State Ex Rel. Lawler v. Knott

• Decision Date: 12 April 1937
• Citation: State Ex Rel. Lawler v. Knott, 129 Fla. 136, 176 So. 113 (Fla. 1937)
• Parties: STATE ex rel. LAWLER v. KNOTT, State Treasurer, et al.
• Court: Florida Supreme Court

176 So. 113

129 Fla. 136

STATE ex rel. LAWLER v. KNOTT, State Treasurer, et al.

Florida Supreme Court

April 12, 1937

On Rehearing August 31, 1937.

Extraordinary Rehearing Denied Oct. 5, 1937.

En Banc.

Original mandamus proceeding by the State, on the relation of A. M Lawler, against W. V. Knott, as State Treasurer, as ex officio treasurer of Everglades Drainage District, and others, wherein the relator moved for a peremptory writ and the respondents moved to quash.

Motion for peremptory writ denied and motion to quash granted.

ELLIS C.J., dissenting.

On Rehearing.

COUNSEL Pleus, Williams & Pleus, of Orlando, for relator.

F. E Bryant, of Miami, for respondents.

OPINION

TERRELL Justice.

On petition of relator, alternative writ of mandamus was issued from this court directed to respondents, commanding them to pay from funds in their hands matured bonds and coupons issued by the Everglades Drainage District in the aggregate sum of $9,170. A return, motion to quash, and a motion for final judgment awarding a peremptory writ notwithstanding the return were duly entered and the cause is here for disposition on the issue thus made.

The question for decision in whether or not the 'first come, first served' rule is applicable and may be invoked by the holder of Everglades Drainage District bonds against funds of said district in the hands of the State Treasurer as treasurer ex officio thereof.

The 'First come, first served' rule was approved by this court in State ex rel. Gillespie v. Carlton, 103 Fla. 810, 138 So. 612; Humphreys v. State ex rel. Palm Beach Co., 108 Fla. 92, 145 So. 858; State ex rel. DuPont Ball, Inc., v. Livingston, 104 Fla. 33, 139 So. 360; State ex rel. New York Life Ins. Co. v. Curry, 104 Fla. 242, 139, So. 891; and State ex rel. Buckwalter v. City of Lakeland, 112 Fla. 200, 150 So. 508, 90 A.L.R. 704. The underlying philosophy back of these cases is that there must be an inexhaustible fund replenishable by an annually enforceable tax levy, limited but continuing until all the bonds outstanding are redeemed. Equitable considerations would not sustain a rule that would result in bondholders of equal dignity being treated differently.

The ownership of the bonds in question, the fund on hand, and the obligation of the Everglades Drainage District to pay them is not questioned, but it is shown by the return of respondents that the district has outstanding bonds aggregating $9,470,000, that $2,530,000 of said bonds are due and unpaid, and that, in addition thereto, the district is in arrears on the payment of interest coupons on bonds outstanding in the sum of $2,347,805.32, that the said bonds are guaranteed by an annual acreage tax imposed on the lands of the district according to benefits, that the lands of the district are very largely wild and unimproved, a large portion of which have been certified to the district for the nonpayment of taxes, and that the funds in the hands of the district are insufficient to pay all the bonds and coupons due and unpaid or even a small percentage of them.

The law in force at the time the tonds were issued constitutes a part of the bond contract. It can be enforced only to the extent provided in the law. The bonds in question are supported by nothing but the annual acreage tax based on benefits to the lands. Such a tax is a type of special assessment limited in application and experience has demonstrated in this case that it does not constitute an inexhaustible fund sufficient to redeem the bonds.

The lands and other assets of the district are not bound for the payment of the bonds and the acreage tax being arbitrary and dependent on the increased value of the lands and other factors has been shown to be insufficient to meet the installments on them. It would be inequitable and unjust under the circumstances to apply the 'first come, first served' rule to the funds on hand under such circumstances. Moran et al. v. State ex rel. Montgomery, 111 Fla. 429, 149 So. 477; Norris v. Montezuma Valley Irrigation District (C.C.A.) 248 F. 369.

The motion for peremptory writ is accordingly denied and the motion to quash is granted.

It is so ordered.

WHITFIELD, P.J., and BROWN, J., and HOBSON and SHIELDS, Circuit Judges, concur.

ELLIS, C.J., dissents.

