Bradfield v. Hospital Authority of Muscogee County, 25921

• Decision Date: 09 July 1970
• Docket Number: No. 25921,25921
• Citation: 226 Ga. 575,176 S.E.2d 92
• Parties: J. P. BRADFIELD v. HOSPITAL AUTHORITY OF MUSCOGEE COUNTY et al.
• Court: Georgia Supreme Court

Page 92

176 S.E.2d 92

226 Ga. 575

J. P. BRADFIELD v. HOSPITAL AUTHORITY OF MUSCOGEE COUNTY et al.

No. 25921.

Supreme Court of Georgia.

July 9, 1970.

Syllabus by the Court

The proposed project of the Hospital Authority of Muscogee County and the Hospital Authorities Law authorizing it (Code Ann. Chap. 88-18) are not subject to any of the constitutional attacks made thereon in the plaintiff taxpayer's action to enjoin the implementation of the project and the summary judgment in favor of the defendant Authority was properly granted.

Appellant J. P. Bradfield ('Bradfield'), plaintiff below, filed a complaint in the Superior Court of Muscogee County, Georgia, against Hospital Authority of Muscogee County et al. ('Appellees'), defendants below, alleging that pursuant to the Hospital Authorities Law (Ga.L.1964, p. 598), as amended, and particularly as amended by Ga.L.1969, p. 103 (hereinafter sometimes called the 'Hospital Authorities Law'), Hospital Authority of Muscogee County (hereinafter sometimes called the 'Authority') acting by and through its members had adopted a resolution reciting the existence of an urgent and immediate need in Muscogee County, Georgia for additional hospital facilities in order to promote and maintain the public health in said county and authorizing and approving: (1) the acquisition by the Authority of St. Francis Hospital (the 'Hospital') in Muscogee County from St. Francis Hospital, Inc. (hereinafter sometimes called 'St. Francis'), a Georgia non-profit corporation; (2) the construction of extensions, additions and improvements to the hospital at an estimated cost of approximately $5,000,000; (3) the issuance and sale of the Authority's revenue anticipation certificates in the principal amount of $5,000,000 to finance, in whole or in part, the cost of said construction; and (4) the leasing of the hospital to St. Francis with the repayment of the principal, interest and redemption premium (if any) on said certificates to be made solely from the revenues derived from the hospital, including the monthly rentals to be made under the lease agreement proposed to be entered into between the Authority and St. Francis. Bradfield prayed that appellees be restrained and enjoined from proceeding with the issuance and sale of said revenue anticipation certificates and from incurring any further expense in connection therewith, from constructing said extensions, additions and improvements to the hospital, and from executing and delivering said proposed lease agreement, on the grounds that such actions by the appellees would be and are unconstitutional, illegal, null and void in that they contravene the equal protection and due process clauses of the Fourteenth Amendment of the Constitution of the United States and six distinct provisions of the Constitution of the State of Georgia of 1945.

Appellees filed an affidavit which indicated the religious affiliations of each of the members of its board of directors and simultaneously filed a motion for summary judgment on the ground that there exists no genuine issue of any material fact, that the action of the appellees in adopting said resolution and the proposed action of the appellees contemplated, authorized and directed by said resolution is not unconstitutional, illegal, null and void for any of the reasons stated in the complaint and that the appellees are entitled to judgment as a matter of law.

Upon consideration of written briefs, the Superior Court of Muscogee County entered its order without opinion granting appellees' motion for summary judgment. Within thirty days Bradfield filed a notice of appeal.

On November 14, 1967, pursuant to the provisions of the Hospital Authorities Law, the Board of Commissioners of Muscogee County adopted a resolution creating the Authority, a public body corporate and politic and an agency or instrumentality of the State of Georgia or Muscogee County. The Authority was duly organized and exists for the purpose, among others, of promoting the public health of Muscogee County. The members of the Authority are those individuals who were named as parties defendant below and who are now individual appellees in this court.

