FIRST STATE SAVINGS BANK OF MORENCI, MICHIGAN, ET AL.,
v.
LITTLE RIVER DRAINAGE DISTRICT, ET AL.
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The Florida Supreme Court reversed a lower court's denial of an injunction that would prevent a drainage district from accepting bonds and interest coupons in payment of taxes owed to the district. The court held that where bonds are payable in money, the legislature cannot authorize the debtor to accept bonds and coupons in satisfaction of taxes without providing an equally efficient alternative payment method.
The court held that the legislature cannot permit acceptance of bonds and coupons in payment of taxes pledged for bond payment without providing an equally efficient and adequate alternative means of payment. Where bonds are payable in money, taxes levied for their discharge must be collected and applied in money as covenanted. The recent legislative amendments purporting to authorize such acceptance were therefore insufficient as a defense to the injunction sought.
“Where bonds are provided to be payable in money, it is incompetent for the Legislature, against the protest of holders of such bonds, to permit taxes levied for the payment of the principal and interest of the bonds and pledged to be collected and applied thereon, to authorize the debtor obligor to accept bonds and coupons in payment of taxes levied for debt service and due to be paid in money as provided by the laws in force at the time the bonds were issued, unless some equally efficient and adequate means of payment is provided as a substitute”
Establishes the core holding that the legislature cannot authorize acceptance of bonds in place of money for debt service taxes without providing an equally efficient alternative
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Join FLexlaw to unlock all legal intelligenceFirst State Savings Bank and other bondholders sought an injunction against the Supervisors of Little River Valley Drainage District to prevent them f…
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The decree in this case refusing to award an injunction to complainant below to restrain the Supervisors of Little River Valley Drainage District established under Article I, Chapter 3, Title 7, First Division, Compiled General Laws of Florida, 1927, as amended by Chapter 12078, Acts 1927, General Laws of Florida, from accepting bonds or interest coupons in lieu of money in payment of taxes due the District with which to provide for the payment of, and to retire, appellants’ bonds, should be and the same is hereby reversed on the authority of the following cases: Frier v. State, 11 Fla. 300; Crummer v. City of Fort Pierce, 2 Fed. Suppl. 737; McNee v. Wall, 4 Fed. Suppl. 496 (reversed by U. S. Supreme Court on other grounds); Keefe v. City of St. Petersburg, 5 Fed. Suppl. 132; Moore v. Branch, 5 Fed. Suppl. 101; Harris v. City of Miami, 6 Fed. 305; Humphreys v. State, ex rel. Palm Beach Co., 108 Fla. 92, 145 Sou. Rep. 858.
Where bonds are provided to be payable in money, it is incompetent for the Legislature, against the protest of hold*306ers of such bonds, to permit taxes levied for the payment of the principal and interest of the bonds and pledged to be collected and applied thereon, to authorize the debtor obligor to accept bonds and coupons in payment of taxes levied for debt service and due to be paid in money as provided by the laws in force at the time the bonds were issued, unless some equally efficient and adequate means of payment is provided as a substitute for the discharged taxes so provided to be settled by a medium of payment other than money as covenanted for in the bonds and statutes under which they were issued.
In connection with the foregoing discussion, it should be pointed out that appellants’ bonds are not general obligations of a district for which ordinary taxes can be levied and collected, in perpetuity if necessary, to satisfy the district debt. On the contrary, in Drainage Districts such as this one, the special tax levies (i. e. special assessments for benefits) authorized to discharge the outstanding obligations of the drainage district are restricted to the total amount of the district benefits ascertained and set forth in the plan of reclamation. See: Moran v. State, ex rel. Montgomery, 111 Fla. 429, 149 Sou. Rep. 477. Compare: State, ex rel. Smith, v. Butt, 111 Fla. 630, 149 Sou. Rep. 746, text 755 (special concurring opinion discussing Futch Acts of 1933).
Therefore all funds on hand (the term “funds” here used being employed in the sense of tax liens capable of being realized upon and converted into cash as well as cash itself after realization) are equitable assets of the drainage district held by the Supervisors thereof under a special statutory trust created for the particular security and benefit of the district’s creditors. Accordingly the district supervisors, as statutory trustees, are wifhout authority to discharge, satisfy, liquidate or release any of the equitable *307assets held by them as security for the payment of the district’s bonds, except in accordance with the terms of law under which such assets were originally provided to be collected and held, any subsequently passed statutes providing to the contrary being incapable of being given judicial effect for that purpose as against a complaint in equity duly asserted against the same by one alleging himself to be a creditor of the district and prejudiced thereby. See: Duval County v. Jennings, 121 Fla. 584, 164 Sou. Rep. 356.
Chapters 15054, Acts 1931; 14712, Acts 1931; 16251, Acts 1933, and 16256, Acts 1933 (being Sections' 999-2 and 999-20 and Sections 1474-4 and 1474-9, C. G. L., 1934 Supplement), are therefore insufficient to constitute any defense to the injunction sought in this case, which the Chancellor should have granted.
Reversed for proceedings not inconsistent with this opinion.
Whitfield, C. J., and Brown, J., concur.
Ellis, P. J., and Terrell and Buford, J. J., concur in the opinion and judgment.
Cases With Similar Vibessemantic neighbors from the corpus
Citator
Cited By
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Bedell v. Lassiter, 143 Fla. 43 (Fla. 1940)…security pledged for the payment of the bonds of the district is the power to tax that was in force at the time the bonds of the district were issued. This Court, in the case of First State Savings Bank of Morenci v. Little River Drainage District, 122 Fla. 304, 165 So. 48, held that funds on hand raised by taxation are equitable assets of the drainage district to be administered by statutory trustees in accordance with the terms of the law under which such assets were collected and held. In the case of S…
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State v. Jumper Creek Drainage Dist., 153 Fla. 451 (Fla. 1943)…bonds were first negotiated. Sec. 41, Chapter 6458, Acts 1913. The action of the supervisors in accepting the bonds and releasing the total tax was contrary to law and of no effect. See First State Bank of Morenci v. Little River Drainage District, 122 Fla. 304, 165 So. 48. The board of supervisors are the legal representatives of all the land owners in the district. They are also trustees of all assets allocated by law to pay and discharge bond obligations of the district. Those assets may be accumulated…
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Halifax Drainage Dist. of Volusia Cnty. v. State, 134 Fla. 471 (Fla. 1938)…sessments for bond payments are enforced by suits in equity and not by sale of the land by the tax collector.” See: Sovereign Camp W. O. W. v. Lake Worth Inlet District, 119 Fla. 782, 161 So. 717; First State Bank v. Little River Drainage District, 122 Fla. 304, 165 So. 48; State, ex rel. Root, v. Crandon, 115 Fla. 153, 155 So. 667. It appears that Section 1114 of the 1920 Revised General Statutes limits the power of the Board of Supervisors to levy a tax on the drainage area to benefits to pay the cost o…
Previewing 3 of 5 citing cases — full citator treatment, depth of discussion, and citing context are member features.
Join FLexlaw to unlock all legal intelligenceAuthorities Cited
- Humphreys v. State, 108 Fla. 92 (Fla. 1933)
- Moran v. State, 111 Fla. 429 (Fla. 1933)
- Duval Cnty. v. Jennings, 121 Fla. 584 (Fla. 1935)
- State v. Elliot W. Butts, 111 Fla. 630 (Fla. 1933)
- Henderson v. Ford, 111 Fla. 269 (Fla. 1933)
- Jimenez v. Spicola, 111 Fla. 570 (Fla. 1933)
- Frier v. State, 11 Fla. 300 (Fla. 1867)