P.M. Palumbo, Jr., M.D., Inc. v. Bennett, 901551
| Decision Date | 20 September 1991 |
| Docket Number | No. 901551,901551 |
| Citation | 242 Va. 248,409 S.E.2d 152 |
| Parties | , 6 IER Cases 1453 P.M. PALUMBO, JR., M.D., INC. v. Dean R. BENNETT, M.D. Record |
| Court | Virginia Supreme Court |
Gerald R. Walsh, Fairfax (Robert F. Donnelly, Jr., Walsh & Cremins, on briefs), for appellant.
Hope B. Eastman, Bethesda, Md. (Stephen H. Paley, Bethesda, Md., Frances Pierson Dwornik, Fairfax, Paley, Rothman, Goldstein, Rosenberg & Cooper, Bethesda, Md., Odin, Feldman & Pittleman, Fairfax, on brief), for appellee.
Present: CARRICO, C.J., and COMPTON, STEPHENSON, RUSSELL *, WHITING, LACY and HASSELL, JJ.
The sole and narrow issue we consider in this appeal is whether an employment contract which violates Code § 13.1-546 is void and unenforceable.
The trial court decided this case on a demurrer, and, therefore, we shall recite the facts in accordance with well-established principles that a demurrer admits the truth of all material facts that are properly pleaded, facts which are impliedly alleged, and facts which may be fairly and justly inferred from alleged facts. Bowman v. State Bank of Keysville, 229 Va. 534, 536, 331 S.E.2d 797, 798 (1985).
P.M. Palumbo, Jr., M.D., Inc. (Palumbo), is a Virginia professional corporation which provides medical services in orthopaedics and orthopaedic surgery. Dean R. Bennett, M.D., an orthopaedic physician, executed an employment contract with Palumbo. The contract, captioned "Independent Contractor Agreement," provided that Bennett would act as an independent contractor and that he would perform professional services as an orthopaedic surgeon for Palumbo. The contract contained certain restrictive covenants, including a covenant which prohibited Bennett from competing with Palumbo.
Bennett decided to terminate the contract and informed Palumbo of his decision. Thereafter, Bennett allegedly breached several of the contract's restrictive covenants, including the covenant not to compete.
Palumbo filed this suit to enforce the provisions of the contract and to obtain injunctive relief and damages. Bennett filed a demurrer on several grounds, including an assertion that the contract is illegal and unenforceable. Bennett argued that the contract violated Code § 13.1-546 because an independent contractor is not an officer, employee, or agent who can legally render professional services for Palumbo. The chancellor considered memoranda and argument of counsel and granted the demurrer, concluding that the contract violated Code § 13.1-546 and, therefore, the contract was void and unenforceable. We granted Palumbo an appeal.
Palumbo argues that Code § 13.1-546 is not an exercise of the police power of the Commonwealth which would render the contract unenforceable and, therefore, the chancellor erred when he granted the demurrer and dismissed the proceeding.
Code § 13.1-546, in relevant part, states:
No corporation organized and incorporated under this chapter may render professional services except through its officers, employees and agents who are duly licensed or otherwise legally authorized to render such professional services within this Commonwealth....
Paragraph 2 of the contract states:
Relationship of Parties.
The Contract Physician is performing services for the Corporation as an independent contractor and not as an employee. The Corporation is interested in the results to be achieved, and the conduct and control of the services will lie solely with the Contract Physician. The Contract Physician shall not be considered an agent, employee, or partner of the Corporation for any purpose. The Contract Physician is not entitled to any of the benefits that the Corporation provides for its employees. All income from the services of the Contract Physician shall belong to the Corporation.
We agree with the chancellor that the contract violates Code § 13.1-546 because the statute does not allow a professional corporation to render professional services through an independent contractor. Thus, we must now consider whether Palumbo may maintain an action to enforce the contract.
We have held that, generally, a contract to perform an act prohibited by a statute is void and that an action will not lie to enforce the contract. Blick v. Marks, Stokes and Harrison, 234 Va. 60, 64, 360 S.E.2d 345, 348 (1987); Niemeyer v. Wright, 75 Va. 239, 243 (1881); Middleton v. Arnolds, 54 Va. (13 Gratt.) 489, 489-90 (1856). This rule, however, is subject to certain exceptions.
The courts should always look to the language of the statute, the subject matter, the wrong it seeks to prevent, and the purpose to be accomplished in its enactment; and if from these it is manifest that it was not intended to render the act in contravention of the statute void, the courts will so hold.
Watters & Martin v. Homes Corp., 136 Va. 114, 127, 116 S.E. 366, 370 (1923) (emphasis in original). Thus, we must discern the relevant legislative intent and ascertain whether it was manifestly intended that a contract, which violates Code § 13.1-546 would be unenforceable. The legislative intent must be ascertained by examination of the plain words used in the statute.
Chapter 7 of Title 13.1, of which Code § 13.1-546 is a part, is entitled "Professional Corporations." This chapter contains several statutes relating to professional corporations and was enacted by the General Assembly in 1970. Code § 13.1-542, which is the first statute contained in Chapter 7 and is entitled "Legislative intent", states:
It is the legislative intent to provide for the incorporation of an individual or group of individuals to render the same professional service to the public for which such individuals are required by law to be licensed or to obtain other legal authorization from the Commonwealth of Virginia.
Code § 13.1-546 permits certain professionals, who are duly licensed or legally authorized to practice their professions in this Commonwealth, to render professional services as officers, employees, or agents of a professional corporation. These professionals could not render professional services as officers, agents, or employees of a professional corporation before the enactment of Chapter 7 of Title 13.1.
We hold that the chancellor erred when he sustained the demurrer because we conclude that Code § 13.1-546 was not intended to be an exercise of the Commonwealth's police power. Not only does the plain language of the statute support this conclusion; Code § 13.1-546 does not mention contracts, nor does it contain a penalty within its provisions. Code § 13.1-546 was enacted to ensure that officers, employees or agents of professional...
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