Arthur L. Jenkins, Jr., Richard L. Grossman, Smith, Aker, Grossman, Hollinger & Jenkins, Norristown, for appellants.
Thomas J. Burke, Fred B. Fromhold, Ardmore, for appellees.
Eagen, O'Brien, Roberts, Pomeroy, Nix and Manderino, JJ. Jones, C. J., took no part in the consideration or decision in this case. Pomeroy, J., concurs in the result.
The instant appeal challenges the propriety of a Decree of the Chancellor granting a preliminary injunction to enforce a restrictive covenant in an employment agreement. William H. Crochiere, the individual appellant herein, accepted employment under an oral contract of employment with John G. Bryant Co., and Overhead Lifts Company in March 1963. The oral agreement of employment did not provide for a restrictive covenant not to compete. The two companies involved specialized in the field of selling and servicing of devices used in industrial
material lifting. This is a highly technical field requiring specialized skills and methods of doing business. In June 1963 John Bryant, who was in fact the sole proprietor of the two companies, entered into two written employment contracts with Crochiere under which Crochiere was appointed as a sales representative for both companies. Each agreement provided that upon the termination of the employment, Crochiere would not engage in a competitive business within the sales territory of the two companies for a period of three years following the termination of employment. The sales territory was specifically defined and essentially included Eastern Pennsylvania, South Jersey and the State of Delaware. Thereafter, the Bryant Company and Overhead Materials Company, incorporated under the respective names of John G. Bryant Company, Inc., and Overhead Materials Handling, Inc., these corporations being the instant appellees. Following the incorporation in August of 1968, new agreements were entered into between the newly formed corporations and Crochiere essentially incorporating the terms of the 1963 agreements of employment.
On January 1, 1973, a third written agreement was entered into between the parties as a result of Crochiere's expressed desire to go into business on his own. The 1973 agreement provided that Crochiere would be permitted to form a company (to be designated Sling Testing and Repair, Inc.) and to solicit new business within the defined sales territory. However, Sling Testing and Repair, Inc. was prohibited from selling directly to established accounts of Bryant and Overhead Materials. The agreement specifically set forth the prohibited accounts which were customers of Bryant's and Overhead Materials' as of March 1, 1973. The agreement further provided that Crochiere would remain in the appellees' employ until February 28, 1973, at which time Bryant Company was to become the manufacturer's agent for
Crochiere's newly formed company and that Crochiere's company was to become sales agent for Overhead Materials. The term of this agreement was for a period of three years and was expressly binding on successors and assigns. Crochiere formed and incorporated a business under the name of Sling Testing and Repair, Inc. and had begun to engage in business. It is admitted on this record that Sling Testing made direct sales to accounts of appellees in violation of the 1973 agreement. Sling Testing is now defunct. However, Crochiere has undertaken a new corporate venture under the name of Sling Manufacturing, Inc., which engages in the same business as Sling Testing and Repair, Inc.
The appellees filed an action in equity requesting, inter alia, a preliminary injunction to restrain Crochiere and Sling Testing from continuing direct sales to those accounts protected under the covenant. After hearing, a Decree granting the preliminary injunction was entered on January 15, 1975, and an appeal to this Court followed.
The first question raised is the scope of our review in appeals from a Decree providing for a preliminary injunction enforcing an employee's covenant not to compete with his former employer and the essential prerequisites that must be shown to justify the issuance of the restraining order. This subject was discussed in our decision in Albee Homes, Inc. v. Caddie Homes, Inc., 417 Pa. 177, 207 A.2d 768 (1965). There we observed:
"The scope of our review on an appeal from a decree either granting or denying a preliminary injunction is to examine the record only to determine if there were any apparently reasonable grounds for the action of the court below . . . ." Lindenfelser v. Lindenfelser, 385 Pa. 342, 343-44, 123 A.2d 626, 627 (1956). (Emphasis supplied). Summit Township v. Fennell, 392 Pa. 313, 140 A.2d 789 (1958). Alabama Binder & Chemical Corp. v. Pennsylvania Industrial Chemical Page 7} Corp., 410 Pa. 214, 215, 189 A.2d 180, 181 (1963). And the essential prerequisites for the issuance of a preliminary injunction are: first, that it is necessary to prevent immediate and irreparable harm which could not be compensated by damages; second, that greater injury would result by refusing it than by granting it; and third, that it properly restores the parties to their status as it existed immediately prior to the alleged wrongful conduct. Alabama Binder & Chemical Corp. v. Pennsylvania Industrial Chemical Corp., supra. Even more essential, however, is the determination that the activity sought to be restrained is actionable, and that the injunction issued is reasonably suited to abate such activity. And unless the plaintiff's right is clear and the wrong is manifest, a preliminary injunction will not generally be awarded: Keystone Guild, Inc. v. Pappas, 399 Pa. 46, 159 A.2d 681 (1960), and Herman v. Dixon, 393 Pa. 33, 141 A.2d 576 (1958)."
Id. at 181, 207 A.2d at 770.
See also, Sidco Paper Company v. Aaron, 465 Pa. 586, 599-602, 351 A.2d 250, 257-58 (1976) ...