Court Opinion

ID: 9687412
Source: CourtListenerOpinion
Date Created: 2023-08-24 16:27:32.737727+00
Date Added: 2024-06-11T18:18:27.123499
License: Public Domain

DIXON, Justice
(dissenting).
I must respectfully dissent.
This action was characterized by the lawyers involved as a “test case.” With commendable frankness, it was stated in argument before us that the plaintiffs hoped they would lose. So far, their wishes have come true. On appeal to the Court of Appeal, certain questions were certified to this court. We may answer the questions, or take the whole case and decide it, under the authority of Constitution Article 7, § 25.
The principal objection and difficulty to the litigation at hand is that it lacks the qualities imparted by partisanship. The Anglo-Saxon legal system contemplates advocates on each side of the case, who seek to advance the best interest of their *269clients. Thus courts can have some confidence that they have explored the applicable jurisprudence and theories on each side.
What is presented to us for our approval is a financing scheme for a hospital service district. In November, 1970 a $1,600,000 bond issue proposed by the hospital service district was defeated, according to the testimony, by a ten to one margin. Now the hospital service district continues in its efforts to issue revenue bonds, to be financed by revenues generated from the operation of the hospital. Although the method adopted involved the use of a “public trust” (R.S. 9:2341-2347), almost any other legal entity might have served the purposes of the hospital service district. Under the public trust act, a “trust indenture” was executed. The so-called “trustor,” Pat F. Willis, recited that he paid the “trustees” $100.00, for which the “trustees” agreed to hold and manage, etc. property which might from time to time be transferred “unto this Trust or the Trustees hereof.” Hospital Service District No. 2 is made the “beneficiary.” The trustees are the same persons who are the chairman and board members of Hospital Service District No. 2.
The scheme further contemplates that Hospital Service District No. 2 should “lease” its facilities to the trust. The contem'plated lease is not before us. After the hospital district has leased itself to the trust, the trust proposes to issue bonds and pledge the hospital revenues, mortgage the “leasehold interest” and mortgage any new facilities that may be added to the hospital as a result of the bond issue.1
The record before us consists of: the petition, which contains allegations of certain infirmities suggested by the plaintiffs; the “trust indenturethe answer; a stipulation of fact; about fifty pages of “testimony.” The testimony included that of an architect, the chairman of Hospital Service District No. 2, a member of the Board of Hospital Service District No. 2, and an economist. The economist explained the financing scheme at length.
There are several relevant constitutional and statutory provisions that affect a scheme for public financing like the one before us.
Article 14, § 14(d-2) of the Constitution provides that the legislature may authorize police juries to create hospital districts, and *271“by general law and within the limitations and conditions contained in this Section 14, authorize hospital service districts so created, through such governing authority as may be provided therefor by the Legislature, to incur debt and issue negotiable bonds for the purpose . . . Further, the section provides:
“Hospital service districts so created shall be considered sub-divisions of the State for all of the purposes of this Section 14 and the provisions of this Section which pertain to the authorization, issuance and payment of bonds by sub-divisions of the State shall be applicable in all respects to the authorization, issuance and payment of the bonds by hospital service districts so created.”
Article 14, § 14(a) allows subdivisions to incur debt and issue bonds after an election, and requires the governing authority to impose and collect taxes necessary to service and retire the bonds.
We recently held in Liter v. City of Baton Rouge, 258 La. 175, 245 So.2d 398, that Article 14, § 14(a) required the consent of the electorate before the City of Baton Rouge could issue revenue bonds. We struck down a bond resolution of the city and parish of East Baton Rouge which was to have been funded by revenues from a sales tax ordinance, the validity of which we sustained.
If Hospital Service District No. 2 were proposing to issue bonds, it could not, under the very constitutional provisions which allow the creation of the district, issue the bonds without an election.
The majority holds that this financing plan is not subject to the charge that the subdivision is doing indirectly what it cannot do directly, and is not a scheme to circumvent the requirement of an election. This is so, says the majority, because the subdivision “is not incurring a debt or imposing a tax.”
The financing scheme proposed here is not even transparent. It is bold, almost to the point of being flagrant. The ultimate object of the commissioners is commendable. They want to do something for the public which will benefit the public. Nevertheless, to add on to the facilities of the hospital, after having been defeated in a bond proposal election, the commissioners merely convert themselves into “trustees,” lease the property of their charge to the “trust,” and proceed to issue revenue bonds without an election. It may be true that this is not indirection; if not, it is certainly not conformity. It is studious avoidance of the provisions of the Constitution and statutes by the mere device of changing the names of the offices held by the commissioners of Hospital Service District No. 2. Whatever the courts of Oklahoma have done in cases like this, the courts of Louisiana have not yet begun to allow the circumvention of constitutional provisions with such ease.
