Jackson v. Pepper Gasoline Co.

• Decision Date: 22 October 1940
• Citation: 284 Ky. 175
• Parties: Jackson et al. v. Pepper Gasoline Co. et al.
• Court: United States State Supreme Court — District of Kentucky

284 Ky. 175

Jackson et al. v. Pepper Gasoline Co. et al.

Court of Appeals of Kentucky.

October 22, 1940.

1. Contracts. — Courts cannot set aside a contract made by competent persons dealing at arm's length merely because one party secures an advantage in the transaction.

2. Pleading. — In action for declaratory judgment involving construction of leases and distributing agency contract filed by plaintiffs, allegations of petition as to character of relationship of parties arising out of leases and contract should be considered in connection with the instruments, and such instruments as construed by court must control decision on legal efficacy of the pleading.

3. Judgment. — Ordinarily, defense of res judicata must be pleaded, but, where facts are shown in petition or other pleading of adverse party, the question may be raised by demurrer.

4. Judgment. — The rule of "res judicata" is that question or fact which could have been or might have been litigated in previous action cannot thereafter be relitigated by same parties or those in privity with them, and this includes every matter which was offered and received or might have been admitted to sustain or defeat the claim or demand.

5. Judgment. — The best and most accurate test as to identity of causes of action within res judicata rule is whether the same evidence would sustain both causes of action.

6. Judgment. — Where construction of distributing agency contract between oil company and owner of filling station could have been brought in and decided in forcible detainer proceedings instituted by company against owner to recover possession of filling station leased by owner to company and re-leased to owner, and in owner's suit to have lease to company declared invalid for want of mutuality, contract would not be construed in declaratory judgment action between owner and oil company, under "res judicata" rule.

Appeal from Fayette Circuit Court.

Hamilton and McCord for appellants.

McDonald & McDonald for appellees.

Before Chester D. Adams, Judge.

OPINION OF THE COURT BY STANLEY, COMMISSIONER.

Affirming.

On August 19, 1937, E.P. Jackson leased a certain filling station property in Versailles to the Pepper Gasoline Company for five years for an agreed rental of an amount equal to one cent a gallon on gasoline delivered there. On the same day the company leased the premises back to Jackson for the same period for the sale of its products, the rental being also one cent a gallon on gasoline delivered. The company installed tanks, pumps and other equipment. In September, 1938, it exercised its option to cancel the lease to Jackson. Forcible detainer proceedings were instituted by it to recover possession and a judgment in favor of the company was rendered and affirmed. Jackson v. Pepper Gasoline Company, 276 Ky. 302, 124 S.W. (2d) 93. Jackson then brought suit seeking to have his lease as owner to the Pepper Gasoline Company held invalid for want of mutuality. An adverse judgment was affirmed. Jackson v. Pepper Gasoline Company, 280 Ky. 226, 133 S.W. (2d) 91; 126 A.L.R. 1370. Those suits were in the Woodford Circuit Court. The present suit brought in the Fayette Circuit Court by Jackson and two others, to whom he had sold an interest in the property, sets up a contract between Jackson and the Gasoline Company, first executed on February 15, 1937, and renewed on June 1, 1938, whereby Jackson became the distributing and sales agent of the company for all its products in Woodford, Jessamine and Franklin Counties. The goods were furnished the agent on consignment, with payment of commissions as stated in the contract. It appears that that contract was terminated before the forcible detainer proceeding was instituted. It is alleged that this was the only real contract between the parties; that the two leases were executed as a matter of form and were sham contracts; that the defendant always paid the plaintiff under the terms of the distributing agency contract; that the property was used only as an incident to that...