Court Opinion

ID: 3386773
Source: CourtListenerOpinion
Date Created: 2016-07-05 18:42:18.345217+00
Date Added: 2024-06-11T13:52:52.631704
License: Public Domain

Complainants pray for an enforcement of the increased acreage tax levy made by Chapter 10026, Acts of 1925, to pay the past due and unpaid coupons from their refunding bonds of the Everglades Drainage District, dated July 1, 1925. Holders of the refunded bonds were entitled to an enforcement of only the smaller acreage tax levy made by Chapter 9119, Acts of 1923. See 57 F.2d 1028.
Where, as in this case, bonds are issued by a governmental subdivision under a statute which levies an annual tax at a specific rate, the proceeds of the tax to be used to pay the interest and to provide a sinking fund for the payment of all of the bonds issued by the taxing unit as they become due, such statutory annual tax levy and the duty and obligation to collect the tax and apply the proceeds as required by the statute, may become a part of the bond contract which may be enforced by due course of law.
The Constitution forbids the passage of a law impairing the obligation of contracts; therefore, where a specific annual tax levy is made a part of a bond contract, such tax levy cannot legally be reduced except by due consent of the bondholders, unless an adequate fund is produced by a reduced tax levy or is otherwise provided and secured and duly applied in payment of the interest and in providing a sufficient sinking fund as required by the statutes under which the bonds were issued. An increase in the tax levy rate may be made by a later statute and the proceeds applied in payment of the bonds and interest thereon; but such an increase of the tax rate is not a part of the bond contract that may be enforced by the bond holders as one of the bond obligations, unless it is so provided by statute. Refunding bonds take the place of the bonds refunded and have such tax obligations as may be provided by the statute authorizing *Page 547 
the refunding bonds. Such obligations may be the same as, or different from, that of the refunded bonds. The refunding bonds do not increase the total indebtedness; but they constitute a new contract and may have obligations peculiar to the refunding bonds though they usually have the same contract obligations that the refunded bonds had. Where a statute authorizing the refunding bonds makes them of equal dignity and payable out of the tax funds equally with all other bonds of the taxing unit, and another statute relating to the same general subject authorizes additional, not refunding, bonds to be issued,provided an accompanying increase in the annual tax rate be levied sufficient to pay the additional bonds, and the statute does not expressly or by clear implication make the increased tax rate a part of the obligation of the refunding bonds issued after the increase in the tax rate, and no additional bonds were issued, the holders of the refunding bonds are not entitled to enforce the higher tax rate for the benefit of the refunding bonds, unless so provided by law, even if the taxing unit or the State may be authorized to enforce the higher tax levy as a statutory duty. The holders of such refunding bonds are not entitled to enforce the higher tax levy, even though under the statute the refunding bonds participate in the proceeds of any tax levy made to pay any and all bonds of the taxing unit, when all the statutes providing for the issue and payment of the bonds of the taxing unit considered together indicate an express intent that when additional bonds are authorized, such authority shall be accompanied by an increased tax levy sufficient to meet the payments of the additional
bonds, and when it does not appear expressly or by clear implication in the statutes that the increased tax levy shall be enforced, whether additional bonds are issued or not, or that the *Page 548 
holders of the refunding bonds are entitled to enforce the higher tax levy. While the holders of refunding bonds have no right to enforce the higher tax rate when noadditional bonds have been issued, yet if the increased taxes are collected, the holders of the refunding bonds may have a right under the statute to participate in the proceeds of the higher taxes equally with the holders of all the bonds issued by the taxing unit.
The Everglades District Drainage District was established and its administrative and financial functions, including the issue and payment of bonds of the district, to be performed by a Board of Commissioners, were defined by Chapter 6456, Acts of 1913, and the amendments thereto which were re-enacted as Sections 1160 to 1188, Article IV, Chapter 3, Title VII, Revised General Statutes of Florida.
The amendments to sections contained in said Article IV, became a part of the Article and have such legal effect as is intended by the amendatory statutes. The intent of the amendments severally is to be determined by a judicial consideration of their terms, purpose and import.
