Parker v. St. Stephen's Urban Development Corp., Inc.

• Decision Date: 24 August 1990
• Citation: 243 N.J.Super. 317,579 A.2d 360
• Parties: Hazel PARKER, Plaintiff-Appellant, v. ST. STEPHEN'S URBAN DEVELOPMENT CORPORATION, INC., Defendant-Respondent.
• Court: New Jersey Superior Court — Appellate Division

Page 317

243 N.J.Super. 317

579 A.2d 360

Hazel PARKER, Plaintiff-Appellant, v. ST. STEPHEN'S URBAN DEVELOPMENT CORPORATION, INC.,

Defendant-Respondent.

Superior Court of New Jersey,

Appellate Division.

Argued June 5, 1990.

Decided Aug. 24, 1990.

Patricia D. Connelly, for plaintiff-appellant (Shebell & Schibell, attorneys for plaintiff-appellant; Peter Shebell, Jr., Asbury Park, on the brief).

Thomas Frascella, for defendant-respondent (Hill Wallack & Masanoff, attorneys for defendant-respondent; Thomas P. Frascella, Princeton, on the brief).

Before Judges PRESSLER, LONG and GRUCCIO.

The opinion of the court was delivered by

LONG, J.A.D.

In 1988, plaintiff Hazel Parker filed a complaint against defendant St. Stephen's Urban Development Corp., Inc., alleging that she had sustained injuries in a fall on a sidewalk at Stephen Manor, an Asbury Park apartment complex owned and operated by defendant. The trial judge granted defendant's motion for summary judgment and dismissed plaintiff's complaint on the ground that it was barred by the Charitable Immunity Act. N.J.S.A. 2A:53A-7. Plaintiff appeals. We reverse.

The facts in the case are relatively straightforward. In June 1968, the governing body of St. Stephen's A.M.E. Zion Church of Asbury Park determined "to serve as a sponsoring organization to work in conjunction with other agencies and particularly with the Federal Housing Authority," and "to help fill an immediate need for respectable housing" in Asbury Park. Accordingly, it created defendant, a nonprofit corporation, pursuant to the provisions of Title 15 of the New Jersey statutes. As set forth in its certificate of incorporation, defendant's goals include working for the "health, welfare and morals of the community" and assisting low and moderate income persons to obtain housing. Among defendant's by-laws, the following corporate purposes were set forth:

a. To undertake any activity or do anything specifically or inferentially permitted under any Act of the United States or the State of New Jersey, specifically including, but not limited to anything permitted or authorized directly or indirectly under Sections 221(d) and/or 236 of the National Housing Act.

b. To immediately undertake the building of a low to moderate income housing development in Asbury Park Urban Renewal Area to provide decent and standard housing for the local community.

* * * * * *

e. To solicit, receive, and hold money and other property, real or personal, whether the same be acquired by gift, devise, bequest, or otherwise, and to make such disbursements thereof from time to time as may be determined to be in the best interests of the realization of the objectives of the National Housing Act as it applies to Stephen Manor and other objectives of this Corporation.

Because defendant's incorporation conformed in every respect with the requirements of Section 236 of the National Housing Act (12 U.S.C.A. § 1701 et seq.), it qualified for an arrangement with the United States Department of Housing and Urban Development (HUD) pursuant to which HUD agreed to make mortgage interest reduction payments and provide mortgage insurance on a housing complex which defendant proposed to construct.

With the federal funding in place, in 1971 defendant constructed Stephen Manor, an eight-building apartment complex containing one, two and three-bedroom apartments. As the owner of a multi-family housing project receiving mortgage insurance and interest reduction payments from HUD, defendant also qualified for federal rent supplement payments. 24 C.F.R. § 215.15 (1971). This program requires that individuals who fall into HUD's federal preference categories be given the first opportunity to rent an apartment at Stephen Manor. (All tenants at Stephen Manor fall into one of the federal preference categories.) The program contemplates that the income from all apartments will cover the total expenses of a project including all operational costs, salaries ¹, taxes and the portion of the mortgage not paid under Section 236. That total figure is prorated among the apartments to establish the "basic rent" for each unit. The actual rent paid by tenants is determined by an income formula including certain authorized deductions not here relevant. Under the formula, the rent paid is equal to 30 percent of a tenant's net monthly income. The difference between the rent actually paid by each tenant and the basic rent assigned to the unit is covered by a HUD rental subsidy. Approximately 60 percent of the tenants at Stephen Manor receive HUD subsidies. The remaining tenants, whose net monthly income is sufficient, pay the basic rent or more, up to a predetermined market rent. Any amount paid in excess of the base rent by tenants who do not receive HUD subsidies is used to reimburse HUD. 24 C.F.R. § 236.60 (1971); 12 U.S.C.A. § 1715z-1(g). Defendant's operation of Stephen Manor is governed entirely by HUD regulations and is supported by a combination of federal moneys and tenant rental payments. Defendant does not engage in private fund-raising activities of any kind.

