Eaton v. James Walker Memorial Hospital Board of Managers Petition for Writ of Certiorari to the US Court of Appeals for the Fourth Circuit

    I n th e

(Emtrt nf the Imteii States
October Term, 1958 

No..................

H ubert A. E aton , et ol.,
Petitioners,

B oard of M anagers of t h e  J ames W alker  M emorial 
H ospital, et ol.,

Respondents.

PETITION FOR WRIT OF CERTIORARI TO THE 
UNITED STATES COURT OF APPEALS 

FOR THE FOURTH CIRCUIT

T hurgood M arshal l

J ack  Greenberg

10 Columbus Circle 
New York 19, New York

C onrad 0 .  P earson

203% E. Chapel Hill Street 
Durham, North Carolina

R obert R . B ond

612 Red Cross Street 
Wilmington, North Carolina

Counsel for Petitioners



I N D E X
PAGE

Citations to Opinions Below ................... ...................... . 1

Jurisdiction ..........................................................................  1

Question Presented............................................................... 2

Statement ..............................................................................  2

Reasons for Allowance of the W r it ..................................  6

Conclusion ...................................................   14

T able oe C ases

American Communications v. Douds, 339 U. S. 382, 401 
(1950) ................................................................................  7

Betts y . Easely, 161 Kan. 459, 169 P. 2d 831 (1946) .....  7
Board of Managers of the James Walker Memorial 

Hospital of Wilmington v. City of Wilmington, 237 
N. C. 179, 74 S. E. 2d 749 ............................................... 10

Conley v. Gibson, 355 U. S. 4 1 .............................................6,14

Derrington v. Plummer, 240 F. 2d 922 (5th Cir. 1956) 7
Dorsey v. Stuyvesant Town, 299 N. Y. 512, 87 N. E. 2nd 

541 (1949), cert. den. 339 TJ. S. 981 (1950) ...............  7

The Girard Trust Case, 353 TJ. S. 230 ........................... 13

Marsh v. Alabama, 326 TJ. S. 501 (1946) .......................  7

Oliphant v. Brotherhood of Locomotive Firemen and 
Enginemen, 262 F. 2d 359 (6th Cir. 1958) ....... ....11,13,14



11
PAGE

Steele v. Louisville and N.R.R. Co., 323 U. S. 192 (1944) 7

Williams v. United States, 341 U. S. 97 (1951) .............  7

O th er  A uthorities

Clark, Charitable Trusts, the Fourteenth Amendment 
and the Will of Stephen Girard, 66 Yale L. J. 979 
(1957) ...............................................................   7

Horowitz, The Misleading Search for “ State Action” 
Under the Fourteenth Amendment, 37 Calif. L. Rev.
208 (1957)...........................    7

49 Journal of the National Medical Association, 272,
352, 429 (1957) ................................................................. 13

Reitzes, Negroes and Medicine X X X  (1958) ...............  12



I n  th e

Bnpnmv Court of %  luitrii
October Term, 1958 

No..................

H ubert A. E aton , et al.,
Petitioners,

—v.—

B oard of M anagers oe th e  J ames W alker  M em orial 
H ospital, et al.,

Respondents.

PETITION FOR W RIT OF CERTIORARI TO THE 
UNITED STATES COURT OF APPEALS 

FOR THE FOURTH CIRCUIT

Petitioners pray that a writ of certiorari issue to review 
the judgment of the United States Court of Appeals for 
the Fourth Circuit entered in the above-entitled case on 
November 29,1958.

Citations to Opinions Below

The opinion of the Court of Appeals is printed in the 
appendix hereto, page la, infra, and is reported at 261 
F. 2d 521. The opinion of the District Court herein is 
reprinted in the appendix at page 13a, and is reported 
at 164 F. Supp. 191.

Jurisdiction

The judgment of the Court of Appeals was entered on 
November 29, 1958. By order of the Chief Justice, time to



2

file petition for writ of certiorari was extended to and in­
cluding March 23, 1959. The jurisdiction of this Court is 
invoked under 28 U. S. C., §1254.

Question Presented

Whether the complaint, which invoked the Fourteenth 
Amendment right to be free from racial discrimination, 
and which alleged substantial governmental support of 
defendant hospital, that it had been created by the City 
and County, was governed by a govemmentally created 
board, and had other significant governmental contacts, 
was properly dismissed under the Federal Rules of Civil 
Procedure, where it was admitted that plaintiffs, Negro 
physicians, were excluded from practicing in said hospital 
solely because of race, or whether plaintiffs have stated 
a claim upon which relief can be granted sufficient to allow 
presentation of proof on the merits.

Statement

The complaint in this case demanded declaratory judg­
ment and injunction and posed the following question:

. . . whether the custom and practice of the defen­
dants in denying, on account of race and color to plain­
tiffs and other qualified Negro physicians similarly 
situated the right to courtesy staff privileges, includ­
ing the right to treat their patients when they are 
admitted to defendants hospital, the James Walker 
Memorial Hospital, Wilmington, North Carolina, is 
unconstitutional and void as being a violation to the 
Fourteenth Amendment to the Constitution of the 
United States (App. 2).*

* App. refers to petitioners’ appendix in the Court of Appeals.



3

The three plaintiffs herein are Negroes and physicians 
who reside and practice in Wilmington, North Carolina. 
The defendants are the Board of Managers of the James 
Walker Memorial Hospital, a body corporate under and 
by virtue of the laws of the State of North Carolina and 
in the complaint alleged to be a governmental instrumen­
tality, the Secretary of the Board of Managers of said 
hospital, who as its chief administrative officer has over­
all control and management thereof, the City of Wilming­
ton, North Carolina, and the County of New Hanover in 
which that City is located.

The complaint sets forth the professional qualifications 
of plaintiffs, including their education, training and ex­
perience, and that they have been denied, solely because of 
race, the right to treat their patients at the James Walker 
Memorial Hospital (App. 3, 4). It alleges certain contacts 
between the hospital and various arms of government, by 
virtue of which it is claimed that action of the hospital is 
state action in the sense that it is governed by the equal 
protection clause of the Fourteenth Amendment to the 
United States Constitution. These allegations, it may be 
noted at this point, are admitted both by motions to dis­
miss (App. 10, 11, 13) and by stipulation (App. 15).

In particular the allegations concerning state action con­
sist of the following:

1. “ Defendants, including defendant Hospital, have ex­
ercised the right of eminent domain . . . for expansion and 
maintenance of the said Hospital” (App. 6).

2. Defendants have received “ large grants of money 
from the Federal Government for expansion and mainte­
nance of the said Hospital” (App. 6).



4

3. That the hospital is on a tract of land which was pur­
chased by the County and City of Wilmington in 1881 
(App. 6, 55-57).

4. That the City and County held and used said hospital 
under the Will of James Walker “as a hospital for the 
treatment of the ‘sick and afflicted’ ” (App. 6). The will 
directed (App. 38-40) that the hospital be constructed by 
monies to be derived from Mr. Walker’s estate “ and after 
the completion of the said Hospital my said Executors are 
hereby directed to deliver and turn over the same to the 
proper authorities of the City of Wilmington and the 
County of New Hanover, State of North Carolina, to be 
held and used by them and their successors as a Hospital 
for the treatment of the sick and afflicted” (App. 39).

