State v. Citrus County

• Decision Date: 27 September 1934
• Citation: 116 Fla. 676,157 So. 4
• Parties: STATE et al. v. CITRUS COUNTY et al.
• Court: Florida Supreme Court

157 So. 4

116 Fla. 676

STATE et al. v. CITRUS COUNTY et al.

Florida Supreme Court

September 27, 1934

En Banc.

Statutory proceeding by the County of Citrus, Fla., and others against the State of Florida and others to validate refunding bonds. From a decree for complainants, defendants appeal.

Reversed and remanded, with directions.

See also, Bay County v. State, 157 So. 1; 157 So. 12. Appeal from Circuit Court, Citrus County; Fred L. Stringer, judge.

COUNSEL

Hampton Bull & Crom, of Tampa, and Lovick P. Williams and M. C Scofield, both of Inverness, for appellants.

Erskine W. Landis and Hull, Landis & Whitehair, all of De Land, C. H. Lockhart, of Brooksville, and Ernest C. Johnson, of Tampa, for appellees.

OPINION

DAVIS Chief Justice.

On May 7, 1934, the board of county commissioners of Citrus county, pursuant to chapter 15772, Laws of Florida, Acts of 1931 (Ex. Sess.), Comp. Gen. Laws Supp. 1934, § 2383(1) et seq., by resolution, and without any vote of the freeholders or other approval of the electors of the county, duly provided for the issuance of $1,511,000 refunding bonds, to refund outstanding bonds in the same amount. The bonds proposed to be refunded had all been validated by decree of the circuit court. The refunding bonds, as so authorized, have been judicially validated by a decree of the circuit court in a special bond validation proceeding instituted under sections 5106-5112, Comp. Gen. Laws, sections 3296-3302, Rev. Gen. St. This is an appeal from the circuit court's final decree of validation.

The purpose of the statutory bond validation proceedings provided for by sections 5106-5112, Comp. Gen. Laws, sections 3296-3302, Rev. Gen. St., is to set up a special course of legal procedure in the nature of a proceeding in rem as to proposed bonds, for the purpose of having their validity investigated in the courts of this state in advance of issuance.

The object of the proceedings is to have finally adjudicated by the court in advance of their issuance whether or not proposed obligations projected in the form of bonds or transferable evidences of a funded debt have been validly authorized and may be legally issued in the form, and containing the recitals, covenants, undertakings, pledges, or limitations stipulated, described, or set up in the authorizing ordinance or resolution providing for same, as approved or adopted by the representatives of the county or other corporate, or quasi corporate, obligor, and to judicially determine the legal sufficiency of the proceedings constituting the initiatory steps for the issuance and sale of the particular obligations sought therein to be validated. Spencer v. City of Clarkesville, 129 Ga. 627, 59 S.E. 274. The questions of law and fact to be decided in such statutory bond validation proceedings extend to whether or not the proposed warrants, certificates or bonds, and the obligations and contractual relationship attempted to be created thereby, directly or indirectly, principally or collaterally, are within the authority of law, so that whatever is decided by the court with reference thereto shall never again be subject to be called in question in any court in this state. State ex rel. Diver v. City of Miami, 113 Fla. 280, 152 So. 6; Lippitt v. City of Albany, 131 Ga. 629, 63 S.E. 33. Section 5109, Comp. Gen. Laws, section 3299, Rev. Gen. St.

It appears by the resolution of the county commissioners that in authorizing the particular refunding bonds here brought in controversy said county commissioners provided, among other things, as follows:

(1) That the refunding bonds to be issued should contain on their face a specific pledge in the following form: 'For the prompt payment of this bond and the interest thereon as the same become due, the full faith, credit and all the resources of said Citrus County are hereby irrevocably pledged.'

(2) That all revenues and income of the county derived from sources other than ad valorem taxes, now authorized by law for the payment of interest and principal of indebtedness created for highway purposes and/or any revenues and income of the county now or hereafter derived from sources other than ad valorem taxes, and not otherwise dedicated by law, shall be and were thereby to be pledged to the payment of the road and bridge refunding bonds therein authorized, and that such income and revenues were thereby pledged, and as and when such funds should be allocated or made available, they should be converted into the interest and sinking fund account for the payment of said road and bridge refunding bonds and were to be thereby appropriated to pay the interest and retire said road and bridge refunding bonds and should be used for no other purpose. Section 10, resolution adopted by county commissioners May 7, 1934.

