SHENK, J., Dissenting. I dissent.
I cannot agree with the prevailing opinion for two principal reasons. In the first place, I challenge the test of exemption from liability based on the ability of the patient to pay. A poor man is just as much entitled to good treatment at a hospital as a rich one and is just as much in need of it. (Compare Robinson v. Pioche, Bayerque & Co., 5 Cal. 460, 461.)
In the second place the reasoning and conclusions of the prevailing opinion are contrary to the declared policy of this [777]state and the overwhelming weight of authority elsewhere on the question of exemption from liability of charitable institutions. If such an important change in state policy, affecting as it does the substantive rights of the parties to this type of litigation, is to be brought about, it should be done by the legislature and not by the courts.
An extensive research has disclosed that the prevailing rule, though based on varying reasons, favors the exemption of charitable institutions from liability to the beneficiaries thereof, either pay or nonpay, for the torts of servants who have been carefully selected. Identity of conclusion reached, though by different reasoning, may be accepted as strong proof of the correctness of the rule. It is reasonably safe to say that less than eight states have held that charitable institutions are liable for the negligence of their employees on the same basis as private profitmaking corporations. Among the small number of jurisdictions appearing to so declare are Alabama, Oklahoma,' Minnesota, Florida, Georgia and Rhode Island, the latter apparently having by statute since adopted the majority rule as regards charitable hospitals. (Southern Meth. Hospital v. Wilson, 45 Ariz. 507 [46 Pac. (2d) 118,121]; 33 A. L. R. 1369, 1370.) Practically all of the remaining states, on one ground or another, have granted exemption to charitable hospitals from tort liability for the negligence of their servants at least as regards the beneficiaries of such charity, whether they be nonpaying, true charity patients or patients obtaining the benefit of the charity’s facilities though paying all or a part of the rate established by it for those financially able to pay. We are not here concerned with the liability or nonliability of a charitable institution to its employees or to strangers who have not in any way availed themselves of its facilities. It is interesting to note, however, that most of the jurisdictions which grant exemption as to the two classes of beneficiaries just above mentioned, deny such exemption as to employees of and strangers to the charity. (Phoenix Assur. Co. v. Salvation Army, 83 Cal. App. 455 [256 Pac. 1106], [stranger injured on street by defendant’s automobile]). It is not necessary to consider or determine the propriety of the rule which denies exemption in the case of employees and strangers. That problem is not here involved.
[778]In applying the general doctrine of exemption as regards beneficiaries of a charity practically all jurisdictions do so upon the premise that the charitable institution as a part of its affirmative defense of nonliability has established that it exercised due care in the selection of the servant or employee whose negligence is sought to be imputed to it. In other words, the authorities generally recognize that such an institution is not liable for the negligence of its servants if it has exercised reasonable care in their selection and retention. (Lewis v. Young Men’s Christian Assn., 206 Cal. 115, 116 [273 Pac. 580]; Roberts v. Ohio Valley Gen. Hosp., 98 W. Va. 476 [127 S. E. 318, 42 A. L. R. 968] ; Ritchie v. Long Beach Com. Hosp., 139 Cal. App. 688, 691 [34 Pac. (2d) 771]; Old Folks etc. Home v. Roberts, 83 Ind. App. 546 [149 N. E. 188] ; Carver C. College v. Armstrong, 103 Okl. 123 [229 Pac. 641, 109 A. L. R. 1202.) Upon the trial of the present cause the plaintiff conceded that the defendant hospital had exercised due care in the selection of its nurses.
Research discloses that the cases applying the exemption doctrine fall into several categories. The first group bases the rule on what is known as the “trust fund theory”. Parks v. Northwestern University, 218 Ill. 381 [75 N. E. 991, 4 Ann. Cas. 103, 2 L. R. A. (N. S.) 556], is typical of the cases basing the rule on this theory and expounds it is follows: “The funds and property thus acquired are held in trust, and cannot be diverted to the purpose of paying damages for injuries caused by the negligent or wrongful acts of its servants and employees to persons who are enjoying the benefit of the charity. An institution of this character, doing charitable work of great benefit to the public without profit, and depending upon gifts, donations, legacies and bequests made by charitable persons for the successful accomplishment of its beneficial purposes, is not to be hampered in the acquisition of property and funds from those wishing to contribute and assist in the charitable work by any doubt that might arise in the minds of such intending donors as to whether the funds supplied by them will be applied to the purposes for which they intended to devote them, or diverted to the entirely different purpose of satisfying judgments recovered against the donee because of the negligent acts of those employed to carry the beneficent purpose into execution.”
