The Maryland Jockey Club, which operates the Pimlico Race Track in Baltimore City, has filed a bill to restrain the imposition and collection by the State Racing Commission of a daily license fee of $3000 for every day of racing permitted, in addition to the license fee of $6000 per day, exacted of or imposed on all one-mile tracks in the state, the additional license fee now made payable by the Racing Commission to the Treasurer of Baltimore County, in accordance with the provisions of chapters 89 and 264 of the Acts of 1918, and the same as amended by chapter 273, section 1, subdivision 8, of the Acts of 1920, the latter section 8, article 78B, of the Code of Public General Laws.
Prior to 1918 horse racing in Baltimore County was under the control of a board appointed by the Governor (Act of 1912, ch. 77), known as the "Baltimore County Racing Commission," and one of the tracks within its jurisdiction was the plaintiff's track at Pimlico. By the Act of 1918, ch. 82, certain portions of Baltimore and Anne Arundel counties were annexed to Baltimore City, and in the territory of Baltimore County so annexed the Pimlico Race Track was located, from the owner of which, the Maryland Jockey Club, Baltimore County had been collecting an annual license fee of $3000 for every day of racing at that track. Act of 1918, ch. 89.
The Act of 1918, ch. 264, provided (section 1): "That nothing contained in the Act of the General Assembly of 1918, entitled `An Act to Extend the Limits of Baltimore City by Including Therein Parts of Baltimore County and Anne Arundel County,' shall operate to affect any race track or racing or the jurisdiction of any racing commission or the rights and powers of said commission or its licensees within the limits defined by the said Act; it being the intent of this Act that such race tracks and *Page 85 the racing thereon shall continue to be subject to the jurisdiction of the present Racing Commission of Baltimore County and be governed only by the laws in existence prior to the first day of January, 1918, including such Acts of the General Assembly concerning race tracks and racing applicable to the Racing Commission of Baltimore County, as may be passed by the present General Assembly; and by such laws as may hereafter be enacted; — provided that all license fees collected by said Racing Commission of Baltimore County shall be applied to the same purposes [roads and two agricultural associations, Act of 1918, ch. 98] as are now prescribed by the laws applicable to said Racing Commission of Baltimore County, including any amendments thereof passed at the present session of the General Assembly." Section 2 made this Act effective one day after the Annexation Act should take effect.
By the Act of 1920, ch. 273 (Code, article 78B), the Racing Commission of Baltimore County was abolished, and the Maryland Racing Commission was created, with jurisdiction over all racing for purses in the state, and by section 8 it was provided that the license fee prescribed in section 432 of the Public Local Laws of Baltimore County, as amended by the Act of 1918, ch. 89, shall be paid by the Maryland Racing Commission to "* * * the Treasurer of Baltimore County for the uses and purposes described in Section 435 of the Revised Code of the Public Local Laws of Baltimore County, Edition of 1916, as said Section 435 was amended by Chapter 89 of the Acts of 1918."
The plaintiff has paid this license fee every year since 1918 until 1938, when it filed its bill to enjoin the members of the Maryland Racing Commission, (1) from demanding or collecting more than $6000 for the issuance of a license to it for the dates allotted; (2) from refusing a license unless or until the additional $3000 a year be paid; and (3) commanding the Commission to issue the license upon the payment of $6000 per day for each of said days of racing. *Page 86
The original defendants, together with the County Commissioners of Baltimore County, allowed to intervene as party defendant, demurred to the bill of complaint. The demurrers were overruled, with leave to amend in ten days. The defendants declined to answer further, when a decree was passed directing the injunction to issue as prayed, from which the defendants appealed.
It was not argued before the chancellor, nor here, that the tax was discriminatory, or because in excess of the license fee exacted of the three other mile tracks in the state; nor was there any question of procedure, that is whether the remedy should be by mandamus or injunction. Code, art. 5, sec. 10. The question is whether the Legislature can require the payment of this additional license fee, whether directly or indirectly payable to one political subdivision of the state, by a person or corporation to operate a business located in another political subdivision. There is no contention that the license and regulation of racing is not within the police power of the State.
