Court Opinion

ID: 9538533
Source: CourtListenerOpinion
Date Created: 2023-08-07 07:37:29.95692+00
Date Added: 2024-06-11T14:57:57.070035
License: Public Domain

SHENK, J., Dissenting.
I dissent.
My views on the issue of exemption of charitable institutions from liability to the beneficiaries thereof, either pay or nonpay, for the torts of servants who have been carefully selected are expressed in my dissenting opinion in the case of Silva v. Providence Hospital of Oakland, S. F. No. 16229 (ante, p. 762 [97 Pac. (2d) 798].) I cannot accept the majority opinion herein which runs counter to the great weight of authority and to the established rule in this state.
The defendant hospital satisfies the requirements of a charitable institution as defined by the authorities referred to in my dissent in the Silva case, supra. In fact the hospital here involved was held to be. exempt as a charitable institution in the case of Shane v. Hospital of the Good Samaritan, 2 Cal. App. (2d) 334 [37 Pac. (2d) 1066]. The evidence in the present case attests the correctness of that conclusion for the defendant’s articles of incorporation and by-laws disclose that it was established and is maintained under the auspices of the Protestant Episcopal Church in the Diocese of Los Angeles for the purpose of affording medical and surgical aid to sick and disabled persons and to provide such persons while inmates of the hospital with the ministration of the Gospel, if they so desire. The board of directors consists of the bishop of the diocese, the rector of St. Paul’s Episcopal Church and certain parishioners of the diocese. It is also declared therein, and the trial court found, that the defendant was not *797organized “for the purpose of realizing profits from the operation of its hospital”. In addition to the foregoing, the defendant adduced evidence tending to establish, and the trial court found, that it had no stockholders and no method of distributing profits, if any were made, and that no persons other than employees of the hospital received any salary or compensation of any kind from the defendant. It also appears from the evidence, and the trial court found, that the defendant receives and treats three classes of patients, viz., (1) indigent or charity patients who are treated without charge; (2) part charity patients who are able to pay a portion of the cost of the treatment afforded to them; and (3) pay patients financially able to pay the fees charged for their care and treatment and from which the defendant derives a “profit”. Defendant also cares for patients sent by the Good Hope Clinic. The evidence also discloses, and the trial court found, that the defendant’s income is derived from paying patients, contributions from Episcopal churches and returns from investment of an endowment fund. It likewise receives the proceeds from its operation of a pharmacy and lunch-counter. A financial statement put in evidence discloses that the defendant’s annual operating deficit for each of the years 1931-1934, inclusive, was $32,240, $65,809, $45,246 and $3,278, respectively. In 1935, the year of plaintiff’s accident, this same statement discloses a net surplus of $62,767. However, the record indicates that these figures merely disclose “the sums actually expended by the hospital . . . and do not include the cost of free care”. The mere presence of a surplus which ultimately is employed in its general charitable purpose does not alter defendant’s character as a charitable institution. (Baylor University v. Boyd, (Tex. Civ. App.) 18 S. W. (2d) 700, 701.) It was also shown herein, and the trial court found, that the average cost of treatment per day per patient was $8.70 in 1931; $8.80 in 1932; $8.09 in 1933; $7.06 in 1934, and $6.49 in 1935; and that the average weekly cost to the defendant in rendering hospitalization, nursing service, room and board to the plaintiff was $45.43— for which he paid, as already stated, $25 a week. It was further shown that indigent persons were admitted without restriction as to race, creed or color and that in 1935 the charitable work of the institution cost $25,967.30. Finally, it was shown that “the profits received from the operation of *798the hospital, when any are made, are devoted to (1) the care and treatment of indigent patients unable to pay anything; (2) to the care of patients who are able to pay some amount toward their care and treatment but less than the cost thereof, and (3) to a reduction of the mortgage indebtedness and the operation of the hospital”.
In addition to the findings already mentioned, the trial court found that the “hospital was operated by the defendant for charitable purposes” but it was also found that plaintiff was unaware of defendant’s charitable character and was not the recipient of any charity, but that, on the contrary, and like other pay patients, he had paid the charges imposed by the defendant hospital, from which it was found to have derived a “profit” permitting it to care for its non-pay or charity patients and to reduce its mortgage indebtedness. In the Silva case, supra, I pointed out that these latter elements were false quantities in the determination of whether an institution is charitable in character and entitled to exemption. The general purpose of an institution to render service, rather than to acquire and distribute profits among its members, establishes its charitable character. Here, as in the Silva ease, any “profit” derived from pay patients “merely served to foster the charitable objective of the institution—its general nature being that of service to the afflicted rather than the accumulation and distribution of profits”.
Rehearing denied. Shenk, J., voted for a rehearing.