Arnold v. Commissioner of Corporations and Taxation

• Decision Date: 13 September 1951
• Citation: 327 Mass. 694,100 N.E.2d 851
• Parties: ARNOLD et al. v. COMMISSIONER OF CORPORATIONS AND TAXATION et al. (two cases).
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 851

100 N.E.2d 851

327 Mass. 694

ARNOLD et al. v. COMMISSIONER OF CORPORATIONS AND TAXATION et al. (two cases).

Supreme Judicial Court of Massachusetts, Hampshire.

Argued June 25, 1951.

Decided Sept. 13, 1951.

H. Robinson, Springfield, W. E. Dwyer, Northhampton, for petitioners.

Francis E. Kelly, Atty. Gen., M. H. Selzo, Asst. Atty. Gen. for respondents.

Before QUA, C. J., and WILKINS, SPALDING, WILLIAMS and COUNIHAN, JJ.

WILKINS, Justice.

The petitioners, who have undertaken to form a charitable corporation, bring two petitions against the commissioner of corporations and taxation and the Secretary of the Commonwealth. One is by way of appeal under G.L. (Ter.Ed.) c. 180, § 6, as appearing in St. 1949, c. 692, § 1, and the other is for a writ of mandamus. The purpose of each petition is the same. The bringing of two petitions emanates from procedural doubts. The facts are agreed, and at the request of the parties, the cases are reported to this court without decision. G.L.(Ter.Ed.) c. 231, § 111.

Annie H. Childs, late of Northampton, by her will appointed a Springfield trust company as her executor and trustee and made the following provision: 'Twentieth: I direct and authorize my said executor and trustee, as soon as may be after my death, to cause to be formed or organized a corporation--either by special act or under the general statutes relating to charitable corporations--with such powers as it shall deem proper or necessary to enable such corporation to fully carry out the spirit and purposes of this clause of my will and of the devise hereunder * * *. Upon the formation and organization of such corporation I direct my said executor and trustee to convey and transfer to such corporation my real estate * * * in said Northampton, commonly known as 'Childs Park' * * * the same to be held, managed, controlled, developed and forever maintained by said corporation and its successors in trust as a public park and a place of rest and quiet recreation, to be known as at present as 'Childs Park,' for the benefit of the people of Northampton and the public generally.'

The executor caused the requisite steps to be taken to form the corporation. G.L.(Ter.Ed.) c. 180, §§ 1, 2, 3, as appearing in St. 1947, c. 559, § 1; c. 156, §§ 6, 8-12, as amended. On May 4, 1950, the petitioners, eleven in number, executed an agreement of association, and held a first meeting, at which were elected directors and certain officers. A meeting of the board of directors was held, certain other officers were elected, and the petitioners, as officers and directors of Childs Park Foundation, Inc., executed articles of organization. On May 24, 1950, the petitioners submitted to the respondent commissioner the agreement of association, the articles of organization, the record of the first meeting of incorporators, and the bylaws, and paid the statutory fee.

On June 14, 1950, the commissioner wrote the attorney for the petitioners: 'The agreement of association and articles of organization have been received and all the papers are in order. They have now been sent to the board of public welfare for approval by them, after which, we will send them to the Secretary of State for the charter.' See G.L. (Ter.Ed.) c. 180, § 6, as appearing in St. 1949, c. 692, § 1.

