Court Opinion

ID: 9539493
Source: CourtListenerOpinion
Date Created: 2023-08-07 16:04:58.256462+00
Date Added: 2024-06-11T14:58:53.875311
License: Public Domain

KAUGER, Justice,
concurring in part and dissenting in part:
In Travis v. Travis, 795 P.2d 96, 100 (Okla.1990)—in which I did not participate-this Court held that the good will of a law practice owned by a sole practitioner was not a divisible asset. The majority ignores the Oklahoma statutes and skews its conclusion by relying on Webster’s New Collegiate Dictionary to define good will. This is despite: 60 O.S.1991 § 315 which defines good will of a business as the expectation of continued public patronage;1 60 O.S.1991 § 2 which provides that the good will of a business is subject to ownership; 2 60 O.S.1991 § 316 which recognizes that good will is transferable property;3 18 O.S.1991 § 1092 which authorizes corporate sale, lease, or exchange of goodwill;4 and 54 O.S.1991 § 209, which allows partnerships to dispose of it.5 The conclusion cannot be avoided that the division of good will is contemplated under these statutes. Additionally, the great weight of authority from other jurisdictions acknowledges that corporate goodwill is a property interest subject to division in a divorce proceeding.6 *510All that is left for division under the corporate agreement is the goodwill of the radiology practice. Oklahoma statutory law7 and the majority rule8 support its division.
In Mitchell v. Mitchell, 152 Ariz. 317, 732 P.2d 208, 211 (1987), the Arizona Supreme Court aptly described the confusion that exists in division of good will on divorce. Divorce ends the marriage. It does not terminate an ongoing business. Upon dissolution of a marriage, a professional practice goes automatically to the spouse licensed to practice it. The practitioner is not selling or liquidating the business. Effectively, a silent partner withdraws from an ongoing business. In order for that partner to receive fair compensation for his/her share, or his/her enforced retirement, the good will must be evaluated. Good will and pension rights acquired during the marriage are assets of the marriage even though their enjoyment may be deferred. The majority should accept the economic reality that the good will of a professional practice has value, and it should treat it as property upon dissolution of the marriage — regardless of the form of business.
Here, because of an artfully drafted contract provision, there will be no meaningful inquiry into the fair market value of the good will of the husband’s professional practice. By drafting similar provisions, professional corporations may shield corporate partners, ensuring that their spouses never receive any renumeration from the established good will of an ongoing professional practice upon divorce. Recovery of the non-partner spouse will be blocked whatever the facts may show concerning that party’s support leading to the establishment of the practice or during its ongoing operation. This will be the law— even though the wife’s expert witness testified that: 1) buy-sell agreements were not intended to be used for valuations in divorce proceedings but rather when a corporate partner was leaving the corporation; and 2) the buy-sell agreement did not make provision for the evaluation of good will in any instance. Here, the wife is being bound by a document not intended to cover the facts presented — divorce, upon which her signature does not appear, and containing provisions for which she did not bargain.
Rather than follow the Oklahoma statutes and the mainstream of authority, the majority chose gratuitously to increase the amount of support alimony. Although the majority seeks to do equity, its failure to follow the law has not done the wife a favor. Despite the fact that her rights vested,9 she may lose everything if she chooses to remarry or to live with someone of the opposite sex without benefit of marriage; and, should she die, her children have nothing.10

. Title 60 O.S.1991 § 315 provides:
"The good-will of a business is the expectation of continued public patronage, but it does not include a right to use the name of any person from whom it is acquired.”

. Title 60 O.S.1991 § 2 provides:
“There may be ownership of all inanimate things which are capable of appropriation, or of manual delivery; of all domestic animals; of all obligations; of such products of labor or skill, as the composition of an author, the good will of a business, trade marks and signs, and of rights created or granted by statute.”

. Title 60 O.S.1991 § 316 provides:
"The good-will of a business is property, transferable like any other."

. Title 18 O.S.1991 § 1092 provides in pertinent part:
"A. Every corporation, at any meeting of its board of directors or governing body, may sell, lease, or exchange all or substantially all of its property and assets, including its goodwill ...”

. Title 54 O.S.1991 § 209 provides in pertinent part:
"... (3) Unless authorized by the other partners or unless they have abandoned the business, one or more but less than all the partners have no authority to:
... (b) Dispose of the goodwill of the business ...”

. See, Annot., "Divorce & Separation: Goodwill in Law Practice as Property Subject to Distribution on Dissolution of Marriage,” 79 A.L.R.4th 171 (1990); Annot., “Valuation of Goodwill in Medical or Dental Practice for Purposes of Divorce Court’s Property Distribution,” 78 A.L.R.4th 853 (1990); Annot., "Valuation of Goodwill in Law Practice for Purposes of Divorce Court's Property Distribution,” 77 A.L.R.4th 683 (1990); Annot., “Divorce & Separation: Goodwill in Accounting Practice as Property Subject to Distribution on Dissolution of Marriage,” 77 A.L.R.4A 645 (1990); Annot., “Divorce & Separation: Goodwill in Medical or Dental Practice as Property Subject to Distribution on Dissolution of Marriage,” 76 A.L.R.4th 1025 (1990).

. Title 60 O.S.1991 § 2, see note 2, supra; 60 O.S.1991 § 316, see note 3, supra; 18 O.S.1991 § 1092, see note 4, supra; 54 O.S.1991 § 209, see note 5, supra.

. See, Annot., "Divorce & Separation: Goodwill in Law Practice as Property Subject to Distribution on Dissolution of Marriage," see. note 6, supra; Annot., "Valuation of Goodwill in Medical or Dental Practice for Purposes of Divorce Court’s Property Distribution," see note 6, supra; Annot., "Valuation of Goodwill in Law Practice for Purposes of Divorce Court's Property Distribution,” see note 6, supra; Annot., "Divorce & Separation: Goodwill in Accounting Practice as Property Subject to Distribution on Dissolution of Marriage,” see note 6, supra; Annot., "Divorce & Separation: Goodwill in Medical or Dental Practice as Property Subject to Distribution on Dissolution of Marriage," see note 6, supra.

. Property interests represented by a divorce decree's support alimony award are vested rights embodied in a judgment. They are constitutionally insulated from legislative interference by after-enacted legislation. Messenger v. Messenger, 827 P.2d 865 (Okla.1992).

. Nantz v. Nantz, 749 P.2d 1137, 1140 (Okla.1988); 43 O.S.1991 § 134 provides in pertinent part:
"... B. The court shall also provide in the divorce decree that upon the death or remarriage of the recipient, the payments for support, if not already accrued, shall terminate. ...
D. The voluntary cohabitation of a former spouse with a member of the opposite sex shall be ground to modify provisions of a final judgment or order for alimony as support. If voluntary cohabitation is alleged in a motion to modify the payment of support, the court shall have jurisdiction to reduce or terminate future support payments upon proof of substantial change of circumstances of ei*511ther party to the divorce relating to need for support or ability to support. As used in this subsection, the term cohabitation means the dwelling together continuously and habitually of a man and a woman who are in a private conjugal relationship not solemnized as a marriage according to law, or not necessarily meeting all the standards of a common-law marriage....”