ANNAPOLIS, JUNE 27 -- Maryland's second-highest court upheld a Montgomery County law today that strictly regulates the towing of cars parked illegally on private property.

Ruling unanimously in an emotional case that pitted the county's motorists against its tow-truck operators, a three-judge panel of the Court of Special Appeals found that the county did not exceed its authority when it required property owners to post explicit "no parking" signs before having cars towed and barred private towing of vehicles with handicapped license plates.

The court's action overturned a ruling issued last year by Montgomery Circuit Court Judge William M. Cave, who said the law was an unconstitutional exercise of the county's police powers.

Today, writing for the panel, Associate Judge William W. Wenner said there was "no evidence" that the law is "unduly restrictive of the rights of private property owners." In addition to approving the sign and handicapped provisions of the wide-reaching law, the panel upheld the requirement that tow-truck operators accept checks and credit cards, not just cash, as payment for relinquishing towed vehicles.

The court's opinion clears the way for the three-year-old law, which also regulates how far cars may be towed and allows the county to set maximum towing fees, to go fully into effect for the first time, perhaps within days, said Assistant County Attorney Patricia Hines.

Approved by the County Council in 1987, the ordinance was immediately challenged in court by tow-truck operators who said it would put them out of business.

Under an agreement forged while the case was pending in Circuit Court, the handicapped and sign provisions were in force in 1988 and 1989 until Judge Cave gutted the entire bill, Hines said.

Today, William C. Brennan, attorney for the tow-truck operators, said he could not comment on the court's opinion because he had not yet received it. He added, however, that his clients will probably appeal.

The law covers virtually every aspect of towing of vehicles on private property except for single-family dwellings. Towing companies will have to enter into written agreements with parking lot owners or real estate management companies authorizing them to remove vehicles from certain properties.

The measure requires that towed cars be taken to the nearest available storage site and not more than 12 miles away. The towing company must notify the police of all tows. Finally, the law requires towing companies to remain open for two hours after their last tow.