Marriage of Lukens, In re, No. 1801--II

CourtCourt of Appeals of Washington
Writing for the CourtREED; PETRIE, C.J., and HALE
Citation16 Wn.App. 481,558 P.2d 279
PartiesIn re the MARRIAGE OF R. M. LUKENS, Petitioner, and D. L. Lukens, Respondent.
Docket NumberNo. 1801--II
Decision Date06 December 1976

Page 481

16 Wn.App. 481
558 P.2d 279
In re the MARRIAGE OF R. M. LUKENS, Petitioner,
and
D. L. Lukens, Respondent.
No. 1801--II.
Court of Appeals of Washington, Division 2.
Dec. 6, 1976.

Page 482

[558 P.2d 280] James H. Morton, Ken Fielding, Bonneville, Viert & Morton, Tacoma, for appellant.

Edward M. Lane, Johnson, Lane & Gallagher, Tacoma, for respondent.

REED, Judge.

On March 14, 1975, Roberta M. Lukens was granted a dissolution of her marriage to Dr. David L. Lukens. Dr. Lukens appeals from those portions of the Pierce County decree that pertain to: (1) the inclusion of an intangible element of professional goodwill as an asset of his medical practice; and (2) the valuation and division of this intangible as part of the property distribution. We affirm.

The parties were married in August 1965, at which time Mrs. Lukens was teaching school and Dr. Lukens was entering his final year of osteopathic school in Philadelphia. Upon completion of his education Dr. Lukens commenced a year's internship in Grand Rapids, Michigan, and Mrs. Lukens secured employment as personnel manager in a department store. In 1967 the Lukens moved to Tacoma, where they temporarily resided with her parents. Dr. Lukens obtained his license to practice in December of 1967 and immediately associated with another osteopath under a salary-bonus arrangement. Mrs. Lukens resumed school teaching in September of 1968 and remained with the University

Page 483

Place School District until June 1970. In 1972 Dr. Lukens established his own practice, which he still maintained and operated at the time of the dissolution. The new practice was financed with a loan, which was repaid in 1973 by withdrawing $21,000 from the parties' joint savings account. Mrs. Lukens also participated in the organization of the new practice: she maintained the personnel records, established office procedures, including a bookkeeping system, hired the office workers, and aided in the design of the office. She continued to help with the office administration until she filed for a dissolution in 1974.

Dr. Lukens enjoys a large clientele and his practice has been very successful, averaging over $50,000 net income per year. He employs a registered nurse, a full-time secretary-receptionist, and a part-time office worker. The trial court found that his practice consists of physical assets, including an X-ray machine valued at $16,000, accounts receivable valued at $33,600, and cash in the amount of $6,200. The trial court also found an element of professional goodwill and valued it at $60,000, bringing the total worth of his practice to $115,800. It is the $60,000 item that is the subject of this appeal.

Dr. Lukens contends that professional goodwill has no market value and that it is therefore not subject to disposition in a dissolution proceeding. The questions presented in this appeal require consideration of the nature of goodwill, and an examination of the means by which goodwill contributes to the economic profits of the professional practice.

Goodwill is property of an intangible nature and is commonly defined as the expectation of continued public patronage. In re Marriage of Foster, 42 Cal.App.3d 577, 117 Cal.Rptr. 49 (1974). Justice [558 P.2d 281] Story, in an oft-quoted definition, characterized goodwill as

a benefit or advantage 'which is acquired by an establishment beyond the mere value of the capital, stock, funds or property employed therein, in consequence of the general public patronage and encouragement, which it receives from constant or habitual customers on account of its local position, or common celebrity, or reputation

Page 484

for skill or affluence, or punctuality, or from other accidental circumstances or necessities, or even from ancient partialities or prejudices'.

J. Crane and A. Bromberg, Law of Partnership § 84 (1968), quoting from J. Story, Partnership § 99 (3d ed. 1850). See also 14 Williston on Contracts § 1640 at 116 (3d ed. W. Jaeger 1972); In re Glant's Estate, 57 Wash.2d 309, 356 P.2d 707 (1960); Cooper & Co. v. Anchor Sec. Co., 9 Wash.2d 45, 113 P.2d 845 (1941); Stanton v. Zercher, 101 Wash. 383, 172 P. 559 (1918).

