City of Naples v. Conboy

• Decision Date: 13 October 1965
• Docket Number: No. 33707,33707
• Citation: 182 So.2d 412
• Parties: The CITY OF NAPLES, a municipal corporation organized and existing under the laws of the State of Florida, et al., Appellants, v. Vincent H. CONBOY, and other taxpayers of the City of Naples, not named but made parties as members of a class, Appellees. Vincent H. CONBOY, and other taxpayers of the City of Naples, not named but made parties as members of a class, Cross-Appellants, v. The CITY OF NAPLES, a municipal corporation organized and existing under the laws of the State of Florida, et al., Cross-Appellees.
• Court: Florida Supreme Court

Page 412

182 So.2d 412

The CITY OF NAPLES, a municipal corporation organized and existing under the laws of the State of Florida, et al., Appellants, v. Vincent H. CONBOY, and other taxpayers of the City of Naples, not named but made parties as members of a class, Appellees.

Vincent H. CONBOY, and other taxpayers of the City of Naples, not named but made parties as members of a class, Cross-Appellants, v. The CITY OF NAPLES, a municipal corporation organized and existing under the laws of the State of Florida, et al., Cross-Appellees.

No. 33707.

Supreme Court of Florida.

Oct. 13, 1965.

Rehearing Denied Dec. 2, 1965.

David C. Spingler, Naples, for City of Naples and Bert L. Pinkston.

Smith, Carroll, Vega, Brown & Nichols, Naples, for Aqualane Shores, Inc., and Fuller Industries, Inc.

Darrey A. Davis and Hector, Faircloth & Davis, Miami, for Port Royal, Inc.

Berryhill, Avery & Law, Fort Lauderdale, for Moorings Development Co. of Canada, Ltd.

Walter R. Condon, Condon & McDaniel, Naples, for Vincent H. Conboy, and others, appllees and cross-appellants.

ROBERTS, Justice.

This is a direct appeal to review a decision of the Circuit Court of Collier County invalidating a contract and two ordinances of the City of Naples, purporting to extend certain tax benefits to the appellants. In reaching his decision the chancellor, in his decree, construed Sections 1 and 5 of Article IX of the Constitution of Florida, F.S.A., and the appellate jurisdiction is therefore vested in this court. See McNayr v. State ex rel. Dupont Plaza Center, Inc., 166 So.2d 142 (Fla.1964); Green v. Walter, 161 So.2d 830 (Fla.1964); State ex rel. Glynn v. McNayr, 133 So.2d 312 (Fla.1961).

Among other things, the chancellor found (1) ordinances 400 and 615 of the City of Naples to be invalid; (2) the contracts between the municipal corporation and the appellants (developers) to be invalid and unenforceable; and (3) that the taxing authorities of the City should reassess the property owned by the appellants (developers) involved in this litigation for the years 1962 and 1963; and in effect that the contracts were ultra vires and also barred by Sections 1 and 5, Article IX of the Constitution of Florida.

In 1954 the City of Naples adopted Ordinance No. 400 which provides:

'Section 1. All developers of land lying within the City of Naples, Florida, who desire to create subdivisions from lands composed generally of mangrove swamp, overflowed and other low lands, and who desire to take advantage of this Ordinance shall first submit to the Council for its approval, the method and the approximate cost of such improvements.

'Section 2. The Council shall then determine from such plans whether such development as proposed will benefit the City from the standpoint of health or safety or general welfare and should it so decide that such development is in the public interest, shall do the following provided that other ordinances and laws relating to plats and subdivisions are complied with: (a) Make a specific finding that the proposed development is in the public interest from the standpoint of health, safety or general welfare. (b) Agree to assess all lots in the subdivision, unimproved by physical buildings, to which title remains in the developer, whether it be a person, firm or corporation, as acreage until such time as sixty per cent of the lots have been sold, or the period of ten years has elapsed whichever shall occur first. (c) Enter into a binding contract with the developer guaranteeing the above for the term stated.

'Section 3. This ordinance is hereby declared to be in the public interest and designed to promote the health, safety and general welfare of Naples, Florida.'

In 1957 certain amendments were made but the amendments are immaterial to the issues here involved.

For many years the City and various developers acted without objection under contracts similar or comparable to the following:

'It is hereby mutually agreed between the parties hereto that for the next 10 years, or until 60% of the lots shall be sold by Port Royal, Incorporated, whichever is sooner, all lots in the proposed subdivision shall be assessed for City tax purposes as acreage only and at valuations comparable to valuations assessed against other unimproved, submerged lands within the City limits; provided that in the event Port Royal, Incorporated, shall place buildings upon any of said lots while still assessed to it then and in that event the particular lot shall be treated and assessed as though sold.'

