THE ATTORNEY GENEKAL 

OF TEXAS 

Honorable Ralph Prince Opinion NO. ww-630 

Criminal District Attorney 

Gregg County Re: 

Longview, Texas 

Authority of the Gregg 

County Commlssloners~ 

Court to lease the 

Dear Sir: county hospital. 

In your recent letter you have requested our 

advice as to whether Gregg County has authority to enter 

into a certain lease of its county hospital considering the 

circumstances hereinafter quoted from your letter: 

"Gregg County owns and operates a County 

Hospital under the authority of Article 4478 which 

authorizes counties to provide for the care and 

treatment of the County's sick . . . From time to 

time the hospital has been improved and the 

facllltles expanded by the Issuance of hospital 

bonds, the last Issue of $500,000 being dated 

May 15, 1955, authorized at an election held within 

the County on February 12, 1955. 

"Gregg County desires to lease Its hospital 

to a non-profit Episcopal Church corporation for 

a period in excess of five years and such lease 

would provide that the hospital be operated as a 

non-profit corporation, that it would accept Gregg 

County charity which would be paid for by the Commissioners' Court at a 25% discount of the regular 

rates; that such lease contract will be in all 

things similar to the attached contract of lease 

between Smith County, Texas, and the East Texas 

Hospital Foundation." 

Article 449&L, Vernon's Texas Civil 'Statutes, 

provides in part: 

"Section 1. Any county in this State having 

a county hospital which Is operated by said county, 

may, and such county Is hereby authorized to 

lease such hospital, provided the Commissioners 
Honorable Ralph Prince, page 2 (~~-630) 

Court of said county shall find and determine 

by an order entered In the minutes of said Court 

that it is to the best interest of said county 

to lease such hospital. . . .' 

Gregg County, acting by and through Its Commlssloners' Court, is therefore authorized by statute to 

lease its county owned and operated hospital in the manner 

provided in such statute. In our opinion this statute 

contravenes neither the Constitution of the State of Texas 

nor the Federal Constitution. 

A county Is by Section 52 of Article III of the 

Texas Constitution prohibited from lending its credit or 

granting public money or thing of value in aid of or to any 

individual, association or corporation whatsoever or becoming a stockholder in same. By Section 3 of Article III of 

our State Constitution, a county is enjoined from becoming 

a subscriber to the capital of any private sorporation or 

association or making any appropriation or donation or 

loaning Its credit to same. Thus, it Is that the Commissioners' Courts may not dispose of county property so as to 

virtually amount to a donation. Llano County v. Knowles, 

29 S.W. 549 (Civ.App. 1895). Clearly, Article 4494L, 

Vernon's Texas Civil Statutes, does not violate any of these 

constitutional provisions by authorizing a county to lease 

its hospital. 

We do not, however, have sufficient facts before 

us to say whether the proposed lease contract accompanying 

your letter amounts to a virtual donation of the county 

hospital Inasmuch as such factors as the value of the hospital and Its equipment In relation to the benefits to be 

derived by the county by virtue of the lease contract would 

have to be considered. The One Dollar ($1) annual rental 

to be received by the county from the lessee according to 

the lease contract is patently so nominal as to not be 

controlling on the question of whether a donation is being 

made by the county. Again the benefit to the county from 

being relieved of responsibility of operating the hospital 

is a consideration which we cannot evaluate without knowing 

what that responsibility has involved in the past or would 

entail in the future. Bearing the aforesaid constitutional 

provisions in mind, the Commissioners' Court can, however, 

make a proper determination of the question in light of the 

facts known to it. 

It is apparent from the proposed lease contract 
Honorable Ralph Prince, page 3 (Ww-630) 

that the county does not lend its credit or become a stock- . . . holder In or subscrlber to tne capital of the lessee and 

does not enter upon a joint venture with said lessee since 

control over the management and operation of the hospital 

is ceded to the lessee, all debts of the hospital are avoided 

by the county, and it is held safe from any liability which 

might arise from the operation of the hospital. Further, 

according to the lease contract, the county does not stand 

to derive any financial gain from the operation of the hospltal. 

Insofar as the proposed lease contract provides 

that the county will effect a sale of the hospital to the 

extent that the laws of the State of Texas permit same at 

some time in the future, if and when the lessee elects to 

purchase the hospital, the Commissioners Court would be 

acting without authority. No statute or constitutional provision authorizes Gregg County to sell its hospital or to 

contract to sell its hospital in the future. The Commlsslonerst 

Court is a court of limited jurisldction and has only such 

powers as are conferred upon It by statute and the Constltution by express terms or by necessary implication. Childress 

County v. State, 127 Tex. 343, 92 S.W. 2d 1011 (1936); V 

Rosenberg v. Lovett, 173 S.W. 508 (Clv.App. 1915, erro*f.); 

m.W. 289 (Civ.Anp. 1925). The power to 

lease neither expressly nor by Implication confers the power 

to contract to sell. 

Statutes, 

While Article 44$+L:, Vernon's Texas Civil 

empowers Commissioners' Courts . . . to lease such 

county hospital to be operated as a hospital by the lessee of 

same under such terms and conditions as may be satisfactory to 

the Commissioners Court . . .)l (Section 4 of the statute), 

the discretion thus conferred upon the Commissioners1 Courts 

in setting the terms and conditions of such leases is obviously 

limited to leases only and does not confer the power expressly 

or,by Implication to contract to sell by Incorporating such a 

provision in a lease agreement. 

