Aven v. Steiner Cancer Hospital Inc.

5 S.E.2d 356 | Ga. | 1939

1. A contract between a municipality and another corporation for a lease, for a term of thirty-five years, of land owned by the municipality, in consideration of care of the poor of the city by the lessee to the extent of supplying specified medical and surgical treatment in a clinic or hospital existing on such land, is not unlawful as violating any of the provisions of the constitution embodied in the Code, §§ 2-5301, 2-5401, 2-5501, and 2-6401.

2. Under an act of the General Assembly approved January 28, 1938, revising and amending the previous law as to chartering corporations, a petition for charter need not be advertised before the charter is granted. Section 42 of the amending act, declaring that "A corporation not organized for pecuniary gain or profit and without capital stock may be incorporated under the terms of this act," is not unconstitutional on the ground that it violates the constitutional provision contained in the Code, § 2-1817, relating to the manner in which laws may be amended or repealed.

3. Under the charter of the City of Atlanta, the municipality, acting in its proprietary capacity, would be authorized to rent or lease real estate belonging to it, for any valid and sufficient consideration within the objects of its incorporation.

(a) The mayor and council are further empowered to pass any and all bylaws and ordinances respecting "care of the poor."

(b) The charter does not limit care of the poor either to direct donation or to personal administration by officers or agents of the municipality; but the city may, except as otherwise limited by law, enter into a contract with another corporation having appropriate charter power, under the terms of which the latter corporation will care for the poor in the matter of medical and surgical treatment.

4. Such an agreement for care of the poor would not be invalid merely because the municipality in its governmental capacity would have no control over the directorate or management of the other contracting corporation, but would be dependent solely upon the contract and the remedies provided by law with respect to its performance or breach. 5. One municipal council may not be ordinance bind itself or its successors so as to prevent free legislation in matters of municipal government.

(a) While under the charter of the City of Atlanta the mayor and general council are authorized to pass all laws and ordinances respecting "care of the poor," the city is not actually required by the charter to furnish to the poor any relief or assistance whatever, and a determination of whether it will do so, and to what extent, is a governmental function.

(b) Accordingly, a lease of land owned by the city, for a term of thirty five years, for a rental or consideration to the city in the form of medical and surgical treatment to be furnished to the poor by the lessee corporation, would have the effect of preventing free legislation in a matter of municipal government, and for this reason would be illegal and void.

6. Such proposed agreement being unlawful, its execution and delivery may be restrained by injunction, at the instance of taxpayers. The judge erred in refusing to grant an injunction.

No. 12815. OCTOBER 19, 1939. This case involves the validity of a proposed contract between the City of Atlanta and the Steiner Cancer Hospital Inc., in which the city would lease to the hospital a described tract of land for thirty-five years, the "rent reserved" to be "in the form of the use by the lessee of said premises for the poor of the City of Atlanta." In the petition as amended, citizens and taxpayers sought to enjoin the City of Atlanta, W. B. Hartsfield, mayor, and Steiner Cancer Hospital Inc., from entering into the proposed contract, in pursuance of an ordinance or resolution adopted by the general council of the municipality. On interlocutory hearing the case was submitted to the judge upon an agreed statement supplemented by evidence. Several attacks were made upon the validity of the proposed agreement, all of which were overruled. The plaintiffs excepted to the refusal of an injunction. The petition was filed by C. C. Aven as a taxpayer of the City of Atlanta, in behalf of himself and of such other taxpayers as might afterwards desire to join in the petition. More than fifty other persons were later added, by amendment, as parties plaintiff. The petition as amended alleged substantially the following facts: The will of Albert Steiner, dated December 6, 1918, contained the following provision: "I leave the rest, residue, and remainder of my estate unto my executors, as trustees, subject to the following uses: They shall invest such portion as they deem adequate and proper, or all of the corpus, in the purchase of ground and the erection of a ward and its equipment to be a part of Grady Hospital in the City of Atlanta, Georgia, or some other similar institution owned by the City of Atlanta, said ward to be known as `The Albert Steiner Ward.' The remainder of the corpus, if any, shall be invested, and the net income therefrom shall be expended for the maintenance and medical or surgical treatment of the poor of Atlanta in said ward." The City of Atlanta furnished a tract of land, the same being a part of the Grady Hospital territory, and the trustees of the Steiner will erected the Albert Steiner ward adjoining Grady Hospital. The land and the building all belong to the City of Atlanta, and have been used and operated as a cancer clinic from a date some time after the death of Albert Steiner until the present time. On January 3, 1939, the general council of the City of Atlanta passed an ordinance authorizing the mayor to execute in behalf of the city a lease contract between the city and Steiner Cancer Hospital Inc., according to the terms and conditions of a proposed contract attached to and made a part of the ordinance. Steiner Cancer Hospital Inc. was granted "some kind of charter" on January 4, 1939, the validity of which is denied by the plaintiffs. The following is a copy of the proposed contract:

"This agreement, made and entered into this the __________ day of __________________ 193_, by and between the City of Atlanta, Georgia, hereinafter referred to as lessor, and Steiner Cancer Hospital Inc., hereinafter referred to as lessee, witnesseth that for and in consideration of the mutual covenants herein contained it is agreed:

"Lessor, pursuant to a resolution of the Mayor and General Council of the City of Atlanta, adopted on the _________ day of __________________, 193_, does hereby lease unto lessee the following described property, to wit [description of land], subject to the following terms and conditions:

"(1) This lease shall commence on the 1st day of January, 1939, and shall extend for a period of 35 years.

