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24908 - Medical Society of SC v. Medical University of SC

Davis Adv. Sh. No. 8
S.E. 2d

THE STATE OF SOUTH CAROLINA

In The Supreme Court



Medical Society of South

Carolina, Respondent

v.

Medical University of

South Carolina, Appellant.



Appeal From Charleston County

John C. Hayes, III, Judge



Opinion No. 24908

Heard January 6, 1999 - Filed February 22, 1999



REVERSED



Thomas A. Hutcheson, of Sinkler & Boyd, P.A., of

Charleston; and H. Simmons Tate, Jr., of Sinkler &

Boyd, P.A., of Columbia, for appellant.





Carl F. Muller and Frank S. Holleman, III, both of

Wyche, Burgess, Freeman & Parham, P.A., of

Greenville; and John C. Moylan, III, of Wyche,

Burgess, Freeman & Parham, P.A., of Columbia, for

respondent.



W. Hogan Brown and Paula G. Benson, Attorneys

for the Senate; Charles F. Reid, Counsel to the

Speaker, South Carolina House of Representatives;

and Stephen T. Draffin, Code Commissioner and

Director, Legislative Council of the General

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MEDICAL SOCIETY OF SC v. MEDICAL UNIVERSITY F SC





Assembly, for amicus curiae President Pro Tempore

of the Senate John W. Drummond, Speaker of the

House of Representatives David H. Wilkins, and

Legislative Council of the General Assembly.



MOORE, A.J.: This appeal is from an order enjoining a

proposed transaction between appellant (MUSC) and Columbia/HCA

Healthcare Corporation. We reverse.





FACTS



On March 13, 1996, the MUSC Board of Trustees approved a

proposed transaction with Columbia/HCA which included a master

agreement, an academic affiliation agreement, a lease agreement, a license

agreement, a shared services agreement, a guaranty agreement, and an

option/affiliation dissolution agreement. Pursuant to these agreements,

MUSC would lease the MUSC Medical Center in Charleston to

Columbia/HCA for a term of twenty years for a base yearly rental of $8

million. MUSC would also sell Columbia/HCA certain assets such as

equipment, inventory, and accounts receivable for a purchase price of

approximately $42.7 million. Columbia/HCA would operate and manage

the Medical Center and MUSC would be paid for providing hospital

services. In addition, the master agreement provides that before closing,

an un-named affiliate or affiliates of Columbia/HCA would acquire title to

the Trident Regional Medical Center, the Summerville Medical Center, and

the Colleton Regional Medical Center which, together with the Medical

Center, would comprise the Charleston System Facilities.





Shortly after the MUSC Board of Trustees approved these

agreements, on April 4, 1996, the Attorney General issued an opinion in

response to an inquiry by two legislators regarding the proposed

transaction. The Attorney General concluded MUSC did not have the

statutory authority to consummate the transaction with Columbia/HCA

and the transaction would require authorization by the General Assembly.





Meanwhile, Bill H.3915, an unrelated bill regarding the composition

and functions of the State Commission on Higher Education, was pending

in the legislature. It had been referred to the Senate Education and

Public Works Committee. Shortly after issuance of the Attorney General's

opinion, on April 10, 1996, H.3915 was recalled from committee and re-

submitted the same day, retaining its place on the calendar. On May 2, it

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MEDICAL SOCIETY OF SC v. MEDICAL UNIVERSITY OF SC





received a favorable committee report "with amendment" and was read a

second time in the Senate "with notice of general amendments."





H.3915 continued its way through the Senate and House. When it

was finally reported out of the Conference Committee on May 23, it had

the same original title regarding the State Commission on Higher

Education but the body of the bill had been completely replaced with

language authorizing MUSC to lease to a private operator with specific

terms and conditions referring to Columbia/HCA. H.3915 passed both

houses that day. Before H.3915 was ratified on May 30, its title was

amended to conform to its subject indicating authorization of an MUSC

lease agreement. The Governor signed the bill into law on June 4 and on

June 5 it was enrolled in the Secretary of State's office. This enrolled bill

became 1996 S.C. Act No. 390.





On July 26, respondent filed this action seeking to enjoin MUSC's

transaction with Columbia/HCA. On summary judgment, the trial judge

enjoined the transaction on the grounds 1) MUSC has no authority to

dispose of the property in question, and 2) the authorization purportedly

granted by Act No. 390 is invalid because the Act violates article III, §§ 17

and 34, of our State Constitution.





