*1 gestive rather language than mandatory employment manual does promise constitute at-will modify employment relationship).
As employee Duldulao manuals contain requires a clear they modify statement before will be held an at-will employment to make relationship, requires municipalities Romanik a clear state they ment before will be held have altered the at-will status of pro officers. The is that bationary police policy underlying pro Romanik a bationer’s should the unfettered discretion supervisors have probationer determine whether such is fit to be a police officer. (Brzana 415, 421.) v. Martin As our supreme court recognized: of testing
“The science cannot indicate how a will react person trust, grave under situations of unmonitored responsibility, can it severe stress. Nor warn such characteristics as rude ness, insubordination, arrogance, laziness, carelessness, dishon (Romanik, or malice.” 61 Ill. 2d at esty, contrary regulations, In the of a clear to the its absence statement therefore, lawfully discharge plain- we hold that the Board could tiff, notice or probationary employee, pretermination without hearing. court of Lake is affirmed. judgment County circuit
Affirmed. GEIGER, JJ., concur. WOODWARD SUPPLY, INC., Plaintiff-Appellee, v. WIL- CENTRAL WORKS WATER al., Defendants-Appellants. LIAM FISHER et 4—92—0460 Fourth District No. 4, 1993. February filed Opinion *2 COOK,J., specially concurring.
George Wilson, Chesley, Chesley Bloomington, L. of appellants. & for Schneider, Hammer, Cox, Ginzkey, Hayes, James P. Miles & Bloom- ington, appellee. for
JUSTICE opinion McCULLOUGH delivered the of the court: Plaintiff Inc., Central Water Works Supply, granted prelimi was nary injunction against defendant Fisher. Defendant en William was joined from soliciting, or contacting plaintiff, selling customers of products similar to products plaintiff, any sold manner com by peting with plaintiff specific in a area to a geographical pursuant cov enant not compete to contained in plaintiff’s agreement. shareholders’ Defendant brings interlocutory this appeal pursuant Supreme Court Rule 307(a)(l) (134 307(a)(l)), contending Ill. 2d R. the circuit
court erred in granting preliminary injunction (1) because no protectable has interest and (2) geographical scope pre- liminary injunction is overbroad. Defendant also contends the circuit court erred in plaintiff from excusing posting bond in this matter. We affirm.
Plaintiff, a wholesale distributor of water sewer was supplies, August defendant, Schroedor, formed in John Delich, Stan and Steven Mehnke. Plaintiff supplies products municipal- over ities, underground utility contractors, private industry, developers, subdivisions, State city projects. Delich forming plaintiff, Prior employed and defendant were by Water Products direct Company, a Delich competitor plaintiff. general was manager of Prod- Water representative. ucts defendant was sales Both men had be- unhappy come with Products and they Water decided to either at- tempt purchase Bloomington branch of that or form company own their with Products. company Water Water Products Bloomington office, has branch in but its corporate which covers area, Chicago is located in metropolitan Aurora.
When their purchase Bloomington bid to branch unsuc- was cessful, these four plaintiff. individuals formed These four men were the initial shareholders and directors of the company and Delich was As of the time of the share- president. hearing, defendant was still a *3 and plaintiff. However, holder director of defendant took no active in the part management plaintiff. Delich and defendant contributed $100,000 off cash and on a Small Business signed Administration $300,000. loan (SBA) gave for Each his residence personal posses- and 1991, sions as collateral the SBA February for loan. In se- plaintiff $150,000 $50,000 cured another SBA loan for with a cash contribution total, Delich and In has an by plaintiff outstanding defendant. debt $400,000. approximately loan,
In pro- order to secure SBA the men were required information initial personal history vide financial of the work Moreover, for the they proposed budget shareholders. had submit as initial years gross first three as sales and forecasts. The profit well budget was in the sales forecast was million and defendant’s share $3 of the budget. 50%
The which agreement shareholders entered into a shareholders’ Delich, 55 listed the of shares issued: John following breakdown shares; shares; shares; Schroedor, 25 10 Fisher, Stan William agree- the shareholders’ Mehnke, Steve 10 shares. 15 of Paragraph ment stated: The hereto parties
“COVENANT NOT TO COMPETE. are all of the employees important each is to the suc- Company cess of the new if enterprise. parties agree they their should terminate with the Company, they will not with the Company geographical area in which the then Company doing business for a period years of three after the termination of employment.” This all agreement was executed four shareholders on February Delich testified that the of the purpose to com- pete was “to basically demonstrate on the commitment and the paper loyalty of the initial parties starting involved This company.” showing commitment was for the benefit of the issuing bank SBA loan as well as to evidence the shareholders’ commitment to each other and to the company.
