Opinion
Casey, Walton & Spain, of Miami, Fla., for plaintiff.
George Couper Gibbs, Atty. Gen., H. E. Carter and J. Compton French, Asst. Attys. Gen., and Robert J. Pleus, of Orlando, Fla., for defendant. The plaintiff obtained final judgment July 18th, 1938 in the amount of $22,138.49, together with costs.
This judgment was rendered upon past due bonds and coupons issued by the defendant, Monroe County, which bonds and coupons were parts of the following issues: County of Monroe Highway Bonds, Issue of June 1, 1925; County of Monroe Road Bonds, Issue of June 1, 1927.
Included in said judgment was interest after maturity on the items involved.
Pursuant to verified motion of the plaintiff, there was issued, under date of November 30th, 1938, an order to enforce payment of the said judgment out of moneys allegedly held by the State Board of Administration and applicable to such payment. This order would have taken the form of an alternative writ of mandamus, but under Federal Rules of Civil Procedure, 28 U.S.C.A.following section 723c, writs of mandamus, having been abolished by Rule 81(b), the procedure is governed by Rule 69. The said State Board of Administration is composed of the Governor, the Comptroller, and the Treasurer of the State of Florida, and was created under Chapter 14486, Laws of Florida, Acts of 1929, Ex. Sess. The State Treasurer is also made, by said Act, County Treasurer ex officio with reference to the funds being administered on behalf of the local units involved.
The said verified motion and order, as subsequently amended, recites the procuring of the judgment by the plaintiff, the return of execution on said judgment unsatisfied, and that the said State Board of Administration established, and until July 20th, 1938, maintained, a joint consolidated account then known and designated in its records as 'Road, Bridge and Ferry Bonds, all issues', wherein it placed and commingled and whereupon it disbursed moneys coming into its hands for payment of the principal and interest on all county-wide road, bridge, road and bridge, and ferry bonds issued by Monroe County, including the issues above mentioned, upon which plaintiff's judgment was founded; but that subsequent to said date the name of said account was changed to 'Road and Bridge Refunding Bonds', but that the same was merely a change in name, and is in fact the same identical account; that the said Treasurer ex officio now has in said account, under the control of the Board of Administration, including moneys theretofore remitted by the said Board of Administration to paying agent banks, but not yet disbursed by them, a sum of money amounting in the aggregate to $13,442.29, consisting of the following items:
Auto transportation mileage tax $1,502.28
Money originally placed in the County's Kanner Bill account and subsequently transferred from that account to the said joint and consolidated account when still known by its former name, after which it was forwarded to a paying agent bank for the purpose of paying interest on certain refunding bonds, and was then recalled and replaced in the said joint account ... 1,335.00
Money originally placed in the County's Kanner Bill account and subsequently transferred before the change in name of the said account, after which it was forwarded to a paying agent bank subject to recall by the Board of Administration ... 10,605.00
The order commanded the members of the State Board of Administration to convene and order paid out of the Monroe County account, known as 'Road and Bridge Refunding Bonds', including money not yet disbursed by the paying agent and remaining under the control of the said Board, the said judgment insofar as said moneys would go.
The members of the said Board of Administration, in response to said order to show cause, filed their answer wherein they admitted that there was an original consolidated account, but that now no moneys are placed therein; they denied that at the time of the service to show cause there were any funds in said account, but alleged that the records of the Board and the certification to it by the officials of Monroe County showed that the County-wide issues of bonds of Monroe County eligible to participate in the gasoline tax made available to the counties by the Legislature (Chapter 15659, Acts of 1931, Ex. Sess.) are shown to have been refunded by an issue of refunding bonds dated July 1st, 1936. It is further set up in the answer that the Board of Administration has in its control no funds to the credit of the original issues of bonds upon which the judgment was based, but that the only balances in their hands are the said amounts of $1,502.28 in Auto Transportation Mileage tax, and $1,335 in recalled funds; but that there had been no appropriation of the mileage tax moneys to pay the bonds on which plaintiff's judgment was based, and also that the recalled funds had been sent to the paying agent and recalled after ascertaining that certain coupons on refunding bonds for which the said moneys were sent to pay had been theretofore discharged.
