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VA SCHOOL OF THE ARTS, INC. v. EICHELBAUM, ET AL.


VIRGINIA SCHOOL OF THE
ARTS, INC.

v.

ROBERT EICHELBAUM, ET
AL.


October 31, 1997

Record No. 962535

VIRGINIA SCHOOL

OF THE ARTS, INC.

v.

ROBERT EICHELBAUM, ET AL.

OPINION BY JUSTICE A. CHRISTIAN COMPTON

FROM THE CIRCUIT COURT OF THE CITY OF LYNCHBURG

Mosby G. Perrow, III, Judge

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


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 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 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 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
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.

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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