Court Opinion

ID: 5047031
Source: CourtListenerOpinion
Date Created: 2021-10-01 07:27:24.118999+00
Date Added: 2024-06-11T08:18:49.823149
License: Public Domain

HOWERTON, Judge,
concurring.
I concur in the result reached by the majority, but I must differ in the reasoning by which such result was reached.
This action is an appeal from a summary judgment of the Franklin Circuit Court, wherein the Court concluded that there was no issue of fact in controversy, and that as a matter of law, the City of Frankfort, pursuant to a properly enacted ordinance, conveyed property to the Appellee with a covenant of special warranty of title and that the deed recited adequate consideration and was binding upon the parties. I affirm this decision of the Franklin Circuit Court.
I am at an absolute loss to understand where the majority found the evidence to conclude that “the City would occupy a quasi-trusteeship of the naked legal title for the use and benefit of the Board (Electric and Water Plant Board of the City of Frankfort) and not for the use and benefit of its own taxpayers.” I must also conclude that KRS 96.175(7) has no application to this case. The subsection reads as follows: “The title to any property, real or personal, which the board may acquire shall vest in the municipality for the use and benefit of the electric and water system.” The property in question was never acquired by the “Board”; it was acquired by the City of Frankfort, and if it was acquired for the use and benefit of anyone, it was for the use and benefit of the Appellee.
The issues raised by the parties to this appeal are as follows: The Appellants argue that a legislative body of a Kentucky municipality may not make a gift of city-owned real estate to a private corporation, and that a deed by which such gift was made may be cancelled. The Appellee contends that the City has no standing to maintain this action, and further, that the City is estopped to maintain this action.
I agree at the outset that the City may not give real property to a private corporation, but I conclude that the facts surrounding the transfer of this property do not constitute a gift. I am also disposed to agree with the Appellee that the City has no standing to maintain this action and that, under the circumstances of this case, the City would be estopped by its deed. *181But, there is still the taxpayer to contend with. As stated in McQuillin Municipal Corporation, 3rd Edition, Yol. 10 § 28.49:
If a municipal corporation purports to, transfer its property without power to do so, it may, in some instances, avoid or set aside the invalid transfer . . . and the restraint, recision, or cancellation of such a transfer may be compelled in a suit by a taxpayer, or by other appropriate court process, provided such avoidance is not barred by the doctrine of estoppel to the extent that it is applicable against the municipal corporation. .
The Kentucky legislature has enacted three general statutes granting municipalities the power to dispose of real estate. They are: KRS 65.010, KRS 82.060(1), and KRS 84.010(1). In essence, the statutes gave the City the authority to convey its surplus property for such purposes and considerations as the City legislative body deemed proper for the public welfare.
In the case at bar, the City legislative body did declare the hospital annex to be surplus to its needs and deeded the property to the former owner for the sum of One Dollar with conditions and a reversionary clause. The City originally acquired the property from the Appellee for the purpose of obtaining a Hill-Burton Grant to construct the new wing on the hospital which was owned and operated by the Appellee. The City acquired the property for a nominal sum and essentially held title for the use and benefit of the Appellee. The property was, in fact, leased to the Appellee until June 30, 2014. The new construction was attached to and became inseparable from the original building. The new conveyance was based upon the condition that the property be used for a specific public purpose, to wit: housing for the low and moderate income families of Frankfort. The deed contained a possibility of reverter, conditioned upon the Appellee ceasing to use the property for the stated purpose. Furthermore, the conveyance contained a substantial contingent liability by requiring the Appellee to hold the City harmless in the event the City was required to repay any of the Hill-Burton Grant funds due to the discontinuance of the hospital for which the grant was made.
Although the City held legal title to a valuable piece of real estate, it had almost no investment in it. The municipal utility bought the bonds for the City’s matching funds, and the utility has written-off the loss.