Opinion ID: 2456652
Heading Depth: 1
Heading Rank: 3

Heading: The Jury Findings on Which Champlin Relies

Text: Champlin holds to the finding on Special Issue 2 as the basis for reversing the courts below. The reason assigned is that there is some evidence to support the issue. Some evidence to support an immaterial issue is no basis for a judgment. The issue submitted was: Do you find from a preponderance of the evidence that the Plaintiffs, prior to the time when Chastain met John McNamara could have discovered by the use of ordinary care the allocation method used by the defendants was different from the allocation formula described in the Natural Gas Processing Agreement? (Emphasis added.) The jury answered Yes. The trial court properly disregarded the issue. Chastain objected to the issue because, among other reasons, the test, could have discovered by the use of ordinary care, is the wrong test. If the majority approves that issue it should clearly say so. The opinion interchangeably mingles a variety of tests such as could have discovered by the use of ordinary care, could have ascertained, could and should be imputed, impute to Chastain    knowledge, sufficient means of knowledge to charge him with notice, if carefully examined would disclose. These tests leave the law in confusion. We do not even have a finding that Chastain  should have discovered by the exercise of ordinary care   . The finding is that he  could have.  Of course, most things are possible, but possibility is neither negligence nor a lawful measure of duty. The finding is meaningless. The legal authorities relied upon by the majority to support its galaxy of tests add further confusion. Love v. Barber, 17 Tex. 312 (1856) is cited. The quote states that one is estopped when the  wilfully causes another to believe the existence of a certain state of things. Gregg v. Wells, 113 Eng.Rep. 35 (1839) is quoted for the rule that one is estopped against a person whom he has himself assisted in deceiving.  Dimond v. Manheim, 61 Minn. 178, 63 N.W. 495 (1895) is quoted for the rule that It is enough if the circumstances are such that a knowledge of the truth is necessarily imputed to him. Those indeed are the kind of cases in which equitable estoppel should operate. Applied, they mean that Chastain wilfully caused Champlin to believe he wanted to give Champlin $118,076.25, that Chastain deceived Champlin into believing he did not want the money, or that the hints and suggestions in the Champlin letter and the monthly reports necessarily imputed knowledge to Chastain that Champlin had overlooked for ten years. The law on this point has been settled contrary to the majority opinion. While this case has been under submission, we have decided Fultz v. First National Bank in Graham, 388 S.W.2d 405 (Tex.1965). Fultz had an employee make his deposits with slips that were endorsed by Fultz For Deposit Only. The employee, upon deposit, would withhold some of the funds by making deposits less cash.' We held that Fultz had a deposit contract with the bank upon which he could rely. We rejected the contention by the bank and the holding of the intermediate court that negligence on the part of Fultz in not examining his bank statements and other records and discovering the defalcations so as to notify the bank would, if found to be true, constitute a defense   . The case stands for the rule that one who has a contract that clearly states the rights of the parties, may lawfully assume that the other contracting party is abiding by the agreement. Chastain was under no duty to assume that Champlin was breaching its contract, for the same reason that Fultz was not. We then said:    [I]t was the clear and simple duty of the bank in the case here to honor the `For Deposit Only' endorsement, and Fultz was not expected to know that the bank had not done so, or to anticipate that the bank might not do so, or to take measures to determine if the bank had done so. Further, as recognized in Liberty State Bank, since Fultz owed no duty to the bank to examine his bank statements and other records, he was, for that reason, not guilty of negligence in not doing so, and in not discovering the defalcations of his employee. For the same reason he is not estopped to assert the liability of the bank.    Champlin has problems that exceeded even those in Fultz. It not only had the contract which it was breaching and the duty to make a full and fair disclosure upon discovery of its breach, it was under the handicap of an innocent misrepresentation of fact to Chastain. When Champlin discovered it was performing under the mistaken formula its duty was to speak, for to remain silent would be a tacit misrepresentation. McGinn v. McGinn, 50 R.I. 236, 146 A. 636 (1929). An innocent misrepresentation at the bargaining stage is actionable. Loper v. Robinson, 54 Tex. 510 (1881); Wilson v. Jones (Tex.Com.App.), 45 S.W.2d 572 (1932). The reason for this is that an innocent misrepresentation of a material fact creates a false impression the same as an intentional one. Powers v. Sunylan Co., (Tex.Com.App.), 25 S.W.2d 808, on rehearing 27 S.W.2d 129 (1930); Russell v. Industrial Transp. Co., 113 Tex. 441, 251 S.W. 1034, 51 A.L.R. 1, aff'd 113 Tex. 441, 258 S.W. 462 (1923); Pendarvis v. Gray, 41 Tex. 326, 329 (1847); Haldeman v. Chambers, 19 Tex. 1, 50 (1857). In Buchanan v. Burnett, 102 Tex. 492, 119 S.W. 1141, 132 Am.St.Rep. 900 (1909), the Court held that a vendor, after making a misrepresentation about the title to his land, could not charge his vendee with negligence in failing to examine the abstract which admittedly the vendee had in his hands. Buchanan quoted from Labbe v. Corbett, 69 Tex. 503, 6 S.W. 808 (1888):    `When once it is established that there has been any fraudulent misrepresentations,    by which a person has been induced to enter into a contract, it is no answer to his claim to be relieved from it to tell him that he might have known the truth by further inquiry. He has a right to retort upon his objector: `You, at least, who have stated what is untrue    for the purpose of drawing me into a contract, cannot accuse me of want of caution, because I relied implicitly upon your fairness and honesty.'' The defense of equitable estoppel has often been denied litigants who stand in a position similar to that of Champlin. The Court, in Hunt v. W. O. W. Life Ins. Soc., Tex.Civ.App., 153 S.W.2d 857 (1941) writ ref., wrote about a similar contention. An applicant for insurance ought not to be relieved of the consequences of making false statements concerning his health by showing that the insurer could have discovered the falsity of the statements by making a medical examination of him. Such a thought is foreign to the recognized rules of equity. See also Liberty Mutual Ins. Co. v. First National Bank in Dallas, 151 Tex. 12, 245 S.W.2d 237 (1951); Liberty State Bank v. Guardian Savings & Loan Ass'n, 127 Tex. 311, 94 S.W.2d 133 (1936); Johnson v. Sugg, (Tex.Com.App.), 291 S.W. 857 (1927). Since Champlin's jury issue that Chastain could have discovered applied the wrong test, the finding is immaterial and the courts below correctly disregarded it.