DocketNumber： S. F. 16229
Judges： Edmonds, Shenk
Filed Date： 12/28/1939
Status： Precedential
Modified Date： 11/2/2024
By this appeal, Providence Hospital of Oakland seeks to avoid liability for damages awarded to the plaintiff because of personal injuries suffered by her while under its care, upon the ground that it is a charitable institution.
The facts in the case are practically undisputed. Almost four years ago, while the plaintiff was a patient in the hospital and paying the amounts charged by it for the services rendered to her, she fell and fractured her hip by reason of the negligence of the hospital nurse in failing to equip her bed with a side board. The hospital concedes the sufficiency of the evidence to support the findings on the issues of negligence, but it challenges the findings and conclusions of law upon a special defense of exemption from liability.
In its answer, the hospital alleged that since 1903, when it was incorporated under the laws of this state, it has been, and now is, a nonprofit corporation; that its object and purpose is to erect and maintain one or more hospitals to provide medical and surgical care for sick and disabled persons; that it has no capital stock; that its members and officers derive no pecuniary profit from the operation of the hospital and serve without pay; that poor and needy persons are admitted to the hospital without distinction of class or creed; and that charity patients are afforded the same treatment as patients who pay for services rendered.
Evidence offered in support of this defense established the facts alleged. The appellant also proved that the hospital is one of those owned by the Sisters of Charity of Montreal, Quebec, and is operated and controlled by members of that order. After acquiring land it erected a hospital building with money borrowed from the Roman Catholic Archbishop of San Francisco. Thereafter, solely from the profits of the hospital, it paid off this indebtedness, acquired a new site and commenced the erection of a second hospital. At this time, it had $60,000 in cash in addition to the two properties.
In 1926, when the new building was completed, the assets of the corporation were considered by it to be worth $1,675,-
When Elizabeth Silva, then a woman over seventy years of age, required hospital care, her daughter decided to take her to the respondent’s institution. No special rates for pharmaceutical supplies, X-rays, or surgery were mentioned. So far as she was informed, the hospital did not agree to furnish any care or treatment “at less than the regular profitable rate”.
The appellant contends that it is a charitable organization, and that as there is no claim that it did not use due care in the selection and retention of its employees, it is exempt from liability for tort. This contention presents squarely for decision the question whether a charitable corporation is liable for harm tortiously inflicted by an employee acting within the scope of his employment.
In many states, corporations organized for charitable purposes and operating as such enjoy immunity with respect to liability for wrongs occurring through the negligence of their servants and employees, if those employees have been selected and retained in the exercise of due care. However, there is much inconsistency and confusion among the decisions which follow this rule, due in large measure to the fact that the courts do not all base it upon the same theory. Possibly the one most generally stated is the so-called trust fund doctrine, first announced by an English court in 1848. (Heriot’s Hospital v. Ross, 12 Clark & F. 507; 8 Eng. Reprint 1508.) According to this view the patron deals with the charity upon the condition that the trust assets are not available to him for the payment of damages. Another theory upon which the rule of nonliability has been based is that by implied contract one who accepts the services or care of a corporation organized and operating for charitable purposes waives his right to hold it liable for tort. Other courts have held that
The defense here relied upon was raised as early as 1914 in the case of Thomas v. German Gen. etc. Soc., 168 Cal. 183 [141 Pac. 1186], which arose when an employee of a hospital was injured by falling into an elevator shaft. A judgment for the plaintiff was reversed upon the ground that the injury was caused by the negligence of a fellow servant, which at that time was a bar to recovery in such an action. However, the court mentioned a contention of the hospital that the action would not lie against it because of the rule exempting charitable institutions from liability for torts. In agreeing with that contention it said “that where one accepts the benefit of a public or of a private charity he exempts by implied contract the benefactor from liability for the negligence of the servants in administering the charity, if the benefactor has used due care in the selection of those servants.” (P. 188.)
This statement was characterized as dictum in the later case of Stewart v. California Medical etc. Assn., 178 Cal. 418 [176 Pac. 46], decided four years later, where it was pointed out that the Thomas case was decided upon the ground that the defendant was not liable under the rules governing ordinary business corporations. However, although the court discussed the doctrine which exempts a charitable corporation from liability, it affirmed the judgment in favor of Stewart upon the ground that the evidence showed that the institution was in fact operated for profit. Therefore, all that is stated in the opinion in this second case concerning the various theories of nonliability is also dicta.
