*1 December 28, F. No. 16229. Bank. [S. 1939.] Respondent, HOS- SILVA, ELIZABETH v. PROVIDENCE Appellant. Corporation), (a PITAL OF OAKLAND Weinmann, Quayle Berry & and Herbert Chamberlin for Appellant. Sterry Crutcher, Philip C.
Gibson, Dunn & Norman S. Sterry, Curiae, Appellant. as Amici Behalf of on Respondent. Silver for Raymond and Edward J.
H. Hall *2 By this of EDMONDS, appeal, Providence J. damages to the avoid awarded Oakland seeks to personal injuries by while plaintiff of suffered her because insti upon it care, ground under its that is a charitable tution. undisputed. Almost practically in
The facts the case are patient in years ago, plaintiff the hos- four while was a charged by pital paying the it for the services and amounts hip her, fell and fractured her reason rendered to she equip hospital failing of the nurse to of hospital suffi- her bed with side board. The concedes the a ciency support findings issues evidence to on the of the challenges findings negligence, of but and conclusions it liability. special from of law defense hospital alleged that since when answer, In its been, incorporated state, it under the laws of it was object nonprofit corporation; is, a that its and and now hospitals and one or more purpose is to erect maintain surgical and disabled provide care for sick medical and capital stock; that its and persons; that it has no members profit pecuniary operation derive no from the officers per- poor needy pay; and hospital and serve without that hospital without distinction class to the sons are admitted charity patients the same creed; and that are afforded or patients pay rendered. who for services treatment support of this defense established offered Evidence hospital appellant proved that also alleged. The facts Charity Montreal, the Sisters of those owned is one by members that and controlled operated is Quebec, and building hospital acquiring land erected it After order. Archbishop money Roman Catholic from the borrowed with profits Thereafter, solely from the Francisco. of San acquired site indebtedness, paid a new off this hospital, hospital. At this of a second the erection and commenced properties. $60,000 the two in cash addition to time, it had building completed, the assets the new when In $1,675,- worth were considered it to be corporation 764' subject had those assets
000. At the time of the trial it still year $949,000. Mrs. an indebtedness of patients meet injury, Silva’s income from was sufficient to its pay expenses, taxes, interest, all of operating testimony $11,000 of the treas- From the on its indebtedness. patients are cared appears per six cent of urer it charges thirty per pay the charity, for as matter cent per cent, balance, sixty-four in part; and the maintains clinic on pay in full. It also their bills “straight charity basis”. years seventy Silva, woman over
When Elizabeth then a daughter take her decided to age, required hospital care, special rates respondent’s her institution. No pharmaceutical X-rays, surgery were mentioned. supplies, agree to informed, the did not far So as she was regular than less furnish care or treatment “at profitable rate”. organization, a charitable appellant contends use care it did not due claim that as there is no exempt employees, it of its and retention the selection squarely presents liability for contention tort. This *3 corporation charitable question whether the a
for decision acting employee by tortiously an harm inflicted is liable for employment. scope his within the pur organized for charitable many states, corporations In respect immunity with enjoy poses operating negligence of their occurring through the liability wrongs for employees have been selected employees, those servants However, due care. there is in the exercise of and retained among the decisions which inconsistency and confusion much fact that rule, large measure to the the follow this due theory. upon Possibly same the the courts do not all base it doctrine, fund generally the so-called trust one most stated is (Heriot’s English court in 1848. an first announced 1508.) 507; Reprint Ross, Eng. 12 Clark & F. charity patron According upon view the deals with the to this trust him condition that the assets not available to the damages. theory upon payment of Another which for the by implied nonliability based is has been that con the rule corporation the or care accepts services of a tract one who operating purposes charitable waives organized his liable for tort. Other right to hold it courts have held that upon not be held liable for tort organization such an should ground public policy. the early upon raised as was defense here relied Soc., 168 German Gen.
1914 in case Thomas v. etc. the an employee which when 1186], arose Cal. A elevator injured by into shaft. hospital falling was upon ground the that judgment plaintiff was reversed for the servant, of a injury the fellow was caused in such an recovery action. that time was a bar at However, court mentioned a contention against rule lie it because of the that the action would not liability exempting from torts. charitable institutions accepts where agreeing with that contention it said “that private exempts he benefit of or of negli- implied contract the benefactor from gence administering charity, of the servants in if the bene- factor has used due in the of those care selection servants.” (P. 188.) dictum in
This statement was characterized as the later Assn., case of Stewart v. Medical etc. 178 Cal. California years later, four decided where it was pointed out upon Thomas case was decided ground under defendant not liable rules ordinary governing corporations. However, al- business though exempts the court discussed doctrine which corporation liability, judg- affirmed ment in ground favor Stewart that the evidence operated showed the institution profit. was in fact Therefore, opinion all that is stated this second case concerning nonliability the various theories of is also dicta. On hand, the other in a number of cases District Courts Appeal have corporation held that a operating purposes for charitable is not liable under the doctrine of respondeat superior if ordinary it exercises care in the selec- tion of servants. Apparently, question was first raised by the case of Burdell v. St. Hospital, Luke’s *4 1008], Pac. in which this court a hearing denied day the before it decided the Stewart A case. husband and damages wife sued on account of suffered while patient the wife was a the paying in hospital, regular the rates for the services rendered Upon to her. a showing simi- lar to that made the Hospital, upheld Providence the court the directing verdict for in superior court action the the authority for case Thomas defendant, quoting from the hospital benefits accepts proposition that one who by implied con- “exempts purposes operated for charitable plain- that the liability”. The fact from the benefactor tract nonlia- rule of change the patient not did tiff was a extent was to some court, she bility, said the because hospital. beneficiary dispensed con- question was also Although indirectly presented, the Court, 74 Superior Cal. passed upon Levy sidered and had An of a which App. officer adjudged patron was by a former damages been sued questions asked refusing to answer contempt for guilty of review the con- On a deposition was taken. him when his exempting that the rule of it was contended tempt proceeding, negligent of its em- organization for the acts a charitable adopted state, in this hos- as the ployees had not been liability, indemnifying against it pital carried insurance contention, In answer to this the reason for rule failed. organizations have been pointed out that charitable court may liability upon principle from that a trustee relieved charity by using deplete set aside the trust fund charged tortious those by the acts of damages caused pay trust, pro- and held that the administration with the infringed upon by rule could not be tection afforded insurance. As the court procuring acts of a trustee upon policy maintained could be also held that no action plaintiff until the re- been issued which had judgment insured, against the be said that covered point, controlling. upon which was ease was decided - recognizes, if it apply, decision even does not However, the organizations exempting charitable rule doctrine. fund upon trust Hospital, Big Sisters In Stonaker judgment 520], a based a verdict directed hospital was affirmed on the author the defendant favor of unsuccessfully Later, hospital, Burdell case. ity granting non- defendants’ motion for a that an order urging brought against affirmed, it be contended that in a suit suit institution, but the court said that “this a charitable it was prove the burden to rests defense, an affirmative *5 Hospital, with v. Lane (Inderbitzen the defendant”. 905].) (2d) App. (2d) 744, Pac. 13 Pac.
