State v. City of Miami

• Decision Date: 17 September 1934
• Citation: 157 So. 13,116 Fla. 517
• Parties: STATE v. CITY OF MIAMI.
• Court: Florida Supreme Court

157 So. 13

116 Fla. 517

STATE v. CITY OF MIAMI.

Florida Supreme Court

September 17, 1934

En Banc.

Statutory proceeding by City of Miami against the State of Florida to validate refunding bonds. From an order striking out portions of defendant's answer, and from a final decree validating issue of refunding bonds, defendant appeals.

Affirmed. Appeal from Circuit Court, Dade County; Paul D Barnes, Judge.

COUNSEL

J. W Watson, Jr., and William W. Charles, both of Miami, for appellee.

OPINION

BROWN Justice.

This is an appeal from an order striking portions of appellant's answer and from a final decree of the circuit court in and for Dade county validating an issue of refunding bonds of the city of Miami, amounting in the aggregate to the sum of $29,891,000, for the purpose of refunding its total outstanding bonded indebtedness, together with the interest which had accrued and will accrue thereon up to the date of the consummation of the refunding. The refunding bonds are 30-year bonds, and will bear interest at the rates borne by the particular outstanding bonds to be refunded and exchanged therefor, except that so much of the interest maturing on and before January 1, 1936, in excess of 3 per cent. per annum will be extended as it matures by giving therefor certificates of indebtedness bearing interest at the rate of 2 per cent. per annum. The evident purpose of this provision for taking care of all interest in excess of 3 per cent. per annum maturing on or before January 1, 1936, is to lighten the burden of early cash payments and give the city a 'breathing spell,' as it were, during the next two years, in view of the continued financial and economic depression which has embarrassed the city of Miami and many other municipalities and private businesses as well, in this state, and in the nation at large, during the past few years.

It is claimed, however, in the appellant's answer in the court below that the city was without authority to provide for this deferment in part of interest payments by the issuance of certificates of indebtedness as provided for in the resolution. There is no merit in this objection. These certificates of indebtedness, thus provided for as an incident to the general refunding of the bonded indebtedness of the city, are in substance bonds of the city. Sullivan v. City of Tampa, 101 Fla. 298, 134 So. 211.

Section 2 of chapter 15686 of the Special Acts of 1931 (Ex. Sess.), being an act to authorize the city of Miami to issue bonds to refund its indebtedness and interest thereon, provides that the obligations authorized by it may be made registrable as to principal, or as to both principal and interest, under such terms and conditions as may be determined by the city commission.

Section 6 of article 9 of the Constitution, as amended in November, 1930, expressly recognizes the right of municipalities to issue refunding bonds for refunding the existing bonds of the city and interest thereon. At the next session of the Legislature thereafter, and during the month of July, 1931, a general refunding act was adopted by the Legislature, known as chapter 15772, Laws of Florida (Ex. Sess.), Comp. Gen. Laws Supp. 1934, § 2383(1) et seq., which was intended by its terms as a supplemental and additional grant of power to the various taxing units of the state, including municipalities (see section 26 of the act, Comp. Gen. Laws Supp. 1934, § 2383(26); and a special act relating to the city of Miami, above referred to, chapter 15686, had been adopted just a few days previous to the adoption of the general act; the special act having been approved on June 24, 1931.

In addition to the authority granted to the city by the acts above referred to, we have held that where a municipality is duly authorized to exercise a particular municipal function, and the manner of its exercise is not defined in all respects by statute, but is left to the governing body of the city, the courts will not undertake to control the manner of its exercise by such governing body where no applicable rule of law is violated and the authority given is not exceeded or abused. Perry v. Town of Panama City, 67 Fla. 285, 65 So. 6. Chapter 15686 does not limit the city to the refunding of bonds or interest coupons outstanding upon the date of its passage, but on the other hand authorizes a refunding of 'all funded indebtedness.' (Section 1) The funded indebtedness outstanding at the time of the passage of the act will still be outstanding after the issuance of the refunding bonds, except that it will be evidenced by a different obligation. The outstanding bonds are not the debt, but merely evidence of the existence of the debt, State v. City of Okeechobee, 99 Fla. 617, 127 So. 339, and the statute clearly authorizes the refunding of both principal and interest, and section 3 of the act provides that the refunding bonds may be exchanged for an equal amount of indebtedness to be retired thereby, including indebtedness not matured, and section 1 of said special act defines the word 'indebtedness' so as to include interest as well as principal.

One of the grounds of objection is that some of the outstanding bonds to be refunded were issued by the municipalities of Coconut Grove, Buena Vista, and Silver Bluff, and that when said cities and towns were taken into the city of Miami it was provided that they should not be liable or taxed to pay any part of the indebtedness of any other city or town to which they were annexed, whereas the resolution providing for the issuance of these refunding obligations pledges a levy of taxes upon all taxable property now embraced within the present city of Miami. This question, concerning these identical cities and towns, was settled by this court in the case of State v. City of Miami, 103 Fla. 54, 137 So. 261, which held that when the town and cities were annexed to the city of Miami they did not acquire any contract rights, but only a political right or concession revocable by the grantor, and which was revoked by section 9 of said chapter 15686 of the Special Acts of 1931 (Ex. Sess.). So this question has already been settled by this court, as are most of the other questions which have been raised in this case. See Whitney v. Hillsborough County, 99 Fla. 628, 127 So. 486; Martin v. Dade Muck Land Co., 95 Fla. 530, 116 So. 449; State v. Brevard County, 99 Fla. 226, 126 So. 353, wherein the power of the Legislature to authorize municipalities and other taxing units to issue bonds is recognized. The existence of this power, in spite of the constitutional prohibition against the issuance of state bonds, was also recognized by the adoption of the amendment to article 9, section 6, of the Constitution, above referred to, whereby municipalities are now prohibited from issuing bonds except upon a vote of the people, unless the bonds so issued are refunding bonds.

It is claimed that the city has no authority to pledge to the payment of the refunding bonds the proceeds it might receive from the sale of any property, public utility, or other asset for the acquisition or improvement of which the outstanding bonds were issued. It is argued that chapter 15686 does not expressly authorize such a pledge, and the case of City of Coral Gables v. Hepkins, 107 Fla. 778, 144 So. 385 is cited as authority denying the power to make such pledge. That case involved the issuance of execution against municipally owned property. The instant case involves a voluntary...