On the other hand, in a number of cases the District Courts of Appeal have held that a corporation operating a hospital for charitable purposes is not liable under the doctrine of respondeat superior if it exercises ordinary care in the selection of its servants. Apparently, the question was first raised by the case of Burdell v. St. Luke’s Hospital, 37 Cal. App. 310 [173 Pac. 1008], in which this court denied a hearing the day before it decided the Stewart case. A husband and wife sued for damages on account of injuries suffered while the wife was a patient in the hospital, paying the regular rates for the services rendered to her. Upon a showing similar to that made by the Providence Hospital, the court upheld
Although indirectly presented, the question was also considered and passed upon in Levy v. Superior Court, 74 Cal. App. 171 [239 Pac. 1100], An officer of a hospital which had been sued for damages by a former patron was adjudged guilty of contempt for refusing to answer questions asked him when his deposition was taken. On a review of the contempt proceeding, it was contended that the rule of exempting a charitable organization for the negligent acts of its employees had not been adopted in this state, and as the hospital carried insurance indemnifying it against such liability, the reason for the rule failed. In answer to this contention, the court pointed out that charitable organizations have been relieved from liability upon the principle that a trustee may not deplete the trust fund set aside for charity by using it to pay damages caused by the tortious acts of those charged with the administration of the trust, and held that the protection afforded by this rule could not be infringed upon by the acts of a trustee in procuring insurance. As the court also held that no action could be maintained upon the policy which had been issued to the hospital until the plaintiff recovered a judgment against the insured, it may be said that the ease was decided upon that point, which was controlling. However, the decision recognizes, even if it does not apply, - the rule exempting charitable organizations from liability upon the trust fund doctrine.
In Stonaker v. Big Sisters Hospital, 116 Cal. App. 375 [2 Pac. (2d) 520], a judgment based upon a verdict directed in favor of the defendant hospital was affirmed on the authority of the Burdell case. Later, a hospital, in unsuccessfully urging that an order granting defendants’ motion for a non-suit in a suit brought against it be affirmed, contended that it was a charitable institution, but the court said that “this is an affirmative defense, the burden to prove which rests
Judgments against the Palo Alto Hospital were affirmed in Baker v. Board of Trustees, etc., 133 Cal. App. 243 [23 Pac. (2d) 1071], upon the ground that it “was not formed and maintained for charitable purposes”. Some time later the Long Beach Community Hospital was absolved from liability. Citing the Thomas, Burdell and Stonaker cases, the court held that “the character of respondent association as a charitable institution being established, the trial court properly directed a verdict in its favor if it exercised due care in the selection if its servants, ...” (Ritchie v. Long Beach Community Hospital Assn., 139 Cal. App. 688 [34 Pac. (2d) 771].)
The next case, Shane v. Hospital of the Good Samaritan, 2 Cal. App. (2d) 334 [37 Pac. (2d) 1066], is of particular interest because it was brought by a minor to recover damages for injuries alleged to have been sustained on the day of her birth through the negligence of a nurse. On the child’s behalf it was urged that although the doctrine exempting charitable institutions from liability for injuries suffered by a patron through the negligence of an employee had been recognized in this state upon the theory of an implied contract, because of the plaintiff’s minority the rule could not bar a recovery by her. In answer to this contention the court pointed out that charitable institutions have been held not liable for tort upon four different theories. These, it said, are, first, that of implied contract; second, that funds provided for the maintenance of a charity are contributed for a specific purpose which does not include the payment of claims for damages suffered through negligence; third, the relation of the employee to the patient does not bring the case within the rule of respondeat superior; and, fourth, that it is contrary to public policy to allow funds contributed for the maintenance of a charitable institution to be used for the payment of damage claims.
The reasons advanced for these conclusions, said the court, are irreconcilable. However, relying upon what it declared to be the “direct 'holding” of the Stewart case “that the Thomas case is not to be regarded as establishing in California the doctrine of ‘implied contract’ as the basis for the rule of nonliability”, it said there was no necessity “to' make a
Another action brought against a hospital by a patron who paid regular rates is Armstrong v. Wallace, 8 Cal. App. (2d) 429 [47 Pac. (2d) 740], After stating that the plaintiff’s right to recover was governed by the rules stated in the Thomas and Burdell cases, the court held that the plaintiff had no right of action. But a judgment for the defendant, given upon granting a motion for a directed verdict, was reversed in the case of England v. Hospital of Good Samaritan, 16 Cal. App. (2d) 640 [61 Pac. (2d) 48]. The jury should have been allowed to decide, said the court, whether the hospital was in fact conducted for profit, as charged by the plaintiff, or was operated only for charity. It also said: “We cannot hold that one who, without knowledge that a hospital claims to be a charitable institution and therefore exempt from liability, applies for admission and is received as a patient, paying the regular rates at which the hospital derives a profit, is without redress for injuries occasioned by negligence on the part of the employees of the hospital on the theory that he is accepting the benefits of charity from a benefactor.” This conclusion was based entirely upon the statement in the Stewart case that if the rule of nonliability were followed, “the defendant could hardly claim to be relieved of responsibility, for the reason that the plaintiffs had no knowledge whatever of the charitable character of the organization”.
