Concord Oil Co. v. Alco Oil and Gas Corp. ( 1965 )

CALVERT, Chief Justice.

I respectfully dissent.

Alco’s right to recover the sum of $23,-000.00 paid to Concord depends, in final analysis, on whether there is evidence and jury findings in the record which will support a legal conclusion that Aleo is estopped from asserting its contract right to have the money returned because of Concord’s failure to procure the drillsite by June 1. The Court of Civil Appeals held that a legal conclusion of estoppel is not supportable because “there is no evidence of a false representation or concealment of material facts by Aleo which was relied upon by Concord.” 375 S.W.2d 467. The majority of this Court takes a different tack, and holds that the conclusion is insupportable because Concord was not injured by Alco’s conduct inasmuch as “the record shows conclusively that he [Concord’s president, Pawel] could not have secured the drillsite by June 1st.”

Neither the Court of Civil Appeals nor the majority of this Court suggests that the jury’s verdict is inadequate to support the conclusion, but an understanding of the verdict will serve to bring the holdings of both into better focus. In answer to special issues, the jury found that the officers and agents of Aleo by their course of conduct led Concord’s officers and agents reasonably to believe that Concord’s failure to have the drillsite by June 1 would not cause Aleo to attempt to terminate the agreement; that Concord’s officers relied on the course of conduct of Alco’s officers and agents to the extent that Concord’s officers in good faith believed that Aleo would not attempt to terminate the agreement on June 1 because of failure to secure the drillsite by that date; that but for its good faith belief, Concord could and would have secured the drillsite by June 1. Inasmuch as the judgment of the Court of Civil Appeals is bottomed upon a finding of “no evidence” to support essential elements of the jury’s verdict, and the judgment of affirmance by this Court is based upon a finding of “conclusive evidence” that an essential element of estoppel does not exist, the evidence on the controlling issues should be summarized.

The record reflects that during the months of March, April and May, 1961, Concord and Aleo exchanged numerous letters and long-distance telephone calls. Most of these letters and calls dealt with technical details relative to drilling the proposed well such as obtaining a railroad crossing and using a more economical casing for the well. Once during April, Aleo inquired of Concord’s progress in obtaining the drillsite. However, there was nothing in any of these exchanges indicating that Aleo was particularly concerned with Concord meeting its deadline, and nothing to indicate that Aleo wanted to back out of the deal. It appeared that Aleo was eager to begin drilling. It was in this context that the crucial telephone conversation of May 19 occurred. The conversation was between Pawel, president of Concord, and Moore, general counsel and assistant secretary of Aleo. According to Pawel’s version (which the jury obviously believed), he told Moore that it might take another thirty days to get the drillsite through condemnation; whereupon, Moore told Pawel that Alco’s board of directors was having a meeting on the 22nd at which the contemplated delay would be discussed, and assured him that if the thirty-day delay in securing the drillsite through condemnation was not “all right” with Alco’s directors, Pawel would be so advised. Moore testified that Alco’s board of directors met on June 23 and 24, but did not make a decision on the matter. Moore did not notify Pawel.

Concord asserts that at the time of the May 19 conversation and following the board meeting there was ample time before the June 1 deadline to seek the drillsite through further negotiation with and purchase from the landowners, and that, as Pawel testified, it would have used the time for that purpose had it known Aleo would insist on obtaining the site by that date, even if it meant “paying through the nose”; but that due to Alco’s failure to advise promptly that the delay was not all right, Concord was led to believe that the delay was agreeable and that Aleo would not insist upon its contract right to have the site by June 1. It is Concord’s position that under these circumstances the law imposed a duty upon Aleo to speak, and that because of Alco’s silence, Concord lost its opportunity to use the time available before June 1 to obtain the drillsite by purchase.

Although the Court of Civil Appeals recognized in its opinion that silence under some circumstances may furnish a basis upon which to predicate an estoppel (see 375 S.W.2d 466), it held, nevertheless, that Concord could not sustain its plea of estoppel in the absence of evidence of a false representation or concealment by Al-eo on which Concord relied. What the court meant by the holding is not entirely clear. It could have meant that there is in the record no evidence of a false representation or concealment by Aleo, or it could have meant that there is no evidence that Concord relied on a false representation or concealment which is supported by evidence. I do not share the conclusion in either event.

Silence, where there is a duty to speak, may be as misleading as a positive misrepresentation of existing facts. Humble Oil & Refining Co. v. Harrison, 146 Tex. 216, 205 S.W.2d 355, 361 (1947); Johnson v. Sovereign Camp, W.O.W., 125 Tex. 329, 83 S.W.2d 605 (1935); Burnett v. Atteberry, 105 Tex. 119, 145 S.W. 582, 587 (1912). “Silence, when there is a duty to speak, is deemed equivalent to concealment.” 19 Am.Jur. 666, Estoppel, § 55.