Cal. 466 [12 Hospital were affirmed Judgments against Palo the Alto Trustees, App. 243 Pac. etc., 133 Cal. Baker v. Board (2d) not formed 1071], upon ground the that it “was Some time later the purposes”. maintained for charitable liability. Long Community Hospital Beach was absolved Citing Thomas, cases, the Burdell and Stonaker the court respondent held that “the character of a chari- association as being established, properly table institution trial court di- a rected verdict in its favor if it exercised care due servants, (Ritchie selection if its Long ...” Beach Community Hospital Assn., App. (2d) Cal. 771].) case, The next Shane v. Good Samaritan, (2d) particular is of in- brought by
terest because was damages it a minor recover to injuries alleged day for to have been sustained on the of her through negligence birth a On nurse. the child’s urged it behalf was that although the exempting doctrine institutions from for suffered patron a through employee of an had been rec- ognized in upon theory implied this state contract, plaintiff’s because of the minority the rule not a could bar recovery by her. answer to contention the court pointed out that charitable institutions have been held not upon liable for tort four different theories. These, said, first, are, implied contract; second, that of pro- funds for vided the maintenance of a are contributed for specific purpose which does not payment include the damages through claims suffered negligence; third, employee patient relation not bring does the case respondeat the rule of superior; within and, fourth, that it is contrary to public policy allow funds contributed for the maintenance of charitable institution be used for the damage payment of claims. conclusions,
The reasons advanced these court, said However, irreconcilable. relying upon what it declared 'holding” “direct be the the Stewart case “that regarded establishing Thomas case is to be in California ‘implied contract’ as doctrine basis the rule of said nonliability”, necessity there no “to' make judicial declaration con- as to doctrine which should be forming sidered as If it proper basis for the rule ... urged proper determination of successfully can be question requires declaration of the basis weight foundationed, and the reason the rule authority adequate in the basis doctrine would furnish an support which would public policy, the considerations convincing attack than to be more and less vulnerable to seem *6 support in of theories which those advanced of the other (PP. 340.) judicial sanction.” have had who hospital by patron brought against a a Another action (2d) Wallace, App. regular Armstrong Cal. paid v. rates plaintiff’s (2d) 740], stating that the Pac. After in the governed by rules stated right recover was plaintiff that the cases, and Burdell held Thomas court defendant, right judgment action. But a for the had no verdict, was re- for a directed given upon granting a motion Samaritan, England Hospital Good v. versed in the case of (2d) jury (2d) 640 should Pac. The App. 16 Cal. 48]. decide, court, said the whether hos- have allowed to been charged by plain- profit, in fact conducted for pital was operated only charity. It tiff, was for also said: “We knowledge hospital who, that a hold that one without cannot exempt and therefore institution to be a charitable claims received as a applies for admission liability, from regular hospital which the derives paying rates at patient, by negli- profit, occasioned is without redress a employees part hospital of the on the gence on the of the charity accepting the from a he is benefits bene- entirely upon This was based the state- conclusion factor.” nonliability if rule the Stewart case ment in were followed, hardly claim to be relieved “the defendant could plaintiffs the reason responsibility, for had no organi- the charitable character of the knowledge whatever of zation”. Prindle, character, Hallinan of this
In the last case (2d) (2d) 1075], judgment Pac. in App. Cal. paying patient, had been plaintiff, who was favor of However, question decision was limited to the reversed. charity. “It is not was conducted whether the if court, properly “that disputed,” said the classed as negligent employees held liable acts of its it cannot (P. 669.) in their selection used due care it has ...” Although practically reported all California of the cases brought by rights patron concern the of a in a suit organizations have damages, other charitable also recover liability. example, Young v. claimed from For Boy America, App. (2d) (2d) Scouts Cal. Pac. authority 191], recovery upon the plaintiff was denied a (cid:127) Thomas, Stewart, Later, and Ritchie cases. a church liability. operated boys’ from club relieved (Bardinelli App. All Nations, Church (2d) 1264].) nonliability urged rule been in defense has also by employees brought against organizations suits negli- injured through persons, patrons, who were gence employee. of an of Phoenix the case Assur. Co. Army, plain- Salvation 83 Cal. assignors injured employee tiff’s were when an negligently operated judgment A automobile.
plaintiff was notwithstanding affirmed the defendants’ claim exempt that was purpose “because of the which it exists because of the trust character of the funds disposal.” at Pointing that “the out eases the other hopeless states of the Union are irreconcilability” and “the espoused courts of this state have never either side discussion”, Presiding Justice Works said: “The courts *7 exemption which have declared of in- a charitable from stitution for torts strangers of which charity are the victims have shown an unnecessary solici- tude for the of organizations welfare and of their bene- ficiaries. . . . We think this state should be not to added whose have encouraged—as list those courts in some degree they surely agents have—the of charitable institu- than tions to render less security life, due care limb, property, very things and is the pur- it sole pose preserve protect.” of such institutions to (PP. 461, 462.)
