Warden v. Grafton , 125 W. Va. 658 ( 1943 )

I agree that the ruling of the trial chancellor should be affirmed. But I am not in accord with the conclusion that a "statutory mortgage lien" attaches to land and buildings used as a hospital.

The trust indenture authorized by Section 15, Chapter 68, Acts of 1935, was not utilized by the city of Grafton, but in lieu thereof the municipal authorities passed an ordinance. Section 11 of the ordinance provides for the pledge of the net revenues and subsection J of Section 13 creates a statutory mortgage lien on the hospital, pursuant to Chapter 68 aforesaid. I think that the pledge of the net revenues is well within the power granted by the Legislature in Section 16, Chapter 68, Acts 1935. The power to pledge the entire net revenue of the hospital is not lessened nor limited by the fact that the cost of construction of the hospital will be paid from funds derived from various sources, including general taxation and the sale of direct obligation bonds.

But the statute is silent as to the exact property covered by the "statutory mortgage lien". On examination of Section 22 of Chapter 68, it is clear that the enforcement of the statutory mortgage lien is limited to collection of the revenues from the works (in this instance the hospital) and use thereof to discharge the principal and interest of the bonds. If it were the legislative intent that the lien attach to the corpus of the property, why was the power to sell the property omitted from the statute? No power to sell the property is conferred by Chapter 68. On the contrary a lien on the works created by a trust indenture is expressly inhibited. The vague and uncertain language of Section 22 is not sufficient to create a lien on the land and buildings, nor can such power be supplied by the passage of an ordinance by a municipal corporation.

I reach the conclusion that the statutory mortgage lien authorized by Section 22, Chapter 68, Acts of 1935, only attaches to the net revenue of the utility or works, and only affects the corpus of the property incidentally and so far as is necessary to produce that revenue.