State Bank & Trust Co., Etc., v. Madison County
| Decision Date | 22 November 1938 |
| Citation | 275 Ky. 501 |
| Court | United States State Supreme Court — District of Kentucky |
| Parties | State Bank & Trust Co. of Richmond v. Madison County et al. |
5. Municipal Corporations. — A public body may confer discretion in the administration of a law.
6. Counties. — Proposed bonds to be issued by fiscal court of county for construction and equipment of hospital, which provided that bonds were payable solely from and secured by pledge on fixed amount of gross income to be received by county from leasing of hospital, and which expressly provided that bonds should not constitute indebtedness of county within meaning of constitutional debt limitation, would not represent charge on tax funds of county or represent charge against hospital realty.
7. Deeds. — Proposed bonds to be issued by fiscal court of county to finance part of proposed construction and equipment of hospital on property which was conveyed to county by hospital association to which hospital was to be leased as operating agent, which were payable solely from and secured by pledge on fixed amount of gross income and revenue to be received by county from leasing of hospital, did not violate provision of deed under which hospital association acquired title prohibiting mortgaging of hospital property.
8. Counties. — Proposed bonds to be issued by fiscal court of county for construction and equipment of hospital on property conveyed to county by hospital association to which hospital was to be leased as operating agent, which were payable solely from and secured by exclusive pledge of fixed amount of gross income and revenue to be received by county from leasing hospital, and which specifically provided that bonds did not constitute indebtedness within constitutional debt limitation, did not represent such county obligations within constitutional debt limitation (Constitution, secs. 157, 158).
9. Counties. — Proposed plan for issuance of revenue bonds by county fiscal court to finance construction and equipment of hospital on property deeded to county by hospital association to which hospital was to be leased as operating agent, which bonds were payable solely from and secured by exclusive pledge and lien on fixed amount of gross income and revenue to be received by county from leasing hospital, did not contemplate such a debt obligation as was required to be submitted to the voters under statute (Ky. Stats., sec. 938e-2).
10. Counties. — A county fiscal court had authority to select means of providing for retirement of bonds issued against rentals to be received by it from operation of hospital by lessee as operating agent where no charge was to be placed on tax moneys of county under financing plan adopted (Ky. Stats., secs. 938e-1, 1840).
Appeal from Madison Circuit Court.
JOHN B. BAYER, JR., for appellant.
JOHN NOLAND, OWEN H. HISLE and GEORGE T. ROSS for appellees.
Affirming.
This suit was brought under the Declaratory Judgment Act, sections 639a-1 to 639a-12 inclusive, of the Civil Code of Practice, to test the legality of the proposed plans for financing the erection and equipping and the operation of a hospital in Richmond, Madison county. The suit was filed by the county of Madison and the Pattie A. Clay Infirmary Association against the State Bank & Trust Company of Richmond, Trustee of Carrolie Walker Hanna Trust Fund, to determine whether the purchase of the proposed bonds by the bank as trustee would be valid. The bank's general demurrer to the petition was overruled, and it declining to plead further, the court adjudged that the proposed plans for financing and operating the hospital complied with the statutes. From this judgment appellant appeals.
This suit involves a somewhat different arrangement than is usually found for setting up a plan under which a grant may be received from the Federal Public Works Administration for financing in part a public works undertaking where it is necessary to borrow money to finance the remainder of the undertaking. We have here a situation where the property of a private hospital corporation has been deeded to the fiscal court of Madison county, which in turn has leased the property back to the corporation. The corporation is to manage and operate the hospital as operating agent for the county. The usual arrangement for financing similar undertakings is discussed in Booth v. City of Owensboro, 274 Ky. 325, 118 S.W. (2d) 684, whereby the public agency deeds property to a private corporation which in turn leases it back to the public agency during the period when bonds are being retired. Such plans have been devised to get around constitutional debt limitations by keeping the obligations from being those of the municipal corporations themselves.
The Pattie A. Clay Infirmary Association was organized for the purpose of accepting certain property in the city of Richmond from Brutus J. Clay for the operation of a hospital. The deed from Clay to the Association, made in 1892, set out that he desired to erect a monument to the memory of his wife, Pattie A. Clay, which would be "more enduring than marble." In brief, the deed set forth that (1) the membership of the Association was to be continued under a certain plan; (2) the Association was to raise an endowment fund the income from which was to be used in support of the hospital; (3) the Association was to pay all taxes and keep all buildings fully insured, and, in case of injury by fire or otherwise, to use the insurance money to erect new buildings; (4) the hospital was to be known and forever called the Pattie A. Clay Infirmary, and the Association was to place a memorial tablet in front of the main entrance setting forth that inscription; (5) the board of directors of the Association was empowered to sell the original property after the expiration of 25 years, but the...
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