Engineering Associates, Inc. v. Pankow, 122

• Decision Date: 21 September 1966
• Docket Number: No. 122,122
• Court: North Carolina Supreme Court
• Parties: ENGINEERING ASSOCIATES, INC. v. Kenneth Oscar PANKOW.

Page 56

150 S.E.2d 56

268 N.C. 137

ENGINEERING ASSOCIATES, INC. v. Kenneth Oscar PANKOW.

No. 122.

Supreme Court of North Carolina.

Sept. 21, 1966.

Lee, Lee & Cogburn, by Max O. Cogburn, Asheville, for plaintiff appellant.

Herbert L. Hyde, Roy W. Davis, Jr., Van Winkle, Walton, Buck & Wall, Asheville, for defendant appellee.

PLESS, Justice.

In James C. 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 competitive 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. * * * when 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, 152 A.L.R. 405). 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 James C. 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 Co., 147 App.Div. (N.Y.) 715, 132 N.Y.S. 37, 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...