Northeast Mental Health- Mental Retardation Commission v. v. M. Cleveland

IN THE SUPREME COURT OF MISSISSIPPI
NO. 2014-CA-01195-SCT
NORTHEAST MENTAL HEALTH - MENTAL
RETARDATION COMMISSION
v.
V. M. CLEVELAND
DATE OF JUDGMENT: 08/06/2014
TRIAL JUDGE: HON. C. MICHAEL MALSKI
TRIAL COURT ATTORNEYS: WILLIAM M. BEASLEY, SR.
WILLIAM MICHAEL BEASLEY, JR.
JASON D. HERRING
GARY L. CARNATHAN
COURT FROM WHICH APPEALED: LEE COUNTY CHANCERY COURT
ATTORNEYS FOR APPELLANT: FRED L. BANKS, JR.
WILLIAM MICHAEL BEASLEY, JR.
ATTORNEYS FOR APPELLEE: JASON D. HERRING
MICHAEL S. CHAPMAN
GARY L. CARNATHAN
NATURE OF THE CASE: CIVIL - CONTRACT
DISPOSITION: REVERSED AND RENDERED - 03/17/2016
MOTION FOR REHEARING FILED:
MANDATE ISSUED:
EN BANC.
WALLER, CHIEF JUSTICE, FOR THE COURT:
¶1. The Northeast Mental Health-Mental Retardation Commission challenges the validity
of a ninety-nine-year fixed-lease agreement with a private contractor named V.M. Cleveland.
The Commission contracted to pay Cleveland $18,000 per month over a ninety-nine-year
period to build and to lease a facility on land owned by the Commission. Payments continued
uninterrupted for ten years, until the Commission became concerned about the agreement’s
legality. The Commission stopped making payments and sought to rescind the agreement.
The chancellor found that the agreement was enforceable and ordered the Commission to pay
Cleveland $612,000 in back rent. The Commission appeals, arguing that the agreement’s
ninety-nine-year duration renders the agreement voidable at the Commission’s discretion as
a matter of law due to the rule against binding successors. The Commission also argues that
the specific terms of the agreement are unreasonable, illegal, or both, and thus void ab initio
as a matter of law. Because this agreement violates the common-law rule against binding
successors, we reverse the chancellor’s judgment and render judgment in the Commission’s
favor.
FACTS AND PROCEDURAL HISTORY
¶2. The Northeast Mental Health-Mental Retardation Commission (“the Commission”)
is a regional health commission established under Section 41-19-33 of the Mississippi Code
and a political subdivision of the State of Mississippi. The Commission is governed by a
seven-member board of commissioners, each of whom serves a four-year term.1 Miss. Code
Ann. § 41-19-35 (Rev. 2013).
¶3. In June 2000 the Commission and V.M. Cleveland entered into a Contract and Lease
Agreement (“the Agreement”) to build a facility to house and operate the Commission’s
chemical-dependency facilities in Lee County, Mississippi. Cleveland agreed to construct the
1
The commissioners represent Benton, Chickasaw, Itawamba, Lee, Monroe, Pontotoc
and Union Counties. Each is nominated by his or her respective county’s board of
supervisors. See Miss. Code Ann. §§ 41-19-31, -33 (Rev. 2013).
2
facility at his own expense on land owned by the Commission.2 The Commission leased its
state-owned land to Cleveland and committed to pay Cleveland $18,000 per month for
ninety-nine years and to perform certain maintenance. Cleveland was not obligated to pay
the Commission for the use of the land. The Agreement provided that, should the
Commission have insufficient state and federal funds to make payments at any time during
the ninety-nine-year period, the Commission was to quitclaim its land and the facility to
Cleveland. After Cleveland completed the facility, the Commission began paying rent.
¶4. Four years later, the Commission hired Robert Smith as the new director. After
reviewing the Agreement, Smith became concerned that the ninety-nine-year term and
forfeiture clause were illegal. Based on Smith’s advice, in September 2011, the Commission
agreed to stop making payments and voted to void the Agreement. Up to that date, the
Commission had expended $2,160,000 in lease payments to Cleveland.
¶5. The Commission sought a declaratory judgment in the Lee County Chancery Court,
claiming that the Agreement was void on the basis that a board governing a political
subdivision may not enter into agreements that bind successor boards without express
statutory authority. Cleveland answered the complaint in November 2011, denying the
2
At trial, counsel for the Commission stated, “If it please the Court at this time, I
would like to mark for identification what Mr. Herring [Cleveland’s counsel] and I have
stipulated and agreed reflects the actual cost that Mr. Cleveland incurred in constructing
the facility.” (Emphasis added.) Cleveland’s counsel objected, but only to admitting the
amount based on relevance. The chancellor made it clear he intended to rule on the relevance
of this exhibit in his opinion, but it was not addressed there. The exhibit was marked for
identification as Exhibit 3, and it reflects the amount of construction cost as $807,672. The
construction cost also was set out in the Commission’s brief and was referenced during oral
argument without objection.
3
Agreement’s invalidity and asserting counterclaims for declaratory relief affirming the
lease’s terms and awarding specific performance and breach-of-contract damages.
¶6. In June 2012, Cleveland moved for summary judgment. The Commission filed a
competing motion for summary judgment. In August 2012, the chancellor granted partial
summary judgment in Cleveland’s favor as to the Agreement’s enforceability. But the
chancellor found genuine issues of material fact remained as to the necessity for the
Commission to rescind the lease or whether such action directly or indirectly promoted its
statutory purposes. In July 2014, a trial was conducted on the remaining issues. In August
2014, the chancellor found that the Agreement was fully enforceable and awarded $612,000
in back rent to Cleveland.
