Sanfillippo v. Oehler

• Decision Date: 23 November 1993
• Docket Number: No. 64271,64271
• Citation: 869 S.W.2d 159
• Parties: Terri M. SANFILLIPPO, Personal Representative of the Estate of John J. Sanfillippo, Deceased, Plaintiff/Respondent, v. Kurt OEHLER, D.D.S., Defendant/Appellant.
• Court: Missouri Court of Appeals

Page 159

869 S.W.2d 159

Terri M. SANFILLIPPO, Personal Representative of the Estate of John J. Sanfillippo, Deceased, Plaintiff/Respondent, v. Kurt OEHLER, D.D.S., Defendant/Appellant.

No. 64271.

Missouri Court of Appeals,

Eastern District,

Division One.

Nov. 23, 1993.

Motion for Rehearing and/or Transfer to Supreme Court Denied Dec. 29, 1993.

Application to Transfer Denied Feb. 22, 1994.

Thomas Cicardi DeVoto, Wuestling, James & DeVoto, St. Louis, for defendant, appellant.

Mark David Sadow, Raskas, Ruthmeyer, Pomerantz & Wynne, St. Louis, for plaintiff, respondent.

REINHARD, Judge.

Defendant appeals a judgment of the trial court in favor of plaintiff, as Personal Representative of the Estate of John J. Sanfillippo, ordering defendant to pay the estate $50,660.25, and $1,585.82 per month for ninety-four months thereafter, pursuant to a non-competition agreement entered into between defendant and John Sanfillippo. We affirm.

The parties submitted this case to the trial court on an agreed statement of facts. On December 7, 1990, John Sanfillippo, the president and sole stockholder of the professional corporation "John J. Sanfillippo, D.D.S., P.C.", entered into an "Asset Purchase Agreement" with defendant. That agreement required defendant to pay Sanfillippo $60,000 in exchange for the corporate assets of the professional corporation. The "Asset Sale Agreement" was conditioned on the execution of an "Employment and Non-Competition Agreement" (hereinafter referred to as the Agreement), which was also executed on December 7, 1990.

The employment portion of the Agreement provided that Sanfillippo would provide his dental services to the professional corporation for no more than two and one-half days per week (subject to being increased by mutual agreement of the parties) for a three year period. In the two succeeding years, Sanfillippo was to provide dental services for no more than two days per week. Dr. Sanfillippo would be paid an amount equal to 40% of the collected receipts generated by the work he performed. Dr. Sanfillippo also agreed to assist defendant in the retention of former patients. The employment agreement was terminable by either defendant or Sanfillippo upon ninety days notice. However, termination of the employment agreement, by either party, would not relieve defendant of his obligations under the non-competition agreement. ¹

The non-competition agreement provided that Dr. Sanfillippo would not:

directly or indirectly practice dentistry or take an ownership interest in a dental practice in any fixed location within a radius of fifteen (15) miles from the premises. Further, during the term of this Agreement and for three years thereafter, Sanfillippo will not, from any location, solicit any of the current patients of the practice or patients treated by Sanfillippo at the offices of Oehler.... Provided further, that for an additional two (2) year period, Sanfillippo will not practice dentistry from a fixed location within 1/2 mile from the premises.

The agreement further provided:

As compensation for Sanfillippo's agreement not to compete, Oehler shall pay to Sanfillippo the sum of $120,000.00 payable in equal monthly installments, commencing thirty (30) days after closing and payable thereafter on the 30th day of each month and continuing for an additional one hundred nineteen (119) months thereafter with interest in [sic] the unpaid balance at 10 percent which amount is $1,585.82 per month.

Defendant had the right to prepay the unpaid principal balance at any time. He also agreed to cooperate with Sanfillippo in the purchase, at Sanfillippo's expense, of a life insurance policy to secure payment on the non-competition agreement.

