Moore v. Andalusia Hospital, Inc.

224 So. 2d 617, 284 Ala. 259, 1969 Ala. LEXIS 1072
CourtSupreme Court of Alabama
DecidedJune 12, 1969
Docket4 Div. 341
StatusPublished
Cited by14 cases

This text of 224 So. 2d 617 (Moore v. Andalusia Hospital, Inc.) is published on Counsel Stack Legal Research, covering Supreme Court of Alabama primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Moore v. Andalusia Hospital, Inc., 224 So. 2d 617, 284 Ala. 259, 1969 Ala. LEXIS 1072 (Ala. 1969).

Opinion

PIARWOOD, Justice.

The appellant filed a bill seeking in essence to have a receiver appointed to carry on the affairs of the respondent, the Andalusia Hospital, Inc.

The Chancellor sustained the respondent’s demurrer to the bill.and dismissed it. Hence this appeal.

The bill averred in substance that the respondent hospital corporation was organized under the provisions of the Alabama Non-Profit Corporation Act (Secs. 203-263, Title 10, Code of Alabama 1940), and was organized to conduct and carry on a hospital facility, and is now so operating such hospital which was financed in large part through public subscriptions; that the acts of the Directors are illegal, oppressive, or fraudulent in that those in control of the hospital have deprived the residents of the community, including the contributors to the hospital, of the right to select a physician of their choice in utilizing the hospital.

The bill as amended further avers that the respondent corporation is unable to carry out the purposes stated in its charter to conduct a community public hospital in *261 that it has discriminated against certain physicians practicing in Covington County, Alabama, by refusing to permit these physicians to use its facilities on the same basis as other physicians, thereby depriving citizens of the territory of using the hospital and “still use the physician and surgeon of their choice.”

The amendment further avers that the complainant is a member of, and a contributor to, the respondent hospital, and that he is a duly licensed physician and surgeon practicing in Andalusia, and surrounding territory; that he is deprived of his right to use the facilities of the respondent hospital on the same basis as other physicians practicing in the same territory by being refused the privilege of serving on the active medical staff, and thus the directors have deprived his patients, many of whom are contributors to the hospital, of the right to use the hospital and be attended by the complainant.

The bill lastly avers that the respondent hospital has abandoned its public and nonprofit purpose in that its affairs have been conducted by the directors and officers in such a manner as to “result in profit to, personal gain for, certain of the members and officers of the corporation.”

The bill asserts it is brought under the provisions of Section 247, Title 10, Code of Alabama 1940. In parts pertinent to this review, Section 247 provides as to the jurisdiction of a court to liquidate the assets and affairs of a non-profit corporation:

“Courts of equity shall have full power to liquidate the assets and affairs of a corporation:
* * * * * * “(2) That the acts of the directors or those in control of the corporation are illegal, oppressive or fraudulent; or
“(3) that the corporate assets are being misapplied or wasted, or
“(4) that the corporation is unable to carry out its purposes.”

The bill avers that the acts of the directors or those in charge of operating the hospital have been illegal, oppressive, or fraudulent.

A general averment of fraud (or of illegal, or oppressive conduct) without setting forth facts on which such averment is made is insufficient. Cullman Property Co. v. H. H. Hitt Lumber Co., 201 Ala. 150, 77 So. 574. The appellant did set forth facts in an effort to spell out the fraudulent, illegal, or oppressive conduct of the directors of the hospital.

These facts are to the effect that by refusing to name the complainant to the active medical staff of the hospital, the directors deprived him of using the facilities of the hospital on the same basis as other physicians and surgeons, and his patients were thereby deprived of their right to use the facilities of the hospital.

Such averment does not transfuse equity into the bill.

The bill avers that the hospital corporation was organized under the Alabama Non-Profit Corporation Act (Secs. 203-263, Title 10, Code of Alabama 1940). The Act provides for (a) the organization of such corporation by three or more natural persons (Sec. 230), and (b) that the management, control, and direction of the affairs of such corporation be by a Board of Directors (Sec. 219), elected by the members as provided in its by-laws.

Thus a non-profit corporation organized pursuant to the Alabama NonProfit Corporation Act is a private corporation. It is not controlled or owned by the state, nor supported by public funds-. As stated in Levin v. Sinai Plospital of Baltimore City, 186 Md. 174, 46 A.2d 298:

“* * * So, a hospital, although operated solely for the benefit of the public and not for profit, is nevertheless a private institution if founded and maintained by a private corporation with authority to elect its own officers and directors.”

*262 To the same effect see State ex rel. Sams v. Ohio Valley General Hospital Ass’n., 149 W.Va. 229, 140 S.E.2d 457; 24 A.L.R.2d 850; Hughes v. Good Samaritan Hospital, 289 Ky. 123, 158 S.W.2d 159; Mauer v. The Highland Park Hospital Foundation, 90 Ill.App.2d 409, 232 N.E.2d 776; West Coast Hospital Ass’n. v. Hoare, Fla.Sup.Ct. (1953), 64 So.2d 293.

Being a private corporation, the appointment of members of the medical staff was solely within the discretion of the Board of Directors, and the refusal of the Board of Directors to appoint a particular physician or surgeon to the medical staff of the hospital is not subject to judicial review. Mauer v. The Highland Park Hospital Foundation, supra; Sams v. Ohio Valley General Hospital, supra.

Nor does appellant’s membership in the corporation afford him any special rights or privileges in this regard. West Coast Hospital Ass’n. v. Hoare, supra.

Thus this aspect of the bill contains no equity.

The second aspect of the bill attempts to set up a violation of an equitable right by alleging that profit or gain resulted personally to members or officers of the corporation in transactions with the hospital corporation.

Article VII of the Certificate of Incorporation of appellee provides that the conduct of the business of the corporation shall be under the direction of the Board of Directors, and by Article VIII the Board of Directors is authorized to adopt, amend, and alter the by-laws of the corporation. Article XIV provides that the corporation shall not have stock, and that no dividends shall be paid nor income distributed to directors or officers “provided, however, the corporation may pay compensation in a reasonable amount to its Directors or Officers for services rendered.”

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Bluebook (online)
224 So. 2d 617, 284 Ala. 259, 1969 Ala. LEXIS 1072, Counsel Stack Legal Research, https://law.counselstack.com/opinion/moore-v-andalusia-hospital-inc-ala-1969.