Court Opinion

ID: 6260855
Source: CourtListenerOpinion
Date Created: 2022-02-17 22:03:52.950742+00
Date Added: 2024-06-11T08:59:42.464836
License: Public Domain

Concurring Opinion by
Mr. Justice Roberts :
I concur in the result reached by the majority solely on the ground that the covenant not to compete became ineffective as soon as the loan from Chase Manhattan Capital Corporation was repaid by appellant.1
*494The chancellor found that the covenant not to compete was “important consideration” to Chase Manhattan, and without it Chase Manhattan would not have entered into a loan agreement with appellant. Only the insistence of Chase Manhattan brought the covenant into existence. When mahing the loan to appellant, Chase Manhattan sought to protect its investment by insuring that should appellant lose a hey employee, then at least he would not be able to compete with appellant. The chancellor further found that this loan and the interest on it had been fully paid by appellant.
These findings were approved by the court en banc. It is well established that, absent an error of law or an abuse of discretion, the chancellor’s findings of fact adopted by the court en banc, if supported by sufficient evidence,2 will not be disturbed on appeal. Hatalowich *495v. Redevelopment Authority, 454 Pa. 481, 312 A.2d 22 (1973); Field v. Golden Triangle Broadcasting, Inc., 451 Pa. 410, 414-15, 305 A.2d 689, 691-92 (1973), cert. denied, 414 U.S. 1158, 94 S. Ct. 916 (1974); Lefkowicz v. Blumish, 442 Pa. 369, 371, 275 A.2d 69, 70-71 (1971); Pittsburgh Outdoor Advertising Co. v. Virginia Manor Apartments, Inc., 436 Pa. 350, 353, 260 A.2d 801, 803 (1970).
Because the covenant was solely for the protection of appellant’s creditor, Chase Manhattan Capital Corporation, and because that creditor’s loan was repaid, the contractual basis for the covenant has expired. There is now no ground for enforcing the covenant.

 Appellant contends that the chancellor erroneously considered appellee’s defense based on the loan having been repaid because the issue was not raised in appellee’s answer. See Snyder v. Barber, 378 Pa. 377, 382-83, 106 A.2d 410, 412-13 (1954); Real Estate Co. v. Rudolph, 301 Pa. 502, 505, 153 A. 438, 439 (1930). However, the testimony upon which the chancellor based his findings was introduced into evidence without objection. Our rule is that an appellate court will treat the pleadings as amended to conform to the proof, if the case has been tried on the merits and there was no objection to the variance between pleadings and proof. Srednick v. Sylak, 343 Pa. 486, 491, 23 A.2d 333, 336 (1942).

 In reaching his determination, the chancellor had the following evidence before him. Appellee had worked for appellant for over twenty years without appellant asking him to enter into a covenant not to compete.
On August 1, 1968, appellant obtained a loan of $1,100,000 from Chase Manhattan Capital Corporation, under a loan and security agreement dated July 29, 1968. The loan and security agreement between Chase Manhattan and appellant contained an express condition that a non-competition agreement was to be obtained by appellant from its key employees. Appellee was specifically designated as a key employee. The clause further required that the covenant be “in form and substance satisfactory to the Lender.” Appellee’s letter of August 1, 1968, which served as the non-competition agreement, virtuaUy reproduced the language of the clause in the security and loan agreement. Louis L. Allen, president of Chase Manhattan Capital Corporation, testified that the covenant not to compete was to remain in effect until “the loan agreement had been fully paid and satisfied.”
Mr. Allen was further asked by appellee on cross-examination: “Now, has that loan [$1,100,000] been paid off?” The witness responded: “Well, in a way, yes, it has. We have exchanged our notes for stock and made additional advances.” The evidence also *495tended to show that Chase Manhattan converted a debt of $1,260,009 ($1,100,000 plus interest) for an equity position in appellant-corporation. Although appellant still is indebted to Chase Manhattan, according to Mr. Allen, “the majority of our [Chase Manhattan’s] advances occurred after June of 1970.” This was well after the time when appellee ceased to be an employee of appellant
This evidence certainly was sufficient to sustain the chancellor’s findings of fact approved by the court en banc.