Court Opinion

ID: 9776882
Source: CourtListenerOpinion
Date Created: 2023-08-29 19:47:54.612097+00
Date Added: 2024-06-11T07:32:44.392856
License: Public Domain

On Rehearing
NORVELL, Justice.
After due consideration of respondents’ motion for rehearing, we adhere to our holding that the trial court erred' in granting respondents’ motion to disregard the *403jury’s answers to Special Issues Nos. 2, 3, 4 and S (Rule 301, Texas Rules of Civil Procedure) 1, but have reached the conclusion that in the interest of justice, this cause should be remanded to the District Court for another trial. Consequently, our order of remand to the Court of Civil Appeals is set aside and this cause is remanded to the trial court.
As indicated in the original opinion, the petitioner Champlin, in addition to estoppel, pleaded a number of defenses to the cause of action asserted by the respondents, such as reformation, stated account, laches, acquiescence, etc. Some of these defenses were somewhat similar in nature to the estoppel defense and certain of the issues relating to such defenses were not answered. The trial judge also submitted a number of issues which were evidentiary in nature. The controlling estoppel issues, however, were Nos. 1, 2, 3, 4 and 5. In relation to such defense and findings, the following dates are of importance: October 25, 1956, the date of the Natural Gas Processing Agreement which contained the contract allocation formula; September 12, 1958, the date of the Champlin letter written shortly after the completion of the Humble audit; and March 1961, when Chastain met with John McNamara and Dick Castleberry in Dallas, Texas and was told by them that there was a substantial difference between the plant formula being used by Champlin and the contract formula. The time inquired about in the estoppel issues was the period extending from October 1956, when the contract was executed, to March 1961, when Chastain met with McNamara. The period emphasized by the evidence was the period from September 12, 1958 to March 1961.
The record discloses that prior to March 1961, Chastain had two possible sources of knowledge that the plant formula and the contract formula were not identical. These were the monthly statements rendered by Champlin to Chastain and Champlin’s letter of September 12, 1958. The jury returned no answers to the issues submitted to the jury upon whether or not a stated account arose from the statements alone, but under the wording of the estoppel issues, the jury was allowed to consider the statements rendered by Champlin in the light of whatever notice the letter of September 12, 1958 may have given to Chastain.
Had the jury answered Special Issue No. 1 in the affirmative, we would have no hesitancy in saying that Chastain would be estopped from asserting a claim that the contract formula was different from the plant formula. This issue inquired if Chastain had actual knowledge of a difference between the contract formula and the plant formula. See, 2 Pomeroy, Equity Jurisprudence (5th Ed.) 603, § 592, Knowledge and Notice Distinguished. However, Issue No. 1 was answered in the negative so Champlin must of necessity rely upon Special Issue No. 2 to support its es-toppel defense. Ordinarily, when one contracting party discovers or becomes aware of a fact or circumstance affecting the contract, he must make disclosure of such fact or circumstance to the second contracting party before he may assert an es-toppel based upon the non-action of the second party. If full disclosure be made, an estoppel could arise under certain circumstances, even though the second party by inattention, neglect or wanton carelessness, failed to realize the situation and act accordingly. On the other hand, if the second party (the one against whom the estoppel is asserted) has knowledge or information of facts sufficient to put him upon inquiry which if reasonably pursued would lead to the discovery of the controlling fact, — in this instance, the use of the plant alloca*404tion formula, — said second party is in effect charged with actual knowledge of such controlling fact because the circumstances are such that notice of such fact is necessarily imputed to him. 2 Pomeroy’s Equity Jurisprudence (5th Ed.) 613, § 596. Such notice is imputed actual notice and will support an estoppel. “[A]ctual notice is a conclusion of fact, capable of being established by all grades of legitimate evidence.” 2 Pomeroy, Equity Jurisprudence (5th Ed.) 612, § 595. It is Chastain’s position that the letter of September 12, 1958, coupled with the monthly reports submitted to him by Champlin, were insufficient as a matter of law to impute knowledge to him that Champlin was allocating mineral substances to him on a basis other than that prescribed in the contract. We think the evidence presents an issue of fact for a jury.