The principal question in the taxpayers' class suit is whether a municipality has authority to make such contracts. The lower court, in a well-reasoned opinion, held that it did not and cited as authority Tampa Shipbuilding and Engineering Co. v. City of Tampa, 102 Fla. 549, 136 So. 458 (1931), and City of Tampa v. Kaunitz, 39 Fla. 683, 23 So. 416, 63 Am.St.Rep. 202 (1898). The Tampa Shipbuilding case held, inter alia, that without valid legislative authority, no city or town has power to bind itself, by contract, either to forebear to impose taxes on particular property, or to impose them only under given limitations, or on certain given conditions. The purpose of the contract there was to subsidize a shipbuilding plant in the City of Tampa with its various assets to a city community and the purpose of the contract in instant case is to encourage residential improvements, thus, hopefully, increasing the size of the tax roll. We have a similar situation in the City of Tampa case, supra, where the court stated 23 So. on page 420:

'(b) Did the city of Tampa have power, by contract or otherwise, to exempt from taxation the properties of the South Florida Division of the Savannah, Florida & Western Railway Company and the Tampa Waterworks Company, and to perpetually bind itself to accept from the Tampa Bay Hotel Company $200 per annum in full for all city taxes without regard to the value of its property, or the rate of taxation levied thereon? The plaintiff in error cites us to no authorities on this point. He plants himself upon the proposition that the exemptions were granted for a consideration, and that, consequently, they amounted to a contract with the city. But where does the city derive its authority to make such a contract? We have not been cited to any statute of this state authorizing the city to exempt this species of property from taxation, nor to make a contract so to do. Without valid legislative authority, no city or town has power to bind itself, by contract, either to forebear to impose taxes on particular property, or to impose them only under given limitations, or on certain given conditions.'

In connection with the constitutional inhibitions, we have carefully considered the contention that the tax exemptions are for a valid municipal purpose, however, we find that the supposed consideration for the contracts is speculative and incidental and that the courts have held similar plans to be primarily for the benefit of a private enterprise and not primarily for the benefit of the public. City of Daytona Beach v. King, 132 Fla. 273, 181 So. 1 (1938); City of Bradentown v. State, 88 Fla. 381, 102 So. 556, 36 A.L.R. 1297 (1924). The subdivisions are owned and controlled by private persons, firms or corporations and the revenue accrues to these developers. In contrast, in Gwin v. City of Tallahassee, 132 So.2d 273 (Fla.1961), revenue from an electrical generating plant accrued to the city which owned and operated the facilities, and the court there held that the function came within the concept of 'municipal purpose' and was therefore entitled to the tax exemption. There is no question as to the good faith of the taxing authority, but the danger of allowing such power of exemption to exist is so manifest that our Constitution, Article IX, § 1 ¹ and § 5 ² prohibits the exercise of such power.

The chancellor buttressed his decision that the contract was void as being ultra vires by also holding, in effect, that §§ 1 and 5 of Article IX, Constitution of Florida, prohibit such tax advantages flowing to individuals. The chancellor was eminently correct in holding that such discrimination in favor of the appellants would violate § 1, Article IX of the Constitution.

By cross-appeal, the complaining taxpayers, relying on a portion of F.S. § 192.21 ³ and a portion of § 193.23, F.S.A. ⁴ contend that the City should be required to 'back-assess' for 1959, 1960 and 1961, the subject lands at their fair and just valuation.

The chancellor denied the prayer that the City reassess the developers' lands under contract with the City for the three years prior to 1962, the year the action was commenced, stating in his final decree that 'the taxing authorities of the municipal corporation are hereby directed to reassess the property owned by the developers and involved in this litigation for the years 1962 and 1963 and assess said properties for tax purposes as would have been done had the contracts with the defendant developers never existed.' The cross-appellants argue in their brief that '[W]hen a city fails to follow the equal and just principle, and its charter fails to provide a corrective procedure, the Court should implement state law which will enforce the fundamental principle.'

The cross-appellees contend that the claim of cross-appellants for the three years prior taxes allowed to be backassessed under § 193.23 is barred by F.S. § 192.21, F.S.A. which provides in part: '* * * no assessment shall be held invalid unless suit be instituted within sixty days from the time the assessment shall become final * * *.' They further contend that F.S. § 193.23 is inapplicable because the taxes had been levied and collected for those years and that the property did not escape taxation.

The question thus posed is whether the city may reassess at fair value property that had been undervalued for the prior three years. We conclude upon reason and...