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Newco Laundromat Co. v. a L D

MARCH 11, 1958.




Appeal from the Circuit Court of Cook county; the Hon. DANIEL A. ROBERTS, Judge, presiding. Affirmed.


This is an appeal from a decree granting a temporary injunction, restraining defendant from delivering or making available laundromat equipment for use in a specified area in Chicago, Illinois.

Plaintiff, organized to conduct a self-service laundromat store, began negotiations in 1956 to buy Westinghouse laundromat equipment from defendant sole vendor of that equipment in Chicago. Because plaintiff was having difficulty arranging its lease at 2707 North Clark Street, its order from defendant was made contingent on getting the lease. Before this order was given, the parties discussed, and plaintiff asked for, a written assurance that defendant would not sell its equipment to competitors within a several block area. This request was because of knowledge that defendant was negotiating a sale of its equipment to a competing laundromat at 2542 North Clark Street. Defendant declined to accede to the request. On February 6, 1957, plaintiff signed the final order for equipment, paid $15,000 for the equipment and $9,000 for its installation. In April, plaintiff learned that defendant was to deliver its equipment to the laundromat at 2542 North Clark Street. After plaintiff demanded that the delivery be not made at the 2542 North Clark Street laundromat, and its demand was rejected, plaintiff began suit.

The chancellor heard evidence upon the complaint and answer. The theory of the complaint, and plaintiff's evidence, is that defendant's representative, Johnston, made an oral agreement to protect plaintiff by refusing to sell laundromat equipment within a three-block radius of plaintiff's store; that this agreement was made with the knowledge that defendant was negotiating a sale with the owners at 2542 North Clark Street simultaneously with the negotiations with plaintiff; that Johnston informed plaintiff that whichever operator signed first, the other would be "out"; that plaintiff was induced to sign the contingent order on Johnston's assurance that while defendant could not agree to a protective area of six blocks, requested by plaintiff, defendant would agree to a three-block area in accordance with its policy, but that this could not be in writing; that Johnston "felt sure" that the contingent order would assure cutting off negotiations with the laundromat at 2542 North Clark Street; that when the final order was signed, Johnston, in the presence of plaintiff's representatives, telephoned his superior about a written agreement to protect plaintiff within the three-block area; and that Johnston then informed plaintiff there could be no written agreement, but that the negotiations with the other laundromat were "cancelled" and the three-block area protection was agreeable.

On May 13, 1957, plaintiff's representative told Lyson, defendant's district sales manager, that he had seen a sign in the window at 2542 North Clark, which indicated that a Westinghouse laundromat was to open very shortly at that location; that this was a clear violation of all understandings which plaintiff had with defendant; that plaintiff had no alternative but to file an injunction suit, and that Lyson replied that he could not do anything and maybe an injunction would be the answer. This suit followed.

Defendant admitted in its answer that it advised plaintiff that it was its policy not to sell equipment to businesses in close proximity, one to another, and admitted that plaintiff was informed that negotiations were pending for the proposed establishment of another such business at 2542 North Clark Street, but specifically denied any agreements or representations about a three-block radius restriction, and specifically denied that a representative of defendant advised plaintiff that defendant would not sell equipment for use at 2542 North Clark.

Defendant's representative admits that he brought the attention of Cohen and Newman, plaintiff's representatives, to the 2542 North Clark Street store in January, and that when the final order was signed on February 6, 1957, he did make a telephone call to Lyson, because Cohen asked for a written statement of some territorial protection, and as a result thereof he told Cohen that Lyson had informed him they could not give any written protection for territorial rights, but that normally they tried to keep people away from close proximity to each other. A district manager of the defendant testified that it was the policy of defendant not to sell to a store that was so close to another store that both stores would suffer from competition, but that no customer received from defendant a contract right or claim to a particular territory.

Lyson testified that he told Johnston, defendant's salesman, over the telephone, that "We don't sell franchises and we don't protect territory. We can't."; that 2542 North Clark Street did not enter into that conversation nor was there any question of another place of close proximity in the conversation; and that there was no policy concerning territories or proximity regarding sales to businesses in close proximity. He later said defendant had a policy with respect to not selling equipment for use in too close proximity to another location; and that "I was in error in my testimony the other day in the understanding of the word `policy.' . . . If in our opinion the store is too close in proximity, it would be our practice not to sell."

On June 10, 1957, the trial court entered an order for a temporary injunction, restraining defendant from in any manner delivering or making available laundromat equipment for use at 2542 North Clark Street or for use in any premises located within three blocks of 2707 North Clark Street, Chicago, Illinois.

The question on appeal is whether or not the chancellor abused his discretion in granting the temporary injunction. On the evidence in the record and the law applicable thereto, this court believes the trial court was well within its discretion in granting the temporary injunction complained about. The propriety of granting a temporary injunction depends on the facts of each particular case and the general principles of equity as relating to injunctions, and the right to exercise common sense in the granting or refusing of injunctions is one of the fundamental prerogatives of a court of chancery. 43 C.J.S., sec. 12, p. 419; O'Brien v. Matual, 14 Ill. App.2d 173 (1957).

The principal fact issue before the chancellor pertained to the understanding between the parties regarding the protected area for plaintiff. Plaintiff relied on its testimony of an oral agreement by defendant to limit competition within a three-block radius.

If the court had permitted defendant to proceed with its sale of equipment to 2542 North Clark, or to any other prospective purchaser in the three-block area, it is not difficult to perceive that it would be impossible to restore plaintiff to its position at the time it requested the temporary injunction, and that damages could not be gauged with any certainty, keeping in mind that plaintiff's enterprise was newly established. In balancing the inconveniences to the parties here, there would be less inconvenience to the defendant by the allowance of the temporary injunction. Any other conclusion would put a premium upon the wilful disregard of claimed rights until the court has had an opportunity to consider the cause upon its merits.

Defendant contends that the persons who desired to establish the laundromat at 2542 North Clark should have been made parties defendant, i.e., that they were indispensable parties, who were materially affected by the decree. That the courts do not consider persons indirectly affected by a decree to be indispensable parties, or parties without which an equity court will not proceed to an injunctive decree, is illustrated in many cases. In Illinois Power & Light Corp. v. Consolidated Coal Co., 251 Ill. App. 49, request was made for injunctive relief against invasion of territory served by plaintiff, the incidental effect of the injunction being to declare void certain contracts with ...

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