Fisher School v. Assessors of Boston

• Decision Date: 30 March 1950
• Parties: FISHER SCHOOL v. ASSESSORS OF BOSTON (three cases).
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

325 Mass. 529

91 N.E.2d 657

FISHER SCHOOL v. ASSESSORS OF BOSTON (three cases).

Supreme Judicial Court of Massachusetts.

March 30, 1950

Argued Dec. 6 1949.

J S. Mechem and A. H. W. Higgins, Boston, for taxpayer.

D. J O'Connell, Ass't. Corp. Counsel, Boston, for assessors.

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

SPALDING, Justice.

These are three appeals from decisions of the Appellate Tax Board sustaining the refusal of the assessors to abate taxes for the years 1945, 1946, and 1947 on real estate owned by the appellant. The cases also come here on exceptions arising out of the denial by a single justice of the appellant's motion to amend its claims of appeal.

The Appellate Tax Board made findings of fact. The record contains a transcript of all of the testimony before the board. The findings of the board, which were the same in each case, may be summarized as follows: The appellant was incorporated on June 9, 1944 under G.L. (Ter. Ed.) c. 180, as amended. It was not authorized to issue any capital stock. The purposes, as set forth in its certificate of incorporation, were as follows: 'To establish, maintain and conduct a school or schools for instruction in the liberal arts, and in scientific, technical and commercial subjects; to establish, maintain and administer scholarship, alumni, endowments, and other funds in order to assist worthy students to obtain the educational advantages offered by the corporation and generally in order to further and maintain on a high level the educational facilities offered by the corporation and in connection therewith to do any and all other things permitted from time to time under the provisions of chapter one hundred eighty of the General Laws.' ^[1] One of the reasons for the formation of the appellant corporation was to enable it to apply to the Massachusetts board of collegiate authority for recognition as a junior college. The by-laws of the appellant provided that 'All property acquired by gift, bequest, loan or otherwise, including all income and profits, shall be devoted to furthering the purposes of the corporation, and the corporation shall not function in any way for the purpose of making a profit for its members.'

The Fisher Business School, the predecessor of the appellant, operated as a partnership until 1936, at which time it became a corporation. On August 31, 1944, that corporation transferred its real estate and personal property to the appellant. Included in the real estate conveyed was the parcel involved in this controversy, which consistted of six thousand square feet of land and a four and one half story building on Beacon Street, Boston. The building contained classrooms, lecture halls, laboratories, offices, and a cafeteria for students.

Approximately two hundred eighty students attended the school. The instruction included executive, secretarial and business courses and provided special training for those desiring to become assistants to doctors and dentists. The tuition for the year 1945 was $342 and was $360 for the years 1946 and 1947. Six scholarship funds have been established for deserving students, two by the appellant, and four by organizations and individuals interested in the school. The appellant also maintained a placement service for the benefit of its graduates and at no cost to them. Teachers in the school were given an opportunity, at the expense of the appellant, to attend courses in nearby colleges and universities.

Slightly less than one half of the annual gross income of the appellant was devoted to payroll expense. Three of the seven incorporators were members of the Fisher family. All three were members of the board of trustees. Two of these three were officers of the appellant, one being president and the other treasurer. The board of trustees established the salary of the president and he in turn established 'all other salaries for the members and faculty of the school.' Five members of the Fisher family received salaries from the appellant during the period here material. ^[2] In the years 1946 and 1947 the appellant realized a profit which was 'put back into the plant, [for] furniture, fixtures * * * scholarships for deserving students and other expenses of the school.'

The president travelled considerably, at the expense of the appellant, throughout New England, giving lectures and conducting tests in high schools. 'The purpose of these tours is educational and is intended to add prestige to the * * * school.' Several members of the Fisher family have at various times lent money to the appellant. At other times they have borrowed money from the appellant. No interest was charged and no security was required with respect to these transactions.

After finding the foregoing facts, the board concluded that 'no material change in the management or business [of the school] resulted from the incorporation of the appellant in 1944 * * * that the appellant * * * was conducted as a private enterprise and not as a public charity,' and that it had failed to show that it was entitled to an exemption. ^[3]

The principal contention of the appellant is that on the evidence presented to the board it was not warranted in reaching the conclusion that it did. This question was raised before the board by various requests for rulings. In one group of requests (one for each of the three years) the board was asked to rule that on all the evidence the appellant was entitled to the exemption claimed. In other requests the board was asked to rule that the appellant had sustained the burden of proving that it was a corporation of the class specified in G.L. (Ter. Ed.) c. 59, § 5, Third, and that is real estate was owned and occupied for the purposes for which the appellant was incorporated. These requests were denied.

Since the board's decision is 'final as to findings of fact,' it must stand unless vitiated by error of law in an issue of law raised before the board. G.L.(Ter.Ed.) c 58A, § 13, as amended. Board of Assessors of City of Springfield v. Commissioner of Corporations & Taxation, 321 Mass. 186, 190, 72 N.E.2d 528, and cases cited. But it is open to the appellant to contend that the decision of the board was not warranted on the evidence. That would be a question of law and it was appropriately raised before the board. Choate v. Board of Assessors of City of Boston, 304 Mass. 298, 300, 23 N.E.2d 882; Assessors of Lancaster v. Perkins School, 323 Mass. 418, 419, 82 N.E.2d 883. The purposes set forth in the appellant's certificate of incorporation, as the appellee concedes, are unquestionably such as would permit it to qualify as a public charity under G.L. (Ter.Ed.) c. 59, § 5, Third. Assessors of Boston v. Garland School of Home Making, 296 Mass. 378, 6 N.E.2d 374. But to obtain an exemption it is not enough for a corporation to show merely that the purposes for which it was incorporated were charitable. It must also 'prove that it is in fact so conducted that in actual operation it is a public charity.' Jacob's Pillow Dance Festival, Inc., v. Assessors of Becket, 320 Mass. 311, 313, 69 N.E.2d 463, 465, and cases cited. American Institute for Economic Research v. Assessors of Great Barrington, 324 Mass. 509, 512, 87 N.E.2d 186. Apparently it was on this issue that the proof furnished by the appellant failed to convince the board. It is true that all of the evidence before the board was furnished by the appellant and none of it was contradicted. But 'the burden of proof is...