"(2) The rent reserved under this [lease] shall be in the form of the use by the lessee of said premises for the poor of the City of Atlanta; that is to say, the poor of the City of Atlanta shall be entitled to the use of the facilities of said property so leased, and shall be entitled to such use without charge. It is agreed, however, that the rules and regulations for determining those who qualify as the poor of the City of Atlanta under the terms of this lease shall be adopted by the board of directors of the lessee. The said rules and regulations may from time to time be changed or amended by the said board, and a copy of each amendment shall be furnished to lessor.

"(3) It is contemplated that lessee shall at its own expense, and without obligation of lessor, provide additional improvements and facilities on the leased premises, it being agreed and understood that any and all improvements placed on the leased premises shall become the property of the lessor upon the termination of this lease, and that lessee shall not have the privilege or right to in any wise encumber the leased property or any improvements placed thereon, and any attempt or endeavor by lessee to create any lien upon the leased premises or upon improvements so placed on the leased premises shall be sufficient grounds for cancellation of this lease.

"(4) Lessee assumes and agrees to carry out the terms, conditions, and obligations of a certain contract dated April 6, 1922, between lessor, the City of Atlanta, and the trustees of the estate of Albert Steiner, which said contract, among other things, gives priority consideration to the poor of the City of Atlanta.

"(5) The board of directors of said lessee corporation shall at no time consist of more than five members, of which one shall at all times be the mayor of the City of Atlanta, two shall at all times be selected from among the general council of the City of Atlanta, and two shall be selected from the trustees of the Albert Steiner will.

"(6) Lessee agrees to maintain the leased premises in as good order and condition, ordinary wear and tear excepted, as the property is in at the beginning of said lease.

"(7) Upon default by lessee of any of the provisions of this lease, or upon any violation by it of the provisions hereof, lessor will have the privilege of cancelling the said lease on sixty days notice, provided the default or violation be not terminated within said period. Lessor shall give notice to lessee in writing of any such violation; and if the violation or breach has not been terminated or cured, as the case may be, then at the end of said sixty days the lessor may declare the lease terminated and cancelled.

"(8) This lease may be assigned, but no assignment shall relieve lessee of any obligation hereunder.

"(9) This lease shall not become effective until approved hereon in writing by the trustees under the Albert Steiner will."

Other allegations of the petition were as follows: Said proposed lease is beyond the power of the City of Atlanta to execute or carry into effect, for the reason that if executed and delivered, and if the terms are carried out, it will be in violation of the authority of the City of Atlanta, and in violation of the constitution of the State of Georgia as contained in the Code, § 2-5401, which in part is as follows: "The General Assembly shall not authorize any county, municipal corporation, or political division of this State to become a stockholder in any company, corporation, or association, or to appropriate money for, or to loan its credit to any corporation, company, association, institution or individual except for purely charitable purposes." Said lease, if executed and carried into effect, will amount to a conveyance by the City of Atlanta of property for other than charitable purposes in violation of said section of the constitution. Said lease by its terms provides that no rent shall be paid to the City of Atlanta by said Steiner Cancer Hospital Inc. Said property is of a reasonable value of $300 per month. Said lease by its terms does not restrict the income from said property solely to the use of the poor. Said lease does not provide that the City of Atlanta shall administer the proceeds received from said property. Said Steiner Cancer Hospital Inc. is not a division of the City of Atlanta, and any contract between said corporation and the City of Atlanta that the mayor and two members of council shall be members of the board of directors does not give the City of Atlanta any official control over the board. The designation of said members, if they should be designated under the terms of the contract, would amount to no more than the designation of private individuals. Said lease, being an attempt to convey by contract property for a period of thirty-five years without the charge of any rental, amounts to an attempt to appropriate money for and use the credit of the city for the benefit of a private corporation, in violation of said language of the constitution. The mayor and city council of the city have passed said ordinance authorizing said lease, and the mayor has announced that he will sign the lease, and petitioner is informed and believes that he will sign the lease and deliver the same, and that the city will carry out the terms of the lease, unless enjoined and restrained from doing so. The execution and delivery of said lease and the compliance with or carrying out of any or all its terms would be a violation of the constitution of the State as contained in the Code, § 2-6401, as follows: "The General Assembly shall not, by vote, resolution, or order grant any donation or gratuity in favor of any person, corporation, or association." Said ordinance and contract, if carried out, would be a violation of the constitution of the State as contained in the Code, § 2-5301, as follows: "The credit of the State shall not be pledged or loaned to any individual company, corporation, or association, and the State shall not become a joint owner or stockholder in any company, association or corporation."

