*1 day- a fifteen although does, the Commonwealth may, the police a search, not authorize will old warrant a crim regarding information hold for sixty-one days, probable present establish then use it to inal act and not. cause? We think are aimed at the same and McCants
Simmons, Shaw, the existence executed where search warrants evil; Here been established. cause has not probable present of- activity criminal of continuing no evidence A hiatus sixty-one day the issuing authority. fered to of the criminal act commission alleged between vitiates show- any for the search warrant application date as of the the warrant is- cause ing “probable A.2d 899. In the at supra sues.” Shaw, the search warrant for ap- absence of such showing, Fourth Amendment home offended the re- pellant’s shall issue, upon that “no Warrants but quirement cause . . . .” probable Court
The order of the reversed. The Superior sentence of the Court of Common judgment Pleas is reversed and a new trial County granted. of Beaver Jojstks Mr. Chief Justice dissents. Specialties, Appellant, Inc.,
Maintenance v.
Gottus. *2 Argued September 1972. Before C. J., Jones, Nix and Eagen, O’Brien, Roberts, Pomeroy, Man- JJ. derino, B.
David Washington, with him Shields & Wash- for ington, appellant. W.
Martin with him Sheerer, McGregor, Dillman, Sheerer <£ Schuchert, appellee.
Opinion January 25, 1974: Mr. Justice O’Brien, Maintenance Appellant, Specialties, Inc., is a cor- in poration engaged the business of distribution of a main- in products used vehicular variety parts plant maintenance and build- tenance, equipment maintenance. Ronald 1968, appellee, Sometime ing pursuant employed by appellant became Gottus, entered April parties On 29, 1969, oral contract. contract which included into written employment em- termination of competition after against ployment. alleging appellee
February 23, 1972, appellant, is now violation of engaging competition it, complaint the covenant filed against competition, seeking injunction. After oral equity argument, appellee’s chancellor motion for on granted judgment appellant’s complaint dismissed pleadings, with- out leave amend. appeal This followed.
The chancellor our upon based his decision opinion in Capital Inc. v. Bakers, Townsend, *3 A. 2d 292 where we refused to enforce a re- (1967), strictive it covenant because was to the taking of employment. chancellor reasoned that it appellee since was admitted that had “taken employ- in ment” 1968 under oral agreement which did not include the restrictive it was covenant, apparent the restrictive covenant was not ancillary to the taking of employment.
Appellant urges based on error, opinion our in Jacobson Co. v. Int. & Environment 427 Corp., Pa. 439, A. 2d 612 (1967), where we agreed with the chan in cellor that case that rule the that a restrictive coven ant is not enforceable unless ancillary to the “taking of “did not mean employment,” to imply that a restrictive covenant to be valid any employer-employ such ee contract a covenant would have to be part of the original employment between the parties. would be This unrealistic for in requirement, many . . . insertion of instances a restrictive covenant purpose. An original no valid serve contract would restrict employer no desire to has hires novice Only competitive novice present when the force. his possibly expertise, developed could a certain has competitively, injure employer will the if unleashed protection employer begin in terms of the to think reality, economic This is restrictive covenant. by Pa. at 450. it.” 427 be influenced the law should Capital distinguished Bakers be- In Jacobson, we “without the new contract was in the latter case, cause employee’s] any change status.” in [the a restrictive covenant Pa. at other words, 449. supported either consideration, if new is enforceable contract or form an initial change in the conditions appellee’s if status
In the instant case, beneficially parties changed their reduced had when writing, agreement enunciated Jacobson law if the restrictive reason- covenant, dictate that would appellant enforceable. However, would be able, change place any took such does aver change place.1 appellee Conse- no such took states that quently, covenant is not enforceable restrictive complaint properly dismissed. party Each to bear own costs.
Decree affirmed. agreement party The written was terminable either any (15) days notice, although time on fifteen could dispense judgment company, with the notice if “in the sole *4 guilty trust, neglect Ronald Gottus had been of a breach of company’s interest, by faithfully or failure to follow the instruc given by company representa to him tions the or its authorized immediately tive.” Even if the oral contract was terminable with notice, provision out the notice of the written contract would not change appellee’s employment be a sufficient in the status to render Redick, the restrictive covenant enforceable. See Markson Bros. v. 164, Superior 499, (1949). Pa. Ct. A. 66 2d 218
331
Opinion
Concurring
Jones:
Mr. Chief
Justice
opinion,
majority
feel
Although
agree
I
I
necessary
amplification
area of increas
this
that
ing litigation.
restrictive covenants
The enforcement of
litigation
subject
for centuries. At
been
of
has
con
covenants were
earliest common
all
law restrictive
of
therefore were unenf
sidered as restraints
trade and
development
part
of
orceable.1
However,
recognize
began to
modern commercial law, courts
under
limited circumstances covenants
certain
permissible
both
enforceable.2
were
century
than
has
this Commonwealth for more
law
in re
order to be enforceable covenants
(1)
satisfy
requirements:
straint of trade must
three
the covenant
relate to either
contract for the
must
goodwill
subject property
sale of
other
or
or to a con
employment;
sup
(2)
tract of
must
ported by adequate
(3)
applica
consideration;
reasonably
tion
the covenant must be
limited in both
territory.
time and
v.
