works in favor of charities, bur ex plained that il also benefits th e genera l public: It may be said that under this ruling hard cases must occur. . .. On lhe odler hand, still hard er cases would occur und er rhe opposite ru le, by which the wi ll of charitab le donors would be defeated, and the public imerest would be thwarted. Very many of the greatest charities of the presem day have grown from very obscure and feeble beginnings. If rhey had been sold out in their infancy for some trivial sum on accOllnt of the C~\felessness of an agelH or the mistake of a trustee, th us preventing the co nstantly accumu lati ng benefits of centurics, it could nOt truthfully be said that the public good was promotcd by th e sacrifice. FordJu 11. \\7omt'l1J Christian National Libmry Ass 'II, 79 Ark. 550, 569, 96 . W. 155, 162-63 (1906).
Applying the Doctrine The charitable immunity doctrine is capable of being applied to several different types of organi1..ations and businesses. In fact, rh e doctrine has been app lied to a wide range of charitab le entities such as rhe North Litde Rock Boys C lub, a library associarioll, and, na[Urally, churches. Su, e.g., Lt'may v. Trinity LUI/UrdU Church, 248 Ark. 119, 450 S.W.2d 297 (1970) (church); Cabbinm v. City of Nort/' Little Rock, 228 Ark. 356, 307 S.W.2d 529 (1957) (boys club); fordyct'l1. \-tromen sCbristiall National Library Ass 'II, 79 Ark. 550, 96 S.W. 155 ( 1906) (library). Charitable immunity has aJso been applied to hospitals. Su, t'.g., Georgt v. Jeffirson Hospital Ass'n, 337 Ask. 206, 987 S.W.2d 7 10 (1999); Marion Hospiflll Ass'n v. Lanphier, 15 Ark. App. 14,688 S.W.2d 322 ( 1985); Williams v. Jeffirson Hospital Ass!I, 246 Ark. 123 1, 442 S.W.2d 243 (1969); Htlton v. Sistm of Macy of Sr. Josep", Hospital, 234 Ark. 76, 351 S.W.2d 129 (1961 ). It is in thi s cOlHext that most of the more recent li tigation has ari sen. In 1995, the Arkansas Supreme Coun adopred a number of (.1Crors designed (Q address whether an emity is created and maintained exclusively for charity. These factors, which were first announ ced in Mastersoll v. Stambllck, 32 1 Ark. 39 1, 902 S.W.2d 803 (1995), are co be used to determine whether an emity is cnrided to rhe doctrine of charitab le immunity. These factors are illustrative, not exhaustive, and no single facto r is dispositive of charitabl e 5[ams. George v. Jeffirsoll Hospital Ass'II, 337 Ark. 206, 212, 987 S. W.2d 71 0, 7 13 (1999): (l )Whether the organization 's charter limits it to charitable or eleemosynary purposes (2)Wh ether the organization's charter contains a unot-forprofit" Ijmitation A non-profir co rporation 's anides of incorpo ration will likely address rh e flrst (wo facrors. It is interesting to notc, howeve r. th at wh ile the enriry as a who le must he non-profit, ils sub-emiries may be "for profit." For example, in G,org' v. J,ffirsoll Hospital Ass'n, 337 Ark. 206, 987 S.W.2d 7 10 (1999), the hospital owned and ran a number of for-profit clinics and a collection agency. The emire hospital associatio n was non-profit and whatever profits were realized from the for-profit entities went back ilHO rh e institution to he used for its benevolent purposes. The doctrine of charirable immunity
was held to apply. 337 Ark. at 2 17, 987 S.W.2d at 7 15. (3) Wllether the organization'S goal is to break eve n A charity's goal may not be to break even but co have so me surpillS at [he end of th e yea r lO rerum ( 0 lhe charity. This has been co nsidered by rh e courts [0 be good stewardship of charitable funds and docs not defeat a claim of charitable immunity. For examp le, in G~org~ v. J~ffirson Hospital Ass'n, the coun stated that "{mJodern hospirals are compl ex and expensive, rechnological, economic and medi cal enterprises [hat can ill afford to co me shorr of even in their finan cial integriry." 337 Ark. at 213, 987 S.W.2d at 7 13. (4)Whether the organi7..ation earn ed a profit A surplus should nOt be co nfused with a profiL If an individual or an oU[side entity (such as a city or the sralc) ea rns a profit, [his facror will nor be meL Su, OUllcbitfl Wilderness Institute v. Mergen, 329 Ark. 405, 947 S.W.2d 780 ( 1997); Mastmon v. Stambllck, 32 1 Ark. 391,902 S.W.2d 803 ( 1995). (5)Whether any profit or surplus must he used for charitable or eleemosynary purposes An imporrant factor appears to be how any surplus is app lied. Where all excess revenue goes back inco the organization for operations, sa1aries. and capital purchases to maintain and improve the charitable entity, rhe doctrine app li es. Su, G~orgt' 11. }t'ffirson Hospi!lll Ass'n, 337 Ask. 206, 987 S.W.2d 7 10 (1999). (6) Whethe,r th e organization depends on contributions and donations for its existence This f..1.cro r has nO( been given great weight. In George 11. jeffirsofl Hospital Ass 'n, 337 Ark. 206, 987 S. W.2d 7 10 ( 1999), on ly 6% of the hospitaJ association's enrire revenue was from donations. The court nored [hat with a modern hospital , it wou ld be impossible ro be wholly or predominantly run on donations. (7}Whether the organization provides its services free of charge to those unable to pay A hospiral that is "free to all who arc not pecuniarily able, and supported in parr by pri va te comributions and pardy by fees from patients, [andJ producing no profit, is a purely public charity." \Villiallls v. Jeffirson Hospital Ass'n, 246 Ark. 1231, 442 S.W.2d 243 ( 1969), quoting Hot Springs Sc/'ool Dist. v. Simrs of M"cy, 84 Ark. 497,106 S.W. 954 ( 1907). (8) Whether the directors and officers receive compensation Salary. bonuses, and normal pay for working employees do not preclude a claim of charitable immunity. Ir is not necessary for {he charity to have an enrirely vo lunteer slafT or managemenr. See, George v. Jeffirsoll Hospital Ass'n, 337 Ark. 206, 2 14, 987 S.W.2d 7 10,7 14 (1999). Michelk Cauley is a member of MitclJt!11, Williams, Selig, Gates 0Woodyard, P.LL C. where she specializes ill defellding hospitals and medical p,.ovitle,.s (",d is a membe,. ofthe /;"m 's new 111/0" ",atio1l Mmlflgemetlt alld Secu,.ity pmctice gro up.
Vol. 42 No. 4/ Foll 2007 The Arbnsos LO"Yer
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