SHARP ELECTRONICS CORP. v. SHAW

ON APPLICATION FOR REHEARING

PER CURIAM.

The original opinion in this case is withdrawn and the following opinion is substituted in its place. On application for rehearing, appellee, Stanleigh C. Shaw, vigorously contends that this Court's statement of facts in the original opinion was incorrect in certain aspects, and that this Court would reach a different conclusion if the facts were properly stated. The office of a rehearing is to call to the Court's attention any errors of fact, as well as of law, and to provide the Court with a final opportunity to see that justice is done. This Court should stand with an open mind throughout all stages of the appellate process, including the rehearing stage. In this case, we agree with the appellee that certain inaccuracies appeared in our original opinion.

FACTS

Appellee, Stanleigh C. Shaw, attended a meeting of office machine dealers in Florida, where he first became acquainted with the photocopiers being introduced to the United States market by Sharp Electronics Corporation. There he saw the model 710 for the first time, having first gotten a pass to go to a hotel room where the machine was being demonstrated. Sharp had been marketing calculators, but had not been in the copier business prior to August 1975, when it introduced the model 710.

The Sharp 710 copier is a plain paper copier; that is, it will copy on virtually any kind of paper. For 20 years, until 1974 or 1975, Xerox Corporation was the only copier firm in the United States with a plain paper copier. Sharp was one of the first to enter the plain paper copier market after the Xerox patent expired.

Shaw was impressed with the good quality of the copies made by the 710, which he considered superior to the Xerox machines. At the Florida meeting, Shaw was told by the Sharp people that the machines were of good quality; that they would compete well on the open market, specifically with the Xerox 3100; and that they were capable of running up to 8,000 copies a month.

At that meeting Shaw and Phillips, Shaw's partner, decided to take the Sharp copier as another product line for their business to market in the Anniston area.

Sharp made other representations about the quality of the 710 copier in written materials furnished Shaw, which were in evidence as defendant's exhibits 4, 5, 7, and 18. After taking on the line, Shaw began marketing and servicing the Sharp copiers, relying upon the representations as to the competitive quality of these copiers that were made to him by Sharp's sales people and service people and in documents furnished by Sharp after the machines were received.

As alleged in Shaw's counterclaim, this lawsuit involves representations about three models of the Sharp photocopier. Sharp introduced model 720 as a replacement for the 710 in August 1976. The 720 was replaced by the 726 in November 1977. The model 726 was produced until December 1978.

Shaw testified at considerable length. He described the servicing of the three models and the experiences he had with his customers who owned them. Shaw said he relied upon the statements made to him about the model 710 when he first saw it, upon statements to him by Sharp's sales people and service people and upon statements made in Sharp's sales brochures, that the machines were of good quality, that they would produce without having much service, and that they would compare well with other makes of copiers. He also said that because the representations were not true, he was almost forced out of business.

Shaw identified a box of service records pertaining to Sharp copiers owned by his customers. That box was introduced into evidence as defendant's exhibit 21. Testimony also was given as to how each document in the box had been given a sequential number with the Bates numbering machine. Summaries were prepared from these service records and were used to calculate the number of service calls Shaw made for which he did not charge the owner of the copier. Using Shaw's hourly rate charge, a determination was made that Shaw's business lost $25,184.25. Defendant's exhibit 18 is a copy of those calculations.

On cross-examination, Shaw testified that it first occurred to him in the latter part of 1979, or January 1980, that Sharp's representation about the three models of the copier were not true. He said: "I think I started talking to other dealers, started buying machines through other dealers who had problems. Several of the dealers who were authorized Sharp dealers told me they had the same problem with the machines and they could not get them working. So at that time I started thinking there must be something defective about it." Shaw testified that "I would not have ordered that 726 in February 1979 if I had known that Sharp had misled me."

Over Sharp's objection, the trial court submitted to the jury both the issue of Sharp's claim of an amount due from Shaw, and Shaw's counterclaim based on misrepresentation. The jury returned a verdict in favor of Sharp for $4,224.35,1 and in favor of Shaw on his counterclaim for $100,000.00.

