             IN THE SUPREME COURT OF MISSISSIPPI

                      NO. 2007-CA-00693-SCT

GREENE COUNTY, MISSISSIPPI, JOHN
MARSHALL EUBANKS, TOMMY ROBERTS AND
MARION PIERCE

v.

CORPORATE MANAGEMENT, INC.

DATE OF JUDGMENT:             03/16/2007
TRIAL JUDGE:                  HON. T. KENNETH GRIFFIS, JR.
COURT FROM WHICH APPEALED:    GREENE COUNTY CHANCERY COURT
ATTORNEYS FOR APPELLANT:      JERRY L. MILLS
                              EDWIN LLOYD PITTMAN
ATTORNEY FOR APPELLEE:        DARREN E. GRAY
NATURE OF THE CASE:           CIVIL - CONTRACT
DISPOSITION:                  REVERSED AND RENDERED - 05/28/2009
MOTION FOR REHEARING FILED:
MANDATE ISSUED:
                     CONSOLIDATED WITH

                      NO. 2008-CA-00122-SCT

CORPORATE MANAGEMENT, INC.

v.

GREENE COUNTY, MISSISSIPPI

DATE OF JUDGMENT:             12/13/2007
TRIAL JUDGE:                  T. KENNETH GRIFFIS, JR.
COURT FROM WHICH APPEALED:    GREENE COUNTY CHANCERY COURT
ATTORNEY FOR APPELLANT:       JOHN R. REEVES
ATTORNEYS FOR APPELLEE:       CHRISTOPHER GARRETT HENDERSON
                              HEBER S. SIMMONS, III
NATURE OF THE CASE:           CIVIL - CONTRACT
DISPOSITION:                  REVERSED AND RENDERED - 05/28/2009
MOTION FOR REHEARING FILED:
MANDATE ISSUED:
       BEFORE CARLSON, P.J., DICKINSON AND LAMAR, JJ.

       DICKINSON, JUSTICE, FOR THE COURT:

¶1.    In this breach-of-contract case, the trial court found that a county, through its board

of supervisors, improperly terminated its agreement to allow a private company to manage

a county hospital. The county now appeals, raising several issues, including that it was not

bound by the contract.

                    BACKGROUND FACTS AND PROCEEDINGS

¶2.    Counties in Mississippi are authorized to build and operate community hospitals.

Specifically, counties may

       acquire and hold real estate for a community hospital . . . and may . . .
       construct a community hospital thereon and/or appropriate funds according to
       the provisions of this chapter for the construction, remodeling, maintaining,
       equipping, furnishing and expansion of such facilities by the board of trustees
       upon such real estate.

Miss. Code Ann. § 41-13-15 (Rev. 2005). Pursuant to the statute’s authority, the Greene

County Board of Supervisors (“Supervisors”) purchased land on which it constructed a

community hospital and operated a nursing home. In conjunction therewith, the Supervisors

created the Greene Rural Health Center (“GRHC”) and empowered its Board of Trustees

(“Trustees”) to govern and operate the hospital and nursing home, pursuant to the powers

enumerated in the statute. In 1991, the hospital closed, but the Supervisors continued to use

a portion of the building and grounds to operate the nursing home.

¶3.    On June 24, 2004, the Supervisors published a Notice of Public Hearing, which

provided that “a public hearing will be held on the possibility of the lease, lease with option




                                              2
to purchase, or sale of the Greene Rural Health Center . . . ,” and on August 12, the

Supervisors held the public hearing on the matter during their regular meeting.

¶4.     On August 23, 2004, the Supervisors requested “proposals for the purchase or lease

of Greene County Rural Health Center by health care organizations experienced in the

operation of general acute care hospitals and nursing homes.”          On October 4, 2004,

Corporate Management, Inc. (“CMI”) responded to the request by submitting a proposal.

¶5.     At their October 6, 2004, meeting – noting receipt of CMI’s proposal – the

Supervisors unanimously agreed to “take the matter of [GRHC] under advisement.” They

further authorized their attorney to “get any necessary information from [the administrator

of GRHC] that may be needed to move the negotiations process between [Greene] County

and [CMI] along more quickly.”

