First State Sav. Bank of Morenci, Mich. v. Little River Drainage Dist.

• Decision Date: 27 December 1935
• Parties: FIRST STATE SAV. BANK OF MORENI MICH., et al. v. LITTLE RIVER DRAINAGE DIST. et al.
• Court: Florida Supreme Court

165 So. 48

122 Fla. 304

FIRST STATE SAV. BANK OF MORENI MICH., et al. v. LITTLE RIVER DRAINAGE DIST. et al.

Florida Supreme Court, Division A.

December 27, 1935

Suit by the First State Savings Bank of Morenci, Mich, and others against the Little River Drainage District and others. From an adverse decree, plaintiffs appeal.

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

COUNSEL

C. L Chancey, of Fort Lauderdale, for appellants.

John E Holland and Brown & Wood, all of Miami, for appellees.

OPINION

DAVIS Justice.

The decree in this case refusing to award an injunction to complainant below to restrain the supervisors of Little River Valley drainage district established under article 1, c. 3, title 7, First Division, Compiled General Laws of Florida 1927, as amended by chapter 12078, Acts 1927, General Laws of Florida, from accepting bonds or interest coupons in lieu of money in payment of taxes due the district with which to provide for the payment of, and to retire, appellants' bonds, should be, and the same is hereby, reversed on the authority of the following cases: Frier v. State, 11 Fla. 300; Crummer v. City of Fort Pierce (D.C.) 2 F.Supp. 737; McNee v. Wall (D.C.) 4 F.Supp. 496, reversed on appeal from final decree by United States Supreme Court on other grounds, 56 S.Ct. 177, 80 L.Ed.--; Keefe v. City of St. Petersburg (D.C.) 5 F.Supp. 132; Moore v. Branch (D.C.) 5 F.Supp. 1011; Harris v. City of Miami (D.C) 6 F.Supp. 305; Humphreys v. State ex rel. Palm Beach Co., 108 Fla. 92, 145 So. 858.

Where bonds are provided to be payable in money, it is incompetent for the Legislature, against the protest of holders of such bonds, to permit taxes levied for the payment of the principal and interest of the bonds and pledged to be collected and applied thereon, to authorize the debtor obligor to accept bonds and coupons in payment of taxes levied for debt service and due to be paid in money as provided by the laws in force at the time the bonds were issued, unless some equally efficient and adequate means of payment is provided as a substitute for the discharged taxes so provided to be settled by a medium of payment other than money as covenanted for in the bonds and statutes under which they were issued.

In connection with the foregoing discussion, it should be pointed out that appellants' bonds are not general obligations of a district for which ordinary taxes can be levied and collected, in perpetuity, if necessary, to satisfy the district debt. On the contrary, in drainage districts such as this one, the special tax levies (i. e., special assessments for benefits) authorized to discharge the outstanding obligations of the drainage district are restricted to the total amount of the district benefits ascertained and set forth in the plan of reclamation. See Moran v. State ex rel. Montgomery, 111 Fla. 429, 149 So. 477. Compare State ex rel. Smith v. Butts, 111 Fla. 630, 149 So. 746, text 755, 89 A.L.R. 946 (special concurring opinion discussing Futch Acts of 1933).

Therefore all funds on hand (the term 'funds' here used being employed in the sense of tax liens capable of being realized upon and converted into cash as well as cash itself after realization) are equitable assets of the drainage district held by the supervisors thereof under a special statutory trust created for the particular security and benefit of the district's...