Suit was originally filed by Sharp Electronics on December 11, 1980, in the District Court of Calhoun County to collect a debt due on some 12 or 15 copying machines sold to the defendant, Stanleigh Shaw. The district court entered a judgment in favor of Sharp in the amount of $4,224.35, and Shaw appealed to the circuit court, where the case was tried to a jury, as previously stated. It was when this original suit on account was appealed to the circuit court that Shaw filed his counterclaim alleging fraud and misrepresentation as to the quality, serviceability, and productivity of Sharp's copiers; the fraud and misrepresentation were alleged to have occurred on August 17, 1981. Although Sharp's suit against Shaw for failure to pay his bill for copiers included claims related to several other models, the suit also included a claim for $2,111.73 for an SF 726 copier, and although Shaw, in his counterclaim, alleges that the fraud and misrepresentation occurred as to other copiers, he also claims that fraud and misrepresentation occurred as to the SF 726 copier. A copy of the invoice of Sharp Electronics Corporation to Shaw on this particular copier was, along with copies of other invoices, attached to the complaint.

Doctrine of Relation Back of Counterclaims

The doctrine of relation back is applicable under the facts in this case because when Sharp filed suit against Shaw for the unpaid debt on the copiers, it sued in regard to a copier that had been the subject of representations at the Miami conference in August 1975. The parties do not dispute the fact that Sharp's suit against Shaw for nonpayment of the account was within the statute of limitations, and, likewise, there can be no dispute that if Shaw had not filed his claim concerning the SF 726 as a counterclaim to Sharp's action, he would have been forever barred from making that claim, because it arose out of a transaction to which plaintiff's complaint related. It is of no moment that the suit related back to the sales of other copiers that may not have been part of the same transaction; it is sufficient that the subject of one of the claims was a part of the same transaction.

The problem in this case arises from our Rule 13, A.R.Civ.P., dealing with counterclaims and cross-claims. Rule 13(a) provides:

Rule 13(c) provides:

Rule 13(b) provides:

According to the Committee Comments to Rule 13(c), the reason for the relation back of counterclaims was to harmonize Rule 13(c) with Title 7, § 355, Code of Alabama (1940). This statute is currently codified as Code 1975, § 6-8-84, and it provides:

As in the majority of American jurisdictions, Alabama case law has always applied the "indestructability-of-recoupment" doctrine. (Although a somewhat broader concept, the modern compulsory counterclaim is basically equivalent to common law recoupment. See A.R.Civ.P. 81(e).) For example, Harton v. Belcher, 195 Ala. 186, 190, 70 So. 141, 142 (1915), held:

As to other jurisdictions, "Almost without exception the cases which deal with recoupments, so recognized and named, run to the effect that if a defendant's claim is in fact a recoupment the general statutes of limitation do not defeat it; on the contrary it may be availed of defensively so long as plaintiff's cause of action exists." Annot., 1 A.L.R.2d 666, 667 (1948) (emphasis added).

In most jurisdictions, permissive counterclaims (basically equivalent to common law setoff, A.R.Civ.P. 81(e)), do not relate back. 6 Wright & Miller, Federal Practice and Procedure § 1425, p. 135 (1971): 51 Am. Jur.2d Limitation of Actions § 78, p. 657 (1970). The original version of § 6-8-84 was enacted to give relation-back effect to setoff in addition to recoupment. In time, the statute came to be applied to recoupment as well as setoff, Tennessee Valley Cotton Oil Mill v. Oakland Gin Co., 341 So.2d 153, 156 (Ala.Civ.App.1976); thus, the 1975 recodification of the statute replaced the term "setoff" with "counterclaim" (i.e., all counterclaims, compulsory and permissive). However, the statute has never been read to alter the "indestructability of recoupment" doctrine.2

We admit that our cases have not clearly explained the rules of relation back of counterclaims.3 As to our recent cases, since Campbell v. Regal Typewriter Co., 341 So.2d 120 (Ala.1976), it is not apparent from the opinions that the results of any of our cases were incorrect—we just did not adequately set out the correct rules. We take this opportunity to set the record straight.

The rules of relation back of counterclaims are simply these:

(1) Relation back is invoked only when the counterclaim would be time-barred judged from the date the counterclaim was filed.