¶6.     On October 28, 2004, the Supervisors employed an attorney to “evaluate the options

of the Nursing Home/Hospital sale or lease.” The attorney advised the Supervisors that they

could either proceed in negotiations with CMI (the only company that had submitted a

proposal), or reject CMI’s proposal and begin a new RFP process.

¶7.     On November 23, 2004, after a presentation by CMI, the Supervisors unanimously

agreed that they “want[ed] an emergency room within a three-month period and a critical

care hospital within one year[’s] time and so long as it [did not] cost [the] County anything.”

The Supervisors agreed that their attorneys should research the matter in depth and report

back.

¶8.     On December 9, 2004, the Supervisors unanimously agreed to “recommend [the

Trustees] to move forward for a period of at least [a] one year contract with a consultant to


                                              3
assist in aiming UPL monies toward building an emergency room/hospital.” At a March 30,

2005, meeting (which was attended by several of the Supervisors), the Trustees voted to hire

CMI to take over consulting, effective April 1, 2005; and, on April 1, 2005, Ted Cain (on

behalf of CMI), Tommy Roberts (ostensibly on behalf of the Trustees), 1 and Morris Hill

(ostensibly on behalf of the Supervisors),2 executed a contract (the “Nursing Home

Contract”). The stated purpose of the Nursing Home Contract was for “CMI to provide

designated management services in relation to Owner [Supervisors] and Agent’s [Trustees’]

operation of Facility [nursing home].” The Nursing Home Contract included a provision

which automatically renewed the contract for successive one-year terms, unless the contract

was terminated.

¶9.    On June 28, 2005, the Trustees met to discuss a possible agreement with CMI to

reopen the community hospital, which previously had been designated a Critical Access

Hospital (“CAH”).3 When a few of the Supervisors who attended the Trustees’ meeting

suggested the decision should be delayed for more consideration, CMI explained that the

contract needed quick approval because the CAH designation was due to expire at the end

of the year.




       1
        The Trustees did not actually purport to be a party to the contract but, rather, an agent for
the Board of Supervisors.
       2
        Although both the Trustees and Hill purportedly signed on behalf of the Supervisors, the
contract was neither voted on by, nor entered on the minutes of, the Supervisors.
       3
         “Critical Access Hospital” is a federal designation which allows a hospital to participate in
certain federal programs, such as Medicare.

                                                  4
¶10.   On June 29, 2005, the Trustees presented the Supervisors with a proposed contract,

and the Supervisors voted that the contract be accepted, after certain corrections were made.

The Supervisors also voted to “allow the Nursing Home to borrow money for the new

construction of a hospital for Greene County.”

¶11.   On June 30, 2005, the Trustees met, with some of the Supervisors present. CMI

presented a contract which reflected the changes requested by the Supervisors. The Contract

(the “Hospital Agreement”), dated June 30, 2005, was executed by Ted Cain on behalf of

CMI, Tommy Roberts on behalf of the Trustees (as agent for the Board of Supervisors), and

Morris Hill (ostensibly on behalf of the Supervisors). The purpose of the Agreement was for

“CMI to provide designated management services in relation to Owner [Supervisors] and

Agent’s [Trustees’] operation of their critical access hospital.” The Hospital Agreement

included a provision which automatically renewed the agreement for successive one-year

periods, unless terminated.      The Hospital Agreement was neither voted on by the

Supervisors, nor entered on its minutes.

¶12.   At an October 17, 2005, Trustees’ meeting, one of the Trustees moved to cancel

CMI’s contract.4 Another trustee seconded the motion, stating it needed no discussion, and

should be called for a vote. At that point, the Trustees’ attorney asked the Trustees to

consider the matter before calling for a vote, due to the “repercussions that will certainly

arise from [breaching] the contract.”       When the attorney’s advice was ignored, he




       4
        The minutes of the meeting do not disclose the reason for the motion to cancel CMI’s
contract. In fact, the minutes reflect someone asking the trustee who made the motion “where his
motion was coming from.”

                                               5
immediately resigned as the Trustees’ legal counsel. The motion was called for a vote, and

passed.

