Wall v. McNee

• Decision Date: 29 January 1937
• Docket Number: No. 8120.,8120.
• Citation: 87 F.2d 768
• Parties: WALL et al. v. McNEE.
• Court: U.S. Court of Appeals — Fifth Circuit

87 F.2d 768 (1937)

WALL et al. v. McNEE.

No. 8120.

Circuit Court of Appeals, Fifth Circuit.

January 29, 1937.

Cary D. Landis, H. E. Carter, and James B. Watson, all of Tallahassee, Fla., for appellants.

D. C. Hull, Erskine W. Landis, and Francis P. Whitehair, all of De Land, Fla., for appellee.

Before FOSTER, SIBLEY, and HUTCHESON, Circuit Judges.

SIBLEY, Circuit Judge.

The decree appealed from adjudged unconstitutional as applied to the complainant-appellee Janet McNee, because impairing the obligation of her contract as a bond creditor of St. Lucie Inlet District and Port Authority, a statute of Florida enacted in 1933 (Acts Fla.1933, c. 16252), which made "bonds or matured interest coupons of all counties or other taxing districts receivable at par and in lieu of money in redemption of tax-sales certificates or other evidences of tax liens held in the name of the State * * * for all purposes other than the levy made for State taxes." Section 6. The act expressly requires the state's part of the taxes to be paid in cash, the payment in bonds and coupons being restricted to taxes due to a county or other taxing district, and that the bonds and coupons received be held uncanceled for adjustment of accounts between the county and taxing districts interested.

The taxing district here involved issued bonds in 1926 of which the complainant-appellee owns $43,000. The special statute authorizing them required the levy each year of a tax upon all the real and personal property of the district sufficient to pay interest on the bonds and to provide a sinking fund to pay the principal, the tax to be collected as other taxes are. Taxes were levied accordingly in each year, but were largely uncollected, so that the sinking fund is insufficient to pay matured bonds and the interest is in default since 1931. At the filing of the bill tax-sale certificates amounting to $212,639 were outstanding against the property of the district for its uncollected taxes. The record shows that, since the collapse in 1926 of the Florida boom and the consequent reduction in property values, the taxes necessary to service large local bond issues have been such as to cause nearly half of the land of the state to pass under tax-sale certificates and thus off the tax-paying rolls. In the effort to absorb the defaulted obligations of the counties and lesser taxing districts and to redeem the certificated property and return it to the active tax rolls, the statute under attack and others have been passed. In 1929 an act (Acts Fla.1929, Ex.Sess., c. 14572) was made authorizing the sale of tax certificates, after the two-year period for redemption, for less than the taxes due. It was upheld as against a property owner in Ridgeway v. Peacock, 100 Fla. 1297, 131 So. 140. A 1931 act (Sp.Acts Fla. 1931, c. 15810) made a city's bonds and matured coupons receivable by it in lieu of money to pay current taxes. It was held unconstitutional as against holders of pre-existing bonds in Crummer v. City of Fort Pierce (D.C.) 2 F.Supp. 737, and the decision is cited approvingly by the Supreme Court of Florida in First State Savings Bank v. Little River Drainage District, 122 Fla. 304, 165 So. 48. In 1933 the act now in question was passed, which deals not with current taxes, but with those which, after an unsuccessful effort at sale of the property, have passed into the form of tax-sale certificates held by the state. Its validity was sustained as against taxpayers who objected that their taxes would be increased by allowing the defaulted taxes of others to be discharged in depreciated coupons, in State ex rel. Smith v. Butts, 111 Fla. 630, 149 So. 746, 89 A.L. R. 946. Notwithstanding the last-cited decision, which was thought not in point on a question of the rights of the holder of bonds made before the date of the act, a three-judge court held the act invalid as impairing the contract in this very case. McNee v. Wall (D.C.) 4 F.Supp. 496. The decision was reversed because the case was not one requiring three judges, 296 U.S. 547, 56 S.Ct. 177, 80 L.Ed. 388, but was cited and followed by the Supreme Court of Florida in First State Savings Bank v. Little River Drainage District, supra.

The statutes regulating the collection of property taxes in Florida are fully stated in the above-cited cases. Such taxes, while not a personal charge against the property owner, are a lien upon the property assessed. When not paid, the property is offered publicly for sale and, if no one will bid the amount of the taxes charged against it, it is knocked off to the state and a sale certificate issued accordingly. The property may be redeemed by the owner within two years. If not then redeemed, the title vests in the state but may still be redeemed until otherwise disposed of. The cited cases make it plain that the state holds but as trustee for the taxing authorities concerned, and, when it receives money for the property, the money should go to discharge in due order their claims. The act here under examination...