Appeal by defendants from Canaday, Judge. Preliminary injunction issued 23 September 1980 in Superior Court, Wake County. Heard in the Court of Appeals 23 September 1981.
Clark, Judge. Chief Judge Morris and Judge Wells concur.
The sole question before this Court is whether the trial court erred in granting the preliminary injunction, the defendants having elected to appeal before the ultimate questions raised by the pleadings are decided at the trial on the merits. Ordinarily, a preliminary injunction will be granted pending trial on the merits, (1) if there is probable cause for supposing that plaintiff will be able to sustain his primary equity, and (2) if there is reasonable apprehension of irreparable loss unless injunctive relief be granted, or if in the court's opinion it appears reasonably necessary to protect the plaintiff's right until the controversy between him and defendant can be determined. Pruitt v. Williams, 288 N.C. 368, 218 S.E.2d 348 (1975); Laboratories, Inc. v. Turner, 30 N.C. App. 686, 228 S.E.2d 478 (1976). See G.S. 1-485, and G.S. 1A-1, Rule 65.
On appeal we are not bound by the findings or ruling of the court below in injunction cases, but may review the evidence on appeal. However, there is a presumption that the judgment entered below is correct, and the burden is upon appellant to assign and show error. Pruitt v. Williams, supra; Realty Corp. v. Kalman, 272 N.C. 201, 159 S.E.2d 193 (1967); Huskins v. Hospital, 238 N.C. 357, 78 S.E.2d 116 (1953); 7 Strong's N.C. Index 3d Injunctions § 12.1 (1977).
The plaintiff in his complaint alleges that defendants are engaging in a pyramid distribution scheme in violation of G.S. 14-291.2 which provides as follows:
" Pyramid and chain schemes prohibited. -- (a) Any person who shall establish, promote, operate or participate in any pyramid distribution plan, program, device or scheme whereby a participant pays a valuable consideration for the opportunity or chance to receive a fee or compensation upon the introduction of other participants into the program, whether or not such opportunity or chance is received in conjunction with the purchase of merchandise, shall be deemed to have participated in a lottery and shall be punished as provided for in G.S. 14-290.
(b) 'Pyramid distribution plan' means any program utilizing a pyramid or chain process by which a participant gives a
valuable consideration for the opportunity to receive compensation or things of value in return for inducing other persons to become participants in the program;
'Compensation' does not mean payment based on sales of goods or services to persons who are not participants in the scheme, and who are not purchasing in order to participate in the scheme; and
'Promotes' shall mean inducing one or more other persons to become a participant.
(c) Any judge of the superior court shall have jurisdiction, upon petition by the Attorney General of North Carolina or solicitor of the superior court, to enjoin, as an unfair or deceptive trade practice, the continuation of the scheme described in subsection (a); in such proceeding the court may access a civil penalty against any defendant found to have engaged in the willful promotion of such a scheme with knowledge that such conduct violated this section, in an amount not to exceed two thousand dollars ($2,000) which shall be for the benefit of the general fund of the State of North Carolina as reimbursement for expenses incurred in the institution and prosecution of the action; and the court may appoint a receiver to secure and distribute assets obtained by any defendant through participation in any such scheme.
(d) Any contract hereafter created for which a part of the consideration consisted of the opportunity or chance to participate in a program described in subsection (a) is hereby declared to be contrary to ...