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WAINWRIGHT'S TRAVEL SERVICE v. SIGRID SCHMOLK AND HAWAIIAN FANTASY (11/08/85)

filed: November 8, 1985.

WAINWRIGHT'S TRAVEL SERVICE, INC.
v.
SIGRID SCHMOLK AND HAWAIIAN FANTASY, INC., APPELLANTS



Appeal from the Decree entered in the Court of Common Pleas of Northampton County, Civil Division, No. 85-C-953.

COUNSEL

Anthony F. LoFrisco, Philadelphia, for appellants.

Marc J. Sonnenfeld, Philadelphia, for appellee.

McEwen, Montemuro and Tamilia, JJ.

Author: Tamilia

[ 347 Pa. Super. Page 202]

This is an appeal from the final decree of June 14, 1985 enforcing the injunction of February 8, 1985, which prohibits appellant/Schmolk from continuing her employment with appellant/Hawaiian Fantasy, Inc. (hereinafter Fantasy). It also prohibits her participation or assistance in its business in any way for a period of one year either from the date she ceases to be a shareholder in Wainwright's Travel Service, Inc. (hereinafter Wainwright's), or from the date she tenders her shares to Wainwright's.

The basis of the injunction is a restrictive employment covenant contained within a "Shareholder Agreement" entered into by appellant/Schmolk on November 2, 1978, while an employee of Wainwright's, and contemporaneously with the signing of a "Purchase Agreement" for twenty shares of Wainwright stock.

The restrictive covenant reads as follows:

The Shareholders agree that while they are shareholders and/or directors and for twelve (12) months thereafter, that they will not compete directly or indirectly with the business of the Corporation within its service and trade area of Pennsylvania, New York, New Jersey, Delaware and Maryland.

Plaintiff's exhibit 1.

Appellants raise four issues on appeal: 1) the covenant not to compete is unenforceable because it is in a shareholder agreement as opposed to an employment agreement; 2) Schmolk is not a shareholder because she paid only $6,000 of the agreed purchase price of $20,000; 3) the covenant not to compete is not supported by adequate consideration; and 4) the covenant is not reasonable in time and geographic scope.

[ 347 Pa. Super. Page 203]

In examining a final decree in equity, our scope of review is limited and the decree will not be disturbed absent an error of law or abuse of discretion. Sack v. Feinman, 489 Pa. 152, 413 A.2d 1059 (1980); Rosen v. ...


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