Radio Electronics Co. v. Radio Corp. of America

92 S.E.2d 664 (1956)

244 N.C. 114

RADIO ELECTRONICS COMPANY v. RADIO CORPORATION OF AMERICA.

No. 386.

Supreme Court of North Carolina.

May 9, 1956.

*666 Spry, White & Hamrick, Winston-Salem, for plaintiff, appellant.

Deal, Hutchins & Minor, Winston-Salem, for defendant, appellee.

BOBBITT, Justice.

If the contract is illegal, either at common law or by reason of statutory provisions relating to monopolies and trusts, G.S. § 75-1 et seq., plaintiff cannot recover damages for the breach thereof. Florsheim Shoe Co. v. Leader Department Store, 212 N.C. 75, 193 S.E. 9; Standard Fashion Co. v. Grant, 165 N.C. 453, 81 S.E. 606. In the cited cases, the contract, in direct violation of G.S. § 75-5(2), prohibited the merchant from selling competitive products of other manufacturers.

The oral contract as alleged herein contains no express provision of this character. Nor does it contain any express provision prohibiting plaintiff from purchasing similar products from defendant's competitors. Lewis v. Archbell, 199 N.C. 205, 154 S.E. 11. We need not consider whether the terms of the oral contract as alleged imply an obligation on the part of plaintiff to deal in defendant's said products to the exclusion of those of defendant's competitors.

The oral contract as alleged prohibits defendant from making any sale or distribution of its said products in North Carolina other than to and through plaintiff as exclusive distributor in the territory.

G.S. § 75-4, in pertinent part, provides:

"No contract or agreement hereafter made, limiting the rights of any person to do business anywhere in the State of North Carolina shall be enforceable unless such agreement is in writing duly signed by the party who agrees not to enter into any such business within such territory."

G.S. § 75-4 was applied in Maola Ice Cream Co. of North Carolina, Inc., v. Maola Milk & Ice Cream Co., 238 N.C. 317, 77 S.E.2d 910. Reference was made to G.S. § 75-4 in Sonotone Corp. v. Baldwin, 227 N.C. 387, 42 S.E.2d 352. No other case in which G.S. § 75-4 was considered has come to our attention.

The question is not whether the oral contract as alleged herein is void as an unreasonable restraint of trade, but whether it is void and unenforceable by reason of the provisions of G.S. § 75-4. The General Assembly has declared that no contract whereby a person limits and restricts his legal right to do business in the State shall be valid and enforceable unless in writing and signed by the party so contracting.

True, the oral contract as alleged does not exclude defendant from engaging in business in North Carolina, but it does prohibit defendant's right to do business except through plaintiff as its exclusive distributor. Thus, it limits substantially defendant's right to do business in North Carolina. Hence, under G.S. § 75-4, the alleged oral contract is void and unenforceable.

The conclusion reached is that a contract whereby a person, firm or corporation is made exclusive distributor for the State of North Carolina, precluding the manufacturer from doing business in North *667 Carolina otherwise than through this single channel, is void unless the party so limited or restricted agrees thereto in writing. We need not consider whether the contract as alleged herein is void and unenforceable on other grounds. G.S. § 75-4 controls. The wisdom thereof is a matter for the General Assembly.

For the reasons stated, the judgment of the court below is

Affirmed.