Medical Soc. of South Carolina v. MUSC

• Decision Date: 22 February 1999
• Docket Number: No. 24908.,24908.
• Citation: 513 S.E.2d 352,334 S.C. 270
• Court: South Carolina Supreme Court
• Parties: MEDICAL SOCIETY OF SOUTH CAROLINA, Respondent, v. MEDICAL UNIVERSITY OF SOUTH CAROLINA, Appellant.

334 S.C. 270

513 S.E.2d 352

MEDICAL SOCIETY OF SOUTH CAROLINA, Respondent, v. MEDICAL UNIVERSITY OF SOUTH CAROLINA, Appellant.

No. 24908.

Supreme Court of South Carolina.

Heard January 6, 1999.

Decided February 22, 1999.

Thomas A. Hutcheson, of Sinkler & Boyd, P.A., of Charleston; and H. Simmons Tate, Jr., of Sinkler & Boyd, P.A., of Columbia, for appellant.

Carl F. Muller and Frank S. Holleman, III, both of Wyche, Burgess, Freeman & Parham, P.A., of Greenville; and John C. Moylan, III, of Wyche, Burgess, Freeman & Parham, P.A., of Columbia, for respondent.

W. Hogan Brown and Paula G. Benson, Attorneys for the Senate; Charles F. Reid, Counsel to the Speaker, South Carolina House of Representatives; and Stephen T. Draffin, Code Commissioner and Director, Legislative Council of the General Assembly, for amicus curiae President Pro Tempore of the Senate John W. Drummond, Speaker of the House of Representatives David H. Wilkins, and Legislative Council of the General Assembly.

MOORE, Justice:

This appeal is from an order enjoining a proposed transaction between appellant (MUSC) and Columbia/HCA Healthcare Corporation. We reverse.

FACTS

On March 13, 1996, the MUSC Board of Trustees approved a proposed transaction with Columbia/HCA which included a master agreement, an academic affiliation agreement, a lease agreement, a license agreement, a shared services agreement, a guaranty agreement, and an option/affiliation dissolution agreement. Pursuant to these agreements, MUSC would lease the MUSC Medical Center in Charleston to Columbia/HCA for a term of twenty years for a base yearly rental of $8 million. MUSC would also sell Columbia/HCA certain assets such as equipment, inventory, and accounts receivable for a purchase price of approximately $42.7 million. Columbia/HCA would operate and manage the Medical Center and MUSC would be paid for providing hospital services. In addition, the master agreement provides that before closing, an un-named affiliate or affiliates of Columbia/HCA would acquire title to the Trident Regional Medical Center, the Summerville Medical Center, and the Colleton Regional Medical Center which, together with the Medical Center, would comprise the Charleston System Facilities.

Shortly after the MUSC Board of Trustees approved these agreements, on April 4, 1996, the Attorney General issued an opinion in response to an inquiry by two legislators regarding the proposed transaction. The Attorney General concluded MUSC did not have the statutory authority to consummate the transaction with Columbia/HCA and the transaction would require authorization by the General Assembly.

Meanwhile, Bill H.3915, an unrelated bill regarding the composition and functions of the State Commission on Higher Education, was pending in the legislature. It had been referred to the Senate Education and Public Works Committee. Shortly after issuance of the Attorney General's opinion, on April 10, 1996, H.3915 was recalled from committee and resubmitted the same day, retaining its place on the calendar. On May 2, it received a favorable committee report "with amendment" and was read a second time in the Senate "with notice of general amendments."

H.3915 continued its way through the Senate and House. When it was finally reported out of the Conference Committee on May 23, it had the same original title regarding the State Commission on Higher Education but the body of the bill had been completely replaced with language authorizing MUSC to lease to a private operator with specific terms and conditions referring to Columbia/HCA. H.3915 passed both houses that day. Before H.3915 was ratified on May 30, its title was amended to conform to its subject indicating authorization of an MUSC lease agreement. The Governor signed the bill into law on June 4 and on June 5 it was enrolled in the Secretary of State's office. This enrolled bill became 1996 S.C. Act No. 390. On July 26, respondent filed this action seeking to enjoin MUSC's transaction with Columbia/HCA. On summary judgment, the trial judge enjoined the transaction on the grounds 1) MUSC has no authority to dispose of the property in question, and 2) the authorization purportedly granted by Act No. 390 is invalid because the Act violates article III, §§ 17 and 34, of our State Constitution.

ISSUES

1) Does MUSC have pre-existing statutory authority to dispose of buildings or personal property?

2) Is Act No. 390 unconstitutional because its title was inadequate before it was ratified and enrolled?

3) Is Act No. 390 unconstitutional special legislation?

