Court Opinion

ID: 9776883
Source: CourtListenerOpinion
Date Created: 2023-08-29 19:47:54.616802+00
Date Added: 2024-06-11T07:32:44.395716
License: Public Domain

CALVERT, Justice
(dissenting).
Reversal has been ordered by the Court because of its conclusion that Champlin was entitled to judgment based on the jury’s answers to Special Issues 2, 3, 4 and 5, the estoppel issues. I do not agree that these findings furnish a sound basis for judgment in Champlin’s favor.
Reversal is ordered upon a holding that one may be estopped from asserting his rights because he was silent when he had a duty to speak. One cannot quarrel with that general rule or with its soundness. The crucial inquiry in this case is whether Chastain was under a duty to speak when he was silent.
The holding of the Court is that Chastain was under a duty to speak upon receipt of Champlin’s letter if a jury should find that Chastain was then “in possession of information which would cause a reasonably prudent man, similarly situated to Chastain, to make inquiry, which inquiry, if pursued with ordinary diligence, would have disclosed that the plant formula in actual use was a different formula from that prescribed in the Natural Gas Processing contract.” Aside from the fact that that is not the issue submitted in this case on which Champlin obtained a favorable finding, a matter to which I will refer later, I suggest that the holding has no support in the case law of this State and that it will extend the defense of estoppel by silence far beyond any rational philosophical basis.
The true basis of estoppel by silence is deceit. One cannot be guilty of deceit by silence if he has no knowledge of the facts which the law requires him to disclose. In Burnett v. Atteberry, 105 Tex. 119, 145 S.W. 582 (1912), cited in the Court’s opinion, the party held to be estopped by silence had *406actual knowledge1 of his rights. In the course of our opinion in that case we quoted from Mr. Bigelow as follows: “A representation in the nature of a negative of one’s rights may, as we have seen, arise from pure silence; and from pure but misleading 2 silence with knowledge * * * an estoppel will arise.” 145 S.W. 587. We also quoted from Lord Denman in Pickard v. Sears, as follows: “A party who negligently or culpably stands by and allows another to contract on the faith and understanding of a fact which he can contradict cannot afterwards dispute that fact in an action against the person whom he has himself assisted in deceiving.” 145 S.W. 587. We also quoted Chancellor Kent as declaring in Wendell v. Van Rensselaer, 1 Johns Ch. (N.Y.) 353, that the act of one who “knowingly” permits another to act to his prejudice is “an act of fraud and injustice.” 145 S.W. 587.
In an even earlier case, Burleson v. Burleson, 28 Tex. 383, 415-416 (1866), we stated the rule as follows:
“The effect of an estoppel in pais is to prevent the assertion of an unequivocal right, or preclude a good defense, and justice demands that it should not be enforced unless substantiated in every particular. Carpenter v. Stilwell 12 Barb. [N.Y.] 128. The ground upon which the estoppel proceeds is fraud, actual and constructive, on the part of the person sought to be estopped. What will amount to the suggestion of a falsehood, or the suppression of the truth, may be difficult to determine in all cases; but some turpitude, some inexcusable wrong, that constituted the direct motive, or induced the outlay or purchase, is necessary to give silence or acquiescence the force of an estoppel in pais. Hence, the ignorance of the true state of the title on the part of the purchaser must concur with willful misrepresentation or concealment on the part of the person estopped. * * *
“The true doctrine is well expressed in Story, Eq. § 386. In order to apply an estoppel, it is indispensable that the party standing by and concealing his rights should be fully apprised of them, and should, by his conduct or gross neglect, encourage or influence a purchaser; for if he be wholly ignorant of his rights, or the purchaser know them, or if his acts, silence, or negligence do not mislead or in any manner affect the transaction, there can be no just inference of actual or constructive fraud on his part. Rights can be lost or forfeited only by such conduct as would make it fraudulent and against conscience to assert them.”
W. S. Simkins in his great work on Equity, 2d Ed., p. 674, sums up his discussion of estoppel in these words: “To sum up the matter, then, we have the basis of estoppel succinctly stated as follows: First. It arises where there is ignorance and acts. [Cases cited] Second. Where there is knowledge and silence. [Cases cited] And sometimes presence and silence, as we have seen. [Cases cited] But not silence and ignorance. [Cases cited]”
It seems to me that the foregoing clearly defined expressions of the law in this State should have more controlling effect on our decision in this case and in charting our future course than should vague, contradictory, and generalized statements from American Jurisprudence and Corpus Juris Secundum.
It is enough to rest a duty to speak upon actual knowledge or knowledge imputed as a matter of law. In support of its holding the Court quotes extensively from Weinstein v. National Bank, 69 Tex. 38, 6 S.W. 171 (1887). That case does not support the holding made in this case. In the first place, that case relates to the relationship *407between a bank and its depositors concerning forged checks. In the second place, close analysis of the facts and of the Court’s holding will clearly disclose that the estop-pel was predicated upon knowledge imputed as a matter of law, the only question left to the jury was the question of injury to the bank.