BUFORD and DAVIS, JJ., disqualified.

DISSENTING

ELLIS, Chief Justice (dissenting).

In this case I perceive no logical reason why the doctrine heretofore announced by this court in the cases cited in the opinion upholding the so-called doctrine of 'first come, first served' should not be applied. I do not agree that the doctrine is a sound one, for reasons which I have heretofore given, but the court having committed itself to the validity and logical correctness of such doctrine, it has become the rule of law in this state. I, therefore, think that it should be applied here.

On Rehearing.

SHIELDS Circuit Judge.

This is an original proceeding in mandamus.

The petition for the alternative writ alleges that the respondents in their official capacities exercise the powers and are subject to the duties imposed by the laws of Florida with reference to the Everglades Drainage District, and particularly by chapter 6456, Acts 1913, chapter 6957, Acts 1915, chapter 10027, Acts 1925, and other acts amendatory thereof.

The petition then alleges that under the authority of said laws said board of commissioners on January 1, 1921, made, executed, and sold certain bonds, together with interest coupons annexed thereto; and on July 1, 1925, made executed, and sold certain refunding bonds together with interest coupons annexed thereto; and on July 1, 1925, made, executed, and sold certain other refunding bonds, together with interest coupons annexed thereto; that the relator is the bona fide bearer and holder of certain of each of said issues of bonds and interest coupons, so executed and sold, evidencing the sum of $9,170, which sum is due and owing the relator; and that all the said securities evidencing said sum are past due and unpaid.

Said petition further alleges that in order to pay said interest when due and to establish a sinking fund for the payment of the principal of said bonds, there was levied an acreage tax, in varying amounts, based upon location, upon all the lands embraced in said Everglades Drainage District, and the proceeds of said taxes were pledged for the payment thereof; that pursuant to the levy and collection of said acreage tax there is in the hands of the State Treasurer, as ex officio treasurer of said district, a sum in excess of the amount necessary to pay the relator's past-due obligations above mentioned, and said moneys in the hands of said respondent are legally applicable to the payment thereof; and that the relator is entitled to have his past-due obligations herein enumerated paid and it is the duty of the respondents to pay the same.

On the filing of the petition an alternative writ of mandamus was issued on December 30, 1936, directed to the State Treasurer, as ex officio treasurer of the Everglades Drainage District, and to the board of commissioners of said district and to the members constituting said board and to the chairman, vice chairman, secretary, and general manager of said district, requiring them to pay out of the funds on hand the amounts due by virtue of the relator's matured bonds and coupons amounting to $9,170.

To the writ all the respondents filed a joint motion to quash. The State Treasurer filed a return and the drainage district and its officials a separate return.

From said returns it appears that the respondent W. V. Knott, as Treasurer of the state of Florida, at the time of the service on him of the writ, had in his hands, as ex officio treasurer of said drainage district, a total of $13,671.84, but that of said amount only $8,816.82 was the proceeds of the annual acreage tax and interest on delinquent collections. The balance of said fund, $4,855.02, it appears, was derived from other sources than the acreage tax and respondents's claim is not by law subject or applicable to the payment of the relator's claim by virtue of his bonds and interest coupons. It further appears that said district has outstanding bonds including those of relator, and secured by the same acreage tax, aggregating $9,470,000, of which $2,530,000, in amount, are due and unpaid, that it is in arrears in the payment of interest on the outstanding bonds about $2,347,800, and that the only funds in its hands resulting from said tax and available to pay the bonds and interest in default are not sufficient to pay one-third of 1 per cent. thereof.

It further appears from said returns that on July 1, 1936, the respondent board of commissioners executed and delivered a written assignment to a bondholders committee formed under an agreement dated January 2, 1931, between said committee and such holders of Everglades Drainage District bonds as had become parties thereto in the manner provided therein; that a copy of said assignment was delivered to and accepted by said Knott as such treasurer several months prior to the service of the alternative writ upon him. That by the terms of said assignment any and all sums of money in the custody of said respondent Knott, as such treasurer and custodian, and which should come into his custody as such from any and all sources prior to July 1, 1937, were assigned and transferred to said bondholders committee. The considerations for said assignment are set forth in full in the return of the respondents, but for the purposes of this opinion it is deemed unnecessary to comment upon them further than to state that the respondents claim that the assignment was made for the benefit of a large majority of the bond...