Hood v. Hood, 132

• Decision Date: 05 February 1958
• Docket Number: No. 132,132
• Citation: 100 So.2d 422
• Parties: Marjorie McClure HOOD, Appellant, v. Douglas Whitney HOOD, Appellee.
• Court: Florida District Court of Appeals

Page 422

100 So.2d 422

Marjorie McClure HOOD, Appellant, v. Douglas Whitney HOOD, Appellee.

No. 132.

District Court of Appeal of Florida, Second District.

Feb. 5, 1958.

McClure & Turville, St. Petersburg, for appellant.

Herman W. Goldner, St. Petersburg, for appellee.

KANNER, Chief Judge.

Appellant petitioned the chancellor or declare appellee's creation of Suncoast Medical Clinic, Inc., hereinafter referred to as the clinic, and the contracts entered into by appellee with the clinic to be fraudulent insofar as she was concerned, or if not fraudulent to be in violation of her alimony rights under the contract theretofore entered into between the appellant and appellee, in consequence of which he should pay her alimony as though the clinic had never existed. In the alternative, if the contracts were found to be valid, then because of the changed circumstances in the method in which appellee conducts his business, it was prayed that the court find that the money received as alimony under the formula in their agreement is insufficient for the appellant and for the support and education of the three children of the parties and that the court consequently increase the amount of alimony for appellant and, in addition, set a reasonable sum for the care and education of the children. The chancellor ruled that the creation of the clinic and appellee's contracts with it were not in violation of appellant's alimony rights, but ordered that appellee pay an additional $100 per month to appellant for each child for their support and maintenance and made certain other findings and allowances. It it from this decree that this appeal was taken. Appellee has filed a cross appeal in this connection but directs his attack upon the award for the children and certain of the findings.

The prelude to this appeal includes two previous actions. First, there was the divorce proceeding in 1953, after the couple had been married for ten years, the final decree to appellee embodying an agreement between the two whereby appellant received custody of the three children, the sum of $400 per month from the appellee for support and maintenance of the children and hereself, and their home upon which appellee would continue to make mortgage payments until appellant remarried.

The first sequel to the divorce action came in 1955 when appellant filed a complaint in which she charged that appellee was guilty of fraud and deceit or overreaching in the divorce proceeding. She petitioned the court to set aside and annul provisions of the final decree except for the granting of the divorce to appellee. The result of this controversy was a settlement whereby an agreement was entered into between the parties on December 27, 1955, and approved by the court. The agreement incorporated the following formula and provisions:

'* * * 3. Defendant agrees to pay to the Plaintiff, as alimony, sums of money to be compulted as follows:

'b. Commencing in February, 1956, sums of money arrived at by computing Defendant's individual adjusted gross income, as defined by the Internal Revenue Code of 1954, taking into consideration only his income and deductions derived solely from his medical practice and the real property described as

'North one-half (1/2) of Lot 3, Block 82, Revised Map of the City of St. Petersburg according to the map or plat thereof on file in the Public Records of Pinellas County, Florida.

multiply said individual adjusted gross income by .35 and subtract $2,600. In the event the real property above described is sold or otherwise liquidated, the investment and reinvestment of the proceeds of said sale or liquidation of said property shall be substituted in the preceding formula for the property itself. * * *

'6. The Plaintiff shall have the primary responsibility for the support and maintenance of the minor children of the parties. * * *'

The second sequel to the divorce came subsequent to this agreement when, in 1956, appellee created a corporation known as the Suncoast Medical Clinic, Inc., in which were issed one hundred shares of capital stock at five dollars a share for a total of $500, forty-nine shares of which appellee purchased and forth-nine shares of which his present wife purchased, with the bookkeeper of appellee purchasing the remaining two shares. The clinic became operative July 1, 1956. In appellee's contracts with the clinic, the following arrangements were included:

1. Appellee sold all of his office equipment, furniture, and fixtures to the clinic for $9,370.20.

2. Appellee sold to the clinic all of his accounts receivable and cash received at the time services were performed, owning from his own personal services as a physician, for 60% of the face value of the amount billed. Payment was to be made at the end of each month on the basis of the total amount billed for services rendered during the month. In consideration for its 40% discount on the accounts receivable and cash collected, the clinic assumed all risk of bad debts and guaranteed 60% of the defendant of the amounts billed; the clinic performed all administrative functions required by the defendant in his practice and in the collecting of accounts receivable; and the clinic provided office space and equipment necessary to conduct the practice of medicine.