(2) All counterclaims, compulsory and permissive, relate back. Code 1975, § 6-8-84; Rule 13(c).

(3) Omitted counterclaims allowed by the court pursuant to Rule 13(f) also relate back. Rules 13(c) and 15(c). See 1 C. Lyons, Alabama Practice § 13.10, p. 224 (1986).

(4) Counterclaims relate back to the date the plaintiff's (or claimant's) action accrued. Because the statute requires the counterclaim to be "a legal subsisting claim" on the date the plaintiff's action accrued, a counterclaim that accrues after the date the plaintiff's action accrues but becomes time-barred before suit is filed cannot be used offensively, that is, to exceed the amount of plaintiff's recovery, if any.

(5) Permissive counterclaims that were not legally subsisting claims on the date the plaintiff's action accrued (e.g., claims that became time-barred earlier) are subject to a statute of limitations defense.

(6) Compulsory counterclaims that were not legally subsisting claims on the date the plaintiff's action accrued (e.g., claims that became time-barred earlier) cannot be used offensively. Such compulsory counterclaims that are still untimely under our relation back rules can be used defensively, that is, to cancel out the amount won by the plaintiff. Examples: (a) P wins $20,000 and D wins $50,000 on an untimely compulsory counterclaim. Judgment for zero, a "wash". (b) P wins $20,000 and D wins $5,000. Judgment for P for $15,000. (c) P wins $20,000 and D wins $20,000. Judgment for zero.

Our recent cases have not adequately distinguished between this offensive and defensive use of compulsory counterclaims. By quoting only half of the rule, we left the impression that all compulsory counterclaims can always be used offensively. For example, Campbell v. Regal Typewriter Co., 341 So.2d 120, 126 (Ala.1976), merely stated, "Counterclaims in the nature of recoupment are not defeated by the general statutes of limitations." Although literally true, such statements ignored the offensive/defensive distinction. This distinction applies in the majority of jurisdictions, but in almost all other states counterclaims relate back only to the date of the plaintiff's complaint. Also, most other jurisdictions do not allow permissive counterclaims to relate back at all. See J. Hoffman, Fictitious Party Practice and Relation Back of Amendments and Counterclaims, in Selected Problems in Alabama and Federal Civil Practice, Section I, published by Cumberland School of Law, The Institute for Continuing Legal Education, for a seminar on December 12, 1986.

Thus, the issue in this case is whether appellee/defendant Shaw can use his compulsory counterclaim offensively, or only defensively for the limited purpose of canceling out Sharp's $5,250.86 recovery. In other words, was Shaw's claim of fraud a legally subsisting claim at the time Sharp's breach of contract action accrued? Around 1975, Sharp made representations to Shaw about the quality and performance of Sharp's copiers. Shaw testified that it first occurred to him in the latter part of 1979, or in January 1980, that Sharp's representations about the three models of the copier were not true. Sharp filed suit against Shaw on December 11, 1980. The date of discovery of fraud is a jury issue. We restate the offensive/defensive use-of-the-counterclaim principle: Under the relation-back doctrine, Shaw's compulsory counterclaim may be used offensively—not merely defensively as a credit—if it was not time-barred on the date Sharp's cause of action accrued. There was evidence from which the jury could have determined that Shaw first discovered—or reasonably should have discovered—the fraud no longer than one year prior to the accrual of Sharp's cause of action for breach of contract. Thus, Shaw's claim was not time-barred. Therefore, our doctrine of relation back of counterclaims would allow Shaw an offensive use of his counterclaim.

Appellant's Other Claims

In our original opinion we concluded that the facts did not justify invocation of the doctrine of relation back, and, therefore, that the statute of limitations barred Shaw's counterclaim; thus, we concluded that the judgment of the circuit court had to be reversed and a judgment rendered for Sharp on Shaw's counterclaim. Having so concluded, we found it unnecessary to address Sharp's other claims of error. Now realizing that this issue is not dispositive of the litigation, we are required to address the other contentions made on this appeal.

Although Sharp has made many claims of error, they chiefly concern matters that the jury, exercising its proper authority, could rightfully resolve. Sharp makes the following claims of error:

1. That the trial court erred in failing to rule that Stanleigh Shaw suffered no injury and had no standing to bring the counterclaim because the alleged representation was not made to him personally.