¶7. The Commission appeals and raises the following issues: (1) whether the Agreement
was voidable at the Commission’s discretion as a matter of law based upon the rule against
binding successors, and (2) whether the Agreement was void ab initio as a matter of law
based on its unreasonable duration, fixed rental terms, and an illegal interest rate. Finding
that the chancellor erred in not holding that the Agreement was voidable at the Commission’s
discretion due to the rule against binding successors, we reverse this judgment and render
judgment in the Commission’s favor. Since the first issue is dispositive of this case, we
decline to address the second issue.
ANALYSIS
¶8. The inquiry here is a question of law. Because the issue here concerns a question of
statutory interpretation and contract construction, it is governed by a de novo standard of
4
review. Epperson v. SOUTHBank, 93 So. 3d 10, 16 (Miss. 2012); Capital One Servs. v.
Page, 942 So. 2d 760, 762 (Miss. 2006).
I. Whether the Agreement was voidable at the Commission’s
discretion as a matter of law based upon the rule against binding
successors.
¶9. Under the common law in Mississippi, governing bodies, whether they be elected or
appointed, may not bind their successors in office by contract, unless expressly authorized
by law, because to do so would take away the discretionary rights and powers conferred by
law upon successor governing bodies. See, e.g., Biloxi Firefighters Ass’n v. City of Biloxi,
810 So. 2d 589 (Miss. 2002); Smith v. Mitchell, 190 Miss. 819, 1 So. 2d 765 (1941);
American Oil Co. v. Marion County, 187 Miss. 148, 192 So. 296 (1939); Tullos v. Town
of Magee, 181 Miss. 288, 179 So. 557 (1938); Edwards Hotel & City R. Co. v. City of
Jackson, 96 Miss. 547, 51 So. 802 (1910). The law provides that these types of contracts are
voidable at the discretion of the successor governing body. Id.
A. A political board or commission cannot prevent a successor
administration from exercising an express statutory power by
contract.
¶10. Central to our decision here is American Oil, 192 So. 296. The Commission argues
that, according to American Oil, a contract that binds successors is voidable at the option of
the successor board, and that this is especially true with lease agreements that prevent public
bodies from selling their property. Cleveland responds that this Court voided the lease in
American Oil solely because the statute at issue in American Oil did not grant the board the
power to lease property. Since Section 41-19-33(1)(a) of the Mississippi Code grants the
5
Commission the authority to lease, Cleveland argues that American Oil does not apply here.
Cleveland correctly notes that the American Oil Court voided the lease because the board
lacked statutory authority to lease county property in that case. But that was not the only
reason the Court voided the lease contract.
¶11. In American Oil, the board of supervisors of Marion County executed a lease for
county property for a term of twenty-five years. Id. at 297. The successor board filed a bill
to cancel the lease executed by its predecessor board, and the trial court cancelled the lease.
Id. The board of supervisors in American Oil had statutory authority to sell and convey
county property. Id. But this Court found that the statutory authority “did not embrace the
power to lease [county property] for a term of years.” Id. at 298. The Court declared the lease
null and void, reasoning that “if a predecessor board could lease county land, it would
prevent its successors from exercising the power to sell and convey, the very thing which the
Legislature has granted—the power to sell lands of the county which have ceased to be used
or useful for public purposes.” Id. at 299-300 (emphasis added).
¶12. The Court also held the lease contract was voidable as a matter of law because its
excessive duration prevented the board from exercising its full authority to sell and convey
property, even if the board had the power to lease. American Oil, 192 So. 2d at 299. That is
why this Court stated “[a] board of supervisors may not, by contract, preclude itself or its
successors in office from the right and the duty to exercise the power given it by a statute,
whenever, in its judgment or discretion, it is deemed necessary to exercise a clearly granted
power.” Id. The Court voided the lease because the board lacked statutory authority to lease
6
and it was for an impermissible duration that bound successor boards. Cases before and after
American Oil support this reading of the case. See infra ¶¶ 14-20 (discussing Biloxi
Firefighters, 810 So. 2d at 590-93, and Edwards Hotel, 51 So. at 803-04).
¶13. The Agreement between the Commission and Cleveland prevents future commissions
from selling and conveying the subject property, exactly like the lease in American Oil. The
Agreement requires the Commission to pay Cleveland $18,000 a month in rent for ninety-
nine years and to lease the facility on state-owned property without the ability for successor
commissions to renegotiate. It attempts to bind successor commissioners, who serve only
four-year terms, without any statutory authority. By entering into this Agreement, the
Commission’s statutory authority “[t]o acquire, own and dispose of real and personal
property” under Section 41-19-33(1)(m) of the Mississippi Code clearly was impeded. We
agree that the Agreement is voidable at the Commission’s discretion as a matter of law.
B. The Agreement violates the rule against binding successors
and is voidable as a matter of law at the Commission’s
discretion.
¶14. This Court repeatedly has applied the rule against binding successors to void all types
of agreements, even when that board or municipality had statutory authority to lease or
contract, but not statutory authority to bind successors. One such case is Biloxi Firefighters
Association, 810 So. 2d 589. The city adopted a resolution that designated a firefighters’
association as the collective bargaining agent of the city’s firefighters. Id. at 590. The
resolution required that the mayor “enter into good faith negotiations” with the association.
Id. After a successor board took office, the new mayor vetoed the resolution. Id. The
7
association sought a declaratory judgment to require the mayor to negotiate with the
association as the resolution mandated. Id.
¶15. This Court considered whether the resolution in Biloxi Firefighters was binding upon
subsequent administrations. Id. at 591. This Court did not strike down the resolution solely
because the board of aldermen lacked the statutory authority to engage in collective
bargaining. In fact, the Court said that the board possessed that power. The board had the
power to adopt, modify, or repeal resolutions and ordinances, to “‘provide for the prevention
and extinguishment of fires,’” and “‘to provide for and maintain a fire department . . . .’” Id.