In September defendant ended plain- his with tiff. April 7, On defendant began again for working Water Prod- ucts as a salesman in the same geographical area as he did for plain- tiff with many same customers. Defendant was in the midst of divorce proceedings in which he was forced sell his home. In order to complete home, the sale of his defendant was released from his pledge of his home as for the SBA security loan. Defendant remained obligated personally on the SBA loans.
Delich and defendant met informally in March 1992. At that meet- ing, they discussed the that defendant possibility begin would working for a competitor of plaintiff. Defendant testified did not offer Delich him a job but that was he only because had stated he already could not return to for work at the he salary had when he origi- left nally plaintiff. Defendant testified that Delich stated that his go- ing work for Water Products would have a serious negative impact on plaintiff.
On 13, 1992, April plaintiff filed its for petition preliminary in- junction seeking to enforce the covenant not to compete contained in agreement. shareholders’ Following hearing matter, on this on 6, 1992, May the circuit court granted the preliminary injunction. This interlocutory appeal followed.
A preliminary injunction is a provisional remedy granted pre serve the quo. (Ron status Trucking, Smith v. Inc. Jackson Ill. App. The four factors which must be established before an injunction granted will be are *4 that (1) a clearly right exists; ascertained in need of ir protection (2) reparable harm will occur injunction; (3) without the there is no ade quate at law for remedy the injury; (4) success on the merits is
956 likely. (Hartlein (1992), 142, 156, v. Illinois Co. 151 Power Ill. 2d 601 720, N.E.2d 726-27.) criteria, In addition to consideration of the above the trial court must conclude that the of granting benefits the injunc outweigh tion the possible injury which defendant might suffer as a result thereof. (Lee/O’Keefe Agency, Insurance Inc. v. Ferega (1987), 997, 163 Ill. App. 1003, 1313, 3d 516 N.E.2d 1317.) The sole question us on appeal before is whether the trial court abused its discretion in the granting injunction. We not the preliminary disturb trial court’s unless are findings they against the manifest weight ev Decker, Co., idence. Berta & Ltd. v. Berta (1992), 24, 3d App. 27-28,
The
of
relief in
propriety
injunctive
the
case
present
depends
upon
enforceability
the
of the restrictive covenant at issue. Because
such covenant
at
as a
operates
partial
trade,
least
restraint of
it is
scrutinized
the
carefully by
courts
ensure
its intended effect is
not the
of
se.
prevention
competition per
Lee/O’Keefe,163 Ill.
3d
at
Restrictive covenants often appear
employment contracts and
contracts for the sale of a business. Courts evaluate these restrictive
covenants
of
differently because
the difference in the nature of the in
terests
sought
protected.
Courts
a more
test
impose
stringent
of
on
reasonableness
restrictive covenants in employment contracts than
they do under restrictive
ancillary
covenants
the sale of a business.
for the
basis
distinction rests
the fact that a
upon
purchaser
the sale of a business context holds more bargaining power than an
Decker,
Co.,
an
ordinary employee in
context.
Berta
&
Ltd.,
App. 3d
If the
covenant is
the sale of a business
ancillary
cove
covenantee,
nantor to the
then all the covenantee must show is that
time,
the restriction is
as to
area and
geographical
scope
reasonable
prohibited
If, however,
activity.
ancillary
to an
employment agreement, the covenantee must show addi
circumstances,
tional
such
special
near-permanent
relationship
as
that,
with his
customers and
for his association with
employee’s
the former
employer,
employee would
have had contact with
customers,
lists,
the existence
customer
trade secrets or
other
(Hamer Holding Group,
confidential information.
Inc. v. Elmore
Ill.