2. That Shaw failed to establish the essential elements of a fraud and misrepresentation claim.

3. That Shaw failed to establish the essential elements of a fraudulent concealment claim.

4. That there was no competent evidence of actual damages suffered as a proximate consequence of Sharp's alleged fraud.

5. That this Court should reverse Shaw's judgment outright, or grant Sharp a new trial because of the inadequacy of the record.

6. That the verdict of $100,000.00 indicates bias, passion, and prejudice on the part of the jury.

As we view this case, Sharp's main contention dealt with the relation back doctrine as it applies to compulsory and permissive counterclaims. Shaw's attorneys have competently and thoroughly discussed other claims of error, but we do not believe they deserve the minute attention we have given the relation back claim. For that reason we will deal with them as they interrelate one to the other.

Sharp's first claim, that the trial court erred in failing to rule that Shaw suffered no injury because the alleged representation was not made to him personally, is not borne out by the record. The record indicates that the representation was made directly to Shaw in 1975, at a demonstration room in a hotel in Miami. Although his partner was also in Miami at the time, the evidence shows that the jury could have concluded that the representation to Shaw was personal and that it was reiterated by the mailing of literature directly to Shaw, describing the efficiency, productivity, and reliability of the SF 710, later manufactured and restyled as the 710, the 710 itself being later manufactured and restyled as the 726, which was the subject of Shaw's counterclaim. Landy v. FDIC, 486 F.2d 139, 169 (3d Cir.1973).

Next, Sharp claims that Shaw failed to establish the essential elements of a fraud and misrepresentation claim. Those elements are: (1) that a false representation was made to the plaintiff; (2) that the false representation related to a material existing fact; (3) that the plaintiff justifiably relied on the representation to his detriment and (4) that actual damages were sustained as a proximate consequence of the representation. Cecil Crews Chevrolet-Oldsmobile, Inc. v. Williams, 394 So.2d 912, 914 (Ala.1981). We have already dealt with whether a false representation was made to the plaintiff. As to whether the representation here was merely puffery or trade talk, a matter calling for application of the doctrine of caveat emptor, or truly a representation concerning a material fact, we have said:

Fidelity & Casualty Co. of New York v. J.D. Pittman Tractor Co., 244 Ala. 354, 13 So.2d 669 (1943). Here, the facts indicated that Sharp Electronics Corporation was posturing itself to launch into a new business to compete for that business as to which Xerox Corporation had no longer a monopoly because its patent had expired.

The jury had the right to look at the statement in that context, and they apparently did, finding in favor of Shaw. Furthermore, there was adequate evidence for the jury to find that in reliance on the representation Shaw purchased copiers from Sharp, and as a result incurred a detriment in the sum of $25,184.25 and was almost driven out of business. The jury, having credible testimony concerning each of the elements of fraud and misrepresentation, did not err in returning a verdict in favor of Shaw on his counterclaim.

Sharp's third contention is that Shaw failed to establish the essential elements of a fraudulent concealment claim. Section 6-5-102, Alabama Code (1975), provides:

We are of the opinion that the trial judge was right to submit, under proper instructions, the fraudulent concealment claim. As we have pointed out, Sharp was attempting to get some of the business that Xerox could not necessarily hold because its patent had expired. For a long time, Xerox had held a monopoly in this field. Where there is a knowledge on the part of one party superior to that of another, we have, in some cases, held there was a duty to communicate the facts that the party with superior knowledge might have. The claim is that Sharp represented to Shaw that the Sharp copiers were able to compete favorably with the comparable Xerox copier and even had an edge on the Xerox copier. Judge Quattlebaum was right to submit to the jury the question whether, under those circumstances, Sharp was obligated to tell Shaw that these copiers had not been tested sufficiently. See Jim Short Ford Sales, Inc. v. Washington, 384 So.2d 83, 86 (Ala.1980); First Virginia Bankshares v. Benson, 559 F.2d 1307 (5th Cir.1977).

