Thacher, J.
The claimants, employed by The New Opera Company, Inc., one as a singer and the other as a violinist, claimed benefits under the Unemployment Insurance Law (Labor Law, art. 18). Their claims were allowed by the Unemployment
Insurance Appeal Board and confirmed in the Appellate Division. The question presented is whether the employer is a corporation organized and operated exclusively for literary or educational purposes, no part of the net earnings of which inures to the benefit of any private shareholder or individual. If it is such a corporation it is not an employer within the meaning of the law (Labor Law, § 560, subd. 4, which before amendment was § 502, subd. 3, par. [d], the language claimed to be applicable in this case appearing in both the original and amended sections).
The New Opera Company was organized in 1941, under the Membership Corporations Law. Its powers and purposes are defined in its certificate of incorporation as follows:
“
The purposes for which it is to be formed are to cultivate, promote, foster, sponsor and develop the understanding, taste and love of the musical arts, and to lawfully do all and everything necessary, suitable and proper for the attainment of any of the ■.purposes, the accomplishment of any of the objects or the furtherance of any of the powers hereinabove set forth, and to have, enjoy and exercise any and all rights, powers, privileges and exemptions which are now or which may hereafter be conferred upon corporations organized pursuant to the Membership Corporations Law of the State of New York as it now exists or 'may be amended or supplemented.” There is no provision in the certificate for the issuance of any capital stock or the distribution of any profits.
The facts found by the board disclose that The New Opera Company was founded by a group of devotees of music who were concerned with the future of light opera and the plight of young artists in this country. It maintains itself, among other things, by box-office receipts, gifts and contributions, from its sponsors and patrons. On its list of contributors appear the names of well-known patrons of the arts. One of its objects was to give employment to young American artists who were unemployed and to present operas in English at low prices. In view of the fact that this country had only one permanent opera company, the Metropolitan, in New York City, opportunities for graduates of American music schools to further their careers in this country were limited. The employer, attempted to develop thdpe potential American artists (par
ticularly during a period when opera was blacked out in Europe because of the late war) and to popularize opera itself, and to enlarge the repertoire ordinarily available to devotees of opera. During its first season it presented Mozart’s “ Cosi Fan Tutte ”, Offenbach’s “La Vie Parisienne ”, Tchaikowsky’s “Pique Dame ” and Verdi’s “ Macbeth ”, the latter being presented in Italian.
One of its aims was to enlarge the audience for operas by presenting opera in a modern manner, freed from the dullness of tradition, with dramatic zest and freshness, so that its qualities as entertainment should be enhanced. It sought to provide a fertile soil for the growth of native singers in operatic works, and maintained a “ workshop ” to train its singers in stage techniques. All singers who applied were auditioned. A competition was sponsored by the employer for an American one-act opera. Free admissions were given to school children, servicemen, student nurses and the blind. Many of the singers aided by the employer subsequently found employment with outstanding opera companies of this country.
In July, 1943, the employer borrowed money from various persons to produce “ The Merry Widow ” and agreed to repay these loans out of net profits, the agreement providing that after establishing a reserve fund of $15,000, and after repayment of the amounts advanced to the employer, the profits were to be divided equally between the employer and those who had made the advances.
A similar agreement was made in February, 1944, in connection with the production of “ Helen Goes to Troy
The board and the Appellate Division, feeling constrained by the decision in
Matter of Peoples Theatres, Inc. (Miller)
(266 App. Div. 694), held that the activities of an organization in aiding singers and sponsoring operatic productions are not ordinarily viewed as exclusively educational or charitable.
The law which we are to construe, exempting corporations organized and operated exclusively for educational purposes was first enacted as subdivision 1 of section 502 of the Labor Law (L. 1935, ch. 468, enacted April 25, 1935). The language appears to have been derived from section 360 of the Tax Law, which then provided — and now provides — for deduction from individual net incomes of contributions made to such corporations. The same language then appeared in the Federal income tax laws, providing for deduction of similar contributions (U. S. Code, tit. 26, § 23, subds. [o], [q]), and exempting such corporations from taxation (U. S. Code, tit. 26, § 101, subd. [6]), and was incorporated in the Social Security Act (enacted Aug. 14,1935, 49 IJ. S. Stat. 620, 625, 639, 643; now in IT. S. Code, tit. 42, § 409, subd. [b], par. [8]; § 1011, subd. [b], par. [8]; § 1107, subd. [c], par. [7]).
