State v. City of Daytona Beach

• Decision Date: 28 December 1934
• Citation: 158 So. 300,118 Fla. 29
• Parties: STATE et al. v. CITY OF DAYTONA BEACH.
• Court: Florida Supreme Court

158 So. 300

118 Fla. 29

STATE et al. v. CITY OF DAYTONA BEACH.

Florida Supreme Court

December 28, 1934

Equitable proceeding by the City of Daytona Beach, wherein the State and others intervened. From an adverse final decree interveners appeal.

Affirmed with direction. Appeal from Circuit Court, Volusia County; M. B Smith, Judge.

COUNSEL

Ray Selden, of Daytona Beach, for appellants.

Leon J. C. Harton, of Daytona Beach, for appellee.

OPINION

DAVIS Chief Justice.

This is an appeal prosecuted by certain interveners from a final decree rendered against them by the circuit court of the Seventh judicial circuit for the state of Florida in a statutory equitable proceeding instituted by the city of Daytona Beach under section 5106 et seq., Comp. Gen. Laws, section 3296 et seq., Rev. Gen. St., for the validation of $280,000 water revenue certificates proposed to be issued by the City of Daytona Beach.

The principal question to be decided on this appeal is whether or not the city of Daytona Beach had the power and authority under its charter (FN1) to fund certain anticipated revenues of its water supply and distribution system by borrowing the present value of several years anticipation thereof, to be repaid with interest, solely out of the water revenues anticipated under contractual terms binding solely and only in the nature of debentures on the special water revenues to be realized, and not constituting either a direct or contingent pledge or obligation of the municipality's taxing power so as to authorize the municipality of Daytona Beach to execute and deliver appropriate certificates of indebtedness purporting to create and express a legal obligation on the part of the municipality for the repayment of the amounts of the certificates out of the water revenues pledged, if, when, and as realized and available for that purpose. rn1. Chapter 10466, Sp. Acts 1925, as amended by chapters 11461 and 11464, Acts 1925, Ex. Sess., by chapters 13997 and 13998, Sp. Acts 1929, by chapter 15158, Sp. Acts 1931, and by chapter 16389, Sp. Acts 1933, Laws of Florida.

It appears from the record that authority was conferred upon the city of Daytona Beach by section 146 of the city charter, known as chapter 10466, Sp. Acts 1925, to construct, establish and maintain waterworks and to bore and dig wells, construct reservoirs, lay pipes, and to do such other things as may be necessary, essential or convenient for procuring and distributing an abundant supply of good and wholesome water to the inhabitants of the city of Daytona Beach for domestic and other purposes and to protect the property of the city and its inhabitants against fire, and to collect reasonable rates, prices, and compensation for furnishing and supplying the same.

It further appears from the record that the city of Daytona Beach, being desirous of obtaining a loan from the United States government with which to construct certain additions and improvements to the water supply system already owned and operated by it under the foregoing statutory authority, on October 9, 1934, passed an ordinance reciting that, inasmuch as it was necessary for the protection of the existing water supply system and for the preservation of the property, safety, and health of the inhabitants of the city, to construct the additions and improvements aforesaid, that the city of Daytona Beach would authorize and provide for the issue of $280,000 in negotiable water revenue certificates bearing interest at 4 per cent. per annum, payable semiannually on the 1st days of January and July of each year; said water revenue certificates to be executed and issued in substantially the following form:

'No. ----- United States of America $1,000

'State of Florida County of Volusia City of Daytona Beach

'Water Revenue Certificate

'The City of Daytona Beach, in Volusia County, State of Florida, for value received, hereby promises to pay solely from the special fund provided therefor as hereinafter set forth, to the bearer, or, if this certificate be registered as to principal, to the registered owner hereof, on the first day of January, 19--, the principal sum of one thousand dollars and to pay, from said special fund, interest thereon at the rate of 4% per annum, payable semi-annually on the first days of January and July of each year upon the presentation and surrender of the annexed interest coupons as they severally become due. Both principal and interest of this certificate are payable in lawful money of the United States at the Irving Trust Company of New York, in the City of New York, New York.