DISCUSSION

1) Pre-existing statutory authority

An agency created by statute has only the authority granted it by the legislature. Nucor Steel, A Division of Nucor Corp. v. South Carolina Pub. Serv. Comm'n, 310 S.C. 539, 426 S.E.2d 319 (1992). The trial judge found that, absent Act No. 390, the legislature has granted MUSC no authority to dispose of buildings or personal property. We agree.

First, Title 59, Chapter 123, which enumerates the specific powers of the MUSC Board of Trustees, does not include the power to dispose of real or personal property.¹ Under S.C.Code Ann. § 59-101-180 (1990), which applies generally to institutions of higher learning, the MUSC Board of Trustees has "the power to sell and dispose of any of its real estate other than buildings." Since this statute was enacted in 1968, MUSC's continuing lack of authority to dispose of buildings is demonstrated by the fact it has received legislative approval to dispose of buildings in specific instances. See, e.g., 1983 S.C. Act No. 151, Part I § 25D (granting MUSC Board of Trustees authority to sell residence designated for occupancy by President).

MUSC contends, however, it has the power to dispose of buildings and personal property under § 59-123-30 which provides:

The charter of The Medical University of South Carolina is hereby confirmed and extended with all the rights and privileges granted heretofore by the original act of incorporation or by any subsequent extension of its charter.

Although MUSC's original 1832 charter included no right to dispose of property, MUSC argues it had acquired the power to transfer real and personal property by the time it became a State entity in 1913 ² and this power is continued under § 59-123-30. MUSC points to the renewal of its charter on January 25, 1900, issued under the law allowing for incorporation at the time, 1896 S.C. Act No. 45. MUSC contends its certificate of renewal issued in 1900 under Act No. 45 bestowed all the powers granted corporations chartered under that Act which specifically includes the power to transfer real and personal property. 1896 Act No. 45, § 15.

First, this argument was not raised to or ruled upon by the trial judge and is not properly before this Court. Wilder Corp. v. Wilke, 330 S.C. 71, 497 S.E.2d 731 (1998).

In any event, this argument fails on its merits. As evidenced by the petition filed in 1900 with the Secretary of State requesting charter renewal for MUSC (then "Medical College of South Carolina"), the existing MUSC charter had expired on December 24, 1899. Under Act No. 45, if the charter of an existing corporation had expired and the Secretary of State issued a certificate of renewal, as opposed to issuing a charter, the following provision applied:

Upon the issuing of such certificate of renewal the charter of such corporation shall thereupon be renewed, and the corporation shall be entitled to and vested with all the franchises, powers, rights, privileges, immunities and property enjoyed, possessed and owned by it at the expiration of its charter....

(emphasis added). 1898 S.C. Act No. 333, § 8; 1898 S.C. Act No. 479. Under Act No. 45, a certificate of renewal did not bestow the powers granted a corporation chartered under the Act.³ Accordingly, MUSC gained no new powers under the certificate of renewal issued in 1900.

We hold the trial judge correctly ruled MUSC has no statutory authority without Act No. 390 to consummate its transaction with Columbia/HCA.

2) Article III, § 17

Absent existing statutory authority for its transaction with Columbia/HCA, MUSC must rely on the authority bestowed by Act No. 390. The trial judge found Act No. 390 unconstitutional under article III, § 17, which provides: "Every Act or resolution having the force of law shall relate to but one subject, and that shall be expressed in the title."

MUSC relies on the "enrolled bill rule" to argue that Act No. 390 is not unconstitutional under article III, § 17, because, irrespective of the title of the bill during the legislative process, the title of the bill as enrolled was sufficient.⁴ The enrolled bill rule provides that an Act ratified by the presiding officers of the General Assembly, approved by the Governor, and enrolled in the Office of the Secretary of State is conclusively presumed to have been properly passed. Such an Act is not subject to impeachment by evidence outside the Act as enrolled to show it was not passed in compliance with law. Beaufort County v. Jasper County, 220 S.C. 469, 68 S.E.2d 421 (1951); State v. Moorer, 152 S.C. 455, 150 S.E. 269 (1929). The rationale for this rule is that respect for a coequal and independent department of government and the need for finality in enacted laws outweigh the evils of applying the rule. State v. Town Council of Chester, 39 S.C. 307, 17 S.E. 752 (1893).

In Wingfield v. South Carolina Tax Comm'n, 147 S.C. 116, 144 S.E. 846 (1928), a case heard in this Court's original jurisdiction, petitioners argued the Act before the Court violated article III, § 17. Petitioners challenged not the title of the Act as enrolled, but its title during the legislative process. We applied the enrolled bill rule and held the Act as enrolled in the Secretary of State's Office was dispositive. 144 S.E. at 850. We refused to consider the legislative journals⁵ or any other document including the original bill to impeach the enrolled Ac...