Darsie v. Duke University, 7914SC990

• Decision Date: 05 August 1980
• Docket Number: No. 7914SC990,7914SC990
• Citation: 268 S.E.2d 554,48 N.C.App. 20
• Parties: Charles DARSIE, Guardian Ad Litem for Lola Mae Hardy v. DUKE UNIVERSITY.
• Court: North Carolina Court of Appeals

Page 554

268 S.E.2d 554

48 N.C.App. 20

Charles DARSIE, Guardian Ad Litem for Lola Mae Hardy v. DUKE UNIVERSITY.

No. 7914SC990.

Court of Appeals of North Carolina.

Aug. 5, 1980.

Grover C. McCain, Jr., and James B. Archbell, Durham, for plaintiff-appellant.

Newsom, Graham, Hedrick, Murray, Bryson & Kennon by E. C. Bryson, Jr., Durham, for defendant-appellee.

MORRIS, Chief Judge.

Plaintiff's sole contention on appeal is that defendant may not assert the defense of charitable immunity for negligence in the medical treatment furnished by Duke Hospital because the hospital operations, although an integral part of Duke University, constitute a commercial and noncharitable enterprise. Plaintiff argues that although the University as a whole operated as a charitable institution during the fiscal year 1961-62 because only forty-five percent of the total cost of operating the University was derived from revenue accruing through the operation of the University, for the same period approximately ninety-six percent of the costs of operating Duke Hospital were covered by patient receipts, income from the public dispensary, and other revenue. Plaintiff argues further that "while 55% of the operating costs of the University were covered by grants, gifts and income from charitable or benevolent sources, only 1.73% of the costs of operating the Hospital were covered by gifts and grants from the Duke Endowment and other sources." In order properly to answer plaintiff's contentions, we must first review the law with respect to charitable immunity.

The doctrine of charitable immunity in North Carolina was abolished in 1967 in Rabon v. Rowan Memorial Hospital, Inc., 269 N.C. 1, 152 S.E.2d 485 (1967), and the subsequent enactment the same year of G.S. 1-539.9 by the General Assembly. Since the injury on which this lawsuit is based occurred in 1961, whether defendant may claim charitable immunity in this case must be determined in light of the law existing prior to 1967.

The rule of tort liability, as it existed before Rabon, was explained by Justice Sharp (later Chief Justice), writing for the majority, as follows:

In Williams v. Hospital, 237 N.C. 387, 389, 75 S.E.2d 303, 304, it is said:

"It is settled law in this jurisdiction that a charitable institution may not be held liable to a beneficiary of the charity for the negligence of its servants or employees if it has exercised due care in their selection and retention. Barden v. R. R., 152 N.C. 318, 67 S.E. 971; Hoke v. Glenn, 167 N.C. 594, 83 S.E. 807; Herndon v. Massey, 217 N.C. 610, 8 S.E.2d 914; Johnson v. Hospital, 196 N.C. 610, 146 S.E. 573; Smith v. Duke University, 219 N.C. 628, 14 S.E.2d 643."

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Decided cases indicate that the present state of the law in North Carolina is as follows: A patient, paying or nonpaying, who is injured by the negligence of an employee of a charitable hospital may recover damages from it only if it was negligent in the selection or retention of such employee, Williams v. Hospital, supra, Williams v. Hospital Asso., supra, or perhaps if it provided defective equipment or supplies. Payne v. Garvey, 264 N.C. 593, 142 S.E.2d 159. A stranger (anyone who is not a beneficiary of the charity, i. e., one other than a patient) who is injured by the negligence of any employee, however, may collect damages from the hospital. Cowans v. Hospitals, 197 N.C. 41, 147 S.E. 672. Nor does the fact that a charitable institution has procured liability insurance affect its immunity. Herndon v. Massey, 217 N.C. 610, 8 S.E.2d 914.

269 N.C. 3-4, 152 S.E.2d at 486-87. Assuming the status of a charitable institution, defendant is, under pre-Rabon law, immune from liability for the negligence of Duke Hospital or its employees. The only question before us is, therefore, whether defendant was a charitable institution at the time of its alleged negligence, which would enable defendant to assert the defense of charitable immunity as a bar to plaintiff's claim.

