Court Opinion

ID: 3394371
Source: CourtListenerOpinion
Date Created: 2016-07-05 18:59:12.571493+00
Date Added: 2024-06-11T14:02:54.226411
License: Public Domain

The arguments on rehearing are predicated mainly upon the suggestion that the Court overlooked the contentions for respondents that the bonds in controversy, issued by the municipalities, and by statutory authority assumed by the Port District, are illegal and void ab initio upon the asserted ground that the issue of such bonds by the municipalities violates the provisions of Section 10, Article 9 of the Florida Constitution that: "The Legislature shall not authorize any county, city, borough, township or incorporated district to become a stockholder in any company, association or corporation or to obtain or appropriate money for, or to loan its credit to, any corporation, association, institution or individual." Decisions of this and other courts are cited, which, it is argued, support the contentions made. Much industry, research, and ability *Page 57 
of counsel are shown by the briefs which have been of great assistance to the court. The quoted provisions of the Constitution is controlling in cases where it is applicable. See Brumby v. City of Clearwater, 108 Fla. 149 So. 203.
The statutes applicable to this case do not authorize any city or district to become a stockholder in any company, association, or corporation, or to obtain or appropriate money for, or to loan its credit to, any corporation, association, institution, or individual; and it is not contended that either of the cities or the district has become a stockholder in any company, association or corporation. But it is contended that the bonds in controversy are illegal and void because of stated activities of J. W. Young resulting in a tripartite agreement, and because of the agreement itself entered into June 28, 1926, between the City of Fort Lauderdale, party of the first part, the City of Hollywood, party of the second part, and Hollywood Land  Water Company, the Home Seekers' Realty Company, Hollywood Development  Harbor Company, all Florida Corporations, and J. W. Young, an individual, parties of the third part, having reference to the issue of bonds by each of the cities and the use of the proceeds thereof for the construction of a harbor improvement situated in both cities, such harbor being now called Port Everglades. It is argued that in issuing the bonds the cities severally do in effect obtain or appropriate money for, or lend the credit of the cities to, the corporations and that the individuals who are the parties of the third part to the tripartite agreement of June 28, 1926, thereby in effect violating the above quoted provision of Section 10, Article 9 of the Constitution, and rendering the bonds issued by the cities for the harbor improvement illegal and void ab initio.
A purpose of the quoted organic provision is to prohibit *Page 58 
the use of public funds in enterprises or projects in which private parties have private rights of ownership or use. There is in the organic provision no purpose to forbid contributions by private parties to an enterprise or project that is wholly public in its nature, ownership, management and use.
In the cases principally relied on by counsel for respondents the statutes attempted to expressly authorize the use of public funds for enterprises or projects in which private parties had private property rights of ownership or use. See Pleasant Township v. Aetna Life Ins. Co., 138 U.S. 67, 11 S. Ct. 21534 L. Ed. 864; Lord v. Denver, 58 Colo. 1,143 P. 284, L.R.A. 1915B, 306 Ann. Cas. 1916C 893. Citizens' Sav.  Loan Association v. Topeka, 20 Wall. 655, 22 L. Ed. 455, involved a manufacturing enterprise. In Munroe v. Reeves, 71 Fla. 612,71 So. 922; State, ex rel. Nuveen, v. Greer, et al., 88 Fla. 249,102 So. 739, 37 A. L. R. 1298; Brown v. City of Lakeland,61 Fla. 508, 54 So. 716; Holland v. State, 15 Fla. 455; and, State v. L'Engle, 40 Fla. 392, 24 So. 539, the statutes expressly authorized the bond issues that were impliedly forbidden by the Constitution. See, also, Johnson v. Board, 81 Fla. 503,88 So. 308; Leonard, et al., v. Frankin, et al., 84 Fla. 402,93 So. 688. Here the public harbor project and the bond issues are authorized by statute, and are not expressly or impliedly forbidden by the Constitution. The project is a public and not a merely quasi public improvement.