¶16. This Court in Biloxi Firefighters noted the discretion municipal authorities have to
determine the manner in which they exercise their powers. Id. at 592 (quoting Webb v. City
of Meridian, 195 So. 2d 832, 835 (Miss. 1967)). A city’s dealings with employees are
discretionary. Id. (citing Scott v. Lowe, 223 Miss. 312, 318, 78 So. 2d 452, 454 (1955)).
Relying on American Oil, this Court found that passing the resolution was an ultra vires act
“(one which is beyond the powers conferred upon the municipality by law) and not binding
on its face.” Id. The “city council could not contract away a subsequent governing body’s
‘control of municipal affairs, property, and finances.’” Id. Nor could the city contract away
a successor administration’s right to maintain and regulate the fire department. Id.
[T]his act was clearly discretionary and thus not binding on successor city
administrations. To hold otherwise would permit city administrations, through
their actions, to “tie the hands” of successor administrations and totally destroy
their ability to effectively conduct city business. Accordingly, we hold here
that the . . . adoption of [the resolution] was not binding on subsequent Biloxi
city councils which, in the exercise of discretion, could determine whether to
adhere to the provisions of this resolution.
8
Id. at 593.
¶17. This Court continued, “[o]ne city council cannot legally adopt a resolution binding a
successor administration on discretionary matters . . . . To hold that such action as a matter
of law binds a subsequent administration would violate well-settled Mississippi case law.”
Id. at 595.
¶18. This well-settled caselaw includes Edwards Hotel & City Railroad Co., 51 So. at 802.
Like the resolution in Biloxi Firefighters, this Court in Edwards Hotel applied the rule
against binding successors not because the administration lacked statutory authority to enact
ordinances concerning paving, but because the ordinance lasted for ten years and bound
successor boards. In Edwards Hotel, the mayor and board of aldermen had the statutory
authority to exercise, in their discretion, full jurisdiction to repair, maintain, and pave streets
and sidewalks. Id. at 804. They also had statutory authority to enact, modify, and repeal
ordinances. Id.
¶19. The city in Edwards Hotel passed an ordinance that granted the street railway
company an exemption from a paving requirement for ten years. Id. at 803. The city later
rescinded the exemption and sought to compel the company to pave tracks on certain streets.
Id. at 804. The company refused and claimed the exemption under the ordinance. Id. This
Court stated:
Each mayor and board of aldermen cannot exercise full jurisdiction if
predecessors may tie their hands in the matter of requiring to be done any
matter which is comprehended in the exercise of full jurisdiction; that is to say,
each mayor and board of aldermen has a right, in their discretion, to say when
paving is necessary. It is a discretion which vests in them at the time they
choose to exercise it . . . if one mayor and board of aldermen can take away a
9
part of the right to exercise full jurisdiction as to the streets, it would, to that
extent, abridge the right which vests in the city to have its mayor and board of
aldermen exercise full jurisdiction at all times.
Id. at 805. This Court in Edwards Hotel held that the ordinance was ultra vires.3 Id. “If we
were to hold otherwise, one set of city officers could defeat the powers delegated to the city
and preclude a succeeding set of officers, however necessitous might be the cause, from . .
. [using the powers granted it].” Id.
¶20. This Court also has held that a contract was ultra vires and unenforceable for
“attempting to fix the compensation of a city employee to cover a period of employment
extending beyond any reasonable limitation.” Tullos, 179 So. at 558-59. This Court held “it
is beyond the power of municipal officers to bind their successors in office in the exercise
of their discretionary authority to fix the compensation of employees . . . .” Id. at 558.
¶21. The Attorney General’s Office consistently has advised political entities that they may
not bind successors in office in the exercise of their discretionary authority unless there is
express statutory authority to do so. The Attorney General also has warned that any
agreement that violates this rule is voidable by successor boards. See, e.g., Jacks, Op. Att’y
Gen. No. 2010-00040 (Feb. 26, 2010) (“The Mississippi Supreme Court, as well as official
opinions of this office, have long held that governing authorities may not bind successors in
office in the exercise of their discretionary authority, including the leasing of county and
3
Ultra vires, “A body exercising an invalid excess or power of authority.” Black’s
Law Dictionary (9th ed. 2009).
10
municipal property, unless there is ‘express statutory authority’ to do so.”).4 Although
Attorney General opinions are not binding on this Court, we may view them as persuasive
authority. Poppenheimer v. Estate of Coyle, 98 So. 3d 1059, 1066 (Miss. 2012).
C. Entering into the Agreement was an exercise of discretionary
authority rather than of mandatory authority.
¶22. Cleveland attempts to distinguish the case before us and contends that, when the
Commission entered into this Agreement, the Commission was exercising mandatory, not
discretionary, authority. Cleveland responds that the chancellor was correct in finding that
the Agreement did not bind the Commission’s discretionary powers. The statute governing
regional commissions states that commissions “shall have the following authority and shall
pursue and promote the following general purposes: . . . .” Miss. Code Ann. § 41-19-33(1)
(Rev. 2013) (emphasis added). This includes the authority to “establish, own, lease, acquire,
construct, build, operate and maintain mental illness, mental health, intellectual disability,
alcoholism and general rehabilitative facilities and services . . . .” Miss. Code Ann. § 41-19-
33(1)(a) (emphasis added). The chancellor found that, according to this section of the statute,
it is mandatory that the Commission obtain appropriate facilities to provide services required
under the law.
