terminated McCann's contract as of December 31, 1983.
McCann also claims that the restrictive covenant in his
employment agreement is void as against public policy. McCann
further asks the court to order Hall to pay one-half of his
rental of his Chicago apartment until December 31, 1985; that
he is entitled to 2,000 shares of Hall stock under an employee
stock grant; that he be paid an additional $30,000 in insurance
benefits in that he has suffered mental anguish entitling him
to $100,000.00 and that he is entitled to $50,000.00 in
In considering a motion for summary judgment, the Plaintiff
has the burden of demonstrating that no genuine issue of
material fact exists and that he is entitled to judgment as a
matter of law. Adiekes v. S.H. Kress & Co., 398 U.S. 144, 157
[90 S.Ct. 1598, 1608, 26 L.Ed.2d 142] (1970); Ross v.
Bridgeport & Brass Co., 487 F.2d 804, 808 (7th 1973). Any doubt
as to the existence of a genuine issue of material fact must be
resolved against the movant. Trotter v. Anderson,
417 F.2d 1191, 1192 (7th Cir. 1969). The evidence in the motion is
considered in favor of the non-moving party and all favorable
inferences are likewise to be drawn in their favor. Schafer v.
First National Bank of Lincolnwood, 509 F.2d 1287, 1297-8 (7th
Cir. 1975), cert. denied, 425 U.S. 943 [96 S.Ct. 1682, 48
L.Ed.2d 186] (1976).
The first issue in this case which has not been considered in
great detail by the parties is what law controls the instant
agreement since the agreement itself is silent as to the
controlling law. It is a well established principle that the
law of the place of performance governs the construction and
obligations of the contract when the place of making and place
of performance differ, if the agreement is to be wholly
performed in one jurisdiction. Charles O. Finley & Co., Inc. v.
Kuhn, 569 F.2d 527, 542 (7th Cir.), cert. denied, 493 
U.S. 876 [99 S.Ct. 214, 58 L.Ed.2d 190] (1978). Since this
contract was made in New York, but to be performed in Illinois,
Illinois law will be controlling.*fn1
I. ORAL NOTICE OF TERMINATION.
The contract in the case at bar could not be any more
unequivocal in the requirement that written notice was required
for its termination. Although Illinois has never explicitly
decided whether oral notice effectively terminates a contract
where written notice is required, it is clear that the general
principle is that the terms of the contract must be strictly
followed. McCormick Harvesting Machine Co. v. Cordsiemon,
101 Ill. App.? 140, 141 (3d Dist. 1902). In McCormick, the contract
required five days' notice in writing before its effective
termination. The employee was discharged with no notice. The
court held that "where a contract itself provides the method
for recission, it should be followed . . . [the Defendant]
should have given the written notice specified in the
The same principle has been espoused by the Illinois courts
when forfeiture provisions are in contracts. In Kelly v.
Germania Savings & Loan Assoc., 28 Ill.2d 591, 192 N.E.2d 813
(1963), a real estate contract required written notice of
forfeiture. The court held that the only proper method for
forfeiture was by written notice since that was what the
contract required. Id. at 545. Certainly, termination
provisions in employment contracts are of the same magnitude as
forfeiture provisions in real estate contracts. It would seem
patently unjust to allow Hall to avoid the literal terms of the
The Defendant relies on the case of Maltby v. J.F. Images,
Inc., 632 P.2d 646 (Colo. App. 1981), in support of its
contention that oral notice effectively terminates the
contract, despite a provision requiring written notice.
Colorado law does not control the case at bar, but a review of
the Maltby case is nonetheless warranted. In Maltby, the
Plaintiff's contract required 10 days written notice before it
could be terminated. On June 11, the Defendant orally
notified the Plaintiff that her employment was terminated. It
was not until August 3, that the Defendant notified the
Plaintiff in writing. The court held that the oral notice
effectively terminated the agreement and that the Plaintiff was
entitled to be paid for only ten days from June 11.
The court mistakenly cited the case of Raynor v. Burroughs
Corp., 294 F. Supp. 238 (E.D.Va. 1968), to support the view that
the oral notice was effective. However, a reading of Raynor
supports the opposite view — that the notice was not effective
until it was given in writing. In Raynor, the contract required
30 days written notice. The Plaintiff was orally notified on
March 15 that his present position would be terminated as of
April 27 and was offered another position within the company.
On April 15, the Defendant sent the Plaintiff a letter
confirming the March 15th verbal notice cancelling the contract
and withdrawing the offer of the other position. On May 13, the
Defendant sent the Plaintiff another letter stating his
employment terminated as of May 13. The court found that the
Plaintiff was entitled to damages from May 13 to June 13, thus
finding that the notice was not effective until the written
notice of May 13. Id. at 242.
In the case at bar, McCann was not given written notice until
April 29, 1983. The contract provides that the agreement will
be automatically extended on December 31 of each year to the
December 31 two years from the date of the extension, unless
written notice of termination was given. On December 31, 1982,
McCann's contract extended until December 31, 1984. The written
notice given on April 29, 1983, by the terms of the contract
was not effective until December 31, 1984.*fn2
Hall also contends that McCann, by his actions after the oral
notice was given, waived the right to written notice. This
argument is absurd. McCann merely told other Hall employees
that he had been fired. (See Defendant's Memorandum in
Opposition to Plaintiff's Motion for Summary Judgment, Ex. D).