[779]Other cases espousing this theory or reason as the basis of the exemption rule are: Adams v. University Hospital, 122 Mo. App. 675 [99 S. W. 453]; Gable v. Sisters of St. Francis, 227 Pa. 254 [75 Atl. 1087, 136 Am. St. Rep. 879] ; Roosen v. Peter Bent Brigham Hosp., 235 Mass. 66 [126 N. E. 392, 14 A. L. R. 563]; Parks v. Northwestern University, 218 Ill. 381 [75 N. E. 991, 4 Ann. Cas. 103, 2 L. R. A. (N. S.) 556]; Cook v. John H. Norton Mem. Infirmary, 180 Ky. 331 [202 S. W. 874]; Jensen v. Maine E. & E. Inf., 107 Me. 408 [78 Atl. 898, 33 L. R. A. (N. S.) 141] ; 10 Am. Jur. 695, sec. 146. It is true, as pointed out in the majority opinion, that the trust fund theory has been criticized in some jurisdictions of late years upon the ground that the early English cases first pronouncing it (Heriot’s Hosp. v. Ross, 8 Eng. Reprints 1508; Holliday v. Vestry of St. Leonard’s, 142 Eng. Reprint 769) have been disapproved in principle (Mersey Docks Trustees v. Gibbs, 11 Eng. Reprint 1500), and upon the further ground that no diversion of trust funds may logically be said to result from payment of damage claims, for the donor reasonably must have contemplated such claims being made against an operating charity. However, in spite of such criticism, the “trust fund theory” of charitable exemption finds definite expression in the American Law Institute’s Restatement of the Law of Trusts wherein, after recognizing the exceptions above mentioned as to employees and strangers, it is declared in section 402, subdivision 3, that “A person receiving benefits under a charitable trust against whom a tort is committed in the courts 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.” (This last qualifying phrase would cover the situation, mentioned above, where there has been a lack of care in the selection of the employee.) In comment “f” thereunder it is stated that “If in the administration of a charitable trust a tort is committed against a person who receives benefits under the trust, he cannot reach trust property and apply it to the satisfaction of his claim if the trustee was not personally at fault. This is true whether the person who was injured paid for the benefits which he received or not. Persons receiving benefits under a charitable trust include such persons as patients in a hospital, pupils in a school, inmates of a home,” Among the “illustrations” given under [780]the foregoing comment, is the following: “5. A bequeaths money to B in trust to establish and maintain a hospital. Owing to the negligence of a nurse employed by the hospital, C, a patient, is injured. Whether G is a paying patient or is treated gratuitously, he cannot obtain satisfaction of his claim out of the trust property, if B was not personally at fault.” Again, in comment “h” it is pointed out that “A person receiving benefits from the corporation, whether or not he pays -for such benefits, cannot maintain an action of tort against the corporation, unless the board of management of the corporation was at fault. . . . Thus, if a charitable corporation is organized to conduct a hospital, a patient in the hospital, whether he is a paying patient or not, cannot maintain an action against the corporation for injuries resulting from negligence, unless the board of management was at fault, as for example, in negligently employing or retaining incompetent employees, or in permitting the premises to be in a dangerous condition, or in failing to make proper rules for the operation of the hospital.” In its attempt to minimize the effect of the Restatement, the majority opinion points out that the illustrations given therein have to do solely with endowed charities. Necessarily this is so, for the trust fund theory of charitable exemption from its inception has had particular application to endowed charities. But, as shall presently be shown, there are other theories of exemption applicable alike to all charitable institutions, whether endowed or not. Obviously, charities are not 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 out a purpose recognized in law as charitable, or whether it is maintained for gain, profit or private advantage.
