Neel v. Sun

NOTICE:  This opinion is subject to motions for reargument under V.R.A.P. 40
as well as formal revision before publication in the Vermont Reports.
Readers are requested to notify the Reporter of Decisions, Vermont Supreme
Court, 111 State Street, Montpelier, Vermont 05602 of any errors in order
that corrections may be made before this opinion goes to press.


                                No. 88-408


Harley Neel, M.D.                            Supreme Court

                                             On Appeal from
     v.                                      Caledonia Superior Court

Edward Sun, M.D. and Kathleen Sun            November Term, 1990


John P. Meaker, J.

James C. Gallagher of Downs Rachlin & Martin, St. Johnsbury, for plaintiff-
  appellee

Williams and Green, Morrisville, for defendant-appellant


PRESENT:  Allen, C.J., Gibson, Dooley and Morse, JJ., and Peck, J. (Ret.),
          Specially Assigned


     DOOLEY, J.   This is a declaratory judgment action stemming from the
dissolution of a professional partnership.  Defendant, Edward Sun, M.D.,
appeals from the superior court's order determining the assets and
liabilities of the partnership, claiming error in (1) the composition of the
court during pretrial hearings, the trial, and post-trial proceedings; (2)
the court's findings with respect to certain partnership property; and (3)
the admission of certain evidence.  We affirm.
     Plaintiff, Harley Neel, M.D., and defendant formed a partnership for
the practice of radiology in 1975.  There was no formal partnership
agreement.  They practiced at the Northeastern Vermont Regional Hospital
(NVRH) in St. Johnsbury, Copley Hospital in Morrisville, and Cottage
Hospital in Woodsville, New Hampshire.  The partnership leased a
computerized axial tomograph (CAT) scanner from General Electric Company,
and a room at NVRH in which to operate the CAT scanner.  By 1981, the
partnership relationship had soured, and at the end of September 1982, the
partnership terminated.  Plaintiff commenced this action in 1982 to resolve
post-termination disputes.  Defendant counterclaimed for an accounting.
     The superior court held several preliminary hearings between November
1982 and December 1984.  Both assistant judges participated in an October 7,
1983 hearing on miscellaneous procedural motions.  One assistant judge
participated in a status conference and a hearing on a discovery matter held
on December 12, 1984.  Both assistant judges sat in the trial on the merits
held on May 6 and 7, 1985, and joined in the resulting findings and order,
which resolved some issues and referred the remaining issues to a master
with instructions. The master reported in 1987 and at the November 1987
hearing on the report, defendant moved to dismiss the entire proceeding
because assistant judges had sat on the 1985 hearing on the merits.  The
court denied the motion but dismissed the assistant judges from sitting at
the hearing on the master's report.  The final judgment order, issued in
1988, was signed only by the presiding judge.
     Defendant first argues that the participation of assistant judges in
the various proceedings constituted grounds for a new trial because this is
an action in equity.  Defendant relies on our decision in Soucy v. Soucy
Motors, Inc., 143 Vt. 615, 619-20, 471 A.2d 224, 226-27 (1983) that the
participation of assistant judges at the hearing on the merits of an
equitable action required a new trial because the trial court lacked
jurisdiction to hear and determine the action.  The decision was based on
the statute in effect at the time, which provided that claims for equitable
relief were triable by the presiding judge sitting alone.  See 4 V.S.A. {
219 (1972), amended by No. 201, { 3 (1983 Vt., Adj. Sess) ("all rights,
powers and duties of a chancellor shall vest exclusively in the presiding
judges").  An amendment to { 219, effective April 27, 1984, placed
jurisdiction over chancery matters in the superior court, including the
assistant judges.  See 4 V.S.A. { 219.  A contemporaneous amendment to 4
V.S.A. { 112(b) provided that decisions on questions of law, and mixed
questions of law and fact, would be made solely by the presiding judge in
all proceedings.  See 4 V.S.A. { 112(b), amended by No. 201, { 2 (1983 Vt.,
Adj. Sess.), { 2.  As to this new composition-of-court provision, however,
the Legislature was clear that composition errors could be grounds for
reversal of a judgment only if "a party makes a timely objection and raises
the issue on appeal."  Id.
     The Legislature also provided that no court could set aside a
"judgment, decree or order entered before December 12, 1983" based on the
improper participation or non-participation of assistant judges under 4
V.S.A. {{ 111(a) or 219.  P.A. No. 201, { 5 (1983 Vt., Adj. Sess.).  This
Court held that the legislature had exceeded its authority in passing this
statute.  Solomon v. Atlantis Development, Inc., 145 Vt. 70, 73, 483 A.2d 253, 255-56 (1984).  We decided, however, that Soucy would not be applied
retroactively to cases tried before it was decided -- that is, before
December 12, 1983.  Id. at 74-76, 483 A.2d at 256-57; see also Brown v.
Whitcomb, 150 Vt. 106, 108, 550 A.2d 1, 3 (1988).
     For purposes of analysis only, we will assume that this is an action in
equity and that the improper presence or absence of assistant judges at any
hearing might give defendant some right to appellate relief under the Soucy
rule.  We are dealing, however, with a situation where the claimed improper
participation of the assistant judges came at hearings that occurred either
prior to the Soucy decision or after the amending legislation which placed
jurisdiction over equity actions in the full superior court, including the
assistant judges.  We emphasize also that the hearing on the merits occurred
after the effective date of the amending legislation.
     Defendant concedes that the amendment to 4 V.S.A. { 219 applied to
cases in progress and, if valid, allowed participation of assistant judges
in this action after the effective date of the amendment.  See 1 V.S.A. {{
213, 214.  He challenges the validity of that amendment, however, arguing
that under Solomon, the Legislature is powerless to change the jurisdiction
over an action in progress.  While Solomon has language that might suggest
such a position, see 145 Vt. at 73, 483 A.2d  at 255-56, defendant's argument
is a vast overstatement of the Solomon holding.
     The issue in Solomon was whether the Legislature could determine the
