McNee v. Wall
| Citation | 4 F. Supp. 496 |
| Parties | McNEE v. WALL et al. |
| Decision Date | 22 August 1933 |
| Court | U.S. District Court — Southern District of Florida |
D. C. Hull and Hull, Landis & Whitehair, all of Deland, Fla., for complainant.
Cary D. Landis, Atty. Gen., H. E. Carter and Robert J. Pleus, Asst. Attys. Gen., and T. T. Oughterson and Evans Crary, both of Stuart, Fla., for defendants.
Thomas B. Adams, of Jacksonville, Fla., and Sutton, Tillman & Reeves, of Tampa, Fla., amici curiæ, for defendants.
Before BRYAN, Circuit Judge, and RITTER and STRUM, District Judges.
This is a suit, brought by a holder of bonds of a taxing district known as the St. Lucie Inlet district and Port Authority, to enjoin officers of the state of Florida, whose duty it is under the law to collect state, county, and district taxes, from accepting bonds and matured interest coupons issued by that district in redemption of tax sale certificates held by the state in so far as such certificates represent taxes levied for the purpose of retiring the bonded indebtedness of that district. It is before us now upon an application for an interlocutory injunction, pursuant to 28 USCA § 380. In support of that application, it is contended on behalf of the plaintiff that the tax-collecting officials are without lawful authority to accept anything except money in redemption of delinquent tax certificates and liens held by the state, but that they will, unless enjoined, accept county and district bonds in lieu of money, in accordance with provisions of chapter 16252, Laws of Florida, enacted in 1933, which purport to authorize the acceptance of county and district bonds at par in satisfaction of county and district delinquent taxes; that those provisions, to the extent at least that they affect plaintiff's rights, are unconstitutional, in that they impair the obligation of the contract under which plaintiff's bonds were issued, in violation of section 10, article 1, of the Constitution of the United States.
The St. Lucie Inlet district was created by chapter 9631, Special Laws of 1923, and given authority to issue $250,000 of bonds. That chapter was so amended by chapter 11693, Laws of 1925, Special Session, as to enlarge the district and permit the issuance of $1,250,000. Provisions of the 1923 act, which were declared to constitute "an irrepealable contract" between the district and the holder of any bonds, were made for the annual levy by a district board of taxes on real and personal property with which to create a sinking fund and pay the bonds, principal and interest; for the assessment of taxes so levied; and for their collection by the county tax collector "in the same manner as other taxes are collected."
According to the averments of the bill of complaint, which, not having been denied, are assumed for the purposes of this hearing to be true, the plaintiff is a citizen and resident of a state other than Florida, owns no property subject to taxation within the district, but does own bonds issued by it of a par value of $43,000, and past-due interest coupons amounting to $3,500. The district in 1925 issued $250,000 and in 1926 $1,000,000 of bonds, and pledged its full faith and credit for the payment of the principal and interest thereon. The uncollected taxes levied for the years 1926 to 1931, inclusive, amount to over $200,000, as shown by tax sale certificates, a large proportion of which is held by the state. The district has outstanding bonds and interest coupons in default aggregating approximately $155,000, with only about $23,000 in the interest and sinking funds applicable to the payment thereof, with the result that the amount to which plaintiff is entitled is negligible. The combined effect of chapter 16252, of compliance with it, and of the district's default on its bonded indebtedness, has been to depreciate the market value of the bonds and coupons to such an extent that they are being bought for less than their face value and are being turned in by land owners at par in payment of taxes. Plaintiff, as well as all other bondholders who are not taxpayers, are prejudiced and discriminated against, in that they will be compelled either to sell their bonds and coupons at the depreciated market value, or to hold them without any reasonable expectation of having them paid off so long as bonds are available for the payment of delinquent taxes.
The system of taxation in force in Florida in 1925 and 1926, at the times when the district issued its bonds, is set forth in chapter 1, title 6, Compiled General Laws of 1927. All property is subject to taxation annually, and all taxes create a first lien which continues in force until discharged by payment, and may be enforced by suit in equity. Sections 894, 896. If the taxes upon any real estate are not paid within the time prescribed, the tax collector advertises and sells the land. Section 969. He gives to the purchaser a tax sale certificate, section 981; and, if there be no private bidder, he bids off the "whole tract" for the state. Section 972. The certificates are transferable by indorsement at any time before they are redeemed or a tax deed is issued. Section 982. All certificates owned by the state are held by the clerks of the circuit courts of the several counties wherein the lands are located, not only for sale, but also for redemption. Section 983. Land certified to the state is marked on future tax rolls, though the amount of taxes thereon is not extended, but when the land is redeemed the taxes are paid at the rate of taxation levied for the years "marked as aforesaid." Section 984. The owner of land has the right to redeem it at any time after the tax sale and before a tax deed is issued. Section 985. The holder of any tax certificate at any time within two years after the date of its issue may obtain a tax deed by making proper application. Section 1003. Where land is bid off for the state, "and if the land is not redeemed or the certificate sold by the State, the title to the land shall, at the expiration of the time for redemption, vest in the State without the issuing of any deed, as provided for in other cases, and the certificate shall be evidence of the title of the State," etc. Section 1027.
Chapter 16252, the statute here under attack, in section 6 provides: "That bonds or...
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