Further allegations: The Steiner Cancer Hospital Inc. is not a validly organized corporation, and therefore is not a legal entity. The order of Fulton superior court purporting to create said corporation was signed without any petition for charter for its incorporation having been published for four weeks in the manner provided by law. It was signed without any previous publication whatever of the petition for charter; and the petition being for a corporation without capital stock. no valid order could be passed allowing incorporation pursuant thereto without previous advertisement in the manner provided by law for corporations other than those having capital stock. Said purported corporation is a mere nullity, the public records showing on their face that the corporation is not legally organized. Therefore said contract, if executed, would be merely a contract with individuals purporting to sign in the name of the corporation, and would amount to the giving of the city's money to the extent of the rent on said property to said individuals. The proposed contract would amount to an attempt to place the city under an indebtedness to Steiner Cancer Hospital Inc., to the extent of the rental value of the property each year for thirty-five years, in violation of the constitutional provision (Code, § 2-5501) which declares that no municipality shall incur any debt except for temporary loans to supply casual deficiencies of revenue, not to exceed one fifth of one per centum of the assessed value of the taxable property therein, without assent of two thirds of the qualified voters thereof. Said contract would amount to an attempt by one council by an ordinance so to bind itself as to prevent free legislation in matters of municipal government, and an attempt so to bind its successors as to prevent free legislation in matters of municipal government incidental to the property and the income and use thereof. The order purporting to grant a charter to Steiner Cancer Hospital Inc. is void for these reasons: Section 42 of the act of 1938 (Ga. L. Ex. Sess. 1937-38, pp. 214, 245), under which said charter was granted by decree of Fulton superior court without previous advertisement, is void, it appearing that the laws of Georgia existing at the time of the passing of that act authorizing the creation of non-stock and non-profit corporations, which are not in conflict with the new act, were not repealed by that part of said act, but are merely amended, and it does not appear that the act or the laws which said section of the act of 1938 attempts to amend are described sufficiently to be identified either by description of the acts or by description from Code sections. It does not appear in said act of 1938 what acts or laws section 42 proposes to amend; and therefore the act does not comply with the requirements of the constitution of the State (art. 3, sec. 7, par. 17; Code, § 2-1817), which declares: "No law, or section of the Code, shall be amended or repealed by mere reference to its title, or to the number of the section of the Code, but the amending, or repealing act, shall distinctly describe the law to be amended or repealed, as well as the alteration to be made." Said contract would be violative of the statute as contained in the Code, § 69-202, declaring that "One council may not by an ordinance bind itself or its successors so as to prevent free legislation in matters of municipal government."

Each of the defendants filed an answer, admitting substantially all of the plaintiffs' allegations of fact, but not the legal conclusions. The city alleged affirmatively that the mayor and council were induced to accept the proposal submitted by Steiner Cancer Hospital Inc., after a careful investigation of the proposal, and were moved to accept it by reason of the expectancy that the poor of the city would and could be more efficiently and economically treated through this means. The expense to the city for such cause has for the past several years amounted to more than $40,000 per annum. There are and have been in the city many indigent persons suffering from cancer, who ought to have the best treatment available. The proposed contract represents the best judgment of the mayor and council, who are seeking to provide such treatment, with the least expense to the city.

The Steiner Cancer Hospital Inc. made the following affirmative allegations: The action of the council of the city was taken solely with the view and purpose of providing, as a part of the hospital system of the city, greater facilities in hospitalization and cancer treatment for the poor of the city, without cost to such persons. It is contemplated by this corporation that it shall borrow funds approximating $275,000 on lessee's sole credit, from sources other than the City of Atlanta, the loan or loans to be so arranged that the city will not be responsible or liable in any degree for any portion of such loan or loans, or for interest thereon, and the proceeds of such loan or loans will be used solely to increase the facilities of Steiner Hospital on the leased premises to approximately three times the present facilities, the improvements to be placed on the leased premises free and clear, thereby greatly enhancing the value of the leased property. The additions to the hospital so contemplated will provide approximately sixty-seven beds for patients, in addition to living quarters for nurses, doctors and other hospital personnel. The hospital is now and for some time has been greatly crowded by increase in number of patients seeking treatment for cancer. It was originally designed and built as a clinic or treatment place, with twelve beds only. Due to increase among the citizens of Atlanta of cancer sufferers, it has been necessary to utilize kitchen, workrooms, waiting-rooms, halls, and examining rooms, for placing beds for patients; and at present there are accommodations only for thirty-three bed patients. The entire benefits of the leased property and of the improvements placed thereon by the lessee will inure solely to the poor of the city who are sufferers of cancer and related disorders, and neither the directors nor the officers of the lessee corporation nor any official of the city will receive any compensation or remuneration for their services to the lessee corporation. As shown by the lease approved by council, preferred attention at all times will be given to the poor of the city who are sufferers from cancer and who will not be required to pay any compensation for the use of the facilities of said hospital. As and when the facilities are sufficient to take care of the poor of the city, and to provide available facilities for other persons who are able to pay for the use of such facilities, such persons will be accepted, and the funds received from such persons for the use by them of the facilities will in turn be applied by the lessee solely for the purpose of increasing the facilities of the lessee corporation for the benefit of the poor of the city. No person, whether officer or employee of the lessee corporation, shall have any interest whatsoever in any funds so received or in any other funds of the corporation from whatever source received. The city will be greatly benefited through this lease, by the improvement of the health of its citizens, by establishing a greater facility for the treatment of cancer and related disorders of its citizens, and by the increase in value of the leased property through the improvements contemplated.

Joseph H. Hirsch and Eugene Oberdorfer, trustees of the estate of Albert Steiner, intervening, alleged the following: They are ready, willing, and anxious to approve the lease referred to, being of the opinion that the purposes of the Albert Steiner will can be more efficiently carried out, and so carried out as to provide more efficient surgical and medical treatment and maintenance of cancer sufferers in the city, and that the plans as set forth and embodied in the lease will make it possible to take care of a greater number of the indigent poor of the city than are being cared for as the hospital is now being operated.

