JeToCo Corp. v. Hailey Sales Co., 80-17

• Decision Date: 14 April 1980
• Docket Number: No. 80-17,80-17
• Parties: JETOCO CORPORATION, David Jeffery and Faye Jeffery, Robert Todd and Ruth Todd, Bill Cole and Catherine Cole, Appellants, v. HAILEY SALES COMPANY, Appellee.
• Court: Arkansas Supreme Court

Page 703

596 S.W.2d 703

268 Ark. 340

JETOCO CORPORATION, David Jeffery and Faye Jeffery, Robert Todd and Ruth Todd, Bill Cole and Catherine Cole, Appellants, v. HAILEY SALES COMPANY, Appellee.

No. 80-17.

Supreme Court of Arkansas.

April 14, 1980.

Jones & Segers, Fayetteville, for appellants.

Croxton & Boyer, Rogers, for appellee.

FOGLEMAN, Chief Justice.

This is a suit brought September 9, 1975, by appellee Hailey Sales Company against JeToCo Corporation, David Jeffery, Robert Todd and Ruth Todd, Bill Cole and Catherine Cole, to recover rentals allegedly due under a "Lease Agreement and Construction Contract" executed by the parties on October 2, 1972. After the issues had been made by various pleadings, the case finally went to trial and resulted in a judgment for appellee, from which this appeal is taken. The issues at the time of trial involved pleas of res judicata by appellants as a bar to appellee's complaint (as amended) and by appellee as to appellants' defenses and counterclaims on the basis of a judgment entered on May 22, 1975, in an earlier action (No. 74-206 in the Circuit Court of Benton County) for recovery of rentals under the lease from September 1, 1973 up to the date of trial in April, 1975. The Todds in a counterclaim sought to recover damages of $5,000 and punitive damages of $50,000 for abuse of process by issuance of an execution on a judgment in an earlier action while a supersedeas bond was in effect in that case.

The case was tried to a jury and a judgment was entered on December 21, 1978. The judgment recited the following findings of the court:

2. That the Appellee sued upon a Lease Agreement for rentals from May, 1975 through August, 1976, totaling $11,200.00. That the Appellants raised numerous defenses, including res judicata, breach of the Lease by the Appellee, rescission of the Lease, abandonment and acceptance of the abandonment and mitigation of damages.

3. That the Appellants counterclaimed in conversion and in abuse of process.

4. That Civil Action No. 74-206 litigated all matters up to April 22, 1975 and as such all matters before that time are res judicata. That the Appellants' plea of res judicata to the Complaint was without merit, but that the Appellee's plea of res judicata as that plea related to matters of defenses arising before April 22, 1975 was sustained.

5. That the jury returned the following verdicts:

"We, the jury, find for the Plaintiff, Hailey Sales Company, against the Defendants on its Complaint and fix its damages at $11,200.00."

/s/ Elmer L. Wilson, Foreman

"We, the jury, find for the Plaintiff on Defendants' Counterclaim for conversion."

/s/ (By nine of the members of the jury)

"We, the jury, find for the Defendants, Robert Todd and Ruth Todd, on their Counterclaim for abuse of process and fix their damages at $405.00."

/s/ Elmer L. Wilson, Foreman

The judgment from which this appeal was taken was rendered on these findings.

Appellants first contend that the court erred in ruling that appellee's complaint was not barred by prior proceedings between these same parties on the same issues and in not directing a verdict for appellants on the appellee's complaint. We find no error in this respect. The present suit sought recovery of rentals accruing after the previous trial. The parties are the same and the issues are basically the same as those involved in the earlier suit. Appellants had contended in that suit that the lease had been terminated because appellee had failed to construct improvements as required of it by the lease agreement as a condition precedent; that the appellee had accepted an abandonment of the premises by appellants and had taken possession of the premises. Appellants contend that the issue as to termination of the lease was resolved in their favor in the first trial. They arrive at this conclusion by reason of the fact that, even though appellee had sued for accrued rentals of $14,000 (at $700 per month), the judgment was for only $10,000 based upon a jury verdict in that amount. The jury had been instructed to find for appellee in the amount of $700 per month if it found that appellee had performed the agreement, and that appellants had failed to pay the rentals sued for, unless it found that the lease was surrendered by the appellants here and appellee here accepted such surrender.

Appellee had sued for rent for 20 months. Appellants say that the verdict for $10,000 represented rents for only 141/2 months, and that this meant that the jury found that the lease had been terminated some five months before the trial. Of course, the verdict would have represented 142/7 months if it was divided by the monthly rental rate. But appellants argue that the jury was given a binding instruction which required a verdict of $14,000, unless the lease had been terminated at some point before the case was submitted to the jury. When that judgment was before us on appeal, we did not consider the verdict by nine members of the jury to have had that effect. In our unpublished opinion in that case, rendered May 17, 1976, we said: "That the verdict was for $10,000 instead of for the full $14,000 that had accrued as rentals apparently resulted from a compromise in the jury room, which does not require a reversal."