Summarizing decisions, these it is apparent that the Dis Appeal trict Courts have followed the dicta of this court except Stewart in the Thomas and cases in Phoenix Assur. Army, Co. Salvation supra, England Hospital v. v. Samaritan, supra. case, Good In first the doctrine organization should have ex- was 770 repudiated
pressly strangers so far as to the trust con ; in apply cerned the later one the court same refused to against patient who shown have knowl was not hospital’s edge of the And al asserted charitable character. though recognized the rule comparatively in the recent Young decision of v. Lewis Men’s Christian Assn., said, the Thomas quoting the court case, rely upon that the could not the absence defendant allegation defense, proof, as an that rea affirmative negli sonable in selecting care was used the servants whose gence damages caused for which were claimed.
Apparently
Court,
eases, except Levy
Superior
all
v.
supra, and
Samaritan, supra,
Shane v.
the Good
decided
Appeal
District Courts of
which hold that
organization
a charitable
upon
princi-
liable
should
ple
respondeat
superior,
are based
im-
plied
contract as stated
this court in the Thomas
case.
Levy
case
trust fund doctrine was said to be con-
trolling. Because of the minority
plaintiff
in the
case,
Shane
the court mentioned
theories,
three other
but
say
declined to choose between them other
than
that “rea-
authority
son and weight of
adequate
would furnish an
basis
the doctrine of
policy”.
Considering
legal principles,
first,
point
these various
time,
years
was announced about one
ago,
hundred
when
English
property
courts held that as
donated and held
purposes
for charitable
fund,
constitutes
trust
it would be
property
inconsistent
allow that
pay
to be used for the
(Heriot’s Hosp. Ross,
ment of tort claims.
v.
Clark & F.
Eng. Reprint
507,
1508; Holliday Vestry
Leonards,
St.
769.)
142 Eng. Reprint
This doctrine has been followed in
(Parks
the United States
v. Northwestern University, 218 Ill.
S.)
(N.
E.
L.
N.
Cas.
R. A.
Ann.
556]
University Hospital,
Adams
Mo.
S. W.
Young
Assn.,
Eads v.
Women’s Christian
771
(Hospital
a number of American
Vincent
courts.
St.
(N. S.)
Thompson,
v.
The American Law Institute’s Restatement Law of Trusts summarizes the subject decisions upon this as follows: “A person receiving benefits against under a charitable trust whom a tort is committed in the course of the administration of the trust cannot property apply reach trust it to the claim, satisfaction of his unless personally the trustee was at upon commenting rule, fault.” this the Restatement de- person injured clares : whether the “This is true who was paid (Sec. he benefits which received or not.” 402e.) foregoing It is conceded that the summarizes the conclu- been in a large majority sions which have reached upon question. However, given the illustration eases application the Institute of the rule’s “A assumes that be- B in queaths money to trust to establish and maintain a hospital.” goes upon This back to the which the promulgated England, rule was first where one en- money purposes, for charitable prop- dows erty pay damages cannot used of the trust awarded to injuries at employee who suffers the hands one in whose due care been used. But the selection modern rarely maintained charitably donation dis- posed enterprise, individual. It is business although recipient donations, may be the of some is able to carry on aggregate amount its work because received patients expense is sufficient to meet the ministering *9 accepted who are patients also a certain number
those any charge. reduced rate or without at a example organization. an appellant typical is a Charity originally contributed some Although the Sisters of upon enterprise the land which capital their in buying erected, hospital buildings they have since ac- the first were quired property substantial value from the institu- very operations. probably many typical tion’s is other hos- It pitals through management good support which particular group citizens, have made a success. financial necessary institutions Such are most for human welfare. But change in their from that status founded person’s generosity, one inwas existence at the announced, time trust fund doctrine was first organization modern which, in aspects its economic is non- profit rather character, than charitable in unquestionably why the reason longer some courts no follow the doctrine nonliability. cling Those which old only rule see an founded, institution as described in the Restatement, when bequeaths “A money Bto in trust to establish and maintain hospital” apply thorough rule without a considera- tion of principles fundamental which present-day re- needs quire.
However, the most severe criticism
theory
of the trust fund
that,
logically
if
applied, the property of the charitable
organizations must enjoy complete immunity from claims,
all
regardless of
injured
the status
plaintiff.
(Hospital of
St. Vincent v.
Another
has been stated
which
implied
rule of
is that of
contract. Such a
contract,
by
one,
as defined
“is
the Civil Code
existence
1621.)
(Sec.
terms of
which are manifested
conduct”.
general
implied contract,
degree
in no
than an
less
“In
express
agree
contract, must be founded
an ascertained
perform it,
parties
ment of the
to
the substantial difference
being
proof
in the mere mode of
which
between
two
they
imply
respectively
to be
established.
law will
stipulation
party
did make such a
as under
circum
disclosed,
ought, upon
principles
honesty,
he
stances
justice
course,
made.
all
and fairness to have
Of
the cir
surrounding
particular
actually
parties
in the
cumstances
impli
carefully
transactions are to be
before
considered
(Smith
indulged.”