The petition for incorporation of Steiner Cancer Hospital Inc. contained the following: (1) Petitioners desire incorporation for a period of thirty-five years, with privilege of renewal as provided by law. (2) The corporation will have no capital stock. (3) The object of the corporation is not profit or pecuniary gain to its members, but is to extend to the poor of Atlanta a greater service in medical and surgical treatment of cancer and allied diseases. (4) Said corporation shall make no charge against or collect compensation from the poor of the City of Atlanta for the use of the facilities of the corporation, but it shall have the power and right to charge and collect fees or compensation for the use of its facilities from patients who are financially able to pay therefor. This power and right to charge for the use of the facilities is not, however, intended to authorize the corporation to practice medicine or to make charges or collect fees therefor. (5) All funds of the corporation derived from fees and charges for the use of its facilities shall be expended solely for operating and administrative expenses of the corporation, and the payment of debts of the corporation. (6) All funds received by the corporation from the trustees of the Albert Steiner will shall be used solely for the maintenance, medical, and surgical treatment of the poor of Atlanta, Georgia. (7) No member or incorporator shall have any pecuniary interest in any property or fund of the corporation, and no compensation shall directly or indirectly be paid to any member, incorporator, director, or officer of the corporation; and no member, incorporator, director, or officer shall have any interest, directly or indirectly, in any contract entered into by the corporation, or receive any gain or benefit therefrom. (8) Said corporation shall have as its first board of directors all of petitioners herein, and the successor board of directors shall consist at all times of the mayor and two members of the general council of the City of Atlanta, elected by the general council, acting in their official capacities only, together with the trustees of the Albert Steiner will. (9) In the management of the business of the corporation, there shall be required the affirmative vote of four fifths of all the directors. (10) The corporation shall have the power and right to lease the Albert Steiner ward and clinic from the City of Atlanta. (11) The corporation shall have general powers as to buying, holding, and leasing real and personal property, together with other powers and privileges necessary to carry into effect the purposes of the corporation. (12) The principal and sole office of the corporation shall be in Atlanta, Fulton County, Georgia.

After argument, the judge denied an injunction. His order contained the following: "The legal questions involved in this litigation are not without their difficulties. Whether the city council has a right to enter into the proposed contract with the Steiner Cancer Hospital Inc. is a doubtful question. However, equity seeks, whenever possible, to do the most good to the greatest number, and injunctions should be granted or refused according to the peculiar circumstances of the particular case. The court is of the opinion that the proposed contract is advantageous to the public in general, and the conveniences in its favor greatly outweigh the inconveniences." 1. While there was only one original plaintiff, others intervened, and the term plaintiffs will be used. The plaintiffs alleged, and submitted evidence to the effect that the property in question has a rental value approximating $300 per month; and it is argued in their behalf that the contract virtually makes a donation to a private corporation of this sum monthly, amounting to more than $100,000 for the entire thirty-five years. Hence it is contended that the proposed contract, if carried into effect, would violate the constitutional provision found in the Code, § 2-5401, quoted above. We can not sustain this contention. We do not regard the proposed agreement as embracing anything prohibited by this provision of the constitution. It does not purport to make the City of Atlanta a stockholder of the other contracting corporation, nor will it appropriate money for or lend its credit to such corporation. From the recitals in the lease and the allegations of the petition, the agreement is intended as a contract of rental; and whether valid or invalid as such, it does not involve a donation to the hospital corporation. This is true even though, as shown later in this opinion, the lease, if valid, would constitute a virtual appropriation for the benefit of the poor. In this view, we need not determine whether, if the contract did in fact contemplate a donation to the hospital corporation, it would be saved from the constitutional prohibition by the exception relating to "purely charitable purposes;" nor is it necessary to decide whether the lessee corporation should be treated as a purely charitable institution. Nor will the agreement, as the plaintiffs contend, violate either of the constitutional provisions contained in the Code, §§ 2-6401, 2-5301, quoted above. In view of the purpose of the contract to provide for the poor, the case differs on its facts from Covington Macon Railroad Co. v. Athens, 85 Ga. 367 (11 S.E. 663), Town of Adel v. Woodall, 122 Ga. 535 (6) (50 S.E. 481), and Tedder v. Walker, 145 Ga. 768 (3) (89 S.E. 840), which involved donations by municipalities for purposes held to be unauthorized; Atlanta Chamber of Commerce v. McRae, 174 Ga. 590 (163 S.E. 701), in which there were proposed donations by a county for civic purposes; and Vincent v. MacNeill, 186 Ga. 427 (198 S.E. 68), involving a contract which a county was not authorized to make. Nor will the agreement violate the provision of the constitution which prohibits a municipality from incurring any new debt, except for temporary loans for casual deficiencies, without the assent of two thirds of the qualified voters thereto. Code, § 2-5501. No promise is made by the city to pay or deliver any sum of money or other thing of value at any time. Accordingly, the contract will not create any debt against the municipality.

