State Ex Rel. Fidelity Life Ass'n v. City of Cedar Key

• Decision Date: 06 February 1936
• Citation: 165 So. 672,122 Fla. 454
• Court: Florida Supreme Court
• Parties: STATE ex rel. FIDELITY LIFE ASS'N v. CITY OF CEDAR KEY et al.

165 So. 672

122 Fla. 454

STATE ex rel. FIDELITY LIFE ASS'N v. CITY OF CEDAR KEY et al.

Florida Supreme Court

February 6, 1936

En Banc.

Original proceeding by the State of Florida, on the relation of the Fidelity Life Association, a corporation, for a writ of mandamus to the City of Cedar Key and certain officials thereof. On motion to quash an alternative writ of mandamus.

Motion denied.

COUNSEL

Casey & Walton, of Miami, for relator.

S. M Mathews and J. Turner Butler, both of Jacksonville, for respondents.

OPINION

DAVIS Justice.

In 1890, a municipal corporation known as the town of Cedar Key was brought into existence under the general laws of Florida providing for the incorporation of cities and towns. Chapter 37, §§ 1-85, McClellan's Digest, Laws of Florida (1881). It functioned as a municipality under that charter until 1913.

During the last-mentioned year, the Legislature of Florida, acting pursuant to section 8 of article 8 of the State Constitution, undertook to supersede the pre-existing municipality of the town of Cedar Key by creating, as its successor, a new specially chartered municipality to be styled the Town of Cedar Key, and to comprehand and embrace within its boundaries all territory theretofore comprising the 1890 town, as well as certain described additional territory. Sp.Acts 1913, c. 6673. The taking effect of the 1913 act was, however, made contingent upon its approval by a majority of the electors of the existing town of Cedar Key voting at a special election provided to be held on the second Monday in July, 1913. See section 40, chapter 6673 Special Acts 1913, Laws of Florida.

Pursuant to the last-stated provision of law, a special election was called and held on July 14, 1913, at which election the returns, as disclosed by the official canvass thereof appearing on the town minutes, were to the effect that the 1913 Special Charter Act had been ratified and accepted by the electors by a vote of 72 for, as opposed by 28 votes against, ratification.

The town of Cedar Key functioned under its 1913 Charter Act until the year 1923. In 1923, the Legislature enacted chapter 9698, Special Acts, by which it abolished the 1913 town and created a city to be thereafter known and designated as the city of Cedar Key. The 1923 created city embraced practically the same territory that had been included within the boundaries of the 1913 town under chapter 6673, supra.

The respondent city of Cedar Key is the municipal corporation created and existing under the 1923 act above referred to, and the corespondents named in the alternative writ of mandamus that has been issued herein, are the mayor, the members of the city council, and the clerk and the tax assessor of said city of Cedar Key. The command of the alternative writ of mandamus that has been issued and addressed to them is in substance that the respondents, the municipality city of Cedar Key, and its several named officials, do forthwith make up, publish, and enforce, by appropriate procedural action on respondents' part, a budget of municipal expenditures of the said city of Cedar Key for the fiscal year beginning October 1, 1934, that will include in said budget adequate financial provisions for the payment to relator of twenty-four interest coupons aggregating $7,260, alleged to be due to them and unpaid with respect to an issue of public improvement bonds heretofore floated and sold pursuant to law by the respondent city of Cedar Key, under its corporate seal and signed with its corporate name, after the validation thereof by a formal decree of the circuit court entered July 30, 1927, from which no appeal was taken, whereupon the decree became final. Section 5106 et seq., C.G.L., section 3296 et seq., R.G.S.

The defense interposed to the relator's demand is that the bonds in controversy, though validated both by judicial decree and by legislative act prior to their negotiation and sale, are void and unenforceable, even in the hands of relator as an innocent holder thereof for value, because (so it is alleged) in a separate and subsequently instituted quo warranto proceeding brought and decided by the circuit court of Levy county on January 9, 1934, the municipal corporation styled the 'Town of Cedar Key' provided for by chapter 6673, Laws of Florida, Special Acts 1913, as well as its successor, the 'City of Cedar Key,' provided for by chapter 9698, Special Acts 1923, Laws of Florida, were judicially ousted from exercising, or attempting to exercise, their alleged franchise functions, powers, or duties as municipal corporations existing under either of said special acts of the Legislature on the ground that the charter acts of 1913 and 1923 were void. ^[1]

By section 7 of chapter 9698, Sp.Acts 1923, it was provided that the respondent city, with the consent of its qualified voters, should have the power to issue and sell bonds for certain public improvements, and that its council should levy and collect annually such special tax on the taxable property within its corporate limits as might be necessary to pay interest on the bonds and provide a sinking fund for payment of their principal.