Moynihan,
of a
is to be
v.
promise
cation
53, 62, 63;
California,
Jennings
44 Cal.
v. Bank
79 Cal.
Rep. 145,
233];
5 L. R. A.
852, 12 Am. St.
323
Pac.
[21
Rosenberg
Co.,
v.
Bros. &
& Lumber Co.
Box
Sacramento
;
Contracts,
Law of
App. 56
Pac.
Addison’s
109 Cal.
[292
146]
implied
then,
ed., 447.)
contract,
The true
11
consists
agreement
arising from mutual
and intent
to
obligations
promise
agreement and
have not been ex
where the
promise
(Dunham-Carrigan-Hayden Co.
Ther
pressed
words.
v.
663];
Co.,
App.
84 Cal.
669
Pac.
Williston
Rubber
moid
[258
may
3.)
Contracts,
example,
sec.
For
conduct
form
vol.
on
express writing
although there
novation
is no
basis for a
Goddard,
App.
v.
(Producers’ Fruit Co.
Cal.
agreement
assignee
becomesbound
686]);
a contract
Pac.
737 [243
perform its obligations
agreement
express
when
without
performance
full
(Weidner
has been
him
received
v.
Zieglar,
515];
Rispin,
Cal.
Pac.
Robinson v.
assumption
33 Cal.
979]);
mort
App.
Pac.
of a
gage
may
Warner,
implied.
(Hopkins
debt
be
v.
109 Cal.
868];
Schader,
Pac.
White v.
To the find an contract entirely disregard to organization is other the charitable determining considered in whether factors which should be may be from agreement such inferred the of the conduct say parties. There is no reason for a court to that admission proof an charge to is intention not to it with responsibility wrongdoing. Indeed, agree- for tortious the charged by the rates pay ment to the for its services ordinarily inference; be sufficient opposite basis the would patient indication certainly strong that it is a did not exempt charity injury should be that the agree resulted. of its servants to act from the failure with care. ordinary Samaritan, supra.) There Good (England v. to would also tend may be other circumstances which acts and Moreover, had no such intentions. patient show that nonliability consistently has been stated fact that the rule of with relieving charity if been selected as its servants have care, implied due doctrine has been indicates contract upon inten- used rationalize result and is not based parties, legal principle requires. tion of as against recovery Some have a charitable courts denied organization ground respondeat upon the rule of superior applied re be to it the institution should not because But servants. of its private ceives no benefit from acts by stranger, though even he obliged no one is law to assist word, slightest danger to can do mere so and without However, himself. once he has undertaken to render assis upon duty the law him a imposes tance of care toward (Restatement Torts, 324; assisted. person of Law of sec. Rawson, v. McLeod N. E. Mass. 46 L. R. A. Hoyt (N. S.) 547]; Tilton, N. H. 477 1525.) 120 A. L. R. policy re has also said either allows or
It been (Dun liability. quires of charities tort Assn., 92 can v. Nebraska Sanitarium & Benevolent Neb. (N. S.) 1913E, 1127, 41 L. R. W. Ann. A. N. Cas. College, 886; Currier Trustees Dartmouth Fed. 173].) N. W. Ac Henke, Morrison cording Wis. preserved view, be to this must ‘1 Harper, in his The However, Professor book public benefit. immunity Torts”, points “the of charitable Law of out that corporations very grounds”. dubious in tort based seem that a social Continuing, he concludes: “It would sound fact, require ought, organizations to make policy legally caused their harm activities just compensation for they carry individuals before under the same circumstances requir policy charitable activities. law their on just generous equally ap before seems ing individuals to require corporations. injured To plicable to charitable forego compensation for harm when he other individual thereto, injury because the was committed wise entitled require charity, him to is to make servants of a an unrea charity, against his will, contribution sonable such burdens can imposing not be regarded law rule of *12 776 (See.
socially policy.” desirable nor consistent with sound 294.) justified
No rule
of law
theories ad
legal
vanced
support
principle, and,
to
it lack a foundation of
organiza
as
been shown,
exemption
of a charitable
tion from liability
patient
suffered
through
employee
logically
of an
would
re
quire
exemption
the same
from the tort
of others.
claims
consistently
many
apply
That
courts have refused to
the rule
is
nonliability
conclusive evidence of the fallacious rea
soning
is advanced in
On
contrary,
its behalf.
other courts have
organization
declared that
the charitable
respond
damages
must
paying patient
whom it in
jures.
Evangelischer
(Mulliner
Diakonniessenverein,
Minn. 39
W.N.
Tucker
Infirmary
v. Mobile
Assn.,
Curtis, J., Gibson, J., J., Carter, Waste, J., C. con- curred.
Houser, J., judgment. concurred J., Dissenting. SHENK, I dissent. prevailing opinion
I
agree
cannot
with the
principal
two
challenge
I
place,
reasons.
the first
test
ability of
patient
based on the
pay. A
just
poor
good
man
much entitled
treatment at just
(Com
as a rich one and is
as much in need of it.
Pioche, Bay erque Co., &
pare Robinson v.
An
prevailing
extensive research has disclosed that the
though
varying reasons,
exemption
based on
of
favors
liability
charitable
the beneficiaries
institutions
to
thereof, either
or
for the torts of servants who
pay
nonpay,
Identity
reached,
carefully
have
of
been
selected.
conclusion
though by
accepted
reasoning, may
strong
different
be
as
proof
reasonably
rule.