We assume that the Gregg County Commissioners’ 

Court in agreeing to '. . . co-operate fully with Lessee In 

its endeavor to maintain and operate said hospital and assure 

that the hospital is one of the finest and best equipped in 

Texas, . . ." means only to co-operate with the lessee to the 

extent allowed by the laws of the State of Texas. No approprlation of public funds to charitable or non-charitable organizations managed and operated or controlled by private Individuals 

can be made by a Commissioners' Court. Tex.Const. Art. III, 

Sec. 50, Sec. 51 and Sec. 52; Tex.Const.Art. VIII, Sec. 3; and 

Tex.Const. Art. XVI, Sec. 6. Upon the lease of the hospital 
Honorable Ralph Prince, page 4 (WW-630) 

it will, of course, cease to be a legitimate recipient of 

county funds. 

The proposed lease agreement does not delegate 

or cede away the governmental function of providing for the 

care and treatment of the county's charity patients. Our 

counties are not limited by the Texas Constitution or any 

statute to discharging their obligation to treat the indigent 

sick by means of owning and operating a county hospital. 

Article 4438, Vernon's Texas Civil Statutes, requires counties 

not operating their own hospitals to send the Indigent sick to 

public hospitals In the county. That, according to the lease 

agreement, Is what Gregg County proposes to do. Under the 

lease agreement the county will still determine who is eligible 

for charity treatment and will send those it deems eligible for 

such treatment to the hospital. The county does not, however, 

bind itself to send charity cases to the lessee only. Further 

the county continues to bear the financial burden of such treatment and may determine when the patient is to be discharged. 

Clearly the county's burden and duty toward charity patients Is 

not shifted by the proposed lease agreement. 

According to your letter, the Gregg County Commissioners' Court 

if 

roposes to lease the hospital for a period in 

excess of five 5) years. Leasing the hospital for a shorter 

term would remove the question of constitutionality which is 

raised by the fact that outstanding tax bonds Issued to Improve 

and expand the hospital were voted at a time when Article 4494L, 

Vernon's Texas Civil Statutes, authorized a lease of only five 

(5) years qr less. 

Section 16, Article I of the Texas Constitution, and 

Section 10 of Article I of the Federal Constitution forbid the 

enactment of laws impairing the obligations of contracts. In 

our opinion, Article 4494L, Vernon's Texas Civil Statutes, does 

not authorize the impairment of contracts within the meaning of 

the aforesaid constitutional provisions. 

In Texas It has been held that a contractual relatlonship arises between the county and the voters of a bond issue, 

as well as with the county and the bondholders, and that the 

"vital conditions and safeguards surrounding the tax" became a 

part of the contract. David v. Timon, 183 S.W. 88 (Civ.App. 

1916); San Saba County v. McGraw, 130 Tex. 54, 108 S.W. 2d 200 

(1937). H owever, the statutes which have been held to be lncorporated into the contract between the voters and the county 

or other taxing unit by a bond election have dealt only with 

the tax or bonds, as distinguished from the use to which the 
. . 

Honorable Ralph Prince, page 5 (WW-630) 

public improvement may be put once the tax is established and 

the bond money is expended. Here the money raised by the 

bond issue has been expended for the Improvement and expansion 

of the hospital. Hence, no question as to the diversion of 

public moneys arises. Further, neither the tax, nor the bonds, 

nor the use to which they will be put, nor the tax liability of 

the voters of the bonds will be affected b a lease of the 

hospital for a period in excess of five (5 7 years. Therefore, 

the leasing of the hospital would not Impair any contractual 

right conferred on the voters at the bond election. 

The contracts intended to be protected from legislative interference are those involving property interests. 

9 Tex.Jur. 547, Sec. 112. The obligation must be one of which 

value can be affirmed. Worsham v. Stevens, 66 Tax. 89, 17 S.W. 

404 (1886); Texas & N.O.R. Co. v. Gross, 60 Tex. 621, 128 

S.W. 1173 (1910, error ref.). Under the Texas authorities, it 

cannot be said that the voters at the bond election acquired a 

property right In how long the hospital might be leased after 

the bond money was expended for the purpose announced at the 

election and in accordance with the statutes then existing 

relative to the bonds and the tax. 

As to the bondholders, our courts have held that 

even where a political subdivision has bonds outstanding and has 

been authorized by statute to convey all or a portion of the 

property of the district there Is no Impairment of the obligation of contract, so long as a valid means of equal efficacy Is 

provided for paying its outstanding bonds and debts. El Dorado 

Independent School District v. Tisdale, 3 S.W. 2d 420 (Comm. 

App. 1928); Burns v. Dilley County Line Indenendent School 

District, 295 S.W. 1091 (Comm.App. 1927); Aransas Pass v. 

Keeling, 112 Tex. 339, 247 S.W. 818 (1923). The holders of the 

hospital bonds in question will still have adequate provision 

for the retirement of the hospital bonds and the interest 

thereon as it accrues although the hospital Is leased for a 

period in excess of five (5) years. The tax to retire the bonds 

is in no way affected by a lease in excess of five (5) years, 

and, there is therefore no impairment of any obligation to the 

bondholders. 

SUMMARY 

Based upon the information furnished to 

us, you are advised that the Commissioners' 

Court of Gregg County has authority to 
Honorable Ralph Prince, page 6 (~~-630) 

enter Into the proposed lease contract, 

subject to the exception that it cannot 

contract to sell the county hospital at 

a later time even though the obligation 

to sell is made contingent upon the law's 

then permitting such sale. 

Very truly yours, 

WILL WILSON 

Attorney General of Texas 

HGB:mg 

APPROVED: 

OPINION COMMITTEE 

H. Grady Chandler 

Wallace Flnfrock 

Jot Hodges, Jr. 

REVIEWED FOR THE ATTORNEY GENERAL 

By: W. V. Geppert