Virginia School of Arts, Inc. v. Eichelbaum

Present: Carrico, C.J., Compton, Lacy, Hassell, Keenan, and
Kinser, JJ., and Whiting, Senior Justice

VIRGINIA SCHOOL
OF THE ARTS, INC.
OPINION BY JUSTICE A. CHRISTIAN COMPTON
v. Record No. 962535 October 31, 1997

ROBERT EICHELBAUM, ET AL.

FROM THE CIRCUIT COURT OF THE CITY OF LYNCHBURG
Mosby G. Perrow, III, Judge

In this case involving charitable giving, the main issue is

whether the terms of a so-called "matching grant" or "challenge

grant" are enforceable when there has been a failure to meet the

conditions of the grant.
This action evolved from a suit brought by a decedent's

personal representatives seeking aid and guidance in estate

administration. In November 1994, appellees Robert Eichelbaum

and Lewis B. Goode, Jr., Co-Executors of the Estate of Katherine

Haas Eichelbaum, Deceased, filed a bill of complaint naming as a

defendant, among others, appellant Virginia School of the Arts,

Inc. Noting that the defendant had presented a claim against the

estate, the executors sought the court's aid and guidance

regarding "the legal enforceability of" the claim. The school is

a Lynchburg private "residential high school that fosters and

encourages students of middle and high school age to achieve the

highest possible standards in dance, theater, music and visual

arts."

During the litigation, the cause was transferred to the law

side of the court by agreement. The other defendants were

dismissed, and the case proceeded as a claim by the school
against the estate seeking to enforce a "charitable subscription

of the Decedent" in the amount of $100,000.

Following a June 1996 bench trial, at which only the school

presented testimonial evidence along with stipulated documentary

evidence, the court below ruled in favor of the estate. We

awarded the school an appeal from the September 1996 final order

dismissing its claim with prejudice.

The facts are undisputed. Between 1991 and 1993, Mrs.

Eichelbaum, a resident of Lynchburg, gave $467,433 to the school.

Her benevolence took the form of both outright "special gifts"

and contributions to the school's "annual fund drive." For

example, during the "spring of '93," her $150,000 special gift

enabled the school to avoid closing because of financial

difficulties.
The transaction in question took place in October 1993. At

that time, the school was involved in soliciting prospective

donors for the 1993-94 annual fund for the fiscal year July 1,

1993 to June 30, 1994. Because Mrs. Eichelbaum had been "a major

donor of the school," the school's administrators decided to ask

her to make a "challenge gift" in order to encourage other

persons to contribute to the fund drive.

Helen Burnette Harvey, who managed the school's internal

operations, visited Mrs. Eichelbaum armed with fund-raising

"materials" and a "request letter" dated October 5, 1993. The

letter provided: "A gift of $100,000 as a challenge grant to the

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1993-94 Annual Fund would ensure the School's place in this

community as both a cultural and economic asset." The letter

further provided: "With your permission we would like to promote

your gift to encourage renewing and new donors to invest . . . We

must raise $200,000 during this year's Annual Fund period; we

believe a matching grant would make it possible for us to achieve

this goal."

Following the visit, Mrs. Eichelbaum consulted her financial

adviser and signed a statement dated October 8, 1993 affixed to

the end of the letter in which she "agree[d] to commit the sum of

$100,000 . . . to The Virginia School of the Arts."
The letter did not mention periodic payments of the

"matching grant" or how the pledge would be paid, nor were those

subjects discussed with Mrs. Eichelbaum or her financial adviser

by any of the school's representatives.

On October 18, 1993, Mrs. Harvey on behalf of the school

wrote Mrs. Eichelbaum a letter of appreciation, stating her

"recent generous gift . . . in the form of a $100,000 matching

grant is exactly what we needed to ensure the success of the '93-

'94 Annual Fund drive." On December 3, 1993, the school issued a

press release announcing an anonymous "challenge gift" of

$100,000, which "will encourage other individuals, business and

industry sources, and private foundations in the community and

beyond to contribute to the school's operations and programs."

