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Stocker Hinge Mfg. Co. v. Darnel Indus.

OPINION FILED JANUARY 24, 1983.

STOCKER HINGE MANUFACTURING COMPANY, APPELLANT,

v.

DARNEL INDUSTRIES, INC., ET AL., APPELLEES.



Appeal from the Appellate Court for the First District; heard in that court on appeal from the Circuit Court of Cook County, the Hon. Francis T. Delaney, Judge, presiding.

CHIEF JUSTICE RYAN DELIVERED THE OPINION OF THE COURT:

Rehearing denied April 8, 1983.

Plaintiff, Stocker Hinge Manufacturing Company, appeals from an award of damages in the amount of $44,815.75 entered in the circuit court of Cook County in favor of defendants, Darnel Industries, Inc., Samuel A. Hoffman, and S&S Hinge Company, resulting from the issuance of a temporary restraining order (TRO) under the Injunction Act (Ill. Rev. Stat. 1977, ch. 69, pars. 9, 12). The appellate court affirmed the award of damages (99 Ill. App.3d 340), and we granted plaintiff's petition for leave to appeal (73 Ill.2d R. 315).

This case presents one question: whether damages may be awarded when a temporary restraining order is terminated as a result of the denial of a preliminary injunction where the trial court has previously refused to dissolve the TRO and defendants have failed to appeal that decision. Although the narrow issue involved in this case renders it unnecessary to discuss the substantive issues in detail, a basic explanation of the controversy is required.

This is a controversy concerning alleged "trade secrets." Plaintiff, Stocker Hinge Manufacturing Company, filed a verified complaint on September 14, 1977, seeking to enjoin defendants Darnel and Hoffman from revealing plaintiff's trade secrets to S&S. Plaintiff manufactures and sells hinges used in all types of industry. Defendant Darnel Industries manufactures and sells tools and dies, including continuous, butt and special hinge tools and dies. From 1966 to 1974, defendant Samuel A. Hoffman was employed by Stocker Hinge as its chief engineer; afterward, Hoffman became president of Darnel Industries, Inc. Defendant S&S Hinge Company, a competitor of plaintiff, also manufactures and sells hinges for all types of industry.

On September 19, 1977, plaintiff filed a motion for a temporary restraining order and for a preliminary injunction, pursuant to sections 3 and 3-1 of the Injunction Act (Ill. Rev. Stat. 1977, ch. 69, pars. 3, 3-1), initially seeking a TRO to maintain the status quo by restraining defendants from "selling, disclosing, or utilizing any of Stocker's technology and manufacturing processes for continuous, butt or special hinges until a full hearing can be held on Stocker's motion for a preliminary injunction." The motion alleged that defendants were "about to sell or disclose or ha[d] sold or disclosed the unique technology and manufacturing processes for continuous, butt and special hinges to a competitor of Stocker's, S&S Hinge."

On that same day, the circuit court entered the following order:

"This matter having come to be heard on Friday, September 16, 1977 on Plaintiff's Motion for a Temporary Restraining Order and for a Preliminary Injunction, and the Court having examined the Verified Complaint for Injunction and heard partial testimony in support of the motion, the parties have agreed as follows:

3. That Hoffman and Darnel will not sell, disclose or deliver any technology and manufacturing process for continuous, butt and special hinges developed by Stocker and Hoffman and utilized by Stocker until further order of this Court.

In view of the foregoing agreement of the parties, IT IS THEREFORE ORDERED:

That the status quo shall be maintained consistent with the foregoing agreement of the parties nunc pro tunc as of September 16, 1977 for a period of ten (10) business days, or to and including September 29, 1977." (Handwritten addition to typed order italicized.)

Afterward, the parties strongly disagreed as to whether the above order was in fact an "agreed order," as plaintiff maintains, or an "ex parte order," as defendants argue. The record reveals that there was a substitution of counsel for defendants during this period and that counsel for plaintiff attempted, but was unable, to contact defendants' counsel for approval of the order prior to its entry.

After entry of the temporary restraining order, defendants filed a motion to vacate the order on September 27, 1977, and orally objected to the continuance of the order at the hearing on October 7, 1977. The court denied the defendant's motion and entered an order on September 27, 1977, finding as follows:

"4. That the order entered into by this Court on Sept. 19, 1977 be and is hereby continued until Oct. 7, 1977 upon Plaintiff filing a bond in the amount of $5,000.00.

6. That the Court finds no just cause to delay enforcement or appeal of paragraph 4 of this Order." (Emphasis added.)

The temporary restraining order entered September 19, 1977, was thereafter continued periodically while the court heard evidence on plaintiff's motion for preliminary injunction, and the amount of ...


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