It
the correctness
is
safe to
say
eight
that
than
less
states
held that
have
charitable in
negligence
employees
stitutions are liable for the
of their
on
private
the same
profitmaking corporations.
basis as
Among
jurisdictions
appearing
small number
to so declare are
Alabama, Oklahoma,' Minnesota, Florida, Georgia
Rhode
Island,
apparently
having by
latter
adopted
statute since
majority
regards
hospitals.
rule
(Southern
charitable
Hospital Wilson,
(2d)
Meth.
Ariz.
Pac.
118,121];
1369, 1370.)
Practically
A. L. R.
all
remaining
states,
ground
on
another,
granted exemption
have
or
to
hospitals
liability
negligence
from tort
their
regards
servants at least as
the beneficiaries of such
they
charity, whether
nonpaying,
be
true charity patients or
patients obtaining
charity’s
the benefit of the
though
facilities
part
all or a
rate established
it for those
financially
pay.
able to
We are not here concerned with the
nonliability
of a charitable institution to its em
ployees
strangers
or to
who
have
way
not
availed them
interesting
It is
selves
facilities.
note, however,
its
jurisdictions
grant exemption
most
toas
just
mentioned,
two
beneficiaries
classes
above
deny such
employees
exemption
strangers
as to
charity.
(Phoenix
Co. v.
Army,
Assur.
Salvation
In applying general regards doctrine of jurisdictions charity practically beneficiaries of a all do so premise part charitable institution as a nonliability affirmative defense of has established that employee exercised due care the selection of the servant or negligence sought whose imputed it. In other words, generally recognize the authorities in such an stitution not liable for the its servants exercised reasonable care their selection and retention. (Lewis Young Men’s Assn., Christian 206 Cal. 580]; Valley Roberts v. Ohio Hosp., Gen. 98 W. Va. R. S. E. A. L. Long Ritchie v. Beach Hosp., App. 688, 139 Cal. Com. Roberts,
Old Folks
Home
etc.
83 Ind.
N. E.
*14
;
College Armstrong,
Carver C.
v.
Research discloses that the applying exemption cases categories. doctrine fall into several group The first bases the rule on what theory”. is known as the “trust fund Parks University, v. Northwestern 218 381 991, Ill. N. E. 4 103, (N. S.) 2 typical Ann. Cas. A. L. R. of the cases theory basing the rule on this expounds and it is follows: funds and property acquired trust, “The thus are held in purpose and cannot be diverted to the of paying damages for negligent caused wrongful acts of its ser employees persons vants and enjoying who are the benefit charity. An institution doing of this character, chari work great table benefit profit, without and de pending upon gifts, donations, legacies bequests and made persons accomplishment the successful of its purposes, hampered beneficial is not to be acquisition in the property and funds from wishing those and contribute by any assist in the charitable work might doubt that arise intending in the minds donors as to whether the funds supplied applied them will be purposes to the for they them, intended to devote or diverted entirely dif purpose satisfying ferent judgments against recovered negligent because of the donee acts of those employed to carry purpose the beneficent into execution.”
779
espousing
Other
theory or reason as the basis of
cases
Hospital,
rule
122
are: Adams v. University
App. 675
453];
Francis,
Mo.
S. W.
Gable Sisters
St.
v.
1087,
Rep.
;
Pa.
Am. St.
Roosen v.
879]
Brigham Hosp.,
392,
Peter Bent
the further
that no
diversion of trust funds
logically be
payment
damage
said to result from
claims, for
reasonably
the donor
contemplated
must have
such claims
being
against
operating charity.
made
However,
spite
criticism,
theory”
of such
the “trust
fund
of charitable ex
emption
expression
definite
finds
the American
In
Law
stitute’s Restatement of the Law of
wherein,
Trusts
after
exceptions
recognizing the
above mentioned
employees
as to
strangers,
it is declared in section
subdivision
“A person receiving
benefits under a charitable trust
against whom a tort is committed in the courts of the ad
ministration of the trust cannot reach
property
trust
*15
apply it to the satisfaction of
claim,
his
unless the trustee was
(This
personally at fault.”
last qualifying phrase would
situation,
above,
cover the
mentioned
where there has been
a lack of
in
employee.)
care
the selection
the
In comment
“f” thereunder it is stated that “If in the
administration
a charitable
against
person
trust a tort is committed
a
who
trust,
receives benefits under the
he cannot reach trust prop
erty
apply
it to the satisfaction of his claim if the trustee
personally
not
was
at fault. This is true whether
person
injured paid
who was
for the benefits which he received or
receiving
not. Persons
benefits under a charitable
in
trust
persons
such
in
patients
clude
hospital, pupils
a
in school,
a
home,” Among
inmates of
given
“illustrations”
under
bequeaths
A
foregoing comment,
“5.
following:
is
money
B
hospital.
trust
to establish and maintain
Owing
hospital,
employed by
a nurse
injured.
