Appeals from decree of Court of Common Pleas of Delaware County, Nos. 10881, 13670, 14146, and 14259 of 1966, in case of Theodore V. Yuhas v. John B. Schmidt, Same v. William H. Ivens, Jr. et al., Same v. John B. Schmidt et al., and William H. Ivens, Jr. v. Theodore V. Yuhas et al.
Jerome J. Shestack, with him Robert A. Hanamirian, Ralph S. Snyder, Robert J. Levis, and Schnader, Harrison, Segal & Lewis, and Levis, Connors and Swanick, for appellant.
Richard P. Brown, Jr., with him Thomas C. Sadler, Jr., and Morgan, Lewis & Bockius, for appellee.
Bell, C. J., Jones, Cohen, Eagen, O'Brien and Roberts, JJ. Opinion by Mr. Justice Jones. Mr. Justice Roberts concurs in the result.
William H. Ivens, Jr., a doctor of veterinary medicine, began practicing his profession at 60 Haverford Road, Ardmore, in 1934. John B. Schmidt and Theodore
V. Yuhas, appellant, began working for Dr. Ivens before they had graduated from veterinary school and continued working as full-time veterinarians after receiving their degrees.
Near the end of 1958 Dr. Ivens developed a serious heart condition which required him to reduce his work load considerably. At the same time, Drs. Schmidt and Yuhas became interested in acquiring a proprietary interest in the business; because of his heart condition, Dr. Ivens was receptive to their plans. An agreement was finally worked out among the three doctors, the exact terms of which are in dispute in this litigation. The three doctors consulted a lawyer to draw up the agreement, who, in turn, referred them to an associate specializing in taxation. Three documents were eventually executed.
The first document was the partnership agreement. Under this agreement, Drs. Schmidt and Yuhas as the active partners were each to receive a salary of $150.00 per week plus 45% of the net profits of the business; Dr. Ivens, the inactive partner, was to receive a salary of $500.00 per year and 10% of the net profits and he was to transfer certain equipment and accounts receivable to the partnership.
The second document was a deed transferring the real estate at 60 Haverford Road from Dr. Ivens to Drs. Schmidt and Yuhas as tenants in common for a consideration of $1.00. Dr. Ivens, pursuant to advice from his accountant, filed a federal gift tax return covering this transfer, wherein the property was valued at $50,000.00 subject to an $8,000.00 mortgage.
The third document was a lease in which Dr. Ivens as lessor leased certain kennels he owned in Doylestown to the partnership at a yearly rental of $11,500.00. At all times during the course of these events Drs. Ivens and Schmidt resided at the kennels at Doylestown,
while Dr. Yuhas lived with his family at 60 Haverford Road.
The three doctors also entered into an oral agreement, the terms of which are in dispute. Dr. Ivens alleged, and the court below so found, that the agreement was to the effect that Drs. Schmidt and Yuhas would support Dr. Ivens for the remainder of his life in exchange for which Drs. Schmidt and Yuhas would take over Dr. Ivens' veterinary practice. Allegedly, the three doctors valued Dr. Ivens' capital contribution to the partnership at $250,000.00, including the property at 60 Haverford Road.
From January 1, 1961, until November 1, 1966, the partnership paid the following expenses: the $8,000.00 mortgage on the property at 60 Haverford Road, all maintenance costs for that property, all maintenance expenses for the kennels in Doylestown, and certain expenses incurred by Dr. Ivens in breeding and showing ...