2. It is contended that "Steiner Cancer Hospital Inc." is not a corporation, and is not an entity capable of contracting, because the petition for incorporation was not advertised before the purported grant of its charter, as required by the Code, § 22-303. By an act approved January 28, 1938 (Ga. L. Ex. Sess. 1937-1938, p. 214), the law as to chartering corporations was revised and amended in several respects. Under section 3 of that act, advertisement of the petition for charter is still required, but "it shall not be necessary that any or all of the advertisements appear before the petition is granted." The caption of the act is as follows: "An act authorizing the chartering and empowering of corporations, and amending, revising, and perfecting the present corporation laws of the State; to repeal section 22-308 of the Code of Georgia of 1933, as amended by an act approved March 15, 1935 (Georgia Laws 1935, pages 108-9), and to repeal said last-mentioned act and to insert a new section in lieu thereof; and for other purposes." Section 42 provides: "A corporation not organized for pecuniary gain or profit and without capital stock may be incorporated under the terms of this act, and such corporation need not comply with the provisions of this act relating to capital stock and other matters not pertinent to its organization." It is insisted that this section is void under the provision of the constitution that "No law, or section of the Code, shall be amended or repealed by mere reference to its title, or to the number of the section of the Code, but the amending or repealing act shall distinctly describe the law to be amended or repealed, as well as the alteration to be made." Code, § 2-1817. It has been held in several decisions by this court that an act which does not purport to repeal or amend any particular law or statute is not within the constitutional prohibition here invoked. Crisp v.Head, 187 Ga. 20 (2), 24 (199 S.E. 219), and cit. There is no merit in the contention that the former law as to advertisement was not amended by the act of January 28, 1938. Under the latter statute, previous advertisement was unnecessary.

3. Section 1 of the charter of the City of Atlanta empowers the city to "purchase, hold, receive, enjoy, possess, and retain . . in perpetuity, or for any term of years, any estate or estates — real or personal — lands, tenements, hereditaments, of what kind or nature soever, . . to use, manage and improve, sell and convey, rent or lease, and have the like powers over property hereafter acquired." (Ga. L. 1874, p. 116.) Under this provision, the municipality, acting in its proprietary capacity, would be authorized to rent or lease the real estate in question for any valid and sufficient consideration within the objects of its incorporation. Adams v. Rome, 59 Ga. 765; Mayor c. ofAthens v. Camak, 75 Ga. 429; Bacon v. Walker, 77 Ga. 336;Hirsch v. Brunswick, 114 Ga. 776 (40 S.E. 786);Byrd v. Alma, 166 Ga. 510 (143 S.E. 767). Section 15 of the charter provides: "The said mayor and general council shall have full power and authority to pass all by-laws and ordinances respecting . . care of the poor, . . and every other by-law, regulation, and ordinance that may seem to them proper for the security, for the peace, health, order, and good government of said city." Except as otherwise limited by law, it is permissible, under this provision, for the city to make a contract with another person or corporation, under the terms of which the latter will "care for the poor," medical and surgical treatment included. The charter as written does not limit the dispensing of such relief either to direct donation or to personal administration by officers or agents of the municipality, but the city can perform this function "in every reasonable way, and by the use of all reasonable means," within the constitution and other laws of the State. Bennett v.LaGrange, 153 Ga. 428, 434 (112 S.E. 482, 22 A.L.R. 1312); Tucker v. Virginia City, 4 Nev. 20; Thomas v. Mason, 39 W. Va. 526 (20 S.E. 580, 26 L.R.A. 727); Town of Hamden v. New Haven, 91 Conn. 589 (101 A. 11, 3 A.L.R. 1435); St. Louis Hospital Association v. St. Louis, 15 Mo. 592; 48 C. J. 441, 541, §§ 20, 251; 21 Rawle C. L. 708, 711, § 10. The agreement under consideration contemplates a contract with another corporation for care of the poor in respect of medical and surgical treatment for specified afflictions. Where the city elects to care for the poor by contracting for the services of another, it is not essential that the other contracting party shall be a charitable institution; and therefore it is immaterial in this case that the lessee, Steiner Cancer Hospital Inc., may intend to serve pay patients. Nor is it here needful to inquire about the disposition of the fees expected from such patients. Such a contract, it seems, would be invalid if made with a religious sect, which is itself aided directly or indirectly thereby.Bennett v. City of LaGrange, supra.

4. The agreement provides that the board of directors of the hospital corporation, the lessee, shall be limited to five members, consisting of the mayor, two members of the general council of the City of Atlanta, to be selected by that body, and two members to be selected from the trustees of the Albert Steiner estate. The charter of the hospital corporation provides for a similar board, but further declares that in the management of the business of the corporation there shall be required the affirmative vote of four fifths of all the directors. It is insisted that the city officers thus designated could not act in behalf of the city as a governmental body, and that whatever action they might see fit to take would constitute a mere attempt to exercise duties which could not be delegated by the municipal authorities, especially in view of the charter provision as to affirmative vote of four fifths of all the directors. We can not agree that the contract would be invalid merely because the municipality, in its governmental capacity, may have no control over the directorate or management of the lessee corporation. As stated above, the city under its charter may care for the poor indirectly by contracting for the services of another, and is not limited to its own officers or agencies. If this is a correct conclusion of law, as we think it is, the city is then authorized, subject to other limitations of law, to enter into such a contract with any corporation having appropriate charter power, even though it may in its governmental capacity have no control whatever over such corporation, and is dependent solely upon the contract and the remedies provided by law, with respect to its performance or breach.