C,
patient,
paying patient or
is
Whether G is a
gratuitously,
treated
cannot
his
is
he
obtain satisfaction of
personally
at
B was
property,
claim
the trust
out
“h”
“A
Again,
pointed
comment
it is
out that
fault.”
corporation,
receiving
from the
whether or
person
benefits
benefits,
-for
cannot
an action of
pays
not he
maintain
management
against
corporation,
tort
unless the board of
corporation
Thus,
at
. . .
of the
fault.
if a charitable cor-
organized
poration
patient
hospital,
to conduct a
in the
patient
not,
hospital,
he is a
whether
or
cannot main-
corporation
against
tain
resulting
an action
fault,
negligence,
management
from
unless the
was at
board
example,
negligently employing
retaining
as for
or
incom-
permitting
petent employees,
premises
or
in a
to be
dangerous condition,
failing
proper
or in
to make
rules for
operation
hospital.”
attempt
In its
to minimize
Restatement,
majority
effect of
opinion points
out
given
solely
the illustrations
therein have to do
with en-
Necessarily
so,
dowed charities.
this is
trust fund
theory
inception
exemption
had
particular application
But,
to endowed charities.
as shall
shown,
presently
there
other
ap-
theories
plicable
institutions,
alike
all charitable
whether endowed
Obviously,
or not.
are not
charities
restricted to the endowed
type. Regardless of the method of its establishment, the test
of whether an institution is charitable is whether it exists to
carry
purpose recognized in
charitable,
out a
law as
or whether
gain, profit
private
it is maintained for
advantage.
theory
support
advanced in
Another
of the rule of tort non-
organizations
of charitable
“implied
is that of
reasoning underlying
waiver”.
is well and
expressed in
succinctly
Powers v.
Homeopathic
Massachusetts
tract
*17
administering
charity, if the benefactor
the servants
This
those servants”.
in the selection of
has used due care
unnecessary
for the court
to the decision
declaration was
exemption
regardless
was
the rule of
that
of
view
per-
ordinary
not liable under the
rules
defendant was
liability.
exemp-
Moreover, the rule
taining
corporate
of
to
inapplicable in
tion
was
the cited case
injured
and,
employee
plaintiff
was
of the defendant
deny
above, practically
as indicated
all
of
authorities
employees
strangers
charity.
exemption
as to
of
to the
However,
quotation
leaning
is indicative
this court’s
of
exemption.
toward the well-established rule of charitable
Assn.,
In the
of
later case
Stewart
Med. etc.
California
418,
court
422,
took occasion
prior ruling
refer
to
declaring
to
and after
its status
obiter,
be that
that
“cannot be
of
stated
it
considered as hav
ing
any
court to
committed
one of
several theories
this
on
corporations
nonliability
which the
of
based,
or
nonliability”, concluding
to the doctrine
that “It
be
noted, however,
exemption
that
this rule
im
based on
[of
plied
followed,
hardly
the defendant could
claim
contract]
thereby
responsibility,
to be
relieved of
for the reason that
plaintiffs
knowledge
no
had
whatever
the charitable
organization.”
character of
Thus was indicated that
improper
imply
against
it is
a contract
to
one who is with
knowledge
out
the facts from
implication
which the
arises.
It must
conceded
this
criticism has been leveled at the
“implied
theory
exemption by
contract”
other authorities,
particularly
having to
those
do
plaintiffs
with
who were in
brought
fants or who were
to
hospital
the charitable
in an un
conscious state and therefore
no mental condition
to be
implied
(10
contract,
party
ato
otherwise.
Am. Jur.
cited.)
sec.
and authorities there
In answer to this
proponents
“implied
criticism some
contract”
theory
have
with
countered
the assertion that
implied
not one
the contract is
in fact but in law. Research
exception
reveals that no
was made in favor of minors in the
following cases: Weston’s
Admx. St. Vin
Paul,
In the citation and “implied “implied waiver” or contract” as theory underlying doctrine of of charitable in- reason purposely I have refrained from stitutions, referring Samaritan, ap- Good England in two decisions 48], and (2d) (2d) 640 App. pearing in 16 Cal. now case is for that (2d) 226 simultaneously disposed will be pending this court separate opinion. case, though present with the exempt the cases for by many A third advanced inapplica asserted on the ing is based charitable institutions ex It is well respondeat superior. bility of the doctrine of Hosp., 66 Conn. Waterbury pressed in the case of Hearns v. think the 224], “But A. we L. R. conviction clearly general indicates drift of all the cases an liable for not be held eleemosynary corporation should servant, caused and not neglect injury only due duty perform a in the failure to corporate negligence by its general that this are satisfied imposed by law, on it we law . . . The which legal principles. rests on sound conviction own, his because an act not responsible for makes one rule servant, is based on a wrongdoer is his actual re the doctrine of distinguished as . The rule is policy. . . principle superior is bottomed on the spondeat . . . [which] act advantage from an done expects who to derive that he injury a third which him must answer another come . This defendant does not person . from it. . sustains public policy which main reason the rule within the respondeat superior. It derives no the doctrine supports per of that does, in the sense its servant from what benefit for the rule. gain was the real reason private sonal and injured concerned, especially persons Again, far as the so patients hospital, the defendant at the does they be thing motion”, the sense which that whole “set the expressing the rule. a reason for Such phrase is used injured by wrongful act who patient, stranger third servant, party, a mere to the transac is not *19 participant. thing the rather a about which tion. He is employed healing is the of the sick. is This set servants defendant, motion, for benefit the but of the not the in benefit, Surely, accept contributing those who public. public enterprise, payments and by their not to the also defendant, truly pocket assist as defend private thing in setting the whole motion. . . . in We are now ant rule, time, first class of apply a mas asked others, and who do not from all and cannot come ters distinct asked words, arewe other In reason rule. of the within public policy, new declare a and to rule, to extend by mak- served justice best is say: whole, On the substantial involving private no charity, public ing owners of negli- wrongful own only for their profit, responsible, not of the servants wrongful negligence gence, also for the but We benefit. public they only public use and employ for a rule extension justify such an think law does not enough superior. ... It respondeat is principle defendant, may be corporation like whatever perfor- neglect in the corporate controls its for grounds public corporate liable, duty, on mance of a personal wrongful neglect policy, caused duty by performance whom has selected of his servant care; responsible in such is alone with due but case the servant reached, rea- wrong. result for his own This ... another, by greater number of have son or courts that particular liability corporation public dealt with this purposes." or charitable
Research also discloses decisions that advance other known exempting less theories for charitable institutions. They need not Regardless here be mentioned. of the variant reasons, actually expressed many subject, cases on the underlying I am convinced that them all of is an expression public policy, quoted as declared in the last ease. Samaritan, Shane supra, Good it is said that and the weight authority “reason would furnish an ade quate public basis policy, doctrine of the considerations support of which would seem to be more convincing and than vulnerable to attack those support less advanced in judicial the other theories which have had sanction". Orange also, Hosp., See, D’Amato v. Mem. 101 N. J. L. 61 ; Ettlinger College, v. Trustees R-M. 31 Fed. Assn., 869; M. Bodenheimer v. 68 Fed. Confederate (2d) 507. doctrine of the established
I am satisfied that which, though policy a rule of sound presents cases, injustice encourage tends to in individual do charitable institutions maintenance of establishment financially contributing exerting thereto their advising those the same will not be diverted from the therein that efforts *20 786
original purpose
pay
charity
always
employees
institution, provided
such an
management
selection
thereof uses reasonable care
employees.
