Boatright v. City of Jacksonville

Both the old bonds sought to be refunded and the proposed refunding bonds, or the resolution or ordinance authorizing their issue, pledge the "entire taxable property in the City of Jacksonville" as security for the payment of the bonds. The city had no power to make such a pledge. The legislature could not constitutionally authorize the city to make such a pledge. The city can pledge its taxing powers, and perhaps its own property not held for public purposes from which it cannot be diverted, but it cannot pledge the private property of its citizens, although such private property constitutes property which is subject to taxation. Such taxable property in the city, which does not belong to the city, but which belongs to individuals, firms and corporations, can only be pledged or mortgaged by its owners. The city can pledge its power to tax, and in the exercise of such power, if lawful taxes are not paid, it can as an incident to the enforcement of that power, acquire liens, and even the property itself at tax sales if the taxes remain unpaid, but the bondholder cannot exercise these powers, except in one respect, that is, he may buy at a tax sale if he becomes the highest bidder and pays his bid in cash, just as any other person can. So this clause in the refunding bonds is not legally authorized. This is so plain that no citation of authority is necessary.

It might be contended that by putting in this clause, the city intended to pledge its taxing power. But it did that by another clause — the clause by which the city bound itself to levy a tax each year sufficient to pay the interest and principal of the bonds as the same become due. There is also a clause pledging the full faith and credit of the city. These clauses amount to a pledge of the city's power to tax, which is the real essential security behind the bonds. And the bondholder can compel the city to exercise such power.

There is another feature of most of these bonds which is not allowable under Section 6 of Art. IX of the Constitution in refunding bonds issued without a vote of the people. I refer to the pledge of the net revenues of the city's electric light plant. This pledge was not contained in the old bonds, except as to one of the old issues, which contained a pledge in the authorizing ordinance of somewhat similar import. It is contended that this pledge of the net revenues of the electric light plant does not amount to the creation of any additional liability, nor impose any enlargement of the obligation of the original bond, so as to come in conflict with the previous decisions of this Court, including the recent case of State v. Citrus County, 157 So. 4, because the city charter put the same pledge behind the old bonds. It is true that the city charter Act of 1917 and the amendment thereto in 1931 (See Chapters 7659 and 15255 of Laws of Florida) did provide that all net revenues of the electric light plant and certain other city-owned utilities "shall be applied to the payment of interest on bonds and creating a sinking fund for the redemption thereof, as provided by law and ordinances underwhich said bonds were issued." But as I read this record there was only one of these original issues of bonds to which this section applied, for in only one of the authorizing ordinances does it appear that the net revenues of the electric plant were attempted to be pledged. Therefore most of these bonds enlarge the obligation of the old bonds by pledging new and additional revenues, and are not strictly speaking such refunding bonds as can be issued without the approving vote of the freeholders as provided in Section 6 of Article IX of the Constitution.

It appears that the Improvement Bonds of 1921, heretofore refunded under ordinance No. U-133, did provide that upon default for ninety days, the city commission should take possession of the electric plant and other revenue-producing property of the city and operate the same and apply the net proceeds to the payment of the principal and interest of such bonds. Thus it appears that only $120,000.00 of the bonds here sought to be refunded were secured in their inception by the net revenues of the electric plant.

If the illegal clause, attempting to pledge all the taxable property in the City of Jacksonville, can be stricken by amendment of the authorizing ordinance, or can be regarded as stricken on the ground that it is nugatory and of no effect one way or the other, and if the city amends the ordinance so far as to eliminate the pledge of the net revenues of the electric plant, then I think the proposed refunding bonds could properly be again submitted to the court for validation; but the present decree of validation should, in my opinion, be reversed.

In the present state of this record, I do not see how this Court can adjudicate the question as to whether homestead property can be taxed for the payment of the proposed refunding bonds. The contention that we should adjudicate that question is predicated by appellant upon the fact that both the old and the proposed refunding bonds pledged all the taxable property in Jacksonville, and hence by its terms covered homesteads as well as all other property. For the reasons above pointed out, I regard such pledge as being illegal and void, in toto, and hence we are not called upon to determine its possible operative effect for any purpose. See also in this connection State v. City of Miami, 157 So. 13.

I think this case should be reversed with leave to the lower court to permit the city authorities, if they see fit to do so, to make necessary amendments to their authorizing ordinance and the form of bonds therein provided, so as to make the proposed bonds refunding within the meaning of the Constitution as previously construed by this Court, and then to resubmit the case, with leave to the present intervener or any other citizen to interpose any objection permitted by the statute, and then to render such decree as the law and the facts warrant.