Hon. Clarence L. Darter 

County Attorney 

Childress County Courthouse 

Childress, Texas 

Dear Sir, 

Opinion NO..C-776 

Rer Proper distribution of 

certain assets between 

county and newly established hospital district, 

and related questions. 

You have requested an opinion in regard to the 

above matter. We quote from your request as follows: 

"Under the provisions of Article &&g&q-43, 

an election was recently held In Chlldreaa County, 

and the Childress County Hospital Dlatrict was 

created, . . . . 

"Previously, Childress County had operated 

a County Hospital, and under Section 2 of the 

act authorizing the Hospital District, certain 

of the assets of the County Hospital are to be 

transferred to the Hospital District, the wording 

of the statute being 'There ahall,be transferred 

to it the title to all lands, buildings, improvements and equipment in anywise pertaining to the 

hospitals or hospital system owned by Chlldress 

County.' 

"Certain funds an&accounts receivable exist 

which have been accumulated during the existence 

of the County Hospital, and the question arises 

as to whether these funds and accounts should 

also be transferred by Childress County to the 

Hospital District. The funds and accounts are 

as follows: 

"1 . Interest and sinking funds. The County 

Hospital was purchased and Improved with funds 

derived from the sale of permanent improvement 

bonds,' and approximate1y~$116,000.00 remains unpaid upon these bonds. Childress County has, 

-3723- 
Hon. Clarence L. Darter, page 2 (C-776) 

created an interest and sinking fund, with a 

present balance of $30,61g.OO in connection 

with its permanent improvement bonds. 

“In 1963 the County Hospital was air-conditioned and permanent improvement bonds were 

issued in connection with such expenditures. 

$14,000.00 of these bonds are outstanding. The 

sum of $14,000.00 from the operating revenues 

of the County Hospital has been placed in a 

savings account designated aa an Interest and 

sinking fund for these particular bonds. 

“2. Accounts Receivable. During its 

existence the County Hospital placed upon its 

books a number of aacounts. The amount of money 

that may be realized from these accounts Is uncertain, although some percentage of the accounts 

are likely to be paid. 

"3 . County Hospital Operating Funds. On 

the day the Childress County Hospital District 

was created, the County Hospital had the total 

sum of $37,017.37 In its possession, which represented revenue from operations of the hospital, 

$10,774.67 of this total sum was in a regular 

checking account, and the balance thereof ia 

represented by time deposit certificates and 

savings accounts issued in the name of the 

County Hospital, and bearing interest.” 

Subsequent to the opinion request, we have learned 

from your office, and the office of your county judge, that 

Childress County has never levied any taxes for the operation 

of the County Hospital. Consequently, the question of whether 

tax money is present in the assets and accounts involved, and 

what effect the presence of tax money would have upon diaposition of the aasets and accounts, is not present in this opinion. 

Article 4494q-43, Vernon’s Civil Statutes, authorizes the creation of the Childress County Hospital District. 

Section 2 of said Article is quoted in part a8 follows: 

“The District herein authorized to be 

created shall take over and there shall be 

transferred to it title to all lands, buildings, improvements and equipment in anywise 

pertaining to the hospitals or hospital system 

-3724- 
Hon. Clarence L. Darter, page 3 (c-776) 

owned by Ch1 ldresa County and any city or town 

within such County. . . . Such District shall 

assume full responsibility for providing medical 

and hospital care for its needy Inhabitants 

and shall assume the outstanding Indebtedness 

which shall have been incurred by any city or 

town or by Childress County for hospital 

purposes friar to the creation of said 

District. 

The above quoted Section of Article 44949-43 

does not provide for the disposition of the assets and accounts 

in question. 

