U. S.
2. There is error in the holding of the Circuit Court of Appeals
that the statute is invalid under the Constitution of Maryland.
Several provisions of that Constitution are invoked by the
respondents. They will be considered in succession.
(a) The statute is not repugnant to Article 15 of the Maryland
Declaration of Rights, wherein it is provided:
"That the levying of taxes by the poll is grievous and
oppressive and ought to be prohibited; that paupers ought not to be
assessed for the support of the Government; that the General
Assembly shall, by uniform rules, provide for separate assessment
of land and classification and subclassifications of improvements
on land and personal property, as it may deem proper, and all taxes
thereafter provided to be levied by the state for the support of
the general state Government, and by the counties and by the City
of Baltimore for their respective purposes, shall be uniform as to
land within the taxing district, and uniform within the class or
sub-class of improvements on land and personal property which the
respecting taxing powers
Page 289 U. S. 41
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
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.
127 Md. 434, 96 A. 636; State v. N.C. R. Co.,
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
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
Furtherance of the public good is written over the face of this
statute from beginning to end as its animating motive.
"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."
"It is in the judgment of the General Assembly" that "to
encourage the continued operation" of the road by the grant of an
exemption will be to give heed to the promptings of "a wise and
sound public policy." The
Page 289 U. S. 42
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.
, 187 U. S. 609
Missouri, Kansas & Texas Ry. Co. v. May, 194 U.
; Sproles v. Binford, 286 U.
, 286 U. S.
-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
"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,
Md. 222, 150 A. 455; 282 U. S. 282
172, 282 U. S. 175
We are told that the signs of an arbitrary preference are
written on the statute because the exemption is confined to this
particular insolvent when it might have been extended to all other
insolvents engaged in a like business. There is nothing to show
that any Maryland railroad other than this one was in the hands of
a receiver. The assailants of the statute have the burden of
proving everything essential to their case. Pullman Co. v.
Knott, 235 U. S. 23
235 U. S. 25
Wampler v. LeCompte, supra.
But the result will be no
different if other insolvents be assumed. The public policy that
made it wise in the judgment of
Page 289 U. S. 43
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.
We are told that the statute is not to be distinguished in
principle from the one considered by the highest court of Maryland
in the case of the Starr Church, and there condemned as arbitrary.
City of Baltimore v. Starr Church,
106 Md. 281, 67 A. 261.
But we think the distinctions are many and obvious. A religious
corporation, the Starr Church, had received a gift of wharf
property which it leased for profit. The General Assembly passed an
act exempting the wharf from taxes so long as it continued in the
ownership of the church. The exemption for other churches was
confined to a place of worship and a parsonage. The statute did not
say that the new exemption was designed to promote the comfort or
wellbeing of the community at large. For all that appeared, no such
interests were involved. The statute said no more than this -- that
the exemption would be "a great relief and benefit to said
religious body," which was singled out for privileges denied to any
other. This preference for one, with no profession of a purpose to
advance the common weal and with nothing in the situation to
indicate that such a purpose would be served, is the evil that the
We are told that the many cases upholding an exemption to a
railroad at the time of its formation have no bearing upon this
exemption, which was granted later on. A charter, so it is argued,
is a contract, or becomes one when accepted. There is thus a
quid pro quo.
A privilege conferred thereafter is nothing
more than a gratuity,
Page 289 U. S. 44
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
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.
, 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.
-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,
The policy that sustains an exemption in order to keep a
crippled railroad going is precisely the same as the one that
sustains an exemption to set it going at the start. In the one case
as in the other, the state maintains the highways upon which its
people are dependent for their economic and social life. Cole
v. La Grange, 113 U. S. 1
113 U. S. 7
. It is
idle to say that a railroad, when once it has been organized, is
under a duty to go on, and hence that its distress is not important
for anyone except itself. Science has wrought her wonders, but the
time is not yet here when trains will run under the impulsion of
Page 289 U. S. 45
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.
, 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
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.
The General Assembly, weighing these and other considerations,
has found them adequate to justify a temporary exemption from the
burdens of taxation. Nothing in the Constitution of Maryland or in
the decisions of her courts enables us to say that there has been a
clear abuse of power. We may not nullify for doubt alone. There
must be something near to certainty. We do not reach it here.
(b) The statute is not repugnant to Article II, § 33, of the
Maryland Constitution, wherein it is said that "the General
Assembly shall pass no special law for any case for which provision
has been made by an existing general law."
The highest court of Maryland has considered this provision, and
defined its meaning and effect. The Police Pension Cases,
131 Md. 315, 101 A. 786; City of Baltimore v. United Railways
& Electric Co.,
126 Md. 39, 94 A. 378; City of
Baltimore v. Starr Church, supra; Littleton v. City of
150 Md. 163, 132 A. 773; O'Brian Co. v. County
51 Md. 15; Hodges v. Baltimore Union Pass
58 Md. 603. There has been need, now and again,
Page 289 U. S. 46
develop close distinctions. Our endeavor in what follows is to
extract the essence of the decisions and to give effect to it as
Time, with its tides, brings new conditions which must be cared
for by new laws. Sometimes the new conditions affect the members of
a class. If so, the correcting statute must apply to all alike.
Sometimes the new conditions affect one only or a few. If so, the
correcting statute may be as narrow as the mischief. The
Constitution does not prohibit special laws inflexibly and always.
It permits them when there are special evils with which existing
general laws are incompetent to cope. The special public purpose
will then sustain the special form. City of Baltimore v. United
Railways Co., supra.
The problem, in last analysis, is one of
legislative policy, with a wide margin of discretion conceded to
the lawmakers. Only in cases of plain abuse will there be revision
by the courts. Baltimore v. United Railways Co., supra,
p. 52. If the evil to be corrected can be seen to be merely
fanciful, the injustice or the wrong illusory, the courts may
intervene and strike the special statute down. Baltimore v.
Starr Church, supra.
If special circumstances have developed,
and circumstances of such a nature as to call for a new rule, the
special act will stand. The Police Pension cases,
The distinction is neatly pointed by comparing two decisions. In
Baltimore v. Starr Church, supra,
the court condemned a
special act as a merely arbitrary departure from the rule of
uniform taxation. Declaration of Rights, § 15. It held at the same
time that the act was void under another section of the
Constitution (Article III, § 33) because no evil had arisen, no
circumstances had developed, to give even colorable grounds of
reason for the adoption of a special rule. The Police Pension
show the picture from a different angle. There
were general laws upon the statute books providing for the grant of
pensions to members of the police force, not
Page 289 U. S. 47
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.
(c) The statute is not repugnant to Article XIA, the home rule
article of the Maryland Constitution:
"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."
The act of exemption is so drawn as to apply to two or more
geographical subdivisions of the state -- i.e.,
Baltimore and Annapolis. It is thus within the powers expressly
reserved to the General Assembly.
3. There is error in the holding of the Circuit Court of Appeals
that the franchise payments due to the two cities under municipal
ordinances wherein the payments are characterized as "taxes" are
not "charges in the nature of a tax" within the meaning of the
They were plainly so intended.
4. We have assumed, without deciding, that the respondents,
though without standing to invoke the protection of the Federal
Constitution, will be heard to complain of a violation of the
constitution of the state.
Page 289 U. S. 48
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.
, 208 U. S.
-198; Stewart v. Kansas City, 239 U. S.
, 239 U. S. 16
as to which the federal courts do not exercise an independent
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.
In the absence of any argument to the contrary in behalf of the
petitioner, we make the same assumption here.
The judgments are
* Together with No. 514, Williams, Receiver v. Mayor,
Counselor and Aldermen of Annapolis.