McCombs v. West

• Decision Date: 17 May 1946
• Docket Number: No. 11542.,11542.
• Citation: 155 F.2d 601
• Parties: McCOMBS et al. v. WEST et al.
• Court: U.S. Court of Appeals — Fifth Circuit

155 F.2d 601 (1946)

McCOMBS et al. v. WEST et al.

No. 11542.

Circuit Court of Appeals, Fifth Circuit.

May 17, 1946.

D. C. Hull, Erskine W. Landis, John L. Graham, and J. Compton French, all of DeLand, Fla., for appellants.

George P. Garrett, W. H. Poe, W. K. Whitfield, Jr., Hugh Akerman, Charles O. Andrews, Jr., and William H. Dial, all of Orlando, Fla., for appellees.

Before SIBLEY, WALLER, and LEE, Circuit Judges.

SIBLEY, Circuit Judge.

The plaintiff-appellants' bill for a declaratory judgment and injunction was dismissed on a motion of defendant-appellees for a summary judgment. The main questions are whether bondholders of a city in Florida are bound by judgments in the State courts, rendered after the issue of the bonds and to which the bondholders were not parties, whereby owners of a great part of the land in the city and subject to taxation to pay the bonds was excluded from the city and released from all debts, duties or liabilities of the city; and whether this result deprives the bondholders of their property without due process of law contrary to the Fourteenth Amendment of the Federal Constitution.

On a motion for summary judgment made by defendants the facts alleged in the petition must be taken as true, unless by the admissions, depositions, or other evidence introduced it appears beyond genuine controversy otherwise. Observing this rule the court found it clear that the jurisdiction of the court was shown, and that the exclusion judgments were rendered regularly, and controlled the case in favor of the defendants. To present the case more fully, however, we state it briefly as set forth in the petition.

The City of Ocoee, Florida, was created by legislative Act, Chapter 10951, Sp.Acts of 1925, effective May 13, 1925, embracing in its limits about 1440 acres of land. It was empowered in this Act to issue bonds, and to levy and collect taxes to pay them. Several issues of bonds followed, their validity not being in question; and petitioners own some of an issue of Sept. 15, 1925, some of Aug. 1, 1926, and some of Jan. 1, 1928. All are general obligations of the city, and pledge the full faith and credit of the city for their payment. The lands in controversy were then in the city limits, and subject to city taxation, and the total assessed value of all property was approximately a million and a half dollars. On June 24, 1929, some of the defendants brought suit against the city in the Circuit Court of Orange County under a statute of the State passed in 1903, now Revised Florida Statutes, Sections 171.02, 171.03, to have their lands excluded from the city because there were less than 150 qualified voters in the city and their lands were (in the language of the statute) "from distance or other cause * * * virtually or commensurately excluded from the benefits of such municipal organization." Judgment of exclusion was rendered, and on the city's appeal was affirmed by the Supreme Court of Florida. City of Ocoee v. West et al., 102 Fla. 277, 130 So. 9. On Nov. 27, 1929, others of the defendants filed a similar suit against the city, won it, and it too was affirmed in the Supreme Court. City of Ocoee v. Beggs, 102 Fla. 275, 135 So. 557. On Oct. 25, 1930, Feb. 6, 1931, and June 11, 1931, other like suits were brought which were not defended by the city; but there is no allegation of bad faith or collusion. As a result, about 680 acres of land were excluded from the city, each decree following the statute in adjudging "that the said lands and premises shall be and they are hereby forever released from all debts, duties, or liabilities of said City of Ocoee". By 1941 the total property left in the city was assessed at about 129,000, and the excluded property was assessed, if taxable, at about $135,000. For judgments had been rendered on some of the bonds in the United States District Court, and the court had issued its mandamus against the city, requiring it to assess and tax all the lands within the city when the bonds were issued, to pay the judgments. Also the judgment-plaintiffs had brought in the District Court a suit against the city and some of the present defendants, and obtained a decree enjoining the landowners from resisting the city and the city from failing to tax the excluded lands. These judgments and decrees have all been transferred to the present plaintiffs who own also other bonds. The present petition concludes with averments that to allow the owners of the excluded property to assert the judgments of exclusion will hinder and embarrass the enforcement of the taxes ordered by the District Court to be levied to pay the bonds,¹ and the plaintiffs and other bondholders will be deprived of property without due process of law, petitioners not having been parties and having had no notice and opportunity to be heard; and will deprive them of a large source of their pledged security and will operate as a fraud upon them. The prayers are for a declaratory judgment that the exclusion decrees are inoperative to relieve the property from taxation; that the taxation of all the taxable property described in them, they being within the city when the bonds were issued, is a part of the security for payment of the bonds and is pledged thereto; and that preliminary and permanent injunctions be granted accordingly.

The District Court held the decrees of exclusion are res judicata of the matters decided, binding on the city and on the petitioners, and not capable of being relitigated in this case; that the right to obtain exclusion under the Florida statute existed when the bonds were issued and bondholders took subject thereto; that petitioners and their transferrors have never had any lien upon the lands of defendants; their contracts have not been impaired by the State of Florida, nor their property taken without due process of law. The bill was accordingly dismissed.

The Exclusion Statute referred to is quoted in the margin.² It was passed more than twenty years before these bonds issued, and was part of the public law governing cities and towns, so that these bond purchasers were on notice of it, and took subject to it. The State has not passed any law impairing the obligation of their contracts within the meaning of Art. 1, Sect. 10, of the Constitution. The petition makes no such claim, and the appellants' brief disclaims that position. The claim made is that a decree pursuant to this statute to which bondholders are not parties does not estop them to contest the propriety of the exclusion; and if it does, their property rights are thereby taken without due process of law contrary to the Fourteenth Amendment.

The meaning of the statute and the effect of an exclusion decree is a matter of State law, as to which we must accept the conclusions of the Florida courts. Whether the federal Constitution is transgressed thereby is a question on which we are to exercise an independent judgment. The words "qualified electors", and "virtually or commensurately excluded from the benefits of such municipal organization" have been interpreted for us. In two of the exclusion suits here involved, (City of Ocoee v. West, and City of Ocoee v. Beggs, supra), the former words were held to mean that the electors must be actually registered for voting in the city, as well as otherwise qualified, at the time the suit for exclusion is filed; so that neither citizens who might have registered but did not can be counted to make more than one hundred and fifty and so defeat the application of the statute, nor can those be counted who register afterwards and before the trial. Whether Ocoee had one hundred and fifty or more "qualified electors" was in each exclusion suit a question of fact necessary to be determined and it was determined negatively.

The city being thus established to be a small one within the exclusion statute, it was also necessary to determine whether the land...