No. 666 October Term 1979, No. 725 October Term 1979, Appeals from the Order of the Court of Common Pleas of Bucks County, Civil, at Nos. 74-7140-10-5 and 74-6379-10-5.
Michael Minkin, Philadelphia, for appellants (at No. 666) and for appellees (at No. 725).
Robert A. Naragon, Doylestown, for Rodney T. Buckham.
Spaeth, Cavanaugh and O'Kicki, JJ.*fn*
[ 280 Pa. Super. Page 108]
These are two appeals from an order dismissing exceptions to the chancellor's adjudication and decree nisi. In Appeal No. 666, the appellants are Courtney Davis, Ronald Fogel, Thomas Swartley, Calvin Wolfgang, and Thomas Tolson, individually and trading as the Post Group; the
[ 280 Pa. Super. Page 109]
appellee is Rodney Buckham. In Appeal No. 725, Buckham is the appellant, and the Post Group is the appellee. The issue on both appeals is whether the chancellor properly construed and enforced a covenant by Buckham not to compete with the Post Group.
On November 10, 1969, Buckham, Davis, Fogel, and Swartley*fn1 entered into a partnership agreement for the practice of physical therapy as the Post Group. Buckham was the only senior partner,*fn2 and upon his withdrawal he was entitled under paragraph 12 of the agreement to an amount equal to three times his income for the last calendar year before his withdrawal, payment to be made in 260 weekly installments. The agreement also provided, in paragraph 14, that upon withdrawing from the Post Group, Buckham was not to engage in the practice of physical therapy within a fifteen mile radius of Doylestown, Pennsylvania, for a period of five years.
On November 4, 1970, Buckham withdrew from the Post Group. Since his income for the previous calendar year had been $24,187.44, under paragraph 12 the Post Group became liable to him for $72,562.32, payable in 260 weekly installments. The Post Group paid the installments as they became due. In 1974, however, after having paid Buckham approximately $61,000, the Post Group became aware that Buckham was practicing physical therapy within a fifteen mile radius of Doylestown. It thereupon brought the present action in equity, in the meantime placing the balance due under paragraph 12 in escrow pending resolution of the action. The theory of the action is that the payment provided by paragraph 12 was consideration for the covenant
[ 280 Pa. Super. Page 110]
in paragraph 14 not to compete, and that by breaching the covenant, Buckham forfeited his right to the payment.
A hearing was held on December 8, 1977, and the chancellor filed her adjudication and decree nisi on September 29, 1978. The chancellor held that Buckham had violated paragraph 14 but that the Post Group had failed to prove any damages. She also held that the paragraph 12 payment was not consideration for the paragraph 14 covenant. She therefore awarded the Post Group damages of $1 and ordered it to pay Buckham the balance due under paragraph 12. The chancellor went further, however, and entered an order enjoining Buckham from engaging in the practice of physical therapy for a ...