Fenno v. Jacobe

• Decision Date: 07 July 1983
• Docket Number: No. 01-82-00580-CV,01-82-00580-CV
• Citation: 657 S.W.2d 844
• Parties: Garry W. FENNO, M.D., Appellant, v. Russell L. JACOBE, M.D., Appellee. (1st Dist.)
• Court: Texas Court of Appeals

Page 844

657 S.W.2d 844

Garry W. FENNO, M.D., Appellant, v. Russell L. JACOBE, M.D., Appellee.

No. 01-82-00580-CV.

Court of Appeals of Texas, Houston (1st Dist.).

July 7, 1983.

Rehearing Denied Aug. 4, 1983.

Roland Darby, Houston, for appellant.

Michael Pullara, Houston, for appellee.

Before COHEN, SMITH and BASS, JJ.

OPINION

COHEN, Justice.

Appellee, a physician specializing in ear, nose and throat, entered an employment contract with Dr. D.J. Durcan, for a "maximum" term of one year, January 7, 1973, to January 7, 1974. Appellee's "regular" compensation was set by the contract at $2,000 per month, plus "additional" compensation of one-half of cash proceeds earned by his labor in excess of $4,000 each month. During the contract term, appellant and Dr. Durcan formed a partnership that assumed liability for appellee's employment contract. At the end of the one-year term, appellee continued his employment with the partnership, performing the same duties and being paid the "regular" compensation of $2,000 per month. The parties were simultaneously negotiating a partnership interest for appellee; however, no agreement was ever reached, in part because the partnership had cash flow problems. The cash flow problem made appellee realize that he would have to delay receiving any part of his "additional", i.e., percentage compensation. Nevertheless, the parties continued the employment relation for a second full year, i.e., all of 1974, at the end of which appellee resigned and demanded payment for all of his "additional" compensation, that is, one-half the proceeds attributable to his labor in excess of $4,000 per month, which was earned during the second year of the contract, 1974. Appellant and Dr. Durcan refused payment, claiming that the contract ended after the "maximum" term of one year and was never renewed. They claimed that appellee's employment thereafter was not governed by the written contract, but was simply employment at will, at a salary of $2,000 per month, which had been fully paid. Appellee sued appellant and Durcan for cash proceeds they received in excess of $4,000 per month earned by him during 1974. He won a partial summary judgment against appellant and Durcan on the issue of liability. The damage issue was tried by jury resulting in a judgment for damages against appellant and Durcan in the amount of $39,769.94, plus attorney's fees of $19,000, and prejudgment interest of $17,219.82. Only Dr. Fenno has appealed.

Appellant argues that the trial court erred in granting an interlocutory partial summary judgment holding that the contract for the year 1973 was extended by implication, as a matter of law, for the year 1974. Appellant's major argument is that the contract language creates a fact issue which prevents a summary judgment, because it negates any extension by providing that, "the term of employment under this agreement shall be for a maximum of one year, ...". Appellant also relies on conclusory affidavits of Drs. Fenno and Durcan that the contract was for one year only, and nothing was owed to appellee thereafter. Such affidavits are mere conclusions which add nothing to the summary judgment proof. According to appellant, the "maximum" term of one year stated in the employment contract is a "fact" inconsistent with the trial court's holding that the parties extended the contract by implied agreement, as a matter of law.

Both parties rely on the same authorities. These are Thames v. Rotary Engineering Company, 315 S.W.2d 589, 591 (Tex.Civ.App.--El Paso, 1958, writ ref'd n.r.e.); Magnolia Compress & Warehouse Co. v. Davidson, 38 S.W.2d 634 (Tex.Civ.App.--Galveston 1931, no writ); Accidental Oil Mills v. Tomlinson, 8 S.W.2d 558 (Tex.Civ.App.--Austin 1928, error ref'd); Houston Ice & Brewing Co. v. Nicolini, 96 S.W. 84, 91 (Tex.Civ.App.--1906, error ref'd); 56 C.J.S. Master & Servant § 10, p. 82 (1948).

All of these authorities held that employment contracts were properly extended by implication in similar circumstances, but none were summary judgment cases, as is the instant case.