jurisdictions
its
grant
exemption
In
from liability,
shown,
majority
conceded in
and as
opinion, they
overwhelming
weight
constitute the
author
ity,
general
(almost equally overwhelming)
rule
is that
pay
fact
the institution
of its
receives
from some
nothing
beneficiaries detracts
from its charitable character
regard
not change
does
the rule in
to its
liability, either
paying
nonpaying patients.
(Arm
as to
strong Wallace,
App. (2d) 429,
v.
8 Cal.
433
(2d)
Pac.
[47
740];
Prindle,
Hallinan
(2d) 656,
v.
App.
17 Cal.
669 [62
(2d)
;
Ritchie
Long
Hosp.,
v.
Beach
139
Com.
1075]
App. 688,
690
771];
Evangeli
Greatrex v.
[34
Hosp.,
cal D.
261 Mich.
137,
327
N. W.
86 A.
R.L.
[246
;
University Hosp.,
v.
122
Adams
675
Mo.
487]
[99
;
Francis,
Gable
254
S. W.
v. Sisters
St.
227 Pa.
453]
[75
1087,
Rep. 879]; Taylor
136 Am.
Hosp.
Protestant
St.
Assn.,
1089,
S.)
85 Ohio
(N.
St. 90
N. E.
39 L. R.
427];
A.
[96
Wilson,
Southern
Hosp.
supra;
Meth.
Nicholas v. Evan
gelical
Home,
;
281
182
Deaconess
Mo.
S. W.
Dun
643]
Sanitarium,
1120,
can v. Nebraska
92
162
Neb.
W.N.
1913E, 1127,
(N. S.)
A.
Ann. Cas.
L. R.
Vin
St.
973]
Hosp.
Stine,
537,
cent’s
195 Ind.
N. E.
33 A. R.L.
304;
; 11 C.
700,
J.
10 Am. Jur.
151;
sec.
A.
R.
L.
1204.) Many
reasonably
of the authorities
hold that
availability
pay
patients
the elaborate facilities and ex
pert services of
hospital,
a charitable
which were it not for
charity
involved in its creation and maintenance would
anyone,
not be available
pay
patient,
makes
as well
as the
patient,
beneficiary thereof,
true
though
perhaps
degree.
(Weston
in a lesser
v. Hospital
Vin
St.
cent,
In line with *21 the satisfied state, supra, I am prior decisions in this contributed, have may institution who beneficiaries of an such sum for bene- greater less plaintiff herein, or as did the than who those any position different fits received not charge therefor. test without benefits have received such nature general rule application is of the of the pur- it maintained for the and whether is of the institution service, not the or pose profit that of and extent or for beneficiary by has received avail- of the which the cost benefit (McDonald v. privileges. himself of Massachusetts ing its Rep. 529]; Hosp., 120 Mass. Am. Southern Gen. Hosp. Wilson, supra, 125.) Any test, Meth. other by pointed cases, out of the would tend to several the absurd setting up institution, result two rules of for the conduct patients pay one for to whom it would be for the answerable employees, charity of its and pa- another for true (Powers tients to whom it would not be liable. v. Massa- Homeopathic Hosp., (Mass.) chusetts 109 Fed. 294, 295 [47 372].) In C. A. R. A. this connection it is C. L. “A patient ease that stated last cited nonpaying patient, hospital, defendant as well as a seeks public charity. of a and receives the services such a That hospital in patient of a rich treatment shall be held to a degree greater care than of a pauper its treatment is may given not to be tolerated. Certain luxuries be for- mer, get, latter does not this for rea- various degree protection but sons from unskilled and careless nurses must be the same in both cases.” always course, burden
Of
es
defendant to
institution within
meaning
is a charitable
tablish
granting
exemption.
the authorities
The word char
acknowledged meaning.
a well known and
ity” In its
charity
sense
redounds to
general
truest and broadest
good
is not confined
public
group.
one class or
Merchant, 143 Cal.
475], charity
Estate
gift
as a
benefit of
indefinite
is defined
number of
bringing their
either
under
persons,
hearts
the influence
of education or religion, by relieving their bodies from
disease, suffering
constraint,
assisting
or
or
them to establish
life,
themselves in
erecting
public
or
maintaining
or
build
ings
works,
or
lessening
or
govern
otherwise
the burden of
See, also, Dingwell
ment.”
