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Bruce v. Ferrara

MARCH 19, 1969.




Appeal from the Circuit Court of Cook County; the Hon. CORNELIUS J. HARRINGTON, Judge, presiding. Reversed and remanded with directions.


This appeal is taken from a permanent injunction entered in the Circuit Court of Cook County enjoining the defendants and their employees from making use of plaintiffs' customer lists or soliciting plaintiffs' customers for the purpose of selling them frozen foods or a membership in a frozen food plan. The court also ordered that an accounting be made by the defendants to the plaintiffs.

On a prior appeal, after oral argument, this court, sua sponte, dismissed the appeal on the ground that the court was without jurisdiction because the judgment order was not final and appealable under section 50(2) of chapter 110, Ill Rev Stats 1963. This court noted that if the court below, on application of the appellant, should see fit to enter an order that no just reason exists for delaying the appeal, and if the subject matter of the appeal were again presented to this court, we would transfer the abstracts and briefs then on file to the new file which would be opened for the new appeal.

The appellants obtained an order from the court below which stated that no just reason existed for delaying the appeal, and the defendants filed the instant appeal. We shall now consider the merits.

On August 14, 1962, a temporary injunction was issued against the defendants. The cause was referred to a master who held hearings and filed a report with the court. Objections to the report were filed and the master overruled them, and ordered that they stand as exceptions, which exceptions were overruled by the trial court.

Plaintiffs W.A. Bruce and L.H. Bruce (under the names of Oak Park Food Service and Freezo Center Corporation) were engaged in the business of selling home food freezers, memberships in frozen food purchase plans, and frozen foods to persons residing in the western and northwestern suburbs surrounding Chicago. The offices of plaintiffs are in a building in Oak Park, Illinois, which also houses a freezer area, meat-cutting shop, cooler and work area.

In January 1960, Leonard A. Ferrara, one of the defendants, was employed by plaintiffs as a salesman; he worked for them in that capacity for approximately a month, at which time he left their employ. In May 1960, Ferrara and the plaintiffs entered into a new arrangement, through which Ferrara was to be an independent contractor and dealer selling home freezers and frozen food purchase plans. The plaintiffs agreed that Ferrara could use the name "Oak Park Food Service" and also "Freezo Center" for which privilege Ferrara would pay certain fees to the plaintiffs. In accordance with their agreement Ferrara paid plaintiffs a fee of $55 on every freezer, and a fee of $65 on every food membership plan sold by his organization. Ferrara employed his own salesmen, bookkeepers, telephone solicitors, and had his own office space and telephones. In return for the fees paid by Ferrara the plaintiffs not only agreed to the use of their customer lists for soliciting business, but they supplied Ferrara with certain office space on their premises, permitted the use of plaintiffs' financing source in connection with the sale of home freezers, and supplied certain other incidental services. When any of Ferrara's customers required financing for the purchase of a freezer and/or food membership plan, Ferrara guaranteed the payment of such purchase.

All sales made by Ferrara's organization after September 1960 were made under the names of United Division-Oak Park Food Service and United Division-Freezo Center. Commencing February 1, 1962, Ferrara terminated financing home freezers through plaintiffs and terminated the fee payment arrangement of $55 per freezer. Thereafter he paid the plaintiffs $140 per month for the rental of office space in plaintiffs' building. Ferrara obtained several additional telephone numbers and paid his own telephone bills. When he sold food memberships he sold them in Freezo Center, and the purchasers' names were added to the plaintiffs' customer list. Ferrara testified that after May 1960 he received $185 from Freezo for every food membership contract he sold; that he sold 500 contracts between June 1960 and June 1962, which would amount to $92,500 paid by Freezo to Ferrara for such sales.

On June 16, 1962, Ferrara moved his organization out of plaintiffs' premises to new quarters in River Forest, about a mile and a half from the office of plaintiffs. He then organized Mid-America Food Service, Inc., from which he began selling food freezers and frozen food purchase plans, and transferred his telephone service to the new address. Soon after organizing Mid-America Food Service, Ferrara mailed advertisements to customers, advising that the United Division-Oak Park Food Service had changed its name to Mid-America Food Service.

About two weeks after moving, Ferrara hired the defendant, Mary Eggert, as a telephone solicitor for Mid-America Food Service. Prior to that time she had been employed by the plaintiffs as a telephone solicitor, in which capacity she had a working customer card file in her desk of about 900 cards containing information concerning customers. These names had been supplied by both Ferrara's organization and that of the plaintiffs. Ferrara, while employed by plaintiffs, had found new customers and maintained a duplicate of the list which his organization supplied.

Mary Eggert testified that while working for plaintiffs she kept a working card file of customers' names; that she received the names from plaintiffs and made cards on those from whom she received orders. She stated that she was responsible for 150 customers per month and was the customer contact.

The plaintiffs, doing business as Freezo Center, had been engaged since 1955 in the sale of frozen foods to the owners of home food freezers. They had acquired a list of customers, beginning with several thousand names which W.A. Bruce, as the distributor for the Rich Plan (a frozen food plan which had been discontinued), had purchased from Ranier Corp., for which list he paid $2,000. They had purchased another list from St. Charles Locker Company for $250, and another list of 2,000 customers from Carson Pirie Scott & Company. These lists had been developed over eleven years, since 1952. As Freezo Center, plaintiffs maintained a customer list which, at the time of the hearing, consisted of nine bound books, each labeled "Customers List." (This list was introduced in evidence as Plaintiffs' Exhibit 18.) Freezo Center also maintained a manila folder 8 1/2" x 11" customer file, master customer card, and a working card for the telephone solicitor for reordering.

Mrs. L.H. Bruce testified that she also was employed in the office of plaintiffs and that she solicited customers on the telephone. She stated that Freezo had approximately 4,500 active customers immediately prior to June 29, 1962; that there was a customer working card for each of the active customers; that she had approximately 300 of such cards, and that "the remaining working cards were in possession of Mary."

W.A. Bruce, plaintiff, testified that Mary Eggert had a working card file; that after she left their employ they examined the working cards in her desk and found that approximately 900 of the cards were missing. He stated, "I believe Mary stole 900 cards because they were missing. I did not see her steal them and I know of no one who saw her steal them. Some of the names on the list included Ferrara's customers. Possibly ten, twenty percent of this list. . . . We noticed the cards ...

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