The answer further sets up that each and every fiscal year since the adoption of Chapter 15891, Acts of 1933, generally known as the Kanner Bill, by proper resolution, County of Monroe had invoked the provisions of said Act, and had during each of said fiscal years refused or failed to appropriate the gasoline tax moneys in the county budget to any issue of bonds of said county, and that therefore the plaintiff had no statutory or contractual right to the use of any gasoline taxes for the payment of its judgment.
The answer further sets up that on December 9th, 1936, the County Commissioners of Monroe County adopted a resolution requesting the Board of Administration to transfer all assets and funds from the interest and sinking fund of the issue of bonds which were refunded by the said Road and Bridge Refunding Bonds dated July 1st, 1936, to the interest and sinking fund of the said refunding bonds, but that no such transfer was made for the reason that there were no funds or assets to the credit of said prior issues.
It is further alleged that on December 16th, 1937 the Board of County Commissioners adopted a resolution authorizing and requesting the Board of Administration to transfer sufficient funds from the Kanner Bill account (which is the separate account of gasoline tax moneys set up for those counties invoking the terms of said Chapter 15891, Acts of 1933, with no prior appropriation of said moneys for general debt service purposes in the county budget) of Monroe County to be used specifically for the payment of the interest coupons due January 1st, 1938 on the said refunding bonds of July 1st, 1936; a copy of said resolution attached to the answer also shows that the Board of Administration was requested to continue to hold gasoline moneys not transferred in the Kanner Bill account.
Again, on May 21st, 1938, a similar resolution as that passed on December 16th, 1937 was passed with directions to transfer moneys from the Kanner Bill account solely for the purpose of paying the interest due July 1st, 1938 on the outstanding refunding bonds. Pursuant to said resolutions, the Board of Administration did transfer sufficient moneys and remit the same to the paying agent named in the refunding bonds with instructions to use said funds solely for the payment of the interest coupons on said refunding bonds. It is recited that at the time of the service of the order to show cause the said paying agent had in its possession $10,605 remitted pursuant to said resolutions and the action thereon, solely for the purpose of paying interest coupons on the refunding bonds dated July 1st, 1936 and for no other purpose.
Subsequent gasoline tax moneys having accrued and having been placed with the State Board of Administration pursuant to Section 9 of Chapter 15659, Acts of 1931, Ex. Sess., and on December 30th, 1938 a similar verified motion was filed pursuant to which a similar order to show cause was issued as to said subsequently accruing gasoline moneys, and a similar answer was filed by the members of the State Board of Administration reciting that at the time of the service of said order there were no moneys in their hands, except as referred to in their prior answer, and that pursuant to a resolution of November 18th, 1938, similar in form to the prior transfer resolutions of December 16th, 1937 and May 21st, 1938, a transfer was made of $42,210 in gasoline taxes from the Kanner Bill account of Monroe County to the Road and Bridge Refunding Bonds account and remitted to the paying agent solely for the purpose of paying interest coupons due January 1, 1939 on the said issue of refunding bonds dated July 1st, 1936, and for no other purpose; that said funds were transmitted to the said paying agent by wire on December 31st, 1938, and that at the time of the issuance of the order to show cause on December 30th, 1938 the moneys were still in the Kanner Bill account.
Motion was filed to discharge the orders to show cause, oral argument was had, and written briefs were filed.
HOLLAND, District Judge.
I have given careful consideration to the motion for a discharge of the order to show cause, which motion was filed by the Members of the Board of Administration.
It is correctly stated in the memorandum-brief filed by the defendants, Members of the Board of Administration, that the pleadings in the case show:
1. That neither the bonds merged into the plaintiff's judgment, nor the statute pursuant to which such bonds were issued, contained a pledge of the gasoline taxes for the payment thereof, and that plaintiff has no contractual right to any gasoline taxes.
