Pierce v. Isaac

• Decision Date: 29 October 1938
• Citation: 184 So. 509,134 Fla. 666
• Parties: PIERCE et al. v. ISAAC.
• Court: Florida Supreme Court

184 So. 509

134 Fla. 666

PIERCE et al. v. ISAAC.

Florida Supreme Court, Division B.

October 29, 1938

Suit by J. Frank Isaac against J. E. Pierce and others, as members of the Board of Bond Trustees of Ocean Shore Improvement District in Flagler and Volusia Counties, Florida, and others, to restrain the payment of certain fees due under a contract for refunding of bonds. From an order restraining the payment of such fees, and orders overruling motions to dissolve restraining order previously issued, defendants appeal.

Reversed.

ELLIS C.J., dissenting. Appeal from Circuit Court, Volusia County; H B. Frederick, judge.

COUNSEL

Alfred A. Green, of Daytona Beach, and Giles J. Patterson, of Jacksonville, for appellants.

D. C Hull and Hull, Landis & Whitehair, all of De Land, for appellee.

OPINION

PER CURIAM.

This case is here for review on appeal from an order of the Circuit Court of Volusia County, Florida; (a) Restraining the payment of 3% refunding fees to Leedy, Wheeler & Company; (b) an order dated October 3, 1938, overruling and denying a motion to dissolve the restraining order previously issued (c) from an order overruling and denying a renewed motion to dissolve the restraining order previously issued, dated September 26, 1938. The case at bar grows out of two contracts entered into between the Board of Bond Trustees of Ocean Shore Improvement District, a taxing district created by Chapter 10013, Laws of Florida, Sp.Acts of 1923, as amended by Chapter 10952, Laws of Florida, Sp.Acts of 1925, and supplemented by Chapter 10562, Sp.Acts of 1925. The suit was filed by a taxpayer and resident of the taxing district. The contract dated January, 1938, provided for the refunding and exchange of $1,482,000 of the bonds of the district of the issue dated December 1, 1932. The refunding bonds were validated and the decree of the lower court affirmed in this Court in August, 1938. State of Florida v. Ocean Shore Improvement Dist., 183 So. 925. The material portions of the contract dated January, 1938, are, viz.:

'That First Parties shall defray all expenses incident to: (a) assembling and exchanging the bonds herein proposed to be refunded, (b) printing the said Refunding Bonds, (c) the representation of Second Party in legal proceedings to validate said Refunding Bonds by counsel to be selected by Second Party, (d) obtaining the approving opinion of nationally recognized bond counsel upon the procedure used for the issuance and validation of said Refunding Bonds, said counsel to be selected by First Parties (e) all other expenses in connection herewith which may be approved by First Parties. * * *

'By Second Party paying to First Parties, or their assignee, a sum equal to one and one-half per cent (1 1/2) on the par value of bonds exchanged, sold or purchased, hereunder, the amount due to be evidenced by certificates issued to First Parties by the Secretary of the Board of Bond Trustees of Second Party setting forth the bonds exchanged and amount due * * *.'

Section 11 also provides:

'* * *

'(a) First Parties shall exchange twenty five per cent (25%) of the bonds proposed to be refunded hereunder on or before June 1st, 1938, and shall exchange fifty per cent (50%) or more of said bonds on or before October 1st, 1938, and shall exchange seventy-five per cent (75%) or more of bonds proposed to be refunded hereunder on or before December 1st, 1938, including all bonds due June 1st, 1940; and within six months thereafter exchange the entire outstanding indebtedness proposed to be refunded hereunder.

'* * *

'(c) Unless the percentages and periods as outlined in (a) of this subsection are modified, as set forth in (b) of this subsection, then to the extent that First Parties have failed to exchange 75% of the bonds proposed to be refunded hereunder on or before December 1st, 1938, First Parties will purchase from Second Party sufficient Refunding Bonds at par and accrued interest to give Second Party a sufficient sum of money to pay, upon call, on December 1, 1938, unexchanged bonds in sufficient total to result in a 75% conversion on that date, including all bonds due June 1, 1940. As to the percentages required to be exchanged by First Parties subsequent to December 1, 1938, First Parties may, at their option, purchase from Second Party sufficient Refunding Bonds at par and accrued interest to give Second Party a sufficient sum of money, to pay, upon call, the principal of unexchanged bonds in an amount necessary in order to meet the schedules set forth in (a) of this subsection.

'(d) As to any original bonds unexchanged as of July 1, 1939, First Parties will pay to Second Party, as liquidated damages, $15.00 per $1,000.00 bond then unexchanged,

'(e) If, at any time during the life of this contract, First Parties desire to forfeit this contract, they may do so on paying to Second Party $15.00 per $1,000.00 bond then unexchanged as full and complete liquidated damages; or, if First Party fails to meet the schedules set forth in (a) of this subsection, Second Party may, at its option, cancel this contract upon five days notice in writing by registered mail to the address of each of the parties of the first part above given, whereupon the Second Party shall be fully released and discharged from any and all obligations under this contract and any and all other contract obligation or arrangement with the First Parties relating to said refunding bonds and First Parties shall thereupon pay to Second Party, as liquidated damages for their default in the performance thereof $15.00 per $1,000.00 bond then unexchanged. * * *'

The material portions of the agreement dated September 1, 1938, obligating the refunding agents are, viz.:

'* * *

'We are to be appointed Fiscal Agents for the District in all matters pertaining to and in connection with this issue of Refunding Bonds.

'1. As such Fiscal Agents we are to pay the following items in connection with the issuance of the said refunding bonds:

'A. Bond attorney approving opinion.

'B. Furnish printed bonds ready for signature of proper officials.

'C. Pay the District's attorney fee in connection with this issue.

'D. All expenses incident to the contacting and exchange of bonds with holders thereof.

'2. On or before November 10, 1938, at such date as is to be directed by us, the District will, in accordance with the law, offer for sale such amount of Highway Refunding Bonds of 1937 as have not been then exchanged for the old outstanding bonds. At such advertised sale we agree to submit a bid of not less than par and interest for all such Highway Refunding Bonds of 1937 as are advertised for sale, the bonds to be delivered to us, if we are the successful bidders, accompanied by approving opinion of Messrs. Caldwell & Raymond, at such bank as we may designate where we shall make payment for same so that funds shall be made available to the District on or before December 1, 1938 at Guaranty Trust Company of New York City for the payment of the now outstanding bonds called for redemption on that date. It is understood that we are to have the right to exchange, prior to November 1, 1938, any portion of the outstanding bonds of the District for an equal par amount of said Highway Refunding Bonds of 1937. The purpose of this contract being to retire by sale of Highway Refunding Bonds of 1937, or exchange thereof, the present outstanding approximately $1,414,000 of Highway Refunding Bonds of said District, dated December 1, 1932, such retirement to be effected on or before December 1, 1938.

'3. For our services as above set forth, we are to be paid a sum equal to 3% of the par value of the bonds exchanged or taken up and paid for by us, or by the purchaser thereof, if we are not the successful bidders at the advertised sale, in accordance with the terms of this agreement. Said sum is to be paid to us upon completion of the terms of this contract out of funds on hand with the District, including funds held by the State Board of Administration to the credit of said District, in excess of monies required for payment of principal and interest as same become due and in the event sufficient funds are not available for the payment of the fee in full when due, then the balance is to be paid as funds become available. On...