Goodwill is most often associated with commercial ventures. Nevertheless, it is recognized that the practice of an attorney, physician, or other professional person may include such an element, even though the goodwill in such instances is personal in nature and not a readily marketable commodity. See E.g. 6A A. Corbin, Contracts § 1393 (1962); Lockhart v. Lockhart, 145 Wash. 210, 259 P. 385 (1927); In re Marriage of Lopez, 38 Cal.App.3d 93, 113 Cal.Rptr. 58 (1974); Golden v. Golden, 270 Cal.App.2d 401, 75 Cal.Rptr. 735 (1969). Factors contributing to...

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51 practice notes
  • Washburn v. Washburn, Nos. 49309-0
    • United States
    • United States State Supreme Court of Washington
    • February 16, 1984
    ...re Marriage of Freedman, 35 Wash.App. 49, 665 P.2d 902, rev. denied, 100 Wash.2d 1019 (1983); In re Marriage of Lukens, 16 Wash.App. 481, 558 P.2d 279 (1976), rev. denied, 88 Wash.2d 1011 (1977). While the goodwill of a particular professional practice may not be marketable and the determin......
  • Papin v. Papin, Docket No. 45277
    • United States
    • United States State Supreme Court of Idaho
    • December 20, 2019
    ...future earnings. See In re marriage of Bookout , 833 P.2d 800, 804 (Colo. App. 1991), citing In re Marriage of Lukens [16 Wash.App. 481], 558 P.2d 279 (Wash. App. 1976) ; Dugan v. Dugan [92 N.J. 423], 457 A.2d 1 (N.J. 1983) (other citation omitted); see also In re Marriage of Hall [103 Wash......
  • Papin v. Papin, Docket No. 45277
    • United States
    • United States State Supreme Court of Idaho
    • December 20, 2019
    ...future earnings. See In re marriage of Bookout , 833 P.2d 800, 804 (Colo. App. 1991), citing In re Marriage of Lukens [16 Wash.App. 481], 558 P.2d 279 (Wash. App. 1976) ; Dugan v. Dugan [92 N.J. 423], 457 A.2d 1 (N.J. 1983) (other citation omitted); see also In re Marriage of Hall [103 Wash......
  • McLelland v. Paxton, No. 35401-6-III
    • United States
    • Court of Appeals of Washington
    • November 21, 2019
    ...property or asset defined as the "expectation of continued public patronage." In re Marriage of Lukens , 16 Wash. App. 481, 483, 558 P.2d 279 (1976). Other courts supply helpful definitions of goodwill. Goodwill is essentially the positive reputation that a particular business enjoys. Butle......
  • Request a trial to view additional results
51 cases
  • Washburn v. Washburn, Nos. 49309-0
    • United States
    • United States State Supreme Court of Washington
    • February 16, 1984
    ...re Marriage of Freedman, 35 Wash.App. 49, 665 P.2d 902, rev. denied, 100 Wash.2d 1019 (1983); In re Marriage of Lukens, 16 Wash.App. 481, 558 P.2d 279 (1976), rev. denied, 88 Wash.2d 1011 (1977). While the goodwill of a particular professional practice may not be marketable and the determin......
  • Papin v. Papin, Docket No. 45277
    • United States
    • United States State Supreme Court of Idaho
    • December 20, 2019
    ...future earnings. See In re marriage of Bookout , 833 P.2d 800, 804 (Colo. App. 1991), citing In re Marriage of Lukens [16 Wash.App. 481], 558 P.2d 279 (Wash. App. 1976) ; Dugan v. Dugan [92 N.J. 423], 457 A.2d 1 (N.J. 1983) (other citation omitted); see also In re Marriage of Hall [103 Wash......
  • Papin v. Papin, Docket No. 45277
    • United States
    • United States State Supreme Court of Idaho
    • December 20, 2019
    ...future earnings. See In re marriage of Bookout , 833 P.2d 800, 804 (Colo. App. 1991), citing In re Marriage of Lukens [16 Wash.App. 481], 558 P.2d 279 (Wash. App. 1976) ; Dugan v. Dugan [92 N.J. 423], 457 A.2d 1 (N.J. 1983) (other citation omitted); see also In re Marriage of Hall [103 Wash......
  • McLelland v. Paxton, No. 35401-6-III
    • United States
    • Court of Appeals of Washington
    • November 21, 2019
    ...property or asset defined as the "expectation of continued public patronage." In re Marriage of Lukens , 16 Wash. App. 481, 483, 558 P.2d 279 (1976). Other courts supply helpful definitions of goodwill. Goodwill is essentially the positive reputation that a particular business enjoys. Butle......
  • Request a trial to view additional results

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