Seymour,
Cal. App.
gift
where
“A
it is stated that
to establish
public
and maintain
misery
institution where the
and un
happiness
any person
high
degree,
poor,
low
rich or
sanely
be considered and
dealt with would come within
’'
purview
charity.
definition of a
An act or
feeling
charity.
of benevolence underlies all
When
is to
extended,
sporadically
individuals,
a few
large
but to a
long period
number over a
time,
gener
it is
ally
administered
association,
some
corporation or in
stitution
principal
whose
and distinctive features are that
they
capital
provisions
have no
stock and no
for the distribu
profits but,
tion of dividends or
on
contrary,
hold their
operate
assets and
their facilities in trust
obligation
words,
institution.
In other
the test of
an in
whether
stitution
charitable is whether it
carry
exists to
pur
out a
pose recognized in law charitable,
or whether it is main
*22
gain,
private
tained for
profit, or
(Hearns
advantage.
v.
Waterbury Hosp.,
Substantially the same test has been in prior announced in this state. (Armstrong decisions v. Wallace, 8 Cal. (2d) (2d) Pac. Hollinan Prindle, 17 Cal. App. (2d) 656, Dingwell Sey- supra.) mour, In the Armstrong ease, supra, wherein it appeared Sisters of Joseph St. of Orange, were operating a received, here, as pay both and patients (the plaintiff therein being pay a patient) referred incorporation here, the articles wherein, as and wherein corporation purpose of the charitable with connection that no here, disclosed evidence, as it wherein salary profits received corporation opera- anything left after “if there was appeared that the institu- upkeep toward hospital it went tion of the large”, the order at benefit then for the locally and tion In re- in character. held to be hospital was in that plaintiff trial to the granting a new versing order Mrs. “the fact that declared that appellate court case, the hospital for charged regular rates Armstrong paid the of charitable of the class take it out patients did not up received build was not institutions, paid the amount general charita- carrying on in the profit to assist but purposes the order”. ble defendant ease, supra, Hallinan court held the
In the institution on the to be a charitable Mills Memorial nonprofit corporation ground incorporated as a stockholders; managers directors, and “it has no stock nor charged with- and officers the conduct of its affairs serve with poor, needy injured pay; persons, out without distinction creed, class or admitted to the and treated either charge only part without or to extent of of the cost persons pay charge service rendered. To able to a moderate day for their care rate of four dollars a for a bed in a ward plaintiff paid], charge herein six dollars [same day room, Notwithstanding were established. . . . operations the financial statements of the institution’s have annually expenditures receipts an excess of shown over with years—in exception two one of which so-called purchase profit equipment.” was used to new involved in of the institution The charitable character App. 375, 378, 379 Hospital, 116 Big Sisters Stonaker following “It in the terms: (2d) 520], was described hospital paid no com contradiction appears without paid services, and that no pensation to its constituents *23 good com dividends; that it was conducted Big Sisters organization known munity, by charitable sur that if there was a purpose intent and League, with the expense carrying it, surplus such and above the of plus over League.” said go to the would
790 51 Wilson, Ariz. Hosp.
The Meth. case of Southern 458, 460, pur- declares that “If the (2d) 461], recognized in pose of the institution is one which is law charitable, private gain, not maintained and it is owners, di- profit, advantage organizers, its or or of officers rectly properly indirectly, or we think the institution is char- one, as a that it notwithstanding acterized charitable fact charges all, the services it ren- most, if not which necessary receipts der, long devoted to main- so as its are carrying purpose out of the tenance of the institution and Mc- organized.” To same for which it effect see was Hosp., City supra; Donald v. Massachusetts Gen. Dallas (2d) Smith, S. W. Williams Tex. etc., Ky. (2d) W. v. Church Home S. 721], Brattleboro, A. L. R. Brattleboro Retreat v. 209], Vt. the fact none the patients that hospital were cared charge for without said was not to deprive it of its Rust, character. And, charitable In re Wash. stated that weight great authority profit corporation “mere it- self, it no having stockholders profit to share such and no standing any proprietary relation to to share profit, corporation does not make such other than a corporation”. charitable The last two were tax eases. amI satisfied that the defendant corporation satis- requirements fies the set down in the authorities for that institution. incorporation Its articles of after stating purpose to the establishment of or one more hospitals for the and care treatment disabled, and sick any declared that it “shall not have capital stock” and that the members and officers “shall pecuniary derive no profit therefrom”, adding pecuniary profit that “never shall be the object corporation”. of this evidence also disclosed that its membership was restricted Sisters Charity compensation, received no Providence who other than room services; they board, for and their admit to the many patients question, all without whom charity patients; part they do other full forms of way maintaining furnishing clinic applying same, and financial assistance those meals stated; details of need not here be no at seven-year during period prior plaintiff’s time *24 had a and that they paid out than more they received had buy- institution “revert profit realized it would been facilities expand the and to accommodations ing more meaning evidence, within the hospital”. Under my opinion, should hospital, authorities, the defendant liabil- exempt from institution be held the torts pay patients, including patients, ity to its general nature stated, test is the true As its servants. purpose maintained whether it is institution and or cost profit service, and not the extent or for beneficiary received patient the benefit availing privileges. the evidence himself Inasmuch as average patient maintaining indicates that the cost of day paid day, $4 doubtful whether the rate $7.56 a it is But, plaintiff “profit” found trial court. entailed indicated, if, even if it did the fact would be immaterial merely objective “profit” served to foster the charitable being general the institution—its nature of service the afflicted rather than the accumulation and distribution of profits.
Rehearing Shenk, J., denied. rehearing. voted for a December 28, A. No. 17184. Bank.
[L. 1939.] etc., Respondent, Administrator, ENGLAND, Special E.A. (a Corpora- THE SAMARITAN OF GOOD HOSPITAL Appellant. tion),