2. That the only funds involved in this proceeding are gasoline tax funds, and a small amount of automobile transportation taxes. No ad valorem taxes are involved.
The pertinent facts which control my decision include the following:
(a) That no ad valorem taxes are involved. (b) That there has been no appropriation by Monroe County of the gasoline taxes involved herein for the payment of the obligations, the character of which are those upon which the judgment in this case is based; and (c) That there has been an appropriation by Monroe County of the gasoline taxes involved herein for the purpose of paying certain interest maturities on the refunding bonds of Monroe County.
These features serve, in my opinion, to distinguish this case from the facts in the cases relied upon by the counsel for the plaintiff.
Gasoline taxes are subject to the first come, first served doctrine, when they have been appropriated in the County budget in reduction of pledged and otherwise collectible ad valorem taxes, or have been inextricably intermingled with ad valorem taxes, subject to that rule. See State ex rel. Andrews v. Sholtz, 120 Fla. 423, 162 So. 865. In the matter before me neither of these situations exist.
Plaintiff argues that the earmarking of the gasoline funds was ineffective by reason of the terms of the Board of Administration Act. The gasoline taxes here involved by resolution were first applied to the Kanner Bill account, and then withdrawn for a specified purpose, and plaintiff was never granted any contractual right therein. Furthermore, the funds were never commingled with ad valorem tax funds.
State ex rel. Suwanee River Bridge Co. v. Sholtz, 119 Fla. 460, 158 So. 812, deals with funds, both of a gasoline tax and ad valorem source. The same was true in State ex rel. Andrews v. Sholtz, 120 Fla. 423, 162 So. 865. The County in this case had appropriated its allocable gasoline tax revenues to the payment of any and all interest coupons, and then had supplemented this by ad valorem taxation.
Sholtz et al. v. State ex rel. Jones, 124 Fla. 164, 168 So. 803. This case dealt with gasoline tax moneys which had been duly appropriated as a commutation of unlevied ad valorem taxes contemplated to be otherwise collected to make up such fund. This is not the case here.
Sholtz v. State ex rel. Defoe, 128 Fla. 899, 176 So. 37. The County had appropriated its anticipated gasoline tax revenue to its road and bridge bond sinking fund, and thereafter exercised its statutory privilege of reducing its debt service tax levies that would otherwise have been required for the benefit of its outstanding unpaid road and bridge bonds for the support of which the sinking fund was established, and subsequently sought to earmark some of the revenues by appropriating them for payment of exchanged refunding bonds. In the instant case there never was an appropriation of the gasoline taxes to the unrefunded bonds.
Cone et al. v. State ex rel. Florida Securities, 185 So. 150. The County had appropriated its anticipated gasoline tax revenue to its road and bridge bond sinking fund, and thereafter had exercised its statutory privilege and levied ad valorem taxation in a reduced amount. Held that the County could not subsequently earmark any sinking fund assets by appropriating them solely to exchanged refunding bonds, without levying debt service taxes sufficient for payment of unrefunded and defaulted securities. The same distinction exists. In the case before me there has been no action by the County appropriating the gasoline taxes (and there is no ad valorem tax fund present in the hands of the Board) to all bonded indebtedness. The appropriation resolution of Monroe County was of gasoline taxes never before appropriated by the County to debt service, and plaintiff never became possessed of any vested right in said gasoline taxes. True these gasoline taxes had each year been appropriated under the so-called Kanner Bill, but were withdrawn from that account as was within the power of the County so to do.
State ex rel. Massey v. Cone, Circuit Court, Leon County, unreported case. In this case there were ad valorem tax funds commingled with gasoline tax funds. This fact, together with what has been said as to other cases, shows the distinguishing feature, in the opinion of this Court.
With reference to the automobile transportation taxes. There is nothing in the record to show that these funds were appropriated to the payment of County wide bonds, so I am not called upon to decide as to the effect of any such appropriation, and I hold that in the absence of any commingling with ad valorem taxes these funds are immune from the first come, first served doctrine.
Motion for discharge of the order to show cause granted in accordance with this opinion.