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U-haul Co. of Central Illinois v. Hindahl





APPEAL from the Circuit Court of Tazewell County; the Hon. JAMES D. HEIPLE, Judge, presiding.


Rehearing denied December 22, 1980.

This is an interlocutory appeal from the granting of preliminary injunctive relief to plaintiff U-Haul Company of Central Illinois (hereinafter U-Haul) as against defendants Ron Hindahl, d/b/a H & M Camper Sales, and J.L. Hasty, d/b/a Jim's Standard Service (hereinafter "Hindahl" and "Hasty"). From 1966 until April of 1980 both Hindahl and Hasty operated U-Haul dealerships in Pekin. Their dealership contracts with U-Haul contained a restrictive covenant in which they agreed to refrain from competing (in the rental business of truck and trailer equipment) with U-Haul for a specified period of time after termination of their U-Haul dealership agreements. The covenant restricting competition is principally involved in the instant case.

In March of 1980, both Hindahl and Hasty began operating as dealers in the truck and trailer rental business for Jartran, Inc., a competitor of U-Haul. In April of 1980 both men terminated their agreements with U-Haul, after U-Haul learned of their switch to Jartran. Thereafter, U-Haul filed the instant action seeking to enforce the restrictive covenant and seeking monetary damages. U-Haul moved for preliminary injunctive relief to enforce the restrictive covenant, pending a trial on the merits. After a hearing in which affidavits were submitted and counsels' arguments heard, the circuit court entered an order granting a preliminary injunction prohibiting Hindahl and Hasty from competing in any way in the truck and trailer rental business with U-Haul in Tazewell County. Hindahl and Hasty were required to cease their Jartran operations. From the granting of that preliminary relief, Hasty and Hindahl appeal. Their motion for stay of the injunction was denied by the trial court. On this appeal, they now raise issues as to the sufficiency of the proof on questions of (1) U-Haul's possession of a legitimate business interest in need of protection; (2) the adequacy of U-Haul's remedy at law; (3) the irreparability of the injury to U-Haul; and (4) U-Haul's likelihood of prevailing on the merits.

The record reveals the following facts pertinent to the issues on appeal. Both Hindahl and Hasty had been operating U-Haul dealerships in Pekin since 1966. Originally in business together, they later severed that relationship and each continued in business alone as a U-Haul dealer. Both men signed a 1966 dealership contract with U-Haul. Also in the record are subsequent dealership contracts signed by Hindahl and Hasty individually, Hindahl's in 1972 while Hasty's is undated. Both men continued operations for U-Haul, as dealers, into April 1980. The contracts with U-Haul contained a provision in which Hasty and Hindahl agreed that:

"* * * within the geographical limits of the county of his place of business, he will not represent or render any service either on his own behalf or in any capacity for any other persons, firm or corporation engaged in any rental business which offers the rental of equipment similar to that operated by [U-Haul] for the duration of the then existing telephone directory listing, plus a period of one year from the termination of such telephone directory listing."

Yellow Page telephone advertising for these dealers was paid for by U-Haul and not by the dealers. U-Haul, as it had in past years, had placed advertisements in the 1980 Pekin telephone directory, which is circulated throughout Tazewell County. That advertising identified business locations for Hindahl and Hasty as U-Haul dealerships and also listed their telephone numbers as U-Haul numbers.

In March 1980, while still operating as U-Haul dealers, Hindahl and Hasty were allegedly contacted by a Jartran regional manager. Jartran is a relative newcomer in the truck and trailer rental business. In March 1980, Hindahl and Hasty state, the return on their U-Haul operations had fallen off drastically. They state, by way of affidavit, that a 1978 change in U-Haul policy with respect to one-way rental equipment resulted in severely diminished profits and undermined their successful operations. Hasty and Hindahl became Jartran dealers in March 1980. Neither man apparently notified U-Haul, and both carried Jartran and U-Haul equipment on their lots. Both continued receiving phone calls at the numbers, identified as U-Haul's, in the Yellow Pages. When U-Haul became aware of the Jartran equipment and operation, they objected. Hindahl and Hasty then advised them of their wish to terminate their U-Haul dealerships. They were permitted to do so immediately. Thereafter, up until the time of the court's order in this case, they continued to operate as Jartran dealers, using the same phone numbers and locations as they had as U-Haul dealers.

U-Haul filed the instant action against Hindahl and Hasty, and it also moved for preliminary injunctive relief against them to prevent them from continuing their Jartran dealerships in Tazewell County, pending a hearing on the merits as to the restrictive covenants. After hearing evidence and argument the court found that valid and enforceable agreements between U-Haul and Hindahl and Hasty had been violated and that the covenants not to compete in those agreements were reasonable. The court also found that U-Haul was without adequate remedy at law and that it had a likelihood of ultimately prevailing on the merits. The trial court granted U-Haul's request for preliminary injunctive relief in accordance with the provisions of the restrictive covenants.

• 1 The general rules applicable to the issues on this appeal are well established.

"To justify issuance of a preliminary injunction, plaintiff must establish by a preponderance of the evidence: (1) possession of a `certain and clearly ascertained right which needs protection' [citations]; (2) immediate and irreparable injury if the preliminary injunction is denied [citation]; (3) lack of adequate remedy at law [citation]; and (4) `probability of his ultimate success on the merits.' [Citations.]" Stocker Hinge Mfg. Co. v. Darnel Industries (1978), 61 Ill. App.3d 636, 642, 377 N.E.2d 1125.

"The issuance of a preliminary injunction is addressed to the sound discretion of the trial court. Thus, on appeal, the reviewing court's consideration is limited to whether the trial court properly exercised its broad discretionary powers in granting the temporary relief. [Citation.] Accordingly, we must determine whether, on the basis of the evidence produced at the hearing on [plaintiff's] motion for a preliminary injunction, the trial court abused its discretion in entering the preliminary injunction order. Each substantive issue will be considered only insofar as necessary to determine whether there has been an abuse of the trial court's discretion." (Donald McElroy, Inc. v. Delaney (1979), 72 Ill. App.3d 285, 290-91, 389 N.E.2d 1300.)

We would also emphasize that the purpose of a preliminary injunction is to preserve the status quo and not to determine controverted rights or decide the merits of a case. Frank B. Hall & Co. v. Payseur (1979), 78 Ill. App.3d 230, 236, 396 N.E.2d 1246; Donald McElroy, Inc. v. Delaney (1979), 72 Ill. App.3d 285, 295, 389 N.E.2d 1300.

Considering now the substantive issues, the first issue raised is whether U-Haul showed valid business interests in need of protection. U-Haul, through affidavit of its president, claimed threatened business interests in dealer locations, customers' names, phone book listings and advertising, and good will. The defense denies these as proper interests and denies that they are in need of protection at this time. Despite defense argument to the contrary, we find the trial court did not abuse its discretion in concluding that U-Haul had shown legitimate business interests in need of protection. The record indicates that U-Haul dealerships in Pekin had been with Hasty and Hindahl since 1966. As such, customer contacts with these men and with their locations had been developed over ...

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