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Mccook Window Co. v. Hardwood Door Corp.

SEPTEMBER 29, 1964.

MCCOOK WINDOW CO., A CORPORATION, PLAINTIFF-APPELLEE,

v.

HARDWOOD DOOR CORPORATION, A CORPORATION, AND ASHLEY T. WRIGHT, DEFENDANTS-APPELLANTS.



Appeal from the Circuit Court of Cook County; the Hon. THOMAS E. KLUCZYNSKI, Judge, presiding. Decree affirmed in part and reversed in part with directions.

MR. JUSTICE FRIEND DELIVERED THE OPINION OF THE COURT:

This is an action for injunctive relief, for accounting, and for compensatory damages, and arises out of an agreement (the relevant provisions are hereinafter set forth) entered into by McCook Window Company, Hardwood Door Corporation, and Ashley T. Wright. The cause was referred to a master who heard testimony and made his report to the court. After overruling the exceptions of defendants to the master's report, the court approved the report and entered a decree enjoining defendants from violating paragraphs 5 and 7 of the agreement, and directing defendants to file an accounting. Defendants appeal.

Wright at all times was president, director, principal executive officer, and controlling shareholder of Hardwood which had been engaged in the retailing of windows, doors, screens, and door and window frames. Hardwood also began to build check rail windows from unassembled parts. However, since this was a manufacturing rather than a retailing operation, the management of Hardwood caused McCook to be organized in the spring of 1954. At first McCook operated from the same premises as Hardwood but later moved to its present location in McCook, Illinois. Shortly after McCook was organized Wright became one of its principal stockholders and remained one until May 7, 1959, when he divested himself of all his stock in the company. On that same date McCook purchased, for $40,000, 435 shares of McCook stock owned by Wright. The agreement, likewise dated May 7, 1959, provided that the parties were to maintain the business relationship which existed prior to May 7, 1959; it also provided for certain restraints which were ancillary to the sale of stock by Wright. The two paragraphs which provided for the restraints and which are the basis of this suit are as follows:

"5. Hardwood agrees to continue to handle and purchase as it normally did in the past the various products manufactured and kept for sale by McCook and McCook agrees to make the same available to Hardwood, and Hardwood agrees not to handle or purchase any competing line of said products during the existence of this agreement, from the date hereof to the 10th day of April, 1964. In the event Hardwood makes purchases from any other competitor in violation of the terms hereunder, then McCook can at its option, forfeit as liquidated damages the balance, if any, due and owing by McCook to Wright under the terms of this agreement. Prices charged by McCook for such products must be reasonably competitive, otherwise Hardwood shall be relieved of its obligation to purchase such products which are not reasonably competitive. Hardwood agrees to cooperate with McCook in the furtherance or promotion of newly designed products by McCook.

"7. Wright and Hardwood agree to and with McCook that they will not engage in the wholesale manufacturing, distributing or selling of exterior window frames and unit business within one hundred and fifty miles (150) radius from location of McCook, which is at Route #66 and B & O Railroad Overpass, McCook, State of Illinois, either directly or indirectly, either as an individual, employee, corporation, association, venture, or partnership, during the time McCook may be engaged in said business in said area."

Because it claimed that McCook's prices were not competitive, Hardwood began seeking products from other manufacturers. Meetings between McCook and Hardwood were held for the purpose of trying to work out their differences, but no solution could be found. In the summer of 1960 Hardwood began to purchase from McCook's competitors and also began to change the nature of its operation — it began to carry on assembly operations with parts purchased from McCook's competitors. On October 13, 1960 McCook filed suit against Hardwood and Wright, claiming that, by purchasing goods from McCook's competitors and by engaging in manufacturing operations, defendants had violated paragraphs 5 and 7 of the May 7, 1959 agreement.

