This section is from the book "Popular Law Library Vol7 Equity Jurisprudence, Trusts, Equity Pleading", by Albert H. Putney. Also available from Amazon: Popular Law-Dictionary.
"When one, by his words or conduct, wilfully, causes another to believe the existence of a certain state of things, and induces him to act in that belief, so as to alter his own previous position, the former is precluded from asserting, as against the latter, a different state of things as existing at the same time."1
Mr. Merwin states it as follows:
"Equitable estoppel consists in this: whenever, by his conduct or declarations, one has induced another to act upon the belief in certain facts, he shall not thereafter deny the truth of such facts, to the prejudice of the other." 2
The doctrine of equitable estoppel was discussed at some length by the Supreme Court of Illinois in the case of Gillet vs. Wiley,3 the decision in which case was in part as follows:
"The doctrine of estoppel in pais is never applied except where it would be contrary to equity to allow the assertion of the right, or proof of the fact, to avail. It is never applied to one who is without fault, or who has not, by some act or declaration, or by silence when he should speak, induced another to alter his condition on the faith of such acts or the truth of such declarations. The facts which give rise to an estoppel must be such as to make it unjust and inequitable to allow the party estopped to assert what would otherwise be his right, or make proof of matters tending to establish such right. Its effect is the forfeiture of pre-existing right, or the exclusion of evidence of such right. At the time of the execution of this receipt by Wiley, it is apparant that he had no knowledge that appellant was security on the guardian's bond, or that the security of such bond, whoever he might be, had taken a mortgage or other security from Day. Wiley so testifies, and is uncontradicted by any credible testimony. It is therefore evident that he could have had no purpose, in executing said receipt, of aiding said Day in perpetrating a fraud upon the security of such bond, even if he had known that he was executing a receipt. The ward owed no duty to appellant; made no statement or declaration to appellant to influence his conduct. Instead of giving the receipt to deceive appellant, and induce him to believe that the guardian had paid him, he was himself the victim of fraud and deception.
1 Picard vs. Shears, 6 Adol. & E. 469.
2 Merwin on Equity, Sec. 910. 3 126 III., 310; 19 N. E., 287.
"It was said by this court in People vs. Brown, 67 I11., 436, that 'the doctrine on this subject we understand to be, that when a person, by his words or conduct, voluntarily causes another to believe in the existence of a state of things, and induces him to act upon that belief, so as to change his previous position, he will be estopped to aver against the latter a different state of things.' It is clearly apparent in this case that there was no voluntary act of Wiley which could have misled appellant, or induced him to part with his security. The act of Wiley was procured by fraud and misrepresentation of his guardian, for the faithful performance of whose duty appellant was surety. The mind of Wiley never assented to the execution of the receipt as an acknowledgment of having received the money therein mentioned. What he voluntarily did was to execute what he supposed to be a promissory note. It is not essential to the creation of estoppel that there should be an actual fraudulent intent at the time of making the declarations or performing the act upon which the other party has relied, but it is essential that there should be voluntary acts or declarations by which another is made to believe in the existence of certain facts, and which induce him to act upon that belief. Picard vs. Sears, 6 A. & E., 469; Freeman vs. Cook, 2 Ex., 654; Cornish vs. Abbingdon, 4 Hurl. & N., 549; People vs. Brown, supra; Powell vs. Rogers, 105 I11., 318.
'The cases and text writers seem to use interchangeably the words 'willfully,' 'intentionally/ 'means,' and 'voluntarily' as synonymous terms in discussing the question of the making of declarations or performing acts from which it is alleged an estoppel arises. The rule, as gathered from the various cases in respect of this element of estoppel, perhaps is, that where one voluntarily, by acts or declarations, represents a certain state of facts to exist, and thereby procures a change of conduct in another, he can not afterwards be heard to assert a contrary state of facts, if injury results to or fraud is perpetrated thereby upon the party who had acted relying upon the truth of his representations. It is, however, claimed 'that an equitable estoppel will arise by the negligent act and conduct of a party, even though ignorant of the truth of his declarations.'
"It is said in Bigelow on Estoppel, page 540: 'It seems to be settled that a party's ignorance of the truth of the representation will not remove the estoppel if his ignorance is the result of gross negligence.' It is urged that it was gross negligence for Wiley to sign the paper produced as a receipt, without informing himself of the contents thereof. We have seen that he was ignorant of the fact that he was making any representation or acknowledgment of payment by the guardian. His negligence, if any is attributable to him, was in relying upon the statement of Day as to the contents of said paper. It, however, appears that appellee's father died in 1856; that appellee was then about eight years old; that on March 23, 1859, Day was appointed guardian, and took appellee to his (Day's) home, where the ward continued to reside as a member of the guardian's family until after he became of age, and until the spring of 1881. When the signature was procured to the receipt, the ward was still an inmate of his guardian's family, and had just arrived at his majority. He would not be expected to distrust his guardian or question the truthfulness of his representations. Appellee says he had every confidence in his guardian, and the facts and circumstances shown tend to corroborate his statement. He was assured that the paper he was asked to sign was a note, and having been just awakened from sleep, did not read the paper before affixing his mark to it. That we can now see how utterly unworthy of confidence this guardian was, and how recreant to every trust and confidence reposed in him, furnishes no criterion for determining the condition of appellee's mind in this respect. Considering, as we must, the confidential and intimate relations existing between appellee and his guardian, with whom he had had no settlement or talk of settlement of the ward's affairs, it can not be said that there was anything to apprise appellee that he might be acknowledging payment by the guardian, or that would put him upon inquiry in that regard. It is to be remembered that this boy, while having a considerable patrimony, had been reared in ignorance, and allowed to fall into vicious habits, and, in addition, had, several years prior to his arriving at majority, become afflicted with a nervous disease, that, to some degree, impaired his mental faculties. If it be conceded that appellee knew that Day was his guardian, or that Day had money in his hands belonging to appellee, what was there to induce appellee to believe that the signing of this particular paper had anything to do with the matter of his estate? Manifestly, nothing whatever.
"Ordinarily, one having the means of information as to the contents of a paper executed by him, will, as against third persons, be held to have known the contents, and will not be permitted to assert his ignorance of its contents to avoid responsibility according to its real import. Here, however, the signing of this receipt was the will and act of the guardian, rather than that of the appellee. Courts will watch settlements of guardians with their wards, or any act or transaction between them affecting the estate of the ward, with great jealousy. From the confidential relations between the parties, it will be presumed that the ward was acting under the influence of the guardian, and all transactions between them, prejudicially affecting the interests of the ward, will be held to be constructively fraudulent. (Carter vs. Tice et al, 120 I11., 277.) The doctrine is thus stated in 1 Story's
Eq. Jur., Sec. 217: Where the guardianship has, in fact, ceased, by the majority of the ward, the courts will not permit transactions between guardians and wards to stand, even when they have occurred after the minority has ceased and the relation become thereby actually ended, if the intermediate period be short, unless the circumstances demonstrate, in the highest sense of the term, the fullest deliberation on the part of the ward and the most abundant good faith on the part of the guardian, for, in all such cases, the relation is still considered as having an undue influence upon the mind of the ward, and as virtually subsisting, especially if all the duties attached to the situation have not ceased - as, if the accounts between the parties have not been fully settled, or if the estate still remains, in some sort, under the control of the guardian."