The opinion of the court was delivered by: Richard Mills, District Judge:
Ex turpi contractu actio non oritur.
A contract founded upon an illegal consideration cannot be
Marathon Petroleum Company filed this diversity action under
28 U.S.C. § 1332 seeking monetary and injunctive relief against
Chronister Oil Company and its proprietors, Grady and Linda
Chronister, as a result of their retail sale of gasoline
allegedly prohibited by a noncompetition agreement.
In accordance with Fed.R.Civ.P. 52, the Court on July 9, 1987,
denied Marathon's application for a preliminary injunction for
failure to establish a reasonable likelihood of success on the
merits. Because the contract appeared to be an illegal covenant
in restraint of trade under Illinois law, the Court directed
Marathon to show cause why its complaint should not be dismissed.
Now before the Court is Plaintiff's motion for reconsideration
of the July 9 order and discharge of the rule to show cause.
For the following reasons, the motion is denied and the case
Defendants in September 1981 agreed to sell Russell Stewart Oil
Company certain real and personal properties situated throughout
Illinois in exchange for payment of $9,639,072.93. Of that
amount, the assets purchase agreement allocated $1,623,000 to
land, $3,113,772.93 to buildings, and $4,902,300 to equipment and
other tangible property. Included in the sale were two
Springfield self-service gas stations consisting mainly of fuel
pumps, cashiers booths, and restrooms.
At the closing of the deal on October 1, Stewart Oil notified
Defendants that as the buyer it had assigned all rights and
duties arising under the contract to Marathon, 50% owner of the
assignor. The same day, Marathon and Chronister entered into a
noncompetition agreement pursuant to ¶ 14 of the sales accord.
For $300,000 consideration payable over ten years, Defendants
assented to the following:
Sellers will not compete with Marathon Oil Company,
or any subsidiary or affiliate of Marathon, or the
successors or assigns of any of them, directly or
indirectly, as principal, agent, employee, officer,
director, shareholder, partner or otherwise, in the
operation of retail sales outlets of gasoline or
other motor fuel at any place within the State of
Illinois, Rock County, Wisconsin, and the City of St.
Louis, Missouri, for a period of 10 years from date
of execution hereof. . . .
Shortly thereafter, Plaintiff deeded the Springfield concerns
to Stewart Oil, its affiliate and successor under the restrictive
covenant. Today these establishments continue to operate at 1100
West Jefferson Street and 1801 North Grand Avenue East under
their original trade name of "Super Gas," which Defendants
assigned to Plaintiff per the agreement. Following the
transaction, Stewart Oil opened a third station with the same
name and features at 1901 West Jefferson Street.
Marathon to date has remitted $280,000 consistent with the
restrictive covenant. But despite their unflinching acceptance of
the petroleum company's remuneration, Defendants, with over 90%
of the payments in tow, have now reentered the retail gasoline
market in Springfield and sought to undercut their competitor's
prices. Currently, Defendants are managing two "QIK-N-EZ"
stations located on the corners of Chatham Road and Monroe
Street, and Stevenson ...