5. That the County of Wilmington “did by deed transfer 
the land upon which was situated the James Walker 
Memorial Hospital to the Board of Managers of the James 
Walker Memorial Hospital in trust for the benefit of the 
said County and City” (App. 7) by a deed requiring the 
County and City “ To have  and  to hold  the same in trust 
for the use of the Hospital aforesaid, so long as the same 
shall be used and maintained as a Hospital for the benefit 
of the County and City aforesaid, and in case of disuse or 
abandonment to revert to the said County and City as their 
interest respectively appear . . . ” (App. 59-60).

6. That the board of the hospital was constituted by 
state statute, a majority of its members to be selected by 
the County and City, and that since its constitution it has 
been self perpetuating (App. 33-34).

7. The City “has provided financial support for the said 
James Walker Memorial Hospital by granting said Hos­
pital exemption from payment of city taxes . . . ” (App. 5).



5

8. The “ City has for many years prior to 1951 made 
direct annual contributions from its treasury for the sup­
port, maintenance and operation of said Hospital and that 
since the year 1951, the said City has made per diem contri­
bution to said Hospital in payment of services rendered 
certain residents of the City of Wilmington, North Caro­
lina” (App. 5).

9. “ The County has provided financial support for the 
James Walker Memorial Hospital by granting said hos­
pital exemption from payment of County taxes . . . ” (App. 
6).

10. The “ County has for many years prior to 1951, made 
direct annual contributions from its treasury for the sup­
port, maintenance and operation of the said hospital; and 
that since the year 1951, the said County has made per 
diem contributions to said hospital in payment of services 
rendered certain residents of the County of New Hanover” 
(A p p . 6 ).

As noted above, each of the defendants filed a motion to 
dismiss under Rule 12 (App. 10, 11, 13). The existence 
of certain statutes was stipulated by counsel for both sides 
and a tabular list of funds paid over by the County and 
City between 1952 and 1957 was also stipulated as true. 
These funds totaled about 4% of the hospital’s income 
(App. 28). It also was stipulated that none of the original 
members of the board were on the board at the time plain­
tiff applied (App. 15). The Mayor submitted an affidavit 
relating that the city does not contribute any financial sup­
port to the hospital but charges it for water and sewerage 
(App. 17). Other affidavits were submitted concerning City 
and County payments subsequent to 1953 (Appee. 1, 2, 4).*

* Appee. refers to respondents (appellee’s) appendix in the Court of 
Appeals.



6

Reviewing the facts and the law the District Court held 
on defendants’ motion to dismiss under Rule 12 for lack 
of federal jurisdiction (App. 18) “ that for the lack of 
jurisdiction the complaint must be dismissed . . . ” (App. 
30). The Court of Appeals affirmed, 261 F. 2d 521 (4th 
Cir. 1958).

REASONS FOR ALLOWANCE OF THE WRIT

I

Under the Federal Rules of Civil Procedure dismissal 
under Rule 12 was erroneous.

This case at this stage involves essentially a relatively 
narrow issue: whether the district court should have 
granted the motion “ to dismiss under Rule 12 [of the 
Fedeial Rules of Civil Procedure] for lack o f federal 
jurisdiction,” 164 F. Supp. at 192. Petitioners contend 
that under the liberal provisions of the Federal Rules they 
stated enough in their complaint to have permitted them 
to go to trial and make their proof. As stated in Conley 
v. Gibson, 355 U. S. 41, it is “ the accepted rule that a com­
plaint should not be dismissed for failure to state a claim 
unless it appears beyond doubt that the plaintiff can prove 
no set of facts in support of his claim which would entitle 
him to relief.” 355 U. S. at 45-46. And as stated further 
in that case “ the Federal Rules of Civil Procedure do not 
require a claimant to set out in detail the facts upon which 
he bases his claim. To the contrary, all the Rules require 
is ‘a short and plain statement of the claim’ that will give 
the defendant fair notice of what the plaintiff’s claim is 
and the grounds upon which it rests.” Id. at 47. For “ [t]he 
Federal Rules reject the approach that pleading is a game 
of skill in which one misstep by counsel may be decisive



7

to the outcome and accept the principle that the purpose of 
pleading is to facilitate a proper decision on the merits.” 
Id. at 48.

Nor should it matter as here that the motion to dismiss 
particularly alleged lack of jurisdiction. For jurisdiction, 
in the sense that it was an issue here, was co-extensive with 
the issue posed by the merits: There was no jurisdiction, 
it was held, because the hospital in question was not a 
governmental instrumentality. But whether the hospital 
was a governmental instrumentality or not was the main 
substantive question in the case. The decision of this 
question depended upon the nature and extent of the 
hospital’s contacts with the State,1 something which could 1

1 This Court, of course, has not expressed any definitive formula con­
cerning what constitutes state action under the Fourteenth Amendment. 
The cases indicate that any given determination may depend upon a 
full exposition of what constitutes the nexus between the alleged state 
instrumentality, and the government proper. See, e.g., American Com­
munications v. Douds, 339 U. S. 382, 401 (1950) (“  . . . when au­
thority derives in part from Government’s thumb on the scales, the 
exercise of that power by private persons becomes closely akin, in some 
respects, to its exercise by Government itself.” And see Marsh v. 
Alabama, 326 U. S. 501 (1946) (company town; claim of free speech 
upheld against charge of trespass); Dorsey v. Stuyvesant Town, 299 
N. Y. 512, 87 N. E. 2nd 541 (1949) (state aided urban redevelopment; 
insufficient state action) cert. den. 339 U. S. 981 (1950); Steele v. 
Louisville and N. R.R. Co., 323 U. S. 192 (1944) (Railway Labor 
Act held to require fair representation, forbid racial discrimination); 
Betts v. Easely, 161 Kan. 459, 169 P. 2d 831 (1946) (union held 
governmental entity); Williams v. United States, 341 U. S. 97 (1951) 
(private detective qualified as special police officer; state action); 
Derrington v. Plummer, 240 F. 2d 922 (5th Cir. 1956) (injunction 
issued against county’s lessee); Clark, Charitable Trusts, the Four­
teenth Amendment and the Will of Stephen Girard, 66 Yale L. J. 979 
(1957); Horowitz, The Misleading Search for “ State Action” Under the 
Fourteenth Amendment, 37 Calif. L. Rev. 208 (1957).



8

only be developed by the proof. Plaintiffs submit they were 
not obligated to plead except in general terms. And they 
should have been permitted, it is respectfully submitted, 
to adduce detailed proof to substantiate their general al­
legations.

The general allegations which petitioner made were ade­
quate to permit detailed material proof to be made at the 
trial. For example, it should have been pertinent for peti­
tioner to present proof of the extent to which and the 
manner in which the hospital exercised the right of eminent 
domain (App. 6). Moreover, there is an allegation of the 
complaint, admitted for purposes of the motion to dismiss, 
that defendants have received large grants of money from 
the federal government for expansion and maintenance of 
the said hospital (App. 6). It is difficult to see how the 
motion to dismiss could have been granted without know­
ing how much money was given and in what manner and 
under what conditions. It is noteworthy that neither of 
the opinions below so much as mentions the matter of 
federal contribution.

It is further alleged that the City and County, by means 
of a reverter clause, require the Board of Managers to 
maintain the property as a hospital. This reverter clause, 
however, concerns only part of the property and it would 
bear upon the entire picture to know the fiscal significance 
of this requirement and its meaning for the operation of 
the hospital as a whole. Moreover, it has been alleged that 
the County and City have over the years provided financial 
support for said hospital. It very well might make a differ­
ence for the ultimate result if the court knew how much of 
said financial aid was for capital construction which now 
is a part of the hospital and how much was expended in 
day-to-day operation and is, in a sense, no longer a part 
of the hospital.