*273R.S. 9:2344 makes the trustees under a public trust “an agency of the state.” They are also fiduciaries for the Hospital Service District No. 2. They are not merely agents of the hospital district — they constitute the board of commissioners of the hospital district. Can these same people who are prohibited from issuing bonds without an election as commissioners of the hospital district dispense with the election because they call themselves trustees ? When they act as trustees, they act as an agency of the State of Louisiana. Whatever they call themselves, they, and only they, are the people through whom the Hospital Service District No. 2 is able to act.
Whatever the confusion created concerning the offices they hold, the board of commissioners and the trustees are the same, and are prohibited by the Constitution and the statutes from issuing bonds without an election.
Statutory provisions for hospital service districts are at R.S. 46:1051 et seq. 46:1064 specifically makes hospital districts subject to R.S. 39:501 et seq. That section prohibits any subdivision from incurring any debt or issuing any bonds without an election.
R.S. 46:1064 also provides:
“Title to such land and physical facilities shall be in the public. Such districts shall be subdivisions of the State of Louisiana within the meaning of the laws of Louisiana relating to issuing bonds . . .”
Apparently the “trustees” plan to avoid seeking the approval of the State Bond and Tax Board for the bond issue they propose. The plaintiffs allege that such bonds are subject to the approval of the State Bond and Tax Board, and the defendants deny the allegation.
R.S. 47:1803 prohibits subdivisions, public corporations or any other taxing district from borrowing money or issuing bonds or pledging revenues for their payment without the consent and approval of the State Bond and Tax Board. Any bond issued without its consent is void.
Among the infirmities afflicting this financing scheme is the arrangement euphemistically called a “lease” of the facilities from the hospital district to the trust. The plan is for the trust to hypothecate the “leasehold interest” (along with newly constructed facilities) to secure the bonds. This “lease” does not appear in the record, but its nature is suspect. We know that it is not the kind of arrangement contemplated by the statutes governing hospital districts (R.S. 46:1055(9)). The Marianite Sisters operated the hospital under a lease arrangement for several years. The new plan is for the trust to continue the lease with the Sisters for the operation of the hospital.
*275If the “lease” from the hospital service district to the trust were a legitimate lease, the consideration would necessarily be based upon the prospective revenues. One of the board members testified that the revenues from the hospital were such that “we can’t ... do anything else but live from day to day.” We know, however, that the trust plans to use the revenues to service the bonds and retire them. The corpus of the trust is only $100.00, and, as far as the record discloses, will remain at that figure until the hospital service district “leases” itself to the trust.- When it acquires the “lease,” the trust proposes- to issue bonds secured by the “leasehold estate” and the new construction to be built with borrowed money and matching federal funds.
What we can learn and infer from the record about the “lease” indicates that it is more nearly a loan for use (C.C. 2893 et seq.) than a lease. A lease is “a contract by which one of the parties binds himself to grant to the other the enjoyment of a thing during a certain time, for a certain stipulated price which the other binds, himself to pay him.” C.C. 2674. The real reason for the transfer is to enable the trust to issue bonds. The hospital service district has the power to issue bonds, but only within the limitations established by the Constitution and statutes governing “subdivisions” and taxing districts.
Article 4, § 12 of the Constitution prohibits the loan, pledge or grant of the property of any political corporation of the State to or for any person or corporation, public or private.
The .admitted purpose of the creation of this “public trust” is to obtain additional financing for the expansion of the hospital facilities. In,other words, the object of the trust is to issue bonds and avoid the constitional requirement of an election and the statutory requirement of submission of the proposition to the State Bond and Tax Board. Only the most extreme “interpretation” of the powers of the hospital commissioners could prevent such an object from being “ultra vires.”
Since this financing plan proposed by the commissioners of the Hospital Service District No. 2 is so clearly violative of the provisions of our Constitution and statutes, the judgment of the district court should be reversed, and judgment should be rendered in favor of the plaintiffs.

. The testimony of the witness who explained the scheme was:
“A. The bonds will be secured by the revenues generated by the operation of the hospital, the existing facilities plus the facilities to be added under the expansion project, and, in addition, the bond holders will be given the added pledge of a mortgage on the leasehold on the existing facilities for the life of the outstanding bonds, and they will be given a mortgage on the new facilities that will be added under the financial plan involving the use of the Public Trust for purposes of issuing the proposed bonds.”