a business on account of its name, location, reputation and success. Taormina v. Culicchia, 355 S.W.2d 569 (Tex.Civ.App.-El Paso 1962, writ ref'd n.r.e.). Goodwill has been defined as "the advantage or benefit which is acquired by an establishment beyond the mere value of the capital stock, funds, or property employed therein, in consequence of the general public patronage and encouragement which it receives from constant or habitual customers on account of its local position, or common celebrity, or reputation for skill, or influence, or punctuality, or from other accidental circumstances or necessities, or even from ancient partialities or prejudices. Finn v. Finn, 658 S.W.2d 735 (Tex.App. -Dallas 1983, writ ref'd n.r.e.).
Personal goodwill, as opposed to the goodwill that may attach to a trade or business, is not property in the estate of the parties and, therefore, is not divisible upon divorce. Nail v. Nail, 486 S.W.2d 761 (Tex. 1972); Rathmell v. Morrison, 732 S.W.2d 6 (Tex. App. -Houston [14th Dist.] 1987, no writ), Guzman v. Guzman, 827 S.W.2d 445 (Tex.Civ.App. -Corpus Christi) writ denied, 843 S.W.2d 486 (Tex. 1992).
Professional goodwill, a type of personal goodwill, attaches to the person of the professional man or woman as a result of confidence in his or her skill and ability; it does not possess value or constitute an asset separate and apart from the professional's person, or from his individual ability to practice his profession; and it would be extinguished in the event of the professional's death, retirement, or disablement. Rathmell, 732 S.W.2d 6. It is possible that an individual may have accrued professional goodwill and for the business or partnership to also have goodwill attributable to it. Goodwill that exists separate and part from a professional's personal skills, ability, and reputation, is divisible upon divorce. Rathmell, 732 S.W.2d 6; Keith v. Keith, 763 S.W.2d 950 (Tex.App. - Fort Worth 1989, no writ). Similarly, it has been held that an individual's ability to practice his profession does not qualify as property subject to division by the court. Ulmer v. Ulmer, 717 S.W.2d 665 (Tex.App. -Texarkana 1986, no writ)(a janitorial service); See also Salinas v. Rafati, 948 S.W.2d 286 (Tex. 1997, no writ).
Goodwill of a professional corporation, as distinct from personal goodwill, is a part of the property to be taken into consideration on divorce. Geesbreght v. Geesbreght, 570 S.W.2d 427 (Tex.Civ.App. - Fort Worth 1978, writ dism'd). In Geesbreght, the Fort Worth court distinguished the holding in Nail from an ownership interest in the professional corporation in which the husband owned a 50 percent interest. Id. The corporation employed ten full-time and 50 to 100 part-time physicians to fulfill its obligations to furnish emergency services at eight different hospital locations.
Similarly, in determining the value of stock in a professional association, the value of goodwill is considered in determining the value of an interest in a medical association. See Trick v. Trick, 587 S.W.2d 771 (Tex.Civ.App. - El Paso 1979, writ dism'd). (husband was medical doctor owning one-fifth of stock in San Antonio Orthopedic Group, P.A.); See also Trevino v. Trevino, 555 S.W.2d 792 (Tex.Civ.App. -Corpus Christi 1977, no writ), (stock in doctor's professional association was community).
In Austin v. Austin, 619 S.W.2d 290 (Tex.Civ.App. -Austin 1981, no writ) the trial court divided the proceeds from the sale of husband's CPA practice. The sale contract included goodwill and a non-competition clause. The court of civil appeals affirmed and stated:
Once a professional practice is sold, the goodwill is no longer attached to the person of the professional man or woman. The seller's action will no longer have significant effect on the goodwill. The value of the goodwill is fixed and it is now property that may be divided as community property.
Id.
In Finn v. Finn, 658 S.W.2d 735 (Tex. App. - Dallas 1983, writ ref’d n.r.e.), the court announced a two-pronged test to determine whether the goodwill attached to a professional practice is subject to division upon divorce. Id. First, goodwill must be determined to exist independently of the personal ability of the professional spouse. Second, if such goodwill is found to exist, then it must be determined whether the goodwill has a commercial value in which the community estate is entitled to share. Id.
In Eikenhorst v. Eikenhorst, 746 S.W.2d 882 (Tex.App. -Houston 1988, no writ), the husband, a medical doctor, incorporated his medical practice and was the sole shareholder in that professional association. He was also a partner in two partnerships in which each doctor owned 50%. The court mistakenly characterized the professional association and the partnership entities as separate property, but awarded wife community enhancement to husband's separate property, finding that husband's separate property had been increased by "goodwill" in the amount of $150,000. See Id.
The court held:
The Texas Supreme Court has held that the goodwill of a medical practice that may have accrued at the time of divorce was not property of the estate of the parties.
Id.
[I]t is to be understood that in resolving the question at hand we are not concerned with goodwill as an asset incident to the sale of a professional practice or that may exist in a professional partnership or corporation apart from the person of an individual member, or that may be an element of damage by reason of tortious conduct.
The appellee introduced evidence through an expert that the two medical partnerships had approximately $280,000 in goodwill. This goodwill derived from the contracts that the two partnerships had with four local hospitals, and the present monopoly these partnerships have in providing radiological services to the local community. There was evidence that the partnerships themselves had the contracts with the local hospitals, not the individual partners. This evidence is sufficient to support the trial court's finding that the two partnership entities did have goodwill of a commercial value in which the community estate of the parties to this litigation was entitled to share. Id.
In Hirsch v. Hirsch, 770 S.W.2d 924 (Tex.App. -El Paso 1989, no writ), the court noted: "Where the entity is a one person professional corporation conducting business in that person's name, it would be difficult to get past the first prong of the test." Id.; see also Simpson v. Simpson, 679 S.W.2d 39 (Tex.App. -Dallas 1984, no writ) (husband's professional corporation had no goodwill apart from goodwill belonging to individual physicians who owned the corporation).