Untitled Texas Attorney General Opinion ( 1959 )

THE ATTORNEY GENEKAL
OF TEXAS
Honorable Ralph Prince Opinion NO. ww-630
Criminal District Attorney
Gregg County Re: Authority of the Gregg
Longview, Texas County Commlssloners~
Court to lease the
Dear Sir: county hospital.
In your recent letter you have requested our
advice as to whether Gregg County has authority to enter
into a certain lease of its county hospital considering the
circumstances hereinafter quoted from your letter:
"Gregg County owns and operates a County
Hospital under the authority of Article 4478 which
authorizes counties to provide for the care and
treatment of the County's sick . . . From time to
time the hospital has been improved and the
facllltles expanded by the Issuance of hospital
bonds, the last Issue of $500,000 being dated
May 15, 1955, authorized at an election held within
the County on February 12, 1955.
"Gregg County desires to lease Its hospital
to a non-profit Episcopal Church corporation for
a period in excess of five years and such lease
would provide that the hospital be operated as a
non-profit corporation, that it would accept Gregg
County charity which would be paid for by the Com-
missioners' Court at a 25% discount of the regular
rates; that such lease contract will be in all
things similar to the attached contract of lease
between Smith County, Texas, and the East Texas
Hospital Foundation."
Article 449&L, Vernon's Texas Civil 'Statutes,
provides in part:
"Section 1. Any county in this State having
a county hospital which Is operated by said county,
may, and such county Is hereby authorized to
lease such hospital, provided the Commissioners
Honorable Ralph Prince, page 2 (``-630)
Court of said county shall find and determine
by an order entered In the minutes of said Court
that it is to the best interest of said county
to lease such hospital. . . .'
Gregg County, acting by and through Its Commls-
sloners' Court, is therefore authorized by statute to
lease its county owned and operated hospital in the manner
provided in such statute. In our opinion this statute
contravenes neither the Constitution of the State of Texas
nor the Federal Constitution.
A county Is by Section 52 of Article III of the
Texas Constitution prohibited from lending its credit or
granting public money or thing of value in aid of or to any
individual, association or corporation whatsoever or becom-
ing a stockholder in same. By Section 3 of Article III of
our State Constitution, a county is enjoined from becoming
a subscriber to the capital of any private sorporation or
association or making any appropriation or donation or
loaning Its credit to same. Thus, it Is that the Commis-
sioners' Courts may not dispose of county property so as to
virtually amount to a donation. Llano County v. Knowles,
29 S.W. 549 (Civ.App. 1895). Clearly, Article 4494L,
Vernon's Texas Civil Statutes, does not violate any of these
constitutional provisions by authorizing a county to lease
its hospital.
We do not, however, have sufficient facts before
us to say whether the proposed lease contract accompanying
your letter amounts to a virtual donation of the county
hospital Inasmuch as such factors as the value of the hospi-
tal and Its equipment In relation to the benefits to be
derived by the county by virtue of the lease contract would
have to be considered. The One Dollar ($1) annual rental
to be received by the county from the lessee according to
the lease contract is patently so nominal as to not be
controlling on the question of whether a donation is being
made by the county. Again the benefit to the county from
being relieved of responsibility of operating the hospital
is a consideration which we cannot evaluate without knowing
what that responsibility has involved in the past or would
entail in the future. Bearing the aforesaid constitutional
provisions in mind, the Commissioners' Court can, however,
make a proper determination of the question in light of the
facts known to it.
It is apparent from the proposed lease contract
Honorable Ralph Prince, page 3 (Ww-630)
that the county does..not lend
. its credit or become a stock-
holder In or subscrlber to tne capital of the lessee and
does not enter upon a joint venture with said lessee since
control over the management and operation of the hospital
is ceded to the lessee, all debts of the hospital are avoided
by the county, and it is held safe from any liability which
might arise from the operation of the hospital. Further,
according to the lease contract, the county does not stand
to derive any financial gain from the operation of the hospl-
tal.
Insofar as the proposed lease contract provides
that the county will effect a sale of the hospital to the
extent that the laws of the State of Texas permit same at
some time in the future, if and when the lessee elects to
purchase the hospital, the Commissioners Court would be
acting without authority. No statute or constitutional pro-
vision authorizes Gregg County to sell its hospital or to
contract to sell its hospital in the future. The Commlsslonerst
Court is a court of limited jurisldction and has only such
powers as are conferred upon It by statute and the Constltu-
tion by express terms or by necessary implication. Childress
County v. State, 127 Tex. 343, 92 S.W.2d 1011 (1936); V
Rosenberg v. Lovett, 173 S.W. 508 (Clv.App. 1915, erro*f.);
m.W. 289 (Civ.Anp. 1925). The power to
lease neither expressly nor by Implication confers the power
to contract to sell. While Article 44$+L:,Vernon's Texas Civil
Statutes, empowers Commissioners' Courts . . . to lease such
county hospital to be operated as a hospital by the lessee of
same under such terms and conditions as may be satisfactory to
the Commissioners Court . . .)l (Section 4 of the statute),
the discretion thus conferred upon the Commissioners1 Courts
in setting the terms and conditions of such leases is obviously
limited to leases only and does not confer the power expressly
or,by Implication to contract to sell by Incorporating such a
provision in a lease agreement.
