Engineering Associates, Inc. v. Pankow

150 S.E.2d 56, 268 N.C. 137, 1966 N.C. LEXIS 1142

• Court: Supreme Court of North Carolina
• Decided: September 21, 1966
• Docket: 122
• Status: Published

Opinion

Pless, J.

In Greene Company v. Kelley, 261 N.C. 166, 134 S.E. 2d 166, this Court said: “The courts generally have held that restrictive covenants not to engage in competetive employment are in partial restraint of trade, and hence to be enforceable they must be (1) in writing, (2) supported by a valid consideration, and (3) reasonable as to terms, time, and territory. Failure in either requirement is fatal. * * * (w)hen the relationship of employer and employee is already established without a restrictive covenant, any agreement thereafter not to compete must be in the nature of a new contract based upon a new consideration. Kadis v. Britt, 224 N.C. 154, 29 S.E. 2d 543. Therefore, the employer could not call for a covenant not to compete without compensating for it.”

This case was later cited by Higgins, J., in a concise opinion in Greene Co. v. Arnold, 266 N.C. 85, 145 S.E. 2d 304.

Had the defendant signed the proposed contract the plaintiff would have been unable to enforce it. It fails to comply with requirements cited above in at least two particulars. First, there was complete lack of consideration; and second, it was unreasonable in view of the time and territory involved. It may be that in some instances and under extreme conditions five years would not be held to be unreasonable, but when it is coupled with no restrictions whatever as to territory there can be no doubt of its unreasonableness. In effect it would mean that this defendant would have been unable to use the skill, knowledge and experience gained in three and a half years anywhere in the world. As said in Peerless Pattern Co. v. Pictorial Review, 147 App. Div. (N.Y.) 715, that where a person in his new employment undertakes to use the knowledge acquired in the old, it is not unlawful, for “equity has no power to compel a man who changes employers to wipe clean the slate of his memory.”

The defendant refused to sign the contract, and was well within his rights in doing so. The plaintiff, however, is asking the court to bind the defendant to a contract which he voluntarily and knowingly refused to sign.

To state the proposition is to decide the case. The Court has con sidered the plaintiff’s position that in the absence of a contract the defendant should be enjoined from working for its competitor under the conditions alleged.

The plaintiff has offered no evidence that defendant acquired knowledge of its business in bad faith, and “an employee may take with him, at the termination of his employment, general skills and knowledge acquired during his tenure with the former employer.”' Schulenburg v. Signatrol, 212 N.E. 2d 865 (Ill. 1965). Nor is any abuse of confidence or bad faith in later employment shown as to the defendant. He has merely exercised the privilege every citizen has of accepting employment in the field for which he is trained. The plaintiff cannot, by unjustifiably discharging him, deprive him of this right.

The lower court was correct in dissolving the restraining order and dismissing the action.

No error.