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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