Court Opinion

ID: 9776881
Source: CourtListenerOpinion
Date Created: 2023-08-29 19:47:54.606004+00
Date Added: 2024-06-11T07:32:44.389027
License: Public Domain

POPE, Justice
(dissenting).
I respectfully dissent. The majority has correctly held that Champlin proved no basis to reform its contract with Chastain. The Court has incorrectly held that Chas-tain is equitably estopped from recovery on the contract. I would affirm the judgment of the Court of Civil Appeals. Champlin, in my opinion, is ineligible to invoke the aid of a court of conscience to defeat its contractual liability. It breached the contract it drafted, discovered almost three years before Chastain that it was breaching it, was under a duty to make full and fair disclosure of its discovery but did not do so, and owes Chastain $118,076.25. The jury found that Champlin knew it was withholding funds from Chastain almost three years before Chastain discovered it and the jury refused to find that Champlin acted in reliance upon Chastain’s failure to protest. The jury also found that Champlin did not change its position in any way which would make it unjust for Chastain to assert his claim. Champlin has been permitted to keep large sums that were owing Chastain. During one test month, that of November, 1957, Champlin learned it short-measured Chastain 4,218 barrels of product while it was taking for itself an excess of 4,187 barrels. The majority holds it would be inequitable to hold Champlin to its agreement.
Champlin’s defense of equitable estoppel needs to be placed in proper focus. The *394contract upon which Chastain sued is between him and Champlin only. Other producers who supplied gas to the Champlin plant, had separate contracts and none of them is in evidence. Chastain was not a party to any of them. His contract, like the others, was separately negotiated and executed. Chastain’s consideration for his processed product was governed by the method stated in his own contract and was not dependent upon any of the many separately negotiated contracts between Champlin and others. Chastain’s rights were not dependent upon and did not purport to be based upon an allocation plan that was uniform. Panola County Royalty Owners Association was not referred to nor mentioned in the negotiations for nor by the terms of the Chastain contract. Chastain initiated negotiations with Champlin in 1956 and Charles Johnson, Champlin’s Vice-President on September 17, 1956, submitted a draft of a contract to Chastain. Johnson’s letter of transmittal stated: “The contracts are somewhat flexible and may be altered to a specific condition and processing consideration.” This is contrary to the notion that runs through the majority opinion that it was intended that all producers should share alike and proportionately. On October 9, 1956, Johnson sent a revision of the earlier draft and specifically invited Chas-tain’s attention to changes in Section 8 of the contract which section fixed the settlement basis between Champlin and Chastain, and is the one in dispute. Chastain then obtained the advice of an attorney in Shreveport, another in Dallas, and the engineering department of the First National Bank in Dallas. These experts compared the allocation method described by revised Section-8 of the contract with the method used by Champlin’s competitors in the area. After these investigations were taken, Chastain executed the contract.
Champlin and Chastain have agreed that the difference between the sum paid Chas-tain and the amount owed him under the contract is $118,076.25. They agreed that the difference between the contract formula and the method Champlin actually employed “may be calculated with mathematical certainty.” They agreed that, in the event of final judgment against Champlin “the parties will adjust the accounts between them for the plant products marketed after July 31, 1961, on the same date, i. e., using the same method of allocation which it was determined should have been in accounting for plant products marketed prior to August 1,1961.” In other words, Champlin breached its contract and owes Chastain $118,076.25. It can pay this amount without disturbing any of the other producers. Since Champ-lin began its processing enterprise it has distributed more than $77,000,000.00 for processed plant product among its many gas producers and suppliers. However, of this sum, Champlin has distributed to itself as a supplier and as its fee for processing, the sum of $39,208,000.00. What Chastain urges is that Champlin, instead of receiving $39,208,000.00 during its period of processing, should have received only $39,089,-927.75. The argument that a judgment against Champlin would require a disruption of its allocation plan and the entire plant operation, loses sight of the fact that all Champlin need do is to pay up as it agrees it can.