In this case the statutes do not authorize private parties to participate in the control of the public improvement project, which is a deep-water port harbor connected with navigable waters of the Atlantic Ocean. Private parties have no private ownership rights in this harbor. The charter acts of the cities authorize the issue of municipal bonds for purposes that fairly include the public harbor project *Page 59 
for which the bonds were issued. Illegality in the proceedings taken in issuing the bonds is not shown. The bonds were validated by judicial decree under the statute before they were sold. The bonds issued by the City of Fort Lauderdale were validated by Chapter 12739, Special Acts of 1927. See also Chapter 12877, Special Acts of 1927. The validating judicial decrees were not appealed from and are not shown to be invalid. The bonds are not illegal on their face. It is not made to appear as against the statutes, and the court decrees that the municipal bonds were issued to obtain money or credit for private parties. An unlawful use of the proceeds of bonds legally issued and sold may not affect the validity of the bonds in the hands of bona fide holders for value. If property owners and others are benefited by the public project, the municipal bonds issued for the public project are not thereby rendered invalid; the public project being by the statute made a municipal purpose. See Hunter v. Owens, 80 Fla. 812,86 So. 839; City of Venice v. State, 96 Fla. 527, 118 So. 308; West,et al., v. Town of Lake Placid, 97 Fla. 127, 120 So. 361; Whitney v. Hillsborough County, et al., 99 Fla. 628,127 So. 486. Neither the Constitution nor the statute forbids private parties to contribute to the public improvement, no private rights being acquired in the public project by the contributors.
There are averments in the answers of respondents to the effect that J. W. Young and his corporations acquired the bed of Lake Mabel and surrounding lands aggregating approximately 12,000 acres, the greater portion of the land being low, swampy marsh land which required drainage and filling in to make it habitable; that under glowing advertisements the land was subdivided, and sales to the public aggregated $75,000,000; that when the City of Hollywood *Page 60 
was created in 1925, J. W. Young and his companies owned 80 per cent. of the land in the city and that J. W. Young and his employees were named commissioners of the city for four years; that J. W. Young and his companies undertook to build a deep-water harbor at Lake Mabel, now known as "Port Everglades," at a cost of $15,000,000, and issued and sold to the public $5,000,000 of bonds of the Hollywood Development 
Harbor Company: that the project failed; "that some time prior to the 28th day of June, 1926, the said J. W. Young and his Hollywood Allied Companies for the purpose of relieving himself and his corporations from the burden of defraying the cost of the construction of said deep water harbor at Lake Mabel and for the purpose of fulfilling and carrying out their said scheme and plan so advertised and published as aforesaid for the construction of said deep water harbor at Lake Mabel the purpose of which was by the said J. W. Young and his Hollywood Allied Companies calculated to be of great private gain and financial benefit to the said J. W. Young and his Hollywood Allied Companies commenced negotiations with the officials of the said cities of Hollywood and Fort Lauderdale, which last named city is a municipal corporation organized and existing under a special charter in the State of Florida, to-wit, Chapter 10552, Special Acts of 1925, with the view of converting the construction of said deep water harbor into a public enterprise, and of inducing the said Cities of Fort Lauderdale and Hollywood of defraying and paying a portion of the costs and expenses of constructing said deep water harbor; that said negotiations resulted in the execution of an agreement bearing date June 28, 1926, commonly known as the tripartite agreement."
The above and other like and kindred averments do not *Page 61 
render illegal the issues of municipal bonds involved in this case, when no illegality is shown in the statutes and the proceedings had thereunder resulting in the bond issue. It is not shown that J. W. Young or his employees acted for either city in issuing the municipal bonds or in making contracts with J. W. Young or his corporations.
The tripartite agreement of June 28, 1926, contains, among others, these statements:
"2. That the construction of a deep water harbor at Lake Mabel is a feasible and practicable project of statewide, even nation-wide importance, and such construction will be particularly advantageous to the municipalities herein named.
"3. That the contracting parties deem it to the best interests of the public that said harbor be constructed, maintained and operated as a public enterprise."
