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READING AVIATION SERVICE v. BERTOLET (11/26/73)

decided: November 26, 1973.

READING AVIATION SERVICE, INC., APPELLANT,
v.
BERTOLET



Appeal from decree of Court of Common Pleas of Berks County, No. 3524 of 1970, in case of Reading Aviation Service, Inc., a corporation v. Alfred M. Bertolet and Reading Public Aviation, Inc., a corporation.

COUNSEL

Charles H. Weidner, with him Howard M. Fry, and Stevens & Lee, for appellant.

W. Charles Hogg, Jr., with him Richard H. Elliott, John W. Morris, G. Roderick Snyder, and Clark, Ladner, Fortenbaugh & Young, for appellee.

Jones, C. J., Eagen, O'Brien, Roberts, Pomeroy, Nix and Manderino, JJ. Opinion by Mr. Justice Pomeroy. Mr. Justice Eagen concurs in the result. Concurring Opinion by Mr. Justice Roberts.

Author: Pomeroy

[ 454 Pa. Page 489]

This appeal is from a decree in equity refusing an injunction against appellee Bertolet sought by reason of his alleged breach of an agreement not to compete with appellant.

Appellant, Reading Aviation Service, Inc. ["Reading Aviation"], is engaged in the general aviation business, including the maintenance, repair and sale of aircraft. Since 1946, its principal facility has been located at the Reading Municipal Airport in Berks County. It also has maintenance and sales facilities at Queen City airport in Lehigh County and Allentown-Bethlehem-Easton airport in Northampton County.

[ 454 Pa. Page 490]

Defendant Bertolet was an officer, director, and one of three stockholders of Aviation Consultants, Inc., the parent corporation of Reading Aviation. On July 24, 1968 Aviation Consultants, Inc., Reading Aviation and three other aviation companies joined in a merger, of which Reading Aviation became the surviving entity. Bertolet received a substantial block of stock in the merged corporation and was named President and Chairman of the Board.

Five days after the merger was consummated, Reading Aviation entered into a loan and security agreement with Chase Manhattan Capital Corporation ["Chase Manhattan"], pursuant to which Chase Manhattan advanced Reading Aviation the sum of $1,100,000 and received a warrant to purchase shares of the company's common stock. The agreement required that Reading Aviation obtain non-competition agreements from Bertolet and another key employee. Accordingly, on August 1, 1968 Bertolet wrote a letter to Reading Aviation as follows: "In connection with my employment by you, I hereby agree that so long as I am an officer, director, employee or am otherwise active in your business, I will not own any interest in, or engage in any way, directly or indirectly, in any business competitive with you, or any of your subsidiaries, or solicit or in any other manner or way assist any such competitive business after I have voluntarily ceased to be an officer, director, employee or otherwise active in your business, or any of your subsidiaries." Bertolet received an increase in annual salary from $30,000 to $40,000 effective the same day.

Some two years later, on March 20, 1970, Bertolet ceased to be an officer of Reading Aviation. At that time his salary was reduced to $15,000 per year. He continued in Reading Aviation's employ until May 15th, at which time he went to work for a competing organization. Bertolet is now employed by Reading Public

[ 454 Pa. Page 491]

Aviation, Inc., the other defendant in this suit, which he was instrumental in organizing and which occupies a business location at the Reading airport, some 600 ...


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