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United States v. Ga.-Pacific Co. - 421 F.2d 92 (9th Cir. 1970)

Rule:

Equitable estoppel is a rule of justice which, in its proper field, prevails over all other rules. An equitable estoppel will be found only where all the elements necessary for its invocation are shown to the court. In the ninth circuit, four elements must be present to establish the defense of estoppel: (1) the party to be estopped must know the facts; (2) he must intend that his conduct shall be acted on or must so act that the party asserting the estoppel has a right to believe it is so intended; (3) the latter must be ignorant of the true facts; and (4) he must rely on the former party's conduct to his injury.

Facts:

In 1967, plaintiff United States Government initiated a declaratory relief action seeking specific performance of a contract made in 1934 with defendant's, Georgia-Pacific Corporation, predecessor in interest,  Coos Bay Lumber Company, and asserted a claim for lands conveyed. The contract in question had been essentially ignored by the United States for over three decades. The district court found that the agreement was a valid contract whose purposes and objectives were frustrated by official retraction of the national forest boundaries in 1958, thereby terminating defendant's duty to convey any lands. The United States appealed, claiming immunity from the affirmative defenses of equitable estoppel, unclean hands, frustration of contract, and failure of consideration.

Issue:

Was the United States Government equitably estopped from claiming governmental immunity against equitable defenses in its suit for specific performance of a contract made over 30 years earlier with a company's predecessor-in-interest?

Answer:

Yes.

Conclusion:

The Court found that the United States did not have governmental immunity with respect to the agreement in question and that equity required specific performance be denied because the United States knew the facts, the United States ntended reliance by defendant, who was ignorant of the facts, and defendant actually relied on the United States' representations to its detriment.

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