Gonzales v. Personal Collection Service

Decision Date28 February 1972
Docket NumberNo. 4005,4005
Citation494 P.2d 201
PartiesBelle GONZALES and Bertie Brown, Appellants (Defendants below), v. PERSONAL COLLECTION SERVICE, Appellee (Plaintiff below).
CourtWyoming Supreme Court

Ernest Halle, of Legal Services for Laramie County, Inc., Cheyenne, for appellants.

Benedict D. Trierweiler and James A. Tilker, of Kline, Tilker & Lynch, and Walter C. Urbigkit, Jr., of McClintock, Mai, Urbigkit & Moriarity, Cheyenne, for appellee.

Before McINTYRE, C. J., and PARKER, Mc,EWAN and GUTHRIE, JJ.

Mr. Justice GUTHRIE delivered the opinion of the court.

Appellee herein filed complaints against Belle Gonzales and Bertie Brown for accounts due the Memorial Hospital of Laramie County, alleging that these accounts had been assigned to it for collection. Both appellants answered, setting up the defense that appellee was not the real party in interest because such an assignment on a contingent fee basis was constitutionally impermissible. Appellant Gonzales further set up as a defense that she had no means to pay for her hospitalization and that under the statute she was to be furnished these services free.

The parties entered a stipulation affecting both cases and disposal was made of these cases upon an agreed statement of facts. In addition thereto there was testimony by appellant Gonzales as to her income and family responsibility for support of herself and her son. She also testified she had made payments on this account which she stopped when the hospital would not accept such small offered payments.

Upon this agreed statement of facts and the testimony of Belle Gonzales the trial court entered judgment against both appellants for the sums claimed and it is from these judgments this appeal is prosecuted. The cases, involving the same question, were consolidated for this appeal.

Appellants contend that the Memorial Hospital of Laramie County is a municipal corporation and that as such it cannot make an assignment of an account on a contingent fee basis because of the prohibitions of § 40, Art. 3, Wyoming Constitution. They assert that a memorial hospital is a municipal corporation in contemplation of said section and cite a number of Wyoming cases in support of their contention.

Appellee meets these contentions by the assertion that a memorial hospital is not a municipal corporation as contemplated by the constitutional provision but is a 'quasi-municipal corporation' and therefore is not subject to the sections of the cited constitutional provision. Appellee further contends that an assignment of unpaid accounts for collection, because of the nature and effect of such assignments, is not prohibited by this provision.

Although we have examined the cases cited by appellants in support of their contention that a memorial hospital is a municipal corporation in contemplation of the constitutional provision, we are convinced that a determination of that particular question is not necessary or proper for a disposal hereof. A categorization of this character can arise to plague in later cases and in a great many instances reliance upon such categorizations is merely a device to avoid confrontation or analysis. It may also be observed that it is entirely possible that an entity of this type may be a municipal corporation for some purposes and not for others.

Based upon the authorities cited, which they contend establish a memorial hospital to be a municipal corporation, appellants cite as decisive the case of MacDougall v. Board of Land Com'rs of State of Wyoming, 48 Wyo. 493, 49 P.2d 663.

Appellant Gonzales' contention that she had no means to pay and was therefore entitled to receive free treatment from Memorial Hospital will be discussed later in this opinion inasmuch as no such question is raised by appellant Brown.

The assignment under which appellee holds is delightfully simple and unencumbered with detail. Insofar as the operative words are concerned it is as follows:

'_ _ assign the following accounts for collection to Personal Collection Service. Accounts-30% for court and out of town.'

This was followed by names addresses, and amounts of the accounts claimed with the name of the assignor at the bottom.

Appellants assert this assignment is improper because of the following constitutional provision:

'No obligation or liability of any person, association or corporation, held or owned by the state, or any municipal corporation therein, shall ever be exchanged, transferred, remitted, released or postponed, or in any way diminished by the legislature; nor shall such liability or obligation be extinguished, except by the payment thereof into the proper treasury.' Section 40, Art. 3, Wyoming Constitution.

They assert in support of this contention as follows:

'1. The purported assignment makes an unlawful appropriation of public funds.