9

In short, on the motion to dismiss none of these, nor any 
other of the multitude of facts which might have been 
developed upon a trial, were elicited. The purpose of a 
complaint is not to plead such details but to state a claim 
upon which relief can be granted in support of which such 
details may be marshalled.

Petitioners here note certain public records which are 
only part of the evidence which may be produced in sup­
port of petitioner’s general allegations. These are referred 
to merely as an example of the injustice which is done to 
the notice pleading concept of the Federal Rules by cutting 
off proof when a claim is well stated in general terms:

1. The 1943-44 Annual Report of the City of Wilming­
ton, North Carolina, states at page 30:2

James Walker Memorial Hospital 
City’s Contribution $21,000

Located at Dickinson and Red Cross Streets, this 
general, nonprofit hospital serves the greater portion 
of Wilmington’s white population as well as some of 
the negro population. A new addition, financed by 
federal funds at a cost of $508,000, was placed in ser­
vice in March, 1944, to bring the total number of beds 
available for patients to 300.3

2. Moreover, in. a Petition for Condemnation in the 
Superior Court of New Hanover County, State of North 
Carolina, filed by the Board of Managers of said Hospital 
against Kirby C. Sidbury and W ife on April 28, 1942 to 
condemn land taken for said half-million dollar addition

2 A copy of this Report is being deposited with this petition.

3 The original file concerning this federal grant is a public document, 
now on microfilm, held by the Housing and Home Finance Agency, 
Office of the Administrator, Records, Management Branch, FWA 
Project Docket No. 31-127.



10

the Hospital alleged that it was “ a municipal corporation, 
a public body and body corporate and politic . . . ” Said 
petition for condemnation was granted by final judgment 
in said Superior Court on December 5, 1944, the judgment 
reciting that the petitioner “ is a public body, a body corpo­
rate and politic . . . ” 4

3. There is also a public record of the fact that certain 
costs for capital construction have been paid for by the 
City and County in the Hospital’s complaint at page 6 of 
the Record of Board of Managers of the James Walker 
Memorial Hospital of Wilmington v. City of Wilmington 
and New Hanover County, 237 N. C. 179, 74 S. E. 2d 749, 
to which opinion the District Court (Appendix hereto, 
19a) and the Court of Appeals (Appendix hereto, 4a) 
referred:

The North wing referred to above cost approximately 
$100,000 all told, of which the government contributed 
$40,000 and the City of Wilmington and the County 
of New Hanover paid, beginning the first of the fiscal 
year—the first of July, 1937,—$10,000 each for three 
years, making $60,000 all told, in addition to their 
regular appropriations of $15,000 each.

As stated above these references to public documents are 
made solely for the purpose of demonstrating part of the 
proof that would have been possible at a trial on the merits. 
But notwithstanding petitioners’ substantial general alle­
gations they were not permitted to go to such a trial.

On March 9,1959, this Court handed down an order highly 
suggestive of what should be a proper disposition of this

4 A copy of the Petition for Condemnation and the Final Judgment 
are deposited along with this Petition.



11

cause. In passing on petition for writ of certiorari in 
Oliphant v. Brotherhood of Locomotive Firemen and En- 
ginemen, 262 F. 2d 359 (6th Cir. 1958) this Court ruled 
that “ in view of the abstract context in which the questions 
sought to be raised are presented by this record, the peti­
tion for writ of certiorari is denied.” 27 U. S. L. Wk. 3249. 
In the Oliphant case, however, a “ detailed record,”  265 F. 
2d at 361, had been made. Since plaintiffs therein had made 
such a record, which nonetheless failed to remove the issues 
therein from the level of abstraction, no further proceed­
ings were, it seems, warranted. In the instant case, how­
ever, petitioners are in an entirely converse position. Peti­
tioners herein have not been permitted to present the case 
in a manner sufficiently concrete to pose the highly im­
portant constitutional questions involved. Instead, peti­
tioners have been dismissed on the basis of an abstract 
record.

II
The issue presented is one o f  the highest importance.

Discrimination against Negro physicians generally, and 
especially by governmental institutions, raises a question 
of the gravest national importance. The problem is not 
one merely of the economic boycott practiced against such 
physicians, as in this case where Negro patients are per­
mitted to use the hospital in question, but must accept a 
white physician. As stated in a recent scholarly study of 
the subject conducted under the auspices of the Common­
wealth Fund,

. . . medicine is not simply a matter of individual 
patients who seek out physicians according to whim 
or convenience. Modern medicine is practiced in a 
complicated set of institutions—hospitals, clinics, pub-



12

lie health agencies. The physician’s career involves 
finding a place in the system; the patient’s career as 
a consumer of medical services likewise involves ac­
cess to hospitals, clinics, and other agencies, and his 
association with various social groups—unions, em­
ployers, the armed forces, schools—which connect him 
with health services and insurance schemes. The sys­
tem, operating at its best, sends the patient on from 
his first contact to whatever physicians or agencies 
can best handle his case; it also allows the physician, 
as he develops, to move towards those places in the 
system where he can best join his personal bent and 
ambition with maximum service.5

Because Negro physicians are so often excluded from 
the main stream of medical development they have in­
creasingly in recent years eschewed practice in the South. 
It is shocking that notwithstanding the increase in Negro 
population in major southern cities the absolute number 
of Negro physicians in such cities is decreasing.6 This not 
only affects the quantity of medical care available to the 
Negro community, but as indicated above, seriously affects 
the quality. For as Reitzes has written:

. . . The most important single element in the con­
tinued education of physicians is affiliation with a 
hospital. The nature of the affiliations and the type of 
hospital with which a physician is affiliated is probably 
the best single index of his ability to keep abreast of 
good medical practice.7

Reitzes quotes a Negro physician, as follows, in the ensu­
ing passage:

5 Reitzes, Negroes and Medicine xxx (1958).

6 Id. at 272, 295, 316.

7 Id. at 275.



13

. . . One of the Negro physicians stated that being 
excluded from the stream of medical knowledge in At­
lanta made the Negro physician less competent than 
the white physician. He expressed his resentment and 
bitterness as follows:

All Negro doctors here suffer from being cut off 
from the vital source of information—being with a 
good staff, and having the association and conferences 
of an able staff. The young doctors suffer from this 
as well as the older ones. . . .  A  doctor so deprived dies 
at the root. . . . White doctors my age and with my ex­
perience will rub shoulders with their superiors.8

In view of the fact that the Board of Managers of hos­
pital here involved was, as indicated by the record, ap­
pointed by statute to consist of a majority of governmental 
officers, it appears unquestionable that that board was at 
the time of its appointment a governmental board. Since 
subsequent appointees to the board were appointed by the 
board itself, they were appointees of a governmental body 
and the case should seem squarely to fall under the first 
Girard Trust decision, 353 U. S. 230. For just as Girard 
College was managed by a municipal board, so the board 
in this case started out as a municipal board. It cannot 
seriously be urged that the death of the original members 
whose replacements were selected by the board made it any 
less a governmental entity. The Oliphant case, however, 
indicates that it is the view of this Court that questions of 
this sort should not be decided as abstractions, but on the 
basis of a complete record. Therefore petitioners respect­

8 Ibid. And see 49 Journal of the National Medical Association, 272, 
352, 429 (1957) (setting forth reports on discrimination in hospitals 
throughout the nation).



