Court Opinion

ID: 9561997
Source: CourtListenerOpinion
Date Created: 2023-08-21 18:20:16.130569+00
Date Added: 2024-06-11T09:17:09.694981
License: Public Domain

Nichols, Justice.
The Court of Appeals has certified the following question to the Supreme Court: “Is real property held and owned by a public hospital authority, created under and by virtue of the Hospital Authorities Law (Ga. L. 1941, p. 241, as amended, and as superseded by Ga. L. 1964, pp. 499, 598, as amended (Code Ann. § 88-1801 et seq.)), ‘public property’ within the meaning of the Constitution of 1945, Art. VII, Sec. I, Par. IV (Code Ann. § 2-5404) and Ga. L. 1946, p. 12, as amended (Code Ann. § 92-201) so as to be exempt from ad valorem taxation, where the property itself is not a part of the hospital but its income is properly devoted to public purposes (hospital operations) in the furtherance of the legitimate functions of the hospital authority?
“See Code Ann. §§ 88-1802 (a), 1803, 1805; Code Ann. § 87-802 (b) (d); Undercofler v. Hospital Authority of Forsyth County, 221 Ga. 501 (145 SE2d 487); compare Culbreth v. Southwest Georgia Regional Housing Authority, 199 Ga. 183 (33 SE2d 684) (and Ga. L. 1937, p. 210, as amended; §§ 4, 8, 21), and Sigman v. Brunswick Port Authority, 214 Ga. 332 (104 SE2d 467) (and Ga. L. 1945, p. 1023, as amended by Ga. L. 1958, p. 82, §§ 2, 15) with Sheffield v. State School Bldg. Authority, 208 Ga. 575, 582 (4) (68 SE2d 590) (and Ga. L. 1951, p. 241, §§ 2, 21), and McLucas v. State Bridge Building Authority, 210 Ga. 1, 8 (3) (77 SE2d 531) (and Ga. L. 1953, p. 626, §§ 2, 30). See also Stegall v. Southwest Georgia Regional Housing Authority, 197 Ga. 571, 588 (4) (30 SE2d 196); Richmond County Hospital Authority v. McLain, 112 Ga. App. 209 (144 SE2d 565); 3 E.G.L., Authority Financing §§ 4, 13.”
This question does not involve the tax exemption of property used for charitable purposes nor does it involve the tax liability of any person in possession of any such property under any rental or lease agreement; but the sole question is whether or *532not property owned by such hospital authority is “public property” and therefore not subject to ad valorem taxation.
A review of the decisions cited by the Court of Appeals, as well as review of other decisions, shows that there is a conflict in the decisions of this court; although, in some instances an apparent conflict disappears upon closer scrutiny. In the case of Trustees of the Academy of Richmond County v. Bohler, 80 Ga. 159 (7 SE 633) it is held: “Therefore lands held in trust to appropriate the annual product to the erection of a poor-house and the support of its inmates forever, are not exempt [from ad valorem taxation]. The poor-house, when erected, will be exempt, but not detached property from which its support is to be derived.” An examination of the report of an earlier appeal involving the “trust” discloses that the property held in “trust” was privately donated in a trust provision of a will and the “trustees” of the Richmond Academy were the trustees under the will which created the trust. The property was not a part of the corpus of the Richmond Academy property. See City Council of Augusta v. Walton, 77 Ga. 517 (1 SE 214).
As early as Dart v. Houston, 22 Ga. 506, it was recognized that a corporation created by the legislature and funded with State funds is a creature of the legislature and subject to the control of the legislature while a corporation created by the legislature to be funded by private funds is not so subject to future legislative control. Citing Trustees of Dartmouth College v. Woodward (4 Wheaton 518).
