Thomas County Taxpayers Ass'n v. Finney

• Decision Date: 21 January 1978
• Docket Number: No. 49297,49297
• Citation: 573 P.2d 1073,223 Kan. 434
• Parties: THOMAS COUNTY TAXPAYERS ASSOCIATION et al., Appellants, v. Joan FINNEY, Treasurer of the State of Kansas, et al., Appellees.
• Court: Kansas Supreme Court

Page 1073

573 P.2d 1073

223 Kan. 434

THOMAS COUNTY TAXPAYERS ASSOCIATION et al., Appellants, v. Joan FINNEY, Treasurer of the State of Kansas, et al., Appellees.

No. 49297.

Supreme Court of Kansas.

Jan. 21, 1978.

Syllabus by the Court

1. The fundamental rule of statutory construction, to which all others are subordinate, is that the purpose and intent of the legislature governs when that intent can be ascertained from the statutes.

2. When a statute is plain and unambiguous the court must give effect to the intention of the legislature as expressed rather than determine what the law should or should not be.

3. K.S.A.1976 Supp. 19-1878, and its forerunners, provides a means, under certain circumstances, for counties to obtain additional financing to complete the erection and equipping of a county hospital established under the provisions of article 18, chapter 19 K.S.A. when bonds have already been issued or a tax levied and the same prove to be insufficient for their original purpose.

Kenneth Clark, of Clark & Shelton, Hill City, argued the cause and was on the brief for appellants.

Joel R. Kriss, of Cooper, Shalz & Kriss, Colby, argued the cause, and Ronald S. Shalz of Cooper, Shalz & Kriss, Colby, and John S. Dean, Jr. and W. Edward Nichols, of Dean & Nichols, Topeka, were with him on the brief for appellees.

Curt T. Schneider, Atty. Gen., and Jonathan P. Small, Asst. Atty. Gen., were on the brief for the Attorney General of Kansas, amicus curiae.

HOLMES, Justice:

This action was instituted by a group of taxpayers (appellants) under K.S.A. 60-907(a ) seeking an injunction preventing defendants from issuing hospital bonds in the amount of $3,760,000.00 under the provisions of K.S.A.1976 Supp. 19-1878. They now appeal from an order sustaining defendants' motion for summary judgment and overruling plaintiffs' motion for summary judgment.

G.S.1939 Supp. 19-1854 through 19-1859, inclusive, became effective on February 25, 1938. This Act, passed apparently for the benefit of Thomas County, provided a procedure for certain counties to issue bonds for the purpose of constructing, establishing, completing and equipping a county hospital. On April 4, 1938, the Board of County Commissioners of Thomas County, by resolution, declared their intention to issue bonds in the amount of $15,000.00 for construction of a new hospital as provided by the Act. Notice of their intent was published as required. The hospital bonds were issued and, with additional funds received from the federal government and the Sisters of St. Agnes, the hospital was established.

Under the authority of G.S.1939 Supp. 19-1856, the new hospital was leased on October 20, 1941, to the Northwest Kansas Hospital Association, a Kansas corporation, which in turn subleased on October 21, 1941, to the Sisters of St. Agnes.

The Sisters of St. Agnes operated the hospital until October 10, 1973, at which time the lease was terminated and the hospital reverted to Thomas County. The Board of County Commissioners of Thomas County appointed a Board of Trustees pursuant to K.S.A. 19-1803 to take over management and operation of the hospital. The Board of Trustees continues to oversee the operation of the hospital.

The Thomas County Hospital, through its Board of Trustees, entered into an agreement with Hospital Management Corporation, a Delaware corporation, for it to provide professional management of the hospital. Hospital Management Corporation has been employed by the hospital Board of Trustees for approximately 4 years and provides similar services to many hospitals throughout the United States.

Hospital Management Corporation also specializes in providing expertise in promoting, planning, constructing, equipping, and staffing new hospitals and assisting with the transition from an old facility to a new facility. On February 1, 1976, the Thomas County Hospital Board of Trustees and Hospital Management Corporation entered into a second agreement referred to as the Project Management Agreement. The objective of the Project Management Agreement is that a new hospital be constructed that will be properly planned as to size, equipment, staffing, etc., to meet the needs of the area at the lowest possible cost. The Board of County Commissioners ratified the Project Management Agreement on April 5, 1976. As a part of the agreement Hospital Management Corporation was to receive a fee of $200,000.00 for its services. This fee was contingent upon the completion and sale of the necessary bond issue and the successful promotion of the hospital became of prime concern to Hospital Management Corporation. The record also indicates that the Thomas County Board of County Commissioners entered into a contingent fee contract in the approximate amount of $66,000.00 with the then County Attorney for he and certain associates selected by him to do the legal work required by the proposed bond issue. There is nothing in the record to disclose whether these contingent fees were to be paid from the proceeds of the sale of the bonds or from other sources.

As required by the Regional Health Programs Act (then K.S.A. 65-2a01, et seq.), a request for a certificate of need was presented on April 28, 1976, by Hospital Management Corporation and James D. Daher, as administrator of the hospital, to the Far Northwest Region Health Planning Council. Mr. Daher, as Chairman of the Far Northwest Region Health Planning Council, issued a letter dated April 29, 1976, to the Thomas County Commissioners advising that the Council had approved the request for new hospital facilities. K.S.A. 65-2a06 (since repealed) required, as a part of the request for a certificate of need, the applicant to furnish certain information to be considered by the planning agency in determining whether such a certificate should be issued. Included in the required information is a statement of the "projected cost estimates of capital expenditures and operating expenses." The request for the certificate of need presented to the planning council on April 28, 1976, indicated estimated costs of construction, site development and equipment in a total amount of $3,015,000.00. Six days later, on May 3, 1976, the hospital trustees, acting under K.S.A. 19-1878, certified to the Thomas County Board of Commissioners that funds in the amount of $3,760,000.00 were needed to build, furnish and equip a new hospital. No explanation appears in the record of the discrepancy between $3,015,000.00 and $3,760,000.00.

That same day, the Board of County Commissioners passed a resolution authorizing and directing notice to be given to the electorate of Thomas County of the intention to issue bonds to provide funds to build and equip a hospital in accordance with K.S.A. 19-1878. Notice was published and protests were filed in sufficient numbers to require that the question of issuing bonds be voted on by the electorate of Thomas County.

On October 4, 1976, the Board of County Commissioners, by resolution, authorized the submission to the electorate, pursuant to K.S.A. 19-1878, of the proposition of issuing $3,760,000.00 in general obligation bonds for the purpose of constructing, furnishing and equipping a hospital. Notice, as required by K.S.A. 10-120, was provided by publication in the official county newspaper. In addition to the legally required notice, the proposition of issuing the bonds received extensive coverage by the local news media. There was a great deal of discussion, both pro and con, concerning the need for the hospital and whether the hospital would result in additional taxes. It was repeatedly pointed out that the existing hospital constructed in 1938-1941 had been self-supporting and although general obligation bonds were to be issued by Thomas County, it was anticipated that no taxes would be necessary to retire the bonds or...