5. We are of the opinion, however, that the agreement is subject to the objection that it violates the rule that "One council may not by an ordinance bind itself or its successors, so as to prevent free legislation in matters of municipal government." Code, § 69-202. This rule is not of statutory origin, and is not peculiar to Georgia. It is a codification of a principle stated in Williams v. West Point, 68 Ga. 816, which is applicable generally to legislative or governmental bodies. As indicated above, section 15 of the charter of the city provides that "The mayor and general council shall have full power and authority to pass all by-laws and ordinances respecting . . care of the poor." This provision merely confers authority. It is not a command. Contrast McClatchey v. Atlanta, 149 Ga. 648 (101 S.E. 682). Accordingly, the city is not actually required thereby to furnish to the poor any relief or assistance whatever; and the question whether it will do so and to what extent is a matter for determination from time to time by the governing authorities. Since the charter in this respect is not mandatory, each city council, present and future, will have a discretion in the matter. The evidence for the plaintiffs tended to show that the property in question has a rental value of $300 per month, and there was no evidence to the contrary. Under the record, therefore, it must be taken that the use of the property is not without some value. Thus, while the lease does not amount to an appropriation of money, it does attempt to appropriate a property right of substantial yearly value for the benefit of the poor, continuously for the period of thirty-five years. On the general subject of appropriations by the City of Atlanta, see McElroy v. Hartsfield, 185 Ga. 264 (194 S.E. 737). It has been held that the furnishing of aid or assistance to the poor is a "governmental function" (Wood v. Boone County, 153 Iowa, 92,133 N.W. 377, 39 L.R.A. (N.S.) 168, Ann. Cas. 1913d 1070), and that questions as "to what extent, under what circumstances, at what place and by what agencies poor persons shall be relieved at the expense of the public, are all purely legislative questions." Patrick v. Baldwin, 109 Wis. 342 (85 N.W. 274, 53 L.R.A. 613, 616). We consider these rulings sound, and directly in point.

While similar characterization of the matter of caring for the poor is not found in any Georgia decision, the same principle was expressed by this court in Justices v. Chapman, 16 Ga. 89 (2), 94. In that case, the court, in referring to support of the poor by the inferior court, said: "Our legislation only declares that `the inferior courts shall have power to inquire into the circumstances of the poor, bind out orphans, appoint guardians, and appoint overseers of the poor; and for this purpose, shall levy a tax.'. . To the inferior court a wide discretion, in the premises, is thus left. They are to inquire into the circumstances of the poor, to determine who shall be considered and treated as a pauper, and whether or not he or she shall become chargeable to the county." The court further stated that a person would therefore not be "chargeable to the county until the inferior court has given their sanction," and by some act "fixed thisstatus." It should be noted also that, as applied to the matter in hand, the municipal charter speaks only of legislation, conferring authority to pass all by-laws and ordinances respecting care of the poor. Seemingly, therefore, the matter is fixed by the charter itself as one dependent on legislative action. The language is similar to that construed in Justices v. Chapman, supra, not imposing a duty, but merely granting authority, and it is found in the general-welfare clause of the city charter. Other decisions by this court relating to governmental functions clearly show that the matter here is one of municipal government. The governmental functions of a municipality are those conferred or imposed upon it as a local agency, to be exercised not only in the interest of its inhabitants, but in promotion of the public good or welfare, as affecting the public generally. It includes the public peace, health, safety, and morals of the general public, and other similar public interests. Love v. Atlanta, 95 Ga. 129 (22 S.E. 29, 51 Am. St. Rep. 64); City Council of Augusta v.Little, 115 Ga. 124 (41 S.E. 238); Watson v. Atlanta,136 Ga. 370 (71 S.E. 664); Mayor c. of Savannah v. Jordan,142 Ga. 409 (83 S.E. 109, L.R.A. 1915C, 741, Ann. Cas. 1916C, 240); Cornelisen v. Atlanta, 146 Ga. 416 (91 S.E. 415); Mayor c. of Savannah v. Jones, 149 Ga. 139 (2) (99 S.E. 294); City of Warrenton v. Smith, 149 Ga. 567 (101 S.E. 681); Miller v. Macon, 152 Ga. 648 (110 S.E. 873). Care of the poor relates not only to distress of those directly benefited, nor is it a matter of purely local concern. It is a public responsibility, relating to society in general, and may directly affect the peace, health, morals, and security of the public at large. See 21 Rawle C. L. 713; 43 C. J. 182, § 179.