(3) That all covenants, representations, agreements, and undertakings in said resolution set out, as well as those appearing on the face of each of said road and bridge refunding bonds, should constitute a contract with the bondholders to be enforceable by suit, action, or mandamus on behalf of any bondholder in any court of competent jurisdiction, whether or not a monetary default shall then prevail in the payment of the principal or interest of such road and bridge refunding bonds.

(4) That if any clause, section, paragraph, or provision of said resolution or of the road and bridge refunding bonds so authorized should be declared unenforceable by any court of final jurisdiction, it should not affect or invalidate any remainder thereof, and if any of the said road and bridge refunding bonds should be adjudged illegal or unenforceable in whole or in part, the holders should become entitled to the position of holders of a like amount of the indebtedness provided to be refunded, and to enforce their claim for payment.

Section 6 of article 9 of the State Constitution, as amended in 1930, reads as follows:

'Section 6. The Legislature shall have power to provide for issuing State bonds only for the purpose of repelling invasion or suppressing insurrection, and the counties, districts or municipalities of the State of Florida shall have power to issue bonds only after the same shall have been approved by a majority of the votes cast in an election in which a majority of the freeholders who are qualified electors residing in such counties, districts, or municipalities shall participate, to be held in the manner to be prescribed by law; but the provisions of this law shall not apply to the refunding of bonds issued exclusively for the purpose of refunding of the bonds or the interest thereon of such counties, districts, or municipalities.'

The amended constitutional provision as above quoted has heretofore been before this court for consideration in the following cases: Sullivan v. City of Tampa, 101 Fla. 298, 134 So. 211; Ginsberg v. City of Daytona Beach, 103 Fla. 168, 137 So. 253; City of Jacksonville v. Renfroe, 102 Fla. 512, 136 So. 254; State v. City of Miami, 103 Fla. 54, 137 So. 261; Nolle v. Brevard County, 100 Fla. 1692, 131 So. 776; State v. City of Miami, 100 Fla. 1388, 131 So. 143; State v. Special Tax School District No. 5, Dade County, 107 Fla. 93, 144 So. 356; Stewart v. New Smyna-Coronado Beach Special Road & Bridge District, 101 Fla. 823, 132 So. 636; Savage v. Board of Public Inst. Hillsborough County, 101 Fla. 1362, 133 So. 341; Sholtz v. McCord, 112 Fla. 248, 150 So. 234; Herbert v. Thursby, 112 Fla. 826, 151 So. 385; State v. City of Miami, 113 Fla. 280, 152 So. 6; City of Daytona Beach v. State, 101 Fla. 560, 132 So. 490; Masters v. Duval County (Fla.) 154 So. 172; State v. City of Coral Gables (Fla.) 154 So. 234; State ex rel. Pinellas County v. Sholtz (Fla.) 155 So. 736; State v. Ocean Shore Imp. District (Fla.) 156 So. 433 (opinion filed July 31, 1934, not yet reported [in State Report]); County of Bay v. State (Fla.) 157 So. 1 (opinion filed September 26, 1934, not yet reported [in State Report]); State v. City of Miami (Fla.) 157 So. 13 (opinion filed September 17, 1934, not yet reported [in State Report]).

But in none of the cases just cited was it determined whether or not refunding bonds can be validly issued under chapter 15772, Acts 1931 (Ex. Sess.), without the approving vote of freeholders contemplated by amended section 6 of article 9 of the Constitution, where the proposed refunding bonds purport to enlarge upon the obligation of the original bonds by irrevocably pledging as a means of their payment additional source of revenue as well as renewing and continuing the obligation of the bonds that are proposed to be refunded.

The obligation of a contract, whether a bond or otherwise, is defined as the law or duty which binds the parties to perform their agreement. It is coeval with the undertaking to perform and consists of the means which, at the time of the creation of the contract, the law afforded for its enforcement, or, as it has been otherwise stated, in the effective force of the law which applies to and compels performance of the contract, or a compensatory equivalent in the way of damages for nonperformance. It consists in what an obligor has undertaken to perform as measured by the standard of the laws in force at the time it was entered into, as expressed in the terms of the contract interpreted or construed according to their settled legal meaning, and embraces within its purview whatever is undertaken to be done as a legal, as distinguished from a moral, duty to perform the terms and conditions of what has been agreed upon between the parties. Sturges v. Crowninshield, 4 Wheat. 122, 4 L.Ed. 529; Ogden v. Saunders, 12 Wheat. 214, 6 L.Ed. 606; National Surety Co. v. Architectural Decorating Co., 226 U.S. 276, 33 S.Ct. 17, 57 L.Ed. 221; Edwards v. Kearzey, 96 U.S....