City of St. Louis v. Institute of Medical Education & Research

786 S.W.2d 885, 1990 Mo. App. LEXIS 283, 1990 WL 14934
CourtMissouri Court of Appeals
DecidedFebruary 20, 1990
DocketNo. 55892
StatusPublished
Cited by4 cases

This text of 786 S.W.2d 885 (City of St. Louis v. Institute of Medical Education & Research) is published on Counsel Stack Legal Research, covering Missouri Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
City of St. Louis v. Institute of Medical Education & Research, 786 S.W.2d 885, 1990 Mo. App. LEXIS 283, 1990 WL 14934 (Mo. Ct. App. 1990).

Opinion

HAMILTON, Presiding Judge.

Appellant Institute of Medical Education and Research (hereinafter the Institute), a charitable pro forma decree corporation, appeals from a declaratory judgment that the Institute must devote its funds and assets exclusively to assisting the City of St. Louis (hereinafter City) in providing medical care to the City’s residents. The trial court specifically designated the City’s Bureau of Reportable and Communicable Diseases (hereinafter the Bureau) and the St. Louis Regional Hospital (hereinafter Regional Hospital) as appropriate grant recipients. We affirm.

The Institute is a charitable pro forma decree corporation formed pursuant to an order dated February 9,1954, of the Circuit Court of the City of St. Louis. Prior to Institute’s incorporation, the City provided facilities and support staff for the care of indigent patients while the medical schools at St. Louis University and Washington University provided the medical personnel and used the City facilities for training. University-affiliated doctors donated their services. A City ordinance prohibited physicians from billing patients at the City hospitals. During the early 1950s, however, the increased availability of health insurance coverage presented an untapped funding resource. Members of the medical staff at the City’s hospitals formed the Institute as a mechanism for collecting payments from insurance companies. The City then enacted Ordinance 47008 to funnel the collection of fees directly to the Institute. An Internal Revenue Service ruling provided that physicians need not account personally for the funds donated to the Institute.

Members of the Institute Board of Directors (hereinafter Board) were staff of the City hospitals with the exception of the Hospital Commissioner. All recipients of grants had staff appointments to City hospitals. During the years following its incorporation, the Institute used its funds to build animal facilities and research laboratories, to sponsor fellowships and to pay costs of attendance at meetings, to fund a trauma intensive care unit at City Hospital (Max C. Starloff Hospital) in 1980, and to provide supplemental malpractice insurance beginning in 1983.

[887]*887In 1984 the City made plans to close City Hospital on June 30, 1985. Thereafter, the City executed a contract with St. Louis Regional Health Care Corporation, a private not-for-profit corporation, to provide medical services at St. Louis Regional Medical Center. The Institute’s chief source of funding thus ceased to exist, but the Institute still possessed $654,538 in assets. The City brought this action seeking a declaration that the Institute’s funds must be used exclusively for education and research in City-operated hospitals or similar institutions operated by the City and that the five clinics operated by the Bureau of Reportable and Communicable Diseases were such institutions. Evidence was adduced at a hearing on December 14, 1987. On March 15, 1988, the trial court issued a preliminary order directing the parties to file suggestions for a more complete order declaring the scope and nature of the Institute’s obligation to assist the Bureau of Reportable and Communicable Diseases and to assist Regional Hospital. On November 7, 1988, the trial court issued its final judgment.

With that final judgment the trial court entered, inter alia, the following findings of fact and conclusions of law:

7. Since at least June 30,1985, Defendant Institute has neither expended its funds [n]or devoted its assets in furtherance of medical education, research and care conducted in or through the auspices of hospitals and similar institutions operated and maintained by the City of St. Louis.
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10. Defendant Institute holds its assets in trust for the charitable purposes specified in Article Four of its Articles of Agreement.
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12. Read as a whole, Defendant Institute’s Articles of Agreement constrain its activities to medical education, research and care conducted at or through the auspices of public hospitals and similar institutions maintained and operated by Plaintiff City of St. Louis.
13. The overwhelming weight of the testimony addressed at trial confirmed that the purpose and practice of Defendant Institute was ... to conduct and promote medical education research and care at hospitals and similar institutions maintained and operated by the City.

The trial court also determined that the five clinics operated by the Bureau fall within the category “similar institutions.” The trial court ordered the Institute to devote its funds to assist the five clinics and Regional Hospital. Further, it provided that application for grants by the City’s Director of Health and Hospitals shall be the exclusive procedure for awarding grants.

The Institute asserts the trial court erred in its declaratory judgment because (1) its rulings interfere with the fair and reasonable discretion of the Board of Directors and substitute the judgment of the trial court for that of the Board without a finding that the Board’s proposed programs were in excess of its authority under the Articles; (2) its rulings substitute the discretion of the City for that of the Board as to the validity of grant applications and constitute an expropriation or condemnation of the corporate property; and (3) the conclusion that the five clinics are similar institutions to hospitals is contrary to the evidence.

This Court will sustain a declaratory judgment unless no substantial evidence supports it, it erroneously declares the law, or it erroneously applies the law. American Family Mut. Ins. Co. v. Bishop, 743 S.W.2d 590, 591 (Mo.App.1988). Reversal on grounds the judgment is against the weight of the evidence is granted with caution and a firm belief that the decree or judgment is wrong. Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976).

The powers of a not-for-profit corporation and a corporation incorporated for profit are identical. Pilgrim Evangelical Lutheran Church of Unaltered Augsburg Confession v. Lutheran Church-Mo. Syn[888]*888od Found., 661 S.W.2d 833, 838 (Mo.App.1983). A corporation possesses all powers of a natural person except those specifically forbidden to corporations by law. Such powers include all those reasonably necessary to accomplish its proper purposes. Komanetsky v. Missouri State Medical Ass’n, 516 S.W.2d 545, 553 (Mo.App.1974) (quoting H. Oleck, Non-Profit Corporations, Organizations and Associations §§ 47-48 (2 ed. 1965)).

The same rules governing construction of statutes and contracts govern the construction of corporate charters. Missouri State Teachers Ass’n v. St. Louis Suburban Teachers Ass’n, 622 S.W.2d 745, 749 (Mo.App.1986). A court’s primary responsibility in construction is to determine the intent of the language used and to give effect to that intent.

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Bluebook (online)
786 S.W.2d 885, 1990 Mo. App. LEXIS 283, 1990 WL 14934, Counsel Stack Legal Research, https://law.counselstack.com/opinion/city-of-st-louis-v-institute-of-medical-education-research-moctapp-1990.