'This Certificate is one of an issue of Two Hundred Eighty Thousand Dollars ($280,000) Water Revenue Certificates, all of like date and tenor, except as to maturities, issued by said City, under an Ordinance duly adopted by the Commission of said City, for the purpose of constructing certain improvements of the water supply system of said City. Said ordinance provides that the commission of said City shall fix and maintain rates and collect charges for the facilities and services afforded by the water supply system, which will provide revenue sufficient at all times to pay the costs of operation, maintenance and repairs of such system, and also sufficient to pay into a special fund, which fund has by said ordinance been created and designated 'Water Revenue Certificates Sinking Fund,' sufficient amount of revenues over and above such costs of operation, maintenance and repairs, to provide for the payment of the interest and principal of said certificates as the same fall due.

'This certificate with interest coupons hereunto appertaining, is issued upon the following terms and conditions to all of which each taker and owner hereof and of the interest coupons consents and agrees:

'(a) Title to this certificate, unless registered as herein provided, and to the annexed interest coupons, may be transferred by delivery in the same manner as a negotiable instrument payable to bearer; and

'(b) Any person in possession of this certificate unless registered as herein provided, or of the interest coupons hereunto appertaining, regardless of the manner in which he shall have acquired possession, is hereby authorized to represent himself as the absolute owner thereof, and is hereby granted power to transfer absolute title thereto by delivery thereof to a bona fide purchaser, that is, to anyone who shall purchase the same for value (present or antecedent) without notice of prior defenses or equities or claims of ownership enforceable against his transferrer; every prior taker or owner of this certificate, unless registered as herein provided, and of the annexed interest coupons, waives and renounces all of his equities or rights therein in favor of every such bona fide purchaser, and every such bona fide purchaser shall acquire absolute title thereto and to all rights represented thereby; and

'(c) The City of Daytona Beach may treat the bearer of this certificate, unless registered as herein provided, or of the interest coupons hereunto appertaining, as the absolute owner thereof for all purposes without being affected by any notice to the contrary.

'All acts, conditions, and things required by the Constitution and Laws of Florida, and the Charter of the City to happen, exist and be performed precedent to and in the issuance of this certificate have happened, exist and have been performed as so required.

'This certificate is registerable as to principal alone in accordance with the provisions endorsed hereon.

'In witness whereof, the City of Daytona Beach, has caused this certificate to be signed by its Mayor-Commissioner and City Clerk, under its Corporate Seal, and the interest coupons hereto attached to be executed with the facsimilie signature of said Mayor-Commissioner and City Clerk, all as of the first day of January, 1935.

'--------,

'Mayor-Commissioner.

'--------,

'City Clerk.

'Approved as to form and correctness

'--------,

'Special City Attorney.'

Indorsements upon certificates:

'Validated and confirmed by a decree of the Circuit Court of the Seventh Judicial Circuit, in and for Volusia County, Florida, rendered on the 20th day of November 1934.

'--------,

'Clerk of the Circuit Court, Volusia County, Florida.'

Salient provisions of the ordinance above mentioned were to the effect following: (1) That the city of Daytona Beach would fix and maintain rates and collect charges for the facilities and services afforded by its water supply system sufficient at all times (a) to provide adequate revenues to pay the cost, operation, and maintenance of the system, (b) to establish and maintain a special fund sufficient to provide for payment of the principal and interest of the proposed certificates, and (c) likewise sufficient to provide a reserve fund for contingencies; (2) that the gross revenues of the water supply system would be deposited, as received, into a special account to be set aside monthly into separate and special funds to be provided and used as in said resolution prescribed for the purpose of assuring payment for the projected improvements and additions; (3) that, while any of the water revenue...