Gold v. Salem Lutheran Home Assn.

53 Cal.2d 289 (1959) SAM GOLD et al., as Executors, etc., Appellants,

v.

THE SALEM LUTHERAN HOME ASSOCIATION OF THE BAY CITIES (a Nonprofit Corporation), Respondent.

S. F. No. 20008. Supreme Court of California. In Bank.

Dec. 18, 1959. Rodney G. Commons and Wayne M. Hooper for Appellants.

Alfred Nelson for Respondent.

McCOMB, J.

Defendant is a nonprofit corporation which maintains a licensed home for the aged. Applicants are admitted for a trial period of two months. At the end of this period, or earlier if defendant's board of directors consents, a contract may be executed under which defendant becomes obligated to provide a home for the applicant for the remainder of his life. For such life care contract the applicant pays a lump sum, determined by reference to life expectancy tables.

Plaintiffs are executors of the will of Nicholas Chouvaldjy. Mr. Chouvaldjy, 84 years of age, applied for admission to the home and was accepted on a trial basis. He entered August 1, 1956, at which time he paid $130 for his care for the month of August. On August 31, 1956, he paid a like amount for the month of September.

On September 10, 1956, the directors by motion duly accepted Mr. Chouvaldjy's application for permanent residence and directed that a life care contract be granted upon payment of $8,500.

The contract was drawn by defendant and dated October 1, 1956. Mr. Chouvaldjy signed it September 25, 1956, and at the same time delivered to defendant a cashier's check for $8,500. On the same afternoon or the next morning the authorized officers of defendant signed the contract, and Mr. Chouvaldjy was notified that a signed copy was available for him in the office. The contract was thus executed and in force as of September 26, 1956.

Mr. Chouvaldjy suffered a stroke on September 27, 1956, and died on September 28, 1956.

Plaintiff executors brought this action to recover the payment of $8,500. After trial before the court without a jury, judgment was entered in favor of defendant, and plaintiffs appeal.

Question: Since performance of the contract was not to commence until October 1, 1956, and Mr. Chouvaldjy died before performance was to commence, (a) was there a failure of consideration for the contract, or (b) was the doctrine of frustration applicable?