Court Opinion

ID: 9637978
Source: CourtListenerOpinion
Date Created: 2023-08-22 15:28:25.455785+00
Date Added: 2024-06-11T14:59:57.110432
License: Public Domain

*486ROBERTS, Justice
(concurring).
While I agree that the covenant in this case is not specifically enforcible, I cannot agree that the case can usefully be analyzed in terms of “consideration.” It is true that our cases have sometimes used that language, but it has been explicitly recognized that the question whether a restrictive covenant is “supported by adequate consideration” turns on nothing more than whether it was ancillary to a sale of a business or the taking of employment. Thus it is simply confusing for us to continue to treat these questions as if they were distinct “requirements” for enforcement of a covenant not to compete.
The pertinent analysis was well stated by a unanimous Court in Morgan’s Home Equipment Corp. v. Martucci, 390 Pa. 618, 628-29, 136 A.2d 838, 844-45 (1957):
“We have held that employment contracts containing general covenants by an employe not to compete after the termination of his employment are prima facie en-forcible if they are reasonably limited as to duration of time and geographical extent. Seligman & Latz v. Vernillo, 1955, 382 Pa. 161, 114 A.2d 672; Plunkett Chemical Co. v. Reeve, 1953, 373 Pa. 513, 95 A.2d 925, 43 A.L.R.2d 91. General covenants are reasonably limited if they are ‘within such territory and during such time as may be reasonably necessary for the protection of the employer * * * without imposing undue hardship on the employee * * * ’ Restatement, Contracts, § 516(f) (1932).
“The defendants urge that there is yet another requirement in Pennsylvania for the validity of general covenants not to compete. They rely upon the case of Cleaver v. Lanhart, 1897, 182 Pa. 285, 37 A. 811 for the proposition that such covenants are not enforcible unless they are supported by a real and valuable consideration, and contend that real consideration is lacking in the present case.
*487“In the Cleaver case a contract for the sale of creameries was entered into and fully performed. Subsequently, a second agreement was made under seal in which the seller agreed not to compete with the purchaser within a radius of five miles from the site of the creameries for a period of three years from the date of the contract. The contract recited the purchase of the creameries as being the consideration for the agreement. This Court held that when the second agreement was made, the contract of sale had been completely executed, and that there was nothing from this first agreement which could operate as a consideration for the second, and hence, the agreement was unenforcible despite the presence of the seal.
“While the opinion in the Cleaver case was couched in terms of consideration, it is apparent that the Court was referring to the fact that the general covenant not to compete was not ancillary to any principal transaction. It has long been the rule at common law, that contracts in restraint of trade made independently of a sale of a business or contract of employment are void as against public policy regardless of the valuableness of the consideration exchanged therein. United States v. Addyston Pipe & Steel Co., 6 Cir., 1898, 85 F. 271, 281-282 affirmed, 1899, 175 U.S. 211, 20 S.Ct. 96, 44 L.Ed. 136; Mitchel v. Reynolds, 1 P.Wms. 181 (K.B. 1711); Restatement, Contracts, § 515(e) (1932).
“Since in the case at bar the allegedly lacking consideration for the covenants was the employment relationship itself, we must inspect the instant agreement to see whether in fact it was related to the taking of employment.” (footnotes omitted)
The reasons stated by the majority for concluding that the covenant in this case was not supported by “consideration” persuade me that it was not in fact ancillary to *488the contract of the employment, which was formed prior to the extraction of the covenant from appellant. For that reason it is unenforcible and the decree must be reversed.
JONES, C. J., joins in this concurring opinion.