In the last case of this character, Hallinan v. Prindle, 17 Cal. App. (2d) 656 [62 Pac. (2d) 1075], a judgment in favor of the plaintiff, who had been a paying patient, was reversed. However, the decision was limited to the question whether the hospital was conducted as a charity. “It is not disputed,” said the court, “that if properly classed as such it cannot be held liable for the negligent acts of its employees if it has used due care in their selection ...” (P. 669.)
The rule of nonliability has also been urged in defense of suits brought against charitable organizations by employees and persons, not patrons, who were injured through the negligence of an employee. In the case of Phoenix Assur. Co. v. Salvation Army, 83 Cal. App. 455 [256 Pac. 1106], the plaintiff’s assignors were injured when an employee of the charity negligently operated an automobile. A judgment for the plaintiff was affirmed notwithstanding the defendants’ claim that it was exempt from liability “because of the purpose for which it exists and because of the trust character of the funds at its disposal.” Pointing out that “the eases in the other states of the Union are in hopeless irreconcilability” and “the courts of this state have never espoused either side of the discussion”, Presiding Justice Works said: “The courts which have declared for the exemption of a charitable institution from liability for torts of which strangers to the charity are the victims have shown an unnecessary solicitude for the welfare of such organizations and of their beneficiaries. . . . We think this state should not be added to the list of those whose courts have encouraged—as in some degree they surely have—the agents of charitable institutions to render less than due care for the security of life, limb, and property, the very things which it is the sole purpose of such institutions to preserve and protect.” (PP. 461, 462.)
Summarizing these decisions, it is apparent that the District Courts of Appeal have followed the dicta of this court in the Thomas and Stewart cases except in Phoenix Assur. Co. v. Salvation Army, supra, and England v. Hospital of Good Samaritan, supra. In the first case, the doctrine that a charitable organization should have exemption was ex
Apparently all of the eases, except Levy v. Superior Court, supra, and Shane v. Hospital of the Good Samaritan, supra, decided by the District Courts of Appeal which hold that a charitable organization should not be liable upon the principle of respondeat superior, are based upon the theory of implied contract as stated by this court in the Thomas case. In the Levy case the trust fund doctrine was said to be controlling. Because of the minority of the plaintiff in the Shane case, the court mentioned three other theories, but declined to choose between them other than to say that “reason and weight of authority would furnish an adequate basis in the doctrine of public policy”.
Considering these various legal principles, the first, in point of time, was announced about one hundred years ago, when the English courts held that as property donated and held for charitable purposes constitutes a trust fund, it would be inconsistent to allow that property to be used for the payment of tort claims. (Heriot’s Hosp. v. Ross, 12 Clark & F. 507, 8 Eng. Reprint 1508; Holliday v. Vestry of St. Leonards, 142 Eng. Reprint 769.) This doctrine has been followed in the United States (Parks v. Northwestern University, 218 Ill. 381 [75 N. E. 991, 4 Ann. Cas. 103, 2 L. R. A. (N. S.) 556] ; Adams v. University Hospital, 122 Mo. App. 675 [99 S. W. 453] Eads v. Young Women’s Christian Assn., 325 Mo. 577 [29 S. W. (2d) 701]; Powers v. Massachusetts Homeopathic Hospital, 109 Fed. 294 [47 C. C. A. 122, 65 L. R. A. 372]), although the same court which first stated it, later declared that the rule is too unsatisfactory for continued approval. (Mersey Docks & Harbor Trustee v. Gibbs, L. R. 1 Eng. & Irish App. Cases 93, 11 H. L. Cases 686, 11 Eng. Reprint 1500.) The theory has also been examined and repudiated
The American Law Institute’s Restatement of the Law of Trusts summarizes the decisions upon this subject as follows: “A person receiving benefits under a charitable trust against whom a tort is committed in the course of the administration of the trust cannot reach trust property and apply it to the satisfaction of his claim, unless the trustee was personally at fault.” In commenting upon this rule, the Restatement declares : “This is true whether the person who was injured paid for the benefits which he received or not.” (Sec. 402e.)
