Hon. Clarence   L. Darter                  Opinion    NO..C-776
County Attorney
Childress  County Courthouse               Rer    Proper distribution       of
Childress,  Texas                                 certain   assets  between
                                                  county and newly estab-
                                                  lished  hospital    district,
Dear Sir,                                         and related    questions.

              You have requested an opinion   in regard to              the
above    matter.   We quote from your request   as follows:

               "Under the provisions    of Article    &&g&q-43,
        an election    was recently  held In Chlldreaa    County,
        and the Childress     County Hospital    Dlatrict was
        created,     . . . .

               "Previously,     Childress  County had operated
        a County Hospital,       and under Section     2 of the
        act authorizing      the Hospital   District,     certain
        of the assets      of the County Hospital      are to be
        transferred     to the Hospital    District,     the wording
        of the statute      being 'There ahall,be      transferred
        to it the title      to all lands,   buildings,      improve-
        ments and equipment in anywise pertaining             to the
        hospitals    or hospital     system owned by Chlldress
        County.'

               "Certain    funds an&accounts    receivable     exist
        which have been accumulated       during the existence
        of the County Hospital,      and the question      arises
        as to whether these funds and accounts          should
        also be transferred      by Childress   County to the
        Hospital    District.    The funds and accounts       are
        as follows:

               "1 . Interest    and sinking    funds.    The County
        Hospital     was purchased  and Improved with funds
        derived    from the sale of permanent improvement
        bonds,' and approximate1y~$116,000.00         remains un-
        paid upon these bonds.       Childress     County has,

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Hon. Clarence    L.    Darter,    page   2 (C-776)



     created  an interest         and sinking    fund,   with   a
     present  balance   of       $30,61g.OO in connection
     with its permanent          improvement    bonds.

             “In 1963 the County Hospital       was air-condi-
      tioned and permanent improvement bonds were
      issued in connection       with such expenditures.
      $14,000.00     of these bonds are outstanding.         The
      sum of $14,000.00      from the operating     revenues
      of the County Hospital        has been placed    in a
      savings   account    designated   aa an Interest    and
      sinking    fund for these particular      bonds.

             “2.  Accounts   Receivable.     During its
      existence   the County Hospital     placed upon its
      books a number of aacounts.        The amount of money
      that may be realized      from these accounts     Is un-
      certain,   although  some percentage     of the accounts
      are likely    to be paid.

            "3 . County Hospital      Operating     Funds.     On
     the day the Childress        County Hospital     District
     was created,     the County Hospital       had the total
     sum of $37,017.37 In its possession,            which rep-
     resented    revenue from operations        of the hospital,
     $10,774.67 of this total sum was in a regular
     checking    account,    and the balance     thereof   ia
     represented     by time deposit    certificates      and
     savings    accounts   issued   in the name of the
     County Hospital,      and bearing    interest.”

            Subsequent  to the opinion    request,  we have learned
from your office,    and the office   of your county judge,        that
Childress   County has never levied     any taxes for the operation
of the County Hospital.     Consequently,     the question    of whether
tax money is present    in the assets    and accounts    involved,     and
what effect   the presence  of tax money would have upon diaposi-
tion of the aasets and accounts,      is not present     in this opinion.

             Article    4494q-43,   Vernon’s      Civil Statutes,   autho-
rizes   the creation     of the Childress       County Hospital   District.
Section    2 of said    Article   is quoted     in part a8 follows:

             “The District     herein authorized     to be
      created    shall   take over and there shall      be
      transferred      to it title   to all lands,    build-
      ings,   improvements     and equipment in anywise
      pertaining     to the hospitals    or hospital     system

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Hon. Clarence    L.   Darter,    page   3 (c-776)


      owned by Ch1ldresa         County and any city or town
      within such County.          . . . Such District      shall
      assume    full    responsibility     for providing   medical
      and hospital       care for its needy Inhabitants
      and shall assume the outstanding            Indebtedness
      which shall have been incurred           by any city or
      town or by Childress           County for hospital
      purposes     friar    to the creation    of said
      District.

             The above quoted Section        of     Article 44949-43
does not provide     for the disposition          of the assets   and accounts
in question.