¶13.   On October 31, 2005, the Trustees met again, and one of the trustees moved to

“reinstate CMI and to give them the authority to do what they needed to get the hospital

open, and to obtain the CAH designation by the deadline of 12-31-05.” The motion to

reinstate was passed by a vote of three to two.

¶14.   On November 1, 2005, Trustee Larry Brown reported to his office, where he worked

for Supervisor Marion Pierce.5 Pierce demanded that Brown resign from the Board of

Trustees and told him that he had someone to take Brown’s place. Pierce took Brown to the

chancery clerk’s office where Brown signed and submitted his written resignation. Later that

day, however, Brown attempted to rescind his resignation. Brown testified at trial that he

believed he was illegally removed from his position, and that he was still a member of the

Trustees. Brown attended the next Trustees meeting, but was not allowed to participate.

Although it is not entirely clear from the record, at some point the Supervisors apparently

“appointed” I.D. Brown to replace Larry Brown as GRHC Trustee.6

¶15.   On the same day that Brown submitted his resignation, CMI filed a complaint7 seeking

a permanent injunction, preliminary injunction, and temporary restraining order, all for the


       5
           Brown had voted to reinstate CMI’s contract at the October 31 Trustee meeting.
       6
         The issue was addressed in the special chancellor’s final ruling, and it is argued in both
parties’ briefs. Also, it is noted in the Trustees minutes from November 28, 2005, that I.D. Brown
was present and that he was the “trustee appointed by [the Supervisors] to replace Larry Brown.”
       7
        CMI named GRHC, Greene County, Town of Leakesville, Tommy Roberts, Larry Brown,
Marshall Eubanks, James Meadows, Marion Pierce, Rebecca Rylee, Safeco Surety, and RLI Surety
as defendants.

                                                 6
purpose of setting aside the Resolution and Order of [T]ermination of October 17, 2005,

affirming the Order of October 31, 2005, and “restraining [GRHC] from suspending or

terminating the Management Contracts8 with CMI.” CMI’s complaint also asked the court

to direct the Trustees to follow the law and abide by the management contracts, and to enjoin

GRHC from interfering with or obstructing CMI from complying with its obligations under

the management contracts, and for money damages and attorney’s fees.

¶16.   On March 20, 2006, a chancellor (who had been specially appointed to hear the case)

held a hearing on CMI’s motion for a temporary restraining order. The parties signed an

agreed order holding the motion in abeyance until a March 29 hearing on CMI’s motion for

preliminary injunction, and Greene County and GRHC agreed to refrain from taking any

action to terminate, suspend, or interfere with the Nursing Home and Hospital Agreements

in the meantime.

¶17.   At the hearing on March 29, 2006, which concluded on March 30, the chancellor held

that the contracts were not void, but were ambiguous as to when they were to terminate. He

further held that Greene County and GRHC were enjoined from terminating or suspending

the contracts. The chancellor further stated that his rulings were temporary, and would be

in force until a final hearing on the merits.

¶18.       On April 27, 2006, the chancellor entered his official order, which granted CMI’s

motion for preliminary injunction and stated that Greene County and GRHC were prohibited

from suspending or terminating the Nursing Home or Hospital Agreements until further

notice. The court also ordered Greene County and GRHC to continue to operate under the

       8
           The “Management Contracts” referred to both the Nursing Home and Hospital contracts.

                                                7
Agreements until further notice. Greene County and GRHC then filed a motion for, inter

alia, modification of injunction which, on June 30, 2006, the court denied.

¶19.   On July 19-20, 2006, the court held a final hearing on the merits and, on December

18, 2006, the Special Chancellor issued his final ruling in a memorandum opinion. He ruled

that Greene County and GRHC had breached the contracts, and were permanently enjoined

from suspending or terminating the Nursing Home or Hospital Agreements prior to

December 31, 2007, and that the parties were to continue to operate under the terms of the

Agreements.

¶20.   As a result of various post-trial motions by both parties, the final judgment was

amended twice (though not substantially). On April 20, 2007, the special chancellor entered

the second amended judgment, which stated that the Agreements were valid and enforceable

contracts.

¶21.   The judgment also stated that, although the Hospital Agreement obligated Greene

County and GRHC to offer the hospital and nursing home for sale or long-term lease on or

before October 30, 2007, the decision to actually sell or lease rested solely within Greene

County’s discretion, and if Greene County and GRHC chose not to complete a sale or long-

term lease before December 31, 2007, they would be required to enter into a management

contract with CMI for both facilities, effective for at least five years.

