First National Bank v. Rayle

Stolz, Judge.

The litigation before us arises out of the construction of a medical partnership agreement between Drs. Albert A. Rayle, Jr., and J. Frank Walker (now deceased). The pertinent portions of the agreement provide:

"Article I. General Provisions. Section B. Parties. Albert A. Rayle, Jr. and J. Frank Walker constitute the partners of the firm.

"Article IV. Meetings and Voting of the Partners. Meetings of the partners shall be held at such times and places as are necessary for the purposes of the firm’s business upon waiver of notice thereof or upon written notice at least two (2) days in advance signed by any one of the partners, signifying the hour and the purpose of the meeting. All matter affecting the partnership shall be decided by a unanimous vote of all of the partners except as otherwise herein specifically provided. [Emphasis supplied.]

"Article V. Section B. Death or Permanent Disability of a Partner.

"1. The death of a partner shall terminate all of his interest in the partnership, its properties, and assets. The continuing firm shall pay in cash to his estate the following amounts to be paid at the times indicated:. . .

"2. Permanent Disability of a partner to practice radiology shall, on the date of the determination of his permanent disability, terminate his interest in the partnership and his percentage of participation in profits and losses of the firm as a partner. The determination that a partner is permanently disabled shall be made upon evidence of such permanent disability by independent medical advice. Upon such determination of permanent disability, the following amounts shall be paid at the times indicated: . . . [Emphasis supplied.]

"His death before all such payments have been made shall not interrupt the continued payments by the continuing firm; but no further sums shall be owing by the firm because of such death except to continue the payments made pursuant to this paragraph 2.

"Article IX. Termination and Liquidation of Firm. Section A. Termination by Voluntary Action or Otherwise. The partnership may be terminated at any time by the unanimous vote of the partners. . . Section C. Insurance Policies. Upon the termination of the firm, each partner shall have the right to take over his respective health, accident, disability, and life insurance policies, or any of them, and an equitable adjustment shall be made with respect to any prepaid premiums or cash surrender value thereof, and each partner agrees to execute any papers necessary to effectuate such result.”

This action is by the executor of the estate of Dr. J. Frank Walker, deceased, for actual and punitive damages and attorney fees against Dr. Rayle. Briefly, the record shows that Dr. Walker died on October 6, 1973. Prior to that date and since 1950, Dr. Walker and Dr. Rayle had been partners in the practice of medicine specializing in radiology. For many years they worked together under a verbal agreement. On October 14, 1972, they operated under a written contract, the pertinent portions of which have been set out previously. Dr. Walker became ill in 1972. He did no work for the partnership after June 1, 1973.

The plaintiff bank appeals from the judgment of the trial court denying its motion for summary judgment.

1. The issue before us is whether the partnership had been terminated by a determination of Dr. Walker’s permanent disability prior to his death.

There is no ambiguity in the clauses to the partnership agreement. Moreover, the record conclusively shows that there had been no determination of Dr. Walker’s permanent disability under the partnership agreement prior to his death. Thus, the record shows that in the period from June 1, 1973, when Dr. Walker ceased work, until his death on October 6, 1973, Dr. Walker received $3,000 in payments from the partnership. The record does not show the basis for this figure; perhaps it was pursuant to the temporary disability provisions of the contract. The contract’s "permanent disability” clause providing for monthly payments of $416.67 ($15,000 in 36 equal monthly instalments) clearly would not apply to the $3,000 paid Dr. Walker.

Further, Dr. Rayle testified on deposition that on or about September 5, 1973, he delivered a "Retirement Agreement” (R. 96) to Dr. Walker for his approval and signature. Dr. Walker kept the document for study, but did not execute it prior to his death. The "Retirement Agreement” recites that since June, 1973, for reasons of health, J. Frank Walker has been unable to provide professional services of the partnership because of permanent disability, and the partners are now desirous of recognizing such permanent disability in accordance with the provisions of the 1967 draft of the Articles of Partnership. In paragraph 3 of the "Retirement Agreement” it is stated that Dr. Walker recognized that his permanent disability terminates his interest in the partnership (R. 98). As previously noted, Article IV of the partnership agreement required all matters affecting the partnership be determined by unanimous vote except as specifically provided therein. "The determination that a partner is permanently disabled shall be made upon evidence of such permanent disability by independent medical advice.” Article V, section B. (2) partnership agreement. This provision would apply only to situations where the partners have been unable to agree as to permanent disability. Obviously, if the partners agreed that one was permanently disabled there would be no need for an independent medical determination. Moreover, such medical determination is not supplied by opinions obtained after Dr. Walker’s death, even though such opinions may have been formed several months prior thereto. The independent medical determination of permanent disability, in order to be operative, had to be made pursuant to the invoking of the appropriate provision of the partnership agreement and not merely an expression of individual medical doctors’ private opinions.

Argued June 30, 1975 Decided December 2, 1975 Rehearing denied December 19, 1975 Huie, Brown & Ide, Terrence Lee Croft, W. StellHuie, Steven B. Kite, for appellant. Westmoreland, Hall, McGee & Warner, P. Joseph McGee, for appellee.

In the case before us, the controlling point is not the fact of Dr. Walker’s permanent disability immediately prior to his death, but the uncontroverted fact that there had been no determination of such permanent disability pursuant to the partnership agreement prior to his death.

We therefore reverse the trial court and direct that judgment be entered in favor of the plaintiff for the death benefits from the $50,000 insurance policy, Dr. Walker’s interest in his capital account, and his interest in the partnership profits as of October 6, 1973, plus statutory interest on the amount of said principal from said date.

There being issues of law and fact as to the plaintiffs entitlement to "punitive” damages and attorney fees, the trial judge correctly denied the plaintiffs motion for summary judgment as to these matters.

Judgment affirmed in part; reversed in part.

Bell, C. J., Pannell, P. J., Clark, Webb and Marshall, JJ., concur. Deen, P. J., Quillian and Evans, JJ., dissent.