Sharp's fourth argument is that the evidence of actual damages suffered as a proximate cause of Sharp's alleged fraud was not competent because it consisted of testimony by one of the lawyers for Shaw who sat at Shaw's counsel table; that lawyer testified that she computed the amount of actual damages from records of service calls made on defective copiers sold to Shaw by Sharp. The claim is that a lawyer cannot be lawyer, as well as witness, for his own client. However, the rule does not fit the facts of this case. There is no indication in this record that Shaw's lawyer testified to any facts that were not in evidence. Lawyers, indeed judges, can make mathematical calculations, exhibits, and the like from evidence in the record at trial, as well as on appeal, and the rule against lawyers and judges wearing two hats is not applicable. Inasmuch as the procedure utilized to arrive at the amount of actual damages is not condemned by our rules, there was competent evidence of actual damages suffered as a proximate result of Sharp's fraud.

Sharp's final contention is that the Court should reverse Shaw's judgment outright and grant it a new trial because of the inadequacy of the record. Suffice it to say that we are very much aware of the difficulties had in obtaining the record in this case. There are some gaps in the record. However, we are of the opinion that they do not materially impair our understanding of what transpired in the trial. The trial judge was of the opinion that the record was adequate. For a long time this Court superintended the preparation of the record, and we are satisfied that both sides have been adequately protected. For these reasons, we reject appellant's contention with reference to the record.

Because Sharp's motion for remittitur was denied without an opinion or findings of fact, we remand this cause for reconsideration of the issue of excessiveness, pursuant to Hammond v. City of Gadsden, 493 So.2d 1374 (Ala.1986). See, also, Harmon v. Motors Insurance Corp., 493 So.2d 1370 (Ala.1986); Alabama Farm Bureau Mutual Casualty Insurance Co. v. Griffin, 493 So.2d 1379 (Ala.1986). The trial court, within its discretion, may order a further hearing on the remittitur issue, or may comply with this order without a further hearing. In any event, the trial court shall report its findings and conclusions to this Court within 28 days of the issuance of this opinion.

ORIGINAL OPINION WITHDRAWN; OPINION SUBSTITUTED; APPLICATION GRANTED; AFFIRMED IN PART; AND REMANDED WITH INSTRUCTIONS.

JONES, ALMON, ADAMS and HOUSTON, JJ., concur.

TORBERT, C.J., concurs specially.

MADDOX and BEATTY, JJ., dissent.

SHORES, J., recused.

STEAGALL, J., not sitting.

TORBERT, Chief Justice (concurring specially).

I agree that the application for rehearing should be granted, and I agree with the action taken on rehearing. However, in my opinion, the particular circumstances of this case, while sufficient to establish a duty to disclose in connection with the fraudulent concealment claim, do not establish the existence of a confidential relationship.

MADDOX, Justice (Dissenting).

I am of the opinion that the counterclaim in this case should have been dismissed for several reasons, but I list the two primary ones:

(1) It did not arise out of the same transaction giving rise to the underlying suit; therefore, it was at most a permissive counterclaim rather than a compulsory one, and was time barred.

(2) The counterclaimant failed to prove each and every element of his fraud claim.

This case started out in district court as a suit on an account. Sharp sued Shaw for money due on account for copiers he had bought and not paid for, and one of those was a model 726. Sharp won in the district court, but Shaw appealed to the circuit court, filed a counterclaim for fraud, and claimed that Sharp made representations to him in 1975 about the quality of a model 710, a different model from that sued on, and even though he was a member of a partnership at that time. That partnership was dissolved, and he was in business by himself at the time he entered into the sales contract out of which the original suit arose. He had bought the 726 model, on which the suit on the account was based, in 1979, but he claimed that the original representation made to him about the model 710, continued through two model changes, and over a 4-year-period of time, a change of business, and all after he knew that the copiers were not as represented, because he allegedly lost $25,000 as a result of having to service the copiers which were bought in the meantime by the business entities involved.

The majority is of the opinion that the alleged representation made to Shaw about the 710 copier in 1975 was made to him "personally," and not to the business which actually purchased the machines. The majority is also of the opinion that the subsequent model changes and the dissolution of the partnership and the starting of a proprietorship by Shaw is of no legal consequence—that it was a continuing representation to Shaw "personally." I cannot so interpret the facts and the law applicable. I believe the majority errs in reaching these conclusions.