4
See also Lucas, Op. Att’y Gen. No. 2009-00381 (Aug. 28, 2009) (“It has long been
recognized in Mississippi that governing boards, elected and appointed, may not bind their
successors in office by contract unless expressly authorized by law.”); Clayton, Op. Att’y
Gen. No. 2004-0329 (July 28, 2005) (finding no exception to the rule against binding
successors for the authority to operate a center on property for a term of ninety-nine years);
Power, Op. Att’y Gen. No. 2008-00016, (Feb. 8, 2008); Latham, Op. Att’y Gen. No. 2006-
0064 (Jan. 19, 2007); Connell, Op. Att’y Gen. No. 2005-0459 (Oct. 15, 2005); Belk, Op.
Att’y Gen. No. 2003-0527 (Oct. 3, 2003); Moore, Op. Att’y Gen. No. 200-0032 (Feb. 4,
2000).
11
¶23. The Commission argues this statute contains permissive, not mandatory language.5
We agree with the Commission’s interpretation of the statute. The statute grants the
Commission the authority to provide facilities and services by a plethora of options. It does
not mandate that the Commission own, build, construct, or lease anything. It may be
mandatory for the Commission to administer mental health programs. After all, “[i]t shall be
the duty of such regional commission to administer mental health/intellectual disability
programs . . . .” Miss. Code Ann. § 41-19-33(1). But we believe how the Commission decides
to administer these programs is discretionary. The Commission could have bought another
building and converted it into a chemical-dependency facility. It could have hired a
construction company to build the facility or conduct outpatient services. Simply put, the
discretionary act here was signing the lease agreement to carry out its mandated function of
administering mental health programs.
¶24. Besides, acquiring facilities is not the only power bestowed upon the Commission. For
example, the Commission has the authority to enter into contracts with private entities for
maintenance. Miss. Code Ann. § 41-19-33(1)(e). As we noted earlier, the Commission also
has the authority “[t]o acquire, own and dispose of real and personal property.” Miss. Code
Ann. § 41-19-33(1)(m). Both of these are discretionary acts, and this Agreement frustrates
the successor board’s ability to exercise these powers.
5
The Commission argues having “authority” does not mandate the exercise of that
authority, and by its very nature, is discretionary. See Authority, Black’s Law Dictionary
(9th ed. 2009) (defining authority as “[t]he right or permission to act legally on another’s
behalf.”).
12
D. The Commission’s statutory authority to lease and contract
does not allow it to enter into leases and contracts for ninety-
nine years.
¶25. Having determined that the Commission was exercising its discretionary authority
when it entered into the Agreement, we must look to see if there is any statutory authority
that allows it to enter into contracts or leases that bind successor boards. Our Legislature has
granted many public entities the authority to enter into contracts and lease agreements. And
the Legislature also has taken further steps by granting specific entities the power to enter
into long-term agreements that exceed their governing members’ terms. For example, the
Legislature expressly has authorized state institutions of higher learning to enter into long-
term leases that do not exceed thirty-five years. Miss. Code Ann. § 37-101-41 (Rev. 2014).
Airport authorities may enter into leases not to exceed fifty years. Miss. Code Ann. § 61-5-11
(Rev. 2013). Section 31-8-3 of the Mississippi Code permits counties and municipalities to
enter into lease agreements for facilities not exceeding twenty years. Miss. Code Ann. § 31-
8-3 (Rev. 2010). (See also Oktibbeha Cty. Bd. of Educ. v. Town of Sturgis, 531 So. 2d 585
(Miss. 1988) (voiding a ninety-nine-year lease because the county was granted authority only
to enter into a twenty-five-year, not a ninety-nine-year, lease).
¶26. Unlike these governing authorities, the Legislature has not granted mental health
commissions the authority to enter into long-term contracts or leases. So the Commission
argues that any contract the Commission enters into must be for either a term not exceeding
four years, or it is voidable by subsequent commissions. Cleveland counters that if the
Legislature had intended to authorize the Commission only to enter into contracts for the
13
remaining length of its term, then the Legislature easily could have placed that restriction in
the statute.
¶27. We agree with the Commission and reject Cleveland’s argument. We evoke the rule
that “ordinarily a new statute will not be considered as reversing long-established principles
of law and equity unless the legislative intention to do so clearly appears.” Thorp
Commercial Corp. v. Mississippi Road Supply Co., 348 So. 2d 1016, 1018 (Miss. 1977).
The rule that current governing bodies may not bind their successors by contract in the
exercise of their discretionary powers has been a long-established rule in Mississippi for
more than a century. See Edwards Hotel, 96 Miss. 547. We do not believe that Section 41-
19-33, when read as a whole, shows a clear legislative intent to abrogate the common-law
rule against binding successors. Thus, we believe that, had the Legislature intended to grant
the Commission authority to enter into contract and lease agreements for ninety-nine years
and to bind successor boards, it specifically would have provided so in the statute.
¶28. We hold that the Agreement binds successor commissions in the exercise of their
discretionary authority to sell and convey the subject real property, to contract for
maintenance, and to renegotiate the lease. The predecessor commission executed this
Agreement without express statutory authority to do so. For these reasons, we find that the
chancellor erred in not finding the Agreement was voidable as a matter of law at the
Commission’s discretion. Thus, we reverse the judgment of the Lee County Chancery Court
and render a decision in favor of the Commission.
14
II. Whether the Agreement is void ab initio as a matter of law based
on its illegal interest rate, fixed rental terms, and unreasonable
duration.
¶29. Because our decision on the first issue is dispositive, we will not address this second
issue. Deviney Constr. Co. v. Marble, 60 So. 3d 797, 803, ¶ 15 (Miss. 2011).
