Sonotone Corp. v. . Baldwin

42 S.E.2d 352, 227 N.C. 387, 1947 N.C. LEXIS 427

• Court: Supreme Court of North Carolina
• Decided: April 30, 1947
• Status: Published

Opinion

Stacy, C. J.

On the hearing, the case was made to turn primarily on whether the restrictive covenant, here sought to be enforced, is in writing and signed by the defendant. The statute provides that no contract or agreement limiting the right of any person to do business anywhere in North Carolina shall be enforceable unless such contract or agreement is in writing and duly signed by the party who agrees not to enter into any such business within the prescribed territory. G. S., 75-4.

I. CHARACTER OF CONTRACT.

That the parties regarded their written contract of January 1, 1943, as being in full force and effect during the year 1946 is evidenced by the following:

1. From and after December 31, 1945, the parties continued their operations under the contract, each rendering the same services and proceeding as theretofore. See, Styles v. Lyon, 87 Conn., 23, 86 Atl., 564; 35 Am. Jur., 454 and 460; 17 C. J. S., 318.

2. On June 21, 1946, the parties duly executed and signed an amendment to the contract.

3. On December 11, 1946, the defendant, by letter signed by him as “Mgr.,” tendered his resignation as District Manager of defendant’s Charlotte territory, effective December 31, 1946.

The effect of the memorandum of June-21, 1946, was to put in writing the mutual understanding of the parties that the written contract between them was still operative and to continue it in force as amended. It was signed by tbe defendant in bis capacity as District Manager. His letter of resignation, written on December 11, was also signed by bim as “Mgr.” True, in tbis letter, tbe defendant speaks of “tbe absence of contract,” but tbis would seem to be a contradiction in terms. He resigns as District Manager effective at a later date. He evidently regarded bimself as District Manager at tbat time. Under wbat contract % Moreover, tbe defendant was then looking forward to bis contemplated work with tbe Telex Corporation.

Tbe defendant confidently cites, as controlling, tbe decision in Jenkins v. King (Ind., 1946), 65 N. E. (2d), 122, 163 A. L. R., 397, but tbat case was made to rest on a different principle. There, tbe extension of tbe contract by implication alone was all tbe plaintiff bad to rely upon. Here, the parties readopted tbe contract and amended it by writing duly executed and signed on June 21, 1946.

II. VALIDITY 03? COVENANT.

There is no ambiguity in tbe restrictive covenant. It was inserted for tbe protection of tbe plaintiff, and to inhibit tbe defendant, for a limited time, from doing exactly wbat be now proposes to do. Exterminating Co. v. Wilson, ante, 96. Tbe parties regarded it as reasonable and desirable when incorporated in tbe contract. Subsequent events, as disclosed by tbe record, tend to confirm, rather than refute, tbis 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 tbe cove-nantor and not injurious to tbe interests of the public. Beam v. Rutledge, 217 N. C., 670, 9 S. E. (2d), 471; Matthews v. Barnes, 155 Tenn., 110, 293 S. W., 993, 52 A. L. R., 1350; Granger v. Craven, 159 Minn., 296, 199 N. W., 10, 52 A. L. R., 1356; Anno. 98 A. L. R., 963.

Many of tbe authorities in tbis jurisdiction dealing with restrictive covenants are collected in tbe case of Moskin Bros. v. Swartzberg, 199 N. C., 539, 155 S. E., 154.

Perhaps it should be noted tbat cases arising out of tbe conventional relation of master and servant, or employer and employee, are somewhat different in their solution from the one here presented. Anno. 9 A. L. R., 1456. The controlling factors are dissimilar. A workman “who has nothing but his labor to sell and is in urgent need of selling that” may unwittingly accede to an unguarded restriction at the time of his employment, but one who is competent to serve as District Manager óf a large corporation is supposed to understand and fully appreciate the significance of bis 'engagements. While the law frowns upon unreasonable restrictions, it favors the enforcement of contracts intended to protect legitimate interests. It is as much a matter of public concern to see tbat valid engagements are observed as it is to frustrate oppressive ones.

The covenant here seems reasonable in its terms and purposes. It appears to meet the test of validity. Grand Union Tea Co. v. Walker, 208 Ind., 245, 195 N. E., 277, 98 A. L. R., 958, and note. It is reasonably limited both in respect of time and territory, which distinguishes it from Comfort Spring Corp. v. Burroughs, 217 N. C., 658, 9 S. E. (2d), 473. Likewise, Kadis v. Britt, 224 N. C., 154, 29 S. E. (2d), 543, 152 A. L. R., 405, is distinguishable in its factual situation.

In undertaking to change horses for what the defendant regards a better mount, he is reminded of his obligation to the steed which.brought him safely to midstream and readied him for the shift. The purpose here is to call his attention to the matter.

No reversible error has been made to appear.

Affirmed.