A
915-16.)
cove
nant
an
contract shields the
from
employer
possibility
losing
appropriates
his clientele to an
who
employee
benefit,
also
customer information for his own
shields
proprietary
him from
he
losing
enjoys
customers with whom
possibility
*5
the
of a
to
sale
ancillary
A covenant
near-permanent
relationship.
away
not walk
that
the former owner will
buyer
ensures the
business
will, leaving
good
customers and
company’s
from the sale with the
Ha
to
chimerical.
the
an
that turns out
be
buyer
acquisition
with
mer,
3d at
In the
of a
interest
sale
sold,
good
that
is
In
the
will
good
purchased.
protecting
of the
the fact that the
is not uneven
bargaining position
the courts consider
that
the
relationship
in an
generally
employer-employee
as it is
to declare the
likely
post-employ
less
sale of a business
courts are
Industries,
(Stamatakis
King (1987),
Inc. v.
ment restraint
invalid.
con
Courts have also
165 Ill. App.
integ
on the intent of the
the
bearing
parties
protect
sidered facts
Hamer,
of a sale.
3d at
On the other the covenant here plaintiff question is more like one to the sale of a Plaintiff contends ancillary business. forming the the transaction part parcel covenant was the it to company parties and that all intended be evidence successful. good good company faith or will to to make the attempt argues bargaining Plaintiff there was no between unequal power parties. agree with this covenant not
We As an initial more akin one to the sale of business. contributor, capital essentially purchased shareholder and defendant quit Each of the four initial shareholders portion company. new each They his with Products to form plaintiff. Water each signed agreement with the intention shareholders’ the cus and not walk with away would be bound brought tomers and from Products. The covenant was good will Water agreement included in the to be outward evidence of their loyalty and commitment to the and each company other and to ensure that they would not do to hinder the anything success of the All of company. the initial equal shareholders were of bargaining power when they drafted and entered into shareholders’ agreement.
This covenant is not like one ancillary to an employment contract First, for the following reasons. there is not a near-permanent rela- with the customers nor can it tionship that, be said for defend- ant’s association with he plaintiff, would not have had contact with the customers. The evidence indicated that the four initial sharehold- ers had contact with the customers because of their association with Water Products rather than plaintiff. forming a By new company Products, with Water directly compete shareholders hoped to lure customers from Water Products to away become customers of plain- tiff. All conducted, of the business whether by Water Products or *6 plaintiff, done through competitive was bidding and the pricing sys- tem was the same for both companies. we conclude
Accordingly, analogous this covenant is more to a not to which is to the sale of a business. To covenant, enforce such a purchaser the must first pro show a tectable business interest which has injured been his former em by unfair If ployee’s competition. the purchaser interest, establishes this then the purchaser need show that the only restriction is reasonable time, as to area and geographical scope prohibitive of business activi Decker, Co., ties. Ltd., 30, Berta & Ill. 3d at App. N.E.2d at
Plaintiff a protectable has in interest its success as a com pany. Delich testified defendant was responsible for 50% of the sales forecast when the was company formed. Defendant was one of the top salesmen at Water Products. Inasmuch as plaintiff Water Products are in direct competition and defendant personally knows customers, defendant to solicit allowing geographi business in the cal area would certainly injury plaintiff by taking away cause sales. plaintiff protectable We find has a interest which has been and will be injured defendant’s for in the by working geo Water Products same in graphical plaintiff area which does business.