We assume that the Gregg County Commissioners’
Court in agreeing to '. . . co-operate fully with Lessee In
its endeavor to maintain and operate said hospital and assure
that the hospital is one of the finest and best equipped in
Texas, . . ." means only to co-operate with the lessee to the
extent allowed by the laws of the State of Texas. No approprla-
tion of public funds to charitable or non-charitable organiza-
tions managed and operated or controlled by private Individuals
can be made by a Commissioners' Court. Tex.Const. Art. III,
Sec. 50, Sec. 51 and Sec. 52; Tex.Const.Art. VIII, Sec. 3; and
Tex.Const. Art. XVI, Sec. 6. Upon the lease of the hospital
Honorable Ralph Prince, page 4 (WW-630)
it will, of course, cease to be a legitimate recipient of
county funds.
The proposed lease agreement does not delegate
or cede away the governmental function of providing for the
care and treatment of the county's charity patients. Our
counties are not limited by the Texas Constitution or any
statute to discharging their obligation to treat the indigent
sick by means of owning and operating a county hospital.
Article 4438, Vernon's Texas Civil Statutes, requires counties
not operating their own hospitals to send the Indigent sick to
public hospitals In the county. That, according to the lease
agreement, Is what Gregg County proposes to do. Under the
lease agreement the county will still determine who is eligible
for charity treatment and will send those it deems eligible for
such treatment to the hospital. The county does not, however,
bind itself to send charity cases to the lessee only. Further
the county continues to bear the financial burden of such treat-
ment and may determine when the patient is to be discharged.
Clearly the county's burden and duty toward charity patients Is
not shifted by the proposed lease agreement.
According to your letter, the Gregg County Commis-
sioners' Court roposes to lease the hospital for a period in
5) years. Leasing the hospital for a shorter
excess of five if
term would remove the question of constitutionality which is
raised by the fact that outstanding tax bonds Issued to Improve
and expand the hospital were voted at a time when Article 4494L,
Vernon's Texas Civil Statutes, authorized a lease of only five
(5) years qr less.
Section 16, Article I of the Texas Constitution, and
Section 10 of Article I of the Federal Constitution forbid the
enactment of laws impairing the obligations of contracts. In
our opinion, Article 4494L, Vernon's Texas Civil Statutes, does
not authorize the impairment of contracts within the meaning of
the aforesaid constitutional provisions.
In Texas It has been held that a contractual relatlon-
ship arises between the county and the voters of a bond issue,
as well as with the county and the bondholders, and that the
"vital conditions and safeguards surrounding the tax" became a
part of the contract. David v. Timon, 183 S.W. 88 (Civ.App.
1916); San Saba County v. McGraw, 130 Tex. 54, 108 S.W.2d 200
(1937). However, the statutes which have been held to be ln-
corporated into the contract between the voters and the county
or other taxing unit by a bond election have dealt only with
the tax or bonds, as distinguished from the use to which the
. .
Honorable Ralph Prince, page 5 (WW-630)
public improvement may be put once the tax is established and
the bond money is expended. Here the money raised by the
bond issue has been expended for the Improvement and expansion
of the hospital. Hence, no question as to the diversion of
public moneys arises. Further, neither the tax, nor the bonds,
nor the use to which they will be put, nor the tax liability of
the voters of the bonds will be affected b a lease of the
hospital for a period in excess of five (57 years. Therefore,
the leasing of the hospital would not Impair any contractual
right conferred on the voters at the bond election.
The contracts intended to be protected from legis-
lative interference are those involving property interests.
9 Tex.Jur. 547, Sec. 112. The obligation must be one of which
value can be affirmed. Worsham v. Stevens, 66 Tax. 89, 17 S.W.
404 (1886); Texas & N.O.R. Co. v. Gross, 60 Tex. 621, 128
S.W. 1173 (1910, error ref.). Under the Texas authorities, it
cannot be said that the voters at the bond election acquired a
property right In how long the hospital might be leased after
the bond money was expended for the purpose announced at the
election and in accordance with the statutes then existing
relative to the bonds and the tax.
As to the bondholders, our courts have held that
even where a political subdivision has bonds outstanding and has
been authorized by statute to convey all or a portion of the
property of the district there Is no Impairment of the obliga-
tion of contract, so long as a valid means of equal efficacy Is
provided for paying its outstanding bonds and debts. El Dorado
Independent School District v. Tisdale, 3 S.W.2d 420 (Comm.
App. 1928); Burns v. Dilley County Line Indenendent School
District, 295 S.W. 1091 (Comm.App. 1927); Aransas Pass v.
Keeling, 112 Tex. 339, 247 S.W. 818 (1923). The holders of the
hospital bonds in question will still have adequate provision
for the retirement of the hospital bonds and the interest
thereon as it accrues although the hospital Is leased for a
period in excess of five (5) years. The tax to retire the bonds
is in no way affected by a lease in excess of five (5) years,
and, there is therefore no impairment of any obligation to the
bondholders.
SUMMARY
Based upon the information furnished to
us, you are advised that the Commissioners'
Court of Gregg County has authority to
Honorable Ralph Prince, page 6 (``-630)
enter Into the proposed lease contract,
subject to the exception that it cannot
contract to sell the county hospital at
a later time even though the obligation
to sell is made contingent upon the law's
then permitting such sale.
Very truly yours,
WILL WILSON
Attorney General of Texas
HGB:mg
APPROVED:
OPINION COMMITTEE
H. Grady Chandler
Wallace Flnfrock
Jot Hodges, Jr.
REVIEWED FOR THE ATTORNEY GENERAL
By: W. V. Geppert