A comparable provision (Tax Law, § 4, subd. 6) exempts from taxation “ real property of a corporation or association organized exclusively for the moral or mental improvement of men and women, or for * * * educational * * * purposes * * * used exclusively for carrying out thereupon one or more of such purposes.” Construing this statute in 1924, prior to the enactment of the statute with which we are here concerned, the State Tax Commission held exempt real property of the Eastman School of Music, a college of the University of Rochester, although the property was used for daily public concerts and motion pictures for which admission was charged.
(Matter of Eastman School of Music,
31 N. Y. St. Dept. Rep. 91.)
Section 221 of the Tax Law exempts from transfer tax “ property devised or. bequeathed * * * to any * * * educational * * * corporation ”, In
Matter of Mergentime
(129 App. Div. 397, affd. on opinion below 195 N. Y. 572) the Metropolitan Museum of Art was held to be such an exempt corporation. The opinion of the Appellate Division in that case clearly indicated that it was not essential to constitute an
educational corporation that regular corps of teachers with regular classes of students should he furnished, hut, on the contrary, that a corporation organized for the purpose of supplying instruction to those who were willing to accept the facilities or opportunities afforded was an educational corporation, and it was held that the Metropolitan Museum of Art, having been incorporated by the Legislature “ for the purpose of * * * encouraging and developing the study of the fine arts * * * and to that end *
*
* of furnishing popular instruction and recreation ”, was a corporation the whole object of which was directly connected with higher education.
Similarly in
Matter of Moses
(138 App. Div. 525) the Y.M.C.A. and the Y.W.C.A.
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Thacher, J.
The claimants, employed by The New Opera Company, Inc., one as a singer and the other as a violinist, claimed benefits under the Unemployment Insurance Law (Labor Law, art. 18). Their claims were allowed by the Unemployment
Insurance Appeal Board and confirmed in the Appellate Division. The question presented is whether the employer is a corporation organized and operated exclusively for literary or educational purposes, no part of the net earnings of which inures to the benefit of any private shareholder or individual. If it is such a corporation it is not an employer within the meaning of the law (Labor Law, § 560, subd. 4, which before amendment was § 502, subd. 3, par. [d], the language claimed to be applicable in this case appearing in both the original and amended sections).
The New Opera Company was organized in 1941, under the Membership Corporations Law. Its powers and purposes are defined in its certificate of incorporation as follows:
“
The purposes for which it is to be formed are to cultivate, promote, foster, sponsor and develop the understanding, taste and love of the musical arts, and to lawfully do all and everything necessary, suitable and proper for the attainment of any of the ■.purposes, the accomplishment of any of the objects or the furtherance of any of the powers hereinabove set forth, and to have, enjoy and exercise any and all rights, powers, privileges and exemptions which are now or which may hereafter be conferred upon corporations organized pursuant to the Membership Corporations Law of the State of New York as it now exists or 'may be amended or supplemented.” There is no provision in the certificate for the issuance of any capital stock or the distribution of any profits.
The facts found by the board disclose that The New Opera Company was founded by a group of devotees of music who were concerned with the future of light opera and the plight of young artists in this country. It maintains itself, among other things, by box-office receipts, gifts and contributions, from its sponsors and patrons. On its list of contributors appear the names of well-known patrons of the arts. One of its objects was to give employment to young American artists who were unemployed and to present operas in English at low prices. In view of the fact that this country had only one permanent opera company, the Metropolitan, in New York City, opportunities for graduates of American music schools to further their careers in this country were limited. The employer, attempted to develop thdpe potential American artists (par
ticularly during a period when opera was blacked out in Europe because of the late war) and to popularize opera itself, and to enlarge the repertoire ordinarily available to devotees of opera. During its first season it presented Mozart’s “ Cosi Fan Tutte ”, Offenbach’s “La Vie Parisienne ”, Tchaikowsky’s “Pique Dame ” and Verdi’s “ Macbeth ”, the latter being presented in Italian.
One of its aims was to enlarge the audience for operas by presenting opera in a modern manner, freed from the dullness of tradition, with dramatic zest and freshness, so that its qualities as entertainment should be enhanced. It sought to provide a fertile soil for the growth of native singers in operatic works, and maintained a “ workshop ” to train its singers in stage techniques. All singers who applied were auditioned. A competition was sponsored by the employer for an American one-act opera. Free admissions were given to school children, servicemen, student nurses and the blind. Many of the singers aided by the employer subsequently found employment with outstanding opera companies of this country.
In July, 1943, the employer borrowed money from various persons to produce “ The Merry Widow ” and agreed to repay these loans out of net profits, the agreement providing that after establishing a reserve fund of $15,000, and after repayment of the amounts advanced to the employer, the profits were to be divided equally between the employer and those who had made the advances.