3. Appellee sold to the clinic all of his accounts receivable in the total amount of $38,771.26 for services rendered prior to July 1, 1956. Pursuant to the 60% to 40% arrangement, he was to receive $23,262.72 or 60% or the total. Appellee further agreed that the clinic could pay the amount due for the purchase of said accounts at the rate of $500 monthly, the first payment to be made in January, 1957, and subsequent $500 payments monthly until the $23,262.72 had been paid in full.

4. Appellee gave the clinic the right to render all services previously performed by his staff, including the administering of medication, laboratory work, physiotherapy, x-ray, and radiology. Appellee was employed as a director of the clinic at a monthly salary of $435 per month.

We are convinced that the able chancellor erred in holding that the contracts entered into by appellee with the clinic were not in violation of appellant's alimony rights. Appellant having sought relief in the alternative in the event the court should find the contracts with the clinic not to have been in violation of her alimony rights, the other findings of the chancellor were principally under this alternative. Because of our conclusion that the chancellor erred in holding that the contracts were not in violation of appellant's alimony rights, we are also of the view that certain of the further decretal provisions cannot stand, as hereinafter noted.

Appellant contends that the contracts with the clinic by the appellee were fraudulent insofar as she is concerned, or if not fraudulent that they violated substantially the alimony contract. She urges inadequacy of consideration in connection with the transaction with the clinic. Before these contracts were made with the clinic, it appears that the appellee's gross income for professional services for 1953 was $57,741.84 with an adjusted gross income of $26,153.84; for 1954 his gross income was $89,323.07 and adjusted gross income $50,751.28; for 1955 his gross income was $102,169.05 and adjusted gross income $50,081.70; and for the six months' period from January 1, 1956, through June 30, 1956, his adjusted gross income was $17,624.10 with appellee's contracts with the clinic going into effect on July 1, 1956; that appellee's adjusted gross income for 1956 was $27,368.63, making an adjusted gross income for the last six months of 1956 $9,744.53 as compared to the $17,624.10 for the first six months; and that the clinic's net income for the period July 1, 1956, through September 30, 1956, was $6,647.32.

The records show that the right to the clinic to administer and receive proceeds from certain specialized services to appellee's patients, such as medication, laboratory, and x-ray, represented a source of income which had formerly yielded an estimated fifty-five per cent of appellee's gross income, or approximately $55,000 annually.

Appellee's position is that the altered method of transacting business through the clinic was not arrived at for any fraudulent reasons nor for any purpose of violating appellant's alimony rights. Rather the contention is that the clinic was formed for the purpose, among other things, of relieving him of certain administrative duties in order that he might devote more time to his practice, and in order that the growth potential of the clinic (leading to its expansion with additional physicians, a broadened scope of activities, and the cutting of overhead costs) could, through sole proprietorship, provide security for himself and his family. In the event he became disabled or died, the clinic would continue to operate and provide a constant source of income for appellee and his family. There was testimony that the clinic's mode of operation and appellee's connection with it paralleled that of other medical clinics. He denies that there was inadequate consideration paid him in connection with any of his contracts with the clinic.

Appellee insists that the net sum of $6,647.32 shown to have accrued to the clinic during the first three months of its operation came largely from accounts receivable prior to July 1, 1956, and that after paying current expenses, the clinic actually made little or no profit during those months. However, appellee's own exhibit shows the $6,647.32 as net income and he does not attempt to say that some of it was not profit.

The clinic is owned and controlled by appellee and his present wife. Whatever profit that is...