Section 1164, Revised General Statutes, and the amendments thereof levy an annual acreage tax upon the lands in the Everglades Drainage District for drainage purposes. Section 1165, Revised General Statutes, provides that "the proceeds arising from the acreage tax levied by this Article shall be used" for drainage operations, "and to repay any loans and the interest thereon, and to create a sinking fund for the retirement of the principal of the bonds that the Board may issue under the provisions of this Article and to the payment of the interest thereon." Section 1178, Revised General Statutes, as amended prior to and by Chapter 9119, Acts of 1923, authorized the Board of Commissioners of Everglades Drainage District "to borrow money on permanent *Page 549 
loans," to issue "negotiable coupon bonds" to a stated amount; but the Act does not limit the right of the Legislature to authorize additional bonds of said Board payable from drainage taxes within said district; Provided, any such additional authority shall be accompanied by the levy and imposition of additional taxes and assessments sufficient to meet the payments of the bonds authorized and interest thereon * * * and such additional bonds shall constitute an obligation of equal dignity with the bonds herein authorized and equally with the bonds herein authorized may be entitled to payment from all drainage taxes then or thereafter imposed upon the lands within the said district without preference to any bonds or series of bonds over any other bonds or series of bonds."
Chapter 10026, Acts of 1925; authorized the issue ofadditional bonds, and also increased the acreage tax levy.
Chapter 10027, Acts of 1925, amending Section 1179, Revised General Statutes, authorized the Board of Commissioners to borrow money on permanent loans, and to better enable the board to borrow money, authorized the board to issue "negotiable coupon bonds * * * to refund any of the bonds issued under the provisions of this Article or the interest thereon. * * * Said refunding bonds shall be issued in such denominations, bear such interest rate, and mature at such time or times, not exceeding thirty years from the date of issue, as said board may determine, and in all other respects, said bonds shall, in the manner of issuance and sale, be subject to the provisions of this Article. All refunding bonds issued under authority hereof shall constitute an obligation of equal dignity with any and all other bonds heretofore, or that may hereafter be, issued against and by said district." Section 1182, Revised General Statutes, enacts that "the provisions of this Article shall constitute *Page 550 
an irrepealable contract between the said board and said Everglades Drainage District and the holders of any bonds and the coupons thereof issued pursuant to the provisions hereof. Any holder of any of said bonds or coupons may either at law or in equity by suit, action or mandamus enforce and compel the performance of the duties required by this Article of any of the officers or persons mentioned in this Article in relation to the said bonds, or to the collection, enforcement and application of the taxes for the payment thereof; Provided, however, that no obligation authorized by this Article shall be construed as an obligation of this State, but only as the obligation of the Drainage District herein created."
Relators, holders of refunding bonds dated July 1, 1925, claim the right to enforce the increased acreage tax levy made by Chapter 10026, which became effective June 11, 1925, upon the theory that such increased tax levy being in force when the refunding bonds were issued, the increased levy became a part of the "irrepealable contract" between the board and the district and the holders of the refunding bonds under Section 1182, Revised General Statutes. Statutes in force when the refunding bonds were issued may be part of the refunding bond contract if so intended by the statute and contemplated by the parties.
The increased acreage tax levy made by Chapter 10026 was accompanied by authority to issue $3,000,000.00additional bonds, which authority to issue additional bonds was expressly referred to in Section 2, Chapter 9119, Acts of 1923, and prior Acts under which other bonds had been issued; but such Chapter 9119 and the preceding Acts, in order to protect bonds issued under such statutes, provided that authority to issue additional bonds "shall be accompanied by the levy and imposition of additional taxes sufficient" *Page 551 
to pay the additional bonds, therefore the increased tax levy made by Chapter 10026 had reference to the issue of additional bonds authorized and contemplated by the same Chapter 10026. Whenever additional bonds have been authorized, an increased tax levy has been made by the same statute. See Chapters 6957, Acts of 1915, 7862, Acts of 1919, 8413, Acts of 1921, 9119, Acts of 1923. No additional bonds were issued under Chapter 10026, as was authorized and intended by the Act.
Chapters 10026 and 10027, Acts of 1925, both amend sections of the same Article IV in the Revised General Statutes, and may be regarded as being in pari materia; but each chapter relates to a distinct and different part of the same general subject contained in said Article IV. Neither chapter refers to the other. Chapter 10027 is expressly made a part of the refunding bond contract by being referred to in the refunding bonds and in the resolutions of the Everglades Drainage Board as being a part of the law under which the bonds were issued.
