Wilmington Medical Center, Inc. v. Bradford

Citation382 A.2d 1338
PartiesThe WILMINGTON MEDICAL CENTER, INCORPORATED, Plaintiff, v. Joseph BRADFORD and Delaware Health Facilities Authority, Defendants.
Decision Date16 January 1978
CourtUnited States State Supreme Court of Delaware

Upon certification from Court of Chancery.

Rodney M. Layton and Wendell Fenton of Richards, Layton & Finger, Wilmington, for plaintiff, The Wilmington Medical Center.

Henry N. Herndon, Jr. and Edward M. McNally of Morris, James, Hitchens & Williams, Wilmington, for defendant, Joseph Bradford.

Richard L. McMahon of Potter, Anderson & Corroon, Wilmington, for defendant, Delaware Health Facilities Authority.

Before HERRMANN, C. J., and DUFFY and McNEILLY, JJ.

HERRMANN, Chief Justice:

This certification from the Court of Chancery 1 originated in a declaratory judgment action brought to test the constitutionality of the Delaware Health Facilities Act, 16 Del.C. Ch. 97, (hereinafter "the Statute").

I.

The certificate states the following undisputed facts:

"(a) By an Act effective July 1, 1973 (59 Del.Laws, Ch. 292) 16 Del.C. Ch. 97 was enacted for the stated purpose of '(providing) health care facilities within the State . . . with appropriate additional means to expand, enlarge, and establish health care, hospital and other related facilities.' 16 Del.C. Ch. 97 will hereinafter be referred to as 'the Statute'. The Statute created the Delaware Health Facilities Authority and granted to it the authority to finance health care projects and construct, alter and regulate such projects or designate a health care facility as its agent to do so.

"The Statute was passed by a vote of 28 yes, 10 no, and 3 not voting in the House of Representatives, and by a vote of 20 yes and one absent in the Senate.

"(b) By an act signed by the Governor on July 8, 1976 (60 Del.Laws, Ch. 565), 16 Del.C. § 9704 was amended to change the expiration dates of the terms of the members of the Authority.

"(c) By an act effective July 30, 1976 (60 Del.Laws, Ch. 661) 9 Del.C. § 2601 was amended to provide that the zoning regulations of New Castle County shall not apply to lands, buildings or other structures proposed to be used by or for a non-profit acute general hospital.

"(d) The following members of the Authority were appointed by the Governor on June 1, 1976: James Miles (term expiring June 30, 1977), Shirley Tarrant (term expiring June 30, 1981), Joan C. Wright (term expiring June 30, 1981), Richard G. Carrico (term expiring June 30, 1981), Arthur C. Annone (term expiring June 30, 1980) (resigned and succeeded by Rolf E. Eriksen, September 9, 1976), and Eugene DiSabatino (term expiring June 30, 1978). A sixth member, Norris Bunting (term expiring June 30, 1979) was appointed subsequent to July 8, 1976.

"(e) Plaintiff, The Wilmington Medical Center, Incorporated, is a non-profit corporation which owns and operates the principal hospitals located in the City of Wilmington.

"(f) Plaintiff, The Wilmington Medical Center, Incorporated, has made application to the Authority for the financing by the Authority under the Statute of construction and renovation of hospitals in New Castle County, pursuant to a plan which the Medical Center refers to as 'Plan Omega'. A copy of said application is attached to the Petition for Certification as Exhibit 'A'.

"(g) Defendant Joseph Bradford is a resident taxpayer of the State of Delaware and New Castle County."

The following additional facts appear in the application referred to in subparagraph (f) above:

Of the major hospitals in Wilmington, the Medical Center operates 1104 beds; the other 2 hospitals operate 100 and 267 beds respectively. Under "Plan Omega", the Medical Center proposes to construct a 758-bed hospital in Stanton and to modernize the present Delaware Division of the Center in Wilmington. Upon completion thereof, the Memorial and General Divisions in Wilmington would be vacated under the Plan. The cost of the project would exceed approximately $87 million; of this, about $16 million would be raised through private donations and the remainder would be financed by tax-exempt revenue bonds issued by the Delaware Health Facilities Authority under the Statute. 2 The Authority's bonds would be paid with the proceeds from repayment of a loan from the Authority to the Medical Center. This debt would be secured by a mortgage on the new Stanton Hospital and on the Delaware Division Hospital. As additional security, the Medical Center would pledge its "gross receipts" (defined basically as all receipts, less gifts limited to a specific purpose). The Medical Center would repay the debt to the Authority, principal and interest, in the same manner as the payments on the Authority's bonds are due. The Medical Center would indemnify the Authority for all its expenses.