Another theory advanced in support of the rule of tort non-liability of charitable organizations is that of “implied waiver”. The reasoning underlying this theory is well and succinctly expressed in Powers v. Massachusetts Homeopathic Hospital, 109 Fed. 294 [47 C. C. A. 122, 65 L. R. A. 372], wherein it is stated “That a man is sometimes deemed to assume a risk of negligence, so that he cannot sue for damages caused by the negligence, is familiar law. Such . . . are the cases of athletic sports and the like. . . . One who accepts the benefit either of a public or of a private charity enters into a relation which exempts his benefactor from lia[781]bility for the negligence of his servants in administering the charity; at any rate, if the benefactor has used due care in selecting those servants. To paraphrase the illustration put by the learned judge before whom this case was tried, it would be intolerable that a good Samaritan, who takes to his home a wounded stranger for surgical care, should be held personally liable for the negligence of his servant in caring for that stranger. Were the heart and means of that Samaritan so large that he was able, not only to provide for one wounded man, but to establish a hospital for the care of a thousand, it would be no less intolerable that he should be held personally liable for the negligence of his servant in caring for any one of those thousand wounded men. We cannot perceive that the position of the defendant differs from the case.supposed. The persons whose money has established this hospital are good Samaritans, perhaps giving less of personal devotion than did he, but, by combining their liberality, thus enabled to deal with suffering on a larger scale. If, in their dealings with their property appropriated to charity, they create a nuisance by themselves or by their servants, if they dig pitfalls in their grounds and the like, there are strong reasons for holding them liable to outsiders, like any other individual or corporation. The purity of their aims may not justify their torts; but, if a suffering man avails himself of their charity, he takes the risks of malpractice, if their charitable agents have been carefully selected.” Some of the many other authorities that adopt this theory of “implied waiver” or “implied contract” are: Schloendorff v. Society of N. Y. Hospital, 211 N. Y. 125 [105 N. E. 92, Ann. Cas. 1915C, 581] ; Jensen v. Maine E. & E. Infirmary, 107 Me. 408 [78 Atl. 898, 33 L. R. A. (N. S.) 141]; Hearns v. Waterbury Hosp., 66 Conn. 98 [33 Atl. 595, 31 L. R. A. 224]; McDonald v. Massachusetts Gen. Hosp., 120 Mass. 432, 21 Am Rep. 529]; Morrison v. Henke, 165 Wis. 166 [160 N. W. 173] ; Magnuson v. Swedish Hosp., 99 Wash. 399 [169 Pac. 828] ; 10 Am Jur. 694, sec. 145.
In this state most of the authorities that have extended immunity to charitable institutions from tort liability for the acts of their servants have done so upon this theory. In Thomas v. German Gen. etc. Soc., 168 Cal. 183, 188 [141 Pac. 1186], though dicta, it was stated by a department of this court that “where one accepts the benefit of [782]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”. This declaration was unnecessary to the decision for the court was of the view that regardless of the rule of exemption the defendant was not liable under the ordinary rules pertaining to corporate liability. Moreover, the rule of exemption from liability was inapplicable in the cited case for the injured plaintiff was an employee of the defendant and, as indicated above, practically all of the authorities deny exemption as to employees of and strangers to the charity. However, the quotation is indicative of this court’s leaning toward the well-established rule of charitable exemption.
In the later case of Stewart v. California Med. etc. Assn., 178 Cal. 418, 422, 423 [176 Pac. 46], the court took occasion to refer to the prior ruling and after declaring its status to be that of obiter, stated that it “cannot be considered as having committed this court to any one of the several theories on which the nonliability of charitable corporations is based, or to the doctrine of nonliability”, concluding that “It may be noted, however, that if this rule [of exemption based on implied contract] is followed, the defendant could hardly claim to be thereby relieved of responsibility, for the reason that the plaintiffs had no knowledge whatever of the charitable character of the organization.” Thus it was indicated that it is improper to imply a contract as against one who is without knowledge of the facts from which the implication arises. It must be conceded that this criticism has been leveled at the “implied contract” theory of exemption by other authorities, particularly those having to do with plaintiffs who were infants or who were brought to the charitable hospital in an unconscious state and therefore in no mental condition to be a party to a contract, implied or otherwise. (10 Am. Jur. 694, sec. 145, and authorities there cited.) In answer to this criticism some of the proponents of the “implied contract” theory of exemption have countered with the assertion that the contract is not one implied in fact but in law. Research reveals that no exception was made in favor of minors in the following cases: Weston’s Admx. v. Hospital of St. Vincent of Paul, 131 Va. 587 [107 S. E. 785, 23 A. L. R. 907]; Hogan v. Chicago L. Hosp., 335 Ill. 42 [166. N. E. 461]; [783]Parks v. Northwestern University, supra. In Shane v. Hospital of Good Samaritan, 2 Cal. App. (2d) 334,340 [37 Pac. (2d) 1066], an order granting a new trial to plaintiff, a minor, was reversed with directions to enter judgment on the verdict for the defendant hospital, there held to be a charitable institution. Regardless of the criticism to which the “implied contract” theory has been subjected, it must be held that the discussion and criticism thereof in the Stewart case, supra, was unnecessary for it there definitely appeared, and the trial court had found that the defendant hospital was itself negligent (as distinguished from the negligence of one of its servants) in that it failed to provide the necessary equipment; and further that it had been operated for thirteen years “without having at any time received any charity patients”. Obviously, either one of these elements would serve to deprive the hospital there involved of immunity from tort liability for the acts of its servants. The opinion recognized this for it concluded that “It is, therefore, unnecessary to pass upon the nonliability of public charities for negligence or the reasons therefor. ’ ’