ISSUES



1) Does MUSC have pre-existing statutory authority to

dispose of buildings or personal property?



2) Is Act No. 390 unconstitutional because its title was

inadequate before it was ratified and enrolled?



3) Is Act No. 390 unconstitutional special legislation?





DISCUSSION



1) Pre-existing statutory authority



An agency created by statute has only the authority granted it by

the legislature. Nucor Steel, A Division of Nucor Corp. v. South Carolina

Pub. Serv. Common, 310 S.C. 539, 426 S.E.2d 319 (1992). The trial judge

found that, absent Act No. 390, the legislature has granted MUSC no

authority to dispose of buildings or personal property. We agree.

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MEDICAL SOCIETY OF SC v MEDICAL UNIVERSITY OF SC





First, Title 59, Chapter 123, which enumerates the specific powers of

the MUSC Board of Trustees, does not include the power to dispose of real

or personal property.1 Under S.C. Code Ann. § 59-101-180 (1990), which

applies generally to institutions of higher learning, the MUSC Board of

Trustees has "the power to sell and dispose of any of its real estate other

than buildings." Since this statute was enacted in ' 1968, MUSC's

continuing lack of authority to dispose of buildings is demonstrated by the

fact it has received legislative approval to dispose of buildings in specific

instances. See, e.g., 1983 S.C. Act No. 151, Part I § 25D (granting MUSC

Board of Trustees authority to sell residence designated for occupancy by

President).





MUSC contends, however, it has the power to dispose of buildings

and personal property under § 59-123-30 which provides:



The charter of The Medical University of South Carolina is

hereby confirmed and extended with all the rights and

privileges granted heretofore by the original act of

incorporation or by any subsequent extension of its charter.



Although MUSC's original 1832 charter included no right to dispose of

property, MUSC argues it had acquired the power to transfer real and

personal property by the time it became a State entity in 19132 and this

power is continued under § 59-123-30. MUSC points to the renewal of its

charter on January 25, 1900, issued under the law allowing for

incorporation at the time, 1896 S.C. Act No. 45. MUSC contends its

certificate of renewal issued in 1900 under Act No. 45 bestowed all the

powers granted corporations chartered under that Act which specifically

includes the power to transfer real and personal property. 1896 Act No.

45, § 15.





First, this argument was not raised to or ruled upon by the trial


1 See S.C. Code Ann. §§ 59-123-60 (power to make bylaws and

regulations and confer degrees in medicine and other health related

professions); -80 (power to grant rights-of-way and easements for widening

streets); -90 (power of eminent domain); -95 (power to borrow for purchase of

diagnostic and therapeutical equipment); -210 (power to acquire and renovate

student and faculty housing); and -220 and -310 (power to issue revenue

bonds).



2 1913 S.C. Act No. 126.

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MEDICAL SOCIETY OF SC v. MEDICAL UNIVERSITY F SC





judge and is not properly before this Court. Wilder Com. v. Wilke, 330

S.C. 71, 497 S.E.2d 731 (1998).







In any event, this argument fails on its merits. As evidenced by the

petition filed in 1900 with the Secretary of State requesting charter

renewal for MUSC (then "Medical College of South Carolina"), the existing

MUSC charter had expired on December 24, 1899. Under Act No. 45, if

the charter of an existing corporation had expired and the Secretary of

State issued a certificate of renewal, as opposed to issuing a charter, the

following provision applied:



Upon the issuing of such certificate of renewal the charter of

such corporation shall thereupon be renewed, and the

corporation shall be entitled to and vested with all the

franchises, powers, rights, privileges, immunities and property

enjoyed, possessed and owned by it at the expiration of its

charter. . . .



(emphasis added). 1898 S.C. Act No. 333, § 8; 1898 S.C. Act No. 479.

Under Act No. 45, a certificate of renewal did not bestow the powers

granted a corporation chartered under the Act.3 Accordingly, MUSC

gained no new powers under the certificate of renewal issued in 1900.





We hold the trial judge correctly ruled MUSC has no statutory

authority without Act No. 390 to consummate its transaction with

Columbia/HCA.





2) Article III, § 17



Absent existing statutory authority for its transaction with

Columbia/HCA, MUSC must rely on the authority bestowed by Act No.