This indicates the nature of the project as a public improvement. The agreement contemplated the issue of $2,000,000 of bonds by each of the two cities to be used in the public harbor improvement project, the proceeds of the bonds to be used within the limits of the city issuing the bonds. The corporations and the individuals who were the parties of the third part to the tripartite agreement owned lands used in the harbor improvement, and they were to contribute one-third of the cost of the project and in return for the deposit of excavated material on lands of the third parties, to convey to each city land therein to be used for the sole exclusive, and only purpose of constructing municipal docks, piers, slips, wharves, and warehouses, or else to revert. The private parties were to have credit for what they had expended in constructing the harbor. Such parties of the third part were also to dedicate to the public for harbor purposes portions of the bed of Lake Mabel owned *Page 62 
by the parties of the third part; and to dedicate stated land for street purposes. The private parties were given no rights of ownership, use, or control in the public harbor project. Contracts for the harbor improvements were to be between the cities severally and the construction contractors, the contracts by each city having relation to improvements within its limits. The corporations, and the individual who were parties of the third part to the agreement with the two cities, were to have no right of private ownership or user in the harbor, the subject of the public improvement. Thus, the harbor, a public improvement located in two cities, was under the control of the two cities; the corporations and the individual who were the parties of the third part to the tripartite agreement of June 28, 1926, being merely contributors to the construction of the public improvement without any right in its ownership, use, or management except that common to the public.
An agreement dated October 27, 1927, between the Broward County Port Authority, the two cities, and the several private parties, substituted the Port Authority for the two cities, and is of similar import to the agreement of June 28, 1926. The Port Authority had statutory authority to assume the project then being constructed with appropriate power of taxation for the authorized purposes.
The charter act of the City of Fort Lauderdale, Chapter 10552, Special Acts of 1925, authorized the city to issue bonds for municipal purposes and gave the city broad and comprehensive powers, including the power "To establish, construct, maintain, operate and control public landings, public wharves, and docks within and without the City; * * * to dredge or deepen the harbor or river or any branch or portion thereof. * * *" Section 7 (j). See validating Acts as to "harbor bonds," Section 2, c. 12739, Special Acts *Page 63 
of 1927. The power to impose taxes for the authorized purposes was given by the statute.
The charter Act of the City of Hollywood, Chapter 11519, Acts of 1925 (Ex. Sess.), authorized the city to issue bonds for municipal purposes and gave the city broad and comprehensive powers, including the power:
"To construct and improve, maintain and operate canals, sea-walls, waterways and bathing beaches.
"To establish, maintain and operate public landings, piers, public wharves and docks within the City; * * * to dredge or deepen the harbor, river, canal or any branch or portion thereof. * * *" Article 2, Section 2, Subds. 18, 19.
Appropriate taxing powers for authorized purposes were conferred.
On June 28, 1926, the two municipalities and private parties entered into a tripartite agreement, referred to above, for the construction of deep-water harbor, within the limits of the two cities, each city to contribute one-third of the cost to be used in its borders, and the private parties the other third of the cost of the harbor and its incidental improvements. Each city issued $2,000,000, of bonds for the purposes within the powers conferred by the respective charter acts. Under such agreement and supplemental agreements, work on the harbor project proceeded.
Chapter 12562, Special Acts of 1927, established Broward County Port District, covering the territory within the limits of the City of Fort Lauderdale and within the City of Hollywood, and other territory in addition thereto. The governing body of the district was designated Broward County Port Authority, consisting of officers of the district. The Port Authority was by the statute given power, among other things, to create and improve for harbor purposes any waterways within the district, and to contract with municipalities *Page 64 
in the district for the purposes authorized by the Act, and to assume contracts of the municipalities pertaining to the work authorized by the Act. The power to impose taxes for the authorized purposes was also conferred by the statute.
On October 27, 1927, subsequent to the enactment of Chapter 12562, Special Acts of 1927, the Broward County Port Authority, the two cities, and the several private parties entered into an agreement supplementary to the tripartite agreement of June 28, 1926, above referred to, by which the public harbor project was transferred to the Port Authority of the district. This agreement does not invalidate the bonds. There appear to be no private ownership or user rights in the public harbor project.