Since the decisions in the Thomas and Stewart cases, supra, there has accumulated in this state a series of decisions by the District Courts of Appeal (in some of which this court has denied hearings) wherein it is definitely announced that charitable institutions are exempt from tort liability to beneficiaries thereof upon the theory of “implied waiver” or “implied contract”. Among the cases so holding, may be cited: Burdell v. St. Luke’s Hosp., 37 Cal. App. 310 [173 Pac. 1008]; Stonaker v. Big Sisters Hosp., 116 Cal. App. 375, 379 [2 Pac. (2d) 520] ; Ritchie v. Long Beach Community Hosp., 139 Cal. App. 688, 691 [34 Pac. (2d) 771]; Armstrong v. Wallace, 8 Cal. App. (2d) 429, 433 [47 Pac. (2d) 740]; Bardinelli v. Church of All Nations, 23 Cal. App. (2d) 713, 715 [73 Pac. (2d) 1264]. All but the last cited case involved injuries to paying patients in charitable hospitals, as does the present case. The fact that they had paid the established rates was held to he immaterial to the issue of exemption if the institution was charitable in character.
In the citation and discussion of California cases advancing the theory of “implied waiver” or “implied contract” as the reason underlying the doctrine of exemption of charitable institutions, I have purposely refrained from referring to the [784]two decisions in England v. Hospital of Good Samaritan, appearing in 16 Cal. App. (2d) 640 [61 Pac. (2d) 48], and 22 Cal. App. (2d) 226 [70 Pac. (2d) 692], for that case is now pending in this court and will be disposed of simultaneously with the present case, though by separate opinion.
A third theory advanced by many of the cases for exempting charitable institutions is based on the asserted inapplicability of the doctrine of respondeat superior. It is well expressed in the case of Hearns v. Waterbury Hosp., 66 Conn. 98 [33 Atl. 595, 603, 31 L. R. A. 224], “But we think the drift of all the cases clearly indicates a general conviction that an eleemosynary corporation should not be held liable for an injury due only to the neglect of a servant, and not caused by its corporate negligence in the failure to perform a duty imposed on it by law, and we are satisfied that this general conviction rests on sound legal principles. . . . The law which makes one responsible for an act not his own, because the actual wrongdoer is his servant, is based on a rule of public policy. . . . The rule is distinguished as the doctrine of respondeat superior . . . [which] is bottomed on the principle that he who expects to derive the advantage from an act done for him by another must answer for any injury which a third person sustains from it. . . . This defendant does not come within the main reason for the rule of public policy which supports the doctrine of respondeat superior. It derives no benefit from what its servant does, in the sense of that personal and private gain which was the real reason for the rule. Again, so far as the persons injured are concerned, especially if they be patients at the hospital, the defendant does not “set the whole thing in motion”, in the sense in which that phrase is used as expressing a reason for the rule. Such patient, who may be injured by the wrongful act of a hospital servant, is not a mere third party, a stranger to the transaction. He is rather a participant. The thing about which the servants are employed is the healing of the sick. This is set in motion, not for the benefit of the defendant, but of the public. Surely, those who accept the benefit, contributing also by their payments to the public enterprise, and not to the private pocket of the defendant, assist as truly as the defendant in setting the whole thing in motion. . . . We are now asked to apply this rule, for the first time, to a class of masters distinct from all others, and who do not and cannot come [785]within the reason of the rule. In other words, we are asked to extend the rule, and to declare a new public policy, and say: On the whole, substantial justice is best served by making the owners of a public charity, involving no private profit, responsible, not only for their own wrongful negligence, but also for the wrongful negligence of the servants they employ only for a public use and a public benefit. We think the law does not justify such an extension of the rule of respondeat superior. ... It is enough that a charitable corporation like the defendant, whatever may be the principle that controls its liability for corporate neglect in the performance of a corporate duty, is not liable, on grounds of public policy, for injuries caused by personal wrongful neglect in the performance of his duty by a servant whom it has selected with due care; but in such case the servant is alone responsible for his own wrong. This result ... is reached, for one reason or another, by the greater number of courts that have dealt with this particular liability of a corporation for public or charitable purposes."