We must next of address whether terms the restrictive cove nant were Defendant not challenge reasonable. does three-year limitation in contained the covenant. Durational restrictions of three 1009, years upheld. (Hamer, have been 202 Ill. 560 N.E.2d Rather, 917.) at the geographical scope defendant contends is over- broad. geo- as “the the restricted area
The covenant itself described doing is then business.” Company in area which graphical “Bloomington west consisting found area to be trial court this to Interstate straight North County, of Peoria to the western border the counties (this includes 80, 80 across to Indiana border Interstate Effingham Effingham, on Indiana border 1-80), which border counties con- Peoria, and all back straight Sangamon County tained within said boundaries.” office in Products has a branch testified that Water
Defendant Prod- office is located in Aurora. corporate its Water Bloomington but in Page as Du two areas County County, ucts Cook as well services geo- These areas are outside the does not do business. plaintiff which granting order the preliminary the court’s graphical area described from enjoined court noted defendant was injunction. The trial Products, contacting from customers in but working for Water is to con- area. Inasmuch as defendant able delineated specifically to earn areas his Page County tact customers in the Cook and Du set the trial court livelihood, by not find the limits geographical we do erroneous. manifestly were other ele
Furthermore, has established the we believe granting preliminary injunc ments for us to affirm the of a necessary an First, right threatened business interest identifiable tion. Marriage relief. re injunctive (In which may protected by 1224.) Joerger (1991), App. 3d Next, incapable not be injury party irreparable fears need transgressions continuing of a denote compensation merely this court nature. The mere threat of can be considered dissipation (Joerger, harm. determining the risk of irreparable and the of customers and sales 581 N.E.2d at The loss inter legitimate such loss to a threat the continuation of *7 un irreparable injury will suffer est is sufficient show Books, (1985), the Inc. v. Jones (Eagle less court. protected by if 444, 407, 411, 447.) Delich testified App. 3d 474 N.E.2d area, Bloomington plain in the defendant is allowed solicit business Thus, and sales. tiff harmed and will lose customers severely be unless irreparable injury that it will suffer plaintiff has established the court. protected by to cal damages are difficult legal remedy
A where inadequate Books, 130 Ill. hearing. (Eagle culate the time of the of Here, profits of the loss 411, potential 474 N.E.2d at because in the geograph- defendant’s plaintiff by competition and customers to area, ical damages are difficult to Thus, calculate. plaintiff has es- tablished thé inadequacy of a legal remedy.
Finally, a generally party seeking a injunction preliminary must show that success on the merits is likely. Because of our determina- tion that formation of the plaintiff and the covenants included therein is comparable business, to the sale of a there is a fair question of the existence of right to enforce likelihood the covenant and of suc- cess.
Defendant also contends the circuit court abused its discretion in denying his request that plaintiff give bond this matter. He alleges plaintiff is thinly financed and its ability respond in damages is questionable.
Section 11—103 of the Code of (Ill. Civil Procedure Rev. Stat. ch. par. 103)provides: 11— “Bond. The discretion, court in its may before a entering re-
straining order or a preliminary injunction, require the appli- cant to give sum, bond in such such condition upon and with such security as deemed may proper court, for the payment such costs and damages as be incurred or may suf- fered by any party who is found to have been en- wrongfully joined or restrained.”
When a preliminary injunction order is issued after notice and hear it ing, is not error for the trial court to issue the injunction without bond. Failure to request a bond or to the object lack of a consti bond tutes waiver for a necessity (Hoover Crippen bond. v. (1987), 151 Ill. App. 848, 853; 3d K.F.K. v. Corp. Amer Homes, ican Continental Inc. 1021-22, 159-60.) At the hearing on plaintiff’s petition for a injunction issued, when the preliminary injunction was defendant did not or request object bond to the lack of a bond. He has thus waived the issue.
In his motion dissolve the preliminary injunction, defendant al- leged the preliminary injunction was issued because it erroneously was entered without the bond He requirement. asserts this was suffi- cient to bring the issue to the circuit court’s attention in order to pre- finding clude a accept waiver. Even were we to defendant’s conclu- true, issue, sion as he and find has not waived this we believe his position is meritless. issued, a preliminary injunction
Where has er- properly any been failing ror in an require setting inadequate bond or bond does allowed, injure party against whom order is the order will not be reversed simply inadequacy because absence
961 Services, (1988), 169 Warehousing Inc. v. Weitzman (American bond. Because the 369.) preliminary Ill. App. in not a is issued, requiring error bond properly any was injunction not a for reversal. ground its discretion in
Thus, grant- find trial court did abuse we ing the preliminary injunction.
Affirmed.