St. Francis is a non-profit corporation organized and existing under the laws of Georgia for the purposes, among others, of furthering the cause of religion, education and charity and of constructing, maintaining, conducting and operating a hospital or hospitals and similar facilities for the care of the ill and the diagnosis and treatment of illness. No part of the property of St. Francis nor of its earnings or profits shall ever inure to the benefit of any private person or individual. St. Francis is the present owner, operator and administrator of the hospital. The management and government of St. Francis is vested in a board of directors. This board consists of 19 members and is constituted of individuals who are affiliated with several different religious denominations. Of the 19 directors, six are Methodists, five are Episcopalians, four are Catholics, three are Presbyterians, and one is Jewish.

St. Francis has entered into a management contract with the Third Order of the Sisters of St. Francis of the Diocese of Pittsburgh (hereinafter sometimes called the 'Third Order'), a religious order of the Roman Catholic Church which is dedicated to the relief of human suffering and the operation of hospitals, schools and research programs directed toward the betterment of the human spirit, mind and body. Under this management contract, St. Francis has delegated to the Third Order the responsibility for the day-to-day administration of the hospital but has reserved to itself control over all the general policies governing the operation of the hospital. St. Francis has agreed that its board of directors will include not less than two members of the Third Order during the term of said management contract. The management contract specifies that the Residence Building which is presently located on the hospital grounds shall be available for the exclusive use of the Third Order on a cost free basis and that St. Francis will not establish or approve any policy which shall contravene or interfere with the religious or moral tenets of the Third Order. Either party to the management contract may terminate same upon twelve months' notice in writing to the other party.

On January 20, 1970, the Authority acting by and through its members unanimously adopted a resolution specifying that, following investigation and study, it had determined that there exists in Muscogee County an urgent and immediate need for additional hospital facilities in order to promote and maintain the public health in said county and, by way of providing in part for the fulfillment of such need, the Authority authorized and approved the acquisition by the Authority of the hospital, the construction of certain extensions, additions and improvements thereto substantially in accordance with certain plans and specifications at a cost of not less than $5,000,000, the leasing of the hospital, as extended, added to and improved, to St. Francis for a term of approximately 22 years at a net monthly rental to the Authority sufficient to amortize the principal of and interest and redemption premium (if any) on the monies to be borrowed by the Authority to finance the cost of said construction, all expenses incidental to such financing and all expenses accruing from year to year in carrying out the proposed lease agreement between said parties, and the sale and issuance by the Authority of its revenue anticipation certificates in the principal amount of $5,000,000 to finance the cost of said construction. The proposed extensions, additions and improvements to the hospital would increase its size to a facility of approximately 288 beds.

The form of the proposed lease agreement between the Authority and St. Francis (hereinafter sometimes called the 'lease agreement') was attached to and incorporated in the Authority's resolution and its execution, delivery and performance was approved by the Authority. During the term of the lease agreement, St. Francis will be responsible for the operation, maintenance and repair of the hospital at its own expense. The lease agreement provides that St. Francis shall maintain its corporate existence as a non-stock, non-profit corporation, of such a character as to be exempt insofar as then permitted by law from Federal, State and local income, property and franchise taxes; subject however, to certain situations in which St. Francis might merge into, consolidate with or transfer its assets to another like non-profit corporation. The delivery of the lease agreement to St. Francis is conditioned upon the execution and delivery of a security agreement by St. Francis granting to the Authority a security interest in the furniture, furnishings, equipment and other personal property located in the hospital or on the hospital grounds. The lease agreement provides an option in favor of St. Francis to purchase the Hospital, as added to, extended and improved, at the expiration or sooner termination of the term of the lease agreement, for $100.

The $5,000,000 in principal amount of revenue anticipation certificates will be issued pursuant to the terms of a trust indenture between the Authority and a bank or trust company to be designated and the rents and other revenues revenues received by the Authority from the hospital (including the rents to be received under the lease agreement from St. Francis) will be pledged thereunder as security for the payment of the principal, premium (if any) and interest on such certificates. If the proceeds from the sale of said certificates should be insufficent to complete said extensions, additions and improvements to the hospital, St. Francis has agreed to complete same without delay and to pay any such excess costs of construction. The trust indenture and the certificates...