While the city would be authorized to lease its property for a period of years upon a valid consideration, acting for that purpose in its proprietary capacity, such is not the effect of the agreement under consideration. As tending to distinguish between governmental and business or proprietary action by a municipality, see Code, § 69-301; Wright v. Augusta, 78 Ga. 241 (a) (6 Am. St. Rep. 256); Mayor c. of Washington v.Faver, 155 Ga. 680, 686 (117 S.E. 653); City of Griffin v.Griffin Chero-Cola Bottling Co., 35 Ga. App. 779 (134 S.E. 812); Caruthers v. Hawkinsville, 42 Ga. App. 476 (156 S.E. 634); City of Vincennes v. Citizens Gas-Light c. Co.,132 Ind. 114 (31 N.E. 573, 16 L.R.A. 485); McBean v. Fresno, 112 Cal. 159 (44 P. 358, 31 L.R.A. 794, 53 Am. St. Rep. 191); Illinois Trust Savings Bank v. Arkansas City, 76 Fed. 271 (34 L.R.A. 518); Omaha Water Co. v. Omaha, 147 Fed. 1 (12 L.R.A. (N.S.) 736, 8 Ann. Cas. 614); Picket Publishing Co. v. Board of County Commissioners, 36 Mont. 188 (92 P. 524, 13 L.R.A. (N.S.) 1115, 122 Am. St. Rep. 352, 12 Ann. Cas. 986); City of Biddeford v. Yates, 104 Me. 506 (72 A. 335, 15 Ann. Cas. 1091); 43 C. J. 179-185, §§ 177-180; 19 Rawle C. L. 893, § 193. It is true, the agreement does not purport to establish any general policy as to aiding the poor, or prevent other assistance from time to time in the discretion of the city council. It nevertheless grants the use of valuable property, as consideration for stated benefits to the poor, and is thus in effect a continuing appropriation for the use of the poor, for the term of years stated; whereas future councils should be free to determine whether any expenditures should be made for that purpose; and if so, upon what terms and conditions, to what extent, and in what circumstances. If the agreement should be executed and given effect, it would necessarily prevent free legislation in regard to all of these matters concerning care of the poor. The proposed undertaking will not merely grant a lease on the city's property; it will bargain away governmental discretion. In Macon ConsolidatedStreet R. Co. v. Macon, 112 Ga. 782 (2) (38 S.E. 60), it was held: "A municipal corporation can not make a valid contract abrogating or restricting its legislative or discretionary power." For other cases referring to the rule against preventing free legislation in matters of municipal government, seeWilliams v. West Point, supra; Macon Railway Light Co. v.Macon, 136 Ga. 797 (2) (72 S.E. 159); Neal v. Decatur,142 Ga. 205 (82 S.E. 546); South Georgia Power Co. v.Baumann, 169 Ga. 649 (2) (151 S.E. 513); Washington Water Electric Co. v. Pope Manufacturing Co., 176 Ga. 155, 163 (167 S.E. 286); City Council ofAugusta v. Richmond County, 178 Ga. 400 (173 S.E. 140);Cannon v. Americus, 11 Ga. App. 95 (74 S.E. 701).

We do not mean to say that every contract or undertaking entered into in behalf of a municipality on authority of its council, and involving a governmental function, must be considered as void as to any extension whatever beyond their own tenure. While the question is not involved in the present case, it may be that the rule should be so applied as to allow, in case of necessity, reasonable overlapping to avoid suspension or disruption of municipal government during periods of change in administration. The following authorities might shed some light on this question, whether or not the contracts involved related to governmental functions: Manley v. Scott, 108 Minn. 142 (121 N.W. 628, 29 L.R.A. (N.S.) 652); Jacobberger v. School Dist., 122 Or. 124 (256 P. 652, 655); Gulf Bitulithic Co. v. Nueces County (Tex.Com.App.), 11 S.W.2d 305 (9), 313; Tate v. School Dist., 324 Mo. 477 (23 S.W.2d 1013, 70 A.L.R. 771; 44 C. J. 88.

In Horkan v. Moultrie, 136 Ga. 561 (71 S.E. 785), it was said: "All legislative bodies are limited in their legal capacity in such a manner as not to deprive succeeding bodies of the right to deal with matters involving the same questions as they may arise from time to time in the future, and as the then present exigencies may require. The weight of authority sustains the doctrine that a municipal corporation may make a valid contract to continue for a reasonable time beyond the official term of the officers entering into the contract for the municipality. . . We have found no case, however, that would tend to support a contract made by a city council in behalf of the municipality to furnish water indefinitely to one of its citizens in consideration of his permitting it to lay a sewer through his land. Succeeding councils would necessarily have the power, we think, to change the water rates from time to time as circumstances might require or justify, in order to obtain sufficient revenue to maintain its waterworks system on the one hand, and, on the other, in order to serve all its patrons at reasonable rates and on equal terms. To allow one council to legally bind the city by a contract of the kind here in question might so tie the hands of its successors as to result in great injury to the municipality and to the public. . . Power in a municipality of making and changing, by ordinance, water rates from time to time, whenever necessary to protect the city in its revenues and to enable it to furnish to all on equal terms and at reasonable rates, is a legislative or governmental power, and therefore can not be legally bargained or bartered away by one council so as to forever deprive succeeding councils of the right to exercise it." It was further said that what could not be done by ordinance could not, of course, be done by contract. We cite this case because it refers to legislative or governmental authority, although the power to fix and determine water rates was the particular matter there under consideration. The decision is not inapplicable because it dealt with a contract for an indefinite term. The rule is not limited to either indefinite or perpetual terms. Whether or not the present agreement might have been sustained if it had been so made as to continue for only a reasonable time during or beyond the terms of the officers who undertook to authorize it, we think it should be said as a matter of law that the period of the lease will involve an overlapping for an unreasonable time with respect to the rule that one city council can not bind itself or its successors in matters of municipal government. The period is thirty-five years — more than a third of a century, and half the allotted time of man. Manifestly it would not be a reasonable application of the rule to say that one city council may bind itself and its successorsin matters of municipal government for any such period.

