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Manpower of Guilford County Inc. v. Hedgecock

Filed: August 7, 1979.


Appeal by plaintiff from Wood, Judge. Judgment entered 3 May 1978 in Superior Court, Guilford County. Heard in the Court of Appeals 30 May 1979.

Morris, Chief Judge.


Plaintiff has assigned error to the denial of its motion for a preliminary injunction and to the entry of summary judgment in behalf of both defendants. It is clear from the record that the basis of the trial court's ruling was its conclusion that the corporate employer's signature on the agreement not to compete was insufficient, and that, therefore, plaintiff could not enforce the covenants against competition.

Plaintiff asserts that the issue of the signature is the only question for review because of the trial court's opinion, expressed at the hearing, that the agreement was otherwise valid and enforceable. Plaintiff's argument on appeal is addressed primarily to the sufficiency of the signatures. Although we agree with plaintiff, as pointed out below, that the employment contract and its ancillary covenants against competition are not infirm because of the requisite signatures, the sufficiency of the signatures is not the only question before us. We must consider each challenge to the enforceability of the agreement. A correct ruling by a trial court will not be set aside merely because the court gives a wrong or insufficient reason for its ruling. See e.g., In re Will of Pendergrass, 251 N.C. 737, 112 S.E.2d 562 (1960); Temple v. Temple, 246 N.C. 334, 98 S.E.2d 314 (1957); Reese v. Carson, 3 N.C. App. 99, 164 S.E.2d 99 (1968). The ruling must be upheld if it is correct upon any theory of law.

Plaintiff is correct in its contention that plaintiff's signature is not necessary to render enforceable the covenant not to compete. The sufficiency of the writing is controlled by G.S. 75-4. Its language is clear and unambiguous. Subject to the general restrictions as to reasonableness of ancillary restraints on competition, G.S. 75-4 establishes that contracts or agreements limiting the rights of persons to do business in this State may be enforceable if put in writing "duly signed by the party who agrees not to enter into any such business within such territory". G.S. 75-4 is consistent with the other "statute of frauds" provisions in our law which require only that the writing be "signed by the party

charged therewith", G.S. 22-1 (29 Charles II (1676), ch. 3, sec. 4), or require that the writing be signed by "the party against whom enforcement is sought", G.S. 25-2-201(1) (Uniform Commercial Code). Our holding is consistent with the general view with respect to the necessary signatures to satisfy the Statute of Frauds. See generally 72 Am. Jur. 2d, Statute of Frauds ยง 364. It is not necessary that the person seeking enforcement of the terms required to be in writing also sign the writing. Lumber Co. v. Corey, 140 N.C. 462, 53 S.E. 300 (1906). The reasoning for this rule was stated in the early case of Mizell v. Burnett, 49 N.C. 249 (1857).

"Common justice and the general principles of law, require that there shall be a mutuality in contracts; that is, if one party is bound the other ought to be. But there may be exceptions. Although it is a maxim that a contract is never binding unless there be consideration, yet, there is a distinction between a consideration and the mutuality of contracts in reference to the obligation thereof, and the fact that by some other principle of law, or the provisions of a statute, one party has it in his power to avoid the obligation, although it suggests a very forcible reason for not entering into a one-sided contract, does not necessarily have the effect of making such contract void as to both parties." Id. at 253.

Indeed, in this situation there is no concern over the absence of mutuality. Nor do we find validity to the argument that the employment contract is not a valid contract because not properly signed by a corporate officer. A contract of employment generally need not be in writing in North Carolina to be enforceable. Because of our conclusion that the covenant not to compete satisfies the requirements of G.S. 75-4, we now direct our inquiry to determine whether the covenants are otherwise valid and enforceable as against each defendant.

Defendants contend that the covenant not to compete is unenforceable by plaintiff for three reasons. First, they argue, the agreement sued upon is, on its face, between Hedgecock and Manpower, Inc., a legal entity separate from Manpower of Guilford County, Inc., and therefore is not enforceable by this plaintiff. However, the evidence at the hearing was uncontradicted that "Manpower, Inc." was used by plaintiff as being synonymous with

"Manpower of Guilford County, Inc." and also that "Manpower, Inc." was the name used by plaintiff under the terms of its licensing agreement. The trial court concluded, and we so hold, that for purposes of enforcing this contract Manpower, Inc. and Manpower of Guilford County, Inc. are one and the same. Hedgecock had been employed by plaintiff for some time prior to entering into the employment agreement and no doubt knew that his contract was with Manpower of Guilford County, Inc. Defendants' second argument challenging the validity of the covenant not to compete, which addresses the sufficiency of the signatures to the agreement, has, of course, been resolved against defendants. Finally, however, we must consider the validity of the time and territory restrictions on competition imposed by the agreement.

When the nature of employment such as in the instant case is such that the employee has personal contact with the patrons and customers of an employer, or where the employee acquires valuable information as to the nature and character of the business and the names of patrons or customers, thereby enabling him to take advantage of such knowledge and to compete unfairly with a former employer, equity may be interposed to prevent the breach of a covenant not to compete which is reasonable as to time and territory. Greene Co. v. Arnold, 266 N.C. 85, 145 S.E.2d 304 (1965); Exterminating Co. v. Griffin and Exterminating Co. v. Jones, 258 N.C. 179, 128 S.E.2d 139 (1962). The restrictions, however, must be no wider in scope than is necessary ...

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