State v. City of West Palm Beach

• Decision Date: 11 January 1937
• Citation: 174 So. 334,127 Fla. 849
• Court: Florida Supreme Court
• Parties: STATE v. CITY OF WEST PALM BEACH.

174 So. 334

127 Fla. 849

STATE v. CITY OF WEST PALM BEACH.

Florida Supreme Court, Division B.

January 11, 1937

Petition by the City of West Palm Beach against the State to validate certain refunding bonds. From a final decree of validation the State appeals.

Decree reformed and, as reformed, affirmed. Appeal from Circuit Court, Palm Beach County C. E. Chillingworth, judge.

COUNSEL

J. W Salisbury, State Atty., of West Palm Beach, for the State.

Paul W. Potter, City Atty., of West Palm Beach, for appellee.

OPINION

BUFORD Justice.

The appeal is from a final decree validating certain refunding bonds proposed to be issued by the City of West Palm Beach in Palm Beach county, Fla.

The City of West Palm Beach was established by chapter 6411, Acts 1911. From time to time various charter acts were passed by the Legislature of Florida until finally chapter 16851 was enacted by the Legislature of 1935. That act consolidated the governmental functions which had been theretofore delegated to the City of West Palm Beach and the District of West Palm Beach by chapters 16758 and 16759, Sp. Acts 1933, respectively. Under chapter 16851, Acts 1935, the present municipality acquired all the rights, powers, and privileges of the district theretofore existing, and all the rights, powers, privileges, and duties of the city theretofore existing, and all the debts and liabilities of the district became and are now the debts and liabilities of the city. All of the valid judgments rendered against the district or against the Town or City of West Palm Beach as theretofore existing became judgments against the city so created by the latter act and the city may levy taxes against such properties within the city as either the district or the former city could have levied.

From and after January 1, 1912, the City's predecessors issued some forty-six separate series of bonds of which there is now outstanding for principal the amount of $15,456,500, of which the sum of $4,493,500 has been reduced to judgment and $10,693,500 is represented by bonds either matured or unmatured which have not been reduced to judgment. Interest upon this bonded debt which accrued in the fiscal year ending September 30, 1933, and prior fiscal years in the sum of $800,000 is outstanding and unpaid.

The predecessors of the present city incurred a floating debt in the sum of $657,578.86. Of this amount $347,355.16 has been reduced to judgment and $310,223.70 is represented by a mortgage, certificates of indebtedness and paving lien certificates. There is also due on the last above-mentioned items for interest which accrued in the fiscal year ending September 30, 1933, and prior fiscal years, the sum of $25,000.

Negotiations to refund and fund the indebtedness of the City of West Palm Beach culminated in the enactment of two ordinances by the City of West Palm Beach on the 26th day of August, 1936, authorizing a readjustment of the entire indebtedness of said city. The substantial difference between the two ordinances is that one ordinance provides for the issuance and exchange of refunding bonds for an amount equal to 75 per cent. of the principal amount of the outstanding bonded debt of said city and the refunding of interest which accrued during the fiscal year ending September 30, 1933, and prior fiscal years, by the issuance and exchange of nonnegotiable, noninterest-bearing certificates of indebtedness to an amount equal to the amount of interest to be thereby refunded; while the other ordinance provides for the issuance and exchange of refunding bonds for an amount equal to 75 per cent. of the principal amount of the floating debt of said city and the funding of interest which accrued during the fiscal year ending September 30, 1933, and prior fiscal years, by the issuance and exchange of nonnegotiable, noninterest-bearing certificates of indebtedness of said city for an amount equal to the interest claims to be thereby funded and extended.

The interest rate upon the refunding and funding bonds commences at 2 per cent. for the period beginning August 1, 1941, and gradually increases until it reaches 5 per cent. at August 1, 1956, to August 1, 1961, the dates of maturity of said refunding and funding bonds. The interest contemplated is at the average rate of 3.5 per cent. as compared to 6 per cent. obtaining as to the indebtedness to be refunded and funded.

