116 Fla. 676 | Fla. | 1934
On May 7, 1934, the Board of County Commissioners of Citrus County, pursuant to Chapter 15772, Laws of Florida, Acts of 1931, by resolution, and without any vote of the freeholders or other approval of the electors of the county, duly provided for the issuance of $1,511,000.00 refunding bonds, to refund outstanding bonds in the same amount. The bonds proposed to be refunded had all been validated by decree of the Circuit Court. The refunding bonds, as so authorized, have been judicially validated by a decree of the Circuit Court in a special bond validation proceeding instituted under Sections 5106-5112 C. G. L., *678 3296-3302 R. G. S. This is an appeal from the Circuit Court's final decree of validation.
The purpose of the statutory bond validation proceedings provided for by Section 5106-5112 C. G. L., 3296-3302 R. G. S., is to set up a special course of legal procedure in the nature of a proceeding in rem as to proposed bonds, for the purpose of having their validity investigated in the courts of this State in advance of issuance.
The object of the proceedings is to have finally adjudicated by the court in advance of their issuance whether or not proposed obligations projected in the form of bonds or transferable evidences of a funded debt have been validly authorized and may be legally issued in the form, and containing the recitals, covenants, undertakings, pledges or limitations stipulated, described or set up in the authorizing ordinance or resolution providing for same, as approved or adopted by the representatives of the county or other corporate, or quasi corporate, obligor, and to judicially determine the legal sufficiency of the proceedings constituting the initiatory steps for the issuance and sale of the particular obligations sought therein to be validated. Spencer v. City of Clarkesville,
It appears by the resolution of the County Commissioners that in authorizing the particular refunding bonds here brought in controversy, said County Commissioners provided among other things as follows:
(1) That the refunding bonds to be issued should contain on their face a specific pledge in the following form: "for the prompt payment of this bond and the interest thereon as the same becomes due, the full faith, credit and all the resourcesof said Citrus County are hereby irrevocably pledged."
(2) That all revenues and income of the county derived fromsources other than ad valorem taxes, now authorized by law for the payment of interest and principal of indebtedness created for highway purposes and/or any revenues and income of the county now or hereafter derived from sources other than advalorem taxes, and not otherwise decided by law, shall be and were thereby to be pledged to the payment of the Road and Bridge Refunding bonds therein authorized, and that such income and revenues were thereby pledged, and as and when such funds should be allocated or made available, they should be converted into the interest and sinking fund account for the payment of said Road and Bridge Refunding Bonds and were to be thereby appropriated to pay the interest and retire said Road and Bridge Refunding Bonds and should be used for no other purpose. Section 10, Resolution adopted by County Commissioners May 7, 1934.
(3) That all covenants, representations, agreements and undertakings in said resolution set out, as well as those appearing on the face of each of said Road and Bridge Refunding Bonds, should constitute a contract with the bondholders to be enforceable by suit, action or mandamus on behalf of any bondholder in any court of competent jurisdiction, *680 whether or not a monetary default shall then prevail in the payment of the principal or interest of such Road and Bridge Refunding bonds.
(4) That if any clause, section, paragraph or provision of said resolution or of the Road and Bridge Refunding Bonds so authorized should be declared unenforceable by any court of final jurisdiction, it should not affect or invalidate any remainder thereof, and if any of the said Road and Bridge Refunding Bonds should be adjudged illegal or unenforceable in whole or in part, the holders should become entitled to the position of holders of a like amount of the indebtedness provided to be refunded, and to enforce their claim for payment.
Section 6 of Article IX of the State Constitution, as amended in 1930, reads as follows:
"Section 6. The Legislature shall have power to provide for issuing State bonds only for the purpose of repelling invasion or suppressing insurrection, and the counties, districts or municipalities of the State of Florida shall have power to issue bonds only after the same shall have been approved by a majority of the votes cast in an election in which a majority of the freeholders who are qualified electors residing in such counties, districts, or municipalities shall participate, to be held in the manner to be prescribed by law; but the provisions of this Act shall not apply to the refunding of bonds issued exclusively for the purpose of refunding of the bonds or the interest thereon of such counties, districts, or municipalities."
The amended constitutional provision as above quoted has heretofore been before this Court for consideration in the following cases: Sullivan v. City of Tampa,
But in none of the cases just cited was it determined whether or not refunding bonds can be validly issued under Chapter 15772, Acts 1931, without the approving vote of freeholders contemplated by Amended Section 6 of Article IX of the Constitution, where the proposed refunding bonds purport to enlarge upon the obligation of the original bonds byirrevocably pledging as a means of their payment additional source of revenue as well as renewing and continuing the obligation of the bonds that are proposed to be refunded.