Without reference at this point to applicability of the rule in other instances, we think it may be helpful to mention a few additional things which the present agreement is not: It is not a contract for the construction of a hospital or other building to be used from time to time for charitable or other purposes, according to the discretion of each city council; and it is neither an emergency measure adopted in case of pestilence or epidemic, nor is it a general health measure. It is an undertaking solely for the benefit of the poor, or some of the poor; and although the general subject is within the authority of the city council, the particular agreement must be declared unlawful as exceeding that authority, under the rule invoked. It involves a governmental function none the less because it may seek to benefit only some of the poor in limited respects, instead of all of the poor in a more general way. It is argued in effect, however, that the city, under the constitution and laws of the State, and its charter, would have been authorized to make an outright donation of the property in question for the benefit of the poor; and that, if so, it could do the lesser thing of executing the instant rental contract in reference thereto. Whether or not the lease, being for more than five years, might, if valid, convey an interest in realty (Code, § 85-801), and whether or not the municipality could have made an outright donation of the entire estate in the property, the lease can not be construed otherwise than as an executory contract containing covenants on the part of the lessee, to be performed in the future in reference to the poor, with simultaneous enjoyment of the property as consideration for the service to be rendered. As related to futurity on both sides, note especially the provision as to cancellation in case of breach. Since, as we have shown, the matter of caring for the poor is, under the city charter, a matter for municipal government, such an executory contract, intended to be of force for the period of thirty-five years, can not be upheld as an executed donation or as a proposed immediate donation, whether or not, if it were such in fact, it might be sustainable.

The case is distinguished by its facts from Mayor c. ofMacon v. Bibb County, 138 Ga. 366 (75 S.E. 435). As was said in that case, the resolution of the county with its acceptance by the city was not strictly a contract, because the city did not agree to send all or any of its smallpox patients to the county hospital, but it was "more of an arrangement in the nature of a working basis between the authorities of the two sanitary districts," being a "continuing offer" by the county to care for both county and city patients on a co-operative plan.The arrangement was subject to termination at the will of eitherparty on thirty days notice. The city sent its smallpox patients to the county hospital while the offer was still outstanding, but later refused to pay its part of the expense, in accordance with the resolution. It was held that "the city will not be relieved from the payment of its proportionate expense on the ground that the arrangement of the city and county to combine the pest-houses is void, because, as it is contended, its effect is to create a debt extending beyond the current year, and to bind the successors in office of the city." A mere statement of the facts is a sufficient differentiation.

The decision in Le Bourgeois v. New Orleans, 145 La. 274 (82 So. 268), does not point, except perhaps faintly, to a different conclusion. The question here discussed was apparently not raised in that case. Furthermore, it appears from the decision that the laws of the State and the provisions of the city charter were different. All of the cases cited in the briefs, both local and foreign, have been given careful consideration. None appear to be more closely in point than those expressly mentioned herein.

It is further insisted for the defendants that the original plaintiff, a physician, did not come into equity with clean hands. This contention is based upon his admission that he had published a statement to the effect that everything would be harmonious if Steiner Clinic would confine its activities to treatment of the poor of the City of Atlanta, and admit patients only upon certificate of a physician that they were suffering from cancer, or were suspected of having cancer, and were unable to pay for medical service. This statement may tend to show ulterior motive, but it does not show any unfair or unlawful conduct as to the rights of the other parties respecting the subject-matter of the litigation, and is not enough to defeat the action. Code, § 37-104; Town of Adel v. Woodall, 122 Ga. 535 (6), 539 (50 S.E. 481); Atlanta Association ofFire-Insurance Agents v. McDonald, 181 Ga. 105 (2) (181 S.E. 822); Gulf Oil Corporation of Pennsylvania v. SuburbanRealty Co., 183 Ga. 847 (2), 853 (190 S.E. 179).

6. There is no merit in the contention that the plaintiffs as taxpayers did not show sufficient interest and injury to support the action. Blake v. Macon, 53 Ga. 172; Keen v.Waycross, 101 Ga. 588 (3) (29 S.E. 42); Wells v.Ragsdale, 102 Ga. 53 (7) (29 S.E. 165); Mayor c. of Macon v. Hughes, 110 Ga. 795 (36 S.E. 247); Mitchell v.Lasseter, 114 Ga. 275 (4) (40 S.E. 287); Tolbert v.Long, 134 Ga. 292 (67 S.E. 826, 137 Am. St. Rep. 222).

It is also a doubtful question whether the clause of the contract purporting to authorize the directors of the lessee corporation to adopt "rules and regulations for determining those who qualify as the poor of the city" does not attempt an unlawful delegation of governmental discretion as distinguished from an administrative or ministerial duty; but in view of what has been said, no decision upon this question is necessary.

For the reasons stated, the judge erred in refusing an injunction. However worthy and important the proposed enterprise may seem to be, we as a court must put out of view all but its legal phases. The construction and application of the law being our sole authority and function, our decision can not be permitted to turn on any other question.

Judgment reversed. All the Justices concur, except

JENKINS, J., who dissents from the conclusion reached in division 5 of the opinion, and from the judgment of reversal.

Case Details

Case Name: Aven v. Steiner Cancer Hospital Inc.

Court Name: Supreme Court of Georgia

Date Published: Oct 19, 1939

Citation: 5 S.E.2d 356

Docket Number: 12815.

Court Abbreviation: Ga.