Research also discloses decisions that advance other and less known theories for exempting charitable institutions. They need not here be mentioned. Regardless of the variant reasons, actually expressed in the many cases on the subject, I am convinced that underlying all of them is an expression of public policy, as declared in the last quoted ease. In Shane v. Hospital of Good Samaritan, supra, it is said that “reason and the weight of authority would furnish an adequate basis in the doctrine of public policy, the considerations in support of which would seem to be more convincing and less vulnerable to attack than those advanced in support of any of the other theories which have had judicial sanction". See, also, D’Amato v. Orange Mem. Hosp., 101 N. J. L. 61 [127 Atl. 340] ; Ettlinger v. Trustees of R-M. College, 31 Fed. (2d) 869; Bodenheimer v. Confederate M. Assn., 68 Fed. (2d) 507.
I am satisfied that the established doctrine of exemption presents a rule of sound public policy which, though it may do an injustice in individual cases, tends to encourage the establishment and maintenance of charitable institutions by advising those financially contributing thereto or exerting their efforts therein that the same will not be diverted from the [786]original purpose of charity to pay for the negligence of the employees of such an institution, provided always that the management thereof uses reasonable care in the selection of its employees. In jurisdictions which grant such exemption from liability, and as shown, and conceded in the majority opinion, they constitute the overwhelming weight of authority, the general rule (almost equally overwhelming) is that the fact that the institution receives pay from some of its beneficiaries detracts nothing from its charitable character and does not change the rule in regard to its exemption from liability, either as to paying or nonpaying patients. (Armstrong v. Wallace, 8 Cal. App. (2d) 429, 433 [47 Pac. (2d) 740]; Hallinan v. Prindle, 17 Cal. App. (2d) 656, 669 [62 Pac. (2d) 1075] ; Ritchie v. Long Beach Com. Hosp., 139 Cal. App. 688, 690 [34 Pac. (2d) 771]; Greatrex v. Evangelical D. Hosp., 261 Mich. 327 [246 N. W. 137, 86 A. L. R. 487] ; Adams v. University Hosp., 122 Mo. App. 675 [99 S. W. 453] ; Gable v. Sisters of St. Francis, 227 Pa. 254 [75 Atl. 1087, 136 Am. St. Rep. 879]; Taylor v. Protestant Hosp. Assn., 85 Ohio St. 90 [96 N. E. 1089, 39 L. R. A. (N. S.) 427]; Southern Meth. Hosp. v. Wilson, supra; Nicholas v. Evangelical Deaconess Home, 281 Mo. 182 [219 S. W. 643] ; Duncan v. Nebraska Sanitarium, 92 Neb. 162 [137 N. W. 1120, Ann. Cas. 1913E, 1127, 41 L. R. A. (N. S.) 973] ; St. Vincent’s Hosp. v. Stine, 195 Ind. 350 [144 N. E. 537, 33 A. L. R. 136] ; 11 C. J. 304; 10 Am. Jur. 700, sec. 151; 109 A. L. R. 1204.) Many of the authorities reasonably hold that the availability to pay patients of the elaborate facilities and expert services of a charitable hospital, which were it not for the charity involved in its creation and maintenance would not be available to anyone, makes the pay patient, as well as the true charity patient, a beneficiary thereof, though perhaps in a lesser degree. (Weston v. Hospital of St. Vincent, 131 Va. 587 [107 S. E. 785, 23 A. L. R. 907]; Powers v. Massachusetts Homeopathic Hosp., 109 Fed. (Mass.) 294 [47 C. C. A. 122, 65 L. R. A. 372]; Roberts v. Ohio Valley Gen. Hosp., 98 W. Va. 476 [127 S. E. 318, 42 A. L. R. 968].) In the Roberts case, supra, it is stated that “The fact that one is a paying patient does not alter the rule. Such patient is the recipient of the donor’s gratuity only in a lesser degree than one who makes no payment. The hospital building, with its equipment, management, and its great possibilities
In line with the great weight of authority, including many prior decisions in this state, supra, I am satisfied that the beneficiaries of such an institution who may have contributed, as did the plaintiff herein, a greater or less sum for the benefits received are not in any different position than those who have received such benefits without charge therefor. The test of the application of the exemption rule is the general nature of the institution and whether it is maintained for the purpose of profit or for that of service, and not the extent or cost of the benefit which the beneficiary has received by availing himself of its privileges. (McDonald v. Massachusetts Gen. Hosp., 120 Mass. 432 [21 Am. Rep. 529]; Southern Meth. Hosp. v. Wilson, supra, 125.) Any other test, as pointed out by several of the cases, would tend to the absurd result of setting up two rules of conduct for the institution, one for pay