Wickey v. Muscatine County

• Decision Date: 06 February 1951
• Docket Number: No. 47734,47734
• Citation: 242 Iowa 272,46 N.W.2d 32
• Parties: WICKEY v. MUSCATINE COUNTY.
• Court: Iowa Supreme Court

Page 32

46 N.W.2d 32

242 Iowa 272

WICKEY v. MUSCATINE COUNTY.

No. 47734.

Supreme Court of Iowa.

Feb. 6, 1951.

C. J. Rosenberger and R. C. Petersen, of Muscatine, for appellant.

A. Wayne Eckhardt, County Atty. of Muscatine, for appellee.

BLISS, Justice.

The statute involved herein, in addition to the matters noted in the foreward of this opinion, provides that: the contract for the construction of the hospital shall be awarded after competitive bidding; it shall be managed by a board of trustees, receiving their expenses, but no compensation; the board may employ, fix the compensation and remove at pleasure professional, technical and other employees, skilled or unskilled, as it may deem necessary for the operation and maintenance of the hospital, and it shall order and approve all disbursements of funds in its administration; it shall make all rules and regulations governing board meetings, and the operation of the hospital, and shall fix all rates, fees and charges for the services furnished 'so that the revenues will be at all times sufficient in the aggregate to provide for the payment of the interest on and principal of all bonds that may be issued and outstanding under the provisions of this act, and for the payment of all operating and maintenance expenses of the hospital'; 'For the purpose of acquiring, constructing, equipping, enlarging or improving such hospital or any part thereof, any such county may, pursuant to resolution of the board of supervisors of such county, from time to time issue and dispose of its negotiable interest-bearing revenue bonds payable solely as to both principal and interest from the revenues to be derived from the operation of such hospital'; the resolution may fix the maturity of the bonds not exceeding thirty years from their respective dates, and the rates of interest they may bear, not exceeding 5% a year, a payable semi-annually; after the adoption of the resolution authorizing the hospital and the bond issue, the county auditor shall publish notice thereof, giving the amount of the bond issue, in at least one newspaper of general circulation in the county, once each week for two consecutive weeks; if, within 20 days following the first publication of the notice, a petition--presumably of protest, though the statute does not state--is filed with county auditor, signed by qualified voters of the county to the number of 20% or more of the total vote at the last preceding election for Governor, then the bonds so authorized shall not be issued unless and until the proposition to issue them shall have been submitted at an election throughout the county, and approved by not less then 60% of the votes cast; if such petition is filed it shall be referred to the board of supervisors at its next meeting, and it may either repeal the bond resolution, or order an election, called and conducted as provided by Chap. 345 of the Code of Iowa, I.C.A.; if there be no petition filed or if the proposition is approved at such election, then the board of supervisors 'may proceed with the acquisition, construction, equipment, operation and maintenance of the county hospital, and issuance of bonds in connection therewith, all as in this act permitted and provided; under no circumstances shall any bonds issued under the provisions of this act br or become an indebtedness of the county within the purview of any constitutional or statutory limitation or provision, and it shall be plainly stated on the face of each bond that it does not constitute such an indebtedness, but is payable solely from the revenues aforesaid'; the bonds shall be sold in the manner and upon such terms as are prescribed in the authorizing resolution; the resolution may contain such covenants as the board of supervisors may determine to be desirable in connection with the use and application of the bond proceeds, the operation of the hospital, and the custody and application of the revenues; the sole remedy for any breach or default of the terms of the bonds or in their issuance shall be by mandamus in a court of competent jurisdiction to compel performance and compliance therewith.

As section 3 of the act, now section 347A.3 of the 1950 Code, I.C.A., is the pertinent and important part of the legislation, in the instant case, we set it out in full, towit: 'Tax for maintenance and operation.