CONCLUSION
¶30. The judgment of the Lee County Chancery Court is reversed. We render judgment in
favor of the Commission, finding that the Agreement was voidable as a matter of law at the
Commission’s discretion, because the ninety-nine-year Agreement binds successor
commissions in the exercise of their discretionary authority without express statutory
authority to do so.
¶31. REVERSED AND RENDERED.
RANDOLPH, P.J., LAMAR, KING AND BEAM, JJ., CONCUR. KITCHENS,
J., DISSENTS WITH SEPARATE WRITTEN OPINION JOINED BY DICKINSON,
P.J., COLEMAN AND MAXWELL, JJ.
KITCHENS, JUSTICE, DISSENTING:
¶32. I respectfully dissent. I would hold that the rule against binding successors is
inapplicable in this case. Because Section 41-19-33 evinces a clear legislative intent to
abrogate the common law rule against binding successors, the rule is inapplicable to the
Commission’s contract with Cleveland. I also would hold that the contract was not void ab
initio. I would affirm the judgment of the Chancery Court of Lee County in favor of
Cleveland.
15
A. Because Section 41-19-33 manifests a clear legislative intent to abrogate
the common law rule against binding successors, the rule is inapplicable
to the Commission’s contract with Cleveland.
¶33. The rule against bindings successors is a common law rule under which, absent
express statutory authority, municipal officers may not bind their successors in office in the
exercise of their discretionary authority. Smith v. Mitchell, 190 Miss. 819, 1 So. 2d 765, 767
(1941). The rule exists so that “each mayor and board of aldermen may in their discretion
determine when the powers conferred upon them by law shall be exercised and that one
mayor and board of aldermen may not bind their successors to carry out contracts made by
the former seeking to take away from the latter rights and powers conferred upon them by
law.” Id. (citing Edwards Hotel & City R. Co. v. City of Jackson, 96 Miss. 547, 51 So. 802
(1910)). The “powers of a municipality are given to it, not to the particular [persons] who
hold the office.” Edwards Hotel, 96 Miss. 547, 51 So. at 805.
¶34. Section 41-19-33(1) states that “[i]t shall be the duty of such regional commission to
administer mental health/intellectual disability programs,” and that “a regional commission
. . . shall pursue and promote the following general purposes: (a) [t]o establish, own, lease,
acquire, construct, build, operate and maintain mental illness, mental health, intellectual
disability, alcoholism and general rehabilitative facilities and services designed to serve the
needs of the people of the region so designated . . . .” Miss. Code Ann. § 41-19-33(1) (Rev.
2013) (emphasis added). This statute mandates that the Commission administer mental health
programs. Id. It also mandates that the Commission “pursue and promote” the existence of
mental health facilities. Id. As the majority concedes, the statute allows the Commission no
16
choice in whether it administers mental health programs and pursues and promotes the
existence of mental health facilities; rather, the Commission must do so to fulfill its statutory
mandate. In fact, if the Commission “does not meet the minimum standards and minimum
required services established for certification [by the State Board of Mental Health]” it “shall
be ineligible for state funds from Medicaid reimbursement or other funding sources for those
services.” Miss. Code Ann. § 41-19-33(1)(a) (Rev. 2013).
¶35. Section 41-19-33 manifests a clear legislative intent to abrogate the common law rule
against binding successors when the Commission enters into contracts to fulfill its statutory
mandate. Generally, this Court does not consider a new statute “as reversing long-established
principles of law and equity unless the legislative intention to do so clearly appears.” Lawson
v. Honeywell Int’l, Inc., 75 So. 3d 1024, 1029 (Miss. 2011) (quoting Thorp Commercial
Corp. v. Miss. Road Supply Co., 348 So. 2d 1016, 1018 (Miss. 1977)). Not only does Section
41-19-33 contain language expressly abrogating the common law rule; but the statute, read
as a whole, evinces legislative intent for the Commission to enter into contracts free from the
rule against binding successors, because the rule would frustrate the Commission’s ability
to carry out its statutory directives.
¶36. In drafting and enacting Section 41-19-33, the Legislature included express language
to the effect that the rule against binding successors does not apply to a contract such as the
one at issue today. Subsection (1)(l) states that “[a]ny money borrowed, debts incurred or
other obligations undertaken by a commission, regardless of whether borrowed, incurred or
undertaken before or after March 15, 1995, shall be valid, binding and enforceable if it or
17
they are borrowed, incurred or undertaken for any purpose specified in this section and
otherwise conform to the requirements of this paragraph.” Miss. Code Ann. § 41-19-33(1)(l)
(Rev. 2013) (emphasis added). The Commission’s contract with Cleveland for the
construction, lease, and maintenance of a chemical dependency facility was an “other
obligation” undertaken by the Commission to fulfill its statutory purpose under Section 41-
19-33(1)(a). Section 41-19-33(1)(l) clearly provides that such an obligation “shall be valid,
binding and enforceable . . . .” Miss. Code Ann. § 41-19-33(1)(l). The statute further provides
that such an obligation “shall be valid, binding and enforceable if . . . incurred . . . before or
after March 15, 1995 . . . .” Miss. Code Ann. § 41-19-33(1)(l). Because obligations incurred
before March 15, 1995, are “valid, binding and enforceable, and obligations incurred after
March 15, 1995, are “valid, binding and enforceable,” the Commission’s obligation to
Cleveland, which was incurred in June 2000, was “valid, binding and enforceable.” Section
41-19-33(1)(l), which plainly states that obligations incurred by the Commission in
furtherance of its statutory purposes before or after March 15, 1995, are “valid, binding and
enforceable,” clearly expresses a legislative intent to abrogate the rule against binding
successors when the Commission incurs an obligation in furtherance of a statutory purpose.
In fact, the statute could not be more explicit.
