State v. Town of North Miami

Citation59 So.2d 779
PartiesSTATE et al. v. TOWN OF NORTH MIAMI.
Decision Date20 June 1952
CourtUnited States State Supreme Court of Florida

Glenn C. Mincer, Miami, for appellants.

John H. Wahl, Jr., Miami, for appellee.

MATHEWS, Justice.

This appeal is from a decree validating so-called certificates of indebtedness to be issued by the Town of North Miami.

The Town of North Miami received no special charter from the Legislature but was organized pursuant to the provisions of Chapter 165, F.S.A., as amended. No special or extraordinary powers have been conferred upon the Town by the Legislature and it has only such powers as are expressly enumerated in Chapter 165, F.S.A., and particularly, Section 165.08 F.S.A.; namely, 'to take and to hold property, real, personal and mixed, and to control and dispose of the same for the benefit and best interest of the corporation * * * to sue and be sued, plead and be impleaded, and to do all such other acts and things as are incident to corporate bodies.'

Chapter 165, F.S.A., relates to the organization, powers, duties and privileges of cities and towns, or municipal corporations, and not to private corporations which are authorized to be organized by other statutes.

The certificates are to be issued by the Town without submitting to the freeholders of the Town the question of their issuance. The monies realized from the sale of the certificates are to be used to purchase certain lands lying within the corporate limits and to erect an aluminum manufacturing plant upon the property thus acquired. The property is then to be leased for the term of 20 years to a private corporation under an agreement whereby such private corporation will carry on a manufacturing enterprise for private profit upon the premises. The certificates will recite that the indebtedness evidenced thereby does not constitute a corporate indebtedness of the Town and that the Town is not obligated to pay the principal of or interest on the certificates except from the net revenues derived from the rental of the building to the private corporation.

By the terms of the proposed lease the private corporation is obligated to maintain and keep the building fully insured and is to pay an annual rental so calculated that when paid over the term, the rents will have fully amortized the principal amount of the certificates and the interest thereon, which will have been sold and issued to obtain the necessary funds to pay all costs incident to the issuance of the certificates of indebtedness, their validation and sale, as well as the cost of acquiring the land and constructing the building thereon.

Section 16 of the proposed lease provides, among other things:

'As a part of the consideration for the execution of this lease by the Company, the Town hereby gives to the company an option * * * to * * * renew this lease for an additional term of twenty-five * * * years, the cash rental per year during said additional term to be the sum equal to the taxes that would be due the Town if the building were privately owned. * * * The Company is hereby granted an additional option to purchase from the Town the fee simple title of the land and buildings covered by this lease agreement, at any time during the life of this agreement, or at any time during the life of a renewal lease. Such option to purchase may be exercised by payment to the Town of North Miami the sum of One Thousand and 00/100 Dollars * * * plus an amount necessary to pay in full at their respective redemption prices, including interest, all of said Industrial Building Revenue Certificates which may be outstanding at the time the option is exercised.'

Section 17 of the proposed lease provides, in part:

'The parties recognize that the land and improvements covered by this lease, so long as title thereto is vested in the Town, are and will be exempt from taxation by the State or other political subdivision thereof. If, as the result of any judgment or decree by a court of competent jurisdiction, it is held that such taxes may be imposed, then, and in such event, in addition to the rental elsewhere specified in this lease to be paid by (the) Corporation, the Company will pay the Town as additional rental a sum equivalent to the amount of any such taxes so assessed for each year assessed. * * *'

At the time of the rendition of a final decree validating the certificates the Court also entered an opinion and order, which in part reads as follows:

'* * * the Court has considered each question raised by the Complaint and the Motion to Dismiss and finds that there is merit to the position taken by the Town in the preamble to the Resolution (Exhibit A), and that the certificates authorized to be issued by said Resolution will be issued for a municipal purpose.

'It further finds that because the proposed certificates will not pledge the general credit of the Town but, on the contrary, are to be paid solely and exclusively from the revenue to be derived from the rental of the premises, there is no requirement that they be approved by an election pursuant to Section 6 of Article IX of the Florida Constitution, F.S.A.; that said self-liquidating revenue certificates, when issued, will not constitute a loan or pledge of the credit of the Town to an individual, Company, corporation or association as prohibited by Section 10 of Article IX of the Florida Constitution; and that the Town has full power and authority to issue, validate and sell such certificates for the purposes and in the manner recited in the authorizing Resolution.

'It is apparent that the Town, by acquiring the lands involved, building thereon a building useful for manufacturing purposes, there being no other suitable buildings available in the Town, and leasing the building, when complete, to a manufacturing industry, that the Town and its citizens will enjoy benefits flowing from the employment of several hundred citizens of the Town.'

The appellant presents three question, on the appeal:

1. Does the Town of North Miami, a municipal corporation organized and existing under the general statutes, have the power and authority, and is it a proper municipal purpose, for it to purchase land, erect an industrial building thereon and thereafter lease the premises to a private corporation with the rental revenues thus to be derived pledged for the payment of securities issued by the Town to provide the proceedings with which to acquire the land and building?

2. Is there a violation of the constitutional prohibition against the lending of credit (Article IX, Section 10, Florida Constitution) involved in the proposal by the town of North Miami to acquire an industrial building by issuing certificates of indebtedness and thereupon renting the building to a private corporation, with the rental revenues pledged as the security for the payment of the certificates?

3. Can the Town of North Miami, without an approving election by the freeholders, issue certificates of indebtedness for the payment of which it pledges the revenues to be derived from rentals received from an industrial building to be acquired with the proceeds of such certificates?

We should first decide if the purchase of the land for the specified purpose of erecting a manufacturing plant and the erection of such plant by the municipality for the purposes set forth in the resolution and the proposed lease, will serve a municipal purpose. If the execution of the proposed plan will serve a municipal purpose, then within certain limitations, the Town would have the authority to issue certificates of indebtedness to accomplish the purpose.

The power and authority which the Town has by reason of Section 165.08, F.S.A., 'to take and to hold property, real personal and mixed, and to control and dispose of the same', carries with it the necessary limitation that the same shall be for a municipal purpose.

38 American Jurisprudence, Municipal Corporation, Sec. 484, pages 162 and 163, states:

'* * * For the purpose of carrying on such activities as are intrusted to them, municipal corporations are usually given the power to acquire, hold, and manage real and personal property. In some states, municipal corporations are expressly authorized to acquire and hold real and personal property for corporate purposes. * * *

'Charter authority to purchase and hold property of all kinds relates, unless otherwise expressed, to such property only as is needed for municipal purposes. As a general rule, a municipal corporation has no authority to purchase and hold property for a purpose disconnected with a public use, for that would amount to expending public funds for a purpose which is not public. * * *'

Before entering into a discussion of law with reference to these questions, we deem it advisable to briefly analyze the terms of this proposed lease. It is to be for a term of 20 years and the rental which the private corporation shall pay to the Town will be so calculated that the rental paid over the 20-year period will amortize the principal and interest of the certificates of indebtedness, and at the end of 20 years, the land and the building will be entirely paid for and ownership will be vested in the Town free and clear of any indebtedness.

Section 16 of the proposed lease grants to the private company an option to renew the same for an additional term of 25 years. It then provides that the rental per year during the said additional 25 years shall be only a sum equal to the taxes that would be due the Town if the buildings were privately owned. In other words, the Town binds itself to lease the property, which would have cost $400,000, to this private corporation for no more than the taxes would be if it was owned by the private corporation.

It is also significant to note that this same section of the proposed lease grants to the private corporation an additional option to purchase the fee-simple title to the property at any time during the life of the agreement, or any...

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