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House of Vision, Inc. v. Hiyane

MAY 5, 1965.

THE HOUSE OF VISION, INC., A CORPORATION, PLAINTIFF-APPELLANT,

v.

WILLIAM M. HIYANE AND ACRO CONTACT LENS SERVICE, INC., A CORPORATION, DEFENDANTS-APPELLEES.



Interlocutory appeal, Circuit Court of Cook County, Chancery Division; the Hon. WALKER BUTLER, Judge, presiding. Reversed and remanded.

MR. PRESIDING JUSTICE MCCORMICK DELIVERED THE OPINION OF THE COURT.

This is an interlocutory appeal from an order denying the motion of plaintiff, House of Vision, for a temporary injunction to restrain Hiyane from "engaging directly or indirectly, in the same or similar business as plaintiff anywhere within a radius of thirty (30) miles from the office of plaintiff in Evanston, Illinois; . . ." The complaint contained a prayer that upon the final disposition of the case the injunction be made permanent and final.

The case grew out of a dispute between the plaintiff and Hiyane, a former employee. Hiyane started working for plaintiff in 1959. Prior to that time he had worked for Plastic Contact Lens Company, of Chicago, and as an interior decorator for Polk Brothers in Chicago. He had had three years of high school and had studied at the Ray-Vogue School of Interior Design for two and one-half years. His work with Plastic Contact Lens Company was largely mechanical.

Hiyane started to work for the plaintiff corporation at their main office in downtown Chicago at a salary of $75 a week. Within six months he became a lens fitter, which involved customer contact. In August 1960, the plaintiff began sending the defendant to Waukegan one day a week to service the patients in the offices of Dr. Wones and Dr. Menachof. In September 1960 Hiyane's salary was raised $100 a month. At that time he was the only contact lens fitter for the plaintiff in Waukegan, Highland Park and Evanston. Each week he spent one and one-half days in Highland Park, two and one-half days in Evanston, and Wednesday in Waukegan.

Hiyane had attended three classes for interns specializing in ophthalmology in Chicago hospitals. When he first commenced to fit lenses he was supervised, but shortly began to operate independently at all three offices. Late in 1963 his salary was raised to $700 a month and he was given a car for his business and personal use. In addition, he was given a $5,000 life insurance policy, plus a hospital policy, half of which was paid for by plaintiff.

The contract in question which was entered into on February 1, 1960, between the plaintiff and Hiyane provided that the employee agreed to continue in the employ of the employer. The employer agreed to continue to employ the employee in any place which might be designated by the employer as "Contact Lens Technician" or in any other capacity which might be designated by the plaintiff, for a period of one year from and after February 1, 1960. The contract provided that during the term of his employment Hiyane should receive a base salary of not less than $4,800; that the employment should continue after February 1, 1961, until terminated by either party giving the other not less than 30 days written notice. Paragraph 6 provided:

"Upon the termination of his employment for any cause whatsoever, the Employee shall not engage, directly or indirectly, in the same or similar business as that of the Employer, anywhere within a radius of Thirty (30) miles from any office of the Employer in, or from which, the Employee rendered services at any time during his employment with the Employer."

Hiyane gave the plaintiff 30 days notice of the termination of his employment, effective February 29, 1964. Afterwards Hiyane was employed by Acro Contact Lens Service, Inc., which is engaged in the contact lens business in Evanston, Illinois. While in the employ of the plaintiff corporation Hiyane became acquainted with the names and addresses of plaintiff's customers to whom Hiyane had dispensed contact lenses, and the names and addresses of the general suppliers and ophthalmologists with whom the plaintiff corporation did business. Plaintiff's customers were people who had had their eyes examined and brought to the plaintiff the prescriptions given them. Ninety per cent of the plaintiff's customers were referred to it by ophthalmologists. After the defendant entered the employ of defendant Acro he mailed notices announcing the opening of Acro's office in Evanston, enclosing a business card of Acro containing Hiyane's name, to a customer who had requested that Hiyane tell him of any change of employment. Similar announcements were sent to ophthalmologists. Hiyane had kept a diary containing a list of the customers. In his testimony he had stated that before he left the employ of the plaintiff he had destroyed the diary.

Hiyane filed an answer to the plaintiff's complaint. *fn1 The cause was assigned to a master in chancery who heard evidence and filed a report with the court. In his report the master found that Hiyane, after his employment by Acro, had mailed notices of his name, address and employment to certain of plaintiff's customers in Evanston and to several doctors for whom the plaintiff corporation dispensed its products, and that the names of the patients and doctors became known to Hiyane while he was in the employ of the plaintiff. The master further found that in the employment of Acro, Hiyane was performing the same type of service that he had for the plaintiff and that the office of Acro was within a short distance from plaintiff's Evanston office; that numerous patients of plaintiff whom defendant met while in plaintiff's employ became patients of defendant thereafter. The master found that the plaintiff corporation had a decrease in business in its Evanston office from the time of the employment of Hiyane by Acro, and also a substantial decrease in gross sales.

The master in his conclusions set out "that a restrictive covenant, ancillary to employment, in complete restraint of trade, is unenforceable and against public policy — but where the restraint of trade is reasonable as to its terms even though unlimited as to time, the restrictive covenant, ancillary to employment, has been held enforceable and a temporary injunction granted in some instances." Plaintiff cited certain Illinois cases where a restrictive covenant ancillary to employment was held enforceable. The master found these cases were distinguishable because they dealt with the sale of a business, house, dissolution of a partnership or goodwill, and the consideration given in those instances was for part of the goodwill.

The master also concluded that there is no absolute, rigid rule to determine the fact of the duration of the restraint on the enforceability of a restrictive covenant; that the test is a question of reasonableness and there is a distinction between covenants dealing with the sale of a business, goodwill or dissolution of a partnership, and contracts which are ancillary to an employment contract. The master found that the contract in question would be unenforceable and void, as such contract would preclude Hiyane from "pursuing his occupation and preventing him from supporting himself and family, which would be unduly harsh and oppressive on the said defendant, William M. Hiyane, and injurious to the public, consequently unreasonable."

The master concluded that the thirty-mile restriction in the agreement is reasonable. He also concluded, however, that because the agreement contains no time limitation it is unreasonable and therefore unenforceable. The master then concluded that with regard to plaintiff's prayer for a temporary injunction against Hiyane, the issuing or granting of a temporary injunction, irrespective of the restrictive covenant agreement, is within the discretion of the chancellor. The plaintiff need only show a prima facie case and that he raises a fair question of the right he claims. The master found that the evidence showed at least four instances of actual solicitation or contact with plaintiff's patients by Hiyane and it can be presumed that the other twenty-three patients who were at one time patients of the plaintiff corporation during the employment of Hiyane, but were now patients of Arco, were directly or indirectly solicited by Hiyane "as most of the 27 patients reside in or around Evanston, Illinois."

The master recommended to the court that an order be entered holding that paragraph 6 of the contract previously quoted be held unenforceable as unreasonable and that a request for a temporary injunction restraining the defendant from engaging directly or indirectly in the same or similar business within a 30-mile radius from the office of the plaintiff in Evanston, be denied; that a temporary injunction, upon the deposit of a $1,000 bond, be granted to the plaintiff corporation enjoining Hiyane from "soliciting or contacting the patients or customers he serviced while in the employment of the plaintiff corporation, until the termination of a full and complete hearing."

The master also recommended that plaintiff be denied a temporary injunction against Acro, a question with which we have no concern in this present ...


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