Jacobson
Co.
International
&
Corp.,
(1967);
Environment
427 Pa.
235 A.
612
2d
439,
Capital
v.
Inc.
Bakers,
426 Pa.
231 A.
Townsend,
188,
(1967);
2d
Barb-Lee Mobile Frame
v. Co.
Hoot,
Morgan’s
Equipment Corp. Martucci,
1 In
618,
Home
v.
(1957),
136 A.
English
2d 838
Mr. Justice Cohen detailed the
com
background
employment covenants,
mon law
including
of restrictive
following excerpt
Dyer’s Case,
V,
from The
Y. B. 2 Hen.
PI. 26
(1415).
plaintiff brought
against
dyer
A
upon
an action
a bond
whereby
dyer promised
practice
his craft
in a certain
village
period
for a brief
read,
time. As soon as the bond was
declared,
obligation
the Court
“The
is void because the condition is
against
law,
by God,
plaintiff
the common
if the
present
were
gaeol
paid
he should rot in
King.”
till
(Transla
he
a fine to Court.) Morgan’s
tion from the French
Equipment
Home
Corp Martucci,
9,
v.
390 Pa. at
n.
136 A. 2d at
n. 9.
development
2 The historical
of contracts
in restraint
of trade
Carpenter, Validity
is treated
Contracts
Compete,
Not
(1928).
L.
U.
Pa.
Rev.
*5
332
Equip
Morgan’s
(1965);
Home
Pa. 222,
Corp.
3
example,
Hoot,
For
in Barb-Lee Mobile Frame Co. v.
a re
accompanied
strictive covenant contained in a contract which
taking
upheld.
was
We stated: “It
must
obvious
upon
that
the consideration
which the
in
restrictive covenant
this
case was based was the
itself.
In consideration for
plaintiff’s employing
defendant,
agreed
the latter
not to com
pete
plaintiff
accordance with the terms of the restric
tive covenant. Where the restrictive covenant is
to a
establishing
employment relationship,
where none exist
previously thereto,
ed
sup
constitutes consideration
porting
222, 225-26,
59,
(1965).
the covenant. . ..” 416 Pa.
206 A. 2d
position
jurisdic
This
has been taken
courts from other
tions,
generally only
appears
but
where it
that the
other
discharged,
actually
wise would have
or where he
remained
employed for
time
a substantial
after the execution of the covenant.
See, e.g.,
Burwell,
289,
Roessler v.
(1934)
119 Conn.
(em
In Jacobson & Co. v. International
Environment
427 Pa.
In Markson Bros. v.
Redick,
Ct.
Superior
presented for five working had been An bar. a saleswoman as contract oral under months con a written signed in a store clothing manager floor responsi salary, the same her with provided tract which contained but her contract, oral and benefits bility competitors her work restricting right a covenant only change The her employment. termination after this covenant to support relationship in the where of a creation week-to-week The at will. had previously there in the the covenant contained held that Court Superior consideration supported by was not contract written the restrictive covenant.6 to enforce and refused the same under of employment, The continuation consideration held to be insufficient has also been terms before our covenant cases a restrictive to support National Starch & Chem See pleas. of common courts D. C. 2d 533 C. (Phila. v. & ical Corp. Snyder, Inc. v. 32 Pa. D. & C. 2d Barry, W. N. O. W., P. 1964); Co. v. Voss Machinery Norris, C. P. (York 1963); C. P. 1952); & C. 368 Consol (Allegheny Pa. D. Co. v. 80 D. C. 488 Getson, Home & Furnishing idated to the regard quality C. P. law with 1951). (Phila. support restrictive cov required of consideration provision fifteen-day notice For the same reason support is not sufficient consideration contract written particularly in this ease. This is true since restrictive provision the contract reveals that the notice examination of closer illusory anything. and cannot be considered as consideration for provides company may 7(b) dispense that the of the Glause fifteen-days’ judgment notice if “in the sole COM guilty trust, PANY, neglect *8 Gottus has been breach of Konald interests, or of other acts detrimental to COMPANY’S interests, by faithfully or failure to follow the in COMPANY’S given repre himto the COMPANY or its authorized structions sentative.” upon principles
enant is clear well-settled. appellant has rule are which such is based sound salutary policy presented why should reason this no ma not be here. I therefore concur with followed jority affirming in lower court. the decree and Mr. Pomeroy
Mr. Justice Justice Eagen, Mr. opinion. concurring join Justice Nix in this Pomeroy: Concurring Opinion Mr. Justice join concurring opinion I in the of the Chief Jus- tice, but add this additional word. general proposition,
