Untitled Texas Attorney General Opinion ( 1966 )

Hon. Clarence L. Darter Opinion NO..C-776
County Attorney
Childress County Courthouse Rer Proper distribution of
Childress, Texas certain assets between
county and newly estab-
lished hospital district,
Dear Sir, and related questions.
You have requested an opinion in regard to the
above matter. We quote from your request as follows:
"Under the provisions of Article &&g&q-43,
an election was recently held In Chlldreaa County,
and the Childress County Hospital Dlatrict was
created, . . . .
"Previously, Childress County had operated
a County Hospital, and under Section 2 of the
act authorizing the Hospital District, certain
of the assets of the County Hospital are to be
transferred to the Hospital District, the wording
of the statute being 'There ahall,be transferred
to it the title to all lands, buildings, improve-
ments and equipment in anywise pertaining to the
hospitals or hospital system owned by Chlldress
County.'
"Certain funds an&accounts receivable exist
which have been accumulated during the existence
of the County Hospital, and the question arises
as to whether these funds and accounts should
also be transferred by Childress County to the
Hospital District. The funds and accounts are
as follows:
"1 . Interest and sinking funds. The County
Hospital was purchased and Improved with funds
derived from the sale of permanent improvement
bonds,' and approximate1y~$116,000.00 remains un-
paid upon these bonds. Childress County has,
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Hon. Clarence L. Darter, page 2 (C-776)
created an interest and sinking fund, with a
present balance of $30,61g.OO in connection
with its permanent improvement bonds.
“In 1963 the County Hospital was air-condi-
tioned and permanent improvement bonds were
issued in connection with such expenditures.
$14,000.00 of these bonds are outstanding. The
sum of $14,000.00 from the operating revenues
of the County Hospital has been placed in a
savings account designated aa an Interest and
sinking fund for these particular bonds.
“2. Accounts Receivable. During its
existence the County Hospital placed upon its
books a number of aacounts. The amount of money
that may be realized from these accounts Is un-
certain, although some percentage of the accounts
are likely to be paid.
"3 . County Hospital Operating Funds. On
the day the Childress County Hospital District
was created, the County Hospital had the total
sum of $37,017.37 In its possession, which rep-
resented revenue from operations of the hospital,
$10,774.67 of this total sum was in a regular
checking account, and the balance thereof ia
represented by time deposit certificates and
savings accounts issued in the name of the
County Hospital, and bearing interest.”
Subsequent to the opinion request, we have learned
from your office, and the office of your county judge, that
Childress County has never levied any taxes for the operation
of the County Hospital. Consequently, the question of whether
tax money is present in the assets and accounts involved, and
what effect the presence of tax money would have upon diaposi-
tion of the aasets and accounts, is not present in this opinion.
Article 4494q-43, Vernon’s Civil Statutes, autho-
rizes the creation of the Childress County Hospital District.
Section 2 of said Article is quoted in part a8 follows:
“The District herein authorized to be
created shall take over and there shall be
transferred to it title to all lands, build-
ings, improvements and equipment in anywise
pertaining to the hospitals or hospital system
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Hon. Clarence L. Darter, page 3 (c-776)
owned by Ch1ldresa County and any city or town
within such County. . . . Such District shall
assume full responsibility for providing medical
and hospital care for its needy Inhabitants
and shall assume the outstanding Indebtedness
which shall have been incurred by any city or
town or by Childress County for hospital
purposes friar to the creation of said
District.
The above quoted Section of Article 44949-43
does not provide for the disposition of the assets and accounts
in question.
In regard to .the Interest and sinking funds in
the Instant case, it Is our opinion that Eexar County Hospital
District v. Crosby, 160 Tex. 116, 327 S.W.2d 445 (1959') would
control the aisoosition of thia fund. The Court stated,
(page 448); -
"As between the city and the county on
the one hand and the District on the other, the
effect of the assumption by the latter of pay-
ment of the bonds should be construed as an
assumption of the payment of so much of the
bonds as cannot be retired by the sinking funds
on hand. It is our view that the custody of
the sinking fund heretofore accumulated should
remain In the Cltv and Countv, with the reouire-
ment that suah funds, inc.luai& all interest
which may have accumulated from the investment
thereof, be applied toward retirement of the
bonds first maturing." (Emphasla added)
The Court In the Bexar case, supra, held that the
hospital district could not compel the City and County to
transfer the Interest and Sinking Fund but the fund could be
voluntarily transferred as long as the fund was used to retire
the outstanding indebtedness regardless of who had custody
of the fund. The Interest and Sinking Fund in the instant
case may be treated in the same manner.
Prior to creation of the Childress County Hospital
District, the accounts receivable and the operating expense
fund were property of the county and subject to the control
of the Commissioners Court. Article 4484, Vernon's Civil
Statutes, provides, in part, a8 follows:
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Hon. Clarence L. Darter, page 4 (c-776)
11
. . .the board shall certify all bills
and accounts, including salaries and wages,
and transmit them to the Commissioners Court,
who shall provide for their payment in the
same manner aa other charges against the
COUnty are Daid." (Emphasis added)
Article 4485, Vernon's Civil Statutes, provides,
In part, as follows:
"He fiospital Superintendent7 shall
collect and receive all moneys due the
hospital, keep an accurate account of the
same, report the same at the monthly meeting
of the board of managers, and transmit the
same to the county collector." (Emphasis
added)
In a prior opinion this office ruled that revenuea
from operation of a county hospital should be delivered to
the county treasurer for deposit b such county. Attorney
General's Opinion No. v-1265 (19517 .
Eased upon the statutes providing for the dlsposi-
tion of these funds prior to the establishment of the hospital
district and the fact that the legislature waa silent concern-
in these assets and funds in the enabling act (Article 4494q-
437, it Is our opinion that the accounts receivable and the
operating expense fund are the property of Childross County
and must remain with the county. Harris County Flood Control
Dlst. v. Mann, 135 Tex. 239, 140 S.W.2d 1096 (1940) p. 1103-1104.
You also requested an opinion from this office on
the validity of a proposed contract to distribute these funds
between the county and the district. A copy of the contract
was attached to your opinion request. In light of the above
stated, the only matter which may be disposed of by mutual
agreement are the Interest and sinking funds to retire the out-
standing bonds. The county can relinquish custody of these
funds to the Hospital District, but the funds, and all interest
resulting from the investment thereof, can only be used to re-
tire the outstanding bonds first maturing regardless of whether
it is transferred,to the district or remains with the county.
SUMMARY
-------
Either Childress County or the Childress
County Hospital District may have custody of
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Hon. Clarence L. Darter, page 5 (c-776)
the interest and sinking funds established to
retire the hospital bonds so long aa the slnk-
lng funds, and all interest from the invest-
ment thereof, are used to retire the outstand-
ing bonds first maturing. Bexar County Hospital
District v. Crosby, 160 Tex. 116, 327 S.W.2d 445
71959).
The accounts receivable and the operating
expense fund of Childress County Hospital are
county property and cannot be transferred to the
hospital district by contract.
Yours very truly,
WAGGONER CARR
Attorney General
JCMcC:sck
APPROVED:
OPINION COMMITTEE
W. 0. Shultz, Chairman
John Reeves
John Banks
Paul Phy
Robert Flowers
APPROVEDFOR THE ATTORNEYGENERAL
BY: T. B. Wright
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