Court Opinion

ID: 9539494
Source: CourtListenerOpinion
Date Created: 2023-08-07 16:04:58.260479+00
Date Added: 2024-06-11T14:58:53.877252
License: Public Domain

*511ALMA WILSON, Justice,
dissenting in part and concurring in result:
The majority holds that the trial court erred in valuing and including as divisible marital property the good will of a professional medical corporation. This holding is ambiguous. I would hold that the good will of a physician’s medical practice is an asset that may be included in the marital estate subject to an equitable division between the parties. I would further hold, that in this case the evidence does not support the monetary value assigned to the good will of Dr. Mocnik’s physician practice and that in this case the stock purchase agreement which controls the amount Dr. Mocnik would receive for his stock, also controls the value of the good will asset for purposes of division of marital property.
The trial court included the good will of the appellant’s medical practice within the marital estate, which must be equitably divided in the decree of divorce. The record does not reflect the precise method or formula by which the trial court determined the monetary value of the .good will.
The purpose in examining the concept of good will is to determine the marital property. Title 43 O.S.1991, § 121 provides in pertinent part:
As to such property, whether real or personal, which has been acquired by the parties jointly during their marriage, whether the title thereto be in either or both of said parties, the court shall make such division between the parties as may appear just and reasonable, by a division of the property in kind, or by setting the same apart to one of the parties, and requiring the other thereof to be paid such sum as may be just and proper to effect a fair and just division thereof.
In a clear case, if the parties in a divorce action had a business that was begun after the marriage, and both parties worked at that business, that business is a marital asset. If one of the parties were to be awarded the business, or if the business were to be ordered sold to third parties, the value of the business would be determined by the assets. The assets of the business may include more than the physical assets minus the financial liabilities; the assets may include good will.
The term is defined in our statutes as follows: “The good-will of a business is the expectation of continued public patronage, but it does no.t include a right to use the name of any person from whom it was acquired.” 60 O.S.1991, § 315. The next section (§ 316) provides: “The good-will of a business is property, transferable like any other.” As property, it may become an asset of the marriage. Under 43 O.S. 1991, § 121, the good will of a business could be included in the assets when determining the value of the business for purposes of division.1
The courts have not spoken with a uniform voice in addressing the question of the existence and value of good will in a professional context. Hanson v. Hanson, 738 S.W.2d 429, 433 (Mo.1987). A review of the cases listed in footnote 1 of Travis v. Travis, 795 P.2d 96, 97 (Okla.1990), reveals the confusion existing in the courts over *512this issue. The main cause of the confusion is identified in an article entitled “The Treatment of Professional Goodwill in Divorce Proceedings.”2 The article states that the concept of good will long used in accounting and economics is not the same as the term is now being used by the courts in appellate cases. It states that good will is an asset of a business; it is not personal to any individual.3 What the courts have done in the professional context is to confuse the issue by attempting to put a value on the reputation of an individual as opposed to evaluating a business. Because all individuals, including those outside of professions, have reputations, the courts recognizing the supposed good will of individual lawyers, doctors, or dentists have created an asset based upon future earning ability, but these courts incorrectly label reputation as good will.
For example, in Dugan v. Dugan, 92 N.J. 423, 457 A.2d 1, 9 (1983), the New Jersey court went into great detail concerning methods of setting the good will of a professional for the purposes of dividing marital assets. The court stated that one appropriate method of determining the value of good will of a law practice would be to fix the amount by which the attorney’s earnings exceed that which would have been earned as an employee by a person with similar qualifications of education, experience and capability. If good will can be established by using such criteria, then any employee, whether or not a professional, has good will if he earns more than a person with similar qualifications of education, experience and capability. Under such circumstances, the term good will is inappropriate. The Dugan court is measuring future earning capacity, and as stated in Travis, 795 P.2d at 100, projected earnings can be considered in establishing support alimony, which unlike property division of good will, may be adjusted upward or downward at a later date.4 Nantz v. Nantz, 749 P.2d 1137 (Okla.1988).
