# Gold v. Salem Lutheran Home Assn. > California Supreme Court · December 18, 1959 · 53 Cal. 2d 289 URL: https://www.frixlaw.com/law-library/cases/9856808 ## Case - **Full name:** SAM GOLD Et Al., as Executors, Etc., Appellants, v. THE SALEM LUTHERAN HOME ASSOCIATION OF THE BAY CITIES (A Nonprofit Corporation), Respondent - **Court:** California Supreme Court - **Decided:** December 18, 1959 - **Citations:** 53 Cal. 2d 289; 1 Cal. Rptr. 343; 347 P.2d 687; 1959 Cal. LEXIS 345 - **Precedential status:** Published - **Opinion:** Dissent by Peters - **Judges:** McCOMB, Peters - **Cited by:** 14 later opinions in the Frix Law Library ## Citator (automated) - No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases. - Full citator and citing cases: https://www.frixlaw.com/law-library/cases/9856808 ## How later opinions describe it (automated extraction) - describing frustration of intent as an defense for non-performance because the events which prevented his performance were not reasonably foreseeable at the time of contracting ## Opinion text PETERS, J. I dissent. The majority opinion permits the Home to retain money received by it for a prospective life membership in a situation where the prospective life member died before the commencement date of the relationship, that is, on the date of death the legal relationship between the contracting parties had not yet commenced. The reasoning employed by the majority in reaching such an unjust result is based on a major fallacy. Decedent was not a life member of the Home on the date of his death. His only status on that date was that of a probationary guest, fully paid up until October 1, 1956. The contract entered into between decedent and the Home on September 26, 1956, provided that decedent would become a life member—an annuitant—on October 1, 1956. The annuity investment was not to commence until that date. The contract was therefore subject to an implied condition that decedent be able to become a life member on the date that his annuitant status was to begin. This condition failed. Death prevented effectuation of the contemplated relationship. Hence the Home is not entitled to retain the consideration received. The case is this simple. The majority assume that an annuity relationship already existed between the parties on the date of decedent’s death. Such assumption is contrary to the law and facts. Unlike Coyne v. Pacific Mut. Life Ins. Co., 8 Cal.App.2d 104 [ 47 P.2d 1079 ], decedent did not make an investment on September 26th which was to begin earning interest from that date, the first annuity “payment” to be received on October 1st. Decedent’s investment could not commence until he actually became a life member. Until that time he was only a prepaid guest, a status which carried with it no assumption of the risks inherent in an annuity relationship. Since decedent was not alive on the date he was to become an annuitant he could not possibly have acquired this status. The testimony of the Home’s officers shows that it was the *293 intent of the board that decedent should not become a life member until October 1st, the date inserted into the contract by the Home’s manager. Mr. Swanson, secretary of the board of directors in 1956, testified: “We meet monthly, so at the next meeting he [the manager] said that his [decedent’s] probation period would expire, oh, I think the 30th or 31st, and since the Board would not meet until after that, he made the recommendation that at the expiration of his probation that he [sic] grant him a life term contract—-which is normal procedure with the Board. ...” (Emphasis added.) Thus, the board clearly understood and intended that decedent would become a life member only upon the expiration of his probationary period. The contract was voted upon and executed prior to that date, according to Mr. Swanson, merely to prevent a gap between probation and membership status, because the board met only once a month. It should also be pointed out that the Home’s by-laws provide: “If the Board of Directors approve the application, the applicant shall be received into the Home as a guest for a trial period of two months on such terms as the Board of Directors may determine. At the expiration of two months, the Board may decline to receive the applicant permanently or the latter may withdraw. The Board may in exceptional cases admit a guest permanently without any trial period. ’ ’ This by-law requires a two-month probationary period before membership status is acquired in all but exceptional cases. No exceptional circumstances existed here. Mr. Swanson testified that the board members did not know decedent personally, had no knowledge of his activities, and merely adopted the recommendation of the manager that decedent’s application be accepted. The rules of the Home thus prevented the Home from entering into an annuity relationship with decedent prior to October 1st. It cannot be suggested that execution of the contract terminated the probationary period, initiating membership status on that date. As indicated, the board had no power to terminate the probation prematurely in the absence of exceptional circumstances. Furthermore, decedent was not given any refund on the fee paid for board and room for the probationary period. The record discloses that decedent inquired about a refund and was told that he was not entitled to it. From this evidence it must be concluded that the Home’s manager considered the probationary period, for which decedent had paid, to still be in effect despite execution of the contract. *294 For these reasons it should be held that the parties did not enter into an annuity relationship on September 26th. They entered into a contract to commence an annuity relationship at a later date. Until the inception of this relationship the contract remained subject to the normal contract requirement that performance be possible at the time it was to be rendered. Performance will be excused if, at the time performance is due, one party to a personal contract is dead. Restitution must be made if the consideration has already been paid. (6 Williston, Contracts, § 1937; 6 Corbin, Contracts, §§ 1334, 1368.) It is hornbook law that when a contract is aimed at creating a personal relationship between the parties the contract is subject to the condition that it be possible to establish this relationship at the specified time. This is true even though the contract is of a type which is not generally considered personal if the particular contract contemplated a future personal relationship. (Central Contra Costa etc. Dist. v. National Surety Corp., 112 Cal.App.2d 61 [ 246 P.2d 150 ].) Courts have held that an antenuptial contract is subject to an implied condition that both parties be alive at the intended date of marriage. The contract, though binding at and from the time of execution, contemplates a particular personal relationship and is discharged if death prevents either party from entering into that relationship. (In re Boy’s Estate, 278 Mich. 6 [ 270 N.W. 196 ] ; Campbell v. Jefferson, 296 Pa. 368 [ 145 A. 912 , 63 A.L.R. 1180 ] ; Wilson’s Adm’r v. Nolen, 200 Ky. 609 [ 255 S.W. 267 , 34 A.L.R. 80 ].) Similarly, a doctor must return an advance fee if the patient, through no fault of his own, is incapable of accepting the services on the day of performance. (Bucklin v. Morton, 105 Misc. 46 [ 172 N.Y.S. 344 ].) The ease at bar is clearly analogous. The purpose contemplated by both parties was the creation—and the maintenance —of a relationship. All contractual duties were discharged when fortuitous events prevented the creation of that relationship. It is argued that since the Home’s performance would not have been discharged had the stroke merely disabled decedent, .he cannot be discharged by death. But this contention overlooks the fact that, had decedent remained alive on October 1st, commencement of the relationship would have been possible. Had the prospective benedicts in the above-cited eases become handicapped they and their prospective wives would have *295 remained bound so long as the relationship was still possible. But the law does not permit a party to retain consideration paid under a contract when the object of that contract is a personal relationship which is precluded by the death of the other party. Failure of the implied condition of possibility discharged decedent’s contractual obligations. His estate was entitled to restitution of the consideration paid. I would reverse the judgment of the trial court. Appellants’ petition for a rehearing was denied January 13, 1960. Peters, J., was of the opinion that the petition should be granted. --- Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/9856808. Public record. Not legal advice.