Champlin’s Duty to Speak

When Champlin made its discovery in 1958 that its plant formula was in violation of the Chastain contract it had a duty to speak by making a full and fair disclosure to Chastain who did not learn of the breach until three years later. “He who is silent when he should speak must be silent when he would speak, if he cannot do so without a violation of law and injustice to others.” Consolidated Fruit-Jar Co. v. Wright, 94 U.S. 92, 96, 24 L.Ed. 68 (1876). By ignoring this basic rule, the majority has permitted the ineligible party, not only to breach its contract, but also to breach its further duty to make a full and fair disclosure upon making its discovery. Despite these two Champlin wrongs, it has been *395permitted to gain a windfall of $118,076.25. The jury found, and the finding is not attacked, that Champlin had full knowledge as early as August of 1958 that it was not distributing products correctly and that Chastain did not learn of it until 1961.
Ordinarily the one (Champlin) who asserts estoppel as a defense against another’s (Chastain’s) claim must be the one who is without knowledge of the material facts. Harrell v. City of Lufkin, (Tex.Com.App.), 280 S.W. 174, 177 (1926); Moore v. Carey Bros. Oil Co., 246 S.W. 1083 (Tex.Civ.App.1922) aff’d (Tex.Com.App.), 269 S.W. 75, 39 A.L.R. 1247, on rehearing 272 S.W. 440, 39 A.L.R. 1247; Steed v. Petty, 65 Tex. 490 (1886); Blum v. Merchant, 58 Tex. 400 (1883); Hunt v. W.O.W. Life Ins. Co. Soc., Tex.Civ.App., 153 S.W.2d 857 (1941), writ ref.; Booth Fisheries Corp. v. Eardley, Tex.Civ.App., 233 S.W.2d 872 (1950), ref. n. r. e. Ordinarily the one (Chastain) against whom the estoppel operates is the one who is possessed of knowledge and who, by force of his knowledge, takes some advantage of him (Champlin) who does not have it. Hallmark v. United Fidelity Ins. Co., 155 Tex. 291, 286 S.W.2d 133 (1956); Humble Oil & Refining Co. v. Harrison, 146 Tex. 216, 205 S.W.2d 355 (1947) ; Burnett v. Atteberry, 105 Tex. 119, 145 S.W. 582 (1912); Moore v. Carey Bros. Oil Co., supra; 31 C.J.S. Estoppel § 70; 3 Pomeroy’s Equity Jurisprudence, § 809 (5th ed). In this case, however, the majority has ruled that Champlin, possessed of full knowledge, may successfully invoke estop-pel against Chastain who, the jury said was without knowledge.
In Hallmark v. United Fidelity Life Ins. Co., 155 Tex. 291, 286 S.W.2d 133 (1956), this rule is expressed:
“ * * * It is generally essential to the application of the doctrine of equitable estoppel that the person claimed to be estopped shall have had full knowledge of the real facts at the time of his representation, concealment or other conduct relating thereto and alleged to constitute the basis of the es-toppel. * * * ”
Richey v. Miller, 142 Tex. 274, 177 S.W.2d 255, 170 A.L.R. 832 (1944), held that “an estoppel will not operate against a person who stands by and allows another to deal with his property when the person sought to be estopped has no knowledge of his interest in the property.” In Colquitt v. Eureka Producing Co., (Tex.Com.App.), 63 S.W.2d 1018 (1933), Eureka asserted an estoppel against Colquitt. Eureka’s agent in describing an oil assignment mistakenly included the gas also. The mistake was Eureka’s since it was charged with its agent’s knowledge. This knowledge by the one invoking estoppel defeated its defense of estoppel against Colquitt though he delayed in asserting his rights.