By Chapter 13940, Special Acts of 1929, approved May 7, 1929, the Port Authority, representing the Broward County Port District, was "expressly authorized and empowered by resolution to assume the payment of, and thereby become primarily obligated to pay, and pledge its full faith and credit for the purpose of paying, any bonds heretofore voted, issued and sold by both or either the City of Fort Lauderdale or the City of Hollywood, municipal corporation situate within said District, for harbor purposes, and/or to assume the payment of and become primarily obligated to pay and pledge its faith and credit for the purpose of paying, any such bonds heretofore voted, issued or disposed of by either or both of said municipalities, the proceeds of which have heretofore or may hereafter be expended in the construction and/or maintenance of Port Everglades (formerly Lake Mabel Harbor); provided, however, that the total amount of bonds, payment of which may thus be assumed by said Port Authority, so issued, sold or disposed of by the said City of Fort Lauderdale shall not *Page 65 
exceed in the aggregate sum of Two Million ($2,000,000.00) Dollars as principal, plus accrued and unpaid interest thereon, and provided also that the total amount of bonds, payment of which may be thus assumed by said Port Authority, so issued, sold or disposed of by the City of Hollywood shall not exceed in the aggregate the sum of Two Million ($2,000,000.00) Dollars as principal, plus accrued and unpaid interest thereon." Section 5.
The power of taxation was conferred for the purposes authorized by the statute. The above-quoted provision refers to (1) bonds theretofore "voted, issued and sold" "for harbor purposes," and to (2) bonds theretofore "voted, issued or disposed of" "the proceeds of which have heretofore or may hereafter be expended in the construction and/or maintenance of Port Everglades" within the limits stated.
On July 10, 1929, the Broward County Port Authority, the governing body of Broward County Port District, adopted a resolution reciting in effect that each of the municipalities, City of Fort Lauderdale and City of Hollywood, had issued and sold $2,000,000 of negotiable bonds, the proceeds of which bonds were expended in paying a part of the cost of constructing the harbor of Port Everglades in the district; and that each of said cities had transferred to the Broward County Port Authority the public improvement then being constructed, called Port Everglades, and had also transferred to the Broward County Port Authority the unexpended proceeds of all of said bonds for use in the construction of the harbor; and that in consideration thereof the Broward County Port Authority contracted to pay to each of said cities the principal and accrued interest upon said bonds; and that it was agreed that the Broward County Port Authority, when lawfully authorized to do so, would by resolution expressly assume the payment of said *Page 66 
bonds; that pursuant to the statute authorizing such assumption (Chapter 13940, Special Acts of 1920), "Be it resolved that the Broward County Port Authority has assumed and hereby assumes the payment of, and by the adoption of this resolution becomes primarily obligated to pay, and pledges its faith and credit for the purpose of paying, all of the bonds so issued and sold by each of said cities of Fort Lauderdale and Hollywood as hereinabove recited," the private parties relinquished their rights, if any they had, to the Broward County Port Authority.
Chapter 15107, Special Acts of 1931, abolished "Broward County Port District," established under Chapter 12562, Special Acts of 1927, as amended by Chapter 13940, Special Acts of 1929, repealed such two chapters and established a new Broward County Port District within the same territory with the same governing authority. Sections 4 and 5 of the Act provide:
"That the title, rights, ownership of property, uncollected taxes due, claims, judgments, decrees and choses in action held or owned by the Broward County Port District, or its governing Body, the Broward County Port Authority, shall pass to and be vested in the Broward County Port Authority, the governing body of the new Broward County Port District, established and organized under this Act to take the place of and succeed the Broward County Port District hereby abolished.
"That no obligations or contracts of the Broward County Port District, and/or the Broward County Port Authority, including bonds heretofore issued or authorized or assumed by the Broward County Port District shall be impaired or avoided by this Act, but any such debts and obligations shall pass to and be binding upon the new Broward County Port District and/or Broward County Port Authority, which is *Page 67 
hereby organized and created. That the bonded indebtedness of the City of Fort Lauderdale, and of the City of Hollywood, Florida, heretofore assumed by the Broward County Port District under the Port Act herein repealed shall be the valid and binding obligation of the Broward County Port District hereby created and established."
