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City of Paterson v. Paterson General Hospital

Decided: October 25, 1967.

CITY OF PATERSON, A MUNICIPAL CORPORATION OF THE STATE OF NEW JERSEY, ET AL., PLAINTIFFS,
v.
THE PATERSON GENERAL HOSPITAL, A NEW JERSEY CORPORATION, ET AL., DEFENDANTS



Mountain, J.s.c.

Mountain

Plaintiffs seek to prevent defendant Paterson General Hospital from changing the location of the hospital from its present site on Market Street in Paterson to a tract of land about 3 1/2 miles away in Wayne Township. This defendant wishes to sell its land and buildings in Paterson and construct new facilities on the Wayne site which it has recently purchased. Plaintiffs' sole contention is that this defendant is a charitable trust created for the purpose of ministering to the residents and citizens of the City of Paterson, especially the sick poor, such aid to be administered in physical facilities located within the municipal limits of the city of Paterson. Plaintiffs have joined the members of the board of managers (now trustees) of the hospital as individual defendants. Throughout this opinion, however, the word "defendant" will refer only to the Paterson General Hospital.

By special act of the Legislature adopted April 5, 1871 (L. 1871, c. 480) a corporation came into being known as the Ladies' Hospital Association of the City of Paterson. The charter stated that the corporation was formed "for the purpose of establishing and maintaining a public hospital in the city of Paterson." On June 27, 1887, pursuant to L. 1887, c. 17, the name of the corporation was changed from the Ladies' Hospital Association of the City of Paterson to the Paterson General Hospital Association, the hospital itself thenceforth to be designated "The Paterson General Hospital." On January 24, 1948 the Paterson General Hospital Association was reincorporated under the provisions of Title 15 of the Revised Statutes, "Corporations and Associations Not For Profit." The certificate of incorporation filed at that time stated that thenceforth the name of the corporation

would be The Paterson General Hospital. The purposes of the organization were stated as follows:

"(1) To maintain a Hospital for the care of persons of any creed, nationality or color, suffering from illnesses or disabilities which require that the patients receive hospital care;

(2) To carry on any educational activities related to rendering care to the sick and injured or the promotion of health, which in the opinion of the Board of Managers may be justified by the facilities, personnel, funds or other requirements that are or can be made available;

(3) To promote and carry on scientific research related to the care of the sick and injured insofar as, in the opinion of the Board of Managers, such research can be carried on in connection with the Hospital;

(4) To participate, so far as circumstances may warrant, in any activity designed and carried on to promote the general health of the community."

The office of the corporation as well as the place where it was to be located and its activities conducted was to continue to be No. 528 Market Street, Paterson, New Jersey. On February 18, 1966 the certificate of incorporation was amended to permit the hospital to continue its activities either in the City of Paterson or in the Township of Wayne. On January 10, 1966 this suit was instituted and at the same time an order was entered, later slightly modified, restraining the defendants from disposing of the presently existing hospital facilities and requiring the continued operation of the hospital at its present location pending final hearing.

As set forth above, plaintiffs' contention is that defendant is and at all times during its existence has been a charitable trust; that the purpose, or at least the principal purpose, of the trust is and at all times has been to minister to the needs of the citizens and residents of the City of Paterson, especially the sick poor; that a further condition of the trust is and at all times has been that the hospital's physical facilities be located within the municipal limits of the City of Paterson. Defendant, on the other hand, while of course conceding that it is a charitable corporation, denies that it is or ever has been

a charitable trust. It points to the fact that during the whole of its existence it has been a corporation, that its reincorporation under Title 15 in 1948 was undertaken pursuant to specific statutory authority (N.J.S. 15:1-12), and asserts that during its entire existence it has been subject to and governed by the laws applicable to corporations, charitable in nature, rather than by laws applicable to charitable trusts.

To what extent a charitable corporation is to be governed by laws applicable to charitable trusts is a vexed question to which the authorities give irreconcilable answers. See Note, "The Charitable Corporation," 64 Harv. L. Rev. 1168, 1171 (1951); Blackwell, "The Charitable Corporation and the Charitable Trust," 24 Wash. U.L.Q. 1, 2-4 (1938); 4 Scott on Trusts (2 d ed.), 2559; 2 Restatement, Trusts 2 d, 211.

In my opinion defendant is not, strictly speaking, a charitable trust. It is, rather, a charitable corporation, governed by the law applicable to charitable corporations. To some extent this body of doctrine has its roots in the law of trusts, to some extent in the law of corporations; to some extent it may partake of both or indeed be sui generis.

To return then to the point in issue, we are concerned here to determine whether a charitable corporation, formed for the purpose of maintaining a public hospital in the City of Paterson, is entitled to remove its hospital facilities, in the manner here contemplated, to a closely adjacent municipality where it would continue to render hospital services. I believe defendant has a legal right to do this in the manner proposed. Plaintiffs have argued, and have supported their argument with a mass of evidence, that the original incorporators and initial benefactors were Patersonians, that throughout the history of the hospital it has been largely supported by contributors resident within the city, and that its medical staff, at least at one time, was confined to physicians who lived in Paterson. From this and other evidence they ask the court to infer that the intention of the original incorporators and donors was to establish and support an institution that would forever be physically located within prescribed municipal

boundaries, and then to determine as a matter of law that defendant corporation can never physically leave these municipal precincts. I cannot infer an intention so parochial, nor do I agree that such is the law. In my opinion the intention of the original incorporators and donors was to create a hospital that would minister to the needs of the citizens and residents of the City of Paterson and its environs, and that would furthermore stand ready to offer its services and facilities to all who should seek its help regardless of race, creed or residence. Such has been the policy followed by those to whom its management has been entrusted and such has been its history of long and useful service. Joseph C. Bamford, who was president of the hospital from 1945 until 1963, testified that it had always been the purpose of the hospital to serve the sick poor of the City of Paterson and its environs. Its services and facilities have always been available to all who were in need, regardless of residence. According to ...


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