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Cross Wood Products v. Suter

OPINION FILED JUNE 9, 1981.

CROSS WOOD PRODUCTS, INC., PLAINTIFF-APPELLEE,

v.

RICHARD W. SUTER ET AL., DEFENDANTS-APPELLANTS.



APPEAL from the Circuit Court of Cook County; the Hon. HAROLD A. SIEGAN, Judge, presiding.

MR. JUSTICE DOWNING DELIVERED THE OPINION OF THE COURT:

This is an interlocutory appeal, taken pursuant to Supreme Court Rule 307(a)(1) (73 Ill.2d R. 307(a)(1)), from the circuit court's entry of a preliminary injunction prohibiting defendants Richard W. Suter and National Material Handling, Inc. (hereafter collectively or individually referred to as Suter), from soliciting sales of wood pallet products in a specific geographic area near Chicago. The sole issue raised is whether the circuit court's entry of the preliminary injunction constituted an abuse of discretion.

Plaintiff Cross Wood Products, Inc. (Cross Wood), is engaged in the business of arranging the sale and delivery of wood pallets and other wood products from the producing entity to the purchasing entity. (In other words, Cross Wood is a middle-man operation.) The company hired Richard Suter as a salesman in June 1977. No written employment contract or restrictive covenant was entered into by the parties then or at any subsequent time. Cross Wood's owner, Joseph Reyes, allegedly trained Suter in the methods of salesmanship.

While employed at Cross Wood, Suter was assigned a specific territorial area in which he was to solicit sales for the company. In return for his services, Suter received a draw of $1,200 per month against his commissions, which were set at 50% of the profit on any sales he procured. The draw was increased to $2,800 per month and the commission rate to 60% on January 1, 1980.

In his position as salesman, Suter was responsible for developing a customer base, soliciting orders therefrom, finding a manufacturer to supply the order, and ensuring delivery of the order to the customer. Suter was charged with ascertaining the cost of production and with setting the price quoted to the customer.

While yet in the employ of Cross Wood, Suter incorporated National Material Handling, Inc., on September 23, 1980. Reyes of Cross Wood learned from a customer that Suter was in business for himself and on that date, November 14, 1980, terminated Suter's relationship with Cross Wood and filed the instant action. The two count complaint was based on unfair competition and breach of an employee's fiduciary duty to his employer. Cross Wood sought, inter alia, an injunction against Suter's solicitation of business, an accounting for all sales made by Suter through National Material Handling, damages, and punitive damages.

At the hearing for a preliminary injunction, Suter related that the salesman's duties at Cross Wood included development of a customer list and maintenance of a business relationship with these purchasers. He admitted that after forming the rival entity, he had taken and filled orders from three purchasers for the benefit of National Material Handling, although he was still employed with Cross Wood. Suter noted that all three customers had formerly done business with Cross Wood.

Joseph Reyes testified that after Suter's departure, Cross Wood's business declined 30-35%. Reyes believed this drop was because Suter had taken his customers over to his own company. Reyes admitted that he did not hire a replacement for Suter for nearly three months after the latter's termination. The reason for this delay was not stated. Reyes also related that no one was working Suter's territory full-time after the latter's termination. Finally, Reyes stressed the highly competitive nature of the field.

The circuit court issued a preliminary injunction against Suter covering only that geographic area which had been Suter's territory at Cross Wood. The injunction prohibited Suter from engaging in the business of solicitation of sales or from selling wood pallets and other wood products in that area. The injunction was to be in effect until further order of the court. In its order, the circuit court noted that the injunction was fashioned so as not to deprive Suter of his livelihood, since he could continue to operate anywhere outside the defined area. From this order, Suter appeals.

I

• 1 In order for a preliminary injunction to issue, the plaintiff must establish (1) that he possesses a clearly ascertained right which needs protection, (2) that he will suffer irreparable harm without the injunction, (3) that there is no adequate remedy at law for his injury, and (4) that he is likely to be successful on the merits of his action. (Bromberg v. Whitler (1978), 57 Ill. App.3d 152, 155, 372 N.E.2d 837.) In addition, the court must conclude that the grant of the temporary relief outweighs any possible injury which the defendant might suffer by its issuance. (Iroquois Industries Corp. v. Popik (1980), 91 Ill. App.3d 505, 507, 415 N.E.2d 4.) The findings of the circuit court on the matter of the issuance of a preliminary injunction will not be disturbed unless they are against the manifest weight of the evidence, demonstrating an abuse of that court's discretion. Popik, at 507.

Suter asserts that the circuit court abused its discretion in entering the injunction in this case because Cross Wood allegedly failed to demonstrate the existence of a clear and ascertainable right needing protection, failed to show that it would be irreparably harmed in the absence of injunctive relief, and had an adequate remedy at law.

A

• 2 We cannot agree with Suter's first contention that Cross Wood failed to demonstrate that it possessed a clear and ascertainable right requiring protection. The record indisputably indicates that Suter began solicitation of customers for his own business while he was still employed by Cross Wood. This court has recognized that an ongoing concern has the right to be free from interference with its customers by those in its employ, and that such right is entitled to protection during the pendency of a lawsuit brought to vindicate the right. ABC Trans National ...


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