390. The trial judge found Act No. 390 unconstitutional under article III,

§ 17, which provides: "Every Act or resolution having the force of law

shall relate to but one subject, and that shall be expressed in the title."


3 The distinction between a certificate of renewal and a charter is

evident from the procedural requirements for each. A certificate of renewal

could be obtained for a corporation with an expired charter simply by filing

a petition signed by at least three officers, stockholders, or members. 1898

S.C. Act No. 333, § 8. In contrast, a corporation with a valid charter could

"surrender its charter and secure a new charter under this Act" upon a

majority vote of its stockholders. 1896 S.C. Act No. 45, § 10.

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MEDICAL SOCIETY OF SC v. MEDICAL UNIVERSITY OF SC





MUSC relies on the "enrolled bill rule" to argue that Act No. 390 is

not unconstitutional under article III, § 17, because, irrespective of the

title of the bill during the legislative process, the title of the bill as

enrolled was sufficient.4





The enrolled bill rule provides that an Act ratified by the presiding

officers of the General Assembly, approved by the Governor, and enrolled

in the Office of the Secretary of State is conclusively presumed to have

been properly passed. Such an Act is not subject to impeachment by

evidence outside the Act as enrolled to show it was not passed in


4 At the time H.3915 was passed by both houses, its title indicated the following:



TO AMEND SECTION 59-103-10 CODE OF LAWS OF SOUTH

CAROLINA 1976, RELATING TO THE STATE COMMISSION

ON HIGHER EDUCATION . . .; TO ADD SECTION 59-103-45

SO AS TO PROVIDE THAT THE COMMISSION ON HIGHER

EDUCATION SHALL ESTABLISH PROCEDURES . . .; TO

AMEND SECTION 59-103-60, RELATING TO

RECOMMENDATIONS OF THE COMMISSION ON HIGHER

EDUCATION TO THE BUDGET AND CONTROL BOARD AND

THE GENERAL ASSEMBLY . . .; TO AMEND SECTION 59-103-

90 RELATING TO THE PROFESSIONAL STAFF OF THE

COMMISSION . . .; AND TO CREATE A JOINT LEGISLATIVE

COMMITTEE TO STUDY THE GOVERNANCE, OPERATION,

AND STRUCTURE OF HIGHER EDUCATION IN SOUTH

CAROLINA.



By the time H.3915 was ratified, however, the title had been amended to

reflect that it was:



AMENDING CHAPTER 7, TITLE 44, CODE OF LAWS OF

SOUTH CAROLINA 1976, RELATING TO HOSPITALS BY

ADDING ARTICLE 25 SO AS TO AUTHORIZE THE BOARD OF

TRUSTEES OF THE MEDICAL UNIVERSITY OF SOUTH

CAROLINA (MUSC) TO ENTER INTO LEASE, SALE, AND

OTHER AGREEMENTS TO TRANSFER THE MANAGEMENT

AND OPERATIONS OF THE MEDICAL UNIVERSITY

HOSPITAL INCLUDING ITS LAND, FACILITIES, AND ASSETS

TO ONE OR MORE PRIVATE OPERATORS UNDER CERTAIN

TERMS AND CONDITIONS. . . .

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MEDICAL SOCIETY OF SC v. MEDICAL UNIVERSITY OF SC





compliance with law. Beaufort County v. Jasper County, 220 S.C. 469, 68

S.E.2d 421 (1951); State v. Moorer 152 S.C. 455, 150 S.E. 269 (1929).

The rationale for this rule is that respect for a co-equal and independent

department of government and the need for finality in enacted laws

outweigh the evils of applying the rule. State v. Town Council of Chester,

39 S.C. 307, 17 S.E. 752 (1893).





In Wingfield v. South Carolina Tax Comm'n 147 S.C. 116, 144 S.E.

846 (1928), a case heard in this Court's original jurisdiction, petitioners

argued the Act before the Court violated article III, §17. Petitioners

challenged not the title of the Act as enrolled, but its title during the

legislative process. We applied the enrolled bill rule and held the Act as

enrolled in the Secretary of State's Office was dispositive. 144 S.E. at 850.

We refused to consider the legislative journals5 or any other document

including the original bill to impeach the enrolled Act which had a proper

title. Id.





Wingfield is dispositive in this case. Under Wingfield, the trial

judge should not have considered the constitutional sufficiency of the title

of H.3915 before it was ratified and enrolled in the Secretary of State's

Office. Since the title of Act No. 390 as enrolled is sufficient, the Act does

not violate article 111, § 17.





