Industrial Technical Schools, Inc. v. Commissioner of Ed.
| Decision Date | 09 December 1953 |
| Citation | 116 N.E.2d 260,330 Mass. 622 |
| Parties | INDUSTRIAL TECHNICAL SCHOOLS, Inc. v. COMMISSIONER OF EDUCATION. |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
Theodore A. Glynn, Jr., Boston, for plaintiff.
Joseph H. Elcock, Jr., Asst. Atty. Gen., for defendant.
Before QUA, C. J., and LUMMUS, RONAN, SPALDING and WILLIAMS, JJ.
This is an appeal from a final decree reciting that the trade school conducted by the plaintiff is not 'an endowed school which offers approved coursed without profit' within the provisions of G.L. (Ter.Ed.) c. 93, § 21A, inserted by St.1941, c. 583, § 2.
The case was submitted to the judge on an agreement as to evidence together with various exhibits. King Features Syndicate, Inc., v. Cape Cod Broadcasting Co., Inc., 317 Mass. 652, 59 S.E.2d 481; Lapp Insulator Co., Inc., v. Boston & Maine Railroad, 330 Mass. 205, 112 N.E.2d 359. The judge accepted as true certain statements contained in this agreement, and in addition thereto he found other facts which were different from and inconsistent with some of the evidence set forth in the agreement.
The facts as finally determined may be summarized. A corporation of the same name as the plaintiff was organized as a business corporation under G.L. (Ter.Ed.) c. 155 a few years prior to 1948. It purchased, in 1946, a vacant schoolhouse from the city of Boston for $12,000, built an addition to it, and in its books carried such real estate at a total value of $33,084. It conducted a trade school on the premises until January 2, 1948. At that time it capital stock and all of its property, both real and personal, were transferred to the plaintiff. The plaintiff was incorporated in November, 1947, under G.L. (Ter.Ed.) c. 180 regulating the organization of corporations for educational, charitable, benevolent, and religious purposes, and also for certain other purposes.
The old corporation was owned and controlled by one Hoffman and one Galvin, its only stockholders. The stockholders voted to convey the real estate to the plaintiff 'as an endowment and to be used exclusively for the purpose of the school rent free.' The fair value of this realty was about $100,000. The stock of the old corporation was practcally worthless after the conveyance of the real estate. The plaintiff agreed to assume all liabilities of the old corporations. These liabilities exceeded $60,000. The plaintiff gave its note to Hoffman for $71,450 bearing interest at 6% payable in twenty years, one twentieth of the principal to be paid annually. It gave a similar note to Galvin. Payments on both notes in accordance with their tenor are made out of the profits of the plaintiff. The assumption of liabilities of the old corporation and the giving of these notes constituted the consideration for the transfer of all the assets from the old to the present corporation. The latter corporation like the old one is controlled by Hoffman and Galvin as trustees. The other trustee is merely a straw for them. Hoffman, the president, and Galvin, the treasurer, each receive a salary of $10,000 for administrative services.
The plaintiff about May 15, 1952, received a gift of $15,000 to be held as a permanent fund, the income therefrom to be used for the purposes of the school. The fund is known as the 'John Hoffman Memorial Endowment' and has been deposited in that name in a Boston bank.
The latest income sheet which was made an exhibit discloses that practically the only source of revenue was the tuition paid by the students. The receipts exceeded the expenses by more than $33,000.
The judge found that the plaintiff 'paid for the real estate and that it was not a gift and was not bestowed to it.' He found that the $15,000 was an endowment but that in the attending circumstances the receipt of this fund did not make the plaintiff an endowed school, and that, from the manner in which the earnings have been used and controlled, the plaintiff is not an endowed school which offers approved courses without profit within the purview of the statute.
The advance in the mechanical arts and sciences, the great number of technical inventions, and the enormous production and introduction of labor saving machinery in industry and even in the homes, have created a demand for skilled mechanics. The demand was increased by the requirements of the national government in prosecuting the second World War. There was ready employment at high wages for mechanics skilled in making machine tools, in building ships and constructing aircraft, in radar, radio, television, electronics and allied branches, and in the production of modern weapons employing nuclear energy. Many discharged veterans accepted the benefits of 58 U.S. Stat. at Large, 284, the G. I. bill of rights, so called, and attracted by the advantages in these occupations sought technical training. To supply these demands many trade schools sprang up in various sections of the Commonwealth, some of which were really no more than commercial undertakings for the personal benefit of their owners. See Murray v. Bateman, 315 Mass. 113, 51 N.E.2d 954.
The Commonwealth has a vital interest not only in the academic education of its youth, but also in the technical training of its people. The establishment and operation of private trade schools are regulated and supervised by means of a statutory licensing system. No license is to be granted unless the commissioner of education shall have approved 'the proposed standards adopted and methods of instruction to be followed, the equipment and housing provided, the training and experience of the teachers to be employed, the form and contents of the student enrolment agreement or contract and the method of collecting tuition, nor and unless and until such schools shall have filed in the office of said commissioner its current advertising, if any.' G.L.(Ter.Ed.) c. 93, § 21B, inserted by St.1941, c. 583, § 2.
The statute, G.L. (Ter.Ed.) c. 93, § 21A, defines a private trade school as 'a school...
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