As the assertion Mr. Justice opinion party may dissenting either Manderino’S upon change employment insist in the terms as a employment continuing condition for rela- at-will tionship, employment and that is the con- the continued supporting any change, unarguable. sideration such is points as Mr. Chief Justice Jones out Nevertheless, concurring consistently opinion, his our courts have held that the of an re- continuation at-will lationship support sufficient consideration to to after the has ter- policy supports minated. I believe sound this exception general logic to the rule if even strict does might not. imposed Most of the burdens which on employee employment, in return for continued such compensation as a decrease or an increase in hours or are duties, conditions which terminate when the em- ployment relationship itself comes to end. An em- ployee who them immediately finds too onerous can by quitting job. unburden himself his A covenant not compete, may ability hinder however, a man’s living long earn a after he has left the ancillary. which the covenant An has an economic or even stake, an emotional stake, existing of an the continuation at-will ar- rangement may find it difficult indeed accept not to *9 employer a demands covenant not to when his it. I am the to discard reluctant, rule, therefore, clearly re- our cases have that more is established, quired just support a covenant of this sort than prospect employment uncertain of continued at employer’s will.
Dissenting Opinion Mr. Justice Manderino: I dissent. If a restrictive covenant would be valid employee employed, at the an time is first I fail to see any logic prohibition against employer to the an re- questing subsequent employ- the same covenant continuing ee’s initial as a condition of employment. There is no claim in this case employee an had oral contract of for a specific being term which was altered or breached. employed the absence of such a claim, orally at will and that can be canceled at any illegal at least time, absence of a claim of only cause. The claim here is bald assertion that a restrictive covenant cannot be demanded of an em- ployee after initial if all other circum- unchanged. why. remain stances I fail to see The majority seriously legitimate encroaches on the freedom employer. Why employer requests should who legal restrictive covenant time of initial em- ployment any advantage have over later decides he should have such a restrictive covenant any and no breach oral or written contract or other illegality is involved. appellant,
The Specialties, Maintenance is a Inc., corporation engaged in the distributing business of variety parts products and plant used in vehicular, equipment building, ap- maintenance. The pellee, formerly Eonald employed Gottus, had appellant Appellant salesman. filed a com- plaint alleging appellee that the was in violation of a in- complaint requested The not to compete. filed relief. other No answer general junctive and the appellant but appellee to the complaint, the pleadings. on judgment both moved orally motion and dismissed the appellee’s court granted lower amend. This without leave to complaint appellant’s and remand. We should reverse followed. appeal accepted in the must be complaint The facts alleged *10 April that on or about alleged 29, as true. Appellant a con- and entered into written appellant appellee 1969, a prom- tract of The contract contained in to various appellee compete specified ise the not the term of the contract during with the ways appellant termination of the years following employ- or for two a ment contract. The contract had term with two-year that either could terminate the provision party con- tract after fifteen notice. The giving days appellant the could also terminate contract for immediately breach of of the interest or trust, neglect appellant’s failure to follow instructions. The com- appellant’s that plaint further on or about alleged July 31, 1971, the terminated his appellee employment with the ap- pellant in immediately engaged activities which in were violation the restrictive covenant.
The appellee initially was under an employed oral in contract to year prior the execution There in written contract. is nothing the record to indicate that the oral contract was for a specified term. therefore, must assume at this time We, that it was Lubrecht v. terminable will. Laurel Stripping Co., A. 2d 687 393, 127 (1956); v. Cummings Kelling Nut Pa. 84 A. Co., 368 2d 323 (1951).
A to compete covenant not is effect a restraint of trade. Originally, courts reason, voided such covenants but later recognized that the covenant serves a compete legitimate interest in a free system. covenant not enterprise to compete may give security a business encourage stability secrets cus- his trade by protecting an employer effect of limiting injurious and tomers list, services are of whose employee competitor hiring the cov- recognizing While character. unique the danger be may advantageous, not to compete enant in considering must be also weighed of excessive abuse should be enforceable. such a covenant whether interest against employer’s balancing of a the courts have concluded danger restraint trade, that a shall enforceable covenant is covenant contained (1) when restrictive to an otherwise valid is contract, (2) existing or contract of employment, and (3) in time and to that reasonably limited scope “necessary for the . protection . . without imposing undue hardship on . . .” Restatement of 516(f) Contracts §§515(e), (1932).