In several cases, including Trustees of the Academy of Richmond County v. City Council of Augusta, 90 Ga. 634 (1) (17 SE 61, 20 LRA 151), it was held: “Lands held in trust under the Act of July 31, 1783, and subsequent Acts, vesting in trustees funds arising from the sale and lease of certain lands of the State for the erection and maintenance of a public academy in the County of Richmond, are exempt from municipal taxation, though separate from the tract on which the academy is situated and used only as a means of income for the institution, the same being public property of the State.” In the body of the opinion (p. 646), it was held: “It is claimed *533on the part of the city that the property is not public but private, that the academy is conducted by the trustees as a private school and is not a part of the public school system of the State or county; and that as the lands taxed are separate from the tract on which the academy is situated and are used only as a means of income, they are not within the exemptions allowed by the Constitution and granted by the statute of exemptions. . . In view of the legislation to which we have referred, there can be no question as to the public character of the institution originally. The property vested in the trustees was public property and was committed to them for a public purpose. No private interest of any kind was acquired. The beneficial interest was in the public, and the trustees were merely agents of the State for the administration of the. fund and the management of the institution. Since that time there has been no legislation changing the public character of the trust or parting with the control of the State over the institution or the fund connected with it. Mere non-interference with the control exercised by the trustees could not affect the rights of the State or divest the institution or the property of its public character. Nor is the institution conducted now, any more than it was at first, for any private purpose. It still subserves the public end for which it was created — the education of the people; and its purpose is none the less public because of it being conducted independently of the general public school system of the State or county. The right of the State as to property held in this manner was under consideration by this court in the case of Dart, et al. v. Houston, et al., 22 Ga. 506. It was there complained by the plaintiffs in error that the court erred in deciding that the Glynn County Academy, an institution endowed in the same manner as the Richmond County Academy, was a public corporation and that the trustees had no beneficial interest in the fund, but only a naked power which the State could resume at pleasure. The court affirmed the judgment however, and held that the funds of the academy were public property and that the control of the institution was in the State. As to the same institution, it was said, in the case of The Board of Education of Glynn *534County v. Mayor &c. of Brunswick, 72 Ga. 373: ‘It is not and never was a private or corporate, but a public eleemosynary establishment.’ . . These lands, therefore, are clearly exempt under the statute . . . which declares that ‘all public property’ shall be exempt from taxation. It is immaterial whether the property is used merely for income or not. The proviso at the end of the statute and of the constitutional provision on this subject . . . which excludes property ‘used for purposes of private or corporate profit or income’ does not apply to public property.” Compare Neal-Millard Co. v. Trustees of Chatham Academy, 121 Ga. 208 (48 SE 978) and citations.
A different result was reached in Sheffield v. State School Building Authority, 208 Ga. 575, 582 (68 SE2d 590); State of Ga. v. Regents of University System, 179 Ga. 210 (175 SE 567); and Stegall v. Southwest Ga. Regional Housing Authority, 197 Ga. 571 (30 SE2d 196), but those cases primarily dealt with the bonds to be issued by such authorities being a “debt” in violation of stated provisions of the Constitution. In the Ste-gall case (p. 588), it was held: “While it has been held by some courts that housing authorities created under similar statutes are municipal corporations in the broad sense that their property might be treated- as public property for the purpose of tax exemption, the regional authority here could not be correctly classified as a municipal corporation within the meaning of the foregoing debt clause of our Constitution.” The author of that opinion wrote for the court in Culbreth v. Southwest Ga. Housing Authority, 199 Ga. 183, 188 (33 SE2d 684), with one Justice dissenting: “The Constitution provides that, ‘The General Assembly may, by law, exempt from taxation all public property,’ and it has been declared by statute that all such property shall be exempt. Code §§ 2-5002, 92-201. Property may be public property so as to come within the exemption,, although the legal' title is not in the State, nor in a county or municipality, provided it is .‘not used for purposes of private or corporate profit and income.’ Code § 2-5002; Trustees of the Academy of Richmond County v. Augusta, 90 Ga. 634 (17 SE 61, 20 LRA 151); Walden v. Whigham, 120 Ga. 646 (48 SE 159). ‘Public property, within the meaning of that clause of' *535the Constitution which authorizes the General Assembly to exempt from taxation all public property, embraces only such property as is owned by the State, or some political division thereof, and title to which is vested directly in the State, or one of its subordinate political divisions, or in some person holding exclusively for the benefit of the State, or a subordinate public corporation. Board of Trustees of Gate City Guard v. Atlanta, 113 Ga. 883 (39 SE 394, 54 LRA 806).’ Williamson v. Housing Authority of Augusta, 186 Ga. 673 (8), 691, supra.
