City of Coral Gables v. State

• Decision Date: 30 July 1937
• Citation: 176 So. 40,128 Fla. 874
• Court: Florida Supreme Court
• Parties: CITY OF CORAL GABLES v. STATE et al.

176 So. 40

128 Fla. 874

CITY OF CORAL GABLES v. STATE et al.

Florida Supreme Court

July 30, 1937

Rehearing Denied Sept. 8, 1937.

Suit by the City of Coral Gables against the State of Florida and others, wherein one Culley, a taxpayer, and others intervened. From an adverse decree the plaintiff appeals.

Affirmed. Appeal from Circuit Court, Dade County; Paul D Barns, Judge.

COUNSEL

Morton B. Adams, of Miami, and Carl L. V. Exselsen, of New York City, for appellant.

A Judson Hill, of Miami, for appellee Culley.

Frank E. Bryant, of Miami, for interveners.

OPINION

CHILLINGWORTH Circuit Judge.

The City of Coral Gables sought to validate approximately $4,200,000 refunding bonds and $7,000,000 tax participation certificates, which were to be issued in exchange for old evidences of indebtedness in the approximate amount of $11,200,000--including principal and interest--in full satisfaction, settlement, compromise, and adjustment of the original indebtedness. The state attorney filed an answer raising numerous legal objections. Culley, a taxpayer, intervened to attack the validity of four original bond issues outstanding in the amount of approximately $6,500,000 principal and $2,200,000 accrued interest, which were sought to be refunded. Several taxpayers intervened to uphold the action of the municipality. After hearing testimony, the court validated all of the refunding bonds and tax participation certificates, but held that homesteads, exempt under the provisions of section 7, article 10 of the Constitution (as added in 1934) could not be held liable for the payment of refunding bonds or tax participation certificates, issued to refund a stated account and three judgments procured against the municipality in tort actions.

The city appealed. It assigned as error that portion of the decree which prevented a levy of taxes against homesteads. The state attorney filed an assignment of error alleging that the court erred in entering the final decree, but filed no brief. The intervener Culley assigned a number of errors, but rests his case almost entirely upon the contention that the bonds embraced in the first four original bond issues were void, because issued by the municipality as a loan of credit and appropriation of funds for a private corporation contrary to section 10, of article 9 of the Florida Constitution. His position is that the municipality cannot issue refunding bonds or tax participation certificates to compromise or satisfy void bonds. He also contends that tax participation certificates cannot be validated, nor can homestead property, exempt under section 7, article 10, of the Constitution, be taxed for the purpose of raising funds to pay them.

Culley presented considerable testimony tending to support his opposition to refunding the four original bond issues. He relies upon the decisions of this court in City of Coral Gables v. Coral Gables, Inc., 119 Fla. 30, 160 So. 476, and State v. Town of Belleair (Fla.) 170 So. 434. There is much in this record to justify the views expressed in City of Coral Gables v. Coral Gables, Inc., supra. In that case the assessment lien was held void, but the city was held to have the right to proceed under its charter to make a valid assessment, there being ample authority for that purpose. No bondholder was before the court. The validity of no bond was considered by the court. No refunding bonds were involved. The property of the taxpayer was not held to be relieved from the obligation of paying for the benefits derived from the expenditure of funds by the municipality.

In State v. Town of Belleair, supra, the facts clearly showed the issuance of bonds primarily, and almost exclusively, to promote private enterprises. The public was only incidentally interested. But even there, the bondholder was not deprived of his right to proceed against the properties specially benefited and improved by the proceeds of the bonds, to recover his claim.

In Coral Gables there was unquestionably much jugglery of municipal affairs, but it was typical of the era. A statement of the evidence here would simply be a repetition of the story of fluctuating land values, unparalleled prosperity, the 1925 land boom, its disastrous collapse, the extreme deflation in Florida real estate values, the nation-wide economic depression beginning in 1929, and the gradual recovery beginning in 1933, as to all of which the court will take judicial notice. McCaskill Co. v. Dekle, 88 Fla. 285, 102 So. 252; Reese v. Levin, 98 Fla. 397, 123 So. 809; Evans v. Tucker, 101 Fla. 688, 135 So. 305, 309, 85 A.L.R. 170; State ex. rel. Davis v. City of Clearwater, 106 Fla. 761, 139 So. 377, 381, 146 So. 836; Smith v. Massachusetts Mut. Life Ins. Co., 116 Fla. 390, 156 So. 498, 506, 510, 95 A.L.R. 508; Burns Mortgage Co. v. Bond Realty Corporation (C.C.A.) 47 F. (2d) 985; Brite v. W. J. Howey Co. (C.C.A.) 81 F. (2d) 840.

In addition, we have in the instant case the rapid growth of Coral Gables, its great expansion, its efforts at stabilization of its municipal affairs, its frustrated refunding plans, and much litigation, finally resulting in the plan to issue these refunding securities which seems to be mutually advantageous to the taxpayers, the municipality and the bondholders.

However it is to be observed in this case: That Culley did not testify and few of his witnesses are even taxpayers in Coral Gables; that there are no charges of actual fraud; that there was no use of public funds for an unlawful municipal purpose; that there was no exchange of bonds for property; that the city received cash in payment for these first four issues of bonds; that there was no objection by any taxpayer to the expenditure of any funds procured through any bond issue; there was no objection by the city or any taxpayer to the validity of these bonds, until years after the municipality had issued, validated, sold the bonds, and had received the benefits of the funds received from them; that no court has ever held these bonds to be void even though the matter has been presented a number of times; that the action of one who might have purchased property in South Florida in 1925, at then prevailing market values, only to find that the actual value of the property later, and probably then, was far less than the market value, does not alone constitute any evidence of fraud or inequitable conduct; that refunding bonds of the city were approved by the freeholders twice, once by a vote of 329 to 23 and again by a vote of 566 to 179; that creditors holding approximately 90 per cent. in amount of the outstanding indebtedness have evidenced their willingness to accept these refunding securities; and that the mere...