Case Title: Beam v. Monsanto Co., Inc.

Citation: 532 S.W.2d 175

Docket Number: 75-148

State: arkansas

Court: Arkansas Supreme Court

Date: 1976-02-09T00:00:00Z

Document:
532 S.W.2d 175 (1976) Jim BEAM and Bill Beam, d/b/a Beam Bros. Contractors, Appellants, v. MONSANTO COMPANY, INC., a corporation, Appellee. No. 75-148. Supreme Court of Arkansas. February 9, 1976. *176 Batchelor & Batchelor, by Fines F. Batchelor, Jr., Van Buren, for appellants. William M. Stocks, Fort Smith, for appellee. JONES, Justice. This is an appeal by Jim Beam and Bill Beam, d/b/a Beam Brothers Contractors, Inc., from a circuit court order sustaining a demurrer to their counterclaim, as amended, in a suit filed by the appellee, Monsanto Company, Inc., for balance owed on open account. The final demurrer from which comes this appeal was on the grounds that the counterclaim, as amended, failed to state a cause of action under Ark.Stat.Ann. §§ 70-301-70-307 (Repl.1957), and because the relief sought under the counterclaim, as amended, was barred by the statute of limitations. The trial court sustained the demurrer on both grounds. The points on which the appellants rely for reversal are designated as follows: This litigation was commenced on March 25, 1970, when Monsanto filed suit against Beam Brothers for balance on account, for oil and related products purchased and used by Beam Brothers in mixing asphalt concrete paving material at their plant at Fort Smith and later at Prescott, Arkansas. By amendment filed June 8, 1970, Monsanto alleged that Beam Brothers was indebted to Monsanto in the amount of $14,341.24 for merchandise and material furnished between March 19, 1969, and September 30, 1969. A number of amendments, motions, interrogatories and answers thereto were filed by the parties and on November 30, 1971, Beam Brothers filed a separate answer and counterclaim designated "Cross-Complaint" in which they alleged an assignment which should have been applied on the alleged indebtedness, and otherwise they denied the allegations in the complaint. In paragraph III of their answer Beam Brothers alleged as follows: The designated cross-complaint then alleged in part as follows: On January 3, 1972, Monsanto filed a reply and demurrer to the counterclaim. The reply denied the allegations set out in the counterclaim and for demurrer Monsanto alleged as follows: On January 7, 1972, Beam Brothers filed a response to Monsanto's reply and demurrer in which they reasserted that Ark.Stat. Ann. §§ 70-303-70-313 were applicable to the case and under paragraph III of this instrument they stated as follows: On May 31, 1972, the trial court sustained the demurrer with leave to amend. On June 9, 1972, Beam Brothers filed their first amendment reciting substantially the same allegations as in their original counterclaim. Monsanto again demurred to the amended counterclaim and the demurrer was again sustained by the trial court with leave to amend. On September 10, 1973, Beam Brothers filed their second amendment to their counterclaim alleging in part as follows: Monsanto filed an amended reply and answer to the second amendment stating that it adopted all former pleadings; that the amended complaint did not state a cause of action; that the action stated was barred by the statute of limitations, and that it denied the allegations in the counterclaim as amended by second amendment. Following additional motions and other pleadings not germane to the issues on this appeal, Monsanto filed an additional demurrer on the same grounds as the previous demurrers and this demurrer was also sustained by the order appealed from, which recited as follows: Ark.Stat.Ann. §§ 70-303-70-313 (Repl. 1957) is the "Unfair Practices Act" and it simply does not apply to the alleged facts in this case. Section 70-301 provides as follows: Section 70-310 provides as follows: The purpose of the Act is set out in § 70-313 as follows: We now consider the appellants' points in the order listed. As to appellants' first point, both parties agree that the last counterclaim pleaded by the appellants in *180 their amendment on September 10, 1973, alleged common law fraud or deceit. The three-year statute of limitations applies to fraud and deceit. Ark.Stat.Ann. § 37-206 (Repl.1962); White v. McBride, 245 Ark. 594, 434 S.W.2d 79 (1968). So the key issue on this point is whether the appellants alleged a cause of action for fraud or deceit in their first counterclaim as amended on November 29, 1971 and on June 9, 1972. The counterclaim as thus amended obviously did not allege such cause of action. Consequently the appellants' action for deceit only existed prior to September 10, 1973, if their September 10, 1973, amendment or counterclaim was merely an expansion or amplification of an allegation of deceit expressed in their first or second counterclaim and not an introduction of a new cause of action. Bridgman v. Drilling, 218 Ark. 772, 238 S.W.2d 645 (1951). We are of the opinion that the amendment of September 10, 1973, stated a new cause of action and the trial court was correct in stating that, "The relief sought by the counterclaim as amended by all amendments is barred by the applicable statute of limitations." The appellants argue that the trial court erred in granting this demurrer because in testing a case on demurrer the court is required to construe allegations in the pleadings liberally in favor of the pleader. Citing Quinn v. Stuckey, 229 Ark. 956, 319 S.W.2d 839 (1959). In Quinn this court said: To be well pleaded fraud or deceit must