California Employment Commission v. Betthesda Foundation

WOOD (W. J.), J.

Plaintiff commenced this action under the provisions of section 45 of the California Unemployment Insurance Act (Chap. 352, Stats. 1935; Deering’s Gen. Laws, 1937, Act 8780d) to recover unemployment insurance contributions for the calendar years 1936, 1937 and 1938. Defendant alleged that it is organized and operated exclusively for charitable purposes and claimed to be exempt from making the contributions. The trial court made findings adverse to the allegations of defendant and gave judgment for plaintiff, from which defendant prosecutes this appeal. There is also a purported appeal from an order denying defendant’s motion for a new trial.

We are called upon to determine the question whether the evidence sustains the trial court’s finding that defendant is not such an institution as is exempt under the provisions of section 7(g) of the act, which excludes from the obligation to make contributions: “Service performed in the employ of a corporation, community chest, fund, or foundation, organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private shareholder or individual.”

Defendant corporation was incorporated on October 11, 1935, under the provisions of section 606 of the Civil Code, relating to nonprofit corporations for charitable purposes. On January 1, 1936, defendant began the operation of the Angelus Hospital and the Dr. R. B. Jenkins Clinic. These institutions are located at 1925 Trinity Street and 1901 Trinity Street respectively. The Angelus Hospital is an institution of 110-bed capacity and has been continuously operated

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as a hospital since its construction in 1904. Before the incorporation of defendant the hospital and the clinic were operated by Dr. R. B. Jenkins directly or indirectly through the medium of R. B. Jenkins Corporation. Dr. Jenkins held the property under a lease from the Washington Holding Company and he subleased the properties to defendant corporation upon the commencement of its operations, the rental price being $500 per month during 1936, $600 per month during 1937 and $650 per month during 1938. Defendant had no assets or liabilities at the time it took over the properties. Dr. Jenkins, the president of defendant corporation, continued to be in charge of the hospital and the clinic.