¶37. Not only does Section 41-19-33(1)(l) expressly abrogate the rule against binding
successors, but a plain reading of the whole statute shows that the Legislature did not intend
for the rule to apply to the Commission’s performance of its statutory duties. This is because,
by severely limiting the Commission’s ability to contract, application of the rule would
18
thwart the Commission’s statutory mandate. Regardless of whether a statute is ambiguous,
“the ultimate goal of this Court in interpreting a statute is to discern and give effect to the
legislative intent.” City of Natchez v. Sullivan, 612 So. 2d 1087, 1089 (Miss. 1992). This
Court considers a statute as a whole to determine legislative intent. Lawson, 75 So. 3d at
1029 (quoting Manufab, Inc. v. Miss. State Tax Comm’n, 808 So. 2d 947, 949 (Miss.
2002)). “In construing a statute, the Court must seek the intention of the Legislature, and
knowing it, must adopt that interpretation which will meet the real meaning of the
Legislature.” Pitalo v. GPCH-GP, Inc., 933 So. 2d 927, 929 (Miss. 2006).
¶38. This Court has recognized that a regional mental health-mental retardation
commission’s responsibilities under Section 41-19-33 are “fairly broad.” Region VII, Mental
Health-Mental Retardation Ctr. v. Isaac, 523 So. 2d 1013, 1016 (Miss. 1988). Indeed,
Section 41-19-33 grants broad authority to the Commission to enter into many types of
contracts in order to fulfill its statutory duty “to administer mental health/intellectual
disability programs certified and required by the State Board of Mental Health.” Miss. Code
Ann. § 41-19-33(1)(1) (Rev. 2013). To fulfill this purpose, in addition to the powers
discussed above to establish, own, lease, acquire, construct, build, operate, and maintain
mental health facilities, the Commission is authorized “[t]o enter into contracts and to make
other arrangements as may be necessary, . . . with the United States government, the
government of the State of Mississippi and such other agencies or governmental bodies . .
. for the purpose of establishing . . . facilities and services for the care and treatment of
persons” suffering from a variety of mental illnesses, including drug abuse. Miss. Code Ann.
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§ 41-19-33(1)(d). The Commission also is expressly authorized, as it did in this case, “[t]o
enter into contracts and make such other arrangements as may be necessary with any and all
private businesses, corporations, . . . proprietorships or other private agencies . . .” for the
same purposes. Miss. Code Ann. § 41-19-33(1)(e). The Commission must employ and
compensate necessary personnel and acquire necessary hazard, casualty, workers’
compensation, and professional liability insurance policies. Miss. Code Ann. § 41-19-33(h),
(i), (j). The Commission can enter into “agreements or contracts” to provide programs and
services for persons with mental illness. Miss. Code Ann. § 41-19-33(1)(k). To fulfill the
purposes specified by Section 41-19-33, the Commission is empowered to “borrow money
from private lending institutions . . . [and] pledge collateral, including real estate, to secure
the repayment of money borrowed . . . .” Miss. Code Ann. § 41-19-33(1)(l). The Commission
can “acquire, own and dispose of real and personal property.” Miss. Code Ann. § 41-19-
33(1)(m). The Commission must “provide alternative living arrangements for persons with
serious mental illness . . . .” Miss. Code Ann. § 41-19-33(1)(t). And the Commission is
authorized to make purchases and enter into contracts for purchasing. Miss. Code Ann. § 41-
19-33(1)(u). The Commission “shall have the authority to create and operate a primary health
clinic.” Miss. Code Ann. § 41-19-33(1)(x). Finally, the Commission is directed to “take any
action which will promote, either directly or indirectly, any and all of the foregoing
purposes.” Miss. Code Ann. § 41-19-33(1)(y).
¶39. Each regional commissioner is appointed for a four-year term. Applying the rule
against binding successors to the Commission’s actions under Section 41-19-33 would mean
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that the Commission could not enter into any contract with a duration of longer than four
years. Further, most of the Commission’s contracts would be of even shorter duration
because they would be entered into during the existing commissioners’ terms of office. As
detailed above, Section 41-19-33 authorizes the Commission to enter into a variety of
contracts, including, but not limited to, leases, secured and unsecured loans, employment
contracts, and insurance policies, for the fulfillment of its statutory purpose. It inconceivable
that the Commission could carry out its broad statutory mandate to provide mental health
services to the region if the maximum possible duration of its contracts was, at best, four
years. Therefore, a consideration of Section 41-19-33 as a whole indicates that the
Legislature intended in this instance to abrogate the rule against binding successors.
¶40. Yet another feature of Section 41-19-33 evinces the obvious legislative intent that the
rule against binding successors does not apply. Under the rule of inclusion unius est exclusio
alterius,
where a statute enumerates and specifies the subject or things upon which it
is to operate, it is to be construed as excluding from its effect all those not
expressly mentioned or under a general clause, those not of like kind or
classification as those enumerated.
Lee v. Alexander, 607 So. 2d 30, 36 (Miss. 1992) (quoting Southwest Drug Co. v. Howard
Bros. Pharmacy of Jackson, Inc., 320 So. 2d 776, 779 (Miss. 1975)). That is, when a statute
specifically mentions one circumstance, the implication is that the Legislature intended to
exclude other circumstances not mentioned. Id. In Section 41-19-33, the Legislature
expressly limited the Commission’s power to enter into certain types of contracts on an
indefinite basis. For managed care contracts; contracts that provide facilities and services at
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a discount; contracts by which the Commission assumes financial risk for provision or
delivery of services; contracts for the financial support of nonprofit organizations; and
contracts to form, operate, or participate in a managed care entity, the Commission, if its
action would affect more than one region, “must have prior written approval of the
Department of Mental Health before [the action is] initiated and annually therafter.” Miss.