I will set out the facts from Shaw's initial brief on appeal to show why I am of the opinion that Sharp's claim, which was based on the 1979 open account with Shaw, and Shaw's counterclaim, which was based on alleged "continuing misrepresentations that Sharp made to Shaw in 1974, and made to him continuously through 1979," arose out of separate and distinct transactions or occurrences, and that many of the copiers were not purchased by him but by a corporation or partnership for which he worked, and, therefore, were not compulsory counterclaims as the majority holds.

Shaw's own version of the facts is, as follows:

"Sharp made other representations about the quality of the 710 copier in written materials furnished Shaw, which are in evidence as Defendant's Exhibits 4, 5, 7 and 18. After taking on the line, Shaw began marketing and servicing Sharp copiers, relying upon the representations as to the competitive quality of those copiers, which were made to him by Sharp sales people and service people, and in documents furnished by Sharp after the machines were received.

"* * *

"Shaw identified a box of service records pertaining to Sharp copiers owned by his customers. That box was introduced into evidence as Defendant's Exhibit 21. Testimony was given as to how each document in the box had been given a sequential number with a Bates numbering machine. Summaries were prepared from those service records and used to calculate service calls Shaw made for which he did not charge the owner of the copier. Using the hourly rate Shaw charged, a determination was made that Shaw's business lost $25,184.25. Defendant's Exhibit 18 is a copy of those calculations.

Shaw's own statement of the facts, in my opinion, shows that he was a partner in a partnership when the first alleged representation was made to him, and it concerned a model 710, not a model 726, the model sued on. Furthermore, I am of the opinion that the evidence clearly shows that Shaw did not "personally" purchase the first machines from Sharp. Those machines were purchased by a different business entity which Shaw was associated with as an agent or partner. When Shaw purchased the machine sued upon, he was in business for himself; the partnership had been dissolved, and he had, by his own testimony, experienced much trouble with the Sharp machines which had been purchased by the business entities with which he was associated. Not until he was sued on account did he press a claim for an alleged misrepresentation which occurred several years before concerning other models sold by Sharp, not to Shaw "personally," but to other entities for which he worked as an agent or partner. Under this set of facts, can the counterclaim possibly arise out of the same transaction? I think not, and the majority errs by granting rehearing and affirming the judgment, even conditionally.

The disagreement between me and the majority is the same one which exists between the parties—was the counterclaim a permissive or a compulsory one? I think it was merely permissive, even assuming the claim belonged to Shaw, because he was not the purchaser of the first machines, as I read the undisputed evidence.

The positions of the parties are stated in their briefs.

Sharp argues, inter alia:

"`The plea claims for the deceit of plaintiff ... relating to an entirely different contract from that here involved. That transaction was an insurance policy on the ship, and was a different contract from the indemnity contract which is the foundation of the action in this case. True, they were related, but separate and distinct.... It is not therefore a matter in recoupment, but of set-off.'

Shaw counters, and argues, in brief, as follows:

"`All counterclaims other than those maturing or acquired after pleading shall relate back to the time the original plaintiff's claim arose.'

"`When the defendant pleads a set-off to the plaintiff's demand, to which the plaintiff replies the statute of limitations, the defendant is nevertheless entitled to his set-off, where it was a legal subsisting claim at the time the right of action accrued to the plaintiff on the claim in suit.'

"`Representations continue to be operative where, on a fair construction of the arrangements between the parties, one of them is to be entitled to rely upon a certain representation until he receives notice to the contrary. Likewise, representations will continue in effect where they are made with a view to be relied upon in the future. Also, a representation made without any restrictions has been regarded as continuing.'

This Court discussed recoupment and set-off in a similar case, Campbell v. Regal Typewriter Co., 341 So.2d 120 (Ala.1976), as follows:

"`When the defendant pleads a set-off to the plaintiff's demand, to which the plaintiff replies the statute of limitations, the defendant is nevertheless entitled to his set-off, where it was a legal subsisting claim at the time the right of action accrued to the plaintiff on the claim in suit.'

"`... Recoupment differs from set-off mainly in that the claim must grow out of the same transaction which furnishes the plaintiff's cause of action, and is in the nature of a claim of right to reduce the amount demanded. Recoupment goes to the justice of the plaintiff's claim, while set-off is not necessarily confined to the justice of such particular claim....'