The press statement said the school "must match this challenge

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gift by the end of this fiscal year."

The school then attempted to raise funds to match the

pledge. In letters to prospects, the school called attention to

the "$100,000 challenge gift" and stated it was "striving to meet

this generous offering." In letters of appreciation to donors,

the school stated that the particular gift "brings us closer to

meeting our responsibility in relation to the $100,000 challenge

grant that we received from a loyal supporter."
Mrs. Eichelbaum died testate on January 14, 1994. The

school had not asked her to make any payments on the pledge and

she had made none. Additionally, by that date, the school had

not raised $100,000 to equal the decedent's matching grant. By

the end of the 1993-94 fiscal year, the school had raised only

$67,592.71.

In a letter opinion, the trial court determined that the

"subscription considered in context with the solicitation letter

of October 5, 1993, and the resulting conduct of the parties,

whether analyzed as a unilateral or bilateral contract, is

unenforceable" because the school "failed to match the sum

pledged by the decedent during the 1993-94 Annual Fund Drive."

On appeal, the school contends the trial court erred in

ruling that the estate was not liable for payment of the

decedent's pledge. Arguing that "charitable subscriptions should

be enforced as a matter of public policy wherever possible," the

school says the trial court erred in failing to find it "actually

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matched the pledge in this case." The school argues "its

evidence unequivocally establishes that the gift was matched

within a reasonable time" because it raised $212,000 during the

period October 1993 - June 1995 through gifts from persons other

than the decedent. The school says "nothing in the pledge

provided any limitation to the time within [which] the gift was

to be matched by other pledges." This argument ignores the

uncontradicted evidence and is contrary to settled law on the

subject.
A charitable subscription is governed by the law of

contracts and must be supported by an offer, an acceptance, and

consideration. Galt v. Swain, 50 Va. (9 Gratt.) 633, 635 (1853).

And "a subscription, like any other promise or offer, may be

conditional. If particular terms are prescribed, these terms in

themselves are conditions which must be complied with before the

subscription is binding." Id.

In the present case, there was valuable consideration to

support a binding contract between the decedent and the school.

The decedent's promise of a "matching" or "challenge" grant was

relied on by school officials, who expended effort to solicit

matching funds.

But the contract as expressed in the letter of October 5,

1993, and evidenced by the school's subsequent conduct and

statements, clearly and unambiguously included a condition, that

is, the school was obligated to raise $100,000 during the 1993-94

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fiscal year ending June 30, 1994. This the school failed to do.

The October 5 "request letter" tied the request for a

"challenge grant" specifically to the "1993-94 Annual Fund." The

evidence plainly showed that the school operated on a fiscal year

basis of July 1, 1993 to June 30, 1994, and that school officials

considered the school had the "responsibility" to match the

pledge during that period. The fact that the school raised

$212,000 by June 1995 did not satisfy the condition.
Therefore, because the school failed to fulfill the

condition, the contract is unenforceable, and the pledge is not

binding on the decedent's estate.

The school raises two additional issues. First, it contends

the trial court erred in refusing to apply the doctrine of

promissory estoppel to these facts. We reject this contention.

Today, we decide that the doctrine should not be adopted in

Virginia. W. J. Schafer Assoc., Inc. v. Cordant, Inc., 254 Va.

___, ___ S.E.2d ___ (1997).

Second, the school contends the trial court "erred in

failing to rule on the admissibility of" an August 1992 letter

from Mrs. Eichelbaum to her financial adviser, who was one of the

executors, directing payment of "all signed commitments, in the

form of a pledge, to charitable organizations." There is no

merit to this contention. The recitals in the court's opinion

letter and final order implicitly show that the court, sitting

without a jury, considered the letter.

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 Accordingly, we hold there is no error in the judgment from

which this appeal is taken, and it will be

Affirmed.

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