GREEN, J., concurs. COOK, specially concurring:
JUSTICE Delich, Plaintiff was formed in corporation August by Fisher, Schroedor, and quit Mahnke. Each four his a Products, with in order to form competing corporation, plain- Water tiff. Products; Delich had been general manager Water Fisher had been sales and one of representative Water Products’ salesmen. top The contacts with customers established each of the four share- holders had been developed through his association with Prod- Water ucts, not through any employment plaintiff. with Plaintiff allowed Mahnke to return to August Water Products in 1991. Fisher left his with after only year, September returned to work at in April Water Products opinion states it majority must “determine whether the cove nant not to compete contained in the agreement shareholders’ is more like a covenant to ancillary the sale of a business or a covenant con tained in an employment (240 957.) contract.” Ill. 3d at The ma jority opinion appropriately decides the covenant cannot sustained be as one ancillary contract, an employment goes but on to conclude the covenant is therefore “more analogous a covenant not to com pete ancillary which is to the sale of (240 a business.” Ill. 3d at 958.) There is a possibility, third that the covenant is not ancillary to anything, is therefore as an unenforceable unreasonable restraint on Restatement competition. (Second) of Contracts Mar (1981); §187 athon v. Petroleum Co. Chronister (C.D. 1988), Oil Co. Ill. 687 F. Supp. 437 (sale gas two stations did not justify prohibit ing seller from other opening stations). any states,
As the majority with the sale of a the interest be protected is the value of the good purchased; will cove- “[a] nant to the sale of a business ensures the that the buyer former owner will not walk from the away sale -with the company’s will, and good leaving customers the buyer acquisition with an Ill. In this (240 App. turns out to chimerical.” case be view plaintiff corporation purchasing any good it is difficult to as will any right from Fisher or from else. If to relation anyone defendant here, belonged it good with customers will existed Water ship to plaintiff. Products was never transferred it, as just Plaintiff if Fisher with Water injured competes left, mere avoid injured Products was when Fisher and the others a covenant not ance of is not sufficient enforce injury justification *9 to the injurious partici to All is more or less compete. competition The fact that Fisher is a public competition. favors pants, policy him harmed does losing and will be very good any company salesman a not to in an enforcing compete not justify in must the nature business agreement. something be There Shore, Mates 5 North Inc. v. engenders loyalty (Office which customer 1072, 1082), and Ill. 3d 599 N.E.2d App. Hazen in here. nothing plaintiff’s there was like that business categories this situation into the Instead of to force attempting business, a sale of we should take (1) (2) contract or are deemed compete broader The reason covenants not to valid view. if other transaction is because such covenants ancillary some only harm. If no outweigh where their benefits their only will be sustained there is no to be accompanies other transaction the covenant benefit is se invalid. The against competition per A naked covenant balanced. in the Illi- categories that the two discussed recognizes Restatement §188, (Second) of Contracts (Restatement nois cases are not exclusive. mentions a e, expressly 43-44 The Restatement (1981).) Comment at not to with the partner that of a a category, promise by third I §188(2)(c)(1981).) of Contracts (Restatement (Second) partnership. further, a transaction where recognize would and willing go be ais they employed a in which will be individuals establish business an enforceable covenant support sufficient transaction to compete. business, form a employees
The be asked: “where question may if not to the nature exchange compete, can covenants they agree I believe the justify not otherwise a covenant?” the business would are enforced in connection with Restrictive covenants yes. answer does not en if the nature of the business the sale a business even if has no confiden is, customer even gender loyalty, no customers, provides spe information, no near-permanent tial at App. 163 Ill. Lee/O’Keefe, (See cial contacts with customers. nec business, it is the sale of a 1318.) 516 N.E.2d at With time, area, is reasonable that the restriction to show essary Decker, 915; at 3d at 560 N.E.2d scope. (Hamer, Co., A similar view Berta & into the formation of should taken of or others who enter partners of the investors are entitled to legitimate expectations business. business, as of a are enti They, purchasers consideration. well as the Co-ownership tled to a transaction which is more than “chimerical.” tighter employment. of a business is a bond than Products, It the parties is troublesome that could leave Water where their customer contacts in the first they developed place, Still, then agree not return with those contacts to Water Products. rights other may against parties whatever Water Products have after Al- apparently exist even this decision and should not affect it. though court should consider the interest cove- public evaluating nants not to compete, private interests Water Products do not rise to that level.
THE ILLINOIS, *10 THE Plaintiff-Appellant, PEOPLE OF STATE OF v. at., STANLEY ROUNDTREE et Hedden, Defendants-Appellees (Dawn R.
Defendant). Fourth District No. 4—92—0152
Opinion February filed