McCallum v. Asbury

McCallum (plaintiff) was a surgeon associated with the Corvallis Clinic. Three other doctors organized the clinic in 1947. McCallum became a partner in 1953. By 1962, the clinic had 17 doctors, including 10 total partners. The partners renewed the material provisions of the partnership agreement each time a new partner entered the clinic. The partnership agreement provided that all partners would have an equal share in the management of the business. It further provided that a majority vote of the partners could amend the agreement, so long as no amendments discriminate against any partner(s). Differences regarding clinic management arose between McCallum and the other partners. A majority of partners, over McCallum’s protest, amended the agreement to create an executive committee to manage generally all affairs of the partnership except the committee could not enter any employment contract with a physician for services as a medical doctor, act in a way that discriminates against any partner(s), nor exercise any power expressly reserved to the partnership by the partnership agreement. Per the amendment, a majority of partners could alter or cancel committee actions and reconstitute the committee. No committee action, except emergency action, took effect until 10 days thereafter. All partnership members could attend committee meetings, but any partner who was not an executive committee member needed permission to participate in committee deliberations. McCallum sued to dissolve the partnership and for other relief. The remaining partners (defendants) countersued to enforce a provision of the partnership agreement permitting a majority of the partners to expel and buyout a partner, as well as the noncompete provision. The trial court denied McCallum’s requested dissolution relief. The trial court also found the majority of the partners had no right to form the executive committee, held that the remaining partners released McCallum from his obligation to comply with the partnership agreement provisions by breaching the agreement before he sought dissolution, and denied the remaining partners’ requested injunctive relief. All parties appealed.