Kalez v. Miller , 20 Wash. 2d 362 ( 1944 )

Appellants excluded respondent from the partnership and then, when the action was instituted by respondent, they abandoned the partnership. It was then too late for appellants to avoid liability to respondent for his proportionate share of the value of the good will of the partnership.

While a corporation to practice medicine cannot exist within this state, the physicians who attempt to organize such corporation have the status of partners. As between themselves, their relationship each to the other and all of the partners being highly fiduciary in character, the courts hold each of the partners to a high standard of integrity. Bank v. Nelson,199 Wn. 631, 635, 92 P.2d 711.

Having excluded respondent from the partnership, the remaining partners, each being the trustee for all of the partners, appropriated the good will of the partnership, and, under the authorities, the excluded partner is entitled to recover from his partners the proportionate value of the good will of which he was deprived. See Hutchins v. Page, 204 Mass. 284, 90 N.E. 565, 134 Am. St. 656.

The trial court found, and the findings are sustained by ample evidence, that, shortly after respondent was called into active service, appellants jointly excluded respondent from further participation in the income and profits of the clinic, deliberately appropriated to themselves the income as cash was collected, and declared that respondent was no longer entitled to participation therein. The court further found that appellants continued the practice of medicine and surgery and the performance of contracts between the clinic and various patients for medical and hospital treatment, maintained the same offices, and used the same name of Spokane Medical and Surgical Clinic. By reason of the use of the name and the reputation which it established during the period of years it operated, the clinic developed a very valuable good will of which the respondent's interest therein was in the amount of ten thousand dollars. Appellants were doubtless satisfied with the foregoing findings, as there is an absence of request on their part for contrary findings.

That good will exists in a professional practice or in a business which is founded upon personal skill or reputation, is now accepted by the courts as a correct doctrine. That good will exists in the professional practice of a physician and surgeon and is entitled to protection of the law, is held in Randolph v.Graham, 254 S.W. (Texas Civ. App.) 402. See, also, Maxwell v.Sherman, 172 Ala. 626, 55 So. 520; 24 Am. Jur. 808, § 11.

It is true there are some cases which hold that the good will of a clinic operated by parties as in the case at bar could not have been sold for any amount because it was the professional practice of physicians and surgeons, therefore, not a business to which good will adhered; however, the weight of authority iscontra. It should be borne in mind that this is not the sale of a business but it is a case where the appellants appropriated the respondent's interest in a business. Appellants continued to practice medicine and surgery at the same old stand under the name of the Spokane Medical and Surgical Clinic, occupied the same offices, and kept on receiving the revenues from the patients.

Where such an appropriation takes place, the excluded partner — respondent in the case at bar — is entitled to what the business is worth to those who take it and they — appellants — must be charged therewith. Hutchins v. Page, supra; Donleavey v. Johnston, 24 Cal.App. 319, 141 P. 229;Sheppard v. Boggs, 9 Neb. 257, 2 N.W. 370.

The judgment in all respects should be affirmed.

SIMPSON, C.J., concurs with MILLARD, J.

May 17, 1944. Petition for rehearing denied.