Court Opinion

ID: 5637704
Source: CourtListenerOpinion
Date Created: 2022-01-11 05:58:30.190237+00
Date Added: 2024-06-11T08:38:03.964909
License: Public Domain

Sognier, Judge,
dissenting.
I disagree with the majority’s opinion. I agree with Judge McMurray’s dissent but would add thereto. The Ashburn-Turner County Recreation Authority (Authority) was lawfully created by a March 2,1978 ordinance of the City of Ashburn, which adopted Ga. L. 1946 pp. 152 et seq. (Code Ann. Ch. 69.6) and appointed the various Authority members. A similar resolution creating the joint Authority was adopted by Turner County on March 6,1978. During 1978 while this Authority was in existence, appellant supplied the Authority with recreational supplies and other items on open account. On March 2, 1979 the city and county repealed the ordinance creating the Authority, and in the repeal thereof specifically disclaimed all responsibility for any debts of the Authority.
When the Authority was abolished it no longer existed as a legal entity and could not be sued by the plaintiff creditor. See Rabun County Recreation Bd. v. Jarrard, 150 Ga. App. 56,57 (256 SE2d 661) (1979) where this court said: “As the ‘Rabun County Board of Recreation’ no longer exists, it cannot sue as a legal entity. [Cit.]” That case also rules that the creating body can abolish its own creation.
I view the disclaimers of liability for the debts in the repealing ordinance as mere surplusage. If the city had direct liability to the creditors it could not impair its contracts by disclaiming recitals in an ordinance. Winter v. Jones, 10 Ga. 190, 191 (4, 5) (1851).
The Authority had the power “to maintain and equip parks, playgrounds, recreation centers and the buildings thereon and to develop, maintain, and operate all types of recreation facilities, or to operate and conduct facilities on properties controlled by other authorites, and . . . employ play leaders, playground or community center directors ...” Code Ann. § 69-603. Under Code Ann. § 69-604 *219the Authority “shall possess all the powers and be subject to all the responsibilities of local authorities under this law [§§ 69-601 through 69-612.2].” Under § 69-602 such authority can “acquire or lease lands or buildings” for such purpose. Under § 69-606 such Authority “may accept any grant or devise of real estate or any gift or bequest...” The foregoing powers are all indicators that such an Authority is a legal entity having the right to sue or be sued in its own name. It would be an anomaly of law to allow these powers to be exercised without labeling the recipient thereof a legal entity. Cravey v. Southeastern Underwriters, 214 Ga. 450,455 (105 SE2d 497) (1958). However, this legal entity has now been abolished by act of the governing body (the municipality) and cannot sue or be sued. Rabun County Recreation Bd. v. Jarrard, supra.
The Authority is not the agent of the city for the authorizing of debts. Since it held its own property prior to its dissolution, was authorized to receive appropriations from the city to meet its own budget and had exclusive control of its monies under Code Ann. § 69-611, it contracted for goods on its own behalf. Thus, the Authority did not act as an agent for the city and had no authority to bind the city for its debts. This is the basis of my disagreement with the majority opinion, which would permit legal entities such as this Authority to bind the governing body for its debts. For instance, if a state authority contracted with others beyond its current appropriations would this bind the General Assembly to make a future appropriation? No.
Such Authorities are sometimes referred to as quasi-public corporations and often are created for the purpose of incurring independent debt for a new project to be supported solely from the project’s revenue. See e.g., International Longshoreman’s Assn. v. Ga. Ports Auth., 217 Ga. 712 (1(a)) (124 SE2d 733)(1962); Richmond County &c. Assn. v. Augusta-Richmond County Coliseum Auth., 233 Ga. 94 (210 SE2d 172) (1974); City of Jonesboro v. Clayton County Water Auth., 136 Ga. App. 768, 773 (3) (222 SE2d 76) (1975); Thompson v. Municipal Elec. Auth., 238 Ga. 19 (231 SE2d 720) (1976); see generally, 1 McQuillin, Municipal Corporations § 2.29a; 3 EGL 8, 15, Authority Financing, §§ 4, 7. It is my opinion that this Authority, based on the above rationale, is a legal entity — a quasi-public corporation — responsible for its own debts without authority under the code to bind the governing body for its debts. Such Authorities, in carrying out their duties, do not act for the governing authority but instead of them.
However, the plaintiff is not without a remedy. Although our code on corporations fails to provide a dissolution procedure for Authorities of this nature, Georgia has historically applied a “trust *220fund doctrine” to both profit and nonprofit corporations whenever the rights of creditors have intervened. Hightower v. Thornton, 8 Ga. 486, 492 (4) (1850). See also, Hale v. Eberhardt, 54 Ga. App. 395 (1) (188 SE 53) (1936). See generally, Nadler, Ga. Corp. Law, §§ 546, 547 (1950 Ed.) and cases cited. By analogy here the “stockholders” are the governing authorities who may be pursued by the creditors of the dissolved Authority as implied trustees of the remaining assets of the Authority. However, such creditors’ recovery is limited to the extent of the remaining assets only. To hold otherwise would permit the Authority to create debts for the municipality. I disagree with the majority’s view that suit may be pursued against the City of Ashburn in a direct capacity as distinguished from its capacity as implied trustee. Since the summary judgment granted below dismisses the city as a defendant, I would direct the trial court to vacate its judgment so as to procedurally permit amendment of the complaint to allow appellant to proceed against the municipality as implied trustee of the remaining assets of the dissolved Authority. Code Ann. § 81A-115 (c); Downs v. Jones, 140 Ga. App. 752 (2) (231 SE2d 816) (1976), reaffd. Downs v. Jones, 142 Ga. App. 316 (1) (235 SE2d 760) (1977). After such amendment, the trial court should then grant the city summary judgment, dismissing it as a defendant in its individual capacity, but continuing it in the suit solely in its capacity as implied trustee. The dissolved Authority, under the authority of Rabun County Recreation Bd. v. Jarrará, supra, should be dismissed as a defendant.
I am authorized to state that Chief Judge Deen joins in this dissent.