The department of public walfare reported favorably on October 5, 1950. Thereupon the commissioner without notice to, and without the consent of, the petitioners or their attorney, struck out the words shown in italics in the following portion of the articles of organization: 'The purposes for which the corporation is formed are as follows: To operate and function exclusively as a charitable corporation, with the rights, powers and privileges permitted by Chapter 180 of the General Laws * * * and more particularly to own, hold, control, maintain, operate, improve and manage a park in the City of Northampton for the benefit of the people of Northampton and the general public, and subject to and in connection with such charitable purposes to acquire, own, hold, maintain, improve, sell, mortgage and otherwise deal with real and personal property in such park, and to erect * * * buildings * * * and other structures in such park and to acquire, install, maintain, improve and otherwise deal with shrubs, planting, vines, flowers, trees and all other things horticultural and arboreal in such park and to * * * engage in any activities and business in such park which can be appropriately and legally carried on therein for the recreational, educational and civic advantage and the general benefit of the general public; and further to accept and receive the devise under the twentieth clause of the will of Annie H. Childs * * * commonly known as 'Childs Park' * * * and to hold, maintain, improve and deal with said park in accordance with the provisions of said will and this charter * * * provided that all activities and business conducted or engaged in by this Corporation shall be civic, educational or charitable in nature.'

On or about October 10, 1950, the commissioner indorsed approval upon the articles of organization in their deleted form, dating his approval May 25, 1950, and filed the articles with the Secretary of the Commonwealth. The latter obtained favorable reports as to the proposed corporation and the incorporators from the requisite municipalities. G.L.(Ter.Ed.) c. 180, § 5, as amended by St. 1947, c. 559, § 2. The Secretary sent a certificate of incorporation to the attorney for the petitioners, who then learned for the first time of the unauthorized changes in the articles of organization. The certificate of incorporation was returned to the Secretary.

On this record, it is impossible to sustain the commissioner, because the agreed facts accept as true all 'allegations and facts' of the petition. One of these allegations is that the commissioner, acting in a manner contrary to G.L. (Ter.Ed.) c. 156, § 11, and c. 180, § 6, 'has failed and refused arbitrarily and without justification in fact or law, to approve said articles of organization as originally submitted.' The respondents, however, in their brief declare that the parties are in agreement except for this matter. As the result will not be affected, we regard the respondents as continuing to deny, as in their answer, that such conduct was arbitrary or unjustified.

It it agreed that the purposes of the incorporation are proper and legal and are not to cover an illegal business; that the petitioners are of financial ability and suitable in every respect; and that there has been compliance with all provisions of G.L. (Ter.Ed.) c. 156 and c. 180 relative either to the investigation of the purposes of incorporation and of the persons applying for incorporation or to the organization and incorporation.

1. The first question is that of the remedy. It is provided in G.L. (Ter.Ed.) c. 180, § 6, as appearing in St. 1949, c. 692, § 1: 'Before approving the articles of organization of a charitable corporation the commissioner of corporations and taxation shall refer such articles to the department of public welfare, which shall immediately make an investigation as to the applicants for incorporation and as to the purposes thereof, and any other material facts relative thereto, and shall give such applicants a public hearing * * * and shall forthwith report to the commissioner of corporations and taxation all the facts ascertained by it. If it appears to him from said report or otherwise that the probable purpose of the formation is to cover any illegal business, or that the persons applying for incorporation are not suitable persons, from lack of financial ability or from any other cause, he shall refuse to approve such articles of organization. If he refuses, the applicants may appeal to the superior court, which shall hear the case and finally determine whether or not the articles of organization shall be approved.'

The petitioners are in doubt whether the last sentence of section 6 governs when there has been no refusal to approve on any of the grounds referred to in that section. The sentence begins, 'If he refuses,' with no qualification stated. We think that the refusal is intended to be all-inclusive and is not confined to the enumerated grounds. We construe the sentence as if it began, 'If for any reason he refuses.' Accordingly, the petition for writ of mandamus should be dismissed. Tuckerman v. Moynihan, 282 Mass. 562, 569, 185 N.E. 2; Tranfaglia v. Building Commissioner of Winchester, 306 Mass. 495, 497, 28 N.E.2d 537; Seney v. Board of Health for City of Northampton, 314 Mass. 272, 273, 50 N.E.2d 3.

2. The record discloses no reason for the deletions in the articles of organization. The argument is made that maintenance of the park is not a 'charitable' purpose under G.L. (Ter.Ed.) c. 180, § 2, ¹ in construing which it is contended that that word 'is to...