retroactive effect of the Soucy rule on cases pending at the time Soucy was
decided, thus removing this Court's jurisdiction to rule on such cases.  The
effect of the legislation would have been to revive judgments which were
void, for lack of trial court jurisdiction, if the Soucy rule were
retroactive.  We held that only this Court could determine whether its
decision was prospective or retroactive and give appropriate relief.  In
this case, the Legislature made a prospective change in the composition of
the trial courts in equity matters.  No vested right of any party was
involved.  We see no ground for holding that the Legislature has violated
the separation of powers in its action.
     The bulk of defendant's challenges are to proceedings that occurred
after the effective date of the amending legislation.  As to those
proceedings, improper participation by an assistant judge can be raised on
appeal only if it has been the subject of a "timely" objection below.  4
V.S.A. { 112(b).  Defendant failed to object to assistant judge partici-
pation until November of 1987.  This objection was not timely.  See Deyo v.
Kinley, 152 Vt. 196, 200, 565 A.2d 1286, 1289 (1989) (purpose of requiring
timely objection is to bring error to attention of trial court so that court
may have opportunity to correct the error).  Once defendant objected, the
presiding judge excused the assistant judges from further participation as
requested. (FN1)
     There is one challenge to a motion hearing in October, 1983.  This
hearing occurred before the decision in Soucy.  It cannot be grounds for
reversal since the Soucy holding does not apply to proceedings that
occurred before it was decided.  Brown v. Whitcomb, 150 Vt. at 108, 550 A.2d  at 3.
     Defendant's next set of claims focuses on the trial court's findings
that, although the CAT scanner and NVRH room lease were technically
"assets," they were nonetheless without value.  Defendant argues that the
trial court's action violated an agreement entered into by the parties which
purported to limit the issues for trial, and that the findings were
inconsistent with the evidence.
     Defendant claims that because the agreement required the court to
submit valuation questions to the designated master, the court was without
authority to rule on these issues. (FN2) We fail to see how defendant can base a
claim on an agreement that was not before the trial court.  Although
defendant referred to the agreement in a "Proposed Judgment Order," he did
not assert that the agreement imposed a limitation on the court's authority
to make a threshold finding on whether a particular asset was without value.
Further, in his several motions filed in response to the court's October
1985 order, defendant never objected to the court's making of a finding on
whether the leases had any value.   Here again, defendant failed to preserve
this claim and we will not address it for the first time on appeal.  See
Bancroft v. Bancroft, ___ Vt. ___, ___, 578 A.2d 114, 117 (1990).
     Nor can we find error in the court's substantive findings that the
leases were without value.  We will not disturb a trial court's findings of
fact if they are supported by the evidence and not clearly erroneous.
Meadowbrook Condo. Ass'n v. South Burlington Realty Corp., 152 Vt. 16, 26,
565 A.2d 238, 244 (1989).  Supporting evidence must be viewed in the light
most favorable to the prevailing party, and any modifying evidence will be
disregarded.  Id.  On review of the entire record, we are satisfied that
there was ample evidence to support the court's findings that the leases
were without value.  In particular, there was evidence that the partnership
lost money on the CAT scanner operation, was in arrears on its lease
payments, and had only three more months on the lease when the partnership
dissolved.   There was also evidence that there existed a heavy arrearage on
the NVRH room lease.  There was no error.
     Defendant further claims that the court erred in not directing the
master to account for partnership funds invested in capital improvements to
the leased room at NVRH.  Defendant failed to specify at trial any capital
improvements for which accounting was required, failed to raise this claim
in his proposed findings of fact, and raised no timely objection to the
court's October 1985 order on this ground.  Even if the issue had been
preserved for appeal, it is difficult to imagine how the capital
improvements could be assessed or recouped if the lease was worthless.
     Defendant also argues that the court erred in failing to find good will
as an asset of the partnership.  See Klein v. Klein, 150 Vt. 466, 470, 555 A.2d 382, 385 (1988) (definition of "good will" for professional practice).
There was substantial evidence that the partnership developed a poor
reputation in the local medical community, due in large part to the
difficulties that other physicians had experienced in dealing with
defendant.  This evidence, largely undisputed, was sufficient to rebut any
"presumption" that good will had accrued as a partnership asset, and was
sufficient to support the court's finding. (FN3)
     Defendant next claims that the trial court erred in admitting evidence
showing that, following dissolution of the partnership, substantially all
local physicians referred patients to plaintiff rather than defendant.
Defendant maintains that the evidence was both irrelevant and inadmissible
hearsay.  The trial court has broad discretion in determining whether
evidence is relevant.  State v. Derouchie, 153 Vt. 29, 34, 568 A.2d 416, 418
(1989).  Relevant evidence is evidence that has "any tendency to make the
existence of any fact that is of consequence to the determination of the
action more probable or less probable than it would be without the
evidence." V.R.E. 401.  The evidence at issue here made it more probable
that dissatisfaction in the local medical community with defendant's
services had diminished the value of the partnership, thus tending to (1)
refute defendant's equitable claim that he was entitled to a share of
plaintiff's post-dissolution earnings, and (2) demonstrate the absence of
good will as a partnership asset.  It was plainly relevant.  With respect to
defendant's hearsay claim, defendant objected and argued solely on grounds
of relevancy.  An objection based on hearsay grounds was "not apparent from
the context," V.R.E. 103(a); the hearsay claim was not preserved on appeal.
State v. Recor, 150 Vt. 40, 49, 549 A.2d 1382, 1389 (1988) (objection on one
ground does not preserve appeal on other grounds).
     Affirmed.

