Beard v. Achenbach Memorial Hospital Ass'n, 3624.
| Decision Date | 12 November 1948 |
| Docket Number | No. 3624.,3624. |
| Parties | BEARD v. ACHENBACH MEMORIAL HOSPITAL ASS'N et al. |
| Court | U.S. Court of Appeals — Tenth Circuit |
Harry O. Glasser, of Enid, Okl. (Harry O. Janicke, of Winfield, Kan., on the brief), for appellant.
Riley W. MacGregor, of Medicine Lodge, Kan., and J. B. Patterson, of Wichita, Kan. (Paul R. Wunsch, of Kingman, Kan., A. W. Hershberger, Richard Jones, and Wm. P. Thompson, all of Wichita, Kan., on the brief), for appellees.
Before PHILLIPS, Chief Judge, and BRATTON and MURRAH, Circuit Judges.
Jacob Achenbach died leaving a will which contained a provision directing the trustees of his estate to erect and equip a public hospital in the town of Hardtner, Kansas, or on a specified tract of land adjacent to the town, at a cost to the estate of not more than $125,000. The provisions permitted the trustees to secure such persons or organizations as they might deem best to manage, control, and operate the hospital. The will was admitted to probate; and the hospital was constructed, equipped, and conveyed to Achenbach Memorial Hospital Association, a nonprofit corporation organized under the laws of Kansas for the purpose of accepting and operating it. The deed of conveyance recited that it was executed under the terms and provisions of the will and certain orders of court; and it provided that should the grantee become unable or unwilling to maintain and operate the property as a hospital, or should it commit or permit waste upon the premises, or should it not protect and preserve the property according to the true intent and purpose of the conveyance, the conveyance should terminate and the property revert to the estate of the testator. Several months prior to the opening of the hospital, the corporation entered into a contract with Doctor H. L. Galloway, then engaged in conducting a hospital at Anthony, Kansas, a town located approximately forty miles from Hardtner, which provided that Doctor Galloway should move to Hardtner and be the chief of the hospital; that he should receive as remuneration for himself and other doctors and specialists sixty-five per cent of all moneys received from members of the hospital association, except that received from membership pledges, and sixty-five per cent of all moneys charged for the treatment of non-members who were treated by Doctor Galloway and his associates; that the remaining thirty-five per cent of such moneys should be used for the upkeep and maintenance of the hospital; and that all moneys received from the use of rooms, drugs, medicines, bandages, X-ray machines, laboratory equipment, and any other equipment owned by the association should go into the permanent or maintenance fund to be used for the maintenance of the hospital. The contract further provided that it should be in force and effect for a period of five years. The hospital was opened for the reception of patients in September, 1941. Doctor Galloway became its chief and he had two medical assistants.
In 1946, Charles C. Beard, a member of the association, on behalf of himself and other dissatisfied members, brought this class action against the corporation, certain directors, certain former directors, the three members of the medical staff of the hospital, the superintendent of the hospital, the executor of the last will of the testator, and the trustees of the estate of the testator. The cause of action pleaded in the second amended complaint was that the deed conveying the property to the corporation did not fulfill in certain particulars the intent and purposes of the provision contained in the will and subjected the corporation to certain handicaps and burdens not contemplated by the bequest; that funds of the corporation had been and were being paid to the members of the medical staff of the hospital as compensation for medical services, in violation of the contract with Doctor Galloway; that funds of the corporation had been wrongfully paid to Doctor Galloway and his associates in the form of a bonus; that the original contract with Doctor Galloway would terminate soon; and that unless prevented from doing so, the corporation and the doctor would enter into a new contract beneficial to the doctor and harmful to the corporation. The prayer was for the appointment of a receiver, for an appropriate order restraining the execution of a renewal contract, and for an accounting of the funds wrongfully paid to the members of the medical staff of the hospital. By answer, the defendants admitted certain allegations contained in the complaint, denied fraud, and pleaded that all of the dealings between the directors of the corporation and Doctor Galloway, including the payment of the bonus, had been from time to time approved by the members of the association. Judgment was entered for the defendants, and plaintiff appealed.
It is urged that more funds were paid to the doctors for their professional...
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