Baptist Memorial Hospital v. Couillens

• Decision Date: 08 June 1940
• Citation: 140 S.W.2d 1088
• Parties: BAPTIST MEMORIAL HOSPITAL v. COUILLENS.
• Court: Tennessee Supreme Court

140 S.W.2d 1088

BAPTIST MEMORIAL HOSPITAL v. COUILLENS.

Supreme Court of Tennessee.

June 8, 1940.

Error to Circuit Court, Shelby County; Ben L. Capell, Judge.

Action by Mrs. Annie Couillens against the Baptist Memorial Hospital to recover damages for injurious burns received by the plaintiff while a pay patient at the hospital as a result of the alleged neglect of attendants in applying a hot pad. From a judgment of the circuit court in favor of the plaintiff, the defendant appealed to the Court of Appeals. To review a judgment of the Court of Appeals, affirming the circuit court's judgment with modification, the defendant brings error.

Judgment in accordance with opinion.

John W. McCall and Julian C. Wilson, both of Memphis, for plaintiff in error.

J. Granville Farrer, of Memphis, for defendant in error.

CHAMBLISS, Justice.

This is an action to recover damages by a pay patient in the Hospital for injurious burns received as the result of alleged neglect of attendants, selected with reasonable care, in applying a hot pad. From a judgment for $1,000 the Hospital appealed. The Court of Appeals affirmed, with the modification, however, that no property held in trust and being used for charitable purposes might be subjected to satisfaction of the judgment, but without determining whether or not the defendant corporation had funds or property free from the immunity declared by its decree. This Court has granted certiorari and heard argument. The question for consideration, as will be seen, comes down to this: In recognition of both legislatively declared and commonly observed changing public policy, may not the doctrine of immunity of charitable trusts from liability to beneficiaries for torts be limited, consistently with the principles heretofore announced by this Court, to exemption from levy of that property of the defendant which is directly and exclusively used in execution of the purposes of the trust? The petition broadly challenges the liability of the defendant, a charitable corporation, for damages resulting from negligence of its servants, selected with due care, in caring for a patient, a beneficiary of the charitable trust.

It is found by the Court of Appeals, and not denied, that the defendant Memorial Hospital, located in Memphis, is a purely charitable institution, operated under a non-profit charter granted by this State. The insistence made for the Hospital is further, as stated in the opinion, "that all of its property and assets, including the hospital building and the buildings operated in connection therewith, and all the equipment and furnishings, consists of trust funds and that it has no assets other than trust funds and property out of which to pay any judgment that might be obtained against it as the result of the negligence of its agents, servants, nurses or employees."

Touching the precise character and source of the property owned and operated by the Hospital, the Court of Appeals makes this finding, supported by the record:

"The hospital building and furnishings and the other property owned by the defendant at the time the suit was brought, and at the hearing of the cause in the court below, was from funds and property donated to the corporation, and the earnings from other business owned either wholly or partly by the corporation. This property consisted of a very extensive hospital plant and building located in the City of Memphis; a large office building where the space was rented in the main to physicians and surgeons in the City of Memphis; a retail drug store, the business of which was not confined solely to furnishing drugs and medical supplies to the hospital or its patients, but retail sales were made to the general public from the drug store as well as to the hospital and its patients. It also owned an interest in a business engaged in selling and dealing in surgical supplies, etc., and also a large farm located in the State of Mississippi.

"It also operates a training school for nurses in buildings on the premises devoted to that purpose, and also affords hotel accommodations, including rooms and meals, for friends and members of families of patients confined and being treated in the hospital. The hospital receives both charity and paying patients for hospitalization, some of the rooms being used for charity patients and many of the rooms are occupied by paying patients."