The obligation of a contract, whether a bond or otherwise, is defined as the law or duty which binds the parties to perform their agreement. It is coeval with the undertaking *682
to perform and consists of the means which, at the time of the creation of the contract, the law afforded for its enforcement, or, as it has been otherwise stated, in the effective force of the law which applies to and compels performance of the contract, or a compensatory equivalent in the way of damages for nonperformance. It consists in what an obligor hasundertaken to perform as measured by the standard of the laws in force at the time it was entered into, as expressed in the terms of the contract interpreted or construed according to their settled legal meaning, and embraces within its purview whatever is undertaken to be done as a legal, as distinguished from a moral, duty to perform the terms and conditions of what has been agreed upon between the parties. Sturges v. Crowinshield, 4 Wheat. 122, 4 L.Ed. 529; Ogden v. Saunders, 12 Wheat, 214, 6 L.Ed. 606; National Surety Co. v. Architectural Decorating Co.,
The amendment to Section 6 of Article IX of the Constitution of Florida, approved in 1930, was designed as a specific limitation upon the pre-existing power of the Legislature to authorize the creation of any new or additional obligations upon the part of counties, districts or municipalities. The limitation expressed is absolute. And in the cases hereinbefore cited, it has been applied to every form of proposed contractual device intended as a future obligation of the taxing power, directly or indirectly undertaken regardless of form, in those instances where the question has arisen in the courts since the ratification of the amendment at the general election in 1930. *683
What then is the meaning of the proviso that the restrictions of this 1930 constitutional amendment shall not apply to "the refunding of bonds" etc.?
The language adopted is expressive of nothing more than the clearly implied, if not expressly stated, idea that since theobligation of contract of those earlier outstanding "bonds" cannot consistently with the Constitution of the United States (Section 10, Article I, U.S. Const.) be defeated by any default or neglect of the obligors in failing to provide payment when due, nor circumvented by the will of the electors in refusing to vote to authorize the making of new obligations to discharge what is already owed, if the latter course be found necessary, that in that event refunding bonds continuing the contractual obligation of the old bonds might be authorized by the Legislature, without regard to any consenting vote of the freeholders, such as would otherwise be required by the very terms of the amendment if this exception had not been incorporated therein.
Thus construed, it will be seen that while a particular class of bonds described as refunding bonds may be authorized by the Legislature to be issued without any vote of the freeholder electorate consenting thereto, the only authority left in the Legislature to provide for the issuance of such refunding bonds without a vote of the freeholders, is that power which is limited to a mere authorized extension of the old obligation of contract to the new bonds, when the latter purport to be issued "exclusively" as refunding bonds to be used for the purpose of refunding the old bonds or the interest thereon.
Otherwise expressed, it may be stated that the plan intended to be carried out by the proviso to amended Section 6 of Article IX of the Constitution with reference to that class of bonds usually described as ordinary refunding bonds, is *684 to leave resident in the Legislature all of its pre-existing legislative power to issue bonds to be designated as refunding bonds, which, when authorized by the Legislature, issued and negotiated to take up earlier outstanding bonds or the interest thereon, will by force of the refunding statute and of the Constitution itself, merely subrogate the holders of such authorized refunding bonds to all the outstanding legal rights and remedies of the holders of the bonds refunded, and not attempt to enlarge the original obligation of the contract by imposing a greater liability than would be enforceable by legal means with reference to the original bonds, unless by consent of the freeholder electorate to the creation of such enlarged obligation, as provided in Section 5, Article IX of the Constitution, as amended.
Chapter 15772, Acts of 1931, is a legislative Act adopted by the Legislature in 1931 to carry out the purpose and intent of amended Section 6 of Article IX of the Constitution as ratified but a few months before this general refunding Act of 1931 was enacted. It is in effect a legislative interpretation of the amended provision of the Constitution relating to the issuance of refunding bonds by counties, districts and municipalities, and appears to have been carefully and skillfully drawn to accord with the Legislative powers in the premises as now defined in the Constitution.
