Rogers v. Wolfson

763 S.W.2d 922, 1989 WL 11296
CourtCourt of Appeals of Texas
DecidedJanuary 6, 1989
Docket05-88-00234-CV
StatusPublished
Cited by45 cases

This text of 763 S.W.2d 922 (Rogers v. Wolfson) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Rogers v. Wolfson, 763 S.W.2d 922, 1989 WL 11296 (Tex. Ct. App. 1989).

Opinion

ENOCH, Chief Justice.

Dr. S.J. Rogers and Dr. N. Jay Rogers appeal from the district court’s grant of Dr. Jerome Wolfson’s motion for summary judgment. The Rogers sued Wolfson for an accounting and to recover sums of money due and owing under the terms of a written agreement. In six points of error, the Rogers contend that the trial court erred in granting Wolfson’s motion for summary judgment. Agreeing with points three through six, we reverse and remand this case for a trial on the merits.

Facts

The Rogers are optometrists who were formerly owners of Texas State Optical Company (T.S.O.). Wolfson is also an optometrist. In 1969, the Rogers and Wolf-son executed a written agreement consisting of two phases. The first phase provided for the operation of a T.S.O. office as a partnership between the Rogers and Wolf-son. The second phase provided for the sale of the Rogers’ interest in the partnership and the office to Wolfson. By later amendment, the parties agreed that during the second phase of the contract, the T.S.O. office would be moved from San Antonio, Texas, to Dallas, Texas.

The business was operated as a partnership until 1977 with the Rogers receiving fifty percent of the profits. In 1977, the Rogers sold their partnership interest to Wolfson in consideration for the payment of ten percent of the “net cash” of the office for the next eight years. Before the transfer, the Rogers notified Wolfson by telephone and certified mail that certain provisions of the second contract phase were rescinded, canceled, and declared null and void. Wolfson expressly refused to consent to any of the changes announced by the Rogers. However, the transfer of the partnership interest and office from the Rogers to Wolfson was consummated.

Being concerned that Wolfson had un-derreported the “net cash” of the office and, therefore, had not paid the full amount that was due, the Rogers sought to exercise their right under the second phase of the contract to audit Wolfson’s financial records. Wolfson refused. This lawsuit commenced.

In answer to the Rogers’ lawsuit, Wolf-son asserted that the contract was illegal and unenforceable. The trial court granted Wolfson’s motion for summary judgment, holding that the contract was “illegal, void and unenforceable” under the Texas Antitrust Act. The trial court subsequently granted the Rogers’ motion for summary judgment on Wolfson’s counterclaim for damages. Final judgment was entered providing that all parties take nothing. 3

Standard of Review

The function of a summary judgment is not to deprive a litigant of his right to a full hearing on the merits of any real issue of fact, but to eliminate patently unmerito-rious claims and untenable defenses. Gulbenkian v. Penn, 151 Tex. 412, 416, 252 S.W.2d 929, 931 (1952). A summary judgment for the defendant disposing of the entire case is proper only if, as a matter of law, the plaintiff could not succeed upon any theories pleaded. Delgado v. Burns, 656 S.W.2d 428, 429 (Tex.1983). In this case, the judgment states that the summary judgment is granted for defendant because the contract sued upon is illegal. Therefore, our inquiry focuses on the alleged illegality.

The Rogers argue that the trial court erred in granting Wolfson’s motion for summary judgment because: (1) the first phase of the contract created a partnership between the parties and, therefore, did not violate the Texas Antitrust Act (agree *924 ments between partners are not subject to the Texas Antitrust Act); (2) the purportedly illegal provisions of the second phase of the contract were rescinded, canceled, aud declared null and void, and this act by the Rogers was ratified by Wolfson; and (3) assuming that the provisions were not rescinded, the purportedly illegal provisions of the agreement were severable and, thus, the contract terms which were not illegal were enforceable.

Illegality of the Contract: Ratification

In points of error three and four, the Rogers contend that the purportedly illegal provisions of the second phase of the contract were rescinded, canceled, and declared null and void. In support of this contention, the facts show that the Rogers notified Wolfson by certified mail and phone that they were alerted that certain provisions in the contract may violate antitrust laws. Consequently, they renounced these provisions and declared them to be unenforceable and that such provisions would be no longer considered a part of the agreement. In response, Wolfson expressly stated that he would not agree to any changes. However, subsequently, the transfer of the business was completed.

Wolfson contends that because the contract was illegal from the start, the trial court was correct to decline to give the contract validity. He argues that if a contract is illegal and void, it cannot be subject to ratification.

Ordinarily, Texas courts will not enforce a contract which is void because it violates a statute and is, therefore, illegal. See Mayfield v. Troutman, 613 S.W.2d 339, 344 (Tex.Civ.App.—Tyler 1981, writ ref’d n.r.e.); Peniche v. AeroMexico, 580 S.W.2d 152, 157 (Tex.Civ.App.—Houston [1st Dist.] 1979, no writ). However, there is a difference between a contract that is void because the subject matter of the contract is illegal and a contract where the subject matter is legal, but certain ancillary provisions in the contract are illegal. We conclude that any illegality in this cause involves certain ancillary provisions and not the subject matter of the contract.

The issue facing this Court is whether Wolfson’s continuation of the contract after notification by the Rogers of their intent to delete certain provisions constituted ratification of the changes. Express ratification is not necessary; any act based on a recognition of the contract as subsisting or any conduct inconsistent with an intention of avoiding it has the effect of affirming the contract. See Rosenbaum v. Texas Bldg. & Mort. Co., 140 Tex. 325, 167 S.W.2d 506, 508 (1943); Newsom v. Starkey, 541 S.W.2d 468, 472 (Tex.Civ.App.—Dallas 1976, writ ref’d n.r.e.). Wolfson received the business from the Rogers as the contract provided. The presence or absence of the provisions in question had no effect on the benefits Wolfson received. Certainly, Wolfson cannot accept the T.S.O. office, but now, when it is his turn to transfer benefits to the Rogers, assert that the contract is unenforceable. See Daniel v. Goesl, 161 Tex. 490, 341 S.W.2d 892, 895 (1960); Rosenbaum, 167 S.W.2d at 508.

Wolfson argues, however, that he never intended to accept the proffered changes in the contract. He made his denial clear to the Rogers.

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Cite This Page — Counsel Stack

Bluebook (online)
763 S.W.2d 922, 1989 WL 11296, Counsel Stack Legal Research, https://law.counselstack.com/opinion/rogers-v-wolfson-texapp-1989.