3) Article III, § 34



The trial judge held Act No. 390 was special legislation in violation

of article III, § 34(IX), which provides in pertinent part that "where a

general law can be made applicable, no special law shall be enacted."





We will not declare a statute unconstitutional as a special law

unless its repugnance to the Constitution is clear beyond a reasonable

doubt. Horry County v. Horry County Higher Educ. Comm'n, 306 S.C.

416, 412 S.E.2d 421 (1991). The purpose of the prohibition on special

legislation is to make uniform where possible the statutory laws of this


5 In Wingfield, we noted that the Constitution does not specifically

require legislative journals to show titles of bills and ruled that only matters

constitutionally required to be entered in legislative journals can be used to

impeach an enrolled bill. 144 S.E. at 850. See article III, § 22 (yeas and

nays of members of either house be entered on journal at desire of specified

number from each house respectively); article XVI, § 1 (constitutional

amendment with yeas and nays must be entered).

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MEDICAL SOCIETY OF SC v. MEDICAL UNIVERSITY OF SC





State in order to avoid duplicative or conflicting laws on the same subject.

Duke Power, supra. We have repeatedly acknowledged, however, that

there are cases where a special law will best meet the exigencies of a

particular situation.





A special law is not unconstitutional where there is "a substantial

distinction having reference to the subject matter of the proposed

legislation, between the objects or places embraced in such legislation and

the objects and places excluded." Horry County, 306 S.C. at 419, 412

S.E.2d at 423; Duke Power Co. v. South Carolina Pub. Serv. Comm'n, 284

S.C. 81, 90, 326 S.E.2d 395, 400-401 (1985); Shillito v. City of

Spartanburg, 214 S.C. 11, 20, 51 S.E.2d 95, 98 (1948). The General

Assembly must have a logical basis and sound reason for resorting to

special legislation. Horry County, supra; Gillespie v. Pickens County, 197

S.C. 217, 14 S.E.2d 900 (1941). This Court will not overrule the

legislature's judgment that a special law is necessary unless there has

been a clear and palpable abuse of legislative discretion. Sirrine v. State,

132 S.C. 241, 128 S.E. 172 (1925), overruled on other grounds, McCall v.

Batson, 285 S.C. 243, 329 S.E.2d 741 (1985).





In South Carolina Pub. Serv. Auth. v. Citizens and Southern Nat'l

Bank, 300 S.C. 142, 386 S.E.2d 775 (1989), we upheld special legislation

relating only to the Santee Cooper electric utility allowing it to change its

fiscal year to the calendar year. We noted that Santee Cooper was unique

since it was the only State agency involved in the production, sale, and

distribution of electricity, and that the Act in question was enacted to

address a special condition facing this unique agency. 300 S.C. at 161,

386 S.E.2d at 786. Accordingly, we concluded the Act before us was not

prohibited special legislation.





In another special legislation case, Duke Power, supra, we upheld an

Act allowing voters to approve a referendum granting the Greenwood

County Power Commission approval to sell its electric utility to Duke.

Duke challenged the Act on the ground of special legislation. We noted

the Greenwood County Power Commission had no power to sell its facility

without legislative authorization, and the proposed transaction was unique.

Accordingly, the challenged Act was not prohibited special legislation. 284

S.C. at 92-93, 326 S.E.2d at 402.





In this case, MUSC is a unique State agency because it is the only

one that owns and operates an acute-care teaching hospital. Further, the

proposed transaction regarding hospital services is one unique to MUSC.

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MEDICAL SOCIETY OF SC v. MEDICAL UNIVERSITY OF SC





Moreover, the fact that MUSC has no authority to enter the proposed

transaction without legislative approval indicates such legislation is

necessary. Since the legislature had a "logical reason and sound basis" for

enacting a special law authorizing the proposed transaction, Act No. 390 is

not unconstitutional special legislation.





CONCLUSION



While we agree with the trial judge's ruling that MUSC has no

statutory authority to dispose of buildings or personal property absent the

authorization of Act No. 390, we find Act No. 390 does not violate article

III, §§ 17 and 34(IX). Since Act No. 390 is valid, the injunction issued in

this case is



REVERSED.



FINNEY, C.J., TOAL, WALLER and BURNETT, JJ., concur.

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