Princeton Montessori Soc., Inc. v. Leff

• Decision Date: 03 June 1991
• Docket Number: No. A-702-90T3,A-702-90T3
• Citation: 591 A.2d 685,248 N.J.Super. 474
• Parties: , 68 Ed. Law Rep. 85 The PRINCETON MONTESSORI SOCIETY, INC., Plaintiff-Appellant, v. Alan LEFF, Defendant-Respondent.
• Court: New Jersey Superior Court — Appellate Division

Page 474

248 N.J.Super. 474

591 A.2d 685, 68 Ed. Law Rep. 85

The PRINCETON MONTESSORI SOCIETY, INC., Plaintiff-Appellant, v. Alan LEFF, Defendant-Respondent.

No. A-702-90T3

Superior Court of New Jersey Appellate Division.

Argued April 30, 1991.

Decided June 3, 1991.

Dennis J. Helms, for plaintiff-appellant (Mathews, Woodbridge & Collins, attorneys; Dennis J. Helms, of counsel and on the letter brief), Princeton.

Sharon Handrock Moore, for defendant-respondent (Gebhardt & Kiefer, attorneys; Sharon Handrock Moore, of counsel and on the brief), Clinton.

Before Judges MICHELS, GRUCCIO and D'ANNUNZIO.

The opinion of the court was delivered by

MICHELS, P.J.A.D.

Plaintiff The Princeton Montessori Society, Inc. appeals from a judgment of the Law Division, Special Civil Part that dismissed its complaint for the balance due under its tuition contract and awarded defendant Alan Leff $5,000 on his counterclaim in this breach of contract action.

Plaintiff is licensed by the State of New Jersey to operate a private school. In the Spring of 1989, plaintiff began its application process for the 1989-90 school year. On or about April 1, 1989, defendant enrolled his daughter, Fay, in plaintiff's school and signed a "Junior Contract." In accordance with the terms of the contract, plaintiff agreed to accept defendant's daughter as a student for the period beginning September 1989 and ending May 1990, and defendant agreed to pay tuition fees of $6500 for the full contracted year, development fees of $750 and a junior activities fee of $150. The contract also provided that no tuition would be refunded if a student withdrew or the school dismissed the student at any time throughout the school year. The contract, which contained a tuition payment schedule, in pertinent part, provided:

The undersigned parent or guardian (the "Parent") of the student agrees to pay

tuition fees of $6500 for the full contracted year. As a convenience to the

undersigned, the tuition may be paid as follows:

                Payment I                    May 1, 1989                    $1200
                Payment II                   July 1, 1989                   $1200
                Junior Activities Fee        July 1, 1989                   $ 150
                Payment III                  August 15, 1989                $1200
                Payment IV                   November 1, 1989               $1200
                Payment V                    February 1, 1990               $1200
                Payment VI                   March 1, 1990                  $N/A
                Due with return of contract
                Non-refundable Contract Deposit                             $ 500
                Non-refundable Development Fee                              $ 750
                

The Parent understands that the obligation to pay the fees for the full year is

unconditional and that no portion of such fees paid or outstanding will be

refunded or cancelled in the event of absence, withdrawal or dismissal from

the School of the above Student.

Plaintiff also offered defendant the opportunity to participate in the Tuition Refund Plan whereby plaintiff could purchase insurance for 2.2% of the annual tuition fees to provide for paying the tuition if the child withdrew. However, defendant elected not to participate in the Tuition Refund Plan. The contract explained the Tuition Refund Plan as follows:

In view of this obligation, the Parent understands that the option to participate in the Tuition Refund Plan is being made available at this time to protect the yearly financial obligation under the terms of this enrollment contract. This program will give the Parent an opportunity to insure fees (prepaid and due) in the event of separation according to the terms of the policy.

It is imperative that either Option A or B be checked below to indicate the Parent election of the Tuition Refund Plan.

A. The parent elects to participate in the Tuition Refund Plan. It is understood that the premium cost will be billed to the Parent when the Registrar sends the Parent a copy of the signed contract. The premium rate will be 2.2% of the annual tuition fees (see enclosed letter listing premiums for each program). This plan is in effect only after the Student has been in attendance a minimum of 24 school days. The Parent authorizes the School to collect any claim payment entitled to the Parent under the Tuition Refund Plan and credit the balance due, paying any excess to the Parent. The Parent agrees to pay the School whatever balance remains unpaid, after any payment by the Plan is made, within 30 days after receipt of a final, itemized bill from the School.

X B. The Parent does not elect to participate in the Tuition Refund Plan. The Parent understands that no refund or cancellation of the annual tuition fees will be made by the School for absence, withdrawal or dismissal before the end of the school year and herewith agrees to assume full responsibility for the full annual fees.

