Town of Medley v. State
| Decision Date | 23 March 1964 |
| Docket Number | No. 32822,32822 |
| Citation | 162 So.2d 257 |
| Parties | TOWN OF MEDLEY, a municipal corporation of Florida, Appellant, v. The STATE of Florida, and the taxpayers, property owners, and citizens of the Town of Medley, Florida, including non-residents owning property or subject to taxation therein, Appellee. |
| Court | Florida Supreme Court |
Swink & Swink and Clyde A. Willard, Miami, for appellant.
Richard E. Gerstein, State Atty., and Glenn C. Mincer and Joan Elizabeth Odell, Asst. State Attys., for appellee.
The petition of the Town of Medley for validation of $156,000 of 'Public Improvement Revenue Bonds' was denied by the trial court and this appeal followed.
To retire the subject bonds the Town pledged revenues from a proposed water system, Proceeds of the cigarette tax, franchise tax on electric power, utility taxes and occupational license taxes. No ad valorem taxes were pledged and the form of the proposed bond and the ordinance authorizing the issue specifically provides that the Town is not 'directly or indirectly or contingently' obligated to levy ad valorem taxes for the payment thereof.
Thus it is apparent that the 'public Improvement Revenue Bonds' proposed to be issued are not bonds within the meaning of Section 6, Article IX, Fla.Const., and a freeholders election is not required as a condition to their being lawfully issued.
The funds received from the proposed issue are to be used to construct a water system, streets, storm sewers, and a building to house the Town's water, fire and police departments.
The State alone filed answer to the petition and objected to the issuance of the bonds.
Nevertheless, after the final hearing the Chancellor entered a decree denying validation, stating his reasons which we will discuss below.
The first reason given by the Chancellor for refusing to validate the bonds was that validation thereof would directly result in an increase in real property taxes without vote of the freeholders.
As stated earlier nothing in the bonds or the supporting ordinance pledges the ad valorem taxing power of the Town to meet the obligation created thereby.
In any instance in which a municipality has been using funds from special non-advalorem sources of revenue to meet its operating costs and then diverts those funds by pledging them to payment of a specific indebtedness as done here, the result will probably be that ad valorem taxes will have to be increased to make up the deficiency in funds available for operating expenses.
Nevertheless, this result does not make the revenue bonds or certificates subject to the provisions of Section 6, Article IX, of our State Constitution, F.S.A. A contrary holding would mean that any pledging of non-ad valorem revenues previously used for the general operating expenses of a municipality would require approval by vote of the freeholders and such was never the purpose of the cited constitutional provision.
Only bonds or certificates of indebtedness which directly obligate the ad valorem taxing power are encompassed by Section 6, Article IX, Fla.Const. The incidental effect on use of the ad valorem taxing power occasioned by the pledging of other sources of revenue does not subject such bonds or certificates to that constitutional requirement.
We have consistently and repeatedly so held. Schmeller v. City of Fort Lauderdale, Fla.1948, 38 So.2d 36; State v. City of Lakeland, Fla.1949, 42 So.2d 764; State v. City of Daytona Beach, Fla.1949, 42 So.2d 580; State v. City of Pensacola, Fla.1949, 40 So.2d 569; State v. City of Pompano Beach, Fla.1950, 47 So.2d 515; State v. City of Jacksonville, Fla.1951, 53 So.2d 306; and State v. City of West Palm Beach, Fla.1960, 125 So.2d 568.
It may be true that the pledging of the special sources of revenue to retire the subject revenue bonds may require the Town of Medley to increase its ad valorem taxes in order to meet its operating expenses. Nevertheless, this does not require that the bonds be approved by freeholders vote since the ad valorem taxing power of the Town is not directly pledged to the payment of the bonds.
The first ground advanced by the Chancellor is therefore not a valid basis for denying validation.
The second ground given in the decree denying validation was that the proposed plan of financing was 'unreasonable and not financially and economically feasible' under the facts and circumstances of this case and 'would eventually result in depriving the Town of its traditional and necessary operating expenses.'
We have consistently ruled that questions of business policy and judgment incident to the issuance of revenue issues are beyond the scope of judicial interference and are the responsibility and prerogative of the governing body of the governmental unit in the absence of fraud or violation of legal duty. State v. City of Daytona Beach, 1934, 118 Fla. 29, 158 So. 300; State v. Florida State Turnpike Authority, Fla.1961, 134 So.2d 12, and State v. Dade County, Fla.1962, 142 So.2d 79.
In State v. Dade County, supra, Mr. Justice Drew speaking for this Court explained that the courts do not have the authority to substitute their judgment for that of officials who have determined that revenue certificates should be issued for a purpose deemed by them to be in the best interest of those whom they represent. The responsibility of the courts in such proceedings is primarily that of determining whether the issuing body has the power to act and whether it exercised that power in accordance with law.
A contrary holding would make an oligarchy of the courts giving them the power in matters such as this to determine what in their opinion was good or bad for a city and its inhabitants thereby depriving the inhabitants of...
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...We are, however, not concerned and it's not our function to override the business judgment of the contracting parties (see Town of Medley v. State, 162 So.2d 257, Fla.1964). We have, however, examined it to the point of ascertaining that on the whole it is an agreement entered at arm's leng......
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