14

fully submit that on the authority of the Oliphant case and 
Conley v. Gibson, supra, the judgment below should be 
vacated and petitioners permitted to make their proof.

CONCLUSION

Wherefore for the foregoing reasons it is respectfully 
submitted that the petition for writ of certiorari should 
be granted.

Respectfully submitted,

T hubgood M abshall  
J ack  Gbeenbebg

10 Columbus Circle 
New York 19, New York

CONBAD 0 .  P eABSON
203% E. Chapel Hill Street 
Durham, North Carolina

R obebt R . B ond

612 Red Cross Street 
Wilmington, North Carolina

Counsel for Petitioners



la

A P P E N D I X

UNITED STATES COURT OF APPEALS 

F ourth  C ircu it

(Argued Oct. 24, 1958 Decided Nov. 29, 1958.)

H ubert A. E aton , D aniel, C. R oane, and 
S am u e l  J ames G ray ,

Appellants,
— v .—

B oard oe M anagers of th e  J ames W alker  M em orial H ospi­
tal , a body corporate, Alan A. Marshall, Chairman, 
H. E. Hamilton, Secretary of the Board of Managers 
of the James Walker Memorial Hospital, the City of 
Wilmington, North Carolina, Dan D. Cameron, Mayor, 
and the County of New Hanover, North Carolina, Ralph 
T. Harton, Chairman of County Commissioners,

Appellees.

S oper, Circuit Judge:

The question in this case is whether certain Negro physi­
cians practicing in Wilmington, North Carolina, are entitled 
to a declaratory judgment that they may not be excluded 
from courtesy staff privileges at the James Walker Me­
morial Hospital in that city solely on account of their race 
or color. The suit was brought by three physicians against 
the Board of Managers of the hospital, the City of W il­
mington, and the County of New Hanover. Federal juris­
diction is based on the theory that the Board of Managers 
of the hospital, a corporation created by an act of the



2a

General Assembly of North Carolina, is an instrumentality 
of the City of Wilmington and the County of New Hanover 
and as such is an agency of the State of North Carolina, 
which is prohibited by the first section of the Fourteenth 
Amendment to the Federal Constitution from denying to 
any person within its jurisdiction the equal protection of 
the laws. Jurisdiction is also based on the civil rights 
statutes, 42 U. S. C. A. §§1981, 1983, which furnish redress 
for persons who are deprived of their constitutional rights 
under color of any State statute or usage.

The defendants filed a motion to dismiss the complaint 
on the ground that the hospital is a private corporation 
not subject to State control, and hence the discriminatory 
treatment complained of can not be regarded as State ac­
tion cognizable in a Federal court. The District Judge 
being of the opinion (164 F. Supp. 191) that this position 
was sustained by the undisputed facts set forth in the 
pleadings, stipulation and affidavits of the parties, dis­
missed the complaint.

The City of Wilmington and the County of New Hanover 
were authorized by Chapter 23 of the Public Laws of North 
Carolina of 1881, to establish and maintain a hospital and 
accordingly acquired land, erected a building thereon and 
established a hospital under the control of the Board of 
Managers of the City Hospital of Wilmington. In 1900, 
James Walker, a charitable citizen of Wilmington, fur­
nished funds to build a modern hospital on the site of the 
City Hospital, and the old building was razed and construc­
tion of the new building was begun. It was completed on 
July 19, 1901, after Mr. Walker’s death. He specified in 
his will that his executors should provide such moneys as 
were necessary for the completion of the building and 
should deliver and turn it over to the proper authorities 
of the City and of the County to be held and used by them 
as a hospital for the sick and afflicted.



3a

As a result of this benefaction the Board of Managers of 
the James Walker Memorial Hospital was chartered by 
Chapter 12 of the Private Laws of North Carolina of 1901. 
This statute noted the liberality of the donor in providing 
a modern hospital for the maintenance of the sick and 
infirm poor who might become a charge upon the City and 
County, as well as for other persons, and declared that it 
was desirable that the management of the hospital be 
removed as far as possible from the control of local munici­
pal authorities, subject to changing political conditions, and 
to that end chartered the hospital as a body corporate, 
provided for the selection of the individuals to constitute 
the original Board of Managers and made them a self- 
perpetuating body empowered to succeed to the powers 
and duties of the Board of Managers of the City Hospital 
after the new hospital had been turned over to and ac­
cepted by the City and County. Upon the completion of the 
building in 1901, the City and County conveyed the tract 
of land upon which it stood to the new Board of Managers 
of the hospital to hold in trust for the use of the hospital 
so long as it should be maintained as such for the benefit 
of the City and County, with reverter to the City and 
County in case of its disuse or abandonment. Subsequently 
additional land was acquired and additional buildings were 
erected by the Board of Managers.

The hospital has been operated under the authority of 
this Board of Managers since its charter was granted in 
1901. In that charter it was stipulated that New Hanover 
County should provide the sum of $4,800 annually and the 
City of Wilmington $3,200 annually, to be placed in the 
hands of the Board of Managers of the hospital for the 
maintenance and medical care of the sick and infirm poor 
admitted thereto. Subsequent acts of the General Assem­
bly, passed in 1907, 1915, 1937, 1939, and 1951, authorized 
various appropriations to be made for these purposes by



4a

the City and County. All of these provisions, however, 
were declared to be unconstitutional by the Supreme Court 
of North Carolina in Board of Managers of the James 
Walker Memorial Hospital of Wilmington v. City of Wil­
mington, 1953, 237 N. C. 179, 74 S. E. 2d 749, in which the 
hospital sought a declaratory judgment adjudging the 
rights of the hospital to support from the City and County 
for the care of their sick and indigent. The court held that 
the appropriations for the hospital contained in the acts of 
1901, 1907 and 1915 were invalid since the support of the 
hospital was not a necessary governmental expense and 
had not been approved by a majority of the qualified voters 
of the area, which is a prerequisite to the validity of an 
appropriation for an unnecessary governmental expense 
under Article VII, Section 7, of the State Constitution. 
The provisions for the payment of moneys to the hospital 
under the acts of 1937, 1939 and 1951 were also held invalid 
on the ground that they contravened the provisions of 
Article II, Section 29, of the State Constitution, adopted 
by the vote of the people of the State in 1916, which pro­
hibited the passage of any local act relating to health.

The Supreme Court of North Carolina, however, pointed 
out in the cited case that the General Assembly of the State 
has power to authorize the governing body of any city or 
county to contract with the hospital for the medical care 
and hospitalization of the sick and poor of the area. Such 
a statute had previously been enacted for certain other 
towns and counties, and a similar act, applicable to the 
City and County in this case, was passed by the General 
Assembly of North Carolina, in Chapter 878 of the acts of 
1953, G. S. '§153-176.1, under which funds have been paid 
to the James Walker Memorial Hospital by the City and 
County under contract. The amounts thus paid and the 
total cash revenues of the hospital from 1952 to 1957 were 
as follows:



Receipts
City of Wilmington Total All

Year & County of New Hanover Cash Receipts
1952 .... ................  $24 ,149 .60  .................... . $  922,061.78
1953 .... ................  21,672.75 .................... 974,520.02
1954 .... ................  60,867.32 .................... . 1 ,081,903.33
1955 .... ................  46 ,285 .40  .................... . 1 ,081,144.80
1956 .... ................  64,804.36 .................... . 1 ,228,403.34
1957 .... ..... ........ 60,271.05 .................... . 1 ,412,509.56

At the time of the trial of the suit the City did not have 
a contract with the hospital and provided no revenue to it, 
but the County operated under a contract dated May 6, 
1957, for the care of certified indigent patients whereby it 
paid a specified per diem, which amounted to $16 per day 
per patient. The per diem cost was between $18 and $19.

