Pape v. St. Lucie Inlet District and Port Authority

• Decision Date: 22 February 1935
• Docket Number: No. 7334.,7334.
• Parties: PAPE v. ST. LUCIE INLET DISTRICT AND PORT AUTHORITY, etc., et al.
• Court: U.S. Court of Appeals — Fifth Circuit

75 F.2d 865 (1935)

PAPE v. ST. LUCIE INLET DISTRICT AND PORT AUTHORITY, etc., et al.^*

No. 7334.

Circuit Court of Appeals, Fifth Circuit.

February 22, 1935.

Giles J. Patterson, of Jacksonville, Fla., for appellant.

D. C. Hull and Francis P. Whitehair, both of De Land, Fla., and T. T. Oughterson and Evans Crary, both of Stuart, Fla., for appellees.

Before BRYAN, SIBLEY, and HUTCHESON, Circuit Judges.

HUTCHESON, Circuit Judge.

Appellant, plaintiff below, a citizen of and resident in the state of Florida, is the holder of eighty-nine of the first issue bonds of the St. Lucie Inlet District, a Florida public corporation, created for the purpose of improving and maintaining the St. Lucie river as a waterway, by deepening it, and constructing and maintaining an inlet connecting its mouth with the Atlantic Ocean. Appellees are the Board of Commissioners of and the St. Lucie Inlet District and Port Authority, a public corporation created to take over, assume responsibility for, and levy, assess, and collect taxes to pay the first and second issue bonds, and the other indebtedness of the St. Lucie Inlet District. The suit, brought on the assumption that first in issue was first in right, sought a decree awarding the first issue bonds priority of lien and payment out of tax and other moneys in and coming into the hands of the board, and a mandatory injunction enforcing this award. It was brought in the federal court on the ground that obligations of plaintiff's contract were impaired by the action of the Port Authority and its board, in failing to provide sufficient moneys to fully service the bond maturities, and in apportioning the insufficient moneys on hand in partial pro rata payment of all maturities, instead of in full payment of those of the first series. As a basis for the claim made and the relief asked, the bill alleged the creation in 1923 of the St. Lucie Inlet District (Special Acts Fla. 1923, c. 9631), with defined boundaries, and authority to issue bonds if approved by vote of the taxpayers; the aggregate amount of such bonds to at no time exceed $250,000. That the board was required, in connection with and as a part of the issue of bonds, to determine by resolution the amounts necessary to be raised annually by taxation, to pay interest and establish a sinking fund, to provide for their annual levy and collection, and for their pledging and devotion to the purpose for which they were collected. It alleged the issuance and sale of 250,000 6 per cent. bonds, maturing serially in equal amounts over 35 years, beginning January 1, 1930; the making of due provision for their servicing and payment; and the setting aside as a special fund, and as pledged to the bonds, the sums to be so provided.

It was further alleged that the provisions of the act creating the district¹ and the proceedings taken under it, including the resolution of the board, and the bonds themselves, constituted an unimpairable contract between the district and the holder of the bonds, that these bonds had, and would continue to have, a first lien and claim upon the revenues of the district. The bill then sets out the amendment in 1925 of the act creating the district, changing and greatly enlarging its boundaries, and increasing the bond limit from $250,000 to $1,250,000 (Acts Fla. 1925, Ex. Sess., c. 11693); the due issuance under this authority of $1,000,000 of 5½ per cent. serial bonds,² the due provision for interest and sinking funds to service them, and that ever since, the Board of Commissioners of the District as amended, at first under that name, and after 1927 (Acts Fla. 1927, c. 12254) under the name of Martin St. Lucie Counties Improvement District, to which the Legislature in that year changed it, had levied and collected taxes on all the lands embraced in the new district, for the interest and sinking fund on both issues.

In 1929 the Legislature abolished the Martin-St. Lucie Counties Improvement District, creating a successor to it known as the St. Lucie Inlet District and Port Authority, to take its titles, rights, and ownership, and to assume and discharge its debts, contracts, bonds, and other obligations, with authority to levy upon the taxable property in the district a special tax sufficient to pay and retire, as they matured, all of its bonds and other obligations.³ From the taxes lately levied the district has received sums which, though sufficient to pay in full the maturing bonds of the first series, if solely applied to them, are wholly insufficient to pay all, and it has passed a resolution attempting to divide the proceeds of the levies between the issues, 4 mills to the first series, the balance to the second.

