Gladstone v. McHenry Medical Group

553 N.E.2d 1174, 197 Ill. App. 3d 194, 143 Ill. Dec. 188, 1990 Ill. App. LEXIS 577
CourtAppellate Court of Illinois
DecidedApril 26, 1990
Docket2-89-0439
StatusPublished
Cited by9 cases

This text of 553 N.E.2d 1174 (Gladstone v. McHenry Medical Group) is published on Counsel Stack Legal Research, covering Appellate Court of Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Gladstone v. McHenry Medical Group, 553 N.E.2d 1174, 197 Ill. App. 3d 194, 143 Ill. Dec. 188, 1990 Ill. App. LEXIS 577 (Ill. Ct. App. 1990).

Opinion

PRESIDING JUSTICE UNVERZAGT

delivered the opinion of the court:

Plaintiff, Dr. Lee Gladstone, brought an action in the circuit court of McHenry County for breach of contract against defendants McHenry Medical Group, a partnership, and the partners, individually. By majority vote of the partners, defendants had deleted a provision of the partnership agreement which provided continuing annual payments of partnership income to plaintiff until age 65. Prior to deletion of the provision, defendants had made payments to plaintiff from 1960 through 1975. The trial court held that the deleted provision was a separate contract severable from the rest of the partnership agreement and, therefore, not subject to the amendatory powers set forth in the agreement upon which defendants relied in deleting the provision. The court entered summary judgment in plaintiff’s favor on the issue of liability and denied defendants’ summary judgment motion.

Subsequently, the trial court granted plaintiff’s motion for summary judgment on the issue of damages and awarded plaintiff damages in the amount of $67,710.63 for the years 1976 through 1979, the year in which plaintiff became 65 years old. The court denied plaintiff’s motion for prejudgment interest on the damages pursuant to the Illinois prejudgment interest statute. Ill. Rev. Stat. 1987, ch. 17, par. 6402.

Defendants appeal, contending that the trial court erred in entering summary judgment in favor of plaintiff because the contested provision of the partnership agreement did not constitute a separate contract severable from the rest of the agreement. Plaintiff cross-appeals, contending that the trial court erred in finding that plaintiff was not entitled to prejudgment interest on the damages arising from the separate contract.

About 1946, plaintiff, Lee Gladstone, began practice as a general practitioner in McHenry. Some time prior to 1955, plaintiff began practicing under the name McHenry Medical Group and located his office in a building which he had constructed. Believing that the medical needs of the community could not be fully satisfied by a general practitioner and that it was imperative to have a surgeon in the area, plaintiff formed a medical partnership on January 1, 1955, with Dr. George Alvary, a surgeon. The partnership operated under the name McHenry Medical Group and leased space in the building plaintiff owned.

During the years 1955 to 1960, plaintiff personally secured loans for the expansion of the medical group. Both plaintiff and Dr. Alvary spent a great deal of time in organizing and financing the needs of the group as well as in training the people working for them and in establishing the medical group’s reliability. In an effort to build their practice and to maintain good public relations with the community, the two doctors spoke to endless numbers of organizations and made continual house calls and night calls, often making themselves available 24 hours a'day.

Late in the 1950’s plaintiff was instrumental in establishing McHenry Hospital, and both he and Dr. Alvary guaranteed the mortgage on the hospital as well as contributed large sums of money to the hospital so that the hospital could function.

On January 1, 1959, plaintiff and Dr. Alvary entered into a new partnership agreement which provided that the net profits of the partnership were to be divided equally between the two partners and that the net losses were to be borne equally by them.