Plaintiff became a resident of Stephen Manor in September 1986. On January 17, 1987, she tripped and fell on a sidewalk within the complex, resulting in injuries and medical expenses of approximately $1,000. This action followed.

The doctrine of charitable immunity is rooted in English common law. Holliday v. St. Leonard, Shoreditch, 11 C.B. (N.S.) 192, 142 Eng.Rep. 769 (1861); The Foeffees of Heriot's Hospital v. Ross, 8 Eng.Rep. 1508 (1846); Duncan v. Findlater, 7 Eng.Rep. 934 (1839). The original point of the doctrine was to avoid diverting charitable trust funds to non-charitable purposes in order to live up to the reasonable expectations of the benefactor. In 1876, in a case of first impression in the United States, the Supreme Judicial Court of Massachusetts cited Holliday v. St. Leonard, Shoreditch and declared the doctrine of charitable immunity viable in the New World. McDonald v. Massachusetts General Hospital, 120 Mass. 432 (Sup.Jud.Ct.1876); Bottari, "The Charitable Immunity Act", 5 Seton Hall Leg.J. 61, 62 (1980). A number of other jurisdictions including New Jersey, in the case of D'Amato v. Orange Memorial Hosp., 101 N.J.L. 61, 127 A. 340 (E. & A.1925), followed suit. ² In 1942, Judge (later Justice) Rutledge observed that the Massachusetts decision in McDonald, from which all of the other American cases approving charitable immunity had taken their cue, had been based upon a principle of English common law which had since been overruled. President & Directors of Georgetown College v. Hughes, 130 F.2d 810 (D.C.Cir.1942). A series of jurisdictions then disclaimed the doctrine, "vigorously" according to one commentator. Bottari, supra, at 62. ³ On April 28, 1958, the New Jersey Supreme Court declared that charitable immunity no longer comported with present day concepts of right, justice and morality, and abolished the doctrine:

The primary function of the law is justice and when a principle of law no longer serves justice, it should be discarded; here the law was embodied not in any controlling statute, but in a judicial principle of the law of torts; it had no sound English common law antecedents and found its way into American law through a misconception; it runs counter to widespread principles which fairly impose liability on those who wrongfully and negligently injure others; it operates harshly and disregards modern concepts of justice and fair dealing; it has been roundly and soundly condemned here and elsewhere and the time has come for its elimination by the very branch of government which brought it into our system. [Collopy v. Newark Eye and Ear Infirmary, 27 N.J. 29, 47-48, 141 A.2d 276 (1958).]

See also Benton v. Y.M.C.A, 27 N.J. 67, 141 A.2d 298 (1958); Dalton v. St. Luke's Catholic Church, 27 N.J. 22, 141 A.2d 273 (1958).

Within a week after these decisions were announced, bills were introduced in the Legislature "to provide immunity for all nonprofit corporations organized for religious, charitable, educational, or hospital purposes from negligence suits brought by any ... beneficiary...." Schultz v. Roman Catholic Archdiocese of Newark, 95 N.J. 530, 536-537, 472 A.2d 531 (1984). On July 22, 1958, the Legislature revived charitable immunity by enacting L.1958, c. 131. The present statute ( N.J.S.A. 2A:53A-7 to -11) was enacted in 1959. It is identical to the 1958 statute, differing only in the absence of a fixed expiration date. Schultz, 95 N.J. at 537, 472 A.2d 531. It provides:

No nonprofit corporation, society or association organized exclusively for religious, charitable, educational or hospital purposes shall, except as is hereinafter set forth, be liable to respond in damages to any person who shall suffer damage from the negligence of any agent or servant of such corporation, society or association, where such person is a beneficiary, to whatever degree, of the works of such nonprofit corporation, society or association; provided, however, that such immunity from liability shall not extend to any person who shall suffer damage from the negligence of such corporation, society, or association or of its agents or servants where such person is one unconcerned in and unrelated to and outside of the benefactions of such corporation, society or association; but nothing herein contained shall be deemed to exempt the said agent or servant individually from their liability for any such negligence. [ N.J.S.A. 2A:53A-7.]

According to Anasiewicz v. Sacred Heart Church, 74 N.J.Super. 532, 535-536, 181 A.2d 787 (App.Div.1962), certif. den. 38 N.J. 305, 184 A.2d 419 (1962), the effect of this statute was to reinstate the common law doctrine as it existed prior to its demise at the hands of the 1958 trilogy of Benton, Collopy and Dalton:

That the Legislature did not intend to expand, modify or alter in any way the span of the pre-existing immunity seems...