Code Ann. § 41-19-33(1)(n)-(r) (Rev. 2013). These provisions show that the Legislature fully
considered appropriate limitations on the Commission’s power to contract and specified them
in the Commission’s governing statute. The inclusion of these express limitations on the
Commission’s power to contract indicates that the Legislature intended no other limitations
to apply.
¶41. Additionally, considering, as I must, Section 41-19-33 as a whole also belies the
majority’s position that the Commission’s contract with Cleveland impermissibly impeded
its statutory authority “[t]o acquire, own and dispose of real and personal property.” Miss.
Code Ann. 41-19-33(1)(m). To reach that conclusion, the majority relies on American Oil
v. Marion County, 187 Miss. 148, 192 So. 296 (1939). But the statute at issue in American
Oil was materially different from Section 41-19-33. In American Oil, a statute gave the
board of supervisors the authority to sell and convey county property, and the board of
supervisors leased certain county property for twenty-five years. This Court held that the
lease exceeded the board’s statutory authority because the statute did not grant the board the
power to lease. In this case, Section 41-19-33 grants the Commission both the power to lease
and the power to sell real property. From a consideration of the statute as a whole, and giving
22
effect to all its provisions, the majority errs by holding that the Commission’s statutory power
to sell must defeat its statutory power to lease.
¶42. In conclusion, Section 41-19-33 manifests a clear legislative intent to abrogate the
common law rule against binding successors. Section 41-19-33(1)(l) expressly states that
obligations incurred by the Commission in furtherance of its statutory purpose are valid,
binding, and enforceable. Considering Section 41-19-33 in its entirety, the Legislature’s
broad grant of authority to the Commission to enter into a wide variety of different contracts
to carry out its statutory purpose clearly indicates that the Legislature intended to abrogate
the common law rule against binding successors as applied to the Commission. Its inclusion
of specific limitations on the Commission’s power to enter into certain types of contracts
indicates that, had the Legislature intended to subject the Commission to further limitations
on its ability to contract, it would have specified these limitations in the statute. The majority
ignores these clear expressions of legislative intent and finds that the contracts of a regional
mental health-mental retardation commission will be limited by the rule against binding
successors. It is inconceivable that regional mental health-mental retardation commissions
will be able to fulfill their statutory mandate after today’s case, given that they may enter into
contracts no longer than the remaining terms of their board members, with a maximum
possible length of four years.
B. The Commission’s contract with Cleveland was not void ab initio.
¶43. The Commission argues that, notwithstanding the rule against binding successors, its
contract with Cleveland was void ab initio. In contrast to a contract that is voidable at the
23
request of one of the parties, a contract is void ab initio if it seriously offends law or public
policy. Hood ex rel. State v. Barbour, 958 So. 2d 790, 815 (Miss. 2007). The Commission
contends that the contract was void ab initio because of its duration, or alternatively, because
the contract is, in actuality, a contract that allowed the Commission to borrow money from
Cleveland at an illegal interest rate.
¶44. I would hold that neither law nor public policy is offended by the Commission’s
contract with Cleveland. This was an arm’s length transaction between two parties
represented by counsel. At the hearing, the Commission’s chairman of the board, Mark
Ormon, testified that the Commission was “desperate” to obtain a new chemical dependency
facility to fulfill its statutory directives. The Commission’s minutes reflect that, after its
negotiations with other potential builders fell through, it contacted Cleveland and began
negotiations. After negotiation of the contract terms was complete, the Commission’s
members met and approved the “Contract and Lease Agreement” with Cleveland.
¶45. The agreement reached by the Commission and Cleveland provided that the
Commission would lease the property to Cleveland for ninety-nine years. Cleveland promised
to construct on the property a chemical dependency facility and parking lot, along with
landscaping, at his own expense. The Commission would pay Cleveland $18,000 per month
in rental payments as long as it had available state and federal funds sufficient to make the
payments. In the event of the Commission’s inability to pay the rent, the Commission would
quitclaim its interest in the property to Cleveland. The contract also provided for Cleveland’s
upkeep of the facility’s slab, roof, and outside walls for the duration of the contract.
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¶46. The Commission requests that this Court declare the contract void ab initio due to its
ninety-nine year duration. In support, it cites a Fifth Circuit case, Hoskins v. City of Orlando,
41 F.2d 901 (5th Cir. 1931). In Hoskins, the City of Orlando assumed a ninety-eight year
lease of an apartment building. Id. at 904. The court held that no statutory authority existed
for the municipality’s assumption of the lease, the municipality had identified no appropriate
municipal use for the lease, and the lease was a “mere investment” outside the scope of
municipal authority. Id. The court stated that “[a]n apartment house in operation is so remote
from the ordinary purposes of municipal government that the purchase of an interest in it is
not presumptively valid, but apparently invalid, and the declaration should have alleged, if
it could be done, some proper municipal use intended for it.” Id. The court also found that
the contract’s duration was too long because, absent express statutory authority,
“municipalities, even in their proprietary functions, may contract only for a reasonable time.”
Id. at 905.