The ability of the Medical Center to repay the debt incurred would depend on the revenues it derives for its services. In 1975, the State of Delaware supplied about 4% Of the Medical Center's $61,000,000 in operating income, i. e., over $2,400,000.

II.

The following are the questions of law certified:

"(a) Does the Statute violate Article II, Section 16 of the Delaware Constitution for the reason that it contains subjects not expressed in its title or because it embraces more than one subject?

"(b) Does that part of 16 Del.C. § 9717 which exempts any bonds or notes issued under the Statute, their transfer and the income therefrom, from taxation of every kind by the State violate the tax uniformity requirement of Article VIII, Section 1 of the Delaware Constitution?

"(c) Does the Statute authorize that public funds be spent and public credit be pledged for a private purpose, and, if so, is this a violation of Article VIII, Sections 1, 3 and 4 of the Delaware Constitution?

"(d) Does the Statute authorize the Authority to borrow money and create debts on behalf of the State, in violation of Article VIII, Section 3 of the Delaware Constitution?

"(e) Does the Statute authorize the Authority to appropriate public money, issue or loan bonds of the State, or pledge the credit of the State to a corporation, in violation of Article VIII, Section 4 of the Delaware Constitution?

"(f) Does the Statute authorize the Authority to spend public money in violation of Article VIII, Section 6 of the Delaware Constitution?

"(g) Does the Statute authorize a pledge of the credit of the State by the guarantee or endorsement of the bonds or other undertakings of a corporation otherwise than pursuant to an Act of the General Assembly, passed with the concurrence of three-fourths of all the members elected to each House, in violation of Article VIII, Section 4 of the Delaware Constitution?

"(h) Did the appointment of the present members of the Authority violate the terms of the Statute, frustrate a legislative mandate expressed in the Statute, or constitute an unlawful attempt to legislate in violation of Article II, Section 1 of the Delaware Constitution, or have the present members been duly appointed?

"(i) Is 9 Del.C. § 2601, as amended by a bill (60 Del.Laws 661) signed July 30, 1976, unconstitutional for any of the following reasons?

"(1) As special legislation creating an unreasonable and arbitrary classification;

"(2) As a limitation of the zoning authority of New Castle County only;

"(3) As an act with no proper legislative purpose in excluding a particular class of hospitals from zoning requirements."

III.

It is to be noted as a threshold observation that the defendant Bradford, 3 seeking to overthrow the Statute, has the burden of rebutting the presumption of validity and constitutionality with which every statute is cloaked. That burden has been summarized by this Court as follows, once the constitutional question has been determined to be "fairly debatable":

"Having reached that conclusion, we become mindful of the traditional self-restraint of this Court whenever it becomes engaged in testing the constitutionality of an act of the General Assembly. Such self-imposed limitation has been expressed by this Court in varying but consonant terms: Legislative acts should not be disturbed except in clear cases, and then only upon weighty considerations; a legislative enactment is cloaked with a presumption of constitutionality and should not be declared invalid unless its invalidity is beyond doubt. Klein v. National Pressure Cooker Co., Del.Supr., 31 Del.Ch. 459, 64 A.2d 529 (1949). Every presumption is in favor of the validity of a legislative act and all doubts are resolved in its favor; and if the question of the reasonable necessity for regulation is fairly debatable, legislative judgment must be allowed to control. State v. Hobson, Del.Supr., 7 Terry 381, 83 A.2d 846 (1951). There is a strong presumption of constitutionality attending a legislative enactment which, unless the evidence of unconstitutionality is clear and convincing, the court will be reluctant to ignore State Highway Dept. v. Delaware Power & Light Co., Del.Supr., 39 Del.Ch. 467, 167 A.2d 27 (1961). One who challenges the constitutionality of a statute has the burden of overcoming the presumption of its validity. State v. Brown, Del.Supr., 195 A.2d 379 (1963)." Justice v. Gatchell, Del.Supr., 325 A.2d 97, 102 (1974).

It is in the light of the foregoing criteria that each constitutional challenge presented here must be tested.

IV.

It is contended by Bradford that the title to the Statute (see 59 Del.L. Ch. 292) violated Del.Const. Art. II, § 16. 4 The title is:

"An Act to Amend Title 16, Delaware Code, by Adding a New Part IX Providing For a Delaware Health Facilities Authority."

First, it is argued that the Statute embraces subjects not expressed in its title in that Title 16 previously dealt almost entirely with controlling potential threats to public health and treating or aiding those in need of special health care; thus, the argument goes, the reader was mislead and deceived as to the nature of the Authority being created. In support of this...

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