Folk v. Wallace Business Forms, Inc.

• Decision Date: 16 April 1968
• Docket Number: No. 11994,11995.,11994
• Parties: Emerson D. FOLK and National Business Forms, Inc., Appellants, v. WALLACE BUSINESS FORMS, INC., Successor to Standard Business Forms, Inc., Appellee. Emerson D. FOLK and National Business Forms, Inc., Appellees, v. WALLACE BUSINESS FORMS, INC., Successor to Standard Business Forms, Inc., Appellant.
• Court: U.S. Court of Appeals — Fourth Circuit

394 F.2d 240 (1968)

Emerson D. FOLK and National Business Forms, Inc., Appellants, v. WALLACE BUSINESS FORMS, INC., Successor to Standard Business Forms, Inc., Appellee.

Emerson D. FOLK and National Business Forms, Inc., Appellees, v. WALLACE BUSINESS FORMS, INC., Successor to Standard Business Forms, Inc., Appellant.

Nos. 11994, 11995.

United States Court of Appeals Fourth Circuit.

Argued March 8, 1968.

Decided April 16, 1968.

William M. Pate, Atlanta, Ga. (Mitchell, Clarke, Pate & Anderson, Atlanta, Ga., Thomas Ashe Lockhart, and Cansler & Lockhart, Charlotte, N. C., on brief), for appellants in No. 11,994 and appellees in No. 11,995.

Fred B. Helms, Charlotte, N. C., and Henry M. Whitesides, Gastonia, N. C. (Helms, Mulliss, McMillan & Johnston, Charlotte, N. C., on brief), for appellee in No. 11,994 and appellant in No. 11,995.

Before BRYAN and CRAVEN, Circuit Judges, and MacKENZIE, District Judge.

MacKENZIE, District Judge.

On October 21, 1957, Standard Business Forms, Inc. purchased Emerson D. Folk's interest in that corporation. As part of the consideration for the sale, the usual agreements were executed under which Mr. Folk agreed not to compete in a three state area and not to hire employees of Standard Business Forms, Inc. for a ten year period.

In 1959, a declaratory judgment suit was instituted by Folk and his new company, National Business Forms, Inc. to clarify the contract provisions relative to Folk's not hiring Standard's employees. On August 12, 1959, a consent permanent injunction was entered as follows:

"Now, therefore, it is ordered, adjudged and decreed as follows:

1. That the individual plaintiff, Emerson D. Folk, his heirs, executors, administrators, legal representatives, successors and assigns and the corporate plaintiff, National Business Forms, Inc., its officers, agents, servants, employees, attorneys, successors or assigns and all other persons in active concern or participation with them or either of them be and they are hereby permanently enjoined, inhibited and restrained from, directly or indirectly through any other person, firm or corporation or in any manner, until after December 31, 1967: Attempting to hire, hiring, employing or continuing to employ, without the prior written approval of W. E. Hendricks, any person except Charles B. Brown, as set forth in the agreement of October 21, 1957, who was or has been at any time from October 21, 1954, to October 21, 1957, employed by Standard Business forms, Inc., a corporation with principal offices in Gastonia, North Carolina.

2. It is further ordered that the defendant and its surety be and they are hereby discharged from any bond heretofore posted in this proceeding, and that the plaintiffs be taxed with the costs hereof.

This 12th day of August, 1959.

/s/ Wilson Warlick Wilson Warlick District Judge".

Five years later, on October 14, 1964, Standard Business Forms, Inc., under its new merged title of Wallace Business Forms, Inc., moved for a contempt citation against Emerson D. Folk and his corporation, National Business Forms, Inc., for violating the permanent injunction set forth in the paragraph just above. In brief, the citation charged that Folk and National Business Forms, Inc., either collectively or separately, "* * * employed or caused to be employed in violation of said consent judgment and consent permanent injunction Clyde Walker, Witzel K. Chastain and J. B. Hodgins, all three of whom were employed by Standard Business Forms, Inc. at some time during the period between October 21, 1954 and October 21, 1957".

After extensive hearings over a period of three years, on June 16, 1967, Chief Judge Wilson Warlick of the District Court for the Western District of North Carolina found that the injunction had indeed been violated and supplemented that finding by an order filed August 28, 1967, finding civil contempt damages against Folk and National Business Forms, Inc., in favor of Wallace Business Forms, Inc. (formerly Standard Business Forms, Inc.) in the amount of $30,000.00 plus the costs arising from the prosecution of the contempt, and attorneys' fees of $6,000.00.

From the contempt order this appeal was taken by Folk and National Business Forms, Inc.

From that portion of the order fixing damages and attorneys' fees, a cross-appeal was taken by Wallace Business Forms, Inc. (formerly Standard Business Forms, Inc.).

The questions for decision on appeal are:

(1) Whether the finding of the trial court that Folk and National violated the injunction by employing Witzel K. Chastain, Clyde Walker and J. B. Hodgins, is supported by the evidence;

(2) Whether the evidence supports the trial court's finding of injury to Standard or Wallace proximately resulting from the violation of the injunction found by the court;

(3) Whether the evidence authorizes a finding of damages in the amount of $30,000;

(4) Whether the award of attorneys' fees was proper.

We find ample evidence to support the findings of the District Court that Folk and National Business Forms, Inc. violated the injunction; that the damages as found by him proximately flowed from the violation and that the award of attorneys' fees was proper.

It is admitted that Chastain, Walker and Hodgins were employees of Standard Business Forms, Inc. during the period October 21, 1954 to October 21, 1957, and therefore covered by the permanent consent injunction of August 12, 1959, as being persons whose hiring was forbidden to Emerson D. Folk, National Business Forms, and all persons or corporations participating with Folk and National directly or indirectly.

Chastain, Walker and Hodgins left Standard and became employees of Eastern Business Forms, Inc., a corporation discussed by them as early as the fall of 1963, while they were still employed at Standard, and finally incorporated in September, 1964.

As early as February, 1964, while Chastain, Walker and Hodgins were still employed with Standard, Folk and National Business Forms were...