be specifically alleged. In Burns v. Burns, 199 Ark. 673, 135 S.W.2d 670 (1940), we said: In the early case of McIlroy v. Buckner, 35 Ark. 555 (1880) this court said: This court has adhered to the general rule that fraud, as an affirmative defense, must be specifically pleaded by the party claiming it. Bridges v. Harold L. Schaefer, Inc., 207 Ark. 122, 179 S.W.2d 176 (1944); Van Houten v. Better Health Ins. Assn. of America, 238 Ark. 815, 384 S.W.2d 465 (1964). Prosser, Law of Torts 4th ed. § 105 at p. 685 states the elements of the tort cause of action in deceit as follows: In Cleveland v. Biggers, 163 Ark. 377, 260 S.W. 432 (1924), this court approved a pleading of fraud as sufficient to support damages, saying: An examination of the appellants' counterclaim as amended by the first and second amendments reveals that they neither specifically set out the misrepresentations, nor pleaded the elements of deceit. They did not state that Monsanto's representation as to its price of A C oil was false at the time made, or that price was material to the transaction, or that appellants relied upon this representation. In their third counterclaim appellants specifically allege these elements. However, the trial judge was correct in determining that the appellants' third counterclaim was an attempt to bring in a new cause of action barred by the statute of limitations. As to the appellants' second point, the order of the trial court stated, "The counterclaim, as amended by all amendments, fails to state a cause of action under Ark.Stats. Section 70-301 through 70-307." The appellee argued in the trial court and also on this appeal that since it was not in competition with the appellants, there was no violation of the Arkansas Unfair Practices Act. Appellants argue that as buyers of appellee's goods, they were in "vertical competition" with appellee and that the trial court erred in not considering this "vertical competition." The appellants' argument is without merit. Aside from the purpose as recited in the statute, § 70-313, supra, the parties have cited three cases in which this court has also stated the purpose of the statute. Baratti v. Koser Gin Co., 206 Ark. 813, 177 S.W.2d 750 (1944); Concrete, Inc. v. Arkhola Sand & Gravel Co., 228 Ark. 1016, 311 S.W.2d 770 (1958); Concrete, Inc. v. Arkhola Sand & Gravel Co., 230 Ark. 315, 322 S.W.2d 452 (1959). All three of these cases involved competition between sellers. In each case this court said that the Unfair Practices Act makes it unlawful to lower prices in certain areas with the intent to destroy competition. But, appellants argue these cases cannot be controlling in a situation involving "vertical competition"; that is, competition between seller and buyer. The reason appellants' argument is without merit is found not in case authority, but in the construction of the statute. The Arkansas Unfair Practices Act is penal in nature and imposes liabilities unknown at common law; therefore, it must be strictly construed in favor of those upon whom the burden is sought to be imposed, and that which is not clearly expressed will not be taken as intended. Davis v. Fowler, 230 Ark. 39, 320 S.W.2d 938 (1959). The first section of the Unfair Practices Act, § 70-301, supra, applies to the, It is apparent that the statute is intended to foster competition for the primary *182 benefit of the general public by protecting dealers, especially small dealers from unfair competition by large dealers. The term "dealer" is not defined in the statute but its common meaning as defined in Random House Dictionary, is "one who buys and sells articles without changing their condition." Appellants' argument for "vertical competition" would broaden the Act to not only protect dealers, those who buy and sell, from unfair competition by other dealers, but would also protect buyers from competition by the various and sundry business buyers who use and purchase the same or similar product for use in their various businesses. The concern of the Unfair Practices Act is to prevent goods which are unfairly priced below the goods of competitors from temporarily entering the market and forcing the competitor out of business, thus gaining a monopoly within a given locality after which time the prices may be raised without limit and without competition to the final detriment of the public interest. The emergency clause of the Unfair Practices Act recites as follows: What we have already said disposes of the appellants' third and fifth points, and we find no merit to the appellants' fourth point under the facts in this case. Under appellants' sixth point they contend that under Arkansas practice a demurrer may not be filed after the filing of an answer in the action. The appellants overlook the fact that appellee's response to appellants' second amendment to Separate Answer and Counterclaim, entitled Plaintiff's Amended Reply and Answer filed October 12, 1973, included a demurrer. It is a well settled rule of law that a pleading will not be judged by what it is called but by what it contains. Smith Chickeries v. Cummings, 224 Ark. 743, 276 S.W.2d 48 (1955); Askew v. Murdock Acceptance Corp., 225 Ark. 68, 279 S.W.2d 557 (1955); Stroud v. Barksdale Lbr. Co., 229 Ark. 111, 313 S.W.2d 376 (1958); Little Rock Land Co. v. Raper, 245 Ark. 641, 433 S.W.2d 836 (1968). Paragraph three of the appellee's response contained the classic statement for a general demurrer. "Plaintiff further states that the counterclaim as amended fails to state a cause of action." The judgment is affirmed.