Chapter 10026 is not referred to in the resolutions or in the bonds. The statutes refer to the tax levy as being to pay all bonds issued under "this Article" of the Revised General Statutes; but the provisions of the Article under which prior bonds in stated amounts were issued, expressly provided that the issue of additional bonds "shall be accompanied by the levy and imposition of additional taxes and assessments sufficient to meet the payment of the bonds authorized and interest thereon." Chapter 10027 provides that the refunding bonds shall in the manner of issuance and sale be subject to the provisions of this Article"; and the refunding bonds shall constitute an obligation of equal dignity with any and all other bonds," etc.
Refunding bonds issued under Chapter 10027 are of *Page 552 
"equal dignity" with all other bonds of the district; but the holders of refunding bonds have no superior right over other bond holders to enforce an increased tax levy merely because the increased levy had been made by Chapter 10026 before the date of the refunding bonds, when the statutes authorizing the original bonds issues, required an increased tax levy to accompany every issue of additional, not refunding, bonds, and Chapter 10026 which made the increased tax levy also provided for the issue of additional bonds. Clearly, the intent of Chapter 10026 amending sections of Article IV, Revised General Statutes, was that the increased tax levy was to provide for the payment of the additional bonds that were authorized and contemplated by the same Chapter 10026 to be issued as authorized. The parties to the refunding bond contract — the officials who issued the bonds and the purchasers of the refunding bonds — could not reasonably have contemplated that the increased tax levy made by Chapter 10026 could be enforced by the holders of the refunding bonds if additional bonds were not issued as authorized and contemplated by Chapter 10026, the increase in the tax levy being made by the same Chapter 10026.
If the increased tax levies may legally be enforced by the State or by the district, the refunding bonds will, under the statute, participate in the proceeds equally with all other bonds; but that does not give the holders of the refunding bonds issued under Chapter 10027 a right to enforce the increased tax levies made by Chapter 10026 when noadditional bonds have been issued as provided for and contemplated by Chapter 10026.
"No specific increase in tax rates having been levied or authorized in the refunding Act, the tax levies applicable to the retired bonds apply also to the refunding bonds by *Page 553 
which the former bonds were retired." Rorick v. Board of Commissioners, 57 F.2d 1048, text 1058.
Under the statute all the bonds issued by the district participate in the proceeds of an increased tax levy on an equality. Chapter 10026 provides for the issue of bothadditional bonds and increased acreage taxes, thereby indicating that the increased taxes were levied not for the benefit of refunding bonds, but for the payment of theadditional bonds that were authorized and contemplated by the Act to be issued "for the purpose of raising funds to continue and prosecute to final completion the drainage operations. Even if the State or the Board of Commissioners of the district might require the increased acreage tax levy of 1925, to be executed as a statutory duty, yet the increased acreage tax levy was made by Chapter 10026 not for the benefit of any outstanding bonds, or of refunding bonds to be issued and sold for the redemption of outstanding bonds, but in anticipation of the issue of additional bonds as authorized to continue thedrainage operations, which increased levy would inure to the benefit equally of all the bonds of the district if additional bonds be issued as contemplated. Proceeds of additional bonds would go to the benefit of drainage operations to compensate for the increased tax levy. As no additional bonds have been issued under Chapter 10026, the increased tax levies, made by Chapter 10026, did not become a part of the contract of the refunding bonds dated July 1, 1925; therefore the holders of such refunding bonds are not entitled to enforce the increased tax levy of 1925, but are limited to the tax levy of 1923, even if the State or the Board might legally enforce the higher tax levies of 1925, in which case all the bonds of the district would participate equally. And this is so even after the enactment of Chapter 12017, Acts of *Page 554 
1927, which validates the tax levy but does not make the increased levy a part of the refunding bond contract.
The provisions of Chapter 10027 do not make any statutory tax levy a part of the refunding bond contract except such tax levies as were part of the contract of other bonds issued by the district. Refunding bonds take the place of the bonds that are refunded and carry the same contract obligation as did the refunded bonds, unless otherwise clearly provided. Chapter 10026 was not in force when Chapter 10027 became effective, and though both statutes amend provisions of Article IV, Chapter 3, Title VII of the Revised General Statutes, only Chapter 10027, effective June 4, 1925, is expressly referred to in the refunding bonds dated July 1, 1925; and the subject and terms of Chapter 10026 which became effective June 11, 1925, do not indicate that its intent is to make the increased tax levy made therein, a part of the contract of refunding bonds which were authorized by Chapter 10027, so as to entitle the holders of such refunding bonds to enforce the increased acreage tax levies, at least unless additional bonds, as authorized and contemplated by Chapter 10026 to be issued, are duly issued. The intent of Chapter 10026 is to comply with the requirement of Chapter 9119, Acts of 1923, and those prior thereto under which bonds of the district were issued, that authority to issue additional bonds shall be accompanied by a levy of increased taxes sufficient to pay the additional bonds.