“As we have seen above, the applicable statutes purport to make Southwest Regional Housing Authority a public corporation, and we cannot say that they are ineffectual for that purpose. Since the housing authority is thus a public eorportion, and is using this property exclusively for a declared public and governmental purpose, and not for private or corporate benefit or income, it is in effect an instrumentality of the State, and therefore the property is exempt from taxation to the same extent as if the legal title thereto was in the State itself or in a county or city. Newton v. Atlanta, 189 Ga. 441 (3) (6 SE2d 61).”
In the ease of the State of Ga. v. Regents of the University System, 179 Ga. 210, supra, the court was dealing with bonds to be issued and pledging anticipated revenue to pay the principal and interest thereon. It was there said (p. 222): “If the proposed bonds here under consideration would create a debt at all, it would be a debt against the corporation governed by the Board of Regents, and not against the State. This conclusion is not based upon the terms and conditions of the particular contract. Regardless of the stipulations made, the State of Georgia could never be called upon to pay these bonds. Nor would it be under any obligation, moral or otherwise, to levy any tax for the purpose of repairing any loss that might result to the university in consequence of these transactions, if the action of the board should ultimately prove to be unwise and a loss should result. If the payment of any of these bonds from the income as pledged should by any chance cause such a drain upon the resources of the affected institution that it might be in need of increased appropriations in order to function *536properly as an educational unit, the State would still be under no obligation to supply the deficit, even though it might desire to do so and actually do so. Such a condition would place the State only in the same situation as if the regents should be guilty of waste or mismanagement whereby they could not function without increased appropriations. If waste and mismanagement would not create a debt against the State, the issuance of these bonds would not do so. Such a condition would be referable only to the character of the management, and would not lead to constitutional difficulties. The fact that the regents promise to make every reasonable effort to fill the new dormitories to the possible exclusion of the old, whereby the non-pledged income from dormitory fees for the use of existing buildings may be reduced, does not tend to make the bonds a debt against the State. This again is a mere matter of management, and is one falling within the discretion of the regents concerning the use of the property confided to their government.” Such case did not involve the pledge of property of the university, nor under the provisions of the Revenue Bond Law of 1937 (Ga. L. 1937, p. 761; Code Ann. §§ 87-807, 87-812), enacted after the decision in such cases can property, other than revenue received from such property, be levied upon to repay such proceeds from bonds. As was further said in that case (p. 226): “The final question is whether the regents have legal authority to obtain the loan in accordance with the terms and conditions of the loan agreement, including the proposed pledge of the portions of the income therein specified. In the first division of this opinion we have disposed of the question whether the obligations would create a debt against the State, and in the briefs filed for defendants- it is maintained that such obligations would not even create a' debt against the regents as a corporation. This for the reason that the bonds do not constitute general obligations, but are payable only out of special funds. In the view which we take of the case it is unnecessary to decide whether in these circumstances a 'debt’ will be created against the Corporation.' Whatever the nature of the particular obligation, it is our opinion that the board of regents,' or the corporation as the case may be, is vested with *537sufficient authority to issue the bonds and to obtain the loan upon the conditions agreed upon. The buildings are to be erected on the lands of the corporation, and the title to the buildings will be in the corporation from the time of their construction, ownership by the corporation not being dependent upon any condition, not even the payment of the loan. No mortgage or other lien is created, and the only stipulation which in any manner contemplates a lien is the statement which specifies the income to be pledged. None of the other property or resources can ever be held liable, and all possible remedies must be aimed at such special income.”
