Hughes v. Cole

Decision Date19 July 1979
Docket NumberNo. 1270,1270
PartiesJames C. HUGHES and Ingabord Hughes d/b/a Austin Orthotic Center, Appellants, v. Dennis COLE, d/b/a Austin Prosthetics Center, Appellee.
CourtTexas Court of Appeals

Bradley M. Bingham, Meurer & Bingham, Austin, for appellants.

David W. Nelson, McGinnis, Lochridge & Kilgore, Austin, for appellee.

MOORE, Justice.

Plaintiff, Dennis Cole, d/b/a Austin Prosthetics Center, brought suit against defendants, James C. Hughes and Ingabord Hughes, d/b/a Austin Orthotic Center, seeking damages for breach of contract. Plaintiff alleged that on September 23, 1974, a written contract was executed by the parties under the terms of which he agreed to allow defendants to share office space with him and to use his business name, Austin Prosthetics Center, in their practice of orthotics to be conducted under the business name of Austin Prosthetics Center, Orthotic Division. As consideration for the use of the trade name, goodwill and other trade name benefits, plaintiff alleged that the defendants agreed to pay him an amount equal to 15% Of the taxable net income earned by the defendants in their orthotic business for a period of three and one-half years commencing on January 1, 1975, payable in semiannual installments. Plaintiff alleged that although the defendants had earned a sizable net income from their orthotic business, they refused to pay in accordance with the terms of the contract. Defendants answered with a general denial and specially denied that they were indebted to the plaintiff under the terms of the contract, except for the sum of $155.91 which they tendered into court as being 15% Of their net taxable income from January 1, 1975, through June 30, 1975. Defendants further alleged that they were willing to pay plaintiff the amount stipulated by the contract until August 26, 1975, the date they allege plaintiff Cole terminated the agreement and moved to another location.

After a trial before the court sitting without a jury, the trial court entered judgment for the plaintiff for 15% Of defendants' net taxable income for the three and one-half year period as stipulated in the contract and ordered the defendants to render an accounting to the plaintiff reflecting the amount of their net taxable income between January 1, 1975, and June 30, 1978. The judgment denied relief as to other claims asserted by the plaintiff and likewise denied the defendants any relief on their cross-action. Defendants duly perfected this appeal but limited the scope of the appeal to only that portion of the judgment which awarded the plaintiff a judgment for 15% Of the net taxable income during the three and one-half year period stipulated in the contract.

Reformed and as reformed affirmed.

The evidence shows that in the early part of 1974, appellee, Dennis Cole, and appellant, James C. Hughes, met and began making plans for Hughes to move from San Antonio to Austin, Texas, for the purpose of opening an orthotics business in conjunction with Cole's practice of prosthetics. Shortly thereafter Hughes moved to Austin and the parties operated under an oral agreement until September 23, 1974. The basic understanding underlying the agreement was that they would operate out of the same office, with appellee performing the prosthetics work of making artificial limbs and Hughes performing the orthotic work of making braces. Pursuant to the oral agreement the parties began operating under the business name of Austin Prosthetics Center, Orthotic Division. On September 23, 1974, the parties executed a written agreement under the terms of which Cole agreed to allow appellants to use his trade name, Austin Prosthetics Center, in conducting Hughes' orthotics work. As consideration for the use of Cole's business name, good will and other trade name benefits, appellant, James C. Hughes, agreed to pay appellee an amount equal to 15% Of the taxable net income derived by Hughes through his work at the Austin Prosthetics Center, Orthotic Division. The evidence shows that Cole introduced appellant to members of the medical profession practicing in Austin who would be referring business to Hughes and also allowed Hughes to order materials and equipment under his charge account. Approximately six months after the parties began working together, serious disagreements developed in their business relationship, which disagreements also affected their personal relationship. Cole decided that he could no longer continue the business relationship, moved out and moved his business to a new location in Austin. Thereafter he commenced operating under the name of "Austin Prosthetics Center." Hughes continued to operate his business at the old location but changed the name of his business to "Austin Orthotic Center."