The doctrine of equitable estoppel may have application to a variety of fact situations. See, 3 Pomeroy, Equity Jurisprudence (5th Ed.) 190, § 805. Consequently, each case must to a considerable extent stand upon its own facts. Here as pointed out in the original opinion, the letter of September 12, 1958 informed Chastain of Champlin’s intention “to continue to employ the aforementioned procedure (of allocation) as to all producers connected with our plant”. Champlin also offered to discuss the matter with Chastain or any other operator producing to the plant and then stated that, “Unless we hear from you to the contrary within thirty (30) days, we will consider that our suggestion for continuing this procedure meets with your approval.” It would seem that this information would call upon Chastain for a re-examination of his position. He and Champlin were engaged in a business relationship which involved a month to month accounting by Champlin to Chastain. Inquiry was made of Chastain as to whether or not he was satisfied with the allocation processes then being used by the Champlin plant. The statement of any objection to a continuation of the operating and accounting procedures was suggested and called for. Depending upon a jury’s estimate of the information set forth in the Champlin letter, it could be concluded that Chastain was under a duty to speak. “An estoppel may arise as effectually from silence, where it is a duty to speak, as from words spoken.” Burnett v. Atteberry, 105 Tex. 119, 145 S.W. 582, 1. c. 587 (1912). Cf. Humble Oil & Refining Co. v. Harrison, 146 Tex. 216, 205 S.W.2d 355 (1947).
In Weinstein v. National Bank of Jefferson, 69 Tex. 38, 6 S.W. 171 (1887), it was held that a bank depositor was precluded from asserting that certain checks were forgeries because of his silence and failure to notify the bank of such forgeries within a reasonable time. Mr. Justice Gaines, speaking for this Court, said:
“The banker impliedly says to the depositor: ‘This is my account. Examine it, and, if not found correct, report to me its inaccuracies.’ And should the latter fail to complain within a reasonable time, the banker would have the right to consider that there was no objection to it. By his failure to speak in proper time, he virtually admits the correctness of the items charged. It is now held that an estoppel may be created, not only when the party sought to be concluded knows the material facts he is charged with having represented or concealed, but also when he is ‘in such position that he ought to have known them, so that knowledge will be imputed to him.’ 2 Pom.Eq.Jur. § 809: Here it is the duty of the depositor to know whether the account is correct or not, and, promptly to report a forgery when detected. Should he negligently fail to make the examination and consequent discovery, (when he could have discovered it,) it is as if he had expressly admitted the genuineness of the checks, and he will not be permitted to deny the fact, provided the bank be prejudiced by his failure. * * * ”
The issue of imputed actual knowledge was submitted to the jury by means of *405Special Issue No. 2, inquiring if Chastain could have discovered by the use of ordinary care that the method used by Champlin was different from the contract formula. While the wording of the issue is not patently or substantially erroneous, a more accurate statement of the test would be to inquire if Chastain prior to March 1, 1961, was 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.
While numerous objections to Special Issue No. 2 were filed, predicated for the most part upon the assertions that the issue was immaterial or that the evidence did not raise the issue of imputed actual notice, there was no objection to the wording of the issue in the particular here discussed. Cf. Allen v. American National Insurance Company, 380 S.W.2d 604 (Tex.Sup.1964). However, in view of our reversal, we are of the opinion that the case should be remanded to the District Court for another trial rather than remanded to the Court of Civil Appeals as originally ordered. In this way, a more nearly accurate inquiry relating to the theory of imputed actual notice may be framed and the jury submission simplified in other particulars, as it appears that some confusion in the jurors’ minds may have resulted from the submission of certain evidentiary issues as well as from the wording of some of the issues relating to defenses similar in nature to that of estoppel.
What we have said is based upon the record of this case. The jury submission upon another trial will of course be controlled by the evidence received by the court at that time, which may or may not raise issues in addition to that of estoppel.
Respondents’ motion for rehearing is granted to the extent herein indicated, otherwise it is overruled.
Motion for rehearing granted in part and overruled in part.
On Rehearing

. Special Issues Nos. 10 and 12 were also attacked in this motion. By its answers to these issues, the jury found that Chas-tain delayed in asserting a claim against Champlin, etc., and that Champlin had distributed to the Chastain wells the amount of liquids produced by such wells.