"See Norton v. Bumpus, 221 Ala. 167, 127 So. 907 (1930); Walker v. McCoy, 34 Ala. 659 (1859); and Mauldin, Montague & Co. v. Armistead, Ex'r, 14 Ala. 702 (1848).

Campbell v. Regal Typewriter Co., 341 So.2d at 126.

On rehearing, Shaw, in brief, argues:

"In making purchases of the flawed copiers from Sharp, Stan Shaw relied upon the continuing misrepresentations that Sharp initially made to Shaw in 1974 and made to him continuously through 1979. Statements made to induce a sale are, in the absence of any restrictions, operative as to future sales of like commodities between the same parties. Goldsmith v. Stern (Sup.App.) 84 N.Y.S. 869 (1903). The effect of a deceit continues until discovery of the true facts. Anderson v. Tway, 143 F.2d 95, 101 (6th Cir.1944). Had Stan Shaw known he had been misled by Sharp, he would not have continued to make purchases. Stan Shaw was acting under Sharp's misrepresentations when he ordered the SF-726 copier from them on February 22, 1979; Sharp sued for the cost of this machine in its original District Court complaint; and Shaw counterclaimed due to this machine. Clearly, that is a single transaction for purposes of the relation back doctrine under ARCP 13(c)." (Emphasis added.)

I believe the evidence shows that the initial sales by Sharp were not made to Shaw "personally;" consequently, the transactions, in my opinion, do not involve "the same parties."

Shaw contends that the Campbell v. Regal Typewriter Co. case supports his argument. I must respectfully disagree.

A casual reading of the Campbell v. Regal Typewriter case shows that there was one agreement executed by and between the same parties to the lawsuit. The factual situation there is far different from the one here. This case is more like this Court's case of Fidelity-Phenix Fire Insurance Co. v. Murphy, 226 Ala. 226, 146 So. 387 (1933).

In Fidelity-Phenix Fire Insurance Co. v. Murphy, 226 Ala. 226, 146 So. 387 (1933), plaintiff's steamboat, the Rose Murphy, along with its cargo, was lost at sea. Plaintiff sought to recover the cost of the lost cargo based on an indemnity contract with the defendant insurance company. The insurance company defended, claiming that it was not liable because the plaintiff intentionally sank the ship in order to recover under a separate insurance contract the defendant had issued against the loss of the ship itself. The insurance company also claimed damages because of money it had paid on the lost ship. This Court stated:

Fidelity-Phenix Fire Insurance Co. v. Murphy, 226 Ala. at 231-32, 146 So. at 391 (1933).

I believe that the facts of this case are more analogous to those in Fidelity-Phenix Fire Insurance Co. v. Murphy, supra.

There is an additional reason why this Court should not affirm any judgment against Sharp on Shaw's counterclaim. The elements of a fraud and misrepresentation claim are: (1) a false representation made to the plaintiff; (2) the false representation related to a material existing fact; (3) the plaintiff justifiably relied to his detriment on the representation; and (4) actual damages were sustained as a proximate consequence and result of the representation. The majority cites Cecil Crews Chevrolet-Oldsmobile, Inc. v. Williams, 394 So.2d 912 (Ala.1981) in support of that legal proposition. That case involved a sale of an automobile. Suffice it to say that this case was not a transaction involving the sale of an automobile by a dealer to a customer (one transaction), but involved dealing between a manufacturer and distributor with different business entities. The majority then holds that "[a]s to whether the representation here was merely puffery, trade talk, or a matter of caveat emptor, ..." (emphasis added) depended on the facts and circumstances of this particular case. I agree that whether something is "puffery" depends on the facts of each case, but I fail to see how a claim by one photocopy maker that its product will outdo a competitor's is other than puffery and trade talk. Our whole economic system of free enterprise is based, in part, on claims made in brochures and advertising and statements by salesmen that one product is better than the other. The bargaining position between a car dealer and a customer, as in Crews, relating to one transaction is different from what we have here.1

In a proper case, a fraud action could lie, but I do not believe it did here.

Based on all of the above reasons, I must respectfully dissent.