patients to whom it would be answerable for the negligence of its employees, and another for true charity patients to whom it would not be liable. (Powers v. Massachusetts Homeopathic Hosp., 109 Fed. (Mass.) 294, 295 [47 C. C. A. 122, 65 L. R. A. 372].) In this connection it is stated in the last cited ease that “A paying patient in the defendant hospital, as well as a nonpaying patient, seeks and receives the services of a public charity. That such a hospital in its treatment of a rich patient shall be held to a greater degree of care than in its treatment of a pauper is not to be tolerated. Certain luxuries may be given the former, which the latter does not get, and this for various reasons ; but the degree of protection from unskilled and careless nurses must be the same in both cases.”
Of course, the burden is always upon the defendant to establish that it is a charitable institution within the meaning of the authorities granting such exemption. The word 11 charity” has a well known and acknowledged meaning. In its truest and broadest sense charity redounds to the general public good and is not confined to any one class or group. In Estate of Merchant, 143 Cal. 537 [77 Pac. 475], charity is defined as a gift for the benefit of an indefinite number of persons, either by bringing their hearts under the influence [788]of education or religion, by relieving their bodies from disease, suffering or constraint, or assisting them to establish themselves in life, or by erecting or maintaining public buildings or works, or otherwise lessening the burden of government.” See, also, Dingwell v. Seymour, 91 Cal. App. 483 [267 Pac. 327], where it is stated that “A gift to establish and maintain a public institution where the misery and unhappiness of any person of high or low degree, rich or poor, may be considered and sanely dealt with would come within the purview of the definition of a public charity. ’' An act or feeling of benevolence underlies all charity. When charity is to be extended, not sporadically and to a few individuals, but to a large number over a long period of time, it is generally administered by some association, corporation or institution whose principal and distinctive features are that they have no capital stock and no provisions for the distribution of dividends or profits but, on the contrary, hold their assets and operate their facilities in trust for the obligation of the institution. In other words, the test of whether an institution is charitable is whether it exists to carry out a purpose recognized in law as charitable, or whether it is maintained for gain, profit, or private advantage. (Hearns v. Waterbury Hosp., 66 Conn. 98 [33 Atl. 595, 31 L. R. A. 224]; Gitzhoffen v. Sisters of Holy Cross, 32 Utah, 46 [88 Pac. 691, 8 L. R. A. (N. S.) 1161] ; McDonald v. Massachusetts Gen. Hosp., 120 Mass. 432 [21 Am. Rep. 529]; Southern Meth. Hosp. v. Wilson, supra.) In the McDonald case, supra, it is stated that “its affairs are conducted for a great public purpose—that of administering to the comfort of the sick, without any expectation, on the part of those immediately interested in the corporation, of receiving any compensation which will enure to their own benefit, and without any right to receive such compensation. This establishes its character as a public charity.”
Substantially the same test has been announced in prior decisions in this state. (Armstrong v. Wallace, 8 Cal. App. (2d) 429 [47 Pac. (2d) 740]; Hollinan v. Prindle, 17 Cal. App. (2d) 656, 666 [62 Pac. (2d) 1075] ; Dingwell v. Seymour, supra.) In the Armstrong ease, supra, wherein it appeared that the Sisters of St. Joseph of Orange, were operating a hospital which received, as here, both pay and charity patients (the plaintiff therein being a pay patient) [789]and wherein, as here, the articles of incorporation referred to the charitable purpose of the corporation and wherein the evidence, as here, disclosed that no one in connection with the corporation received any salary or profits and wherein it appeared that “if there was anything left after the operation of the hospital it went toward the upkeep of the institution locally and then for the benefit of the order at large”, the hospital was held to be charitable in character. In reversing an order granting a new trial to the plaintiff in that case, the appellate court declared that “the fact that Mrs. Armstrong paid the regular rates charged by the hospital for paying patients did not take it out of the class of charitable institutions, as the amount paid was not received to build up a profit but to assist in the carrying on of the general charitable purposes of the order”.