It is conceded that the foregoing summarizes the conclusions which have been reached in a large majority of the eases upon this question. However, the illustration given by the Institute of the rule’s application assumes that “A bequeaths money to B in trust to establish and maintain a hospital.” This goes back to the theory upon which the rule was first promulgated in England, that where one endows a hospital for charitable purposes, the money or property of the trust cannot be used to pay damages awarded to one who suffers injuries at the hands of an employee in whose selection due care has been used. But the modern hospital is rarely maintained upon the donation of one charitably disposed individual. It is a business enterprise, which although it may be the recipient of some donations, is able to carry on its work because the aggregate amount received from paying patients is sufficient to meet the expense of ministering to
The appellant is a typical example of such an organization. Although the Sisters of Charity originally contributed some capital to their enterprise in buying the land upon which the first hospital buildings were erected, they have since acquired property of very substantial value from the institution’s operations. It is probably typical of many other hospitals which through good management and the support of a particular group of citizens, have made a financial success. Such institutions are most necessary for human welfare. But the change in their status from that of the hospital founded upon one person’s generosity, which was in existence at the time the trust fund doctrine was first announced, to the modern organization which, in its economic aspects is nonprofit rather than charitable in character, is unquestionably the reason why some courts no longer follow the doctrine of nonliability. Those which cling to the old rule see only an institution founded, as described in the Restatement, when “A bequeaths money to B in trust to establish and maintain a hospital” and apply that rule without a thorough consideration of fundamental principles which present-day needs require.
However, the most severe criticism of the trust fund theory is that, if logically applied, the property of the charitable organizations must enjoy complete immunity from all claims, regardless of the status of the injured plaintiff. (Hospital of St. Vincent v. Thompson, 116 Va. 101 [81 S. E. 13, 51 L. R. A. (N. S.) 1025]; Thomas v. German Gen. etc. Soc., supra; Phoenix Assur. Co. v. Salvation Army, supra; Love v. Nashville Agrl. & Normal Institute, 146 Tenn. 550 [243 S. W. 304, 23 A. L. R. 887].) If one paying the rates charged by a hospital for care may not recover for negligence because the institution is organized for charitable purposes, the trust fund rule should logically bar a recovery by one who is not a patron of the institution, such as a person injured by an automobile driven by the organization’s servant, or an employee injured during the course of his employment. Yet in most jurisdictions all persons except patrons are allowed a right to recover in a tort action. (Actions by third persons— Phoenix Assur. Co. v. Salvation Army, supra; Basabo v.
Another theory which has been stated in support of the rule of exemption is that of implied contract. Such a contract, as defined by the Civil Code “is one, the existence and terms of which are manifested by conduct”. (Sec. 1621.) “In general an implied contract, in no less degree than an express contract, must be founded upon an ascertained agreement of the parties to perform it, the substantial difference between the two being in the mere mode of proof by which they are to be respectively established. The law will imply that a party did make such a stipulation as under the circumstances disclosed, he ought, upon the principles of honesty, justice and fairness to have made. Of course, all the circumstances actually surrounding the parties in the particular transactions are to be carefully considered before this implication of a promise is to be indulged.” (Smith v. Moynihan, 44 Cal. 53, 62, 63; Jennings v. Bank of California, 79 Cal. 323 [21 Pac. 852, 12 Am. St. Rep. 145, 5 L. R. A. 233]; Sacramento Box & Lumber Co. v. Rosenberg Bros. & Co., 109 Cal. App. 56 [292 Pac. 146] ; Addison’s Law of Contracts, 11 ed., 447.) The true implied contract, then, consists of obligations arising from a mutual agreement and intent to promise where the agreement and promise have not been expressed in words. (Dunham-Carrigan-Hayden Co. v. Thermoid Rubber Co., 84 Cal. App. 669 [258 Pac. 663]; Williston on Contracts, vol. 1, sec. 3.) For example, conduct may form the basis for a novation although there is no express writing or agreement (Producers’ Fruit Co. v. Goddard, 75 Cal. App. 737 [243 Pac. 686]); the assignee of a contract becomes bound
However, before a contract may be implied, it must be determined, as a question of fact, whether the parties acted in such a manner as to provide the necessary foundation for it, and evidence may be introduced to rebut the inferences and show that there is another explanation for the conduct. (Wojahn v. National Union Bank, 144 Wis. 646 [129 N. W. 1068]; Carlson v. City of Marshalltown, 212 Iowa, 373 [236 N. W. 421]; Sacramento Box & Lumber Co. v. Rosenberg Bros. & Co., 109 Cal. App. 56 [292 Pac. 146] ; 33 Harv. L. Rev. 376.) But in exempting a charitable organization from liability on the basis of implied contract, courts have required only proof concerning the eleemosynary character of the corporation. (Shane v. Hospital of Good Samaritan, supra; Hollinan v. Prindle, supra.) It is said that by accepting the services of a hospital which is not' organized for profit but to benevolently serve the public, one impliedly exempts “the benefactor” from liability, even if he pays the full amount demanded for the services rendered to him. This is fallacious reasoning which can only be justified by ignoring the principles governing implied contract.