The plaintiff contends that it is a tax imposed on a business in one locality for the benefit of another, while the defendants contend that it is a license fee imposed and collected by the State, and that the State can pay or appropriate it to any purpose or object within the state which is not unlawful. The difference in the contentions of the plaintiff and defendants is that the former insists that the additional fee is a tax, and as such is illegal, and of the latter that it is a license fee imposed by the State, as a condition precedent to the right to conduct racing on a mile track in the annexed territory. The implications of the plaintiff's argument are that there could be no valid objection to the tax or license fee if it all went to and was retained by the State. The authority in this state upon which the plaintiff most strongly relies is from the opinion inTalbot County Commrs. v. Queen Anne's County Commrs.,50 Md. 245, where it is said: "A county is one of the public territorial divisions of the *Page 87 State, created and organized for public political purposes connected with the administration of the State Government, and especially charged with the superintendence and administration of the local affairs of the community; and being in its nature and object a municipal organization, the Legislature may, unless restrained by the Constitution or some one or more of those fundamental maxims of right and justice with respect to which all governments and society are supposed to be organized, exercise control over the county agencies, and require such public duties and functions to be performed by them as fall within the general scope and objects of the municipal organization. It is true, the power of the Legislature over these municipal organizations is not without limit, under the Constitution of this State, and especially is there a limit in regard to objects dependent upon the exercise of the power of taxation. This limitation is implied from the very nature and objects of the organization. As applied to these subdivisions of the State, the Legislature has no more power to require a tax to be raised in one county to pay for a purely local object in and for another county, than it has to require that the expenses of a purely public improvement should be paid by one or a given number of individuals." Brooks v.Baltimore, 48 Md. 265; Baltimore City v. Allegany CountyCommrs., 99 Md. 1, 7, 57 A. 632; Appeal Tax Court v.Patterson, 50 Md. 354; Baltimore Eastern Shore Railroad Co.v. Spring, 80 Md. 510, 31 A. 208; 1 Cooley on Taxation (4th Ed.), 337. The case arose from an application by the County Commissioners of Queen Anne's County for a writ of mandamus to compel the County Commissioners of Talbot County to comply with the provisions of the Act of 1876, for the maintenance and construction of a draw-bridge over the channel of Kent Narrows, located wholly within Queen Anne's County, one-half of the cost of erection to be borne by each county, and thereafter to be under the control of the County Commissioners of Queen Anne's County. The Act was upheld because of the benefit which would accrue to Talbot *Page 88 County. While the quotation from Talbot County Commrs. v. QueenAnne's County Commrs., supra, aptly expresses the plaintiff's contention, the decision implies that there may be an exception where the county paying the tax also receives the benefit of the object of taxation.
The defendants rely on the distinction between a direct tax levied on property in Baltimore City to be paid to Baltimore County, which both sides agree would be unlawful, and a license or privilege to engage in a business, in this case the business of horse-rasing, the regulation and licensing of which is within the police power of the State. There is no virtue in the defendants' argument that this is a license and not a tax. It is a tax. Rohr v. Gray, 80 Md. 274, 30 A. 632; LeLoup v. Port ofMobile, 127 U.S. 640, 8 S. Ct. 1380, 32 L. Ed. 311; 2 Bouvier (Rawle's Third Rev.), page 1976.
It is not a tax on property which falls on all owners alike, but a tax on a business, which would apply to all race track owners in the territory of Baltimore County annexed to Baltimore City by the Act of 1918, ch. 82. Corson v State, 57 Md. 251;Havre de Grace v. Johnson, 143 Md. 601, 123 A. 65; Jewel TeaCo. v. Bel Air, 172 Md. 536, 538, 192 A. 417. It just happens that Pimlico is the only mile track in that territory, but there might be others, and if so they would be subject to this tax. The difference between this tax and that on real and personal property is that the property must pay regardless of the ownership, while the business man can decide whether he will continue in business or not, and thus decide whether there will be a tax or no tax, with the license or business tax, if the decision is to remain or continue in business, payable in advance.
The three thousand dollars excess fee exacted in this case from the plaintiff must, therefore, be regarded as a tax, and the question then is whether its diversion to Baltimore County for the purposes specified is lawful. If the Act of 1920. ch. 273, sec. 1, subd. 8, had provided for the payment of any part of the whole license tax, $9000, directly to Baltimore County, it would have offended *Page 89 against the rule as stated in Talbot County Commrs. v. QueenAnne's County Commrs., supra, that the property and persons of one county or city cannot be taxed by another county or city, either by legislative or any other kind of authority. But the contention of the defendants here is that the additional or excess license fee or tax exacted of one mile tracks in the annexed territory (Act of 1918, ch. 82) is paid to the State of Maryland under the authority of section 1, subdivision 8, of the Acts of 1920, ch. 273, and by the same Act is appropriated by the State to Baltimore County for the purposes specified by the Act of 1922, ch. 481 (Local Code, art. 3, sec. 549), and relies on a statement of this court in State v. Applegarth, 81 Md. 293, 304, 31 A. 961, 963, that "If the state has the right to impose the license tax, as we hold it has, it can certainly determine what shall be done with the money, as long as no unlawful use is made of it," and there is no charge made here that the uses to which the money is to be applied are unlawful. It may be said that this statement is obiter because of the difference in the facts of that case and this, but there are enough points of similarity to apply that rule here, so it will hereafter have the force of judicial decision. It was cited and quoted in Foote Co. v. Stanley, 117 Md. 335, 347, 82 A. 380. That case was reversed by the Supreme Court of the United States in232 U.S. 494, 495, 34 S. Ct. 377, 58 L. Ed. 699, on the ground that the oyster inspection Act of 1910, ch. 413, imposed such fees in excess of the public need as to impose a burden on interstate commerce, but otherwise the decision stands.
The license tax here imposed takes nothing away from Baltimore City, for, if the part payable to Baltimore County were taken away, it would not, without legislative authority, go to Baltimore City. Racing is a sport licensed by the State(supra), the fees for which go to the State, as do practically all revenues from licenses, except those collected by municipalities, and are disbursed as directed by the General Assembly. Some of it goes into the general funds, while others, such as the automobile *Page 90 licenses and registration, are ear-marked. In this case, one-third ($3000) of the daily license fee or tax collected from the plaintiff is appropriated by the General Assembly to Baltimore County (Acts of 1918, chs. 89, 264; Acts of 1920, ch. 273, sec. 1, subd. 8), which we find to be a valid exercise of legislative power.
The decree will be reversed, the injunction dissolved, and bill of complaint dismissed.
Decree reversed with costs, injunction dissolved, and bill ofcomplaint dismissed.