'2. The assignment of subject account for collection on a contingent fee basis is an unlawful delegation of authority granted by law to the Laramie County Memorial Hospital trustees to 'sue and be sued'.

'3. The assignment of an account payable for collection on a contingent fee basis is in effect an unlawful delegation of power to compromise and settle the account because the hospital would be required to discharge the indebtedness in full upon receipt of less than the full amount of the debt from Appellee.

'4. The assignment of an account payable for collection on a contingent fee basis is unconstitutional in that it is a transfer of an obligation owed by a person to a municipal corporation.'

In support of these enumerated contentions they rely specifically and solely on the case of MacDougall v. Board of Land Com'rs of State of Wyoming, supra. A rather detailed examination of that case will be required to determine its applicability. The factual circumstances are so much different that the rules laid down therein are of doubtful application in the instant case. It is almost pedantic to repeat that rules and principles of law in an opinion are based upon and applicable to that factual situation. The MacDougall case, to be fully understood, must be read in connection with the later case of Bourne v. Cole, 53 Wyo. 31, 77 P.2d 617, which also involved a contingent fee arrangement by the State Land Board made after statutory authorization to effect the same result as was contemplated by the contract held void in the MacDougall case.

First and of paramount importance in distinguishing MacDougall from the present matter is the fact that the funds sought to be collected by virtue of the contract were funds payable to the treasury of the State and involved 'the permanent school fund, the maintenance of which is guaranteed by the Constitution,' 49 P.2d at 669. The court in that opinion also relied upon, and its holding is in part based upon, § 35, Art. 3, Wyoming Constitution, not herein involved or invoked, holding such section was mandatory and applicable in that case. It was upon this factual background the court held that fee arrangement to be 'an unlawful appropriation of the funds,' 49 P.2d at 666. This removes the MacDougall case as authority for the first stated ground of objection by appellants.

The contract involved in MacDougall gave powers to the party with whom they sought to contract as set out in the opinion, 49 P.2d at 666:

'* * * They are given the absolute power to determine whether the investigation authorized by the contract shall continue, and when or whether it shall end. * * *'

The assignment herein gives appellee no discretion save and except a collection by suit or other peaceable means, and beyond that the record is silent as to any other discretionary power.

Appellants' third specific contention that this assignment unlawfully delegated power to compromise or settle such accounts because the assignor would be required to discharge the full indebtedness upon receipt of a lesser amount is simply not borne out by the record. There is no showing what arrangement appellee had with the hospital. A knowledge of the dangers thereof might well have prompted the hospital to demand full payment and to then remit the fee. That, however, is speculation and appellants make no showing in this area. Appellants' burden is to demonstrate an act in contravention of the constitution and not a possible or feared violation. Burton v. School Dist. No. 19, 47 Wyo. 462, 38 P.2d 610, 612.

We find nothing in MacDougall to in any manner support or clarify appellants' fourth outlined contention that such an assignment as this is a 'transfer of an obligation owed by a person to a municipal corporation' nor any cited authorities in the brief or argument that this is correct.

We earlier mentioned the case of Bourne v. Cole as having been related to and of assistance in the application and understanding of the MacDougall case. This relationship was noted by the court when it was said, 77 P.2d at 619:

'It may be noted that the case herein is similar to MacDougall v. Board of Land Commissioners, 48 Wyo. 493, 49 P.2d 663. It appears in that case that the State Board of Land Commissioners sought to have an investigation made similar to that sought to be made under the contract here in question. We held in that case that the contract then involved was illegal, but stated that the holding might have been otherwise, if it had been entered into pursuant to the authorization of the Legislature, and if not otherwise in violation of the Constitution. * * *'

This opinion further notes that if the usual or customary means or agencies have been found inadequate the legislature in that case has the power to employ special means or agencies for that purpose. This is certainly illustrative that there is no constitutional ban forbidding contingent fee arrangement contracts as such if the statute is sufficient. It also suggests to us that if the hospital does not have sufficient means for collection it may rely upon a contingent fee arrangement without constitutional violation. ...

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