State v. City of Key West

TERRELL, J.: The City of Key West issued bonds for the purpose of acquiring an electric light and power plant hereafter referred to as “the electric system.” The principal and interest of the bonds is made payable solely from the net. revenues derived from the operation of the electric system and in no way constitute a lien or debt on the City. The full faith and credit of the City is not pledged for their security; neither are they secured by the electric system or any other property of the City. This appeal is from a final decree validating said bonds. Questions, one, two and three have to do with the matter of whether Chapter 8290, Special Acts of 1919 or Chapter 19922, Special Acts of 1939, Laws of Florida, is the Charter of the City of Key West and whether the bonds in question are authorized under either of these acts and if so which one. Inspection of the two acts shows conclusively that the latter act is the duly authorized Charter of the City of Key West. In so far as the issue of bonds in question is con *228 cerned, both acts are similar and the ordinance providing for their issue does not in terms refer to either act but the court below treated Chapter 19922, Special Acts of 1939, as the City Charter and we think he was correct. There was ample authority for the bonds under it. Dickey v. City of Fort Lauderdale, 136 Fla. 241, 186 So. 427. It is quite true that the powers of the City as expressed in its charter are general. It is authorized to establish, purchase, lease, condemn, or otherwise acquire an electric utility to supply the city and its inhabitants with light, power, and heat and to do all things necessary to that end. Such a power would certainly imply the means to effect all powers expressly granted. Ginsburg v. City of Daytona Beach, 103 Fla. 168, 137 So. 253; State v. City of Daytona Beach, 118 Fla. 29, 158 So. 300; State v. City of Hollywood, 131 Fla. 584, 179 So. 721; State v. City of St. Petersburg, 145 Fla. 206, 198 So. 837, and others. Whether the bosds so issued are designed as revenue bonds or revenue certificates is not material. Their import will be controlled by their legal effect rather than by the name given them in the ordinance. We find no objection to publication of the ordinance for issue of the bonds by title only , as that meets all requirements of the City Charter. It is next contended that the bonds in question should have been authorized by an approving vote of the freeholders as provided by Section 6, Article IX of the Constitution. There is no merit to this contention. The ordinance provides in terms that the bonds shall be payable solely from the net revenues from the electric system and from no other source. Neither the taxing power nor the credit of the City is in any way pledged to pay them. In case of default in payment, the holders of the bonds have recourse to nothing but the revenues from the electric system. Board of County Commissioners of Pinellas County v. Herrick, 123 Fla. 619, 167 So. 386; Brash v. State Tuberculosis Board, 124 Fla. 652, 169 So. 218; Kinsey v. Walton County, 136 Fla. 204, 186 So. 418, and many others. It is next, contended that the ordinance providing for the bonds is unconstitutional and invalid because it unduly limits *229 the freedom of petitioner in the management and control of the electric system in that it delegates unusual powers and duties to the trustee and the consulting engineer. The courts have recognized a distinction between bonds of a general obligation payable from the- taxing power and those of limited obligation payable solely from net revenues of a public utility. The bonds in question are of the latter class and the rights, powers, and duties of the trustee and consulting engineer do nothing more than provide for a sound fiscal business like administration of the electric system to the end that the bonds be paid as they mature with interest. In a situation like this, the utility is operated by the City as a business enterprise in its proprietary capacity rather than in its governmental capacity. State v. City of Daytona Beach, 118 Fla. 29, 158 So. 300. Closely akin to this question is the one charging that the ■ ordinance is invalid because it provides for the appointment of a receiver for the electric system in the event the bonds go in default for as much as thirty days or in the event the City fails in the execution of any provision of the ordinance for a like period. What we said in answer to the last question is a complete answer to this question but it is not out of place to cite Dickey v. City of Fort Lauderdale, 136 Fla. 241, 186 So. 427, in support of our conclusion on the point. It is last contended that Section Eight of the ordinance in so far as it authorizes the City to acquire the controlling capital stock of the Key West Electric Company violates Section 10, Article IX of the Constitution of Florida as follows: “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.” Mr. Chief Justice BUFORD, Mr. Justice CHAPMAN, Mr. Justice THOMAS, Mr. Justice ADAMS, and Mr. Justice SE-BRING are of the view that the effect of Section Eight of the ordinance and the procedure proposed to be followed there *230 under will make the City a stockholder in a corporation in violation of the quoted provision of the Constitution. They support this conclusion with Wheeler, et al., v. Philadelphia, 77 Pa. State 338. On this point, they think the judgment of the circuit court should be reversed with "directions for further procedings. The writer of this opinion is of the view that the judgment of the circuit court was correct and should be affirmed. It follows that the judgment is reversed with directions. CHAPMAN, THOMAS, ADAMS and SEBRING, JJ., con- • cur. BUFORD, C. J., concurs specially in conclusion. BROWN, J., dissents.