January 13, 1977

Mr. Dennis J. Batteen 
Faulk County State's Attorney 
Faulkton, South Dakota 57438

Official Opinion No. 77-6

SDCL 34-8A authorizes counties and municipalities to loan funds to certain corporations

Dear Mr. Batteen:

You have requested an official opinion based on the following factual situation:

FACTS: 

Faulk County has loaned $25,000 to Faulk County Health Services, Inc., a nonprofit corporation, for operating capital in establishing a medical clinic and dental clinic in conjunction with the National Health Services Corps. Pursuant to this arrangement, the National Health Services Corps has assigned two medical doctors and one dentist to Faulkton, South Dakota.  Faulk County Health Services, Inc., repaid $10,000 on its loan from the operation of a medical clinic and there remains an outstanding balance of $15,000.  A need has arisen for additional operating capital for the dental clinic and Faulk County Health Services, Inc., has asked Faulk County and the City of Faulkton for an additional loan of $5,000 each.  The City Council of the City of Faulkton and the Board of County Commissioners of Faulk County have unanimously agreed to said loans.  The question has been raised, however, as to the legality of such a loan to a corporation.  There are no other medical or dental facilities in Faulk County other than those established by Faulk County Health Services, Inc.

Based on the above facts, you ask:

QUESTION: 

Can the Board of County Commissioners of Faulk County and the City Council of the City of Faulkton loan funds to Faulk County Health Services, Inc., a nonprofit corporation, to insure the continued operation of a dental clinic?

The statute in quesion provides: 

38-8A-1. Notwithstanding any other provisions of law to the contrary, the board of county commissioners and/or the local governing body may, by unanimous vote of its members, grant, loan or pay to an individual, upon such terms and on such conditions as the board shall set forth, moneys from any source of funds available to them for the purpose of ensuring the availability of professional medical services within the county.

In my opinion, the answer to your question is yes.  Statutes are to be interpreted so as to fully effectuate their purpose and intent.  The intent of SDCL 34-8A-1 is to permit governing bodies of municipalities and counties to exercise discretion in expending funds to attract professional medical personnel to their locality. Said governing bodies may loan, grant or pay such funds on such terms as are negotiated when the agreement is finalized. (SDCL 34-8A-3.)  Therefore, the fact that a nonprofit corporation acts as an intermediary in negotiating for funding for securing medical services should not defeat the obvious interest of the law.

Although the term “individual” could be strictly construed to exclude corporations, partnerships, etc., I am of the opinion that the more generally understood and accepted meaning of the term, when used in context, allows their inclusion.  Concededly, the use of the word “person” would have resolved the issue, as by statutory definition “person” includes corporations.  SDCL 2- 14-2(16).

However, as is evidenced by a number of annotations in Words and Phrases, Vol. 21, at 441-445, courts in many jurisdictions have held that the word “individual” should be construed to be used in the sense of “person” and embrace artificial and corporate persons as well as natural.  State v. U.S. Fire Insurance Company, 66 Cal. Rptr. 115.  In addition, and as is stated in Official Opinion 74-41, the statute is permissive and the local governing body must exercise discretion in determining if the purpose of the “individual” seeking financial aid is consistent with the meaning of said statute.

For the above reasons, I conclude that Faulk County and the city of Faulkton may, by unanimous vote of their governing bodies, loan available funds to a nonprofit corporation organized to provide dental facilities and services.

Respectfully submitted,

William J. Janklow
Attorney General

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