            In regard to .the Interest     and sinking  funds in
the Instant   case,   it Is our opinion    that Eexar County Hospital
District  v. Crosby,     160 Tex. 116, 327 S.W.2d 445 (1959') would
control  the aisoosition     of thia fund.     The Court stated,
(page 448);       -

             "As between the city and the county on
      the one hand and the District           on the other,     the
      effect   of the assumption       by the latter    of pay-
      ment of the bonds should be construed            as an
      assumption    of the payment of so much of the
      bonds as cannot be retired         by the sinking      funds
      on hand.    It is our view that the custody            of
      the sinking    fund heretofore       accumulated    should
      remain In the Cltv and Countv, with the reouire-
      ment that suah funds,       inc.luai&     all interest
      which may have accumulated         from the investment
      thereof,   be applied     toward retirement      of the
      bonds first    maturing."      (Emphasla added)

             The Court In the Bexar case,           supra, held that the
hospital    district    could not compel the        City and County to
transfer    the Interest     and Sinking Fund       but the fund could be
voluntarily     transferred     as long as the      fund was used to retire
the outstanding      indebtedness     regardless     of who had custody
of the fund.       The Interest    and Sinking      Fund in the instant
case may be treated        in the same manner.

          Prior to creation       of the Childress    County          Hospital
District, the accounts     receivable     and the operating           expense
fund were property   of the county and subject        to the          control
of the Commissioners     Court.     Article  4484, Vernon's           Civil
Statutes, provides,    in part,    a8 follows:

                                -3725
Hon. Clarence     L.   Darter,    page   4 (c-776)


             11
             .   . .the board shall     certify   all bills
      and accounts,     including   salaries    and wages,
      and transmit     them to the Commissioners        Court,
      who shall provide      for their payment in the
      same manner aa other charges against           the
      COUnty   are Daid."      (Emphasis added)

            Article    4485, Vernon's      Civil   Statutes,     provides,
In part,   as follows:

              "He fiospital   Superintendent7    shall
      collect    and receive   all moneys due the
      hospital,     keep an accurate    account  of the
      same, report      the same at the monthly meeting
      of the board of managers,        and transmit    the
      same to the county collector."          (Emphasis
      added)

            In a prior opinion  this office   ruled that revenuea
from operation   of a county hospital   should be delivered    to
the county treasurer   for deposit    b such county.    Attorney
General's  Opinion No. v-1265 (19517 .

             Eased upon the statutes    providing     for the dlsposi-
tion of these funds prior       to the establishment      of the hospital
district    and the fact that the legislature        waa silent    concern-
in    these assets   and funds in the enabling       act (Article     4494q-
437, it Is our opinion      that the accounts     receivable    and the
operating    expense fund are the property      of Childross      County
and must remain with the county.        Harris County Flood Control
Dlst.    v. Mann, 135 Tex. 239, 140 S.W.2d 1096 (1940) p. 1103-1104.

             You also requested      an opinion     from this office     on
the validity     of a proposed    contract     to distribute    these funds
between the county and the district.             A copy of the contract
was attached     to your opinion     request.     In light    of the above
stated,   the only matter which may be disposed             of by mutual
agreement are the Interest        and sinking     funds to retire     the out-
standing   bonds.    The county can relinquish          custody  of these
funds to the Hospital      District,     but the funds,      and all interest
resulting    from the investment      thereof,    can only be used to re-
tire   the outstanding    bonds first     maturing regardless       of whether
it is transferred,to      the district     or remains with the county.

                           SUMMARY
                          -------
            Either Childress     County or the Childress
      County Hospital   District    may have custody   of

                                 -3726
Hon. Clarence      L.   Darter,    page    5 (c-776)


        the interest    and sinking    funds established    to
        retire   the hospital   bonds so long aa the slnk-
        lng funds,    and all interest     from the invest-
        ment thereof,    are used to retire     the outstand-
        ing bonds first     maturing.     Bexar County Hospital
        District   v. Crosby,   160 Tex. 116, 327 S.W.2d 445
        71959).
               The accounts   receivable    and the operating
        expense fund of Childress        County Hospital  are
        county property     and cannot be transferred      to the
        hospital   district   by contract.

                                             Yours   very   truly,

                                             WAGGONER CARR
                                             Attorney General




JCMcC:sck

APPROVED:
OPINION COMMITTEE

W. 0.    Shultz,   Chairman

John Reeves
John Banks
Paul Phy
Robert Flowers

APPROVEDFOR THE ATTORNEYGENERAL
BY: T. B. Wright




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