In regard to .the Interest and sinking funds in 

the Instant case, it Is our opinion that Eexar County Hospital 

District v. Crosby, 160 Tex. 116, 327 S.W.2d 445 (1959') would 

control the aisoosition of thia fund. The Court stated, 

(page 448); - 

"As between the city and the county on 

the one hand and the District on the other, the 

effect of the assumption by the latter of payment of the bonds should be construed as an 

assumption of the payment of so much of the 

bonds as cannot be retired by the sinking funds 

on hand. It is our view that the custody of 

the sinking fund heretofore accumulated should 

remain In the Cltv and Countv, with the reouirement that suah funds, inc.luai& all interest 

which may have accumulated from the investment 

thereof, be applied toward retirement of the 

bonds first maturing." (Emphasla added) 

The Court In the Bexar case, supra, held that the 

hospital district could not compel the City and County to 

transfer the Interest and Sinking Fund but the fund could be 

voluntarily transferred as long as the fund was used to retire 

the outstanding indebtedness regardless of who had custody 

of the fund. The Interest and Sinking Fund in the instant 

case may be treated in the same manner. 

Prior to creation of the Childress County Hospital 

District, the accounts receivable and the operating expense 

fund were property of the county and subject to the control 

of the Commissioners Court. Article 4484, Vernon's Civil 

Statutes, provides, in part, a8 follows: 

-3725 
Hon. Clarence L. Darter, page 4 (c-776) 

11 

. . .the board shall certify all bills 

and accounts, including salaries and wages, 

and transmit them to the Commissioners Court, 

who shall provide for their payment in the 

same manner aa other charges against the 

COUnty are Daid." (Emphasis added) 

In part, 

Article 4485, Vernon's Civil Statutes, provides, 

as follows: 

"He fiospital Superintendent7 shall 

collect and receive all moneys due the 

hospital, keep an accurate account of the 

same, report the same at the monthly meeting 

of the board of managers, and transmit the 

same to the county collector." (Emphasis 

added) 

In a prior opinion this office ruled that revenuea 

from operation of a county hospital should be delivered to 

the county treasurer for deposit b 

General's Opinion No. v-1265 (1951 7 

such county. Attorney 

. 

Eased upon the statutes providing for the dlsposition of these funds prior to the establishment of the hospital 

district and the fact that the legislature waa silent concernin these assets and funds in the enabling act (Article 4494q437, it Is our opinion that the accounts receivable and the 

operating expense fund are the property of Childross County 

and must remain with the county. Harris County Flood Control 

Dlst. v. Mann, 135 Tex. 239, 140 S.W.2d 1096 (1940) p. 1103-1104. 

You also requested an opinion from this office on 

the validity of a proposed contract to distribute these funds 

between the county and the district. A copy of the contract 

was attached to your opinion request. In light of the above 

stated, the only matter which may be disposed of by mutual 

agreement are the Interest and sinking funds to retire the outstanding bonds. The county can relinquish custody of these 

funds to the Hospital District, but the funds, and all interest 

resulting from the investment thereof, can only be used to retire the outstanding bonds first maturing regardless of whether 

it is transferred,to the district or remains with the county. 

SUMMARY ------- 

Either Childress County or the Childress 

County Hospital District may have custody of 

-3726 
Hon. Clarence L. Darter, page 5 (c-776) 

the interest and sinking funds established to 

retire the hospital bonds so long aa the slnklng funds, and all interest from the investment thereof, are used to retire the outstanding bonds first maturing. Bexar County Hospital 

District v. Crosby, 160 Tex. 116, 327 S.W.2d 445 

71959). 

The accounts receivable and the operating 

expense fund of Childress County Hospital are 

county property and cannot be transferred to the 

hospital district by contract. 

Yours very truly, 

WAGGONER CARR 

Attorney General 

JCMcC:sck 

APPROVED: 

OPINION COMMITTEE 

W. 0. Shultz, Chairman 

John Reeves 

John Banks 

Paul Phy 

Robert Flowers 

APPROVED FOR THE ATTORNEY GENERAL 

BY: T. B. Wright 

-3727-