On March 19, 1955, the plaintiffs applied for staff privi­
leges at the hospital, which consisted of allowing the use of 
private rooms and pay wards for the patients of physicians. 
The applications were denied, and for the purpose of this 
action it is conceded that the applications were properly 
made but were denied by the Board of Managers solely on 
account of the race of the applicants. The plaintiffs argue 
that this action of the Board amounts to action by the State 
which the Federal court has power to interdict. They rest 
their contention mainly upon the following circumstances:

1. The establishment of the original hospital on the 
present site and the appropriation of certain moneys for 
its maintenance by the City and County under authority 
of Chapter 23 of the act of the General Assembly of North 
Carolina, 1881.

2. The operation of the hospital by the City and County 
thereafter until 1901.

3. The declarations in Chapter 12 of the act of 1901, 
incorporating the James Walker Memorial Hospital, that



6a,

the City and County had been provided with a modern 
hospital for the care of the sick and infirm poor of the 
locality and that the City and County should appropriate 
certain moneys annually for the maintenance of the hospi­
tal, and also that the Board of Managers named in the act 
should succeed to all the powers and duties of the Board of 
Managers of the former City Hospital as soon as the new 
building was completed and turned over to the City and 
County and accepted by them.

4. The declaration in the will of James Walker that 
after the completion of the new hospital his executors 
should deliver and turn it over to the authorities of the 
City and County to be held and used by them as a hospital 
for the treatment of the sick and infirm.

5. The provisions of the deed by which the site of the 
hospital was conveyed by the City and County to the Board 
of Managers of the James Walker Memorial Hospital in 
1901, in trust for the use of the hospital so long as it should 
be maintained for the benefit of the City and County, with 
reverter to the City and County in case of disuse or aban­
donment.

6. The substantial appropriations for the support and 
maintenance of the hospital by the City and County under 
the authority of acts of the General Assembly between 1907 
and 1951. It is said that these appropriations were made to 
carry out the provisions of Article XI, Section 7, of the 
State Constitution, which declares the duty of the General 
Assembly to make beneficent provision for the poor and 
unfortunate and to appoint a Board of Public Charities to 
supervise all State charitable and penal institutions.

With respect to the decision in Board of Managers of 
the James Walker Memorial Hospital of Wilmington v. 
City of Wilmington, supra, it is said that the court did not



7a

declare it beyond the power of the State to make appropri­
ations for the maintenance of a hospital but merely held 
that the appropriations referred to were invalid because 
they had not been made in the manner prescribed by the 
State Constitution; and hence the decision may not be 
taken as authority for the proposition that the hospital is 
not an instrumentality of the State.

With respect to the act of 1901 creating the new hospital 
corporation and the deed of 1901 conveying to it the site 
of the hospital, it is contended that the City and County 
were thereby made the beneficiaries of the trust and the 
Board of Managers of the hospital was made the trustee 
and an agency of the State subject to the provisions of the 
Federal Constitution. Reference is made to Commonwealth 
of Pennsylvania v. Board of Directors of City Trusts of 
City of Philadelphia, 353 U. S. 230, 77 S. Ct, 806, 1 L. Ed. 
2d 792, where it was held that the managing board of 
Girard College was made an agency of the State by an act 
of the Pennsylvania Legislature and therefore could not 
exclude Negro children as directed by the will of the 
founder.

Finally, it is contended, on the authority of our decision 
in Kerr v. Enoch Pratt Free Library of Baltimore City, 4 
Cir., 149 F. 2d 212, that the establishment of the Board of 
Managers of the James Walker Memorial Hospital, as an 
independent self-perpetuating body by the act of North 
Carolina Legislature in 1901, is not inconsistent with its 
status as an instrumentality of the State. It is emphasized 
that in the cited case we held that the Board of Trustees of 
the Library was an agency of the State of Maryland al­
though it had been given control of the institution with the 
power of self-perpetuation by an act of the Maryland 
Legislature.

The plaintiffs rightfully confine their effort on this ap­
peal to showing that the hospital is an instrumentality of



the State. They do not argue that the exclusion of qualified 
physicians solely because of their race from an institution 
devoted to the care of the sick is indefensible, as they might 
well do if this court was the proper forum to determine the 
ethical quality of the action. As a Federal court we are 
powerless to take into account this aspect of the ease. We 
may not interfere unless there is State action which offends 
the Federal Constitution. From this viewpoint we find no 
error in the decision of the District Court for the facts 
clearly show that when the present suit was brought, and 
for years before, the hospital was not an instrumentality 
of the State but a corporation managed and operated by 
an independent board free from State control.

This has not always been the case. In 1881, when the 
hospital was established, and thereafter during the period 
ending in 1901, when it was supported and operated by 
municipal authority, it might well have been described as 
a State agency even though the funds for its operation had 
been illegally appropriated by the municipalities. But in 
that year a basic change took place when, taking advantage 
of the beneficence of Mr. Walker, the City and County con­
veyed the land on which the old building stood to the Board 
of Trustees of the James Walker Memorial Hospital, a 
new corporation created by an act of legislature with full 
powers of management and self-perpetuation. At that time 
a new building was erected on the site with funds provided 
by the benefactor. It would seem from the evidence that 
the hospital then ceased to be a public agency, although in 
the subsequent years until 1951 it received certain financial 
support from the City and County, the amount of which 
the record before us does not reveal. Any doubt on this 
point vanished in 1952 and 1953, when annual appropria­
tions came to an end as the result of the decision of the 
Supreme Court of the State, and patients sent to the hospi­
tal by the local governments were treated and paid for



9a

under contract on a per diem basis. It is beyond dispute 
that from that time on the civic authorities have had no 
share in the operation of the hospital and the Board of 
Managers have been in full control.

This conclusion is not precluded by the terms of the deed 
through which the corporation gained title to the land upon 
express trust to operate the hospital for the benefit of the 
City and County. A very similar situation was before the 
Supreme Court of the United States in Board of Trustees 
of Vincennes University v. State of Indiana, 14 How. 268, 
14 L. Ed. 416, where it was held that a grant of public land 
by an act of Congress to the Board of Trustees of the 
University did not make the Board a public corporation. 
The Court said, 14 How. at pages 276-277:

“ * * * The corporators were vested with all the 
necessary powers to carry out the trust. And for the 
purposes of the trust, the title became vested in them, 
as soon as they acquired a capacity to receive it. This 
corporation had no political powers, and could, in no 
legal sense, be considered as officers of the State. They 
were not appointed by the State. Their perpetuity 
depended upon the exercise of their own functions; and 
they were no more responsible for the performance of 
their duties, than other corporations established by the 
State to execute private trust.

“ So far as regards the trust confided to the com­
plainants, there is nothing which, by construction, can 
make it a public corporation. # * * ”

The course of the decision in the case of Girard College 
also illustrates the point.1 In Commonwealth of Pennsyl­

1 For an interesting discussion of this case by Elias Clark, see Chari­
table Trusts, The Fourteenth Amendment and the Will of Stephen 
Girard, 66 Yale L.J. 979.