As the Plaintiff indicates, just repeating that he had been
fired does not constitute a waiver of legal rights under the
contract. Kubiniski v. Dockside Development, 33 Ill. App.3d 1015,
1020, 339 N.E.2d 529 (1975).
In Kubiniski, the court stated that in order for there to be
a waiver of the provisions of a contract the facts and
circumstances must show an intentional relinquishment of a
known right, and the acts relied on must be inconsistent with
an intention to insist on the rights of the party under the
contract. Id. at 1020 [339 N.E.2d 529]. McCann's actions
indicate no intentional relinquishment of any contractual
rights. The day after his firing, the locks on his office had
already been changed preventing him from performing his
obligations under the agreement. Thereafter, his only
statements to Hall employees were that he had been fired.
Understanding that he had been fired and intentionally
relinguishing his right to written notice are two vastly
different things. Indeed, Hall's own actions indicate it
recognized the importance of written notice by its sending
written notice in April of 1983.
In summary, Hall did not give effective notice of termination
until April 29, 1983. There was no waiver of the right to
notice by McCann. Therefore, the agreement extended from
December 31, 1982 to December 31, 1984.*fn3
II. RESTRICTIVE COVENANT.
McCann seeks a judicial determination that the restrictive
covenant in his employment agreement is void as against public
policy. The restrictive covenant in McCann's contract states:
"Except with the written consent of the Company,
you agree that while this agreement is in force
and for two years after the agreement terminates,
you will not compete directly or indirectly with
the Company or any of its subsidiaries by
soliciting or receiving income in any form for
providing insurance services to any person or
entity which was a client of the Company or any of
its subsidiaries at any time during the six months
prior to the end of the term of this agreement."
Since we have found that McCann's contract terminated
December 31, 1984, this restrictive covenant would be in effect
until December 31, 1986. Restrict covenants are not per se void
in Illinois. Illinois has long recognized the right of an
employer to protect "legitimate business interests" by the use
of restrictive covenants. See, e.g., Hursen v. Gavin, 162 Ill. 380,
44 N.E.2d 735 (1896); House of Vision v. Hiyane, 37 Ill.2d 352,
255  N.E.2d 21 (1967). However, Illinois takes a case
by case approach to determine the reasonableness of restrictive
covenants. The court stated in MBL (USA) Corp. v. Diekman,
112 Ill. App.3d 229, [67 Ill.Dec. 938] 237-8, 444  N.E.2d 418
(1983), that "the question of enforceability [of a restrictive
covenant] is a matter of law to be decided on the particular
facts of each case." Illinois uses what has been called the
"blue pencil rule" to rewrite the covenant with reasonable
restrictions. House of Vision, supra.
As a general rule, it can be said that the more limited the
covenant is in geographic scope and length of time, the more
likely it will be upheld. See, e.g., Wessel Co. v. Busa,
28 Ill. App.3d 686, 328  N.E.2d 52  (1975). However,
where the employer has trade secrets of confidential customer
lists which he may legitimately protect, a court will uphold
greater restrictions. See Vander Weif v. Zunica Reality Co.,
59 Ill. App.2d 173, 208 N.E.2d 74 (1965).
In the case at bar, the covenant appears to be unreasonable
on its face since it contains no geographic limitations and a
lengthy time restriction. But there are too many genuine issues
of material fact for this Court to grant summary judgment. In
a motion for summary judgment, the allegations made by the
non-moving party are regarded as true. See, e.g., Askew v.
Bloemaker, 548 F.2d 673, 680 (7th Cir. 1976). Hall has alleged
that it has trade secrets and confidential customer lists.
(Defendant's Memorandum in Opposition to Partial Summary
Judgment, Ex. B). Although it is doubtful that these
allegations are true, see American Hardware Mut. Ins. Co. v.
Moran, 705 F.2d 219, 222-23 (7th Cir. 1983), they must be
accepted as true in the present motion. Since these factors
change what may be reasonable in a restrictive covenant, the
Plaintiff's motion to declare the restrictive covenant void
should be denied.
III. RENT AND OTHER BENEFITS.
Since McCann's contract has been construed as extending to
December 31, 1984, Hall will be liable for an additional years'
rental payment for one-half the amount for McCann's Chicago
apartment. This amount equals $27,000.00 dollars.
McCann also seeks 2,000 shares of Hall stock or its cash
equivalent; and $30,000.00 in insurance benefits. These
requests cannot be considered in his motion since he has
submitted insufficient proof as to his right to these benefits,
nor were they a part of his employment agreement.
McCann's request for an award because of his mental anguish
and for attorneys'
fees are also improper considerations in the motion for partial
For the reasons stated herein, IT IS RECOMMENDED that the
court order Hall to pay an additional $150,000.00 dollars to
McCann for salary from December 31, 1983 to December 31, 1984,
and to pay an additional $27,000.00 for rental of McCann's
Chicago apartment through 1984.
/s/ James T. Balog
JAMES T. BALOG
United States Magistrate