Smith v. Davis

• Decision Date: 03 April 1968
• Docket Number: No. B--470,B--470
• Parties: B. L. SMITH et al., Appellants, v. Charles G. DAVIS et al., Appellees.
• Court: Texas Supreme Court

Page 827

426 S.W.2d 827

B. L. SMITH et al., Appellants, v. Charles G. DAVIS et al., Appellees.

No. B--470.

Supreme Court of Texas.

April 3, 1968.

Greene, Stolhandske, Benbow & Gross, Sam Gross, San Antonio, for appellants.

James E. Barlow, Dist. Atty., Preston H. Dial, Jr., and R. Emmett Cater, Asst. Dist. Attys., San Antonio, for appellees.

GREENHILL, Justice.

This controversy turns upon the constitutionality of a statute providing a manner of taxation for the financing of hospital districts. The particular district before the Court is that of Bexar County which is establishing a teaching hospital in San Antonio to be affiliated with the Medical School, South Texas Branch, of The University of Texas.

The suit was instituted by B. L. Davis and four other citizens, herein called plaintiffs, for themselves and as representatives of a class of taxpayers, to enjoin permanently the levying, assessment, and collection of taxes under Article 4494n, Section 2b, ¹ and for a declaration that the statute is unconstitutional. The defendants were the County Judge, County Commissioners, and County Tax Assessor-Collector of Bexar County. Trial was to the court without a jury. The court upheld the validity of the statute and denied the injunction. The case was brought directly to this Court under Rule 499a, Texas Rules of Civil Procedure. The record does not contain a statement of facts, but the transcript contains findings of fact made by the trial court which are not attacked here. The only questions before us relate to the constitutionality of the statute.

The asserted grounds of unconstitutionality of the statute will be discussed below. They include the assertion that the bill is a local or special bill; that it has a defective caption; that it was a 'revenue bill' which must have originated in the House of Representatives; and that it offends the Fourteenth Amendment to the U.S. Constitution and related sections of the Texas Constitution dealing with equal and uniform taxation.

In 1955, the people of Bexar County voted to create the Bexar County Hospital District pursuant to Article 4494n. In 1961, they voted a six and one-half million dollar bond issue to support the hospital district and also voted to levy a tax for the payment thereof. One and one-half million dollars derived from the sale of the bonds was expended for the renovation of the Robert B. Green Memorial Hospital. The remaining five million was used for the construction of a teaching hospital in conjunction with the construction of The University of Texas Medical School, South Texas Branch. At the time of the trial of this case, the teaching hospital was 70 to 75 per cent completed. The cost of the teaching hospital was fifteen and one-half million dollars. The district obtained, primarily from federal sources, grants of ten and one-half million dollars for this construction, which grants are not repayable if the structure is operated as a teaching hospital. It is anticipated that the cost of operation of the teaching hospital will be five million dollars annually.

Prior to this controversy, the tax for the hospital district was on the basis of 25 per cent of the fair cash market value of the property in the district, which was the same basis for the tax assessment for state and county purposes. The trial court's finding of fact, unquestioned here, was that additional revenue was needed.

Article 4494n was amended in 1965 by the addition of Section 2a, which provided that property in hospital districts created in counties with over 450,000 inhabitants could be assessed at a greater percentage of fair market value than that used for state and county purposes, but only after such assessment procedure was approved by a vote of the people. An election was held pursuant to that section. The voters of Bexar County voted against authorizing the assessment of property at a higher percentage of fair market value. Subsequent to that election, the Legislature in 1967 amended the statute by the addition of Section 2b. This is the portion of the statute attacked here. It states:

'In Hospital Districts created under this Act located in counties containing a population of 650,000 or more according to the last preceding Federal Census and having teaching hospital facilities that are affiliated with a state-supported medical school, the Commissioners Court, on its own motion or on the approval of the qualified property taxpaying electors at an election held pursuant to the provisions of Section 2a of this Act, may order the Assessor and Collector of Taxes to assess the property in the Hospital District at a greater percentage of its fair cash market value than that used in assessing the property for state and county purposes, but in no instance shall that amount exceed fifty (50) per cent of fair cash market value. Such order to the assessor and collector of taxes spread upon the minutes of Commissioners Court shall constitute notice for all purposes to the taxpayers of said Hospital District of the intention to increase assessments.' ²

It is stipulated that the above act is applicable to Bexar County.