'If in any year, after payment of the accruing interest on and principal due on any revenue bonds issued hereunder from the revenues derived from the operation of such hospital, there be a balance of such revenues insufficient to pay the expense of operation and maintenance of the county hospital the board of hospital trustees shall certify that fact as soon as ascertained to the board of supervisors of suit county, and thereupon it shall be the duty of such board of supervisors to make the amount of such deficiency for paying the expenses of operation and maintenance of the county hospital available from other county funds or, the board, of supervisors of such county shall levy a tax not to exceed four mills in any one year on all the taxable property in said county in an amount sufficient the that purpose, it being conditioned that no general county funds or the proceeds of any taxes shall ever be used or applied to the payment of the interest on or principal of any bonds issued under the provisions of this chapter, but that such general county funds or proceeds of taxes may only be used and applied to pay such expenses of operation and maintenance of the county hospital as cannot be paid from available revenue derived from such operation.'

Code section 374A.4, I.C.A., section 4 of the Act, states that Chap. 347A of the Code, shall be construed as an alternative and independent method for the 'acquisition, construction, equipment, enlargement, improvement, operation and maintenance of a county hospital, and for the issuance and sale of revenue bonds in connection therewith, and shall not be construed as an amendment of or subject to the provisions of any other law.' The 'other law' referred to is probably Chap. 347, Code 1950, I.C.A., entitled 'County Public Hospitals'. The hospitals, therein provided for, are established and maintained by general ad valorem taxes.

On September 8, 1947, the board of supervisors of the defendant passed and approved a resolution, of 17 sections, authorized by Chap. 192 of the 52nd G.A., and recited therein that it was 'deemed necessary and advisable that the County of Muscatine * * * acquire, construct, equip, operate and maintain a county public hospital for the health and general welfare of the citizens of said County.' It authorized the issuance of negotiable County Public Hospital Revenue Bonds, to the aggregate principal amount of $1,000,000 payable in specified annual amounts from 1951 to 1977 inclusive, with rate of interest to be determined. It set out a copy of the proposed bond, which recites that it and all other bonds issued are 'payable solely and only from the revenues to be derived from said hospital, a sufficient portion of which revenues has been pledged and ordered set aside as a special fund for that purpose and identified as the 'County Hospital Bond and Interest Redemption Account.' This bond and the series of which it forms a part do not constitute an indebtedness of said County within the meaning of any constitutional provisions or limitation, and said County shall not be obligated to pay the same or any interest thereon except from the special fund aforesaid derived from the revenues of said hospital.'

The bond also recites that 'said County will continuously operate said hospital as a revenue producing undertaking; that such rates and charges will be imposed and collected for the services rendered and facilities furnished by said hospital as will provide revenues sufficient as all times to pay when due the cost of operation and maintenance of said hospital, and to pay interest on and principal of said bonds * * *.'

The resolution provided for published notice for bids for the purchase of the bonds, but also provided that if no award of bonds was thereby made the bonds might thereafter be awarded at private sale upon any terms deemed for the best interests of the county without further advertisement and without regard to the bids, if any, which may have been received pursuant to the original advertisement.

Other sections of the resolution provided that: 'All revenues and income from the operation of the undertaking shall be deposited with or to the credit of the County Treasurer and be kept separate and apart from all other county funds'; there shall be maintained in the office of the county treasurer an account known as the 'County Hospital Bond and Interest Redemption Account' into which each month there shall be paid such amount of the revenues and income from the hospital sufficient to pay the interest on and principal of the bonds as the same become due; that there shall also be maintained by the County Treasurer an account known as the 'County Hospital Operation and Maintenance Account' into which there shall be paid each month such an amount of the income and revenues from the hospital as shall be sufficient with any unexpended balance therein to pay the cost of operating and maintaining the hospital during the then current month, and one-half of such expense for the succeeding month; the county officers and the trustees 'will faithfully and punctually perform all duties with reference to the hospital required by the Constitution and laws of the State of Iowa, and will cause to be charged, collected and accounted for sufficient revenues from the operation thereof to meet the requirements of law and will segregate said revenues and make application thereof as herein provided'; and 'that so long as any of the bonds hereby authorized or permitted to be issued are outstanding, said hospital * * * shall be lawfully operated and maintained as a revenue...