Plaintiff alleges that this act of the commissioners was unwarranted, both because chapter 13808, Laws 1929, creating the defendant district, does not permit the board to make such division, but requires the levy of sufficient taxes to pay all maturities, and because to do so is to impair the obligation of the first issue of bonds as that was fixed by sections 21, 22, and 27 of chapter 9631, note 1, supra.

Plaintiff alleges that this division was made for the benefit of the second bond issue, and because the board was unwilling to levy a sufficient tax, as they were required by law to do, to pay all maturities of both issues. Defendants filed an answer, setting up these "defenses in point of law" that the court, as a federal court, was without jurisdiction of the suit for want of a substantial federal question; that as a court of equity it was without jurisdiction, because the bill shows on its face that plaintiff has an adequate remedy at law; that on its face the bill is without equity, in that it fails to show any right of priority of the one issue over the other, since it shows that no priority was expressly granted, and that the taxes it is claiming were derived generally from the whole district as enlarged, and in that it shows that the question of priority is wholly immaterial, since the district has ample power, and is under the duty, to levy sufficient taxes to pay all the bonds, and it may be compelled by mandamus to do so.

As defenses "in point of fact," the answer admitting the original creation of the district and the issue of its bonds, the amendment changing the boundaries of and enlarging the district and authorizing additional bonds, the levy of taxes upon the new district, and the payment of some of plaintiff's bonds out of it, indeed, substantially all of the well-pleaded facts, denies the conclusions of the bill that the first issue was entitled to priority and that plaintiff's contract has been impaired. By way of affirmative defense the answer alleged that plaintiff is estopped to complain of the issuance of the second series of bonds, because he did not protest the extension of the boundaries of the district, or the issuance of the new bonds, and because he has taken and is claiming the right to take the taxes received from the district at large as it exists since its enlargement, and because, in a mandamus suit to compel payment of some of the coupons and interest on his bonds, he obtained and acquiesced in a mandamus decree that the bonds and interest he obtained payment of were entitled to be paid ratably with and not prior to, the others.

Plaintiff replied to the contention of estoppel by the acceptance of the benefits of the enlarged district, that he was not attacking the creation of the new district, but was merely insisting that the new district first, and the defendant district afterwards, expressly took his preferential contract over as it was, and bound itself to perform it. He replied to the contention of estoppel by the mandamus suit that this suit had been disposed of by adjustment and agreement, and, besides, that it related, and could have effect only as to the particular coupons and bonds then in judgment.

The only testimony taken was on the issue of the mandamus suit. No attempt was made to show the taxable values of the district, or that they were not ample to support levies sufficient to produce the full amount of taxes necessary to service complainant's bonds. No evidence was offered explaining why the commissioners levied less than the full amount necessary to pay all bonds. The District Judge, thinking that the mandamus proceedings estopped plaintiff from taking a position for priority of payment now, when he had taken a position for pro rata payment then, ordered the cause dismissed for want of equity. This appeal is from that order. Here appellant insists that his bill definitely asserts a federal right, and brings him well within the rule that where a federal question is not colorably, but substantially raised, not merely laid claim to, the bill will be entertained and disposed of on its merits, though on an examination no equity is found. Iowa-Des Moines Bank v. Bennett, 284 U. S. 239, 52 S. Ct. 133, 76 L. Ed. 265; Mosher v. Phoenix, 287 U. S. 29, 30, 53 S. Ct. 67, 77 L. Ed. 148. He insists, too, that there was equity in his bill. He claims, on the authority of St. Louis Union Trust Co. v. Franklin American Trust Co. (C. C. A.) 52 F.(2d) 431, 87 A. L. R. 386, that when the Legislature created the St. Lucie Inlet District with the provision that its bonds should not exceed $250,000, and the commissioners, acting under that authority, issued bonds and made provision for levying and collecting interest and sinking fund, a contract arose which was impaired by any increase of the bonded indebtedness of the district, except in subordination to the first issue.

We gravely doubt that appellant's bill presents a substantial federal question. It is true enough that it does lay claim to the right to invoke federal jurisdiction, and does claim that the facts alleged show that plaintiff's contract has, in violation of the Federal Constitution, been impaired. But the most casual inspection of the bill shows the facts relied on to be so unrelated to...