In Fitch v. Lomax, (Tex.Com.App.), 16 S.W.2d 530, 66 A.L.R. 758 (1929), Lomax and another sued Fitch on a written contract to recover certain funds. Unknown to Fitch and contrary to the actual agreement, the contract required Fitch to make certain refunds to Lomax. Lomax requested an issue that Fitch was estopped to deny the terms of the contract as actually written, and the court refused to submit it. Lomax urged that Fitch remained silent after he discovered that the agreement contained the provision contrary to the true agreement and that during this silence Lomax made substantial payments of the consideration. The Court held that Fitch owed Lomax no duty to speak under these circumstances, saying:
“* * * The jury having accepted Fitch’s version that no such agreement was made, leaves the matter in the attitude that Henson and Lomax caused a provision to be inserted as a part of the consideration of the deed to which Fitch had not agreed. Under such circumstances, no duty devolved upon Fitch to notify Lomax and Henson of a fact of which they already had actual knowledge. Harrell v. City of Lufkin (Tex.Com.App.) 280 S.W. [174] 175; *396Miller v. Babb (Tex.Com.App.) 263 S.W. 253.
“If Lomax and Henson deliberately-caused this provision to be placed in the contract, knowing it had not been agreed to by Fitch, it would constitute actual fraud. If they eaused it to be placed therein under the mistaken belief that it had been in fact agreed to by Fitch, it would constitute a constructive or legal fraud. It has been held that silence cannot be used as an estop-pel to prevent a party from setting aside an instrument where its execution has been procured by fraud.”
Hallmark v. United Fidelity Life Ins. Co., supra, says that the one estopped must have full knowledge. Williams v. Texas Employers Ins. Ass’n, 135 S.W.2d 262 (Tex.Civ.App.1940, writ ref.) says the same. Moore v. Carey Bros. Oil Co., 272 S.W. 440 (Tex.Com.App.1925), says “ * * * it is indispensable that the party standing by and concealing his rights should be fully apprised of them.” See Blum v. Merchant, 58 Tex. 400 (1883). No finding and no contention supports the idea that Champlin supplied that measure of knowledge to Chastain and until it did, there was no duty on Chastain to protest.
The majority opinion omits discussion of these settled principles and Texas authorities. Instead it cites and relies solely upon In re Shoemaker, 277 Pa. 424, 121 A. 510 (1923). The case is one in which several owners agreed to an operation of a coal mining venture as a unit. The trustee in charge determined that a change in distribution of proceeds was essential. Champlin should have done in this case what the trustee did in that case. Aside from the fact that in Shoemaker all parties agreed to operate the lease as a unit and here there was a contract between only Champlin and Chastain, the trustees wrote a forthright and direct letter explaining precisely what the changes would be and operations continued thereafter for eighteen years. The case proves my contention because there was a full and fair disclosure as the law requires. See Stein Brothers and Boyce v. State Bank of Stearns, 255 Ky. 270, 73 S.W.2d 13 (1934); Alamitos Land Co. v. Texas Co., 11 Cal.App.2d 614, 54 P.2d 489 (1936); 29 A.L.R.2d 1034.

