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 andnewly established hospital district, andrelated questions. Youhave requested anopinion in regard to the above matter. Wequote from your request as follows:

"Under the provisions of Article &&g&q-43, anelection wasrecently held In Chlldreaa County, and the Childress County Hospital Dlatrict was created,

. . . . "Previously, Childress County had operated aCounty Hospital, andunder Section 2of 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 ownedby 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 andaccounts should also be transferred by Childress County to the Hospital District. Thefunds andaccounts are as follows: "1

. Interest and sinking funds. TheCounty Hospital waspurchased andImproved 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.OOin connection with its permanent improvement bonds.

“In 

### 1963the County Hospital wasair-conditioned andpermanent improvement bonds were issued in connection with such expenditures. $14,000.00 of these bonds are outstanding. The sumof $14,000.00 from the operating revenues of the County Hospital has been placed in a savings account designated aa anInterest and sinking fund for these particular bonds.

“2. Accounts Receivable. During its existence the County Hospital placed upon its books anumber of aacounts. Theamount of money that maybe realized from these accounts Is uncertain, although 

### somepercentage 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 sumof 

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

### $10,774.67of this total sumwas in aregular checking account, and the balance thereof ia represented by time deposit certificates and savings accounts issued in the nameof the County Hospital, andbearing interest.” Subsequent to the opinion request, wehave 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 moneywould 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 2of said Article is quoted in part a8follows:

“The District herein authorized to be created shall take over and there shall be transferred to it title to all lands, buildings, improvements andequipment in anywise pertaining to the hospitals or hospital system 

### -3724-Hon. Clarence L. Darter, page 

### 3(c-776)

ownedby Ch1

ldresa County andany city or town within such County.

. . . Such District shall
assume full responsibility for providing medical andhospital 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. Theabove quoted Section of Article 44949-43 does not provide for the disposition of the assets andaccounts 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, 

### 160Tex. 

### 116,327S.W.2d 445 (1959') would control the aisoosition of thia fund. TheCourt stated, (page 

### 448); -

"As between the city and the county on the one hand and the District onthe other, the effect of the assumption by the latter of payment of the bonds should be construed as an assumption of the payment of somuchof 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 mayhave accumulated from the investment thereof, be applied toward retirement of the bonds first maturing." (Emphasla added) TheCourt In the Bexar case, supra, held that the hospital district could not compel the City and County to transfer the Interest and Sinking Fundbut the fund could be voluntarily transferred as long as the fund wasused to retire the outstanding indebtedness regardless of whohadcustody of the fund. The Interest and Sinking Fundin the instant case maybe treated in the samemanner.

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, a8follows:


### -3725Hon. Clarence L. Darter, page 4

### (c-776)

11

. . .the board shall certify all bills andaccounts, including salaries andwages, and transmit themto the Commissioners Court, whoshall provide for their payment in the samemanner aaother charges against the COUnty are Daid." (Emphasis added)

In part, Article 

### 4485,Vernon's Civil Statutes, provides,

as follows: "Hefiospital Superintendent7 shall collect andreceive all moneys due the hospital, keep anaccurate account of the same, report the sameat the monthly meeting of the board of managers, and transmit the sameto the county collector." (Emphasis added)In aprior opinion this office ruled that revenuea from operation of acounty hospital should be delivered to the county treasurer for deposit b General's Opinion No. 

### v-1265 (1951 7such 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 waasilent concernin these assets andfunds in the enabling act (Article 4494q

### 437,it Is our opinion that the accounts receivable and the operating expense fund are the property of Childross County andmust remain with the county. Harris County Flood Control Dlst. v. Mann, 

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

Youalso requested anopinion from this office on the validity of aproposed contract to distribute these funds between the county and the district. Acopy of the contract was attached to your opinion request. In light of the above stated, the only matter which maybe disposed of bymutual agreement are the Interest and sinking funds to retire the outstanding bonds. Thecounty can relinquish custody of these funds to the Hospital District, but the funds, andall 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 mayhave custody of -3726Hon. Clarence L. Darter, page 

### 5(c-776)

the interest and sinking funds established to retire the hospital bonds so long aathe slnklng funds, and all interest from the investment thereof, are used to retire the outstanding bonds first maturing. Bexar County Hospital District v. Crosby, 160Tex. 116, 327S.W.2d 445 71959). Theaccounts receivable and the operating expense fund of Childress County Hospital are county property andcannot be transferred to the hospital district by contract.Yours very truly, WAGGONER

CARR Attorney General

JCMcC:sck APPROVED: OPINIONCOMMITTEE W.0. Shultz, Chairman John Reeves John Banks Paul Phy Robert Flowers APPROVED

FORTHEATTORNEY GENERAL BY: T. B. Wright

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