Hollywood, Inc. v. Broward County

• Decision Date: 12 September 1956
• Parties: HOLLYWOOD, Inc., a Florida corporation, Appellant, v. BROWARD COUNTY, a political subdivision of the State of Florida, et al., Appellees.
• Court: Florida Supreme Court

Page 47

90 So.2d 47

HOLLYWOOD, Inc., a Florida corporation, Appellant, v. BROWARD COUNTY, a political subdivision of the State of Florida, et al., Appellees.

Supreme Court of Florida, Special Division A.

Sept. 12, 1956.

Rehearing Denied Nov. 8, 1956.

Stanley M. Beckerman, Ellis & Spencer, Hollywood, and Sibley & Davis, Miami Beach, for appellant.

John U. Lloyd and John B. Gregory, Jr., Fort Lauderdale, for Broward County and J. H. Burke, H. J. Driggers, R. T. Gallion, Tony Salvino and H. Vivian Saxon, as members of and constituting the Board of County Commissioners of Broward County, Florida and Broward Public Recreation Assn.

Smathers, Thompson, Maxwell & Dyer, Miami, for Florida Land Holding Corp. and J & J Realty Co. Dale, Scott & Singer, and C. Shelby Dale, Fort Lauderdale, for Fort Lauderdale Board of Realtors, Inc., and Fort Lauderdale Beach Improvement Assn.

CARROLL, Associate Justice.

Appellant filed a taxpayer's class suit for declaratory decree, seeking to invalidate and undo a $1,600,000 land acquisition by Broward County, charging that the payment plan ignored requirements of Section 6 of Article IX of the Constitution, F.S.A.

On the granting of defendants' motions to dismiss in the lower court plaintiff declined to amend, and a dismissal followed.

This appeal is from the order of dismissal, and from an earlier order sustaining objections to the taking of certain depositions by plaintiff.

On the latter point, the order preventing the depositions was within the discretion of the Court under 30 F.S.A., Rule 1.24(b) of the 1954 Florida Rules of Civil Procedure. The depositions were noticed while motions to dismiss were pending. The granting of those motions and dismissal of the cause, within a few days after the ruling on the depositions, rendered that question unsubstantial if not moot.

To support its contention that the complaint was sufficient, appellant argues that the purchase of land by the County without an approving vote of freeholders, subject to a mortgage for a large amount, payable over a number of years, amounts to a coercive requirement for payment of the mortgage by the County equivalent to its personal undertaking, interdicted by the Constitution, Article IX, Section 6.

The complaint contained these allegations:

'2) That Chapter 25709 [Sp.] Laws of Florida, Acts of 1949, as amended by Chapter 28950 [Sp.] Laws of Florida, Acts of 1953, authorized Broward County, acting through its Board of County Commissioners, to acquire lands in Broward County by purchase, gift, or by the exercise of its power of eminent domain to be used for playgrounds, parks, beaches, recreational centers or other recreational purposes, and provided that for the purpose of paying the cost of acquiring any land for such purpose and constructing any roads and bridges which may be necessary to provide accessibility to sand lands and equiping it for recreational purposes, the Board of County Commissioners was authorized and empowered to issue negotiable bonds of Broward County not to exceed the aggregate amount of $2,500,000.00. However, it is provided that such bonds shall be issued only after the same have been approved by the majority of votes cast in an election in which a majority of freeholders who are qualified electors residing in Broward County shall participate.

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'4). Pursuant to the authority vested in said Board as aforesaid, and in the resolution adopted implementing the action of the Board authorizing said bonds, a special election was called to be held on Tuesday, May 4, 1954, for the purpose of submitting to the qualified electors of Broward County who are freeholders, the question of whether such bonds should be issued. On May 4, 1954, at the general primary election of Florida, the freeholders of Broward County voted upon this bond issue and the issuance of the $2,500,000.00 of bonds was disapproved. * * *.

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'6) The defendant commissioners and the said Kleins and Goodfriend, acting in consort, determined to effect the purchase and sale of said property to Broward County, although the county was without authority to create or assume an indebtedness for the purchase price of said property. The Constitution of the State of Florida prohibited the county commissioners from creating an indebtedness of the county for the purchase of said beach land unless the creation of the indebtedness for such purchase was approved by the freeholders of said county. This scheme, gimmick or device employed by the Kleins and Goodfriend and by the county commissioners, was executed in the following fashion: The Kleins created a corporation know as the J & J Realty Co., Inc., a Florida corporation. This was a corporation wholly owned, dominated and controlled by the Kleins and Goodfriend. It was a corporation without funds, without assets, and without any organization. It was in fact a name clothed with a corporate fiction and utilized by the Kleins as a supposed purchaser of the property desired to be purchased by the county commissioners. This phony purchaser entered into a supposed but phony purchase and sales agreement with the defendants, Klein and Goodfriend, wherein and whereby it paid to the Kleins and Goodfriend the sum of $1,600,000.00 (rather than its true value of $800,000.00, as reflected in the resolution of the county as aforesaid) as the purchase price of said property. The Kleins and Goodfriend conveyed the property to the J & J Realty Co., a Florida corporation, and received from said corporation no cash in return, but only a mortgage from the said corporation encumbering said property for the total sum of $1,440,000.00, with interest at the rate of 5% per annum. Actually, the J & J Realty Co., a Florida corporation, had not agreed to purchase the property from the Kleins and Goodfriend, but the truth is, the county commissioners of Broward County agreed to purchase the property on behalf of the county for $1,600,000.00, and agreed to pay $160,000.00 in cash and to pay a mortgage of $1,440,000.00, which was to be created against the property by this fiction, the J & J Realty Co., a Florida corporation, who though owned and dominated by the Kleins and Goodfriend, was acting as a vehicle employed by the county commissioners to create said indebtedness against said property.

'7) As a part of said plan or scheme the county commissioners procured the incorporation of a dummy corporation known as the Broward Public Recreation Association. The said association obtained a charter as a non-profit corporation on the 20th day of September, 1954. This corporation has never had any assets, any cash, or any organization. It is merely a name clothed with a fictitious corporate entity, but without corporate substance and without corporate purpose. It was created solely as a tool of the county commissioners to implement the said commissioners' gimmick or device.

'8) After the feigned sale had been accomplished, whereby the Kleins and Goodfriend conveyed the said property to the J & J Realty Co., a Florida corporation, after that corporation had delivered to the Kleins and Goodfriend notes evidencing the alleged purchase price of said property and a mortgage upon said property securing said notes, thereupon, the J & J Realty Co., a Florida corporation, on September 21, 1954, conveyed the said property to the said Broward Public Recreation Association. * * *.

'9) The execution of all these instruments did not effectuate a bona fide sale of said property for the reason that the true sellers of said property, the Kleins and...