Pursuant to this section, the Commissioners Court voted to assess property at a higher percentage of fair cash market value than that used for state and county purposes, at a valuation not to exceed fifty per cent of its fair cash market value. The plaintiffs thereupon filed this suit. The first contention is that Section 2b is a local or apecial law and therefore invalid under Art. 3, Sec. 56, Texas Constitution, Vernon's Ann.St., which prohibits the passage of local or special laws in cases where a general law can be made applicable. We shall assume that general laws can be made applicable to hospital districts and that the statute in question must conform to this section of our Constitution.

The applicability of the section in controversy is limited to counties with over 650,000 inhabitants containing a teaching hospital facility affiliated with a state-supported medical school. The contention is that this classification is arbitrary and unreasonable and renders Section 2b unconstitutional as a local or special law.

The Legislature may restrict the application of law to particular counties by the use of classifications, providing the classifications are not arbitrary. There must be a reasonable relationship between the classification and the objects sought to be accomplished by the statute. Smith v. Decker, 158 Tex. 416, 312 S.W.2d 632 (1958); Miller v. El Paso County, 136 Tex. 370, 150 S.W.2d 1000 (1941). As stated in Miller, the classification '* * * must not be a mere arbitrary device resorted to for the purpose of giving what is, in fact, a local law, the appearance of a general law.' The ultimate test for whether a law is general or special is whether there is a reasonable basis for the classification and whether the law operates equally on all members within the class. County of Cameron v. Wilson, 160 Tex. 25, 326 S.W.2d 162 (1959); Rodriguez v. Gonzales, 148 Tex. 537, 227 S.W.2d 791 (1950).

In passing upon the constitutionality of a statute, we begin with a presumption of validity. It is to be presumed that the Legislature has not acted unreasonably or arbitrarily; and a mere difference of opinion, where reasonable minds could differ, is not a sufficient basis for striking down legislation as arbitrary or unreasonable. The wisdom or expediency of the law is the Legislature's prerogative, not ours. As quoted in this Court's opinion in Texas National Guard Armory Board v. McCraw, 132 Tex. 613, 126 S.W.2d 627 at 634 (1939), "There is a strong presumption that a Legislature understands and correctly appreciates the needs of its own people, that its laws are directed to problems made manifest by experience, and that its discriminations are based upon adequate grounds."

It cannot fairly be said that the classification made by Section 2b is without any reasonable basis. We may judicially notice from the statutes that there are only three state-supported medical schools in Texas, ² and that county hospital districts provide, at no cost to the State, teaching hospital facilities for two of these medical schools. ³ We may assume that those hospital districts operating teaching hospitals have special requirements and obligations which the legislature recognized in classifying them separately. Article 9, Section 4 of the Texas Constitution provides that cities and counties within county-wide hospital districts shall not levy taxes for hospital purposes, and prohibits the legislature from making appropriations for the construction or maintenance of hospitals operated by such hospital districts. Therefore, the operation and maintenance of the teaching hospitals operated by hospital districts must be financed by the hospital districts themselves. The State has a clear and obvious interest in the suitable operation of teaching hospitals for its medical schools, and thus there is a reasonable justification for special provisions relating to the financing of hospital districts operating such teaching hospitals. The legislature could have reasonably determined that property assessments for the maintenance of these hospital districts would be best determined by county officials rather than the voters; this conclusion could be based upon the necessity for more flexibility in providing funds for the operation of teaching hospitals, or a desire to provide that funds for the necessary operation of teaching hospitals for the State medical schools would not be dependent upon the approval by the voters of a particular county. Even though Section 2b is now applicable only to the two county hospital districts that maintain teaching hospital facilities affiliated with state-supported medical schools, this limitation does not render the statute local or special in nature, because the operation of such teaching hospital facilities reasonably distinguishes these counties...