While the Act of 1964, supra (Code Ann. § 88-1807 et seq.), purports to authorize the mortgage of the real property of the Authority, no decision which has been called to our attention specifically upholds such a contract, nor would the existence of such a contract have the effect of changing the status of the real property from public to private or vice versa.
In Sheffield v. State School Building Authority, 208 Ga. 575, supra, the court held that property held by the Authority was not public property but was exempt from taxation under the “charity” exemption. The same result was reached in McLucas v. State Bridge Bldg. Authority, 210 Ga. 1, 8 (77 SE2d 531). Thereafter, in Sigman v. Brunswick Port Authority, 214 Ga. 332 (2) (104 SE2d 467), it was held: “The Act of the General Assembly as amended creating the Brunswick Port Authority and exempting its property and revenue bonds from taxation is not violative of Art. VII, Sec. I, Par. IV of the Constitution (Code Ann. § 2-5404), and such exemption does not grant a donation or gratuity in violation of Art. VII, Sec. I, Par. II of the Constitution (Code Ann. § 2-5402). No private interest exists in the property of the Authority. The members thereof may not use it for private gain or income. The Authority holds title only for the benefit of the State and the public, and the Authority is an instrumentality of the State or a subordinate public authority or corporation of the State. In Williamson v. Housing Authority of Augusta, 186 Ga. 673, 691 (199 SE 43), it is said: ‘If the project under attack is for public purposes, and the property about to be acquired by it is for public *538purposes, then the property may be exempted from taxation, and its bonds, being instrumentalities of government, are nontaxable. Property may be public property so as to come within the exemption from taxation although the legal title is not in the State, the county, or a municipality. Compare Trustees of the Academy of Richmond County v. Augusta, 90 Ga. 634 (17 SE 61, 20 LRA 151). See also Walden v. Whigham, 120 Ga. 646 (48 SE 159). Public property, within the meaning of that clause of the Constitution which authorizes the General Assembly to exempt from taxation all public property, embraces only such property as is owned by the State, or some political division thereof, and title to which is vested directly in the State, or one of its subordinate political divisions, or in some person holding exclusively for the benefit of the State, or a subordinate public corporation. Board of Trustees of Gate City Guard v. Atlanta, 113 Ga. 883 (39 SE 394, 54 LRA 806). (Italics ours.) See also McGinnis v. McKinnon, 165 Ga. 713 (141 SE 910); Swoger v. Glynn County, 179 Ga. 768 (177 SE 723). Property used for the purpose of public convenience and welfare in the matters of public travel and transportation and to facilitate public transportation and as a dock or port operation, to provide buildings which the users of the port may lease, and in which to store and process commodities transported by water, is in the aid of commerce, and is for the promotion of public transportation, public commerce, and general welfare, and may properly be classified as public property and therefore exempt from taxation.” A dissent on other grounds was filed in that case.
In Undercofler v. Hospital Authority of Forsyth County, 221 Ga. 501 (145 SE2d 487), with one Justice not participating, it was held that hospital authorities are granted the same exclusion from taxes as cities and counties. While that case dealt with the Sales and Use Tax Act the same reasoning would apply as to ad valorem taxes. The exemption to cities and counties is because their property is public property. The same exemption for a hospital authority of necessity would be because its property is public property.
While the court has waivered on occasion as to the ownership of “authority” property, the oldest decisions show it to be *539public property as do the latest decisions. We believe the true rule is well expressed in Sigman v. Brunswick Port Authority, 214 Ga. 332, supra, and accordingly the question propounded by the Court of Appeals is answered in the affirmative.

All the Justices concur except Felton and Hawes, JJ., who dissent.