Champlin Did Not Discharge Its Prior Duty

Champlin, as a matter of law, did not make a full and fair disclosure of its discovery. Champlin supplied Chastain with only two sources of information, the mimeographed letter written on September 12, 1958, and the monthly distribution statements. Neither satisfied Champlin’s legal duty of full and fair disclosure. The letter is set forth in the majority opinion on page 380 and must be followed to understand how it disguised and obscured more than it revealed.
The letter began by artfully throwing Chastain off the scent. The first two paragraphs mention four audits by Humble Oil & Refining Company and Pan American Petroleum and allude to a 1948 agreement with Panola County Royalty Owners Association. Chastain knew that his contract mentioned and concerned none of those parties or periods of time. The audits covered a period of time that began six years before Chastain’s contract. The Panola County Royalty Owners Association agreement was made eight years before Chastain’s contract. Champlin’s letter mentioned a letter from that association dated June 11, 1952. These earlier collateral negotiations with other entities were distractions and of no concern to Chastain, whose contract did not begin until October 25, 1956, and was with Champlin only.
The letter then said that a “question” had arisen about the language in the processing agreements and the actual procedure used by Champlin, which procedure was agreed upon by Panola County Royalty Owners Association and Champlin. The fact that there was a question between those parties was, of course, ignored. The third para*397graph emphasizes the Royalty Owners Association by mentioning it a third time. Surely the letter meant that those who had contracts with or through the Royalty Owners Association should take notice. This would not include Chastain but would throw him off guard.
The letter was misleading. It said: “Humble agrees with Champlin that this procedure * * * is most equitable and after reviewing the entire matter Pan American expressed no disagreement with the procedure.” The beguiling inference is that those two producers had situations comparable to Chastain’s. The truth was, and Champlin knew it, that the non-contract allocation used in the Champlin plant afforded both Humble and Pan American excessive allocations on the order of 1,000 barrels a month. Champlin, says the letter, also agreed that such a system was equitable. While Chastain was losing 4,217 barrels during a single month, Champlin was receiving an excess of 4,186. Champlin .thought that was equitable.
The letter was a partial disclosure. It is undisputed that Champlin knew many things which it did not report. The letter did not state (1) that Champlin had innocently misrepresented its plant allocation system to Chastain; (2) that it had made allocations continuously from the inception of the Chastain contract in a way that violated its contractual duty, (3) at Chastain’s great expense, but (4) to Champlin’s advantage, (5) for one test month alone, Chastain was shorted 4,217 barrels while Champlin gained a windfall of 4,186 barrels ; (6) that Champlin owed Chastain large sums of money; (7) what the actual plant allocation formula was; (8) how it varied from that which was spelled out in two pages in the Chastain contract; and (9) it did not include a copy of the early agreement with Panola County Royalty Owners Association. Champlin had all of this information and could have sent ⅜ to Chastain. Champlin’s Vice-President testified that Champlin did not furnish Chas-tain with the description of the non-contract formula used by Champlin until it was attached to its pleadings six years after the date of the original contract.
We must discuss the majority’s analysis of this letter. It begins by assuming that both Champlin and Chastain intended to receive products in line with an agreement between Panola County Royalty Owners and Champlin. Chastain’s contract did not mention Panola County Royalty Owners. Chastain was not a royalty owner. His contract was made without regard to Royalty Owners. The opinion, to explain the clarity of the letter, helpfully inserts parenthetical explanations and terms that can not be found in the original contract. The majority opinion states that the Champlin letter advised it was “desirable that the same allocation formula be applied to all producers in the area.” I do not find that language in the letter. Even so, what might be “desirable” is best expressed in the contract between the parties and Chastain felt secure in his. Chastain’s rights were not measured by what is “desirable.” Finally, the majority opinion says that the letter informed Chastain that it would continue to use the “plant formula.” That term is one developed by the briefs after a long trial and is not in the letter. In short, the only way the obscure and misleading letter was or could be clarified was to call witnesses, have a trial, and reword it after the fact. This whole idea runs counter to the contract and letter between Champlain and Chastain during their contract negotiations in 1956. At that time Champlin wrote Chastain, “These contracts are somewhat flexible and may be altered to a specific condition and processing consideration.” Agreements that Champlin might have with other producers and which might be affected were not mentioned until after this controversy arose.