¶22.   Finally, the chancellor ordered GRHC to remove I.D. Brown 9 as Trustee and reinstate

Larry Brown immediately. Greene County timely filed its appeal of the chancellor’s orders.




       9
           I.D. Brown was not a party to the proceedings.

                                                 8
¶23.   Thereafter, at a specially-called meeting on September 24, 2007, the Trustees voted

unanimously to enter into a new management contract with CMI. On October 15, 2007, the

Trustees and CMI signed a “lease contract and agreement.” Believing that this new contract

interfered with the court’s December 31, 2007, deadline concerning the possible sale or lease

of the hospital, Greene County filed a Motion for Contempt and Other Relief.10 After a

hearing, the chancellor ruled that CMI and the Trustees were indeed in contempt of the final

judgment, and ordered that they “cease and desist from entering into any further management

contracts until and unless Greene County has failed to enter into a sale or long-term lease of

the Hospital and Nursing Home on or before December 31, 2007.” He also ruled that CMI’s

October 15, 2007, lease contract was “null, void and without effect.” CMI appeals this

ruling, and its appeal was consolidated with Greene County’s appeal of the final judgment.

                                           ANALYSIS

¶24.   Greene County raises six issues on appeal:

       (1)     Whether the management Agreements could be terminated by the
               Trustees prior to the expiration of the contractual terms;

       (2)     Whether the Agreements were binding upon the Supervisors and,
               therefore, Greene County;

       (3)     Whether, upon termination of the Agreements, the plain language of
               Section 41-13-35 prevents a finding that Greene County breached the
               implied covenant of fair dealing;

       (4)     Whether the trail court erred in finding the termination of the
               Agreements breached the implied covenant of fair dealing;




       10
          Greene County also argued that the Trustees and CMI had failed to submit a full accounting
of the financial affairs of the Hospital and Nursing Home as required in the final order.

                                                 9
       (5)     Whether the trial court erred in removing I.D. Brown from the Board
               of Trustees;

       (6)     Whether the trial court erred in denying the full relief sought in the
               motion for a new trial, and particularly as it related to illegal taping,
               compliance with bid laws, and the hiring of Larry Brown.11

¶25.   CMI cross-appeals, raising two issues:

       (1)     Whether the trial court erred in finding the contract did not grant CMI
               the exclusive right to receive an offer to purchase or lease the facilities;
               and

       (2)     Whether the trial court erred in denying CMI lost profits due to the
               breach of contract.

¶26.   CMI also claims (in the second, consolidated appeal) that the trial court erred in

finding it in contempt of the final judgment.

¶27.   We find Greene County’s second issue to be dispositive of the merits of this case. We

also find it appropriate to address two collateral issues – the removal of I.D. Brown from the

Board of Trustees, and the chancellor’s order holding the Trustees and CMI in contempt.

                                                 I.

¶28.   The chancellor – in reviewing the two Agreements together – found that the Trustees

had authority granted by Mississippi Code Section 41-13-35(5)(g) to enter both Agreements

without the approval of the Supervisors, and that all statutory requirements to form a contract

were met. We find the chancellor’s conclusions were erroneous for two reasons.

       Statutory authority to contract.

¶29.   The Hospital agreement clearly states:


       11
          The issues of illegal taping and noncompliance with bid laws were raised for the first time
in Greene County’s motion to alter or amend judgment, or in the alternative for a new trial, which
the special chancellor denied.

