Seligman & Latz of Pittsburgh, Inc. v. Vernillo

• Decision Date: 24 May 1955
• Citation: 382 Pa. 161,114 A.2d 672
• Parties: SELIGMAN & LATZ OF PITTSBURGH, INC. v. Michael T. VERNILLO and Lenore A. Lioyd, individually and trading and doing business as Salon Plaza, a partnership, Appellants. Appeal of Lenore A. LLOYD. Appeal of Michael T. VERNILLO.
• Court: Pennsylvania Supreme Court

Page 672

114 A.2d 672

382 Pa. 161

SELIGMAN & LATZ OF PITTSBURGH, INC. v. Michael T. VERNILLO and Lenore A. Lioyd, individually and trading and doing business as Salon Plaza, a

partnership, Appellants.

Appeal of Lenore A. LLOYD.

Appeal of Michael T. VERNILLO.

Supreme Court of Pennsylvania.

May 24, 1955.

Rehearing Denied June 27, 1955.

Metz, McClure, Hanna & MacAlister, John A. Metz, Jr., Henry Hustin, Pittsburgh, for appellants.

Gilbert J. Helwig, Reed, Smith, Shaw & McClay, Pittsburgh, for appellee.

Before STERN, C. J., and STEARNE, JONES, BELL, CHIDSEY, MUSMANNO and ARNOLD, JJ.

BELL, Justice.

Defendants appeal from a preliminary injunction enjoining them from operating a beauty salon in competition with their former employer, and from soliciting the customers of their former employer in violation of the restrictive covenants of the employment contract they had (respectively) made with plaintiff.

These two appeals were heard and argued as one, since the facts in each case are substantially the same. Lenore Cesarone Lloyd was employed for many years by Seligman & Latz, which was originally a partnership but subsequently incorporated. On November 18, 1949 she signed a contract as employee, party of the third part, with Seligman & Latz, Incorporated, party of the first part, and the plaintiff, Seligman & Latz of Pittsburgh, Inc., their subsidiary, party of the second part. This contract signed in triplicate recited the highly distinctive Antoine methods, technique and styles which parties of the first and second part wished to be preserved for themselves; and in consideration of plaintiff training defendant without expense to her, and giving her employment at a weekly salary plus the commission specifically set forth therein, defendant agreed to the following pertinent restrictions:

'Third. * * * (b) The third party [defendant] agrees that, upon the termination of his employment by the second party [the plaintiff] * * * the third party will not * * * (2) solicit for himself or for any new employer or new associate in any hairdressing business, any of the customers or patrons of the second party [plaintiff] whether or not the third party [defendant] rendered services to or for such customers or patrons; or (3) designate * * * himself * * * as an Antoine operator; or (4) refer to in any way that he was formerly employed by the second party for the purpose of enticing customers or patrons of the second party to patronize him or any beauty parlor with which he may then be associated; * * * or (7) that he * * * will not, for at least one (1) year after such termination, be employed in or be associated with in any way, any beauty or hairdressing establishment or salon, * * * which is or may be conducted * * * within a radius of one (1) mile from such Antoine salon in which he was employed at the time of such termination.'

A substantially similar contract was signed by defendant Vernillo.

Defendants ten days after the termination of their employment by plaintiff began to operate a beauty salon virtually across the street from plaintiff's place of business, and immediately solicited all of plaintiff's customers whose names they could remember, and they admitted remembering most of them. They thereby secured 110 to 130 former customers from the Antoine Salon. These acts were in flagrant violation of the restrictive covenants in their aforesaid contract of employment.

A contract between an employer and an employee which contains restrictive covenants against competition by the employee, after the termination of his contract, is valid and will be sustained unless the employee proves that the contract constitutes an unreasonable or illegal restraint of trade: Plunkett Chemical Co. v. Reeve, 373 Pa. 513, 95 A.2d 925; Harris Calorific Co. v. Marra, 345 Pa. 464, 29 A.2d 64.

Defendants contend that the contract is not binding upon them because Seligman & Latz were originally a partnership and failed to aver and prove an assignment of this contract to the corporation after they incorporated. There is no merit in this contention. The law is accurately stated in 35 Am.Jur., Master and Servant, sec. 33: 'The incorporation of the employer's business without other change does not abrogate the contract of employment, or alter the liability of the parties one to the other.'

That brings us to the main question: Was the contract invalid because it constituted an unreasonable or illegal restraint of trade?

The scope of appellate review is thus stated in Murray v. Hill, 359 Pa. 540, 541, 59 A.2d 877: "Our uniform rule is that, on an appeal from a decree which refuses, grants or continues a preliminary injunction, we will look only to see if there were any apparently reasonable grounds for the action of the court below, and we will not further consider the merits of the case or pass upon the reasons for or against such action, unless it is plain that no such grounds existed or that the rules of law relied on are palpably wrong or clearly inapplicable. Paxson's Appeal, 106 Pa. 429, 436, 437; Sunbury Borough v. Sunbury & Susquehanna Ry. Co., 241 Pa. 357, 88 A. 543. See, also, Holden v. Llewellyn, 262 Pa. 400, 105 A. 639. * * *'

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