APPEAL from the Circuit Court of Cook County; the Hon. ARTHUR
L. DUNNE, Judge, presiding.
MR. JUSTICE MCNAMARA DELIVERED THE OPINION OF THE COURT:
Plaintiffs, second and third year medical students at Northwestern University, commenced this class action on behalf of themselves and all others similarly situated against Northwestern University, its president, and certain of its trustees. The complaint challenged the imposition of a $2,505 increase in tuition for the 1977-78 academic year. Pursuant to section 45 of the Civil Practice Act (Ill. Rev. Stat. 1977, ch. 110, par. 45), defendants filed a motion to dismiss the complaint. The trial court dismissed the complaint, holding that the complaint did not state a cause of action against Northwestern for the alleged unwarranted increase at the medical school. The trial court did not rule on the individual defendants' motion to dismiss.
In count I of their four-count complaint, plaintiffs alleged that certain members of the proposed class enrolled at Northwestern for the 1975-76 academic year and entered into an agreement with defendants to pay annual tuition in the amount of $3,930 in exchange for a medical education. The medical school catalogue for that year provided that "tuition and fees are * * * subject to change without notice." Other members of plaintiffs' class entered Northwestern for the 1976-77 academic year with an annual tuition rate of $4,350. The 1976-77 catalogue stated that "tuition and fees are * * * subject to change on short notice" and that "applicants should anticipate continuing yearly increases * * *." Plaintiffs further alleged that Northwestern's president announced that tuition for the 1977-78 academic year would be increased by $2,505. Plaintiffs charged the increase was 57.6 percent more than the previous year's tuition and seven times greater than the past average increase. They charged that the increase was imposed despite the existence of approximately $1,100,000 in Federal and State assistance funds.
Plaintiffs further charged that due to the minimal attrition rates at medical schools throughout the country, they were unable to transfer to another school. As a result, plaintiffs alleged that defendants had imposed upon them a contract of adhesion prepared solely by defendants and leaving plaintiffs with the sole alternative of paying the increased tuition. Plaintiffs sought damages and a declaration that defendants could not obtain a tuition increase greater than the average increase imposed over the past decade. Plaintiffs also sought an order requiring defendants to return any amounts paid by plaintiffs in excess of the average annual increase.
Counts II through IV realleged the substance of count I and requested identical relief. Count II charged that the tuition increase was unreasonable and constituted a material breach of their agreement with Northwestern. In count III plaintiffs charged that the increase in tuition amounted to moral duress of plaintiffs. Count IV claims that by virtue of defendants' past promises they were estopped from imposing the tuition increase.
Plaintiffs, by amendment to the complaint, attached a letter written by Northwestern's president explaining the need for the tuition increase. He stated the decision was prompted by two factors: First, Federal funding had decreased 50% and State funding was committed to faculty salaries. Second, the reserve created by the tuition increase would enable the school to extend grants to persons without financial resources, while imposing a greater burden on those better able to afford it. Thus, the school would be able to select students on the basis of academic achievement rather than have students, in effect, select Northwestern on the basis of their ability to pay. The letter also outlined student loan programs whereby the borrower would not be required to pay more than six percent of taxable income during the repayment period and could obtain an additional three years to retire the loan. If the loan then had not been repaid, the school would be prepared to cancel the balance. As a result of the additional funds available, the maximum debt required to be incurred by any student would not exceed $22,500, an increase of two percent over the maximum indebtedness requirement of the previous year.
In its order granting Northwestern's motion to dismiss, the trial court found "there was no binding contract, concerning 1977-78 or other future tuition at Northwestern University Medical School." The court noted that in the absence of such a contract it could not establish or change tuition rates.
Plaintiffs contend that the trial court erred in finding that the parties had not entered into a binding contract regarding future tuition rates. They maintain that the language in the medical school catalogues providing that tuition rates are subject to change "without notice" or "on short notice" does not imply that defendants' right to increase tuition is unfettered. They argue that defendants are bound by a standard of reasonableness in deciding whether and by what amount to raise tuition. Under the trial court's ruling, plaintiffs contend that defendants are free to raise tuition by any amount, however exorbitant.
Defendants agree that they are free to raise the tuition rates by virtually any amount, but they argue that in the absence of claim and proof that such action was prompted by malice or taken in bad faith, plaintiffs' financial losses are not redressable by the courts>. Plaintiffs have not charged defendants with bad faith, nor have they alleged unjust enrichment. Defendants therefore urge that since the school catalogues issued to plaintiffs provided that tuition rates were subject to change "without notice" and "on short notice" we must uphold the trial court's finding that there was no binding contract regarding future tuition rates.
1 Bearing in mind that we must take all well-pleaded facts in the complaint as true, we consider whether plaintiffs' complaint stated a cause of action.
2 Both sides agree that the relationship between a school and its students is contractual in nature and that the relevant terms of the contract are those set forth in the school catalogues. (Steinberg v. Chicago Medical School (1977), 69 Ill.2d 320, 371 N.E.2d 634.) The parties also agree that the catalogues here in question reserved to defendants the right to increase tuition "without notice" or "on short notice." The issues for our determination are whether defendants contracted that future tuition increases would be kept within the average range of increases imposed over previous years and whether they are bound by a standard of reasonableness in exercising their right to raise tuition rates.
An identical argument was considered in Basch v. George Washington University (D.C. 1977), 370 A.2d 1364. Plaintiffs, representing a class of approximately 500 medical students of all class years, commenced suit against the university challenging a tuition increase for the 1975-76 academic year. The trial court granted summary judgment in favor of defendant. The 1974-75 bulletin set the tuition rate at $3,200 for that year and further stated:
"Academic year tuition increases have been estimated as follows: 1975-76, $200; 1976-77; 1977-78, $200; 1978-79, $200 * * *. Every effort will be made to keep tuition increases within these limits. However, it is not possible to project future economic data with certainty, and circumstances may require an adjustment in this estimate."
The university thereafter raised tuition to $5,000 per year for the 1975-76 academic year. Plaintiffs, specifically relying upon the language in the bulletin regarding projected tuition increases, maintained that this increase constituted a breach of their contracts with defendant. The reviewing court affirmed the grant of summary judgment in favor of defendant and held that the quoted language did not bind the university to ...