Mr. Justice Pope has cited a number of Texas decisions in his dissenting opinion in which our courts have declared that a duty to speak arises out of actual knowledge of the facts. See Hallmark v. United Fidelity Life Ins. Co., 155 Tex. 291, 286 S.W.2d 133 (1956); Williams v. Texas Employers Ins. Ass’n, Tex.Civ.App., 135 S.W.2d 262 (1940), writ refused; Moore v. Carey Bros. Oil Co., Tex.Com.App., 272 S.W. 440, 39 A.L.R. 1247 (1925). Pomeroy states the rule thusly (3 Pomeroy, 5th Ed., 216, § 809):
“The truth concerning these material facts represented or concealed must be known to the party at the time when his conduct, which amounts to a representation or concealment, takes place; or else the circumstances must be such that a knowledge of the truth is necessarily imputed to him.” 3
I can agree that a duty to speak should be imposed upon one to whom knowledge is necessarily imputed — imputed as a matter of law. Thus one would have a duty to speak of matters in his chain of title, of matters known to his agent, etc. But I cannot agree that one should have a duty, imposed ex post facto by a jury finding, to speak of matters which he did not know but which he might have discovered if he had followed tenuous leads to knowledge. The rule adopted by the Court does more than impose a duty to speak; it imposes a preliminary duty to be wary, suspicious and distrustful. It does more than punish those who with knowledge of their rights are by their silence deceitful; it punishes those who are not alert to the fact that others may be deceiving them about their rights. This, I say, is extending the defense of estoppel far beyond the sound philosophical basis upon which it was founded by equity to prevent injustice; it perpetrates injustice. Once the rule laid down by the Court is adopted, our courts will be confronted constantly with the unsatisfactory and uncertain business of deciding whether there is any evidence of probative force to support the jury finding which imposes the duty and whether the finding of fact which imposes the duty is against the weight and preponderance of the evidence.
The issue actually submitted upon which the Court holds that Champlin was entitled to judgment inquired only if the plaintiffs “could have discovered by the use of ordinary care” that the allocation method used by Champlin was different from that described in the contract. That issue is far different from the one the Court now says should be submitted. Yet the Court states that Champlin was nevertheless entitled to judgment on the jury’s affirmative answer because “there was no objection to the wording of the issue in the particular here discussed.” It seems to me that one of the plaintiffs’ objections went directly to the heart of the matter. The objection follows:
“Plaintiffs object to Special Issue No. 2 on the grounds that such issue is immaterial because by inquiring whether Plaintiffs ‘could’ have discovered, by the use of ordinary care, that the allocation method used by Defendants was different from the allocation formula described in the Natural Gas Processing Agreement said issue in effect inquires whether it was possible, by the use of ordinary care, for the Plaintiffs to have discovered prior to the time Chastain met John McNamara that the allocation method used by Defendants was different from the allocation formula described in the Natural Gas Processing Agreement, and *408whether Plaintiffs ‘could’ have made such discovery is not material.”
Plaintiffs by the quoted objection pointed to the fatal flaw in the issue. The issue was Champlin’s issue, and the plaintiffs owed no duty under the Rules of Civil Procedure to prepare and submit a correctly worded issue or to tell the court how to word the issue correctly. Rule 274. The question is not controlled by Allen v. American National Ins. Co., Tex.Sup., 380 S.W.2d 604 (1964). In that case there was no objection to the incorrectly worded issue.
There is one other matter to which I would direct attention. The Court of Civil Appeals concluded that Champlin could not use the findings to issues 2, 3, 4, and 5 to estop Chastain from asserting his clear legal right to a recovery because as a matter of law Champlin was not in court with clean hands — it had not made a full and fair disclosure to Chastain of facts known to it concerning his rights. This Court has disagreed with that conclusion. It is noticeable, however, that the Court has not held that the letter written by Champlin made a full and fair disclosure as a matter of law, and inferentially the Court recognizes that whether the letter did or did not do so is an issuable fact. Having reached that point, the Court omits further discussion of the problem. Inasmuch as the case must be retried, the problem should be clarified.
I apprehend that “clean hands” is not an affirmative defense to a plea of estoppel; it is a necessary predicate for the plea, and if it is an issuable fact under the evidence, the burden of obtaining a favorable finding is on the party asserting an estop-pel. It is thus but one of the cluster of issues essential to the defense of estoppel.
GRIFFIN, WALKER and POPE, JJ., join in this dissent.

. Emphasis mine unless otherwise indi-dicated.

. Emphasis the author’s.

. Emphasis the author’s.