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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