Panama City v. Seven Seas Restaurant, Inc., G-451

• Decision Date: 18 November 1965
• Docket Number: No. G-451,G-451
• Citation: 180 So.2d 190
• Parties: PANAMA CITY, Florida, et al., Appellants, v. SEVEN SEAS RESTAURANT, INC., Appellee.
• Court: Florida District Court of Appeals

Page 190

180 So.2d 190

PANAMA CITY, Florida, et al., Appellants, v. SEVEN SEAS RESTAURANT, INC., Appellee.

No. G-451.

District Court of Appeal of Florida, First District.

Nov. 18, 1965.

Mercer P. Spear, and Barron & Hilton, Panama City, for appellants.

Davenport, Johnston, Harris & Urquhart, Panama City, for appellee .

WIGGINTON, Acting Chief Judge.

The defendants in this action have appealed a final declaratory decree rendered pursuant to F.S. Chapter 87, F.S.A., the effect of which is to hold invalid a provision of a written lease contract by which the City of Panama City granted to the remaining defendants an exclusive franchise, right, concession, or permit to furnish catering concession, or permit to furnish catering by the City and located on property developed as a civic center and marina. Appellants contend that the chancellor erred in holding the mentioned provision of the lease to be void on the grounds of public policy.

Appellant, City of Panama City, leased to appellant, J. Rowe Sudduth, who in turn subleased to appellant, The Four Winds of Panama City, Inc., the administration building located on the Panama City Civic Center and Marina for the purpose of operating therein a restaurant and cocktail lounge. The lease contract includes the following additional provision, the construction of which gave rise to this litigation, to wit:

'* * * As a further consideration for the covenants provided herein, the LESSOR hereby grants to the LESSEE the exclusive catering rights to the auditorium on the said Marina, shown in Exhibit 'A', provided that the LESSEE shall render able, efficient, courteous and reasonable service in connection therewith.'

The stipulated facts on which the chancellor relied in rendering the decree appealed are that the City auditorium, in which defendant J. Rowe Sudduth was granted the catering rights here complained of, is not now nor has it ever been used or devoted to the carrying on of ordinary city business of defendant City of Panama City, Florida, but is available for rental by members of the general public and associations or groups for holding private meetings, conventions, musicals, plays, and similar activities; that the auditorium was constructed from the proceeds of the sale of municipal bonds of said City, and is under the exclusive control of the officers and agents of said City; that the auditorium is a separate building with approximately seven hundred feet, including a street, separating it from the administration building described on the first page of the lease agreement attached to the complaint.

By their respective answers, the appellants lessor, lessee, and sublessee denied that the provision of the lease assaulted by the complaint was invalid, and interposed the affirmative defenses of estoppel and laches.

As a basis for holding void that provision of the lease which granted to the lessee the exclusive catering rights to the auditorium located on the civic center and marina property, the chancellor found that such provision creates a monopoly, strikes at free enterprise, stifles lawful competition, is in restraint of trade, is detrimental to the public good and is adverse and harmful to other catering services of like kind.

Appellee supports the correctness of the decree appealed upon the basic theory of law that the right or privilege granted by the City to appellant lessees is an exclusive franchise which the City is prohibited from granting in the absence of special statutory authority empowering it to do so. ¹ It is conceded that neither the charter of the City of Panama City, nor the special act authorizing the City to construct and operate the civic center and marina invoved in this proceeding, specifically confers upon the City the right to grant exclusive franchises to private individuals for the performance of any of the functions vested in the City under its charter, the general law or the special act mentioned above.

Appellants contend, and we agree, that the City's act in granting to Sudduth the exclusive right, privilege, concession, or franchise to furnish catering services to the auditorium was done in the exercise of a proprietary as distinguished from a governmental function. The authority of the City to issue and sell revenue bonds and use the proceeds thereof in the acquisition, construction, and operation of the civic center and marina was conferred upon the City by Chapter 11678, Laws of Florida, Extraordinary Session of 1925, as amended (by the City charter) and Section 167.21, Florida Statutes 1955, F.S.A. The powers of the City in this regard are set forth in detail in the decision validating the bonds issued by the City for the acquisition and construction of the marina and civic center, rendered by the Supreme Court in the case of Panama City v. State of Florida. ² Among other things, the City is empowered to acquire and use any real estate or personal property of any kind including recreational facilities and auditoriums and, if found desirable or expedient, may lease, rent, or otherwise dispose of all or any part of such property for the benefit of the City. It is specifically empowered to erect all necessary public buildings and to control and dispose of them as the interest of the City may require, and to be and perform all such other act or acts as shall seem necessary and best adapted to the improvements and general interest of the city or town. The resolution authorizing the issuance of the bonds to acquire, construct, and maintain the project are to be retired solely and exclusively from funds derived from the net revenues of the revenue producing facilities of the project, and from the proceeds of excise taxes theretofore authorized by sundry ordinances of the City on the sale of cigarettes, utility services, and from license taxes and franchise taxes. From the foregoing it appears without serious dispute that the City is authorized to construct an auditorium and to operate it in such manner as will be to the best interest of the City of Panama City. Incidental to this power is the right to furnish catering services to those groups or organizations renting the building, and to derive from such rentals and from the not profits of the catering services revenues which may be utilized in maintaining the property and retiring the bonds issued for its acquisition. Such a function is clearly proprietary in...