Dr. Sanfillippo died on or about January 15, 1991. Defendant had made one payment on his obligation under the non-competition agreement, but made no others after the death of Dr. Sanfillippo. Terri Sanfillippo, personal representative of decedent's estate, brought this action on behalf of the estate, for payments due. Defendant argued that he was excused from further payments because the Agreement was one for personal services which terminated upon Dr. Sanfillippo's death. The trial court found that the non-competition portion of the Agreement was not one for personal services, and therefore, did not terminate upon Dr. Sanfillippo's death. ² It entered judgment in favor of Dr. Sanfillippo's estate.

In his sole point on appeal, defendant states:

The trial court erred in both its findings of fact, declaration of law, and its application of the law in that it concluded that this contract was a "pure" covenant not to compete and not a contract that called for other personal services and that, therefore, it did not terminate upon the death of the covenantor. The court further erred when it concluded that a covenant not to compete is not a personal service contract. The appellate courts of this state have already declared that such contracts are personal service contracts which terminate upon the death of the covenantor in the absence of very specific language in the contract whereby the parties very specifically waive termination upon death of the covenantor.

At the outset, we note that the parties dispute the nature of the Agreement. Defendant contends that the Agreement is a single contract providing "for two specific types of compensation...." Plaintiff contends that the Agreement is "by [its] terms, two separate contracts within one document, ...."

Severable or divisible contracts are, in legal effect, independent agreements about different subjects, though made at the same time. Swinney v. Continental Building Co., 102 S.W.2d 111, 120, 340 Mo. 611 (1937). The question is primarily a question of the intent of the parties determined from the language used and the subject matter of the agreement. Swinney, 102 S.W.2d at 111.

A contract is entire if a party's duty to perform each of his promises is dependent upon the other party's performance of each of his. Fischer v. National Indus. Services, 735 S.W.2d 114, 116 (Mo.App.1987). If a contract embraces distinct promises that admit to separate execution, the contract is divisible. Id.

In the instant case, it is clear that the employment agreement and the non-competition agreement are independent. Each is supported by separate consideration, the employment contract could be terminated upon ninety days notice of either party, and the termination by either party would not relieve defendant from his payment obligations under the non-competition agreement. ³

As the agreements are independent and severable, we turn to the issue of whether the non-competition agreement, entered into within the context of the sale of a business' assets, is one for personal services.

A personal services contract is one "resting on the skills, tastes, or science of a party, that is, those contracts wherein personal performance by the promisor is the essence and the duty imposed cannot be done as well by others as by the promisor himself,...." 17A C.J.S. Contracts § 465 pp. 624-25 (1963).

Defendant asserts that under Missouri law, "personal services contract[s], including Covenant[s] Not to Compete, do not survive the death of the covenantor in the absence of language very specifically waiving the implied condition of survival of the covenantor to perform services called for in the contract." He primarily relies on the Western District case of Siegfried v. I.G.T.W., Inc., 592 S.W.2d 248 (Mo.App.1980). ⁴ The trial court found Siegfried to be distinguishable. In Siegfried, Craig Siegfried entered into an installment sales contract for the sale of his radio station, KIMO. The contract had three parts. Part two of the contract provided for payments to Siegfried of $60,000 in monthly installments of $500.00 "in further mutual consideration of [Siegfried]'s personal special experience, skill, intelligence, energy, unique and specialized talent in the radio field" which Siegfried was to "impart" to the radio station's new owners. Id. at 249-50. Siegfried agreed to make himself available at "all reasonable times during business hours, but no more often than one day in any calendar month,...." Id. at 250. Siegfried also agreed, in part two of the contract, not to be employed, engaged or interested in the business of standard AM radio broadcasting within the effective range of the radio station. Id.

The Siegfried court held that part two of the agreement was one for personal services. It noted that personal services contracts terminate upon the death of the covenantor in the absence of an expressed intent that the payments continue after death. The court found no such intent. Id. at 251.

We agree with the trial court that Siegfried is distinguishable from the instant case. Though not explicitly addressed in Siegfried, it is clear from the contract...