It is also observed that the ordinances disclose that 25 per cent. of the face amount of the certificates of indebtedness to be issued and exchanged to each holder of an interest claimed thereby refunded or funded and extended shall be due and payable on or before September 1st in each of the years 1937, 1938, 1939, and 1940 at 10 per cent. of the face amount thereof.

It is shown that, by the carrying out of the refunding and funding set-up, large amounts of money will be saved to the taxpayers of the municipality. The figures are not material.

For the payment of the refunding and funding bonds and interest thereon and the above-mentioned certificates of indebtedness, the full faith and credit of the taxing power of the city is irrevocably pledged.

The bonds contain the following provisions:

'This bond is issued by said City under authority of and in full compliance with Chapter 15772, General Laws of Florida, Acts of 1931 [Ex.Sess.], and with Sections 70 to 98, both inclusive of chapter 16758, Laws of Florida, Acts of 1933 [Special], and pursuant to an ordinance duly passed and adopted by the City Commission of said City on the --- day of ----- A.D. 1936, and is issued 'for the purpose of funding a like amount of valid subsisting debt of said City for the payment of which the City was obligated to levy taxes upon all property within its present territorial limits which was subject to taxation under the constitution and laws of Florida, as they existed immediately prior to November 6, 1934.”

By the terms of the ordinances they became effective only when approved by a majority of the votes cast in an election, in which a majority of the freeholders who were qualified electors residing in said city participated, to be held in the manner prescribed by law. By proper resolution the city commission called and caused to be held the election. The election was held on October 6, 1936. The record shows that at that time there were 3,076 freeholders who were qualified electors residing in the city who were entitled to participate in said election. A total vote of 2,046 votes were cast upon each of the propositions submitted to the electors in said city and who were qualified to participate in said election. 1,973 votes were cast in favor of the issuance and exchange of the refunding bonds. 1,946 votes were cast in favor of the issuing of certificates of indebtedness with which to refund interest on refunding bonds which accrued on bonds on or before September 30, 1933. 1,934 votes were cast in favor of the issuance and exchange of funding bonds and 1,926 votes were cast in favor of the issuance of certificates of indebtedness with which to fund the interest which had accrued on or before September 30, 1933, on the principal outstanding floating indebtedness of the city.

It, therefore, appears that the issuance of the refunding bonds, the funding bonds, and interest certificates to cover interest on each class of indebtedness was approved and authorized by the vote of the freeholders. The result of the election was duly declared and on October 22, 1936, appellee filed its verified petition seeking validation of the securities involved. On the same date the circuit judge entered an order against the State of Florida requiring it to appear on the 17th day of November, 1936, and on the same date the clerk of the circuit court issued a citation to the citizens and taxpayers requiring them to appear on November 17, 1936, to show cause why the refunding and funding bonds and certificates of indebtedness should not be validated and confirmed. On October 26, 1936, the State's attorney accepted service of copy of the petition and order of the court. On November 17th the State's attorney filed answer on behalf of the State of Florida to the petition for the validation of the securities involved therein.

The petition and answer raised questions which were presented to the court on November 17, 1936, and on the 18th day of November, 1936, the circuit judge entered a final decree nunc pro tunc as of November 17th overruling the objections raised by the answer and validating and confirming the refunding and funding bonds and certificates of indebtedness, and from that order this appeal is taken.

The appellant in the brief filed here states 18 questions for our determination. We find, however, that the appellee has more concisely stated the matters which we must determine in 5 questions.

The questions thus presented are as follows:

'First Question. Does the City of West Palm Beach in Palm Beach county, Florida, have the power and authority under chapter 15772, Laws of Florida, Acts of 1931, and under section 70 to 98 both inclusive, of chapter 16758, Special Laws of Florida, Acts of 1933 to issue and exchange refunding and funding bonds of said city for the purpose of refunding and funding bonds, judgments upon bonds and the floating indebtedness of said city?

'Second Question. Are the refunding and funding bonds and certificates of indebtedness proposed to be issued by the City of West Palm Beach and to be exchanged for principal and interest claims respectively of the bonded and floating debt of said city, invalid, because by the terms and provisions contained therein and in the ordinances authorizing their issuance, the City of West Palm Beach is obligated to levy taxes for the payment thereof...