Pee Dee Nursing Home, Inc. v. Florence General Hosp.
| Decision Date | 04 May 1992 |
| Docket Number | No. 1849,1849 |
| Citation | 309 S.C. 80,419 S.E.2d 834 |
| Parties | PEE DEE NURSING HOME, INC., Appellant, v. FLORENCE GENERAL HOSPITAL, Respondent. . Heard |
| Court | South Carolina Court of Appeals |
Charles B. Baxley and Bruce A. Flora, both of Baxley, Pratt & Wells, Lugoff, for appellant.
Joel H. Smith, Julie Jeffords-Moose and Stuart M. Andrews, all of Nelson, Mullins, Riley & Scarborough, Columbia, for respondent.
Appellant, Pee Dee Nursing Home, Inc., sued respondent, Florence General Hospital, seeking specific performance of an agreement regarding the transfer of nursing home beds. Following a bench trial, the trial judge found the hospital's administrator had neither actual nor apparent authority to enter the agreement and therefore found the agreement invalid and unenforceable. The nursing home appeals. We affirm.
The only issues before us on appeal are whether the trial judge erred in finding the administrator had no actual authority to enter the agreement and finding he had no apparent authority to enter the agreement.
The record reveals the following. In early 1987, Carl G. Kretschmar and two partners became interested in the purchase of Faith Nursing Home, a 148-bed nursing home facility in Florence. Apparently, the hospital became aware of the likely sale to the partners, known as CMK Associates, and approached CMK regarding the purchase of the franchise to 44 of the 148 beds at Faith Nursing Home. On May 4, 1987, the hospital entered an agreement with CMK providing for the transfer of 44 beds to the hospital for the sum of $350,000. This agreement was contingent upon CMK acquiring Faith Nursing Home. The administrator and president of the hospital at that time, Fred Schilling, was specifically authorized by the hospital board to execute this agreement. 1 Effective July 1, 1987, CMK acquired the real estate of Faith Nursing Home and it was operated as Pee Dee Nursing Home, Inc., with Kretschmar serving as president and chief operating officer.
In November 1987, the hospital filed an application for a certificate of need with the South Carolina Department of Health and Environmental Control seeking approval of the transfer of the 44 nursing home beds to the hospital campus. This application was subsequently approved. Initially, the hospital planned to build a separate unit on the campus to house the 44 nursing beds and still make use of the existing hospital laundry and dining facilities. However, over the course of time, the hospital adopted a plan to use existing hospital space to put 19 of the 44 nursing beds in service with construction of the remaining 25 beds to take place at a later date. Around June of 1989, Kretschmar became aware of these plans and requested a meeting with DHEC to express his objection. Kretschmar stated that the transfer of only 19 beds with some future transfer of the remaining 25 would have a significant negative financial impact on the nursing home. At a June 1989 meeting with DHEC officials and the hospital administrator, Kretschmar indicated he opposed any effort to transfer only 19 beds at that time and would appeal any decision by DHEC permitting this modification to the certificate of need. This meeting led to discussions out of which emerged the challenged agreement between the nursing home and the hospital. The agreement, dated August 16, 1989 is signed by Kretschmar and the hospital administrator, Schilling, and purports to transfer the 25 beds back to the nursing home by means of letting the certificate of need expire. There is no provision for the payment of money to the hospital for the 25 beds. Testimony indicated the value of the 25 beds was approximately $200,000.
The nursing home first contends the trial judge erred in finding the administrator did not have actual authority to negotiate and enter the August 16, 1989 agreement. It argues the hospital's by-laws implicitly gave the administrator this actual authority. We disagree. While Article II, Section 2 of the by-laws allows for delegation of authority, it specifically provides that the administrative powers are vested in the governing board "which shall have charge, control, and management of the property, affairs and funds of the hospital." Article V, Section 1 provides for the appointment of an executive officer who "shall be given the necessary authority and responsibility to operate the hospital in all its activities and departments, subject only to such policies as may be issued by the Governing Board or by any of its committees to which it has delegated power for such action." Section 3 of the same article is a list of enumerated responsibilities and authority of the appointed executive officer which includes only matters that are clearly administrative. It suggests no authority to dispose of assets belonging to the hospital.
There is no evidence that the board delegated authority to Schilling to dispose of hospital assets. Further, while Schilling received specific board approval to negotiate the May 4, 1987 agreement, no such authority appears for the August 16, 1989 agreement as evidenced by the hospital board minutes. To the contrary, the day before the agreement was entered, Schilling appeared at a board...
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