Generally defined, a charitable institution is an organization or other entity engaged in the relief or aid to a certain class of persons, a corporate body established for public use, or a private institution created and maintained for the purpose of dispensing some public good or benevolence to those who require it. See generally, Z. Smith Reynolds Foundation, Inc. v. Trustees of Wake Forest College, 227 N.C. 500, 42 S.E.2d 910 (1947); Habuda v. Trustees of Rex Hospital, Inc., 3 N.C.App. 11, 164 S.E.2d 17 (1968); 14 C.J.S., Charities § 2 (1939). As to educational institutions, whether a particular institution of learning is charitable depends on whether it is operated for public benefit or for private gain. E. g., Ettlinger v. Trustees of Randolph-Macon College, 31 F.2d 869 (4th Cir. 1929); Trustees of Iowa College v. Baillie, 236 Iowa 235, 17 N.W.2d 143 (1945). The same test has been applied to public hospitals which are established and maintained for charitable purposes. E. g., Helton v. Sisters of Mercy of St. Joseph's Hospital, 234 Ark. 76, 351 S.W.2d 129 (1961); Danville Community Hospital, Inc. v. Thompson, 186 Va. 746, 43 S.E.2d 882 (1947). Contra, e. g., Adkins v. St. Francis Hospital of Charleston, W. Va., Inc., 149 W.Va. 705, 143 S.E.2d 154 (1965); White v. Charity Hospital of Louisiana in New Orleans, 239 So.2d 385 (La.App.1970).

In Martin v. Board of Commissions of Wake County, 208 N.C. 354, 180 S.E. 777 (1935), the Court held that a hospital created by the General Assembly and maintained to provide medical treatment and hospital care for the indigent sick and afflicted poor within the county, and supported by donations by individuals as well as by sums paid by patients who are able to pay for services rendered to them, primarily was a charitable institution. See also Habuda v. Rex Hospital, Inc., supra (wherein this Court held Martin controlling on issue of whether Rex Hospital was charitable in 1964). Similarly, in Z. Smith Reynolds Foundation, Inc. v. Trustees of Wake Forest College, supra, the Court characterized both the Foundation and Board of Trustees as charitable in nature. As to the Trustees, the Court stated:

"The trustees of Wake Forest College" is declared to be a non-profit, educational institution existing and performing its functions with the support of the Baptist denomination in the State, operating through its local churches and the Baptist State Convention of North Carolina, and as such is a charitable corporation under the laws of the State of North Carolina.

227 N.C. at 510, 42 S.E.2d at 916.

This same rationale was enunciated in Berry v. Odom, 222 F.Supp. 467 (M.D.N.C.1963), where the Court held that a lawsuit similar to the case at bar was barred by defendant Duke University's status as a charitable organization. In Berry, plaintiff sought recovery for personal injuries allegedly sustained while a patient at Duke University Hospital in 1961. Defendant Duke University moved for summary judgment in its favor on the ground that it was a charitable or eleemosynary corporation and thus immune from tort liability. There, plaintiff conceded for the purposes of argument that if defendant Duke University was a charitable institution, and it exercised ordinary care in the selection and retention of the treating physician, no liability results.

After stating the law as discussed above, the Court reviewed the following undisputed material facts:

From the evidence submitted, it appears that Duke University was originally chartered by the 1840-41 General Assembly of the State of North Carolina as Union Institute Academy. In 1850 the name was changed to Normal College. The primary purpose of the institution at that time was to train qualified personnel to teach in public schools of North Carolina. In 1858 the name was again changed to Trinity College. The declared purpose of the corporation at that time was that of operating "a literary institution for the North Carolina Conference of the Methodist Episcopal Church South." In 1891 the charter was again amended to provide for the removal of the operations of Trinity College from Randolph County to "at or near the Town of Durham in North Carolina." There were other revisions of the charter in 1903, which, among other things, empowered the faculty and trustees to confer " * * * such degrees and marks of honor as are conferred by colleges and universities generally: * * * " The final amendment to the charter was in 1924, when the name was changed from Trinity College to Duke University. In the latter amendment, the corporation was given perpetual existence, and was authorized to receive and hold by gift, devise, purchase, or otherwise, property, real and personal, for the use of its purposes as an educational institution.

Duke University is a non-stock, educational corporation and consists of the undergraduate colleges, and the school of arts and sciences, the school of law, the school of medicine, the school of divinity, and the school of nursing as graduate schools. The Duke University Hospital is a unit of the corporation and is adjunct to the School of Medicine.

For the...