At the trial Cole admitted that he intended to terminate the business relationship when he left and moved to a new location. He also admitted that on August 26, 1975, he sent a large number of letters to physicians and patients notifying them that he had terminated his business relationship with Hughes. Omitting the formal parts, the letter reads as follows:

"I have found it necessary to terminate my business relationship with James Hughes and his Orthotic Division.

"Any representation which I may have made in the past in reference to his workmanship or his conduct is hereby withdrawn and I do no accept any responsibility in connection with his business operations in the future.

"As of September 1, 1975, Dennis Cole, Austin Prosthetics Center, will be located at 3913 Medical Parkway."

The evidence shows that after Cole demanded payment for the first semiannual installment due on June 30, 1975, Hughes rendered a statement to the appellee on September 10, 1975, showing that the net taxable income earned by the Orthotics Division amounted to $1,039.45 and tendered Cole the sum of $155.91 representing 15% Of the net taxable income for the first semiannual installment. Cole refused to accept the payment. Thereafter he filed the present suit.

At the trial, appellant, James C. Hughes, admitted that he was obligated to pay Cole the 15% Stipulated by the contract, beginning January 1, 1975, until Cole terminated the contract and moved out on August 26, 1975.

The pertinent parts of the contract (described as Exhibit "A") material to this appeal are as follows:

"THIS AGREEMENT entered into this 23 day of September, 1974, by and between Dennis Cole of Austin Prosthetics Center and Jim Hughes of Austin Prosthetics Center-Orthotic Division by which the parties agree as follows:

"1. Jim Hughes hereby agrees to pay to Dennis Cole fifteen (15%) percent of the taxable net income received by Jim Hughes through his work in the Austin Prosthetics Center, Orthotic Division, said payments to be made semi-annually beginning January 1, 1975 through July 1, 1978, with adjustments to be made annually at the end of each taxable year reflecting the actual net taxable income received. These payments are made in consideration of the benefits Jim Hughes will receive by use of the tradename, (sic) Austin Prosthetics Center, and the Goodwill and other tradename (sic) benefits connected with the Austin Prosthetics Center which is owned and operated by Dennis Cole.

"Although Jim Hughes will be bound by this agreement and will be required to make semi-annual payments representing 15% Of the taxable net income received from his work at the Austin Prosthetics...

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4 cases
  • RSA 1 Ltd. v. Paramount Software Assocs., Inc.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (8th Circuit)
    • 17 d5 Julho d5 2015
    ...thanked its employees, and eventually stopped using Paramount entirely, the RSAs terminated the agreement. See Hughes v. Cole, 585 S.W.2d 865, 866–67, 869 (Tex.Civ.App.1979) (explaining that the contract there could “be terminated by either party by giving notice of or doing something suffi......
  • Fuller v. Fuller
    • United States
    • Court of Appeals of Texas
    • 6 d4 Outubro d4 2011
    ...Worth 1992, writ denied) (affirming a judgment that called for an accounting by the appellant); Hughes v. Cole, 585 S.W.2d 865, 866, 869 (Tex. Civ. App.—Tyler 1979, writ ref'd n.r.e.) (affirming judgment awarding the plaintiff fifteen percent of the defendants' net taxable income over three......
  • In re Leal
    • United States
    • United States Bankruptcy Courts. Fifth Circuit. U.S. Bankruptcy Court — Southern District of Texas
    • 9 d2 Janeiro d2 2007
    ...each person who enters into the partnership. Bohatch v. Butler & Binion, 977 S.W.2d 543, 545 (Tex.1998); Hughes v. Cole, 585 S.W.2d 865, 869 (Tex.Civ.App.-Tyler 1979, writ ref'd n.r.e.). A partnership at will continues until the partnership is terminated. TEX.REV.CIV. STAT. art. 6132b-2.06 ......
  • Salinas v. Rafati, 04-93-00118-CV
    • United States
    • Court of Appeals of Texas
    • 30 d5 Dezembro d5 1994
    ...dissolve a partnership by his express will communicated to the other partners has been upheld by Texas courts. Hughes v. Cole, 585 S.W.2d 865, 869 (Tex.Civ.App.--Tyler 1979, writ ref'd n.r.e.). Though Rafati offered evidence that he may have been treated badly by Salinas and Salazar (he com......

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