A similar agreement was made in February, 1944, in connection with the production of “ Helen Goes to Troy
The board and the Appellate Division, feeling constrained by the decision in
Matter of Peoples Theatres, Inc. (Miller)
(266 App. Div. 694), held that the activities of an organization in aiding singers and sponsoring operatic productions are not ordinarily viewed as exclusively educational or charitable.
The law which we are to construe, exempting corporations organized and operated exclusively for educational purposes was first enacted as subdivision 1 of section 502 of the Labor Law (L. 1935, ch. 468, enacted April 25, 1935). The language appears to have been derived from section 360 of the Tax Law, which then provided — and now provides — for deduction from individual net incomes of contributions made to such corporations. The same language then appeared in the Federal income tax laws, providing for deduction of similar contributions (U. S. Code, tit. 26, § 23, subds. [o], [q]), and exempting such corporations from taxation (U. S. Code, tit. 26, § 101, subd. [6]), and was incorporated in the Social Security Act (enacted Aug. 14,1935, 49 IJ. S. Stat. 620, 625, 639, 643; now in IT. S. Code, tit. 42, § 409, subd. [b], par. [8]; § 1011, subd. [b], par. [8]; § 1107, subd. [c], par. [7]).
A comparable provision (Tax Law, § 4, subd. 6) exempts from taxation “ real property of a corporation or association organized exclusively for the moral or mental improvement of men and women, or for * * * educational * * * purposes * * * used exclusively for carrying out thereupon one or more of such purposes.” Construing this statute in 1924, prior to the enactment of the statute with which we are here concerned, the State Tax Commission held exempt real property of the Eastman School of Music, a college of the University of Rochester, although the property was used for daily public concerts and motion pictures for which admission was charged.
(Matter of Eastman School of Music,
31 N. Y. St. Dept. Rep. 91.)
Section 221 of the Tax Law exempts from transfer tax “ property devised or. bequeathed * * * to any * * * educational * * * corporation ”, In
Matter of Mergentime
(129 App. Div. 397, affd. on opinion below 195 N. Y. 572) the Metropolitan Museum of Art was held to be such an exempt corporation. The opinion of the Appellate Division in that case clearly indicated that it was not essential to constitute an
educational corporation that regular corps of teachers with regular classes of students should he furnished, hut, on the contrary, that a corporation organized for the purpose of supplying instruction to those who were willing to accept the facilities or opportunities afforded was an educational corporation, and it was held that the Metropolitan Museum of Art, having been incorporated by the Legislature “ for the purpose of * * * encouraging and developing the study of the fine arts * * * and to that end *
*
* of furnishing popular instruction and recreation ”, was a corporation the whole object of which was directly connected with higher education.
Similarly in
Matter of Moses
(138 App. Div. 525) the Y.M.C.A. and the Y.W.C.A. were held to be educational corporations within the meaning of the same statute, and in
Matter of Arnot
(145 App. Div. 708, affd. 203 N. Y. 627) it was held that a free art gallery and reference library, directed to be incorporated by a will, was such a corporation. The court rejected the comptroller’s contention that the corporation, not being connected with any educational system or school, could not be exempt as an educational institution.
The trend of decisions in other jurisdictions is the same.
(Royal Choral Soc.
v.
Inland Revenue Comrs.,
169 L. T. 100 [Court of Appeal, 1943];
Bohemian Gymnastic Assn. Bohol of City of N. Y.
v.
Higgins,
147 F. 2d 774 [C. C. A. 2d, 1945];
Oklahoma State Fair and Exposition
v.
Jones,
44 F. Supp. 630 [W. D. Okla., 1942];
City Club of Milwaukee
v.
United States,
46 F. Supp. 673 [E. D. Wis., 1942].) Federal department rulings are in accord with these decisions.
In the light of the authorities, and upon principle as well, we think the Appellate Division was wrong in holding that its own decision in
Matter of Peoples Theatres, Inc. (Miller) (supra)
required a ruling in this case that the purposes of the corporate employer were not exclusively educational. The fact that Peoples Theatres, Inc., acted as an employment agency for its members is perhaps enough to distinguish the case. But, whether or not distinguishable, we are satisfied that in this case the employer was exempt. We agree, however, with the opinion in the court below that there was no proof that The New Opera Company distributed any of its net earnings to private individuals. The payment to the manager of a
The order of the Appellate Division and the decisions of the Unemployment Insurance Appeal Board should be reversed, with costs in all courts and with directions to the Unemployment Insurance Appeal Board to dismiss the claims.