Bexar County Hospital Dist. v. Crosby

• Decision Date: 31 December 1958
• Docket Number: No. 13385,13385
• Citation: 320 S.W.2d 247
• Parties: BEXAR COUNTY HOSPITAL DISTRICT, Appellant, v. Jack B. CROSBY et al., Appellees.
• Court: Texas Court of Appeals

Page 247

320 S.W.2d 247

BEXAR COUNTY HOSPITAL DISTRICT, Appellant, v. Jack B. CROSBY et al., Appellees.

No. 13385.

Court of Civil Appeals of Texas, San Antonio.

Dec. 31, 1958.

Rehearing Denied Feb. 4, 1959.

J. Bruce Aycock, Harvey L. Hardy, San Antonio, for appellant.

Carlos C. Cadena, City Atty., Charles L. Smith, Asst. City Atty., Hubert W. Green, Dist. Atty., L. J. Gittinger, John G. Murray, Asst. Dist. Attys., San Antonio, for appellees.

W. O. MURRAY, Chief Justice.

This suit was instituted by Bexar County Hospital District, a municipal corporation, created under the provisions of Sec. 4 of Art. IX of the Texas Constitution, Vernon's Ann.St., against Jack B. Crosby in his official capacity as County Auditor of Bexar County, and also against Bexar County and the City of San Antonio, seeking a Declaratory Judgment construing the provisions of Sec. 4 of Art. IX of the Texas Constitution and Art. 4494n, Vernon's Ann.Civ.Stats., the enabling act thereunder, for the purpose of determining the custody and control of certain hospital bond interest and sinking funds and also the proceeds derived from certain delinquent taxes. The case was submitted on an agreed statement of facts and conclusions of law, and resulted in a declaratory judgment to the effect that Sec. 13, paragraph 2, of Article 4494n, Vernon's Ann.Civ.Stats., is unconstitutional, and that the Hospital District is not entitled to the proceeds from delinquent taxes levied by the County and City for hospital purposes prior to the creation of the hospital district, and further that it is not entitled to the hospital bond interest and sinking funds held by the County and City, respectively. The Hospital District has prosecuted this appeal.

The second paragraph of Sec. 13, Art. 4494n, V.A.C.S., which the trial court held to be unconstitutional, reads as follows:

'That portion of delinquent taxes owed cities and counties on levies for present city and county hospital systems under Acts 48th Legislature, 1943, Chapter 383, page 691, shall continue to be paid to the Hospital District by the city and county as collected, and applied by the Hospital District to the purposes for which such taxes originally were levied.'

If the court was correct in holding that this paragraph of the Statute is unconstitutional, then the judgment insofar as it affects delinquent taxes should be upheld. In approaching this question it is well to keep in mind that the old hospital system under which the City-County Hospitals were operated was not a municipal corporation. It was not a legal entity and had no power to levy taxes; it was simply a joint agency through which the City and County operated their hospitals for the needy. The Hospital District is a legal entity created under the provisions of Sec. 4 of Art. IX, Texas Constitution, with power to levy and collect taxes up to 75cents on the $100 valuation of all taxable property within the District, which is co-extensive with Bexar County.

Article 9, Sec. 4, of the Constitution, under the provisions of which the Hospital District was created by a vote of the property tax-paying voters of Bexar County, reads as follows:

'Sec. 4. County-wide hospital districts

'Sec. 4. The legislature may by law authorize the creation of county-wide Hospital Districts in counties having a population in excess of 190,000 and in Galveston County, with power to issue bonds for the purchase, acquisition, construction, maintenance and operation of any county owned hospital, or where the hospital system is jointly operated by a county and city within the county, and to provide for the transfer to the county-wide Hospital District of the title to any land, buildings or equipment, jointly or separately owned, and for the assumption by the district of any outstanding bonded indebtedness theretofore issued by any county or city for the establishment of hospitals or hospital facilities; to levy a tax not to exceed seventy-five ($.75) cents on the One Hundred ($100.00) Dallars valuation of all taxable property within such district, provided, however, that such district shall be approved at an election held for that purpose, and that only qualified, property taxpaying voters in such county shall vote therein; provided further, that such Hospital District shall assume full responsibility for providing medical and hospital care to needy inhabitants of the county, and thereafter such county and cities therein shall not levy any other tax for hospital purposes; and provided further that should such Hospital District construct, maintain and support a hospital or hospital system, that the same shall never become a charge against the State of Texas, nor shall any direct appropriation ever be made by the Legislature for the construction, maintenance or improvement of the said hospital or hospitals. Should the Legislature enact enabling laws in anticipation of the adoption of this amendment, such Acts shall not be invalid because of their anticipatory character. Added Nov. 2, 1954.'