In 1931 General Refunding Act in terms recognizes the obvious limitation that has now been placed on the power of the Legislature to provide for the issuance of refunding bonds without a precedent vote of freeholders should such refunding bonds carry a broader base of liability than the bonds that are to be refunded. And so Chapter 15772, in Section 24 thereof, expressly makes mention of the procedure that must be followed with respect to the authorization *685 of refunding bonds that are more comprehensive in obligation than ordinary refunding bonds issued exclusively for the purpose of renewing and extending into the refunding bonds the obligation theretofore prevailing in the bonds refunded.
In Sullivan v. City of Tampa,
In Nolle v. Broward County,
In State v. City of Miami,
In City of Daytona Beach, v. State (1931),
In State v. Special Tax School District No. 5, Dade County,
In State v. City of Coral Gables,
In the case of State v. Ocean Shore Improvement District,
In that case no question was raised by this Court, or by any of the parties, as to the validity of such specific pledge on the part of the Ocean Shore Improvement District being incorporated in the refunding resolution, nor would it likely have been of any avail to an objector had such point been asserted. As set up at the time the resolution authorizing the refunding bonds was adopted by it, the Ocean Shore Improvement District constituted little more than a quasi-corporated instrumentality for the ascertainment and collection of taxes to pay the accrued cost of the road improvements made in the district, and thereby to discharge its outstanding bonds issued in consideration thereof. Consequently the pledge of alldistrict revenues, whether realized *689 from ad valorem taxation in the district or otherwise, presently enjoyed or anticipated for the future, as a means of discharging the district's bonded debt, was no enlargement of the district's obligation on its original bonds, because the district had been created and the continued existence of such district had been preserved by statute for no other purpose than to comply with the district's contractual obligation as contemplated by the bonds that were refunded through the issuance of the refunding bonds approved in the case of State v. Ocean Shore Improvement District, supra. The certificates of indebtedness refunded in that case were in contemplation of law bonds.
In the most recent case decided by this Court, State of Florida v. City of Miami,
The pledge above referred to was upheld by us as valid, on the theory that there was no attempt to pledge any specific property of the city, thereby adding to the obligation already outstanding, nor was there any obligation presently created to compel the city to sell any of its assets and apply the proceeds to payment. All that was pledged was that if the city should abandon the public use of any of its properties and should sell them without an intent to acquire with the proceeds other properties in substitution thereof for public purposes, that then, and in that event, the proceeds so realized should be paid into the sinking fund account to apply on its debts. Thus limited, the pledge was merely a special contractual means of accomplishing an application that would have been ultimately capable of realization through legal process anyway under the rule recently laid down by this Court in City of Sanford v. Dofnos Corporation,
So there was no effort in State v. City of Miami,supra, to enlarge on the contractual obligation of the original bonds by creating in the proposed refunding bonds any additional or enhanced obligation not contemplated as being initially within the purview of the contractual obligation brought into being when the bonds proposed to be refunded were first issued on the city's behalf.
The foregoing review of the principal cases decided by *691 this Court with reference to refunding bonds issued without a vote of the freeholders, and subsequently considered here in judicial proceedings instituted to determine their validity, has been made in an endeavor to point out that in no case heretofore decided by this court since the constitutional amendment of 1930 with reference to issuance of county, district or municipal bonds was ratified, has an attempted enlargement of contractual obligation by means of refunding bonds been sustained as valid, where there was no approving vote of the freeholders as is required for the creation of new or additional obligations in the form of bonded indebtedness, whether called refunding bonds or described as some other kind of bond.
In City of Clearwater v. State ex rel. United Mutual Life Ins. Co.,
The bonds proposed to be refunded by the refunding bonds sought to be validated in this case, as we judicially know from the terms of the state statutes under which such bonds have been issued and are outstanding, are ordinary tax anticipation bonds issued for purposes for which ad valorem taxes for road and bridge purposes could be levied. *692 When issued such original bonds were issued solely in consideration of a pledge of its ad valorem taxing power promised and provided to be exercised by the County of Citrus in order to pay the principal and interest of such bonds when due. Such then was the sole obligation of the county's contract as embraced in the original bonds proposed to be refunded and such must be the limit of the county's contractual obligation in any bonds issued to refund them absent the approving vote of the freeholder electorate of Citrus County acquiescing in an extension of that obligation to include an "irrevocable" pledge of "all the resources" of said Citrus County, Florida.