Champlin’s duty to purge itself of its innocent misrepresentation was not discharged by statements which created another substantially false impression. If a *398corrective statement diverts the attention of the other party from the material facts or induces him to believe that the subject under discussion is trivial when it is not; or if the truth is disguised, hidden, or obscured so that the innocent party is put off his guard; the duty to correct is not discharged and the corrective statement becomes an active concealment. Wintz v. Morrison, 17 Tex. 372, 384, 67 Am.Dec. 658 (1856); Akers v. Martin, 110 Ky. 335, 61 S.W. 465 (1901); First National Bank of Manistee, Mich. v. Marshall & Ilsley Bank, 6 Cir., 83 F. 725 (1897); 3 Pomeroy’s Equity Jurisprudence, § 901a (5th ed.). Though a statement may be literally true, it is actionable if made to create an impression substantially false. Cahill v. Readon, 85 Colo. 9, 273 P. 653 (1929). These principles are significant when the one who seeks relief through equity is the one who has made a misleading corrective statement.
In Wooley v. Chamberlain, 24 Vt. 270 (1852), Wooley sued Chamberlain and Flint to foreclose a mortgage executed by Chamberlain. Flint, another creditor of Chamberlain, also obtained a judgment against Chamberlain and levied on the land. Flint claimed that Wooley was estopped to deny his lien because Wooley had told his agent that he did not own any land in the area. Flint said he caused the levy to be made upon reliance on that statement. The Court held that the discussion between Flint’s agent and Wooley, which was the basis of the claimed estoppel, was not focused upon the matter sufficiently to give rise to an es-toppel against Wooley. This was so because Wooley’s mind was not directed to the very point of the priority of Flint’s mortgage upon the very lot in question and Wooley was not aware of any importance attached to his discussion. The Court wrote:
“ * * * An estoppel of this kind is an equitable abandonment of a claim, a kind of perpetual disclaimer, and a party cannot be covertly led into it. It goes upon the ground of the obligation resting upon one owner, or part owner, of the property, to disclose the true state of his title to another, who is, or who is about to become, interested in the same thing. * * * The manner in which Lyman Ellsworth approached the orator was calculated, and was very obviously intended, to put Wooley off his guard, and lead him to suppose Ellsworth had, in fact, no interest in this particular land, but the contrary. The idea that one is to disclaim his rights beyond all recovery, without being made aware what he is doing, is certainly very far from the fair import of an estoppel in pais. We think the old doctrine that estoppels are odious might very justly be applied to one of this character, which one is to be made to incur covertly and, so to speak, by a kind of sleight of hand.”
Champlin’s final argument is that, though the letter did not tell Chastain the things it should have, it referred him to the monthly statements. Those reports do not purport to describe the distribution method. The argument is that within a short time after Chastain began producing, he received reports from which mathematicians could have unearthed the secrets it had not revealed. Champlin prepared all of these statements. Champlin’s management, under all the evidence, did not discover its own accounting and distribution error until outside auditors for Humble disclosed it in August of 1958. The auditors for Humble and Pan American failed to find the error during four prior audits, but they did uncover the error in their fifth audit. Humble and Pan American promptly disclosed the whole truth to Champlin, but it still was not convinced until it made its own independent audit. Mr. Jones, the Vice-President, an engineer, and an employee of Champlin for eighteen years was called by Champlin to testify. As a part of Champlin’s case and to prove its innocent *399mistake, this occurred on direct examination and is not disputed:
“Q. Do you know when the mistake in that language was first discovered by Champlin?
A. Yes, sir.
Q. When was it?
A. Discovered as the result of the Humble and Pan American audit con ducted in August of 1958.
⅜ ⅜ ⅜ ⅜ ⅜ ⅜
Q. When did you first learn of the mistake in this contract language ?
A. In August, 1958.
Q. Do you know whether anybody else in the company knew about it before that time ?
A. To my knowledge, no, they didn’t; no one did.”
For ten years Champlin was unable to discover from the reports it prepared, those things that the majority now says were sufficient to inform Chastain. Champlin requested issues1 inquiring whether the monthly reports “showed the method of allocation used in computing the payments,” and whether “Chastain acquiesced in the Champlin plant method of allocating plant products * * * as used in the monthly production and disposition reports.” The Court granted Champlin’s requests and submitted the issues. The majority discussion about sufficiency of evidence to raise a jury issue assumes that the jury found favorably to Champlin that the monthly reports gave Chastain notice. The jury left the issues unanswered.
Skilled auditors for Humble and Pan American while making their fifth audit of Champlin’s hooks and records learned and told Champlin about the meaning of the monthly reports. Champlin, still incredulous, undertook its own independent audit. According to Champlin’s argument, it was then faced with a dilemma as to its course of action. Despite an entire decade of total ignorance on the part of Champlin itself, the author and distributor of every report, this Court has sustained its contention that the monthly reports made a full disclosure to Chastain. If Champlin was in total and innocent ignorance of the meaning of its own work product, should it in equity be heard to say that the product gave any more information to those who received it? The courts below have rejected Champlin’s defense that it was ignorant but Chastain was informed. Because of Champlin’s inequitable posture, I would do the same.