On May 11, 1925, the city council adopted an ordinance submitting to a vote of the qualified freeholders the question of whether the city should issue $150,000 of public improvement bonds. The election was held June 12, 1925, and a majority of the votes cast were in favor of issuing the bonds. Chapter 12580, Special Acts 1927, authorized and directed the city to change the denomination and dates of maturity of the bonds, and provided:

'Said City of Cedar Key shall, through its governing authority, annually levy and collect a tax upon all the taxable property within said City sufficient to pay the principal and interest of said bonds, as the same mature.' Section 3.

On June 2, 1927, the city council unanimously passed an ordinance authorizing the bond issue, and providing for an annual tax to pay the principal and interest.

By chapter 12581, Special Acts 1927, the Legislature declared that all acts and proceedings of the city and its officials in the issuance and sale of the bonds were legal and valid, and legalized and validated the same in all respects, and also legalized and validated their sale to a designated company. The bonds were further validated and confirmed by decree of the circuit court of Levy county, rendered July 30, 1927, from which no appeal was taken, and which decree is therefore in full force and effect.

The bonds thus issued recited the full performance of all conditions precedent. Each is in the principal sum of $1,000, bearing interest at the rate of 5 1/2 per cent. per annum, evidenced by coupons constituting a part of the bonds when issued and sold. Of them, the relator, so it is alleged, acquired 24, with certain annexed coupons, for a valuable consideration, before maturity of the bonds and coupons, or either, without notice of any defects or infirmities therein, or defenses thereto, if any such defects, infirmities, or defects then existed. It is specifically averred that relator is the bona fide owner, holder, and bearer of the bonds and coupons so acquired. Certain of the relator's coupons, totaling $6,600, are past due and unpaid, and additional coupons in the sum of $660 will become due in 1935. It is shown that there is no money available for payment of any of them.

Under chapter 9698, Sp.Acts 1923, supra, as well as under pre-existing laws, it became the duty of the proper respondent officials to prepare and equalize an assessment roll for the city for its fiscal year 1934-1935, to adopt a budget for the city for that fiscal year, and to levy a tax for that fiscal year to pay interest upon the bonds and to provide a sinking fund for the retirement of their principal at maturity, but no assessment roll was prepared or equalized. Moreover, no budget has been adopted, no tax levied, and the respondent officials have wholly failed to function in any capacity as officials of the city of Cedar Key.

They attempt to justify their failure so to act by reason of a certain judgment of ouster entered by the circuit court of Levy county on January 9, 1934, in a quo warranto proceeding instituted by the state upon relation of the Attorney General, with city taxpayers as corelators. To such proceeding relator bondholder was not a party.

The information in quo warranto so relied upon was filed December 20, 1933, alleging that two corelators owned land in the city, and that the third held a mortgage upon land therein. It further alleged that: (a) From August 20, 1890, to August 1913, the town of Cedar Key was a de jure corporation, under the general law of Florida; (b) chapter 6673, Sp. Acts 1913, attempted to abolish the town and create a successor town of the same name, with enlarged territory; (c) chapter 9698, Sp. Acts 1923, attempted to abolish the town of Cedar Key as established in 1913, and to establish the city of Cedar Key, with enlarged powers and territory; (d) the city's named officials (respondents herein) were exercising and performing the franchise, functions, and powers of a municipal corporation without authority of law; (e) the boundaries described in chapter 9698, Sp.Acts. 1923, were so vague and indefinite they could not be located; (f) the boundaries claimed by the city were not located in accordance with the act; (g) the corelators' described lands derived no benefit from inclusion in the city; (h) chapter 6673, Sp.Acts 1913, required an election to accept the statutory charter, which election was held August 5, 1913, at which 100 votes were cast, and though the corporate minutes show 72 for and 28 against the charter, the reverse was the true vote, wherefore the town had never functioned...