Case ID: va-cir_43/html/0058-01.html
Source: Caselaw Access Project
Author: {"author": "By Judge Joseph E. Spruill, Jr.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

CIRCUIT COURT OF LANCASTER COUNTY
    Bailey v. Lancaster Ruritan Recreation Center, Inc.
    June 6, 1997
   By Judge Joseph E. Spruill, Jr.

. The plaintiff here is the administrator of the estate of her daughter who drowned while swimming M a pool owned and operated by Lancaster Raritan Recreation Center, Me. (LRRC). M response to her action against LRRC for damages, LRRC filed a plea of charitable immunity. A hearing on the plea was held May 8, 1997. The Court has considered the able arguments made at Me hearing and has studied Me memoranda mid authorities submitted by counsel The Court is of Me opinion that Me plea in bar should be sustained.

LRRC is a non-stock corporation chartered in 1964. Its corporate purposes, as stated m its charter, are to operate a civic center, club, social, or recreation center and to provide funds for Me carrying on of religious, charitable, scientific, literaiy, historical, or educational programs. The charter provides Mat no part of Me funds of Me corporation should Mure to Me benefit of any member of Me corporation. Since its creation, Me corporation has operated a recreation center in Me village of Lively, consisting of a swimming pool, baseball field, tennis court, and concession stand. The facilities have been utilized primarily by members and guests of Me recreation center as well as members of Me general public.

The corporation files state and federal income tax returns. Returns prior to 1980 were not available. Since 1980 Me corporation has reported a profit M only two years: in 1991 its profit was $2,882.01 and M 1993 its profit was $665.00. M alt other years Me returns indicate a loss. The corporate treasurer keeps Me books of Me corporation, receives its Meóme, and pays its bills and is paid a salary of $600.00 per year. The corporate secretary keeps Me minutes and other records of the corporation and is paid a salary of $200.00 per year. Neither has been paid for the past two years due to lack of funds. The corporation pays property taxes to Lancaster County. It has made no contributions for any religious, scientific, literary, or historical purpose but does make its facilities available to the American Red Cross, Boy Scouts of America, and to the Young Men’s Christian Association for educational purposes from time to time. The goal of the organization, as stated by its present treasurer, is to break even and use whatever revenue becomes available to maintain the facilities.

As of January 1997, because LRRC did not have funds to maintain or operate the pool, it leased the pool to the YMCA for $1.00 per year.

The issue to be decided is whether LRRC is a charitable organization.

“The test which determines whether an organization is charitable or otherwise is its purpose, that is, whether or not it is maintained for gain, profit, or advantage. The question as to its character may be determined not rady from the powers and purposes as defined in its articles of incorporation or charter but also from the maimer in which it is conducted.” Danville Community Hosp. v. Thompson, 186 Va. 746, 43 S.E.2d 882 (1947). There is a presumption that defendant is operating a charitable institution in accordance with its charter purposes. Memorial Hosp. v. Oakes, Adm'x, 200 Va. 878 (1959).

In Thompson, the Supreme Court found Danville Community Hospital not , to be a charitable organization. This was a stock company, its charter contained no suggestion of charitable objectives, and the stockholders, while receiving no fees or dividends, were entitled to free hospital services.

In Purcell v. Mary Washington Hosp., 217 Va. 776 (1977), the Supreme Court again found the hospital not to be a charitable institution. The charter here provided for the issuance of stock, stating that its purpose was to conduct: and run a general hospital. The Supreme Court found nothing in the charter; which required foe organization to conduct its affairs as a charitable institution. Charges were set to break even "and a certain amount above font” The hospital operated at a profit for twenty out of twenty-one years and was aggressive in its debt collections. These factors led foe Supreme Court to conclude that Mary Washington Hospital failed to meet foe Thompson test

On foe other hand, Richmond Memorial Hospital was found to be a charitable organization because it was a non-stock, non-profit corporation. City of Richmond v. Richmond Memorial Hosp,, 202 Va. 86 (1960). In Oakes the corporation was found to be a charitable institution. This was a non-stock, non-profit corporation whose financial goal was to break even after allowances.

In Thrasher v. Winand, 239 Va. 338 (1990), Mountain Magic, Inc., a corporation whose purpose was to promote an annual spring festival in Buchanan and to donate its net earnings to local charities tras found to he a charitable organization. In City of Richmond v. Grand Lodge of Va., 162 Va. 471, 174 S.E. 846 (1934), the Masonic Lodge was recognized as a charitable institution.

While the Supreme Court has had many occasions to rule on Issues involving the doctrine of charitable immunity, there appear to be only four cases drat specifically address die issue here, what determines whether a corporation is charitable. In Thompson and in Mary Washington Hosp. neither organization had a charitable or benevolent purpose stated in its charter; each was a stock corporation; and each aimed to operate at a profit Both organizations here were found to be not charitable.

In Oakes and in Richmond Memorial Hosp., each was a non-stock corporation with benevolent purposes stated in its charier. Neither operated expressly to make a profit in die conventional sense but rather to break even. The Supreme Court ruled in each case that these were charitable organizations.

The LRRC more closely conforms to these latter two cases. The corporate purposes set forth in the charter of LRRC are clearly charitable. Thus, the presumption is that it is operating as a charitable organization. The corporation has no stockholders; the officers and directors receive no compensation for their services, other than the stipend paid to die secretary and treasurer who maintain die corporate records and accounts; no individual or corporation receives any return from its operation; and its goal is to break even. Any excess funds are used to repair and maintain die existing facilities.

LRRC is, in actuality, a non-profit corporation. Its activities have been consistent with its corporate purposes, which are to provide recreational facilities for the young people and residents in and around die village of Lively. It makes its facilities available to other charitable organizations, such as die Boy Scouts, the American Red Cross, and the YMCA. The corporation has never undertaken to secure a tax exemption pursuant to § S01(cX3) of Tide 26 of the Internal Revenue Code nor from Lancaster County property taxes but this should not necessarily be disqualifying. The Court finds that LRRC is a charitable organization.

Next, we consider whether the plaintiffs decedent was a beneficiary of the charitable activities conducted by LRRC.

In order for charitable immunity to apply, the plaintiffs decedent must be a beneficiary of the charitable activities of LRRC. Straley v. Urbanna Chamber of Commerce, 243 Va. 32 (1992).

Here, the plaintiffs decedent was a guest of a member of the association who had come to use die facilities of the association for recreational purposes. She swam in die pool. LRRC’s corporate purpose was to establish a recreation center, including a swimming pool, so that members and guests would have facilities to use for their recreation. Whether a fee was paid to defray die costs incurred by the charity has no bearing on the issue because such fees are used for the upkeep and maintenance of the facilities. Weston's Adm'x v. Hospital of St. Vincent, 131 Va. 587 (1921).

The plaintiff argues that her decedent was an invitee at the swimming pool and was in no way a beneficiary of the defendant’s bounty. There is a distinction to be drawn between Straley and Thrasher and the case at hand, hi Thrasher die court found the plaintiffs relationship with the charitable organization to be too remote and speculative, In Straley, the plaintiff was found to receive no benefits from the funds generated by the defendant’s charitable activities, hi this case, the plaintiffs decedent directly benefited by participating in die recreation facility provided by die defendant for that purpose. We must conclude that the plaintiff s decedent was a beneficiary of die bounty of the defendant association.

For these reasons, die plea in bar will be sustained.