Municipal bonds issued without competent legal authority or for a purpose that is forbidden by controlling law are invalid even in the hands of bona fide holders for value. And recitals of compliance with law contained in municipal bonds, cannot confer authority not legally given to issue the bonds, 44 C. J. 1248; State, ex rel. Nuveen, v. Greer, 88 Fla. 249,102 So. 739; 37 A. L. R. 1298; Holland v. State, 15 Fla. 455; State, exrel. Bours, v. L'Engle, 40 Fla. 392, 24 So. 539; Brown v. City of Lakeland, 61 Fla. 508, 54 So. 716; Munroe v. Reeves, 71 Fla. 612,  71 So. 922; Weinberger v. Board of Public Instruction,93 Fla. 470, 112 So. 253; Jones v. McMahon (Fla.) 151 So. 712; First Natl. Bank of Key West v. Board of Public Instruction,107 Fla. 525, 145 So. 203; O'Brien v. Wheelock, 184 U.S. 450,22 S. Ct. 354, 46 L. Ed. 636; Sutliff v. Lake County Comm'rs,147 U.S. 230, 13 S. Ct. 318, 37 L. Ed. 145. Essential requirements of a statute authorizing the issue of bonds must be complied with, or the bonds will be invalid. Bissell v. Spring Valley Township, 110 U.S. 162, 3 S. Ct. 555, 28 L. Ed. 105.
Where there is adequate legal authority for the issue and sale of municipal bonds and the bonds are issued for an authorized municipal purpose, mere administrative or ministerial irregularities in issuing the bonds may not render the bonds invalid in the hands of a bona fide holder, particularly when the bonds contain a statement that the laws have been fully complied with in issuing the bonds. See *Page 68 
Crawford v. State ex rel., 110 Fla. 301, 149, So. 340; State v. Rodes (Fla.) 151 So. 289; Jefferson County v. B. C. Lewis 
Sons, 20 Fla. 980; Town of Aurora v. Gates, 125 C.C.A. 329, 208 F. 101, L.R.A. 1915A, 910, and notes. An illegal use of the proceeds of bonds legally issued and sold to bona fide
holders for value may not affect the validity of the bonds. 44 C. J. 1247.
While the purpose for which, and the extent to which, bonds of a municipality may be issued are to be defined by statute, yet where such bonds are to be paid through the exercise of the power of taxation, organic limitations upon the taxing powers of the municipality may also limit or control the power to issue bonds to be paid by taxation.
Where the Constitution forbids the Legislature to authorize a municipality to obtain or appropriate money for, or to loan its money to any corporation, association, institution or individual, bonds authorized and taxes levied under a valid statute for a lawful purpose cannot legally be used for the forbidden purpose. See Brumby v. City of Clearwater, 108 Fla. 633,  149 So. 203; and an unlawful use may be restrained; but the proceeds of bonds duly authorized and legal tax collections may be used for lawful purposes under valid statutes.
Although Chapter 9294, Acts of 1923, Section 250, Compiled General Laws, makes it unlawful for any person to vote or participate in any county, district, or other bond election held in this state, who is not a freeholder therein, and who is not otherwise qualified as a voter therein, yet a special or local law prevails which is inconsistent with such general law by prescribing different qualifications for electors in an election held to authorize the issue of municipal bonds. Section 24, Art. 3, Section 8, Art. 8, Constitution. See State v. City of Avon Park, 95 Fla. 494, *Page 69 118 So. 223; West et al., v. Town of Lake Placid, 97 Fla. 127,120 So. 361.
The two cities and the port districts are public entities under statutory authority and their powers and obligations are regulated by statutes shown to be sufficient to authorize the issue by the two cities respectively of the bonds in controversy as well as their assumption by the district. Fraud in procuring the issue or the assumption of the bonds is not shown; and it does not appear that the bonds were issued to obtain or appropriate money for, or to loan the credit of the cities to, any corporation, association, institution, or individual.
It is averred that the "plan provided that the City of Hollywood and the City of Fort Lauderdale would not own said project when completed, and would not control, regulate or operate said harbor, nor would the same be used in carrying out the municipal functions of Hollywood and Fort Lauderdale, but on the contrary the said project was to be used in stimulating business so J. W. Young and his Hollywood Allied Companies would have a ready market for their vast areas of land owned adjacent to, or in the vicinity of, said harbor." These averments are not sustained by the statutes of the record proceeding had in issuing the bonds.