The first element, validity restrictive is contained, requires that the formal of contract law be met. requisites There *11 must be an an offer, consideration. The acceptance, offer and this acceptance case are established by the employment The relationship. question here is whether consideration given has since there was a pre- oral contract of existing was termin- able at will. such circumstances the employee is not guaranteed continuing employment nor is the em- ployer guaranteed continuing services of the em- Either ployee. party, therefore, may require any change in the terms of the employment as a condition for con- tinuing relationship. The continued is the consideration supporting any new either requested by term The party. result would be if different the preexisting contract, oral or written, at had not been terminable will. Where the contract one definite were term, party sets to increase the duty giving correspondingly a benefit without other duty party, not be enforce- increased would to that in- for the the consideration able. This is so because continuing employment duty since be the creased cannot already parties em- to continue bound both were specified relationship ployment in the the term for contract. examples the above distinction between
Concrete may contracts terminable at will contracts and term why continuing employment helpful is to illustrate cop- changes in terminable at will consideration for changes A in term contracts. and not for tracts relationship B in an will. are terminable employee, originally employer, hired to theA, B, products per B tells A for hour. now sell A’s $3.50 working an he not continue unless he receives that will may require agrees. A B additional hour. now $1 salary pay for he A him the increased work subse- to quently performs agreement though under even continuing performing B is still same services. B’s quit impunity to for A he could have work when agreement in- is the consideration which makes the salary performs for he crease B’s enforceable work agreement. The is A under that reverse also true. B tells B that will have to conduct interviews with new during
employees his off hours if he wishes to continue working agrees. only required A. B A for is still salary though pay performing B even B the same agreement additional service. new is enforceable for extra since consideration B’s work is A’s con- employ tinuing him. product
If A had hired B to sell A’s $3.50 a contract which contained a hour under definite term during period years requested B of two a raise *12 per the remainder of hour for the term and A $1 compel pay agreed, A B to him could that amount performed during later the remainder for work of already duty years. under a to continue B two was period. working per that same Also, for hour for $3.50 perform agreed demand to the additional if B had to A’s salary interviewing at the same for life services duty per- B a to would be under contract, form that service. There would be no consideration promise duty pay A a B B’s extra since was under per only product hour if B even sells A’s and does $3.50 not interview. preexisting
In this since oral contract case, appellant duty terminable at had no to con- will, employ appellee original employ- tinue to under the appellee ment conditions. When the in the later written compete, covenanted not to contract ployment by his continued em- appellant was the consideration mak- ing all the terms of the written contract enforceable. necessary the first Therefore, element to enforce the covenant is met since the covenant is contained a valid acceptance, contract—there anwas offer, consideration. inquiry
The next is whether the covenant not to compete ancillary employment. is to a contract ancillary term does not mean simply to initial It means coven- compete ant not employ- will be invalid if there is no relationship parties. ment between the Thus if A only relationship B, whose to each other is that neighbors, enter into a contract which contains a coven- B ant not to selling goods with A in in given territory given period for a time, illegal would be considered because it unreason- able restraint of trade. If, however, same is entered into A and B employer, and A is B’s covenant is not considered an unreasonable restraint legitimate of trade because there is protect- interest ing employer. It should make no difference whether agreed a restrictive covenant is to at the time of initial *13 long employment the em- date so or at some later why ployment relationship exists. There is no reason employer protect an obtains the coven- should who we protect initial and not ant at the time of an later obtains same covenant since protected in instances is the the interest to be both same. Inc. v. International Environ Jacobson & Co., Corp., (1967),
ment
Appellee Capital relies on Inc. v. Bakers, Townsend, 426 Pa. (1967), 231 A. 2d 292 for his claim that only restrictive covenant ancillary valid if it is employment. to initial specifically In Jacobson, we rejected interpretation Capital such Bakers, Inc., requirement and held that there was no the re ancillary strictive covenant be to initial so long as the restrictive ancillary covenant was to an employment relationship. Additionally, Capital approval Bakers, Inc., we noted with section 515 of the Restatement of specifically Contracts permits a restrictive covenant which is existing employment or contract of
The third element before a restrictive cov- required enant will enforced is a the covenant finding is reasonable as to time and territory. The trial court expressed no opinion on this element and until an answer is filed we do not if know the appellee is chal- lenging covenant on this basis.
The decree of the trial court should be reversed and the matter remanded for further proceedings.
Mr. Justice joins Roberts this dissenting opinion. *14 County, Appellant,
Butler v. Brocker.