10a

vania v. Board of Directors of City Trusts of City of Phila­
delphia, 353 U. S. 230, 77 S. Ct. 806, 1 L. Ed. 2d 792, the 
Supreme Court held that the exclusion of Negro boys from 
Girard College violated the Fourteenth Amendment al­
though the college was established with funds provided 
under the will of Stephen Girard, which directed that ad­
missions be limited to white male orphans. The will named 
the City of Philadelphia as trustee but subsequently, and 
for a long period of years before the institution of the 
suit, the trust had been administered by the Board of 
Directors of City Trusts of Philadelphia, a body created 
by an act of the Pennsylvania Legislature. The Court held 
that under the terms of the statute the Board was an agency 
of the city and therefore the exclusion of Negro boys was 
unconstitutional. After this decision the Board was re­
moved as trustee and the college was turned over to private 
trustees under an order of the Orphans’ Court of Phila­
delphia and the restriction of the college to white students 
was continued. On appeal to the Supreme Court of Penn­
sylvania it was held that this procedure was not incon­
sistent with the mandate of the Supreme Court of the 
United States and did not violate the Fourteenth Amend­
ment. In re Girard College Trusteeship, 391 Pa. 434, 138 
A. 2d 844. The case was then appealed to the Supreme 
Court of the United States, which granted a motion to 
dismiss the appeal and also, treating the case as a petition 
for writ of certiorari, denied the writ. Later, on October 
13, 1958, reconsideration of this decision was denied, 79
S. Ct. 14.

The State Supreme Court pointed out that the Supreme 
Court of the United States based its decision in 1957 only 
on the ground that the managing board then in control of 
the college had been constituted an agency of the State by 
the enabling act and was therefore subject to the Four­
teenth Amendment; but that the new board thereafter set



11a

up by the Orphans’ Court of Philadelphia, being composed 
of private citizens, was not a State agency and was there­
fore free to carry out the terms of the Girard will. The 
court held that the inability of the old Board to discrimi­
nate in the admission of students to the college affected the 
trustee and not the trust and that it was within the power 
of the Orphans’ Court to substitute a new trustee in order 
to effectuate the charitable purposes of the testator. The 
court also held that the removal of the old and the substi­
tution of new trustees by the court did not constitute 
State action within the scope of the Amendment; and it 
rejected the theory that State action is inherent in chari­
table trusts generally even if they are not administered by 
an agency of the State. We find no decision to the contrary.

The plaintiffs contend that the pending case is indis­
tinguishable from our decision in Kerr v. Enoch Pratt 
Free Library of Baltimore City, 149 F. 2d 212, where we 
held that the Board of Trustees of the Library was a City 
agency notwithstanding the fact that its charter provided 
that it should be managed by a private board of trustees 
created by the donor and clothed with power to appoint 
their successors. In our view the cases are clearly dis­
tinguishable. The similarity between them is confined to 
the one circumstance: that in each instance a self-per­
petuating governing body had been placed in charge by an 
act of legislature in compliance with the wishes of the 
donor. The distinguishing features, on the other hand, are 
decisive. The Library was completely owned and largely 
supported from the beginning by the City and at the time 
the suit was brought it was occupying a modern building 
erected by the City on land owned by the City and, more 
importantly, substantially all of the revenues of the insti­
tution were derived from the City in the form of budgetary 
appropriations. In short, it was shown that the Library 
was so completely subsidized by the City that in practical



12a

effect its operations were subject to the City’s control. 
In the pending case, as we have shown, the hospital is 
neither owned nor controlled by the municipalities and the 
revenues derived from them on a contract basis amount to 
less than 4% per cent of its total income.

Affirmed.



13a

UNITED STATES DISTRICT COURT 

E. D. N orth  C arolina 

W ilm in g to n  D ivision

Civ. No. 700 

June 24, 1958

H ubert  A. E aton , D a n ie l  C. R oane and 
S am u el  J am es  Gray ,

Plaintiffs,

B oard oe M anagers oe th e  J am es W alker  M em orial  H ospi­
tal , a body corporate; Alan A. Marshall, Chairman; 
H. E. Hamilton, Secretary of the Board of Managers 
of the James Walker Memorial Hospital; The City of 
Wilmington, North Carolina, Dan D. Cameron, Mayor; 
and the County of New Hanover, North Carolina, Ralph
T. Horton, Chairman of County Commissioners,

Defendants.

G il l ia m , District Judge:

The instant suit is brought by three Negro doctors for 
themselves and for other Negro doctors, as a class, for the 
purpose of obtaining admission to practice medicine at 
James Walker Memorial Hospital on what is known as 
the “ Courtesy Staff.” The City of Wilmington and the 
County of New Hanover are made parties defendant in 
addition to the Hospital’s Board of Managers and H. E. 
Hamilton who is Secretary of the Board. The defendants 
move to dismiss under Rule 12, Fed. Rules Civ. Proc. 28
U. S. C. A. for lack of federal jurisdiction. The facts of



14a

the case, as determined by pleadings and affidavits, appear 
to be as follows:

By virtue of Chapter 23 of the Public Laws of the North 
Carolina General Assembly of 1881, the City of Wilmington 
and the County of New Hanover were authorized to es­
tablish and maintain a hospital. Pursuant to this authori­
zation land was acquired and the City Hospital of W il­
mington became existent, subsequent expenses relating 
thereto being borne 40 percent by the City and 60 percent 
by the County.

In 1900 Mr. James Walker offered to build a modern 
hospital on the property then owned by the City and County 
and occupied by the City Hospital of Wilmington. The 
building used by the latter institution was removed, and 
construction of the new hospital was begun. The new build­
ing was finished after Mr. Walker’s death and under the 
direction of his will.

As a result of Mr. Walker’s offer, the defendant, Board 
of Managers of James Walker Memorial Hospital of the 
City of Wilmington, North Carolina, was chartered by the 
North Carolina legislature under Chapter 12 of the Private 
Laws of 1901. The purpose of this private law, as stated 
in its preamble, was to provide for the management of a 
hospital in New Hanover County and Wilmington, N. C., 
which hospital had been built with funds provided by one 
James Walker to provide for the maintenance and medical 
care of sick and infirm poor persons who might from time 
to time become chargeable to the charity of the City and 
County, and to provide for other persons who might be 
admitted. The charter further provided that it was de­
sirable, and that the purpose of the act was to remove the 
management of the hospital as far as possible from the 
vicissitudes which generally result when such an institution 
is left in control of local municipal authorities. The act



15a

further declared that it was the purpose to provide for the 
permanent maintenance of the hospital by said City and 
County. To this end the hospital was chartered as a body 
corporate with all the rights and privileges conferred upon 
corporations under law. The original Board of Managers 
of the hospital was appointed pursuant to this act. Three 
were elected by the Board of Commissioners of New Han­
over County; two were elected by the Board of Aldermen 
of the City of Wilmington and four members were selected 
by Mr. James Walker. This board is self-perpetuating 
and has continued as such since its inception.