Sections 1165 and 1183, Revised General Statutes, and the resolutions of the Board of Commissioners of Everglades Drainage District similar thereto, relate to the uses of the proceeds of tax levies and other sources of revenue of the district, but do not regulate the obligations of bond issues. *Page 555 
On June 15, 1925, the Board of Commissioners of Everglades Drainage District in adopting resolutions for the issue of bonds to refund stated prior issues of bonds of the district, stated in a preamble to the resolutions that:
"The Board deems it advisable for the best interest of said District to refund all of the foregoing bonds by the issuance of a like amount of refunding bonds bearing a lower rate of interest, and extending the maturity of said bonds so that only a comparatively small amount, if any, will have to be paid off within the coming ten years, and thereby provide more money out of the taxes already levied with which to carry on needed construction work."
and resolved that:
"Said bonds shall recite that they are issued under, pursuant to, and in full compliance with the Constitution of the State of Florida and the Statutes of said State, including among others Chapter 10027, approved June 4, 1925, and Acts amendatory thereof and supplemental thereto, and shall pledge the faith and credit of the Board of Commissioners of Everglades Drainage District for the prompt payment of the principal and interest thereof."
In accordance with the resolutions under which they were issued, each refunding bond contains the following:
"This bond is issued for the purpose of refunding certain valid, existing and outstanding bonded indebtedness of said District, under and pursuant to, and in full compliance with the Constitution of the State of Florida and the Statutes of said State, including among others Chapters 10027, approved June 4, 1925, and Acts amendatory thereof and supplemental thereto, and in pursuance of resolutions and proceedings of the Board of Commissioners of Everglades Drainage District duly had and adopted * * * and the full faith, credit and resources of said Board of Commissioners *Page 556 
of said District are hereby pledged for the punctual payment of the principal and interest of this bond."
The Constitution of the State of Florida does not provide for or regulate the issue or the payment of bonds of a drainage district, though the Constitution does regulate the enactment of statutes and forbids an impairment of the obligation of contracts and requires due process of law. The validity of statutes is not involved here.
While it is stated in the bonds that they are issued "under and pursuant to, and in full compliance with * * * the statutes of the State, including among others Chapter 10027, approved June 4, 1925, and Acts amendatory thereof and supplemental thereto," "the statutes * * * and Acts amendatory thereof and supplemental thereto" that are referred to are those which relate to the same branches of the general subject of Article IV, Chapter 3, Title VII, Revised General Laws, viz: the issue and the obligations and payment of the previous original bonds and the instant refunding bonds. This is given emphasis by the words, "including among others, Chapter 10027, Approved June 4, 1925," which Chapter relates to refunding bonds, and by not also referring to Chapter 10026, approved June 11, 1925, which does not relate to refunding bonds, but to additional bonds and to an increased acreage tax levy, such latter Chapter being also in force when the refunding bonds were issued, dated July 1, 1925. The refunding bonds were not issued "under, pursuant to, and in full compliance with" Chapter 10026, for that chapter relates to additional bonds and to an increased acreage tax levy; but the refunding bonds were issued under Chapter 10027, predicated upon the same tax levy of Chapter 9119, Acts of 1923, which became a part of the contract of the bonds that were refunded when additional *Page 557 
bonds were issued under Chapter 9119, as provided therein.
Chapter 10026, authorizing the issue of additional bonds and making an increased levy of acreage taxes, repeals all laws and parts of laws in conflict with the provisions of the Act, but such repeal does not affect the rights of holders of the original bonds and the refunding bonds to enforce the acreage tax levy made by Chapter 9119, Acts of 1923, which, upon the issuance of additional bonds thereunder, became a part of the contract obligation of the original bonds that were refunded as well as of the refunding bonds that were issued to redeem the original bonds of the district.
In other respects, the opinion prepared by Judge CAMPBELL is concurred in.
BROWN, J., concurs.