Further details are thus stated in the opinion:

"The record shows that in addition to its hospital plant and equipment and the nurse's training school, appellant owns and operates the office building, the rent from which is approximately $34,000.00 annually; a barber shop from which it derives an annual revenue of approximately $7,000.00, and the gross business from the drug store, which appears to be operated like any privately owned drug store, and caters to the general public, amounts to a business of about $190,000.00 annually. It owns the controlling interest in a surgical supply house in the City of Memphis; and also owns a large plantation which is carried on its books at a valuation of $200,000.00, and which it is now selling on long term payments secured by a long term mortgage."

It is the earnest insistence of petitioner that all of these properties and interests therein and all incomes therefrom are held and devoted to hospital purposes, constitute trust property, held by the defendant in trust for the use and benefit of this charitable institution.

The Court of Appeals reviews at some length the history of the doctrine of exemption of charitable institutions from liability for torts and cites and quotes from the decisions in this and other jurisdictions, including the English case of Feoffees of Heriot's Hospital v. Ross (House of Lords Cases), 12 Clark & Finnelly, 507; the leading case in this State of Abston v. Waldon Academy, 118 Tenn. 24, 102 S.W. 351, 11 L.R.A.,N.S., 1179; Gamble v. Vanderbilt University, 138 Tenn. 616, 200 S.W. 510, L.R.A.1918C, 875; Love v. Nashville A. and N. Institute, 146 Tenn. 550, 243 S.W. 304, 23 A.L.R. 887; Wallwork v. Nashville, 147 Tenn. 681, 251 S.W. 775; Lincoln Memorial University v. Sutton, 163 Tenn. 298, 43 S.W.2d 195; McLeod v. St. Thomas Hospital, 170 Tenn. 423, 95 S.W.2d 917, and Vanderbilt University v. Henderson, 127 S.W.2d 284, decided by the Court of Appeals in July, 1938, and certiorari denied by this Court.

The opinion in the last named case, by Judge Felts of the Middle Division, is an exhaustive and discriminating review of the subject, with particular reference to our Tennessee decisions. The decree affirming a judgment for plaintiff, a pay patient who suffered injuries as the result of negligence of the servants of this charity supported hospital, limited as it was to satisfaction from the proceeds, if available, of insurance carried by the defendant, was consistent with holdings heretofore in this jurisdiction that property placed by benevolent parties under the control of a corporation for charitable uses may not ordinarily be subjected to the satisfaction of claims arising out of the negligence of the servants of the corporation; but that a judgment may be rendered when it appears that satisfaction therefor may be had without encroaching upon property devoted strictly to the purposes of the trust.

It will be seen that the Court of Appeals apparently conceives that the practice in this State, rather than the principle involved, has been modified by expressions in the recent opinion in McLeod v. St. Thomas Hospital, supra, so that a judgment may now be recovered in an action for negligence of the servants of a charitable institution, whether or not it appears that satisfaction may be had of such judgment without encroachment upon, or impairment of, the trust used property. So conceiving, while expressly reserving the question presented on this record whether all of the assets of this defendant are entitled to immunity, the Court enters its decree, with the proviso "that plaintiff may not look to any property owned or held in trust by the defendant for charitable purposes for the satisfaction of the judgment."

The most recent decision by this Court is the McLeod case, which the Court of Appeals treats as controlling its holding, in which the judgment of the trial Court sustaining a demurrer to a replication to a plea of exemption as a charitable institution was reversed, and the case remanded for trial on the merits. From the pleadings it appears that the case differed from that before us in several particulars noted in the opinion. (1) Plaintiff was a visitor to the Hospital, not a beneficiary of the trust, but a stranger, a distinction treated by some authorities as important; (2) she was alleged to have fallen by reason of a condition of the floor, "the result of the negligence of the defendant corporation itself," and not the "negligence of any agent or servant of the defendant," again, a distinction sometimes recognized as having a bearing; and (3) the defendant was carrying liability insurance, an ordinary liability policy, such as was "construed in Gray v. Houck, 167 Tenn. 233, 68 S.W.2d 117, and Associated Ind. Corp. v. McAlexander 168 Tenn. 424, 79 S.W.2d 556, to be an obligation upon the part of the insurer to pay such obligation as the law may impose...