Case Name: State, Margaret E. Marshburn, Intervener, v. Board of Public Instruction, Levy County
Court: Florida Supreme Court
Jurisdiction: Florida
Decision Date: 1940-05-24
Citations: 143 Fla. 212
Docket Number: 
Parties: State, Margaret E. Marshburn, Intervener, v. Board of Public Instruction, Levy County.
Judges: Terrell, C. J., Brown, Chapman and Thomas, J. J:, concur.
Reporter: Florida Reports
Volume: 143
Pages: 212–222

Head Matter:
State, Margaret E. Marshburn, Intervener, v. Board of Public Instruction, Levy County.
196 So. 452
En Banc
Opinion Filed May 24, 1940
T. E. Duncan, for Appellant;
Horace S. Wilson and Oven & Oven, for IntervenerAppellant ;
W. F. Anderson and Robert J. Pleus, for Appellee.

Opinion:
Whitfield, J.
The State avers that the bonds issued in 1925 by the Board of Public Instruction are invalid because the statute authorizing the bonds to be issued violates Section 8, Article XII, of the Florida Constitution, and cites in support of its contention Barrow v. Moffett, 95 Fla. 111, 116 So. 71. The Barrow-Moffett case and other similar cases are distinguished from cases like this one in State v. Board of Public Instruction, Dade County, 126 Fla. 142, 170 So. 602, in which latter case original bonds had been issued for school purposes and were to be refunded. See also State Board v. County Board of Pub. Inst., 138 Fla. 767, 190 So. 253; Board Pub. Inst., Pinellas Co. v. State ex rel. Beers, 127 Fla. 211, 172 So. 922.
In Barrow v. Moffett, supra, the suit was to validate original bonds proposed to be issued. This Court reversed a decree of validation because it did not clearly appear that the purposes for which the bonds were to be issued were properly within the provisions of Section 8, Article XII, of the Constitution. See also State v. Bd. Pub. Inst., Ind. Riv. Co., 98 Fla. 1152, 125 So. 357; Leonard v. Franklin, 84 Fla. 402, 93 So. 688. After bonds are issued and sold under statutory authority by the County Board of Public Instruction, and the proceeds used for any authorized public free school purpose in good faith, the bonds will not be adjudged invalid unless they were not issued for any authorized public free school purpose under the controlling organic provisions. The refunding bonds in this case have not been approved by the required vote of the electors of the county.
A citizen taxpayer intervener also challenges the validating proceedings.
The statutes under which the original bonds were issued are not referred to in the proposed refunding bonds. Chapter 10780, Acts of 1925 (Special) authorized not exceeding $126,000.00 of bonds, and it is not shown that a larger amount is legally outstanding.
Confining tax collections under Section 8, Article XII, to refunding bonds when there are original bonds outstanding, is not authorized because all of the valid original bonds have a right to participate in the funds collected under Section 8, Article XII. The original statute of 1925 made taxation under Section 8, Article XII, applicable to all the bonds issued thereunder, and the refunding bond statute cannot change that provision which is contractural, and does not purport to do so.
If the refunding bonds do not merely extend the original obligation' to all the bonds issued under Section 8, Article XII, then amended Section 6, Article IX, is violated as well as the contract clause, and also Section 8, Article XII.
. The specific amounts from annual tax levies that are pledged in the resolutions and in' the proposed refunding bonds are excessive for annual payments of interest and redemption of bonds, and operate to violate Section 8, Article XII, which does not contemplate that all collections under Section 8, Article XII, be used for bond payments to the serious detriment of current needs of the public free schools of the county. Nor does Chapter 10780 so contemplate. The reduction' in interest in the refunding bonds is only per annum, and the refunding bonds to be issued for past due interest increase the amount of refunding bonds, an'd the large annual payments specifically required may make the refunding bonds an increased burden and not a substantial benefit to justify refunding. If defaults in payments occur, the interest rate reverts to 5
Refunding bonds cannot be paid from any county school funds included in Section 9, Article XII, except a reasonable part of the funds that may be derived from levies under Section 8, Article XII. See Bryan v. Board, Series A case, filed April 30, 1940.
As there is in the transcript of the record brought here no copy of the original bonds which are to be refunded by the bonds here sought to be validated by judicial decree under the statute, and as under the Constitution refunding bonds can be issued without an approving vote of electors, only to extend or continue the obligations of the original bonds except as to the rate of interest and time of payment, the absence of a copy of the original bonds makes the record incomplete for judicial action thereon, in determining whether the refunding bonds merely renew the obligations of the original bonds.
It appears that there were on January 1, 1939, outstanding a total of $144,000.00 of bonds and matured interest coupons and judgments representing matured bonds and coupons. It also appears that four of the original bonds are made payable every year. The proposed refunding bonds and the resolutions adopted for their issue require a tax levy sufficient to raise $3,500.00 in 1938, $7,000.00 in 1939, and $13,000.00 in 1940 and each succeeding year until all of such refunding bonds and interest thereon' have been retired. Four of the refunding $1,000.00 bonds are to be redeemed annually beginning in 1943, and other bonds are subject to call and redemption on any interest payment date prior to maturity upon notice, etc., as provided in the refunding bonds and resolutions. The Constitution does not contemplate that the county school funds derived from the ad valorem tax levied under Section 8, Article XII, Constitution, that may under authorized conditions be used to pay indebtedness legally incurred for public free school purposes, shall be so pledged or disbursed as to unduly reduce the funds raised under Section 8, Article XII, for the current support and maintenance of public free schools, see State v. Board of Public Instruction, Dade County, 126 Fla. 142, text page 152, 170 So. 602, an'd creditors who are to be paid from tax levies under Section 8, Article XII, are held to notice of the intendments and limitations of the Constitution as to such tax levies.
The required specific levy to yield $13,000.00 annually beginning in 1940, is clearly excessive for current interest on bond payments exclusively. With an assessment capable of producing at most not more than $15,000.00 annually and an annual interest charge of $7,200.00 at 5% on $144,000.00 5 °/0 bonds, and $4,000.00 for annual redemptions, making $11,200.00, there will be an annual excess of $1,800.00 collections for bond payments, with a greater excess as interest payments decrease due to redemption of four bonds each year. It is not shown that the specific annual payment exactions accord with the obligations of the original bonds; and the specific annual payments required do not accord with the requirements of the statute under which the bonds were issued, and are not in harmony with the intendments of Section 8, Article XII, Constitution.
The decree of validation is reversed.
Terrell, C. J., Brown, Chapman and Thomas, J. J:, concur.
Buford, J., dissents.