¶47. Hoskins is not binding authority on this Court, and it is easily distinguished from this
case. The Commission is not a municipality, but a political subdivision with a specific
statutory grant of authority. And the Commission had clear statutory authority to enter into
a lease of this duration. Section 41-19-33 provides that the Commission has a “duty . . . to
administer mental health/intellectual disability programs,” and that it “shall pursue and
promote the following general purposes: (a) [t]o establish, own, lease, acquire, construct,
build, operate and maintain mental illness, mental health, intellectual disability, alcoholism
and general rehabilitative facilities and services designed to serve the needs of the people of
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the region so designated . . . .” Miss. Code Ann. § 41-19-33(1)(a) (Rev. 2013) (emphasis
added). The Commission is expressly authorized “[t]o enter into contracts and make such
other arrangements as may be necessary with any and all private businesses, corporations,
. . . proprietorships or other private agencies, whether organized for profit . . .” to fulfill its
statutory duty. Miss. Code Ann. § 41-19-33(1)(e) (emphasis added). Its obligations
undertaken “for any purpose specified” in Section 41-19-33 “shall be valid, binding and
enforceable.” Miss. Code Ann. § 41-19-33(1)(l) (emphasis added). And to promote its
statutory purposes, the Commission is expressly authorized to “take any action.” Miss. Code
Ann. § 41-19-33(1)(y) (emphasis added).
¶48. The chancellor found from the undisputed testimony at the hearing that the Contract
and Lease Agreement fulfilled the Commission’s statutory purpose under Section 41-19-
33(1)(a). Ormon testified that the facility at issue is the only inpatient chemical dependency
facility in the region. The Commission’s executive director, Robert Smith, testified that the
facility successfully meets the needs of the Commission and those suffering from drug and
alcohol dependency. He testified that no other facility is necessary, and that the Commission
has no trouble paying the $18,000 per month rent. Plainly, the Commission’s contract with
Cleveland allowed it to fulfill its statutory purpose to provide “facilities . . . designed to serve
the needs of the people of the region . . . .” Miss. Code Ann. § 41-19-33(1) (Rev. 2013). The
Commission’s contract with Cleveland fulfilled its statutory purpose, and Section 41-19-
33(1) authorized it to enter into the contract.
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¶49. The Commission also argues that the contract actually was an agreement to borrow
money from Cleveland at an illegal interest rate. The Commission bases this argument on an
alternative finding by the chancellor that the contract was an agreement incurred under
Section 41-19-33(1)(l). That section grants the Commission the following authority:
To borrow money from private lending institutions in order to promote any of
the foregoing purposes. A commission may pledge collateral, including real
estate, to secure the repayment of money borrowed under the authority of this
paragraph. Any such borrowing undertaken by a commission shall be on terms
and conditions that are prudent in the sound judgment of the members of the
commission, and the interest on any such loan shall not exceed the amount
specified in Section 75-17-105. Any money borrowed, debts incurred or other
obligations undertaken by a commission, regardless of whether borrowed,
incurred or undertaken before or after March 15, 1995, shall be valid, binding
and enforceable if it or they are borrowed, incurred or undertaken for any
purpose specified in this section and otherwise conform to the requirements of
this paragraph.
Miss. Code Ann. § 41-19-33(1)(l) (Rev. 2013). Mississippi Code Section 75-17-105
provides, in pertinent part, that “[u]nless otherwise provided by law, tax anticipation notes
and reappraisal notes issued by the State of Mississippi or a county, municipality or political
subdivision thereof . . . shall bear interest at a rate not to exceed eleven percent (11%) per
annum.” Miss. Code Ann. § 75-17-105 (Rev. 2009).
¶50. The chancellor found that this subsection allowed the Commission to incur an
obligation for the construction of the facility that would be “valid, binding and enforceable”
if undertaken to fulfill the Commission’s statutory purpose. The chancellor also found that,
even if the contract was considered a loan from Cleveland to the Commission for the
construction of the facility, no evidence had been presented that the interest on the loan
exceeded “the amount specified in Section 75-17-105.” The Commission argues that contract
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was void ab initio because it was a loan from Cleveland to the Commission, and the interest
on the loan exceeded the 11% maximum interest rate allowed by Section 75-17-105.
¶51. I would find that the Commission’s argument that the contract constituted an illegal
loan is erroneous for two reasons. First, the contract cannot be considered to be a loan
because, by its terms, the contract is a construction, lease, and maintenance agreement. The
contract specifically states that the $18,000 per month to be paid by the Commission to
Cleveland is a rental payment. In determining the meaning of a contract, this Court looks to
the four corners of the agreement. Facilities, Inc. v. Rogers-Usry Chevrolet, Inc., 908 So.
2d 107, 111 (Miss. 2005). “[C]ourts are not at liberty to infer intent contrary to that
emanating from the text at issue.” Id. Therefore, under the contract’s unambiguous terms,
the $18,000 per month cannot be deemed installments on a loan repayment.
¶52. Second, the Commission relies on information outside the evidence to conclude that
the purported loan repayment amount includes an illegal interest rate. The Commission
argues that “if the Agreement is a contract to ‘borrow money’ and the eighteen-thousand-
dollar payment does represent a monthly payment that must be paid for a term of ninety-nine
years to pay off the loaned amount of $807,672.82, using simple math, these terms produce
an interest rate of 26.743%, more than double the 11% maximum . . . .” At the hearing, the
Commission attempted to introduce a cost report showing that Cleveland’s cost to build the
facility was $807,672.82. Cleveland objected, and the chancellor reserved ruling on the issue,
but in the end did not accept the cost report into evidence.6 Therefore, neither the
6
Cleveland did not present any evidence of the cost of construction.
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Commission nor this Court can rely on the cost report as evidence of the facility’s cost of
construction.
¶53. I would reject the Commission’s argument that its contract with Cleveland was void
ab initio.
IV. Conclusion
¶54. I would hold that the plain language of Section 41-19-33 manifests a clear legislative
intent that the rule against binding successors does not apply to the Commission’s entry into
a contract that fulfills its statutory mandate. Further, I would hold that the Commission’s
contract with Cleveland was not void ab initio. I would affirm the chancellor’s judgment in
favor of Cleveland.
DICKINSON, P.J., COLEMAN AND MAXWELL, JJ., JOIN THIS OPINION.
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