Court Opinion

ID: 4134118
Source: CourtListenerOpinion
Date Created: 2017-02-18 01:46:17.103175+00
Date Added: 2024-06-11T14:07:14.802012
License: Public Domain

January 7, 1970

Honorable Gene Russell          Opinion No. M-549
County Attorney
Burnet County                   Re:     Filling vacancies on the
Burnet, Texas                           board of directors of a
                                        county hospital authority
                                        created pursuant to the
                                        provisions of Article 4494r,
Dear Mr.   Russell:                     V.C.S.

          Your request for an opinion on the above subject matter
poses the following question:

          "Does the Commissioners' Court have the
     right to appoint minority members so long as
     the Authority exists, and does it have such a
     right as to majority succession at such time
     as the indebtedness is liquidated, or is the
     Court's function merely to impart existence
     to some or all of the directors where the
     Trustee and the Board have not acted?"

          The composition of the board of directors of a county
hospital authority created pursuant to the provisions of Article
4494r, Vernon's Civil Statutes, and the method of filling vacancies
on the board of directors is provided in Section 4 of Article
4494r, which reads as follows:

           "Sec. 4.   (a) The Authority .shall be governed
      by a Board of Directors  consisting of not less
      than seven (7) nor more than eleven (11) members
      to be determined at the time of creating the
      Authority.  Except as hereinafter in this Section
      provided, the first Directors shall be appointed
      by the Governing Body of the County, and they
      shall serve until their successors are appointed
      as hereinafter provided. When the Authority is-
      sues its revenue bonds the resolution authorizing
      the issuance of the bonds or the Trust Indenture
      securing them may prescribe the method of selecting

                               -2617-
Hon. Gene Russell, page 2   (M-549)

    and the term of office of a majority of the members
    of the Board. The remaining members of the Board
    shall be appointed by the Governing Body of the
    County. The Trust Indenture may also provide
    that, in event of default as defined in the Trust
    Indenture, the Trustee may appoint all of the
    Directors, in which event the terms of the
    Directors then in office shall automatically
    terminate.   Unless and until provision is made
    in the Bond Resolution or Indenture in connection
    with the issuance of bonds for the appointment by
    other means of part of the Directors, all of the
    Directors shall be appointed by the Governing
    Body of the County for terms not to exceed three
     (3) years, but the terms of Directors appointed
    prior to the issuance of the first issue of
    revenue bonds shall be subject to the exercise
    of the provision herein made for appointment of
    a majority of the members of the Board in con-
    nection with the issuance of the bonds. NO of-
    ficer or employee of any such County shall be
    eligible for appointment as a Director.   Directors
    shall not receive compensation for services but
    shall be entitled to reimbursement of their ex-
    penses incurred in performing such service.

          "(b) In the event the Authority purchases
     from a nonprofit corporation a hospital then in
     existence or in process of consturction, the
     first members of the Board of Directors and
     their successors shall be determined as provided
     in the contract of purchase."

          Your request for an opinion.and the accompanying docu-
ments set forth the following facts:

          On October 26, 1965, the Commissioners Courts of Burnet
County created the Burnet County Hospital Authority pursuant to
the provisions of Article 4494r, Vernon's Civil Statutes, and
provided that the Authority shall be governed by a Board of
Directors consisting of seven members.   The Resolution passed
by the Commissioners Court appointed seven members to the Board
of Directors of the Authority and provided that the Directors
would serve for a term of three years unless other provisions
should be made.in a Bond Resolution.   Five of the members of the
Board of Directors of the Authority were members of the Board of
Directors of Shepperd Memorial Hospital.   On April 13, 1967,

                               -2618-
Hon. Gene Russell, page 3   (M-549)

the Board of Directors of Shepperd Memorial Hospital passed a
Resolution authorizing the sale of Shepperd Memorial Hospital
to the Authority.  On December 11, 1967, the Commissioners Court
of Burnet County issued an Order amending its Order of October
26, 1965, changing the term of office of the members of the
Board of Directors of the Authority to a term of two years, from
October 26, 1967, and on the same date appointed the same members
for a term of,two years, from December 11, 1967. On October 1,
1967, the Authority authorized the issuance of bonds and executed
a Trust Indenture securing said bonds. Subsequently on December
28, 1967, the Authority passed a Resolution stating that a majority
of the Board of Directors of the Authority shall always be selected
by a majority of the Directors of such Authority.

          In view of the foregoing facts it is our opinion that the
Board of Directors of the Burnet County Hospital Authority was
organized under Subdivision (a) of Section 4 of Article 4494r,
Vernon's Civil Statutes, rather than Subdivision (b), and it
issued bond and executed a Trust Indenture as provided in Sub-
division (a).

          Section 12.06 of the Trust Indenture provided:

           "In accordance with the Act, it is hereby pro-
     vided that four members (being a majority) of the
     Board of Directors of the Authority shall be
     selected as herein provided.   Such four members
     shall be appointed for terms of two years each by
     a majority vote of the Board of Directors, pro-
     vided that the initial terms shall be for the
     periods hereinafter specified.   At the first
     meeting of the Board of Directors following the
     initial authentication and delivery of the Series
     1967 Bonds, said Board of Directors shall by lot
     determine which of their number shall be counted
     among said four members.   Also, at said meeting
     following the selection of said four members, the
     said four members shall by lot determine among
     themselves which of their number will be in Class
     I and which of their number shall be in Class II.
     Each Class shall be composed of two.members.
     Class I shall have terms of office expiring
     October 26, 1968 and Class II shall have terms
     of office expiring October 26, 1969. Thereafter
     all of such four members shall have terms of of-
     fice of two years duration."

                                -26lg-
                                                                      .

Hon. Gene Russell, page 4    (M-549)

           Under this factual situation it is our opinion that Sub-
division (b) of Article 4494r is not applicable to the filling
of vacancies on the Board of Directors of the Burnet County
Hospital Authority.   You are accordingly advised that vacancies
are to be filled in accordance with the.proaisions of Subdivision
~(a) of Article 4494r and Section 12.06 of the Trust Indenture
signed on October 1, 1967, and filed in the County Clerk's of-
fice on the 18th day of November, 1968. Therefore, the majority
of the members of the Board will be appointed by the Board of
Directors and the remaining members of the Board shall be ap-
pointed by the Commissioners Court of Burnet County.

                            SUMMARY

          Under the facts submitted, vacancies oc-
     curring on the Board of Directors of the Burnet
     County Hospital Authority shall be filled in the
     manner prescribed in Subdivision (a) of Section 4
     of Article 4494r, Vernon's Civil Statutes, and the
     Trust Indenture executed and filed pursuant there-
     to, and a~ma-jority of the members will be appointed
     by the Board of Directors and the remaining members
     are to be appointed by the Commissioners Court of
     Burnet County.

Prepared by John Reeves
Assistant Attorney General

APPROVED:
OPINION COMMITTEE

Kerns Taylor, Chairman
Alfred Walker, Co-Chairman
Wayne Rodgers
Sam Kelley
Arthur Sandlin

MEADE F. GRIFFIN
Staff Legal Assistant

 NOLA WHITE
 First Assistant

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