Amdar, Inc. v. Satterwhite , 37 N.C. App. 410 ( 1978 )

246 S.E.2d 165 (1978) 37 N.C. App. 410

AMDAR, INC.
v.
Jimmy Dale SATTERWHITE.

No. 7710SC694.

Court of Appeals of North Carolina.

August 1, 1978.

Boyce, Mitchell, Burns & Smith by G. Eugene Boyce and Lacy M. Presnell, III, Raleigh, for plaintiff-appellee.

Manning, Fulton & Skinner by Howard E. Manning, Jr., Raleigh, for defendant-appellant.

BRITT, Judge.

Defendant contends first that the trial court erred in finding and concluding "that the contract between plaintiff and defendant was supported by valuable consideration and reasonable as to time, terms and territory". We find no merit in this contention.

While defendant suggests in the statement of his first contention lack of valuable consideration for the contract, he does not argue that point in his brief. When defendant's counsel was questioned about this on oral argument, he admitted that evidence at the hearing showed that the agreement in question was preceded by similar annual agreements for the duration of defendant's employment with plaintiff. We therefore hold that this case differs from Wilmar, Inc. v. Liles and Wilmar, Inc. v. Polk, 13 N.C.App. 71, 185 S.E.2d 278 (1971), cert. denied, 280 N.C. 305, 186 S.E.2d 178 (1972).

In those cases the covenants not to compete were entered into after the employees had been employed for some time and the purported consideration, a pension plan and an agreement to pay one-half of the employee's gasoline bills, were held illusory as they were both subject to amendment solely within the discretion of the employer. Here the new contract of employment binds the employer for an additional year. This detriment to him is sufficient consideration to support the covenant not to compete.

Both parties concede that for restrictive covenants not to engage in competitive employment to be enforceable they must be (1) in writing, (2) supported by valid consideration, and (3) reasonable as to terms, time and territory. Greene Co. v. Kelley, 261 N.C. 166, 134 S.E.2d 166 (1964); Henley Paper Co. v. McAllister, 253 N.C. 529, 117 S.E.2d 431 (1960); Mastrom, Inc. v. Warren, 18 N.C.App. 199, 196 S.E.2d 528 (1973).

In his brief defendant states that he does not argue that the provisions of Paragraph 7A of the agreement are unreasonable as to duration or territory, but he insists that the terms of the agreement are unreasonable "because of the restrictions placed upon defendant's right to employment upon termination of his employment with the plaintiff". He argues that this case is controlled by Henley Paper Co. v. McAllister, supra. We disagree.

In Henley Paper Co., the employee, a salesman in the fine paper trade, agreed that he would not "for a period of three years after the termination of this contract, regardless of the cause or manner of said termination, either directly or indirectly engage in the manufacture, sale or distribution of paper or paper products within a radius of 300 miles of any office or branch of the Henly Paper Company or its subsidiary divisions, nor will he aid, assist or have any interest in any such business within the limits of the territory or during said time as herein provided . . . ." The trial court denied plaintiff injunctive relief and it appealed. In affirming the trial court, the Supreme Court held that the agreement was without consideration since defendant signed it several months after he began working with the plaintiff. The Supreme Court further held that since defendant's employment was confined to the fine paper trade, a covenant that he would not engage, either directly or indirectly, in the manufacture, sale or distribution of paper or paper products in a territory extending in a 300 mile radius from any of plaintiff's divisions, embracing territory extending from Delaware to Alabama and from Indiana to the Atlantic Ocean, was unreasonable and void in that it excluded defendant from too much territory and too many activities.

In the case at hand the restraints imposed on defendant were considerably narrower from the standpoint of area and activity. We think this case is more like Wilmar, Inc. v. Corsillo, 24 N.C.App. 271, 210 S.E.2d 427, cert. denied, 286 N.C. 421 (1974), 211 S.E.2d 802 (1975). We consider very appropriate the following statement by Chief Justice Stacy in Sonotone Corp. v. Baldwin, 227 N.C. 387, 390, 42 S.E.2d 352, 354 (1947), quoted in Wilmar:

"There is no ambiguity in the restrictive covenant. It was inserted for the protection of the plaintiff, and to inhibit the defendant, for a limited time, from doing exactly what he now proposes to do. . . The parties regarded it as reasonable and desirable when incorporated in the contract. Subsequent events, as disclosed by the record, tend to confirm, rather than refute, this belief. Freedom to contract imports risks as well as rights. Such a covenant is lawful if the restriction is no more than necessary to afford a fair protection to the covenantee and is not unduly oppressive on the covenantor and not injurious to the interests of the public."

We hold that the covenant in question was not unreasonable.

Defendant contends the court erred in granting the preliminary injunction, not only for the reasons discussed above but because plaintiff failed to show probability of irreparable harm. We find no merit in this contention.

Plaintiff argues that it showed a confidentiality between it and its customers and that defendant's actions betrayed that confidence; that it also showed the loss of one patron to defendant's new employer and the possibility of loss of others. We find this argument persuasive. Furthermore, defendant acknowledged in Paragraph 13 of the employment agreement that irreparable injury would result from a breach by him of the agreement.

For the reasons stated, the order appealed from is

Affirmed.

ARNOLD and ERWIN, JJ., concur.