Appellee had a right to maintain a new action for the rents becoming due after the judgment in the earlier suit against appellants had been rendered, since that suit was for rents and not for damages for breach of the contract and it had not been terminated adversely to appellee. Ark.Stat.Ann. § 27-136 (Repl.1979); Collins v. Paepcke-Leicht Lumber Co., 82 Ark. 1, 100 S.W. 86; Coley v. Westbrook, 208 Ark. 914, 188 S.W.2d 141. Cf. Hemingway v. Grayling Lumber Co., 125 Ark. 400, 188 S.W. 1186. Even though appellee sued upon a different cause of action, i. e., for rents accruing after the former adjudication, the present action would, without question, be barred by the former judgment if, in the prior action, it was directly adjudicated or determined, or necessarily involved in the determination made, that appellants were not liable to appellee because the lease contract had been terminated or rescinded. National Surety Co. v. Coates, 83 Ark. 545, 104 S.W. 219; Meyer v. Eichenbaum, 202 Ark. 438, 150 S.W.2d 958; Gates v. Mortgage Loan & Ins. Agency, Inc., 200 Ark. 276, 139 S.W.2d 19. The term "necessarily involved" means that the determination in the former action could not have been made without determination of the question as to which res judicata is asserted. Knutson v. Ekren, 72 N.D. 118, 5 N.W.2d 74 (1942).

It was essential to appellants' plea of res judicata that it appear upon the face of the record, or that they show, that the particular matter or precise question, i. e., termination of the lease, was raised and determined favorably to them in the prior proceeding. Fisher v. Fisher, 237 Ark. 321, 372 S.W.2d 612; Carrigan v. Carrigan, 218 Ark. 398, 236 S.W.2d 579; Andrews v. Victor Metal Products Corp., 235 Ark. 568, 361 S.W.2d 19; Swanson v. Johnson, 212 Ark. 340, 205 S.W.2d 702; Fogel v. Butler, 96 Ark. 87, 131 S.W. 211. See also, Morgan v. Kendrick, 91 Ark. 394, 121 S.W. 278, 134 Am.St.Rep. 78. Res judicata means a thing or matter that has been definitely and finally settled and determined on its merits by the decision of a court of competent jurisdiction. Knutson v. Ekren, supra. Freely translated, it means "the matter has been decided," Hastings v. Rose Courts, Inc., 237 Ark. 426, 373 S.W.2d 583. See also, Hammond v. State, 244 Ark. 186, 424 S.W.2d 861, cert. den. 393 U.S. 839, 89 S.Ct. 116, 21 L.Ed.2d 109 (1968). We have said that the true test of whether a particular point, question or right has been concluded by a former suit and judgment is whether such point, question or right was distinctly put in issue, or should have been put in issue, and was directly determined by such former suit and judgment. Pulaski County v. Hill, 97 Ark. 450, 134 S.W. 973.

We cannot say from the face of the record that the verdict was based upon a finding favorable to appellants on the question of termination of the lease, so it was permissible for appellants to make the necessary showing by extrinsic evidence. When there is any uncertainty as to whether the precise question was raised and determined in the former suit and the record leaves the matter in doubt, extrinsic evidence showing the precise point involved and determined is admissible to remove the uncertainty. Carrigan v. Carrigan, supra.

Appellants were required to show that the verdict could not have been rendered without deciding the questions of termination and rescission. McCombs v. Wall, 66 Ark. 336, 50 S.W. 876. A prior judgment is not conclusive of any matter to be inferred from the judgment only by argument. Shall v. Biscoe, 18 Ark. 142. See also, Knutson v. Ekren, supra. Where the alleged estoppel is by jury verdict, defense of res judicata must rest upon more than mere speculation, and if a jury verdict could have been rendered without deciding the key issue of fact, and a reasonable doubt exists on the question, the court cannot say with the requisite certainty that the issue was decided by the verdict. Wolfson v. Northern States Management Co., 221 Minn. 474, 22 N.W.2d 545 (1946); Knutson v. Ekren, supra. Cf. Andrews v. Victor Metal Products Corp., supra.

Since there is a dispute between the parties as to what was decided in the former case, the holding of this court on appeal in that case as to what had been determined in the trial court is conclusive, and what we said in the opinion and statement of facts in that case is significant. Missouri Pac. R.R. Co. v. Conway County Bridge Dist., 142 Ark. 1, 218 S.W. 189. See also, Bass v. Minich, 194 Ark. 589, 109 S.W.2d 139, 134 Am.St.Rep. 78. Our treatment of the jury verdict in our opinion in the earlier case does not support appellants' argument that the jury there decided that the lease had been...