In the Hallinan ease, supra, the court held the defendant Mills Memorial Hospital to be a charitable institution on the ground that it was incorporated as a nonprofit corporation and “it has no stock nor stockholders; its directors, managers and officers charged with the conduct of its affairs serve without pay; poor, needy injured persons, without distinction of class or creed, are admitted to the hospital and treated either without charge or to the extent of part only of the cost of the service rendered. To persons able to pay a moderate charge for their care a rate of four dollars a day for a bed in a ward [same as plaintiff herein paid], and a charge of six dollars a day for a room, were established. . . . Notwithstanding this the financial statements of the institution’s operations have shown annually an excess of expenditures over receipts with the exception of two years—in one of which the so-called profit was used to purchase new equipment.”
The charitable character of the institution involved in Stonaker v. Big Sisters Hospital, 116 Cal. App. 375, 378, 379 [2 Pac. (2d) 520], was described in the following terms: “It appears without contradiction that the hospital paid no compensation to its constituents for services, and that it paid no dividends; that it was conducted for the good of the community, by a charitable organization known as the Big Sisters League, with the intent and purpose that if there was a surplus over and above the expense of carrying it, such surplus would go to the said League.”
[790]The case of Southern Meth. Hosp. v. Wilson, 51 Ariz. 424 [77 Pac. (2d) 458, 460, 461], declares that “If the purpose of the institution is one which is recognized in law as charitable, and if it is not maintained for the private gain, profit, or advantage of its organizers, officers or owners, directly or indirectly, we think the institution is properly characterized as a charitable one, notwithstanding the fact that it charges for most, if not all, of the services which it may render, so long as its receipts are devoted to the necessary maintenance of the institution and the carrying out of the purpose for which it was organized.” To the same effect see McDonald v. Massachusetts Gen. Hosp., supra; City of Dallas v. Smith, 130 Tex. 225 [107 S. W. (2d) 872, 878] ; Williams v. Church Home etc., 223 Ky. 355 [3 S. W. (2d) 753, 62 A. L. R. 721], In Brattleboro Retreat v. Brattleboro, 106 Vt. 228 [173 Atl. 209], the fact that none of the patients of a hospital were cared for without charge was said not to deprive it of its charitable character. And, in In re Rust, 168 Wash. 344 [12 Pac. (2d) 396], it was stated that by the great weight of authority “mere profit to the corporation itself, it having no stockholders to share such profit and no one standing in any proprietary relation to it to share in such profit, does not make such corporation other than a charitable corporation”. The last two were tax eases.
I am satisfied that the defendant hospital corporation satisfies the requirements set down in the authorities for that of a charitable institution. Its articles of incorporation after stating its purpose to be the establishment of one or more hospitals for the care and treatment of the sick and disabled, declared that it “shall not have any capital stock” and that the members and officers “shall derive no pecuniary profit therefrom”, adding that pecuniary profit “never shall be the object of this corporation”. The evidence also disclosed that its membership was restricted to the Sisters of Charity of Providence who received no compensation, other than room and board, for their services; that they admit to the hospital any and all patients without question, many of whom are full or part charity patients; that they do other forms of charity in the way of maintaining a clinic and furnishing meals and financial assistance to those applying for the same, the details of which need not here be stated; and that at no time during the seven-year period prior to plaintiff’s injuries [791]had they received more than they paid out and that had a profit been realized it would “revert to the institution for buying more accommodations and to expand the facilities of the hospital”. Under the evidence, and within the meaning of the authorities, the defendant hospital, in my opinion, should be held to be a charitable institution and exempt from liability to its patients, including pay patients, for the torts of its servants. As stated, the true test is the general nature of the institution and whether it is maintained for the purpose of profit or for that of service, and not the extent or cost of the benefit which the patient or beneficiary has received by availing himself of its privileges. Inasmuch as the evidence indicates that the average cost of maintaining a patient was $7.56 a day, it is doubtful whether the $4 a day rate paid by plaintiff entailed a “profit” as found by the trial court. But, even if it did the fact would be immaterial if, as indicated, the “profit” 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.