We hold, therefore, that where an original issue ofcounty road and bridge bonds proposed to be refunded, involved no contractual pledge of more than a specified exercise of the county's ad valorem taxing power provided to be exercised according to the statutes under which such original bonds were issued in order to pay them, that an attempted irrevocable pledge by the county of all the resources of the obligor county, specifically including revenue and income of the county other than ad valorem taxes, is an unjustified extension of the obligation of contract that cannot be constitutionally made effective in refunding bonds issued without the approving vote of a majority of the freeholders who are qualified electors residing in the county by which such proposed bonds are to be issued as refunding bonds to refund earlier bonds wherein no such specific contractual obligation is contained. Section 6, Article IX, State Constitution, as amended 1930.* *693
The obligation of the bonds of a county issued for a county purpose consists in what the county has by its bond contract undertaken to perform as measured by the standard of the laws in force at the time the bonds were issued, as expressed in the terms of the bonds themselves, interpreted or construed according to their settled legal meaning.
Where county bonds have been negotiated with no undertaking to pledge any special revenues, income or properties of the county other than the proceeds of ordinary ad valorem taxes agreed to be levied pursuant to the statutes under which the bonds were issued as county bonds, the obligation of refunding bonds issued to refund such county bonds without an approving vote of the county's electors who are freeholders, cast in the manner provided for in amended Section 6 of Article IX of the Constitution of Florida, must be limited to the renewal of the original obligation as expressed in the bonds refunded. And any attempt to add to, enhance, enlarge or increase such obligation by means of a pledge of special revenues, properties or income not theretofore obligated or pledged in the original bonds, will be held to be in violation of amended Section 6 of Article IX of the State Constitution, unless the issuance of the refunding bonds is ratified by the vote of a majority of the freeholders in the manner required by that section, even though the bonds so providing are characterized or denominated as "refunding" bonds, and as so characterized have been issued exclusively for the purpose of refunding or redeeming the prior bonds.
Where bonds are issued providing not only for their payment of special taxes arranged to be levied for the discharge of the obligation of same according to the terms of the statute under which such bonds are issued, but pledging in addition thereto the "full faith and credit" of the obligor, *694
the effect of such pledge of "full faith and credit" is not to create a general or special lien or charge upon the unspecified revenues, moneys or income of the obligor not therein specifically obligated to the payment of such bonds, but is to acknowledge an indebtedness for the amount of money received as a consideration for the bonds, which indebtedness will become enforceable in an ordinary action, should the special contractual obligation as embraced in the bond itself, fail. City of Louisiana v. Wood,
The secondary proposition argued by appellants to the effect the court below erred in validating the refunding bonds because of evidence adduced tending to show that the county is insolvent and embarrassed, and that its credit will be impaired by the issuance of refunding bonds under the factual circumstances appearing of record in this case, has been considered by us on this appeal, with the result that the ruling by the Chancellor on that proposition in favor of the validation of the bonds is affirmed. Nor have we found any other ground of invalidity shown by the record other than that hereinbefore discussed and pointed out in this opinion.
It follows that the decree appealed from should be reversed *695 and the cause remanded to the Circuit Court with directions to enter its decree validating the issue of refunding bonds herein brought in controversy when and after appropriate amendments have been made in the proceedings for issuance and validation of said bonds to conform to the holding of this opinion. It is adjudged accordingly.
"This Court having found that the validation proceedings are legally insufficient to warrant a decree of validation of the present record, but that the illegal portions thereof pointed out in the opinion of the Court may be eliminated and a decree of validation entered in conformity to the opinion of this Court after the proceedings for the issuance and validation of the bonds in controversy have been so amended as to conform to the opinion of this Court, it is considered, ordered and adjudged that the decree appealed from be reversed and that the cause be remanded to the Circuit Court with directions to said Circuit Court to permit the filing in the Circuit Court of an amended and supplemental petition on the part of Citrus County, Florida, embodying and setting up any resolutions that may be hereafter adopted by the Board of County Commissioners of the county aforesaid, modifying the resolutions under which the proposed refunding bonds are to be issued by eliminating from the bonds and the proceedings had for their issuance, the pledges and provisions held invalid by this Court *696 in its opinion filed herein, to the end that the Circuit Court upon the filing of such amended and supplemental petition to conform to the opinion of this Court, may proceed with said validation proceedings to a judgment or decree in conformity with the holding of this Court on this appeal."
It is further ordered by the Court that judgment be entered in this cause in accordance with the foregoing amendment.
DAVIS, C. J., and WHITFIELD, ELLIS, TERRELL, and BROWN, J. J., concur.