To find an implied contract by the patron in the purpose of the charitable organization is to entirely disregard other factors which should be considered in determining whether any such agreement may be inferred from the conduct of the parties. There is no reason for a court to say that admission to a hospital is proof of an intention not to charge it with responsibility for tortious wrongdoing. Indeed, the agreement to pay the rates charged by the hospital for its services would ordinarily be sufficient basis for the opposite inference; certainly it is a strong indication that the patient did not agree that the charity should be exempt if injury resulted. from the failure of its servants to act with ordinary care.
Some courts have denied recovery against a charitable organization upon the ground that the rule of respondeat superior should not be applied to it because the institution receives no private benefit from the acts of its servants. But no one is obliged by law to assist a stranger, even though he can do so by a mere word, and without the slightest danger to himself. However, once he has undertaken to render assistance the law imposes upon him a duty of care toward the person assisted. (Restatement of Law of Torts, sec. 324; McLeod v. Rawson, 215 Mass. 257 [102 N. E. 429, 46 L. R. A. (N. S.) 547]; Hoyt v. Tilton, 81 N. H. 477 [128 Atl. 688, 120 A. L. R. 1525.)
It has also been said that public policy either allows or requires the exemption of charities from tort liability. (Duncan v. Nebraska Sanitarium & Benevolent Assn., 92 Neb. 162 [137 N. W. 1120, Ann. Cas. 1913E, 1127, 41 L. R. A. (N. S.) 973] ; Currier v. Trustees of Dartmouth College, 105 Fed. 886; Morrison v. Henke, 165 Wis. 166 [160 N. W. 173].) According to this view, the charity must be preserved for the public benefit. However, Professor Harper, in his book ‘1 The Law of Torts”, points out that “the immunity of charitable corporations in tort is based upon very dubious grounds”. Continuing, he concludes: “It would seem that a sound social policy ought, in fact, to require such organizations to make just compensation for harm legally caused by their activities under the same circumstances as individuals before they carry on their charitable activities. The policy of the law requiring individuals to be just before generous seems equally applicable to charitable corporations. To require an injured individual to forego compensation for harm when he is otherwise entitled thereto, because the injury was committed by the servants of a charity, is to require him to make an unreasonable contribution to the charity, against his will, and a rule of law imposing such burdens can not be regarded as
No rule of law may be justified if the theories advanced to support it lack a foundation of legal principle, and, as has been shown, the exemption of a charitable organization from liability for injuries suffered by a paying patient through the negligence of an employee would logically require the same exemption from the tort claims of others. That many courts have refused to consistently apply the rule of nonliability is conclusive evidence of the fallacious reasoning which is advanced in its behalf. On the contrary, other courts have declared that the charitable organization must respond in damages to the paying patient whom it injures. (Mulliner v. Evangelischer Diakonniessenverein, 144 Minn. 392 [175 N. W. 699] ; Tucker v. Mobile Infirmary Assn., 191 Ala. 572 [68 So. 4, L. R. A. 1915D, 1167]; City of Shawnee v. Roush, 101 Okl. 60 [223 Pac. 354]; University of Louisville v. Hammock, 127 Ky. 564 [106 S. W. 219, 128 Am. St. Rep. 355, 14 L. R. A. (N. S.) 784]; Sessions v. Thomas Dee Memorial Hospital Assn., 89 Utah, 222 [51 Pac. (2d) 229]; Gilbert v. Corp. of Trinity House, L. R. 17 Q. B. Div. 795.) This is not only the modern view but the one required by every principle of common justice. As one court has said: “It is a principle of law as well as of morals that men must be just before they are generous.” (Tucker v. Mobile Infirmary Assn., supra.)
The judgment is affirmed.
Curtis, J., Gibson, J., Carter, J., and Waste, C. J., concurred.
Houser, J., concurred in the judgment.