Ackerman v. Physicians and Surgeons Hosp.

• Decision Date: 26 October 1955
• Citation: 288 P.2d 1064,207 Or. 646
• Parties: Dolores ACKERMAN, Appellant, v. PHYSICIANS AND SURGEONS HOSPITAL, an Oregon corporation, Respondent. *
• Court: Oregon Supreme Court

Page 1064

288 P.2d 1064

207 Or. 646

Dolores ACKERMAN, Appellant, v. PHYSICIANS AND SURGEONS HOSPITAL, an Oregon corporation Respondent. ^*

Supreme Court of Oregon, Department 1.

Argued Oct. 13, 1955.

Decided Oct. 26, 1955.

Dwight L. Schwab, Portland, argued the cause for appellant. With him on the briefs were Cake, Jaureguy & Hardy and Jonathan U. Newman, Portland.

Cleveland C. Cory, Portland, argued the cause for respondent. With him on the brief were Hart, Spencer, McCulloch, Rockwood & Davies, Hugh L. Biggs and George H. Fraser, Portland.

Before WARNER, C. J., and TOOZE, ROSSMAN and PERRY, JJ.

PER CURIAM.

The plaintiff-appellant Dolores Ackerman brought an action against the defendant-respondent Physicians and Surgeons Hospital, an Oregon corporation (hereinafter called the hospital), for damages for injuries which she alleges were sustained as a result of respondent's negligence while she was a patient in the hospital. The jury returned a verdict in her favor but the court thereafter, on motion, entered judgment notwithstanding the verdict, resulting in a dismissal of plaintiff's complaint. It is from that judgment she appeals.

The motion for judgment non obstante veredicto was grounded on the premise that the evidence conclusively showed that the hospital at the time appellant suffered her injury was 'an eleemosynary corporation organized and existing under and by virtue of the laws of the State of Oregon as a nonprofit corporation, without capital stock or any provisions for making or distributing dividends or profits, for the purpose of owning and operating a general hospital.' The order which followed and the court's memorandum opinion hereinafter referred to reveal that the court was so persuaded in making its now challenged judgment.

Two questions are projected for consideration by the record. First, is the respondent corporation an eleemosynary corporation? Second, if so, does it enjoy immunity for acts of negligence of the kind here sued upon?

We will give answer to these propositions in the inverse order of their presentation. The question relative to the immunity of the respondent hospital, if in fact a charitable institution, is foreclosed adversely to the appellant by Landgraver v. Emanuel Lutheran Charity Board, Inc., Or., 280 P.2d 301. The Landgraver decision was handed down subsequent to the filing of the briefs in the instant appeal.

The holding in the Landgraver case does not, however, conclude the only other and very important question concerning the claimed charitable character of the respondent hospital, for if it is not an eleemosynary institution, then it must respond to a judgment for damages accruing by reason of its negligence. In answer to this last question, we find ourselves in agreement with the lower court. Its learned, careful and painstaking opinion so fully covers the subject discussed that we adopt it as our own. That which follows is the circuit court's memorandum opinion in its entirety except for certain minor changes by way of interpolation or excision designed to make it more nearly and appropriately conform to the record as we find it or to adapt it in form as the opinion of this court:

The only question as to the corporate character of the hospital is this: Was there any substantial evidence on the basis of which the jury could decide the defendant hospital was not a charitable corporation? This issue was presented to the jury under appropriate instructions defining charitable corporations.

As to the organization and conduct of the hospital, the facts addressed to this issue are undisputed. The issue thus becomes one of law and if it is decided that all the evidence, together with reasonable inferences to be drawn therefrom, fails to establish legal liability, i.e., that there is no substantial evidence establishing liability, then it follows that the motion for judgment n.o.v. was properly allowed. The facts are these:

The defendant hospital was incorporated as a charitable and nonprofit corporation as of July 1945 under the provisions of ORS 61.010 to 61.160. There were 15 original incorporators who advanced approximately $70,000, which was repaid to them without interest. There is no capital stock, no dividends, no salaries to staff nor to individuals. The only salaries go to employes. Excess of income over expenses is disbursed for improvement of facilities, equipment, purchase of a lot for future use, extension of the physical plant and matters incidental to the hospital operation. Physicial properties and so forth go to charity in the event of dissolution of the corporation. Policy is determined by a board of governors, and staff members must be approved by this board. No patient may be treated except by a member of the staff. There are 132 staff members, about adequate for an operation of this size. Under the avowed and practiced policy as disclosed by the evidence, all persons are admitted without discrimination as to race, color or creed and regardless of ability to pay, although inquiry is always made at the time of admission and those who can pay are charged prevailing raties. Frequently collection agencies are employed to collect money owing, although charity patients are not billed. There is no evidence of any person being denied hospitalization because of inability to pay.

The 132 staff members bring their patients to the hospital and its facilities are available to such staff doctors on the same basis as the 15 founding doctors. Gifts such as furniture, equipment, surgical instruments, some cash, books, and labor have been made. There is free use of facilities to the Volunteers of America and others; also radium is made available. Certain aspects of vocational training are provided and some scholarships and nurses' training courses are maintained.

There is no trust fund, as such, separate from general assets, although all assets are held subject to the original incorporation and conduct thereunder and revert to charity generally on dissolution. Gross income runs about $750,000 annually with a net of $60,000 to $75,000. About $28,000 is entered on the books as charity accounts and approximately $100,000 is carried as uncollectible accounts. The staff members pay nothing for the use of the hospital facilities. Value of hospital properties is about $650,000. Donations are not too accurately valued but approximate $15,000.

In 1951, the year plaintiff was injured, 5,656 bed patients were 'discharged' from the hospital and 4,184 patients were treated in the outpatient department, and in 1950-51 there were about 24 charity patients. The fact is established that the proportions of charity patients to all patients and of charity reflected in cash or its equivalent to gross cash income are very small. These are substantially all the facts pertinent to the question as to whether defendant is a charitable corporation.

The plaintiff-appellant argues as follows: Defendant hospital has the burden of proving that it is a charitable corporation, and rarely is a verdict directed in favor of the party having such burden. The jury may not have believed the defendant's witnesses. They were not required to do so. The uncontroverted testimony is that the hospital hires collection agencies to collect at least some of its unpaid accounts. "The jury was entitled to conclude that some of these unpaid accounts turned over to the tender mercies of professional collectors were actually charity cases--persons bona fide unable to pay and needing help." Again: "Well might the jury conclude that charity is the exception, and not the rule, at defendant hospital, and that bona fide charity cases are rejected as such and treated as regular customers. Is the jury required to conclude that the hospital is living up to its high ideals as set forth in its Articles when the evidence shows that .0012% of its patients are charity cases? Could no reasonable jury infer from the evidence that collection agency cases are really charity cases?"

The appellant thereafter discusses Hamilton v. Corvallis General Hosp. Ass'n, 146 Or. 168, 30 P.2d 9, and Gregory v. Salem General Hospital, 175 Or. 464, 153 P.2d 837, and proceeds with consideration as to whether or not the staff physicians do not receive some gain, profit or private advantage, saying:

"Certainly none of the founding doctors got, or gets, cold cash dividends. But that is not the only thing men work for. There are many other things of value. By obtaining this hospital the 15 purchasing doctors absolutely assured themselves of a hospital in which to practice their profession until they died. Was not the jury entitled to infer a gain or a...