For more than 50 years, disabled Utah miners were treated at a Park City hospital financed by trust lands designated at statehood for that purpose. When the mines closed there, so did the hospital.
The Utah Legislature eventually transferred the Miners Hospital trust fund and its assets to the University of Utah to establish a rehabilitation building or unit. That 1957 transfer gave birth to the Division of Physical Medicine and Rehabilitation at the U. Medical Center.The Miners Hospital trust fund, one of four that produces income for the U., generated $100,808 for the U. rehabilitation division in fiscal year 1991.
But the Legislature may not have had the authority to do what it did 34 years ago.
"I think it is very possible that it was illegal for the state to do what it did," said U. law professor Robert L. Schmid, an expert in trusts.
A trust is set up for a specific purpose, explained Schimd, and the money's use for another purpose is a breach of trust.
If, for example, a trust is set up for a needy child and that child subsequently dies, the trustee cannot transfer the trust fund to another beneficiary. The money reverts back to the donor or his heirs, Schmid explained.
In the case of the Miners Hospital, the donor is the federal government. The trustee is the state. The beneficiary is the Miners Hospital.
When Utah became a state in 1896, the federal government gave Utah 7 million acres to compensate for the large amount of land the government retained - about 70 percent. Since that land could not be taxed, the trust lands were intended to generate money for necessary state services, such as education. The Miners Hospital was identified as one of 12 beneficiaries.
The federal enabling act, which allowed the Territory of Utah to join the union and established the trust lands, gave "for a miners hospital for disabled miners, fifty thousand acres." A second grant of an additional 50,000 acres was made in 1929.
Built in 1904, the Miners Hospital was located on Park City's north side on a site known as Nelson Hill. After closing to miners, the hospital changed hands several times. When Park City went from mining town to ski resort, a developer wanted the old hospital's property for condos. The building was moved to a city park on Park Avenue. In 1983, it reopened as the Park City Library.
All assets transferred to U.
Walter P. Gnemi, U. vice president for administrative services, said all funds and assets of the Miners Hospital were transferred to the U. for the construction, equipment and operation of a rehabilitation building or unit, as specified by the law passed by the Legislature, when the U. Medical Center was constructed in the 1960s. Today, the Miners Hospital funds go strictly to the rehabilitation division, he said.
The Utah law that approved the transfer didn't specify that the funds were to be spent on disabled miners, despite the specific language of the enabling act.
Charles A. Evans, director of the U. Research Park, who has studied the U. trust lands issues, said that as he understands it, the miners and their union representatives were involved in the disposition of the Miners Hospital trust fund 34 years ago. "With the elimination of the hospital, there was a need to put it somewhere else. Finally, it ended up at the U.," Evans said.
Schmid said legally there could be a question on whether one group of miners at a particular point in time could decide the trust fund's fate for beneficiaries into the future.
Evans said,"As far as the U. is concerned, we've done strictly what the Legislature told us to do. Now, if whether or not what the Legislature did was appropriate, I don't know."
Dr. James R. Swenson, U. rehabilitation division chairman, said the Miners Hospital trust pays for special projects involving the division's physical plant and equipment. The money hasn't been used to underwrite the facility for any one class of people but for all disabled Utahns, he said.
Kathleen Payne, secretary-treasurer of the United Mine Workers Union of America, District 22, Price, which has about 2,000 members in the state, said she didn't know about the trust fund's existence.
"I'm not aware of anything like that," she said. "Our members sure could use it, especially those with black lung."
But Schmid said it probably doesn't matter if the miners receive services at the University Hospital. The enabling act specified that the trust was for "a miners hospital for disabled miners."
Similar case in New Mexico
In a similar situation, the federal courts interpreted a state's enabling act narrowly, Schmid said, citing a 1976 New Mexico case.
The United States and the United Mine Workers of America sued New Mexico over the disposition of that state's miners hospital trust.
The New Mexico State Miners Hospital at Raton was established in 1905 under that state's enabling act. In 1968, the state consolidated its hospitals. With the reorganization, all assets and control of them went to the New Mexico Hospitals and Institutions Department. The Miners Hospital was later downgraded from a general and chronic hospital to an intermediary care facility. Miners eligible for treatment at the Miners Hospital were sent to other state facilities, with payment for their care being charged to the Miners Hospital's trust funds.
The district court ruled that New Mexico had breached the trust. It ordered New Mexico to maintain "a separate hospital for miners, that trust funds be spent only at a Miners Hospital, that trust funds not be comingled and that certain funds be restored to the trust funds."
The state appealed, but the 10th Circuit Court of Appeals - Utah is in its jurisdiction - upheld the lower court's decision. The appeals court agreed that the enabling act must be strictly construed.
Trusts can be modified or amended, but "the question of to what extent a trust can be modified or by whom is a hard one," Schmid said. The state is not free to do with a trust what it wants, he said.