                                                 10
       Owner and Agent agree to offer for sale or long term lease both the Greene
       County Rural Health Center Skilled Nursing Facility and Hospital Facility to
       CMI, or an entity designated by CMI, on or before October 30, 2007. Owner
       and Agent agree to complete such sale or long term lease on or before
       December 31, 2007. If Owner and/or Agent and CMI cannot agree to sale or
       long term lease terms on both facilities addressed in this agreement, Owner
       and/or Agent hereby agree to enter into a management contract with CMI on
       or before December 31, 2007 for a period not less than five (5) years. If such
       long term management contract for both facilities is entered into, Owner
       and/or Agent agree that such long term management contact will be renewable
       at the sole discretion of CMI or a company designated by CMI, at the end of
       the initial five (5) year term and each and any successive term for successive
       five (5) year periods.
       ...
       Owner and Agent further agree to grant CMI, or a company designated by
       CMI, the first right of refusal to purchase both Greene County Rural Health
       Center Skilled Nursing Facility and Hospital Facility should the Owner/Agent
       desire to sell, lease or discontinue management and/or operation of any one of
       the facilities at any time in the future prior to or after October 30, 2007.
       Owner/Agent and CMI further agree CMI shall have the option to extend the
       October 30, 2007 purchase date for a period of one (1) year and extend any
       management contract of which CMI and Greene County Rural Health Center
       Skilled Nursing Facility and Hospital Facility are parties to for successive one
       year increments until such time as CMI or an entity designated by CMI shall
       purchase the facilities or give written notice to Owner/Agent of the desire not
       to purchase the Skilled Nursing Facility and Hospital Facility.

(Emphasis added.)

We find this language clearly involves the sale or lease of the community hospital. Thus, the

question becomes whether the Trustees had the statutory authority to enter into them without

the Supervisors’ approval.

¶30.   In finding that the Trustees had such authority, the chancellor relied on Mississippi

Code Section 41-13-35(5)(g), which states, in pertinent part, that the trustees have authority:

       (g) To contract by way of lease, lease-purchase or otherwise, with any agency,
       department or other office of government or any individual, partnership,
       corporation, owner, other board of trustees, or other health care facility, for the
       providing of property, equipment or services by or to the community hospital


                                               11
       or other entity or regarding any facet of the construction, management, funding
       or operation of the community hospital or any division or department thereof,
       or any related activity, including, without limitation, shared management
       expertise or employee insurance and retirement programs, and to terminate
       said contracts when deemed in the best interests of the community hospital.

Miss. Code Ann. § 41-13-35(5)(g) (Rev. 2005).

¶31.   Although the statute grants the Trustees authority to acquire property, we find nothing

in its plain language that provides the Trustees authority to alienate property. Thus, we find

the chancellor erred in concluding that the Trustees had authority to enter into the

Agreements – which provided for the alienation of real property – without the Supervisors’

approval.

¶32.   Furthermore, even if the statute granted the Trustees authority to enter into the

contracts, to Trustees failed properly to do so. The statutory language provides that the

Trustees must contract in their own capacity and, in this case, the Trustees chose not to

exercise that authority, but rather to sign the contracts as agents for the Supervisors.12

¶33.   The record contains no evidence that the Board of Supervisors voted on the contracts

or spread them on its minutes. This Court has clearly stated, on numerous occasions, that any

act by a Board of Supervisors must be evidenced by an entry in its minutes in order to be

valid. For instance, in Burt v. Calhoun, 231 So. 2d 496 (Miss. 1970), this Court stated:

       “It is manifest that the board of supervisors of a county can only enter into an
       express contract by an order spread upon its minutes, and that there can be no
       such thing as a verbal or oral order of this board.” No contract can be implied
       or presumed, it must be stated in express terms and recorded on the official


       12
        Both Agreements clearly state: “This Agreement is entered into this the [date], by and
between the Greene County Board of Supervisors (hereinafter “Owner”), through its Agent, the
Board of Trustees of the Greene Rural Health Center (hereinafter “Agent”), and Corporate
Management, Inc. (hereinafter “CMI”).” All three parties signed both Agreements.

                                              12
       minutes as the action of the board of supervisors. The responsibility is placed
       on each person, firm or corporation contracting with a board of supervisors to
       see that the contract is legal and properly recorded on the minutes of the board.

Id. at 499 (quoting Smith County v. Mangum, 89 So. 913, 914 (Miss. 1921) and citing Lee

County v. James, 174 So. 76 ( Miss. 1937)); see also Jackson Equip. & Serv. Co. v. Dunlop,

160 So. 734 (Miss. 1935); Pearl Realty Co. v. State Highway Comm’n, 154 So. 292 (Miss.

1934). See also Gilchrist-Fordney Co. v. Keyes, 74 So. 619 (Miss. 1917); Lamar County

v. Tally, 77 So. 299 (Miss. 1917); Marion County v. Foxworth, 36 So. 36 (Miss. 1903).