Prior to the opening day of school, defendant paid plaintiff $5,000 of the agreed upon tuition. Regular classes began on September 11, 1989. Defendant withdrew his daughter from the school on October 10, 1989, apparently because she was unhappy in the program. At that time, he owed $2,400 for the remainder of the year's tuition and a $100 late charge.

When defendant refused to pay the balance due under his contract, plaintiff instituted this action in the Law Division, Special Civil Part. Defendant denied liability and counterclaimed for a refund of his $5,000 payment. At the conclusion of a bench trial, the trial court found that even though defendant breached the contract, plaintiff had a duty to mitigate damages, which it failed to do, and plaintiff suffered no loss due to Fay's withdrawal. The trial court also found that the strict requirements of the contract to pay the fees and tuition constituted an unenforceable civil penalty, not liquidated damages. We disagree and reverse.

Under a contract whereby an educational institution agrees to provide instruction for a specified period and a parent of a student agrees to pay a definite sum for tuition and similar charges in consideration therefor, we hold that where the contract expressly provides that no deduction or refund will be made, the entire tuition is payable despite the fact that the student withdraws from school. In these circumstances, the educational institution has no duty to mitigate damages. This decision is consistent with the principles enunciated in Tabor Academy v. Schwartz, 129 N.J.L. 390, 30 A.2d 22 (E. & A.1943) and discussed in Alexander Hamilton Inst. v. Calkins, 112 N.J.L. 170, 170 A. 54 (Sup.Ct.1933) and is supported by the majority of jurisdictions. See Wentworth Military Academy v. Marshall, 225 Ark. 591, 283 S.W.2d 868 (1955) (parents obligated to pay full tuition for withdrawn cadet); Stewart v. Claudius, 19 Cal.App.2d 349, 65 P.2d 933 (1937) (contract to furnish instruction for specified period of time is entire and therefore, school entitled to whole sum agreed upon); Hoadley v. Allen, 108 Cal.App. 468, 291 P. 601 (1930) (recognizing entire contract principle); Hitchcock Military Academy v. Myers, 76 Cal.App. 473, 245 P. 219 (1926) (in view of stipulation that academy accepted cadets only for entire year and that tuition would not be reduced for withdrawal, academy entitled to recover unpaid tuition); Bergman v. Bouligny, 82 A.2d 760 (D.C.Mun.App.1951) (contract for schooling for specified period is entire and if student withdraws for personal reasons, school is entitled to agreed tuition for the entire period); Georgia Military Academy v. Rogers, 35 Ga.App. 789, 134 S.E. 829 (1926) (entire contract principle allows academy to recover full tuition); Northwestern Military & Naval Academy v. Wadleigh, 267 Ill.App. 1 (1932) (written application for admission to academy together with catalog, which provided tuition and other charges non-refundable, constituted entire and indivisible contract, entitling academy to recover unpaid balance of tuition); Ham v. Miss C.E. Mason's School, The Castle, Inc., 249 Ky. 478, 61 S.W.2d 7 (1933) (because contract provided for entire year's enrollment and parents responsibility for full payment of tuition, court affirmed judgment for school for amount of unpaid tuition); Penny v. Spencer Business College, Inc., 85 So.2d 365 (La.App.1956) (under contract with school, plaintiff not entitled to refund of tuition because she became sick and unable to undertake scheduled course of study); Missouri Military Academy v. McCollum, 344 S.W.2d 636 (Mo.App.1961) (entire contract payable despite student's withdrawal from school); Drucker v. New York Univ., 59 Misc.2d 789, 300 N.Y.S.2d 749, affirmed, 33 A.D.2d 1106, 308 N.Y.S.2d 644 (1969) (enrollment contract entire and indivisible and therefore, student not entitled to recover tuition paid since he breached contract without cause); Van Brink v. Lehman, 199 A.D. 784, 192 N.Y.S. 342 (1922) (endorsing entire contract principle); William v. Stein, 100 Misc. 677, 166 N.Y.S. 836 (1917) (school's complaint to recover balance due on contract for tuition and board, which expressly provided no reduction for absence or withdrawal except in case of protracted illness, improperly dismissed); Brenner v. Little Red School House, Ltd., 302 N.C. 207, 274 S.E.2d 206 (1981), appeal after remand, 59 N.C.App. 68, 295 S.E.2d 607 (1982), review denied, 307 N.C. 468, 299 S.E.2d 220 (1983) (contract providing for nonrefundable payment of tuition is enforceable as written); Vidor v. Peacock, 145 S.W. 672 (Tex.Civ.App.1912) (parent's obligation for tuition not discharged by son's illness which rendered son incapable of attending school).

In Tabor Academy v. Schwartz, 129 N.J.L. at 390, 30 A.2d 22, defendant enrolled his two sons in plaintiff boarding school in the Fall of 1938. The contract provided that "[t]he fee for the school year 1938-39 is fourteen hundred dollars, an inclusive charge for tuition, room, board and laundry.... Payments for tuition become due twice a year, one-half on October first and the...