Defendants contend that: (1) they did not handle and purchase a competing line of products and therefore did not violate the agreement; (2) they were relieved of their obligation to purchase products from plaintiff because the prices for said products were not reasonably competitive; (3) they did not engage in the wholesale manufacturing, distributing, or selling of exterior window frames and unit business within 150 miles of plaintiff and therefore did not violate the agreement; (4) the requirement of paragraph 5 of the agreement that defendants handle and purchase plaintiff's products and not a competing line of products for five years is void as against public policy; and (5) the requirement of paragraph 7 of the agreement that defendants refrain from the wholesale manufacturing, distributing, or selling of products within a 150-mile radius of plaintiff's plant in McCook, Illinois as long as plaintiff is engaged in the same business in the same area is void as against public policy.

[1-3] The first three grounds for reversal present questions which challenge the master's findings of fact and conclusions of law. We hold, however, that defendants are precluded from doing so because their abstract does not contain the requisite matters upon which such contentions can be resolved. Defendants failed to set out in full the master's findings of fact or any part of his conclusions of law; they also failed to set out the agreement which is the basis of this suit. The failure of defendants to set out objections to the master's report, which stand as exceptions to it, constitutes a damaging omission in the abstract; that omission alone precludes us from considering factual questions presented by defendants in their first three grounds for reversal. Appellate Court rule 6 provides that the abstract "need only be sufficient to present fully every error relied upon." The use of the word "only" does not change the meaning of the word "sufficient"; the abstract must present fully every error relied upon. The abstract of the record is the pleading of the appealing party in a court of review, and whatever is sought to be reviewed must be contained therein. City Nat. Bank & Trust Co. of Rockford v. Almond, 42 Ill. App.2d 314, 192 N.E.2d 297 (1963).

The court in Decatur Coal Co. v. Clokey, 332 Ill. 253, 261, 163 NE 702 (1928), passed on the problem of an abstract which failed to set out the master's report and the objections thereto, and said:

"Rule 14 of the rules of practice of this court requires that in all cases an appellant or plaintiff in error shall furnish a complete abstract of the record, . . . The abstract must be sufficient to present fully every error relied upon. The abstract filed in this case says: `The master's report is not abstracted, for the reason that the findings in the decree follow it almost verbatim. It concludes that complainant . . . should be decreed to have full right, title and interest in the coal claimed by Clokey.' The condition of the record is such that no question of fact is open for review. The decree cannot be resorted to or take the place of the necessary report, objections and exceptions to preserve questions of fact for review. It is the result of all antecedent steps. . . . The decision of the chancellor on the exceptions is not open to review in this court as to any question of fact. Only questions of law are now proper for consideration upon the facts found in the decree."

In the case of Hamalle v. Kimmel, 224 Ill. App. 9 (1922), the abstract omitted the order of reference to the master, the report of the master, the objections to the report, the ruling on the objections, and the exceptions to the report. The court said (11): "This practically withdraws from our consideration all the questions of fact. . . . appellants should be deprived of any question upon the findings of the court as to the facts." Gribben v. Interstate Motor Freight System Co., 38 Ill. App.2d 123, 186 N.E.2d 100 (1962), is likewise in point. Because of defendants' failure to file an abstract which satisfied rule 6, they deprived themselves of the opportunity to question the findings of fact, and we cannot consider their first three grounds for reversal which are basically factual questions. It remains to consider the questions of law presented by the complaint, answer, and decree.

Defendants' fourth ground for reversal is that the provisions of paragraph 5 of the agreement are void as against public policy and therefore unenforceable. Likewise we cannot consider this objection since no question as to the validity of paragraph 5 of the agreement was raised in the trial court; this objection is now being raised for the first time on appeal. It is clear that a defense may not be raised for the first time on appeal. Bryant v. Lakeside Galleries, Inc., 402 Ill. 466, 84 N.E.2d 412 (1949); Bowman v. Pettersen, 410 Ill. 519, 102 N.E.2d 787 (1952).

Finally defendants argue that the provisions of paragraph 7 of the agreement are void as against public policy and therefore unenforceable. This paragraph provides that defendants will not engage in the wholesale manufacturing, distributing, or selling of exterior window frames within a 150-mile radius of plaintiff's ...


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