¶34.   Greene County submits, and CMI does not deny, that neither the Nursing Home

Agreement nor the Hospital Agreement were ever properly “spread upon the minutes” of the

Board of Supervisors. Thus, because neither the Supervisors nor the Trustees properly

entered into the contracts with CMI, all other points on appeal, with respect to the merits of

the case, are moot.

                                              II.

¶35.   Although not necessary for disposition of the merits of this case, we now address the

chancellor’s order removing I.D. Brown from the Board of Trustees and reinstating Larry

Brown. One holding public office may not be removed from his or her position by an action

to which he is not a party. In Jackson Redevelopment Authority v. King, Inc., 364 So. 2d

1104 (Miss. 1978), this Court stated:

       It is a very ancient and salutary principle of the common law, where a person
       claims to hold an office, his title shall not come in question in an action to
       which he is not a party; but while he holds the office de facto, his acts and
       doings therein will be deemed good.
       ...




                                              13
       The incumbent cannot be impeached collaterally and indirectly; if he is in
       possession of the office, discharging its ordinary functions, his official acts are
       conclusive as to all persons interested or affected by them.

Id. at 1109-10. See also Upchurch v. City of Oxford, 17 So. 2d 204, 205 (Miss. 1944);

Rosetto v. City of Bay St. Louis, 52 So. 785, 785 (Miss. 1910); Cooper v. Moore, 44 Miss.

386, 392-93 (1870).

¶36.   CMI argues, nevertheless, that the chancellor had the right to reinstate Larry Brown

to his position because the Supervisors’ removal of him was unlawful. It argues that the

Supervisors, and specifically Supervisor Marion Pierce, “usurped” the power of the GRHC

Board of Trustees by coercing Larry Brown into resigning.

¶37.   Even assuming arguendo the Supervisors did “usurp” the Trustees’ power, the State,

not CMI, had authority to seek removal of I.D. Brown and reinstate Larry Brown. This Court

has stated:

       For the usurpation, or unlawful holding, or exercising its functions without
       lawful right, the person may be dealt with, and punished at the suit of the state
       . . . . If he is a usurper in possession without right, the state, whose authority
       he abuses, can move directly for his ejection and punishment.

Cooper v. Moore, 44 Miss. 386, 392-93 (1870) (emphasis added).

¶38.   It is undisputed that neither the State of Mississippi nor I.D. Brown was a party to the

underlying action, and neither is a party to this appeal. Thus, the chancellor erred in

removing I.D. Brown from the Board of Trustees.

                                              III.

¶39.   The chancellor held CMI and the Trustees in contempt, finding that – by entering the

October 15, 2007, contract – they interfered with the court’s December 31, 2007, deadline



                                               14
concerning the possible sale or lease of the hospital. The chancellor’s deadline, however,

emanated from agreements which we have found to be unenforceable. Furthermore, the

order holding the Trustees and CMI in contempt did not provide for any sanctions. It merely

held that they were in contempt of the final order and that they were to “cease and desist

from entering into any further management contracts . . . .” 13

¶40.   Because we find today that the contracts were not binding, and because the contempt

order resulted in no sanctions, we find the issue moot.

                                      CONCLUSION

¶41.   We find Greene County was not bound by the Agreements with CMI, as it never

properly entered into the Agreements. The fact that no agreements binding Greene County

existed renders all other dispositive issues moot. We reverse the chancellor’s order removing

I.D. Brown from the Board of Trustees and reinstating Larry Brown, and we find the issue

of contempt moot.

¶42.   REVERSED AND RENDERED.

    WALLER, C.J., CARLSON, P.J., RANDOLPH, LAMAR, KITCHENS AND
CHANDLER, JJ., CONCUR.     GRAVES, P.J., AND PIERCE, J., NOT
PARTICIPATING.




       13
         The order did state that the Court would determine whether any damages, costs, or
attorney’s fees were appropriate after the Trustees and CMI produced the required financial
statements. However, the record does not disclose that any sanctions were ever entered.

                                             15
