Judge rules in Fayetteville City Hospital case

Washington Regional declared lawful owner of land, can now sell to Fayetteville Public Library

FAYETTEVILLE -- A judge's ruling late Monday paves the way for the Fayetteville Public Library to purchase the adjoining old City Hospital property.

Washington County Circuit Judge Cristi Beaumont, in an order granting summary judgment, determined Washington Regional Medical Center is the lawful owner of the 4-acre property that was donated to the city more than 100 years ago.

Legal Lexicon

Quiet title is a lawsuit filed to establish ownership of real estate when ownership is in question.Real estate owners want to ensure they have a clear title, meaning there are no liens or levies against the title and no disputes over the property’s ownership. These possible problems are known as clouds on the title and can be resolved by an action to quiet title.

Source: Investopedia.com

"The claims of all other persons whatsoever are hereby extinguished and declared null and void," Beaumont said in her ruling.

A trial had been scheduled today, but it was canceled following Beaumont's ruling.

At issue was whether heirs of Stephen K. and Amanda Stone had a legal claim to the City Hospital property the couple gave the city.

Tom Olmstead, Washington Regional's general counsel, wrote in an email he was pleased with Beaumont's ruling.

"The court correctly applied the law in a manner consistent with the terms of the generous gift to the city of Fayetteville by S.K. and Amanda Stone," he wrote. "The decision will ensure that the Stones' gift will continue to support and enhance hospital services within the city of Fayetteville while also securing for the Fayetteville Public Library the land necessary for its future expansion.

"I would anticipate Washington Regional Medical Center and the Fayetteville Public Library moving toward a closing of the agreed upon sale within the next few months."

David Johnson, the library's executive director, agreed.

"We're still committed to the (City Hospital) property," Johnson said Monday. "We're still committed to expanding at some point in time. We don't know, given our financial situation, how quickly that will be."

But, he added, "This decision helps the library in that we can expand whenever the time is right."

Library officials have spent several months looking for new revenue sources amid a growing gap between library income and ongoing operational expenses. The library is not out of money, but cut $200,000 from this year's budget compared to 2014.

Johnson said the library's foundation will pay for the adjoining property. The money, left over from a fundraising effort that helped build the library in 2004, must be used for capital -- not operating -- expenses, Johnson explained.

The Stones donated land at 221 S. School Ave. to the city more than a century ago on the condition that it would be used to establish a hospital in Fayetteville.

For decades, the land was used for that purpose -- first as a hospital, then as a nursing home. The nursing home closed in September 2012.

The city, via an October 2011 quitclaim deed, conveyed the property to Washington Regional in exchange for 1.1 acres in front of the medical center where a traffic roundabout was built.

The library's board agreed in 2013 to buy the property from the medical center for $2 million, thinking it could be used for a roughly 80,000-square-foot expansion.

Because of restrictions placed on the property in deeds filed in 1906 and 1909, Washington Regional first had to file a quiet title lawsuit against various Stone family heirs to establish its sole claim to the property.

The Stone heirs contested the medical center's claim to the land, and, through court filings, sought to regain ownership.

Stephen and Amanda Stone stated in the 1906 deed if the city failed to build a hospital within four years or if the property should at any point cease to be a hospital the land would revert to them or their heirs.

A deed filed nearly three years later recognized the reversionary clause could impede development of a hospital. The Stones, in the second deed, reasserted their intent to convey the land to the city, and added, if the location of the hospital should one day change, "the entire proceeds of the ... premises shall constitute a trust fund to be devoted exclusively to the establishment and maintenance of such city hospital."

City and Washington Regional officials have argued the medical center is the city's hospital and any proceeds from the land sale should go to it. The hospital intends to use the $2 million to build and equip a neurosurgical operating suite in the medical center on North Hills Boulevard.

The Stone heirs argued the city had no authority to transfer ownership of the City Hospital property to Washington Regional.

"The way I see this ruling is that it dishonors the intent of my ancestors," Jane Stone, the great-great-granddaughter of Stephen and Amanda Stone, wrote in an email Monday. "It is a shame that the city was able to trade (my ancestors') gift for a roundabout and now the city has to buy it back if the library is to expand."

"Simply put, their trust in the city to be a good steward of their gift was misplaced," she added.

Joel Walsh can be reached by email at [email protected] or on Twitter @NWAJoel.

NW News on 03/03/2015

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