Upon the completion of the new James Walker Memorial 
Hospital building on July 19, 1901, the City of Wilmington 
and the County of New Hanover conveyed to the Board 
of Managers of James Walker Memorial Hospital of the 
City of Wilmington, N. C. a tract of land consisting of all 
of Block 227 of the City of Wilmington to hold “ so long as 
the same shall be used and maintained as a hospital for 
the benefit of the County and City aforesaid, and in case 
of disuse or abandonment to revert to the said City and 
County as their interests respectively appear * * # The 
deed specifically refers to the fact that the General As­
sembly has created and established a hospital under the 
supervision of a Board of Managers and the conveyance 
states that it is for the purpose of removing the man­
agement of the hospital as far as possible from the vicis­
situdes which generally result when such an institution is 
left under the control of municipal authorities. The effect 
of this deed was to convey to the original Board of Man­
agers of James Walker Memorial Hospital of the City of 
Wilmington, N. C., a separate corporation, all of Block 227 
of the City of Wilmington, N. C., which had on it a build­
ing which had been built with funds provided by the late 
James Walker. After the acquisition of this property ad­
ditional buildings were built thereon and also an additional



16a

city block was acquired in fee simple by the Board of Man­
agers upon which the south wing of the hospital is now lo­
cated. The acquisition of the additional property was in 
fee simple without the restrictions set forth in the deed 
from the City and County.

After this conveyance was made the corporation created 
by the Private Law of 1901 took over the operation of the 
hospital. At the time of the institution of this suit none 
of the original members of the Board of Managers were 
still on the Board and no member of the City or County 
government is now a member of the Board or in any way 
in charge of the affairs of James Walker Memorial Hos­
pital. The corporate charter gives the Board of Managers 
the absolute power to manage the hospital and to pass all 
rules and regulations necessary therefor, and since its in­
ception the hospital has been operated, without inter­
ference or control by the City of Wilmington or New Han­
over County, by its own self-perpetuating Board of Man­
agers which have a separate corporate existence.

As was stated above, the Act of 1901 which chartered 
the hospital provided for funds in the annual amount of 
$8,000 from the City (40 percent) and County (60 percent) 
to maintain it. Subsequently additional acts were passed 
by the legislature to provide for maintenance as follows:

The Private Act of 1907, Chapter 38 of the North Caro­
lina General Assembly, provided that annual appropria­
tions could be made from public funds of the City of W il­
mington and the County of New Hanover in order that the 
hospital be run in an efficient manner. The Public-Local Act 
of 1915, Chapter 66, provided that the appropriation for 
the support of the James Walker Memorial Hospital should 
be contributed and paid in equal proportions, one-half by 
the City and one-half by the County, and should not be 
less than an annual amount of $15,000 by said City and 
County. The Public-Local Act of 1937, Chapter 8, pro-



17a

vided that a minimum annual appropriation of $50,000 
would be necessary to give proper medical and hospital 
attention to the indigent sick and afflicted poor of the City 
and County, and said Act authorized and directed the City 
and County to make such minimum appropriation to enable 
the hospital to properly care for the indigent sick and 
afflicted poor and to renew its facilities and make addi­
tions to its physical plant. The Public-Local Law of 1939, 
Chapter 470, authorized the City and County to enter into 
contracts with the James Walker Memorial Hospital and 
to appropriate annually a sum not to exceed the amount 
of $25,000 each and authorized, if necessary, an additional 
tax levy. The Session Laws of 1951, Chapter 906, provided 
for contributions of the City and County to the James 
Walker Memorial Hospital to be on a per diem basis for 
the indigent sick and afflicted poor of said City and County.

Pursuant to all of the above statutes, the City of W il­
mington, North Carolina, and the County of New Hanover 
made payments to the hospital up to the year 1951. In this 
latter year the provisions of the Act of 1901 relating to 
financing the hospital and all subsequent acts were declared 
unconstitutional by the Supreme Court of North Carolina 
in Board of Managers v. Wilmington, 237 N. C. 179, 74 
S. E. 2d 749. Since 1951 funds have been paid to the hospi­
tal by the City and County under contract pursuant to 
Article 14A of Chapter 153, General Statutes of North 
Carolina, enacted in 1953. The amounts so paid are as 
follows:

Receipts Receipts Total All
City of County of Other Cash

Year Wilmington New Hanover Total Receipts Receipts
1952 $ 1,666.71 $22,482.89 $24,149.60 $ 897,912.18 $ 922,061.78
1953 None 21,672.75 21,672.75 952,847.27 974,520.02
1954 26,118.31 34,749.01 60,867.32 1,021,036.01 1,081,903.33
1955 12,945.67 33,339.73 46,285.40 1,034,859.40 1,081,144.80
1956 23,675.33 41,129.03 64,804.36 1,163,598.98

1,352,238.51
1.228,403.34

1957 1,738.00 58,533.05 60,271.05 1,412,509.56



18a

At the present time the City does not have a contract 
with the hospital and in no way is a source of revenue for 
the same. The County, however, continues to pay accord­
ing to contract for the care of indigent patients. The his­
tory of this contract and its terms are as follows:

On May 6, 1957, the County of New Hanover requested 
to he quoted the rates under which James Walker Me­
morial Hospital would undertake the care of certified indi­
gent patients. On May 15, 1957, the hospital furnished the 
County of New Hanover with the following proposal:

“ The hospital will accept certified indigent patients 
for a per diem cost of $16.00. Of course, the County in 
its payment may deduct the $3.00 which the hospital 
will receive from other agencies for MCC (Medical 
Care Commission) cases, or $1.00 a day for SS (Social 
Security) cases.

“ In 1954 the hospital’s per diem cost was $15.15 and 
the indigent care cost to the County was set at $15.00. 
In 1955 the hospital’s per diem cost was $16.40, and in 
1956 it was $17.60 not including depreciation. The 
average per diem cost for North and South Carolina 
hospitals in a category with this hospital was ap­
proximately $18.00 to $19.00.

“ In view of the data above, the Hospital Board of 
Managers feels that this rate is reasonable and will 
meet with your approval.”

This proposal was accepted by the County and certified 
welfare patients are presently treated at a per diem cost 
of $16.

On March 19, 1955, the plaintiffs applied for “ Courtesy 
Staff” privileges in the James Walker Memorial Hospital. 
The sole privileges of members of the “ Courtesy Staff” is 
that they are allowed the use of private rooms and pay



19a

wards for their patients. Charity patients who are cer­
tified by the County are not treated by the “ Courtesy 
Staff” members, and the “ Courtesy Staff” members re­
ceive no part of the public funds which are paid for the 
per diem cost of treatment of charity patients. For the 
purpose of the instant motion, it is conceded that the 
applications for the “ Courtesy Staff” privileges were prop­
erly made and that the plaintiffs were denied the same 
solely on account of their race.

On the above facts the defendants move to dismiss con­
tending that the denial of “ Courtesy Staff” privileges to 
the plaintiffs by the hospital is not State action within the 
purview of the Fourteenth Amendment, and, consequently, 
the litigation contains no basis for federal jurisdiction. 
The ultimate question, therefore, is whether the action of 
the hospital constituted public or private conduct. If the 
hospital is a private corporation, then its conduct is also 
private.

At the outset, it is manifest that the fact that the hos­
pital’s purpose is to promote the public interest and con­
venience in providing a place for the sick and afflicted does 
not render the hospital a public corporation. This dis­
tinction is clearly set forth in the concurring opinion of 
Story, J., in the case of the Trustees of Dartmouth Col­
lege v. Woodard, 4 Wheat. 518, 4 L. Ed. 629:

“When, then, the argument assumes, that because 
the charity is public, the corporation is public, it man­
ifestly confounds the popular, with the strictly legal, 
sense of the terms * * # When the corporation is said, 
at the bar, to be public, it is not merely meant that 
the whole community may be the proper objects of 
the bounty, but that the government have the sole 
right, as trustee of the public interest, to regulate, 
control and direct the corporation, and its funds and



20a

its franchises, at its own will and pleasure. Now such 
an authority does not exist in the government, except 
where the corporation, is in the strictest sense, public; 
that is, where its whole interests and franchises are 
the exclusive property and domain of the government 
itself.”

