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08/08/94 EDWARD J. SNYDER v. ROBERT N. DUNN

August 8, 1994

EDWARD J. SNYDER, III, M.D., PLAINTIFF-APPELLEE,
v.
ROBERT N. DUNN, M.D., DEFENDANT-APPELLANT.



Appeal from the Circuit Court of Cook County. Honorable Jerome Lerner, Judge Presiding.

Released for Publication September 13, 1994.

O'connor, Campbell, Manning

The opinion of the court was delivered by: O'connor

JUSTICE O'CONNOR delivered the opinion of the court:

Defendant, Robert N. Dunn, M.D., appeals a judgment entered against him after a bench trial in which the trial Judge found that Dr. Dunn and plaintiff, Edward J. Snyder, III, M.D., had engaged in the practice of medicine together under an oral partnership and that Dr. Dunn was liable to Dr. Snyder for partnership profits.

In August 1986, Dr. Dunn maintained a medical practice at 10555 West Cermak Road in Westchester, Illinois. Dr. Dunn maintained the practice as a personal corporation, of which he was the chairman, sole shareholder, and employee. Around this time, Dr. Dunn and Dr. Snyder were introduced by a mutual friend. Dr. Snyder had recently completed medical school and was seeking practice opportunities. Dr. Dunn offered to help Dr. Snyder get onto the staff at area hospitals and to allow Dr. Snyder to work out of his office with full use of his equipment and employees.

The testimony of the two doctors diverged as to what Dr. Snyder was to do in exchange; however, the trial Judge chose to credit Dr. Snyder's theory of the case. Dr. Snyder testified that Dr. Dunn asked him to deposit all of the fees he received from patients he saw at the Cermak office into Dr. Dunn's practice account, which was, unknown to Dr. Snyder, Dr. Dunn's corporate account. Dr. Snyder had no privileges regarding this account. According to Dr. Snyder, from the money deposited into the account by him, Dr. Dunn was to keep 35% to defray overhead. In addition, Dr. Snyder's medical malpractice costs would be deducted from the practice account. According to Dr. Snyder, he was entitled to any remaining money. Dr. Snyder also testified that he was permitted to keep all of the income generated from work he performed outside the Cermak office.

Dr. Dunn testified that he had not told Dr. Snyder to deposit all of his fees into the practice account. Rather he told him to pay him 35% of his fees for overhead, implying that he simply assumed that that was the amount that Dr. Snyder had been depositing.

Dr. Snyder moved into Dr. Dunn's office in August 1986 and began depositing all of his fees into Dr. Dunn's practice account. Dr. Snyder used Dr. Dunn's office, equipment, and office staff. Each doctor saw only his own patients. The two did not file a certificate of partnership and did not hold themselves out to the public as a partnership. They did not file a partnership tax return; rather each filed his own taxes. The two doctors shared billing sheets, each having his name listed separately at the top. As far as costs of the business, Dr. Snyder testified that he was responsible for the 35% agreed to and nothing more. Thus, if the medical practice suffered losses, Dr. Snyder was not responsible.

After several months, Dr. Snyder convinced Dr. Dunn to move the practice across the street into another office on Cermak Road, sharing space with a third doctor, who held the lease at 10560 West Cermak Road. In conjunction with the move, Dr. Dunn and Dr. Snyder purchased the third doctor's equity in his medical equipment. In order to finance this purchase, Dr. Dunn and Dr. Snyder took out ajoint loan amounting to $20,000; Dr. Dunn wrote a $10,000 check drawn on the practice account; and Dr. Snyder drew a personal check for $5,000.

According to Dr. Snyder, in June 1987, Dr. Dunn withdrew $13,000 from the practice account to finance a trip to Europe. As a result, the account contained insufficient funds to pay the expenses of the practice, including malpractice premiums. At this juncture, Dr. Snyder decided to begin placing his fees into a separate account. Dr. Snyder also prepared an accounting of the money he had deposited into Dr. Dunn's account. Around March 1988, Dr. Dunn moved to Arkansas, but did not reimburse Dr. Snyder the funds remaining after expenses. Dr. Snyder filed suit against Dr. Dunn to recover the money.

The trial court found that Dr. Snyder and Dr. Dunn were partners based solely, apparently, on his finding that the money remaining from the fees that Dr. Snyder deposited into Dr. Dunn's corporate account, after subtracting 35% for overhead and malpractice, were "profits" of the partnership. The trial court therefore entered an award for Dr. Snyder for $34,155.00.

Dr. Dunn claims that the trial Judge erroneously found that a partnership existed between Drs. Dunn and Snyder. The burden of establishing the existence of a partnership is upon the party asserting its existence. Ordinarily such proof need only be by a preponderance of the evidence; however, "where the evidence contains writings of the parties that distinctly indicate a relationship other than a partnership, the assertion that a partnership exists must be based on very clear and convincing evidence." ( Seidmon v. Harris (1988), 172 Ill. App. 3d 352, 357, 526 N.E.2d 543, 122 Ill. Dec. 284). Here, the record does not contain any writings that contradict a partnership. Thus, Dr. Snyder need only prove his contention by a preponderance of the evidence. Peterson v. Prince (1981), 102 Ill. App. 3d 220, 430 N.E.2d 297, 58 Ill. Dec. 355.

Where, as here, the parties have not entered into a written agreement defining the alleged partnership, we review the intent of the parties, as well as the facts and circumstances surrounding the alleged formation, to ascertain whether a partnership was formed. We will not disturb the trial court's decision unless it is against the manifest weight of the ...


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