In Magnolia Compress & Warehouse Co. v. Davidson, the employee won a judgment for damages on a written employment contract with a one-year term. At the end of the year he continued to work, but was assigned greater pay and responsibilities. He was discharged when business turned bad, some nine months after the written contract term expired. He sued for his salary for the remaining three months, alleging that the contract had been renewed by implication for another one-year term. The appellant-employer complained that the court erred by submitting a jury issue on whether there was an implied contract with Mr. Davidson to employ him for another year at the new salary. The court stated:

We think the submission of any part of the inquiry was a submission of a question of law and unnecessarily submitted. The undisputed facts show that appellee was by the permission and acquiescence of ... appellant (allowed) to continue his usual services during the month of August, 1928, after the expiration of the period of the first contract at the same salary as before, without entering into any new contract. We think such facts show a continuation of the original contract as a matter of law. 38 S.W.2d at 637. (emphasis supplied).

In 56 C.J.S. 82-83 it is stated:

As a general rule, ... when one enters into the service of another for a definite period, and continues in the employment after the expiration of that period without any new contract, the presumption is that the employment is continued on the terms of the original contract, and provisions and restrictions forming essential parts of the contract ... continue in force.

In Thames v. Rotary Engineering Company, supra at 591, the court said:

It has been held that continuance of the employment is, as a matter of law, continuation of the old contract.... We find, here, the appellants continued their employment during most of the changes, with the same duties and responsibilities and no additional burdens. We think that each monthly pay period constituted a continuation of the original agreement.... We hold, therefore, ... that appellants by their continuing to work and accept the benefits from their original contracted employment without change or objection on their part, continued the original obligation in full force and effect until they ... terminated their employment. (emphasis supplied).

The question presented is, can a summary judgment in these circumstances be supported by the presumption. We hold that it can be. Nothing in this record rebuts the presumption that these parties intended to continue the same compensation formula after the contract expired at the end of the first year. Appellant asserts, in effect, that after January 7, 1974, appellee's compensation was substantially reduced to a salary of $2,000 per month, thereby depriving appellee of the percentage interest in earnings he had enjoyed, in addition to the salary, during the first year of the contract. Yet appellant presented no evidence that appellee was ever informed of such a change or consented to it, or even that it was discussed. Appellant presented nothing to rebut the presumption that the contract continued. Appellee's summary judgment proof included his affidavit that no one ever told him of any change in his compensation after the original contract term expired. This was never denied in any of appellant's summary judgment evidence. It is thus undisputed that appellee continued to work for appellant, with appellant's consent and acquiescence, performing the same duties as a physician specializing in ear, nose and throat ailments, after the expiration of a contract term, without entering any new contract. Whatever secret intent appellant may have had to terminate the written contract, and thereby reduce appellee's compensation, was never conveyed to appellee, according to the uncontradicted summary judgment proof. "A summary judgment may be based on uncontroverted testimonial evidence of an interested witness, ... if the evidence is clear, positive and direct, otherwise credible and free from contradictions and inconsistencies, and could have been readily controverted." Tex.R.Civ.Pro. 166-A. Thus, the presumption of law that the contract continued is supported by appellee's uncontradicted summary judgment evidence. No more is required. Page v. Pan American Petroleum Corp., 381 S.W.2d 949, 954 (Tex.Civ.App.--Corpus Christi 1964, writ ref'd n.r.e.) cert. den. 382 U.S. 820, 86 S.Ct. 45, 15 L.Ed.2d 66 (1965). Point of error two is overruled.

Appellant next argues that the court erred in entering an order requiring him to pay appellee a cashier's check in the amount of $500.00 on a date prior to trial for sanctions in the form of attorney's fees. The trial court had previously entered its order deeming admitted certain requests for admissions which appellant had not answered. Appellant requested that the court "withdraw its previous order and in its stead, impose a penalty against (appellant) in response to (appellee's) motion for sanctions and award attorney's fees of $500 (against appellant) and have same taxed as costs." Appellant was asking the court to withdraw its prior order deeming the admissions requests admitted and permit him to file responses denying several of the requests. Thus, appellant's request to the trial court to fine him $500 was a way of making appellee whole for fees incurred in obtaining the order deeming the requests admitted, and also was an inducement to the trial court to withdraw the order and permit several requests to be denied by a late filing. The court granted the request but, rather than taxing the $500 as costs, ordered that $500 be paid by cashier's check to appellee's attorney by 9:00 a.m. on December 21, 1981. Appellant complied with the order.

Appellant now complains that the order was improper and unauthorized by Tex.R.Civ.P. 167, 168, 169,...