And further:

“A hospital founded by a private benefactor is, in 
point of law, a private corporation, although dedi­
cated by its charter to general charity. * * * It was 
indeed supposed at the argument, that if the uses of 
an eleemosynary corporation be for general charity, 
this alone would constitute it a public corporation. 
But the law is certainly not so.”

Rather than the nature of its purpose or objective, the 
legal test between a private and a public corporation is 
whether the corporation is subject to control by public 
authority, State or municipal. Mitchell v. Boys Club of 
Metropolitan Police, D. C., 157 F. Supp. 101.1 The essence 
of this concept is that the present ability to control carries 
with it the responsibility for the present action of that 
which can be controlled.

When considering the ability to control, it must be noted 
that it is a composite of elements, for there are as many 
elements of control as there are qualities and quantities 
in the controlled subject. The elements must be viewed in

*A private hospital is defined in 41 C. J. S. Hospitals §1, as one 
“ Founded and maintained by private persons or a corporation, the 
state or municipality having no voice in the management or control 
of its property or the formation of the rules for its government.” By 
implication, The Courts of North Carolina recognize this test in 
Carolina-Virginia Coastal Highway v. Coastal Turnpike Authority, 237 
N. C. 52, 74 S. E. 2d 310.



21a

their relationship to each other and as part of a sum total, 
and for this reason each case must he viewed on its merits.2

2 For this reason the Court will not attempt to discuss and compare at length the 
cases of Kerr v. Enoch Pratt Free Library of Baltimore City, 4 Cir., 149 F. 2d 212, 
and Norris v. Mayor and City Council of Baltimore, D. C., 78 F. Supp. 451, with the 
instant litigation. A summary comparison, however, is as follows:

Enoch Pratt Maryland
Library Institute

Value of plant 
owned and used 
by

Value of plant 
owned by City 
but used by

Annual gross in­
come from prop­
erty or activities 
of

A n n u a l  sums 
paid by City 
and State

P r o p o r t i o n  
of public funds 
received to total 
budget

Public status of 
employees

Control of dis­
bursements by 
city

Salary checks for 
employees

Salary of em­
ployees

Control of Bud­
get

None

Over $4,000,000

$6,000 to $8,000

Over $800,000

99%

Included in munici­
pal employees re­
tirement system

Made through City 
Bureau of Control 
and Accounts on 
vouchers submitted 
by Trustees

Issued by City Pay­
roll Officer

Conform to City 
salary schedule

Submitted to mu­
nicipal budget au­
thorities

$500,000
(Cost)

Leased for $500 per 
year of one city 
building which for 
commercial p u r ­
poses would rent 
for $12,000 a year

$184,000

$42,500 (under con­
tract for scholar­
ships)

About 23% (under 
contract)

None

None

None

None

None

James Walker 
Memorial Hospital
$756,000
(depreciated value)

L a n d  valued at 
$54,000. City and 
County have re­
verter only if aban­
doned by hospital 
in one-half of prop­
erty

$1,412,509.56— 
1957

$60,271.05 ( P a i d  
under contract for 
indigents for ser­
vices rendered)—  
1957

About 4.6% (un­
der contract)

None

None

None

None

None



22a

Past contacts with connotations of control have no im­
portance other than to explain the existing relationship. 
In short, the present ability to control must be determined 
by considering the sum total of all existing relationships 
between the corporation and the State.

Turning to an examination of the elements of State con­
trol as they extend to the hospital in the ease at bar, it is 
noted that the charter of the corporation here involved was 
granted by the General Assembly of North Carolina pursu­
ant to private act. This act created the corporation with its 
own Board of Managers and with full power and authority 
to set forth its own rules and regulations. The express pur­
pose of the act was to remove this corporation and the hos­
pital which it was to operate from the politics which are 
connected with local City and County governments. No ele­
ment of control over the corporation was retained in either 
the City or the County after the initial appointment of the 
Board of Managers. Inasmuch as no member of the Board 
of Managers as originally appointed is presently connected 
with the hospital (all of these having been replaced by 
persons who were elected by the self-perpetuating board), 
this element of control has long since expended itself. The 
hospital receives at present from the County only 4.27% 
of its income, and this money is received by virtue of con­
tract for services performed. For the past six years money 
so received has amounted to an average of 4.05% of total 
revenue. The County has no voice in how such money shall 
be spent. The hospital was not created for political pur­
poses, nor endowed with political powers. It is not an 
instrument of the government for the administration of 
public duties.

The fact that one-half of the property presently owned by 
the hospital was originally owned by the City and County 
has no bearing on present control. This Court knows of no 
authority which holds that the bona fide conveyance to a



23a

private corporation of public lands in turn makes a pri­
vate corporation an agency of the State or creates the 
status of a public corporation. Indeed the conveyance was 
in good faith and for the very purpose of removing the 
City’s and County’s control with regard to the property. 
The deed clearly accomplished this purpose. The only way 
the City and County can claim an interest in the property 
or any control over the property would be in the event that 
the hosjjital ceased to be used for the care of the sick and 
afflicted of New Hanover County. The purpose and effect 
of the deed is to carry out the intent of the charter to cre­
ate a public charity but not a public corporation. The City 
and County may eventually regain the property, but this 
possibility is distinctly within the control of the hospital 
corporation. Only the latter possesses initiative with re­
gard to the same.

The past contributions to the hospital by the City and 
County under the acts of the legislature, which were later 
declared invalid in Board of Managers v. Wilmington, 
supra, are not sufficient to convert the hospital into a public 
corporation. Mitchell v. Boys Club of Metropolitan Police, 
supra. In this regard the following comment of Judge 
Chesnut in Norris v. Mayor and City Council of Baltimore, 
D. C., 78 F. Supp. 451, 460, seems appropriate:

“ Counsel for the plaintiff advances a new and far- 
reaching proposition not within the principle of the 
Pratt Library Case. The contention is that whenever 
the State or Baltimore City as a municipal agency of 
the State, advances money to a private corporation of 
an educational nature in an appreciably substantial 
amount which thereby becomes mingled with other 
general funds of the institution, that action of the in­
stitution or City thereby becomes State action within 
the scope of the 14th Amendment. No authority is



24a

cited for this proposition and I know of none. In my 
opinion it is untenable.”

In addition the past contributions do not have any rela­
tive bearing on the matter of the control of the hospital; 
and the possibility of any such contributions in the future 
has been foreclosed by judicial decision of the State of 
North Carolina.

In summation, the only links between the State of North 
Carolina and the hospital are these: 1.) the City and 
County have a reverter in one-half of the hospital’s land 
should the same fail to be used for hospital purposes; 2.) 
the County pays at a rate provided by contract for the 
treatment of indigent patients. These factors do not carry 
with them such control as to render the hospital a public 
corporation. The Court concludes, therefore, that the 
plaintiff is not entitled to the declaratory judgment prayed 
for because the act of discrimination did not constitute 
“ State action.” It results that for the lack of jurisdiction 
the complaint must be dismissed, and it is so ordered.