This is an appeal from an order of the Common Pleas Court of Franklin County dismissing a counterclaim. Plaintiff-appellee brought a negligence action for personal injuries and property damage arising out of an explosion at his gasoline service station. Appellant filed a counterclaim alleging a prior contract between it and appellee as dealer. The contract allegedly contained an indemnity or exculpatory provision. A dispute was alleged as to the scope of this provision as applied to the pending negligence action of the plaintiff, and also as to a claim by another person against the appellant arising out of the same explosion. The counterclaim prayed for a declaration of the rights and obligations of the parties under the contract. The court sustained a demurrer and dismissed the counterclaim. On the dismissal see
Green
v.
Ryan
(1953),
Appellee contends that the counterclaim presented only new matter which properly should be set up as an affirmative defense and that it cannot stand as a counterclaim.
It is apparent that the counterclaim here fits all the require *271 ments for a declaratory judgment action. A bona fide dispute is alleged involving tbe interpretation of a contract. As we understand it, appellee has conceded that bad tbe declaratory judgment action been filed first it would bave been a proper action. It also complies with tbe requirements of tbe counterclaim statute, Section 2309.16, Eevised Code. Tbe claim could be considered as “connected with tbe subject of tbe action,” and in any event it is one ‘ ‘ arising out of contract. ’ ’ Tbe counterclaim statute permits tbe assertion of any contract claim regardless of tbe fact that tbe principal action was in tort, and even though tbe contract did not arise out of tbe same transaction or was not connected with tbe subject of tbe action. 14 Ohio Jurisprudence (2d), 139, Counterclaim, Section 27; 8th Eeport of tbe Judicial Council (1947), at page 16. In this respect, tbe first paragraph of Section 2309.16, Eevised Code, should be contrasted with tbe wrongful death provision of tbe third paragraph which does not contain tbe “contract” clause.
However, a counterclaim cannot be used to set up a cause of action which is already pending between tbe parties. See Section 2309.22 (C), Eevised Code. Nor can issues already pending between parties be tbe subject of a counterclaim in declaratory judgment. See, for example,
Price
v.
Dempsey
(1941),
A defense generally refers to that which is offered to defeat an action by denying, justifying, or confessing and avoiding tbe plaintiff’s cause of action. It goes to tbe plaintiff’s right and generally would not be considered an independent claim existing against tbe plaintiff. See 14 Ohio Jurisprudence (2d), 117, Counterclaim, Section 3. In tbe present case, tbe defendant’s counterclaim, in effect, assumes liability and asserts a contract claim which would operate as a setoff or recoupment. Tbe present case is thus quite distinguishable from
Royal Indemnity Company.
For tbe same reasons,
Videtto
v.
Marsh
(1960),
A closer analogy to tbe present case is a covenant not to
*272
sue. In theory, such a covenant is a separate contract. Originally, it was not considered as a bar. However, in more recent years the desire to avoid circuity of action has led to the acceptance of pleading such a covenant as a defense. See 45 American Jurisprudence, 676, Release, Section 3, and
Bacik, Admr.,
v.
Weaver, Admr.
(1962),
While the contract here might be considered as a defense to be set up in the answer, we think it permissible to counterclaim in declaratory judgment in cases such as the present one. A similar counterclaim procedure was used in
Kay
v.
Pennsylvania Rd. Co.
(1952),
The judgment of the Common Pleas Court is reversed and the case is remanded for further proceedings according to law.
Judgment reversed.