Moore had been representing Aleo in dealing with Pawel about the drillsite. He knew on May 24 that Alco’s board of directors had failed to approve the contemplated thirty-day delay sought by Concord.

He knew, therefore, that the delay had not been agreed to and had not been approved as “all right” by Aleo. He knew that, in keeping with his assurance, Pawel expected to be advised if the delay was not approved by the board as “all right.” He knew from Pawel’s statement to him that Concord probably would not succeed in obtaining the drillsite by June 1 through condemnation proceedings. He knew that negotiation with and purchase from the landowners was an alternative means for securing the site. His knowledge was Al-co’s knowledge. Under these circumstances, good faith and fair dealing required that Moore speak for Aleo, and his failure to speak was the equivalent of concealment of a material fact. Pawel’s testimony supports the jury’s finding that he relied on the concealment and was misled into believing that Aleo would not insist on its right to terminate the contract if the drillsite was not secured by June 1.

Concord argues that it was injured by loss of opportunity to acquire the drillsite by purchase. In support of its argument, Concord cites Schwarz v. National Bank of Texas, 67 Tex. 217, 2 S.W. 865 (1887), Weinstein v. National Bank of Jefferson, 69 Tex. 38, 6 S.W. 171 (1887), and Fifth National Bank of San Antonio v. Iron City National Bank of Llano, 92 Tex. 436, 49 S.W. 368 (1899). These cases will support the proposition that an estoppel will be raised in favor of one who, in reliance upon the misrepresentations or inaction of another, can show that he has been deprived of a reasonable opportunity to save himself from injury. In Weinstein v. National Bank, supra, it was said:

“It has been held by this court that when one party has been prevented or induced by the conduct and representations of another from taking prompt action for the collection of his debt, that this is such a change in his position for the worse as to meet the requirement of the law in order to create an estoppel. Schwarz v. [National] Bank, 67 Tex. 217, 2 S.W.Rep. 865.”

Further, the party pleading estoppel need not prove to a certainty that the lost op-pórtunity would have ripened into success but for the misrepresentations or inaction of another; it is enough to show that the lost opportunity carried a reasonable possibility of success. Indeed, to force one such as Concord to show what offer it could and would have made and what would have been the landowners’ response to such offer would all but destroy the estoppel defense.

In the case of the Fifth National Bank of San Antonio v. Iron City National Bank of Llano, supra, San Antonio Bank’s lost opportunity to recover its funds from the Llano Bank cashier — a swindler who owned no property — would seem rather remote. Yet this Court there upheld the San Antonio Bank’s plea of estoppel against the Llano Bank for the latter’s negligent delay in notification. The Court quoted with approval the following language taken from Leather Manufacturer’s Nat. Bank v. Morgan, 117 U.S. 96, 6 S.Ct. 657, 29 L.Ed. 811:

“It is not necessary that it should be made to appear, by evidence, that benefit would certainly have accrued to the bank from an attempt to secure payment from the criminal. * * * As the right to seek and compel restoration and payment from the person * * * was in itself a valuable one, it is sufficient if it appears that the bank, by reason of the negligence, * * * was prevented from promptly and, it may be, effiectively exercising ' it.”

The majority does not question the soundness of Concord’s argument or of- its supporting authorities.. What the majority holds is that Concord was not injured by its loss of opportunity because the evidence establishes conclusively that the drillsite could not have-been .purchased by. June 1. I cannot agree with the holding..

In the instant casé it is true, as respondent contends, that' the landowners were' vigorously resisting Concord’s efforts to condemn the drillsite.. They obtained three temporary restraining orders staying the proceedings, and prior to the filing of the condemnation suit, the landowners had refused at least two offers made by Concord to purchase the drillsite. However, as Pawel testified, his first offers were substantially less than the $4,064 condemnation award which was finally set on June 6, 1961 and accepted by the landowners in November, 1961. He further testified that had Concord realized Aleo intended to insist on the June 1 deadline, Concord would have been willing to “pay through the nose”' for the site. There is nothing in the record to show that the landowners would not have sold to Concord if it had raised the ante. Had Concord offered the landowners a handsome premium for the drillsite, there would have been at least a reasonable possibility that the site could have been procured prior to the deadline, and the evidence does not, in my judgment, establish conclusively that it could not have been purchased by June 1.

I would grant the motion for rehearing and reverse the judgment of the Court of Civil Appeals and would affirm the judgment of the trial court denying Aleo a recovery.

STEAKLEY, J., joins in this dissent.