We will here make a rather full statement of the facts. Prior to 1949, the Robert B. Green and Southton Hospitals were operated by Bexar County. In 1949, pursuant to Article 4494i, V.A.C.S., the City and County entered into an agreement for the joint support of said hospitals, and provided that these hospitals would be administratively operated by the San Antonio-Bexar County Hospital Sytem. By this agreement, as finally amended, the City agreed to contribute toward the operation of the Hospital System $110,000 for the period commencing August 1, 1949, and ending December 31, 1949, and thereafter to contribute to the operation of said Hospital System the amount of money raised by a levy by the City of an ad valorem tax of .10 per $100 valuation on the property subject to taxes for such purposes.

This agreement between the City and County remained in effect until about June 28, 1955, when the Hospital System was abolished and the appellant Hospital District created. During the existence of the contract between the City and County for the joint support of the Hospital System, the City not only paid to the Hospital System the amount of money required by the aforementioned agreement with the County, but it also made the following expenditures and contributions in addition thereto for the benefit of the Hospital System:

1. On January 20, 1955, by Ordinance No. 20898, the City Council appropriated and set aside the sum of $704,196 from the General Fund of the City and made this sum available to the exclusive use of the Robert B. Green Hospital, a part of the Hospital System, to be used by said Hospital System to defray its operating expenses, which amount the Hospital System withdrew from the City.

2. During the existence of the Hospital System the City paid for the gas and electrical services to the facilities of the Hospital System. The total amount paid for these services by the City was $44,089.02.

3. The City's financial set-up is one where it borrows money to use during the current fiscal year and repays the lender with taxes collected the following tax year, and during the time the Hospital System was in existence the City borrowed money each year to help finance the Hospital System, and in so doing had to make interest payments to the lender on the amount borrowed. The interest payments on the money borrowed to help support the Hospital System totaled $13,909.02.

Under the ten cent tax levied by the City pursuant to its contract with the County, the City collected and paid to the Hospital System a total of $2,716,084.40. If all the taxes were collected pursuant to this ten cent tax levy and if there were no delinquent taxes outstanding, a total of approximately $2,982,912.98 would have been collected by the City and transferred to the Hospital System. In fact a total of $3,478,278.44 (not including the cost of assessing and collecting the taxes), was either paid to or used for the benefit of the Hospital System by the City, which amount is far in excess of the amount the City contracted to give to said Hospital System.

In May, 1953, the Legislature passed Article 4494n, V.A.C.S. hereinafter referred to as 'the Anticipatory Act', which was to become effective upon the adoption of the proposed constitutional amendment to be submitted to the voters at the general election in November, 1954. This enactment was to be the enabling act of Article 9, Section 4, when adopted, and provided for the transfer to the newly created Hospital Districts of 'title to land, buildings, and equipment.'

In November, 1954, Article 9, Section 4, was adopted as an amendment to the Constitution and provided, as did the Anticipatory Act, for the transfer to the newly created Hospital Districts of 'title to land, buildings, and equipment.'

In May, 1955, the Anticipatory Act was amended by the Legislature by Acts 1955, 54th Legislature, Chapter 257, S.B. 224, and, in addition to providing for the transfer of 'title to land, buildings and equipment' as did the Anticipatory Act and the Constitutional Amendment, the Legislature provided for the transfer of delinquent taxes as collected as above set forth.

On or about June 28, 1955, pursuant to Article 9, Sec. 4 of the Constitution and Article 4494n, V.A.C.S., as amended, the Distrct was duly established by the approval of the majority of the qualified voters, and the Hospital System was abolished.

Upon the establishment of the District, the City, pursuant to Article 9, Sec. 4, of the Constitution, and Article 4494n, V.A.C.S., transferred to the District the lands, buildings, and equipment which included such things as food, drugs, supplies, records, etc. In addition, the unspent portion of the funds set up for the hospital system was transferred to the District.

The City and County, however, refused to transfer the delinquent taxes on levies for the benefit of Hospital System pursuant to Section 13 and claimed this section to be...