Pickard v. Oregon Senior Citizens, Inc.

• Citation: 395 P.2d 168,238 Or. 359
• Parties: Charles M. PICKARD and Adrianne A. Pickard, husband and wife, Respondents, v. OREGON SENIOR CITIZENS, INC., Appellant.
• Decision Date: 10 September 1964
• Court: Supreme Court of Oregon

Page 168

395 P.2d 168

238 Or. 359

Charles M. PICKARD and Adrianne A. Pickard, husband and wife, Respondents, v. OREGON SENIOR CITIZENS, INC., Appellant.

Supreme Court of Oregon, Department 2.

Argued and Submitted June 3, 1964.

Decided Sept. 10, 1964.

John R. Faust, Jr., Portland, argued the cause for appellant. With him on the briefs were Cake, Jaureguy, Hardy, Buttler & McEwen, Portland.

Glenn R. Jack, Oregon City, argued the cause for respondents. On the briefs were Jack, Goodwin & Anicker, Oregon City.

Before McALLISTER, C. J., and PERRY, O'CONNELL, DENECKE and LUSK, JJ.

O'CONNELL, Justice.

This is a suit to recover $2900 which plaintiffs had paid to defendant as an occupancy fee for admission into Rose Villa Manor, a retirement residence operated by defendant. Defendant appeals from a judgment for plaintiffs.

On March 27, 1959 plaintiff executed applications for admission to Rose Villa. Plaintiffs paid $2900 of which $1500 was an application fee and $1400 an 'extra space fee' payable upon admission by those who wished to occupy one of the larger units. Plaintiffs' application was accepted in October, 1960 and they took possession of their apartment in January, 1961.

The application executed by plaintiffs recites that the applicant has carefully read defendant's general rules and agrees to be bound by them. The rules in effect at the time plaintiffs executed their applications provided in part as follows:

'4. Schedule of charges. The following schedule of charges for the living quarters occupied and other services rendered shall remain in full force and effect until changed by the Board of Trustees with the consent of the Federal Housing Commissioner:

'* * *

'(d) A monthly medical and hospital service fee for each resident payable on the 1st day of each and every month and continuing for the same period as the monthly occupancy fee. The amount of this fee may be changed each six months, depending upon the actual costs incurred by the insurance carrier for the coverage of Rose Villa residents. The beginning rate will be $15.00 per month per person.

'* * *

'6. Medical and hospital service. All residents of Rose Villa shall be covered by a medical and hospital service contract selected by the Board of Trustees. Such contract will provide health insurance under a group plan with certificates issued to each resident. The coverage will include the services of physicians and surgeons of the resident's own choosing, complete hospital care and services, ambulance services, preseription drugs and other special services. As indicated in the Schedule of Charges (paragraph 4 above), the rate for this service may vary every six months depending upon the experience of the carrier during the previous six months.'

Prior to making the application defendant's agents had advised plaintiffs that if they were admitted they would have medical coverage under an insurance contract with Oregon Physicians' Service (OPS) or some other insurer. A brochure used by defendant listed as one of the services of Rose Villa, 'Complete medical and hospital insurance * * * provided under a group contract.' The brochure further recited: 'This insurance includes complete care by a physician of your choice, all necessary medical and/or nursing care, plus services rendered by special nurses and ambulance services. Inasmuch as this is a non-profit service, the cost of insurance will be reviewed each six months and adjusted up or down, depending on the actual costs.'

At the time plaintiffs were admitted defendant's monthly medical fee was $15.00 per person. At that time the residents of Rose Villa were covered by a contract with OPS. Effective February 1, 1961 defendant cancelled the contract with OPS and commenced a program of self insurance whereby medical care was paid for by defendant from the medical fees collected monthly from the residents. Shortly thereafter defendant raised the medical fee to $17 per month. In July, 1962 defendant raised the medical fee to $31.50. According to plaintiffs, defendant's agent stated that the monthly medical fee might go as high as $100.

Plaintiffs moved out on August 1, 1962 and brought this suit. The issues were submitted to the court without a jury. Plaintiffs' complaint does not clearly disclose the theory upon which the suit or action was brought. The complaint recites that plaintiffs 'agreed to pay' a monthly fee and 'in return were assured' by defendant that they would have the benefit of a medical insurance program. It is alleged that defendant failed to provide full and adequate medical care, forcing plaintiffs to vacate their apartment. The complaint then recites that plaintiffs are entitled to recover $2900. We construe the complaint as alleging a contract, a breach thereof, and a prayer for rescission and restitution. It appears that the case was tried by both parties upon the theory that the suit was for a rescission of contract based upon an alleged total breach of contract.

On appeal plaintiffs contend for the first time that they are entitled to recover on the theory that defendant's promise was 'illusory' resulting in an absence of mutuality of obligation and a lack of consideration. The promise was illusory, it is contended, because the general rules of Rose Villa contained the following concluding qualifying clause: 'The foregoing rules are subject to repeal, change or amendment from time to time by the Board of Trustees.'

We do not construe this proviso as creating a power in defendant to modify the provisions with respect to the right to continue in possession, the amount of the occupancy fee, the obligation to provide a medical care program and other basic elements of the agreement. The right to amend or repeal reserved to defendant relates only to those parts of the rules and regulations which are concerned with the details of administering the Rose Villa project.

The question is, then,...