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Sports Unlimited v. Scotch & Sirloin






This is an interlocutory appeal by the defendant corporations, Scotch & Sirloin of Woodfield, Inc., The Country Inn of Northbrook, Inc., and the Higgins Street Garlic Press, Inc., from orders granting a preliminary injunction in favor of the plaintiff, Sports Unlimited, Inc., and denying a motion to dissolve that injunction. The defendants contend that the injunction has been improperly issued, citing both procedural and substantive defects.

The plaintiff conducts advertising sales promotions for various businesses through the marketing of discount coupon books. The coupons in the books are redeemable for price reductions in services, food and entertainment when presented at participating establishments. In August 1976, Floyd Fulle, claiming to be the defendants' advertising representative, contracted with the plaintiff to include coupons for the defendants' restaurants in the discount books. He signed a separate agreement for each corporation. Each contract provides that the defendants will honor coupons through December 1978 and that a termination of the agreement by the defendants prior to that date may be made only under specific circumstances. A clause declares that failure of the defendants

"* * * to honor coupons as agreed will cause irreparable harm to [Sports Unlimited, Inc.]. Due to the difficulty of determining damages, in the absence of conclusive evidence to the contrary, [the defendants] agree that [Sports Unlimited, Inc.] shall be paid the amount of twenty-five hundred dollars, or in the alternative, [Sports Unlimited, Inc.] may seek specific performance."

Advertisements for the defendants' restaurants appeared on coupons in the plaintiff's discount book "Entertainment '77." The plaintiff alleges these coupons were honored by the defendants until April 1977. At that time the plaintiff received a letter from the defendants' attorney denying that Fulle had authority to bind the corporations and stating that the coupons would not be honored.

In July 1977, the plaintiff applied for a preliminary injunction to prevent the defendants from dishonoring the coupons, a permanent injunction, damages and any other necessary relief. Notices of the application for the preliminary injunction, to be heard on August 9, 1977, were mailed on August 4, 1977, to the registered agents of the defendant corporations. The notices were sent to addresses obtained from the Annual Corporate Reports that the defendants filed with the Secretary of the State of Illinois. John Theodosakis, the registered agent for Scotch & Sirloin of Woodfield, Inc., president of The Country Inn of Northbrook, Inc., and a director of Higgins Street Garlic Press, Inc., and Sam Mantelos, registered agent for and president of the Higgins Street Garlic Press, Inc., and director of The Country Inn of Northbrook, Inc., claim not to have received the notice. The agent for The Country Inn of Northbrook, Harvey Koloms, received the notice on August 8, 1977; he, in turn, mailed it to Theodosakis. Theodosakis states that the notice Koloms sent him, received on August 10, 1977, was the first knowledge he had of the injunction.

The defendants did not appear at the proceedings on the application for the preliminary injunction on August 9, 1977. The court, upon finding that due notice was served by mail, and ordering the plaintiff to post a bond, issued the preliminary injunction, enjoining:

"* * * the defendants and each of them, their representatives, agents, attorneys, employees and servants * * * during the pendency of this suit and until further order of court:

A. From refusing to honor Discount Coupons of "Entertainment '77" issued by plaintiff.

B. From maintaining or posting notices or advertisements, either on their respective places of business or elsewhere, notifying the general public that each of the defendants will not further honor such coupons."

• 1 On August 15, 1977, the defendants moved to vacate the injunction order; they also filed an alternative motion to increase the plaintiff's bond. The latter motion stated that from January 1977 to April 1977 over $42,000 worth of coupons had been honored at the restaurants. After extensive argument, the court denied the motion to dissolve the injunction; the bond was increased.

Section 3 of the Illinois injunction statute provides:

"No court or judge shall grant a preliminary injunction without previous notice of the time and place of the application having been given the adverse party unless it clearly appears, from specific facts shown by the verified complaint or by affidavit accompanying the same, that immediate and irreparable injury, loss or damage will result to the applicant before notice can be served and a hearing had thereon." (Ill. Rev. Stat. 1975, ch. 69, par. 3.)

According to the defendants, the preliminary injunction should not have been granted because the plaintiff failed to comply with the notice requirements of this section. They assert that mailing the notice of application to opposing parties is insufficient and that only personal service will satisfy the statute. This contention is based upon the rule in Haj v. American Bottle Co. (1914), 261 Ill. 362, 365, 103 N.E.2d 1000, 1001: "`[w]here a statute requires the giving of notice and there is nothing in the context of the law or in the circumstances of the case to show that any other notice was intended, personal notice must always be given.'"

Modern procedure does not make personal service the exclusive means of notice in this matter. Illinois Supreme Court Rule 11(b) lists the accepted methods of service ...

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