Medical Doctor Associates, Inc. v. Lab-Quip Co.

• Decision Date: 19 November 1991
• Docket Number: No. A91A1825,LAB-QUIP,A91A1825
• Citation: 412 S.E.2d 625,201 Ga.App. 880
• Parties: MEDICAL DOCTOR ASSOCIATES, INC. v.COMPANY.
• Court: Georgia Court of Appeals

Page 625

412 S.E.2d 625

201 Ga.App. 880

MEDICAL DOCTOR ASSOCIATES, INC. v. LAB-QUIP COMPANY.

No. A91A1825.

Court of Appeals of Georgia.

Nov. 19, 1991.

Fred L. Cavalli, Decatur, for appellant.

Nadler, Beskin & Scott, Gary M. Nadler, Atlanta, for appellee.

McMURRAY, Presiding Judge.

Lab-Quip Company (plaintiff) brought an action against Medical Doctor Associates, Inc. (defendant) and alleged that defendant failed to make monthly rental payments in the amount of $2,500 under terms of an equipment lease agreement entered into between the parties. Defendant admitted that it entered into a lease agreement for medical equipment with plaintiff, but alleged that it was not responsible for payments under the lease agreement because the equipment never "functioned properly nor has it been used commercially by the Defendant." Defendant counterclaimed for return of a $10,000 down payment.

A bench trial was conducted and the trial court entered, in pertinent part, the following order: "Plaintiff ... and Defendant ... entered into a six-month minimum rental contract with monthly rental of $2,250.00 for medical instruments, to wit: (a) Coulter S7-120; (b) NOVA IV; (c) Roche Cobas Bio; and (d) MLA 600.... Pursuant to the rental contract, Defendant ... paid an initial $10,000.00 to Plaintiff ... which was refundable to Defendant if Defendant optioned to purchase the instruments.... Defendant ... did not exercise its option to purchase the instruments and is not due any return of the $10,000.... The actions of the parties and the terms of the rental contract evidence ... that this was a severable contract.... The rental contract was legally modified to exclude the MLA 600 and the monthly rental was reduced to $2000.00.... [T]he Coulter S7-120, NOVA IV, and Roche Cobas Bio instruments functioned in compliance with the rental contract obligations.... Defendant ... has not carried its burden of proof with regard to its asserted affirmative defenses of accord and satisfaction and failure of consideration.... Defendant ... withheld the contracted instruments (Coulter S7-120, NOVA IV, and Roche Cobas Bio) from Plaintiff for ten (10) months without making any monthly payments to Plaintiff.... Defendant ... did not return the pneumatic glassware for the Coulter S7-120. The reasonable replacement cost for used glassware is $2,500.00.... The electrodes for the NOVA IV needed replacement at a cost of $1,448.00.... Plaintiff's damages pursuant to the rental contract provisions are $24,199.76.... [A] bona fide controversy existed between the parties, and there is no evidence of bad faith or stubborn litigiousness or unnecessary trouble and expense. Therefore, the Court DENIES Plaintiff's prayer for attorney's fees pursuant to O.C.G.A. § 13-6-11.

"IT IS HEREBY ORDERED AND ADJUDGED:

"1. That Plaintiff shall have judgment against the Defendant in the total amount of $24,199.76, plus $37.00 court costs. Such sum was calculated in the following manner: (a) Non-payment by Defendant ... of ten months rental at $2,000.00 per month = $20,000.00.... (b) Replacement by Plaintiff of Coulter pneumatic pump not returned by Defendant ... = $2,500.00. (c) Electrode replacement on NOVA IV = $1,448.00.... (d) Freight on Coulter S7-120 = $231.82.... (e) Freight on NOVA IV and Roche Cobas Bio = $269.94....

"2. That Defendant shall take nothing on its counterclaim." This appeal followed the denial of defendant's motion for new trial. Held:

1. In the first two enumerations, defendant contends the trial court erred in finding the lease contract severable and in finding the lease agreement, "legally modified."

(a) " 'The issue of the severability of a contract is determined by the intention of the parties, as evidenced by the terms of the contract. Code Ann. § 20-112 [now OCGA § 13-1-8]; Spalding County v. Chamberlin & Co., 130 Ga. 649, 654 (61 SE 533) (1908).' Dozier v. Shirley, 240 Ga. 17, 18 (239 SE2d 343) (1977). 'If it appears that the contract was to take the whole or none, then the contract would be entire. Clark, Con. 657.' Broxton v. Nelson, 103 Ga. 327, 331 (30 SE 38) (1897); Dolan v. Lifsey, 19 Ga.App. 518, 519 (91 SE 913) (1917)." Horne v. Drachman, 247 Ga. 802, 804(2), 805, 280 S.E.2d 338. "Whenever there is a contract to pay a gross sum for a certain and definite consideration, the contract is entire, and is not apportionable either at law or in equity. Barnes v. Goodner, 77 Ga.App. 448, 450 (49 SE2d 128)." Williams v. Claussen-Lawrence Constr. Co., 120 Ga.App. 190, 191, 169 S.E.2d 692.

In the case sub judice, the lease agreement provides a lump sum monthly rental rate of $2,250 for all laboratory "systems" provided. The contract does not segregate the equipment, nor does it assign a monthly rental value for each system. Moreover, the lease designates a singular sale price of $52,500 for the laboratory equipment, i.e., "one each Roche Cobas Bio, Coulter S7-120, MLA 600, and NOVA IV." These clear and unambiguous terms reveal that the lease contract is entire and not severable. Consequently, the trial court erred in finding that "the terms of the rental contract evidence ... that this was a severable contract...." However, this error is harmless as there was evidence to support the trial court's finding that the lease agreement was "legally modified."

(b) Mutual modification of an indivisible contract may compensate for failed consideration. Further, "[a]n oral modification of a preexisting contract need not be expressed in words, in writing or signed, but the parties must manifest their intent to modify the original contract. Ryder Truck Lines v. Scott, 129 Ga.App. 871, 873-874(4) (201 SE2d 672) (1973)." Dan Gurney Indus. v. Southeastern Wheels, 168 Ga.App. 504, 505(1), 308 S.E.2d 637.

In the case sub judice, the owner of the defendant corporation, Alan Ott, testified that he "discussed the malfunction or the failure of the M.L.A. [600 with the president of the plaintiff corporation, Kenneth Marshall...