On November 1, 1960, plaintiff and Dr. Alvary amended the articles of partnership of McHenry Medical Group to provide for the admission of Dr. Peter Griesbach, a pediatrician, and for the admission of other physicians into the partnership from time to time. The document was prepared by plaintiff’s attorney, who had represented plaintiff for years and who was also acceptable to Doctors Alvary and Griesbach. All three doctors worked closely together in developing the document, putting a great deal of time and thought into the agreement and bearing in mind that other doctors would eventually be joining the medical group. During the discussions concerning the drafting of the amended document, consideration was given to including a provision which would pay plaintiff and Dr. Alvary a percentage of the partnership profits in compensation for the work and contributions in time and money which the two doctors had expended in building the McHenry Medical Group practice. The provision, section S — 2(c), which was included in supplement A to the amendment to the articles of partnership stated:

“[T]he amount thus credited to the accounts of the various partners (except the single unit account of GLADSTONE and ALVARY) shall be subject to a two (2%) percent charge which shall be immediately credited to a separate single unit retirement account of GLADSTONE and ALVARY to age sixty-five (65) respectively. The two (2%) percent charge is predicated upon the fact that for many years GLADSTONE and ALVARY invested their time and money, frequently working around the clock, seven (7) days a week, in order to develop and build the McHENRY MEDICAL GROUP practice for which they have never been fairly compensated.”

Subsequent amendments to the articles of partnership included this provision. All new members of the partnership were extensively briefed on the agreement, including section S — 2(c). Each defendant doctor testified at his deposition that when he signed the partnership agreement, he was aware of section S — 2(c) and intended to be bound by its terms.

Supplement A to the amended articles of partnership also contained section S — 8, which provided:

“The Partnership Agreement as Amended, together with Supplement A, may be amended at any time by majority vote of the Senior Partners.”

Additionally, the 1960 amended articles of partnership contained section 24(c), which stated:

“Notwithstanding anything herein contained to the contrary, the SENIOR PARTNERS by majority vote shall have full power over all Partnership affairs and its operations.”

From 1960 through 1966, the defendant doctors paid the annual payments set forth in section S — 2(c) to plaintiff and Dr. Alvary. In a letter dated October 4, 1966, plaintiff informed the defendants of his intention to withdraw from the partnership at the end of 1966. In his letter plaintiff stated, “All benefits under the contract accruing to me are to be fulfilled including the 1% retirement clause to age 65.” On October 14, 1966, plaintiff received a letter from the chairman of the executive committee of McHenry Medical Group, stating, “It is understood that the 1% retirement clause will apply to age 65 or death, if it occurs prior to age 65.” Following plaintiff’s withdrawal from the partnership, he received payment from McHenry Medical Group in accordance with section S — 2(c) through December 31, 1975, at which time the plaintiff was 61 years of age.

On April 18, 1977, plaintiff wrote McHenry Medical Group requesting the payment for 1976. In a letter dated April 25, 1977, the administrator of the medical group informed plaintiff that section S— 2(c) had been removed from the partnership agreement as of January 1, 1976, and that there would be no payments for the years subsequent to 1975.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Abbott v. Schnader, Harrison, Segal & Lewis, LLP
805 A.2d 547 (Superior Court of Pennsylvania, 2002)
Hoseman v. Weinschneider
277 B.R. 894 (N.D. Illinois, 2002)
Abbott v. Schnader Harrison Segal & Lewis LLP
50 Pa. D. & C.4th 225 (Philadelphia County Court of Common Pleas, 2001)
Abbott v. Amoco Oil Co.
619 N.E.2d 789 (Appellate Court of Illinois, 1993)
Johnson v. Johnson
614 N.E.2d 348 (Appellate Court of Illinois, 1993)
Pearson R. Crosby v. Ronald A. Gullstrand
909 F.2d 1486 (Seventh Circuit, 1990)

Cite This Page — Counsel Stack

Bluebook (online)
553 N.E.2d 1174, 197 Ill. App. 3d 194, 143 Ill. Dec. 188, 1990 Ill. App. LEXIS 577, Counsel Stack Legal Research, https://law.counselstack.com/opinion/gladstone-v-mchenry-medical-group-illappct-1990.