Kentucky Bldg. Com'n v. Effron
| Decision Date | 20 May 1949 |
| Citation | 310 Ky. 355,220 S.W.2d 836 |
| Parties | KENTUCKY BLDG. COMMISSION et al. v. EFFRON. |
| Court | Kentucky Court of Appeals |
Appeal from Circuit Court, Franklin County; W. B. Ardery, Judge.
Action by Julius Effron, as a taxpayer, against the Kentucky Building Commission and others for a judgment declaring statutes authorizing allocation of funds raised by taxes to nonprofit hospitals not owned by the State or political subdivisions thereof unconstitutional. From a judgment declaring the statutes unconstitutional as to such hospitals defendants appeal.
Reversed with directions.
A. E. Funk; Atty. Gen., M. B. Holifield, Asst. Atty Gen., Bullitt, Dawson & Tarrant, Louisville, John E. Tarrant Robert T. Burke, Sr., Thomas S. Dawson, Louisville, for appellants.
Hensley & Redwine, Louisville, for appellee.
This is a declaratory judgment action brought by Julius Effron, as a taxpayer, against the Kentucky Building Commission and its several members, the State Treasurer, the Commissioner of Health and Division of Medical Hospitals and Related Services in the Department of Health, to test the constitutionality of KRS 211.105 and KRS Chapter 47, Part Three, which latter authorizes the allocation of funds raised by taxes to nonprofit hospitals not owned by the State or a political subdivision thereof. A general demurrer to the petition as substituted and amended was overruled, the defendants refused to plead further, and the chancellor adjudged KRS Chapter 47, Part Three, was unconstitutional insofar as its provisions apply to hospitals which are not owned and operated by the State or one of its subdivisions.
The 79th National Congress enacted Public Law No. 725, 42 U.S.C.A. § 291 et seq., for the declared purpose 'to assist the several States to construct public and other nonprofit hospitals', and appropriated three hundred million dollars of federal funds for the purpose. Section 291i(g) of that Act defined a nonprofit hospital as 'any hospital owned and operated by a corporation or association, no part of the net earnings of which inures, or may lawfully inure, to the benefit of any private shareholder or individual'.
To enable Kentucky to take advantage of the benefits of the Federal Act and to protect the general public health, our General Assembly at its 1948 session enacted KRS 211.105 which created a 'Division of Medical Hospitals and Related Services in the Department of Health' which was authorized 'to accept and receive on behalf of the state any grants, gifts or contributions now or hereafter made by the Federal Government, or from any other source, to the Commonwealth of Kentucky to aid and assist in carrying out the purposes and provisions of Public Law No. 725, * * * or any other Acts for the same or similar purposes * * *.' And to 'counsel and advise counties and communities seeking aid in the construction of hospitals and medical centers and related services, as provided in Public Law No. 725 * * *, receive applications for such aid and transmit same to the Surgeon General of the United States of America for approval'.
In the same 1948 session, our General Assembly enacted KRS Chapter 47, Part Three, which appropriated ten million dollars to be expended among other purposes in 'matching funds for hospital construction under any law now existing or that may be passed by the National Congress'. The Kentucky Building Commission upon the recommendation of the Division of Medical Hospitals and Related Services allotted State funds for new construction by cities and counties of certain public hospitals. Such allotments were held to be constitutional in Miller v. State Bldg. Commission, 308 Ky. 249, 214 S.W.2d 265. Upon the same recommendation the Commission also allotted State funds for new construction of certain nonprofit hospitals, such as J. N. Norton Memorial Infirmary, Hayswood Hospital, and Our Lady of Peace Hospital, which are public hospitals but not owned or operated by the State or any subdivision thereof. The instant action attacks the constitutionality of KRS 211.105 and KRS Chapter 47, Part Three, in allotting funds raised by taxation in the construction of these hospitals.
The petition questions the right of the State under §§ 3, 5, and 171 of our Constitution to make allotments from funds raised by taxes to these nonprofit hospitals. Although such allotments were not attacked as being violative of § 181 (forbidding the General Assembly from levying a tax for any political subdivision), the chancellor held they were. He was in error in this, since it was expressly said in the Miller opinion, 308 Ky. 249, 214 S.W.2d 265 that § 181 does not prevent the allocation of State funds as the State's contribution to public hospitals in which there is statewide interest and concern.
It is clear that § 3 of the Kentucky Constitution () has no application to the question before us, since the construction of nonprofit hospital facilities is a public purpose. District Board of Tuberculosis Sanitarium Trustees v. City of Lexington, 227 Ky. 7, 12 S.W.2d 348; the Miller case, 308 Ky. 249, 214 S.W.2d 265. It is well settled that a private agency may be utilized as the pipe-line through which a public expenditure is made, the test being not who receives the money, but the character of the use for which it is expended. 51 Am.Jur., § 390, p. 381; Hager v. Kentucky Children's Home Society, 119 Ky. 235, 83 S.W. 605, 67 L.R.A. 815; Orphan Society of Lexington v. Fayette County, 69 Ky. 413; Robinson v. Mercer Fiscal Court, 218 Ky. 452, 291 S.W. 721. Since the construction of these nonprofit hospitals is for the common good of all people throughout the State, the appropriations of tax money for building them do not violate the applicable part of § 171 of our Constitution--'Taxes shall be levied and collected for public purposes only'.
This leaves us to dispose of the more difficult question raised by § 5 of our Constitution. That section guarantees religious freedom and among...
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