The Jury Findings on Which Champlin Relies

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 *400Processing Agreement ?” (Emphasis added.)
The jury answered “Yes.” The trial court properly disregarded the issue. Chas-tain 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 he “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. * * ⅜ ”
*401Champlin 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.5 ”5 ”
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.

Findings Defeat Champlin’s Defense of Equitable Estoppel

An essential element of Champlin’s defense that Chastain was equitably estopped is a finding that it relied and was injured by reason of Chastain’s silence after he was under a duty to speak. Gulbenkian v. Penn, 151 Tex. 412, 252 S.W.2d 929 (1952) ; Waxahachie National Bank v. Beilharz, 94 Tex. 493, 62 S.W. 743 (1901). Special Issue 9 was unanswered and Special Issue 11 was answered against Champlin. They were:
SPECIAL ISSUE No. 9. “Do you find from a preponderance of the evidence that the Defendants acted in reliance upon the apparent acceptance, if any, by the Plaintiffs of Champlin’s monthly accountings to them, by altering their position so that it would prejudice the Defendants to require a *402reaccounting to the Plaintiffs?” (Unanswered).
SPECIAL ISSUE No. 11. “Do you find from a preponderance of the evidence that during the period of such delay the Defendants have changed their position in any way which would make it unjust for the Plaintiffs to assert such a claim now?” Answer “No.”
Champlin requested Special Issue 11, and knew its effect when it moved the Court to disregard the answer and hold that “the defendants have changed their position in a way which would, as a matter of law, make it unjust for the plaintiffs to assert such a claim. * * * ” Indeed, as Cham-plin recognized, this Court must hold that all the evidence shows that Champlin has changed its position. Champlin has done nothing hut continue the breach of Chas-tain’s contract. Apparently what Champlin means is that if Chastain had hastily complained, it would have begun abiding by its agreement. The jury probably thought so.
Champlin received about four or five barrels of the processed product out of every ten that were run through its plant. Giving effect to its stipulations, it could pay Chastain all it owes him without disturbing anyone. The argument that it could have recouped its losses from the other 164 suppliers is equally tenuous. After Champlin pays Chastain the $118,076.25 which it owes by force of a contract between those two, how it could pass that loss on to the other producers is difficult to determine. The proof does not divulge the kind of proceedings or the legal theory of liability of these other parties whose rights are measured by their own separate contracts with Champlin. The basis for this confusing argument by Champlin is the assumption that all parties were entitled to an aliquot part of the gas supplied the Champlin plant. The proof is that Cham-plin’s rights and liabilities were measured by 165 separate contracts, and the rights of one were not governed by the contracts of others. In any event, the jury found against Champlin and that defeated their plea of equitable estoppel.

Conclusion

Champlin failed to prove its eligibility to relief in equity, because
(1) Chastain by the finding to the first special issue, was without actual knowledge of Champlin’s mistaken distributions.
(2) Champlin had full prior knowledge of its continuing breach of contract which imposed upon it a duty to speak by making a full and fair disclosure of the material facts.
(3) It failed to prove that it discharged this duty, by failing to request an issue. The trial court’s implied finding is now against Champlin.
(4) As a matter of law, Champlin did not make a full and fair disclosure of the material facts but made a misleading and partial disclosure.
(5) The jury found that Champlin did not change its position in any way which would make it unjust for Chastain to assert his claim.
(6) As a matter of law, Champlin has proved no injury other than its liability upon the contract with Chastain.
I would affirm the judgment of the Court of Civil Appeals.
CALVERT, C. J., and GRIFFIN and WALKER, JJ., join in this dissent.

. The following issues were unanswered:
SPECIAL ISSUE NO. 6.
“Do you find from a preponderance of the evidence that Champlin rendered monthly accountings to Chastain which showed the method of allocation used in computing the payments made by Champ-lin for the gas and liquids credited to the Chastain wells?”
SPECIAL ISSUE NO. 8.
“Do you find from a preponderance of the evidence that the Plaintiffs acquiesced in the Champlin plant method of allocating plant products to the producing wells as used in the monthly production and disposition reports?”