These principles have application to the case at bar. From an accountant’s point of view, Tulsa Radiology Associates, the corporation in which Dr. Mocnik is a stockholder, probably has good will value. Mrs. Mocnik’s expert witness who testified concerning the good will value of the business found that the corporation had a non-compete agreement with radiologists at the hospital in Broken Arrow, Oklahoma. The Broken Arrow radiologists paid the corporation $300,000.00 for the agreement. So there is evidence that the corporation, the business itself, has a good will value. The other methods of figuring good will advanced by Mrs. Mocnik’s expert were based upon a comparison of Dr. Mocnik’s salary with other radiologists, in other words, his future earning capacity. Those methods are not valuations of good will, but are valuations of reputation. Since they measure future earning capacity, they are not properly considered as divisible marital assets.
Even though the corporation has a good will value, that asset is not an asset of Dr. Mocnik unless he has some method of appropriating the asset to himself other than his increased salary. Mrs. Mocnik’s expert admitted that the values that he set were for the purpose of marital dissolution and that a different value would be set if Dr. Mocnik were considering retirement from the practice or selling the practice. The expert testified that the market for Dr. Mocnik’s stock would be very limited since the stock could be owned only by a physician, who as a practical matter must be a radiologist acceptable to the corporation and to the hospitals at which the corporation’s physician-employees practice. He also admitted that a good indicator of the value of the stock would be other sales of stock of the corporation in the same amount as Dr. Mocnik’s stock. Dr. Moc-*513nik’s own expert, who was the corporation’s public accountant, testified that one of the physicians in the corporation was retiring and that his stock was being purchased by the corporation for exactly the price called for under the Stock Purchase Agreement, $9,652.53, without any payment for good will.
The price set by the Stock Purchase Agreement, Dr. Mocnik’s portion of the discounted accounts receivable, and his portion of the non-competition agreement are assets that are certain and not speculative. These amounts, as stated by the majority opinion, are correctly considered as marital assets. But each case should be considered on its facts. Wall v. Chapman, 84 Okla. 114, 202 P. 303 (1921) recognized that a dentist who was a sole practitioner had sold the good will in his practice. The holding by the majority that the good will of Dr. Mocnik’s physician’s business did not become a marital asset, is in my view an incorrect legal conclusion. To this holding I must respectfully dissent. The evidence failed to show that Dr. Mocnik could realize any benefit from the good will of the medical corporation other than that provided through the Stock Purchase Agreement. The good will of a physician’s business, accrued during the marriage, is a marital asset for the purposes of property division if the asset can be valued and sold. If the asset cannot be valued or sold, the good will is not a divisible marital asset. There is insufficient evidence to support a marital asset attributable to good will in Dr. Moc-nik’s corporation.
Accordingly, I dissent to the holding of the majority. I concur only in the result reached by the majority opinion.

. In Wall v. Chapman, 84 Okl. 114, 202 P. 303 (1921), a dentist (Chapman) sold his tools, furniture, and equipment to another dentist (Wall) and signed a contract agreeing not to practice dentistry in Sulfur for five years. When Chapman breached his contract and was sued by Wall, the issue before the court was whether the contract was in restraint of trade and therefore void. This Court cited Section 979, Revised Laws 1910 (now found in amended form at IS O.S.1991, § 218), which provided: "One who sells the good will of a business may agree with the buyer to refrain from carrying on a similar business within a specified county, city or part thereof, so long as the buyer, or any person deriving title to the good will from him, carries on a like business therein.” This Court upheld the contract on the ground that Chapman had sold the good will of his business. If a dentist may sell the good will of his business to another dentist, then that good will is an asset that may be judicially valued and divided as marital property.

. Parkman, 18 Fam.L.Q. 213-23 (Summer 1984).

. Id. at 214.

. The holding in Travis was based on the fact that a law practice is unlike other professions in that it cannot be purchased by another seeking to acquire an established law practice. A lawyer is not free to sell his files to a succeeding lawyer because such a sale would violate the Rules of Professional Conduct. See Travis, 795 P.2d at 100.