Dixon, Odom & Co. v. Sledge , 59 N.C. App. 280 ( 1982 )

296 S.E.2d 512 (1982)

DIXON, ODOM & COMPANY
v.
David L. SLEDGE and Sledge and Trivette, A General Partnership.

No. 8118SC1276.

Court of Appeals of North Carolina.

November 2, 1982.

Wyatt, Early, Harris, Wheeler & Hauser by William E. Wheeler, High Point, for the plaintiff, appellee.

Robert A. Brinson, High Point, for the defendants, appellants.

HEDRICK, Judge.

Defendants first contend that summary judgment was improperly granted for the plaintiff because a genuine issue of material fact exists as to what constitutes a "former client" under the agreement. Defendants argue the term "former client" is ambiguous and does not describe the intentions of the contracting parties. One interpretation of "former clients" given by the defendants is that one of plaintiff's clients could change to a third, unrelated accounting firm and later change to defendant Sledge's firm. This, argues the defendants, was not a situation contemplated by the contracting parties when they entered into the agreement. Yet, a likely occurrence would come about where defendants advised potential clients, who were also former clients of the plaintiff, to use a third firm before moving their business to defendants in order to circumvent the agreement between plaintiff and defendants.

Nonetheless, this court need not entertain all the possible interpretations of "former clients" in order to decide this case. Where the provisions of a contract are plainly set out, the court is not free to disregard them and a party may not contend for a different interpretation on the ground that it does not truly express the intent of the parties. Taylor v. Gibbs, 268 N.C. 363, 150 S.E.2d 506 (1966). We find the language of this agreement, made between professional men, who are deemed capable of guarding their own interest and remaining free from compulsion, is clear and unambiguous on its face. This finding obviates defendants' argument that "former clients" is not what the parties meant at the time of contracting. We note that the agreement contains seven subparagraphs below the provision setting out the obligations concerning "former clients." Furthermore, plaintiff's "Exhibit F" shows that defendant Sledge suggested that "fees be paid to cover present or future clients who become my client during a ten year period to end January 10, 1987." (Emphasis added). Plaintiff's affidavits and exhibits further demonstrate that the original partnership agreement signed by defendant Sledge in 1974 contained certain covenants not to compete and that the agreement in dispute here was adopted in lieu of the original partnership agreement limiting a withdrawing partner's right to compete with the plaintiff partnership.

Defendants contend that this agreement was an unreasonable and unenforceable covenant not to compete. We do not agree with defendants and find this was not a covenant not to compete. The contract simply describes the obligations of the parties with regard to payment of salary, repurchasing of Sledge's partnership interest, cancellation of Sledge's debt and division of fees which Sledge obtained from "former clients." The agreement did not restrict the area in which Sledge could practice accounting nor did it prohibit him from serving former clients of the plaintiff. By paying a portion of his fees to plaintiff, defendant contracted out of the covenant not to compete as contained in the partnership agreement. The subsequent agreement was simply a contract to settle the affairs of the parties concerned, and it was not a covenant not to compete. Therefore, the rules governing covenants not to compete do not apply.

Defendants also contend the agreement fails for lack of consideration. We disagree. Both parties signed the agreement and defendant Sledge received the right to compete with the plaintiff in High Point, an area that would have been off limits under the original partnership agreement. Likewise, plaintiff gave up the right to prevent defendant Sledge from competing in High Point and dissolved other obligations Sledge had under the 1974 partnership agreement. We find this adequate consideration as a matter of law.

Defendants next argue that any disclosure of information under the agreement violates I.R.C. § 7216 (1954) or N.C.G.S. § 75-28. Each prohibits disclosure of any information furnished in connection with the preparation of a tax return. However, the agreement only calls for a list of defendants' clients, defendants' fees and reasonable examination of records for purposes of verification. The information Sledge agreed to disclose was not information furnished by a taxpayer in connection with the preparation of a tax return. Instead, it was information from defendants' own books and financial records. Information to be provided under the agreement did not have to denote a client as one employing defendants to prepare tax returns nor in any way divulge tax return information. A list of defendants' clients, fees and inspection of their bookkeeping records, especially where a withdrawing partner is buying out of a former agreement, has nothing to do with disclosure of confidential tax return information as controlled by these statutes. We find defendants' argument without merit.

Defendants also advance the argument that disclosures required by the agreement violate Section .0204 and Section .0302 of the Code of Ethics of the North Carolina State Board of Certified Public Accountants. Again, the defendants' position is not well founded. Section .0204(a) states that a CPA "shall not disclose any confidential information obtained in the course of a professional engagement except with the consent of the client." Section .0302 bars the payment or acceptance of a commission for client referrals. Neither section applies to the facts at hand. First, the information for disclosure as required by the agreement is not confidential client information. It is simply a listing of clients and fees. Second, plaintiff is not referring clients to defendants and no commissions are involved. By paying plaintiff a percentage of his fees obtained from former clients of plaintiff, the defendants are simply purchasing the right to compete with plaintiff in a certain geographic area, which was prohibited by the original partnership agreement. Therefore, we find these provisions of the CPA Code of Ethics inapplicable.

In Assignment of Error No. 6, defendants contend plaintiff is not entitled to specific performance because there is an adequate remedy at law. Yet, defendants have refused to comply with the agreement and have said they will not comply in the future. The only way for plaintiff to determine the sums, if any, due to it is to obtain the list called for under the agreement. Any damages could not be ascertained without delivery of the client list. Therefore, the trial court properly granted specific performance to the plaintiff.

The final question before this court is the propriety of the trial judge's amendment to the order deleting deposition expenses from the costs charged to the defendants or because "[c]ourt costs do not under applicable State law include deposition expenses and therefore are not properly taxed as part of the costs of this action...." The applicable statute is G.S. § 6-20 which reads: "In other actions, costs may be allowed or not, in the discretion of the court, unless otherwise provided by law." Where the court has taxed costs in a discretionary manner its decision is not reviewable. Hoskins v. Hoskins, 259 N.C. 704, 131 S.E.2d 326 (1963). However, in the instant case the trial court rules as a matter of law to disallow the deposition expenses. As a general rule, recoverable costs may include deposition expenses unless it appears that the depositions were unnecessary. 20 Am.Jur.2d Costs § 56 (1965). Even though deposition expenses do not appear expressly in the statutes they may be considered as part of "costs" and taxed in the trial court's discretion. Therefore, we remand the issue of costs to be determined at the trial court's discretion.

Summary judgment for the plaintiff is affirmed. The case is remanded for a determination of taxing of costs.

Affirmed in part; remanded in part.

MARTIN and HILL, JJ., concur.