Counsel for the respondents state that the two cities were not to be the owners of the project, and were not to have any control over the project; and that the bonds of the cities were to be used for the construction of an incomplete project. Apparently the proceedings contemplate a completed public improvement harbor project, and the private parties are given no authority over the public improvement which the cities had authority to make; and even if the contemplated contribution by the private parties is not made or the project fails of completion, or is not successful, that *Page 70 
shows misfortune or lack of wisdom in undertaking the public harbor project, not lack of authority to exercise the powers conferred by the charter Acts upon the two municipalities. Subsequent events do not invalidate the bond issues, and illegal uses of bond proceeds may be enjoined or otherwise redressed by due course of law.
The bonds here in controversy issued by the City of Fort Lauderdale under Chapter 10552, Special Acts of 1925, and by the City of Hollywood under Chapter 11519, Acts of 1925 (Ex. Sess.) appear to be in accord with the statutes under which they were issued. They state that they were issued in accordance with the requirements of the Constitution and laws of Florida, and that all laws have been complied with in their issue. Board of Commissioners Henderson County v. Travelers' Insurance Co. (C.C.A.) 128 F. 817. They were issued for a public municipal project. See City of St. Petersburg v. Meyers (C.C.A.) 55 F.2d 810; Stockton v. Powell, 29 Fla. 1,10 So. 688, 15 L.R.A. 42. See also Bailey v. City of Tampa,92 Fla. 1030, 111 So. 119. The bonds are not illegal on their face, they have been judicially validated under the statutes, and pursuant to statutory authority, they were assumed by the governing authority of the Broward County Port District in 1929, before the amendment to Section 6, Article 9 of the Constitution, in 1930, was adopted, which required county, city and district bonds to be issued only upon an approving vote of specified classes of electors.
The statutes establishing the port district made no specific reference to the tripartite agreement between the two cities and the private parties; and even if the action taken under the tripartite agreement can be regarded as illegal, the bonds were legally issued for authorized municipal purposes and the public project for which the bonds were issued *Page 71 
has been transferred and relinquished to, and taken over by, the district, and the payment of the bonds has been assumed by the district under statutory authority, and the statute is not shown to be invalid. Where municipal bonds are legally issued, any illegal use of the bonds or their proceeds may be enjoined in appropriate proceedings. Even if some of the disbursements of the proceeds of the bonds issued by the two cities were unauthorized, the statute authorizes and the district took over the harbor improvement project and its assets and assumed the obligation of the bonds.
The authority given the district by Chapter 12562, Special Acts of 1927, as amended by Chapter 13940, Special Acts of 1929, to assume the bonded debt of the two cities incurred in the project transferred to the district, was ample, and the assumption of the bonds by resolution of the governing authority of the district, as authorized by the statute made the liability of the district for the payment of the bonds complete and enforceable without the aid of Chapter 15107, Special Acts of 1931, which had the effect of transferring the assets and liabilities of the old district entity to the new district entity having the same name and covering the same territory with the same governing authority. No liabilities were imposed by Chapter 15107 other than those existing under Chapters 12562 and 13940. No bonds were issued by the district under Section 6, Article 9, of the Constitution, as amended in 1930.
Even if it can be said that Chapter 12562, Special Acts of 1927, does not limit the power of taxation therein conferred, that power is not necessarily in question here, since Chapter 13940, Special Acts of 1929, amending Chapter 12562, limits the amount of bonds issued by the two cities which the district was authorized to assume. A failure to duly limit taxing *Page 72 
power of a statutory district does not necessarily destroy the corporate entity of the district or its legal functions.
Even if the lands are unconstitutionally included in the district, that does not ipso facto invalidate the district or its legal powers, and the remedy is relief of particular lands in the district from illegal taxation at the suit of the landowners. Consolidated Land Co., et al., v. Tyler, et al.,88 Fla. 14, 101 So. 280; Stewart v. Daytona  New Smyrna Inlet Dist. et al., 94 Fla. 859, 114 So. 545; Merriman v. Hutchinson,95 Fla. 600, 116 So. 271.
The wisdom of the authority conferred by the statutes is not subject to judicial review.
Rehearing denied in each case.
DAVIS, C. J., and WHITFIELD, ELLIS, TERRELL, BROWN and BUFORD, J. J., concur.