                                        FOR THE COURT:




                                        Associate Justice






FN1.    Defendant claims error in the dismissal of the assistant judges
although this action was taken in response to defendant's motion.  All the
proceedings from which the assistant judges were excused, and the resulting
orders, involved questions of law.  Thus, the presiding judge was authorized
to act alone.  See Bloch v. Angney, 149 Vt. 29, 30-31, 538 A.2d 174, 175
(1987); Trustees of Net Realty Holding Trust v. AVCO Financial Services,
147 Vt. 472, 476, 520 A.2d 981, 984 (1986).

FN2.    The agreement included the following provisions:
	  [T]he parties desire to narrow the legal theories and
	issues before the court and to delegate to [the arbi-
	trator] the responsibility for determining the specific
	dollar amounts of the various claims set forth by the
	parties:
	  . . . .
	  The following issues will remain for adjudication:
	  . . . .
	  [I]f the partnership has any interest in the existing
	lease on the CAT, what the interest is.
	  . . . .
	  Whether the partnership has any continuing interest
	in the November 1, 1977 lease with Northeastern Vermont
	Regional Hospital and, if so, what that interest is.
	  . . . .
	     The determination of specific dollar amounts
	applicable to the specific court findings shall be
	submitted to binding arbitration . . . .

     We note that defendant's cramped interpretation of the agreement, as
forbidding the court from making a threshold finding on whether an asset had
any value whatsoever, is not supported by the language of the agreement.
The agreement, on its terms, delegates to the arbitrator "the responsibility
for determining the specific dollar amounts" of the parties' claims.
Nowhere does it purport to limit the court's authority to determine whether
a particular asset is without value.

FN3.     Defendant's claim that the trial court erred in failing to require
plaintiff to account for income generated by the CAT operation, during the
three-month period between dissolution and termination of the CAT lease, was
never raised below and is thus waived on appeal.