(dissenting).

With deference, I am unable to agree with the court’s conclusion that “smelter accounting” applies to that part of this case dealing with the appeal by the United States. As more fully set out in the opinion of the district court, this aspect of the case concerns the proper accounting method to be employed under the contract between the government and Hanna.

The government contends that the contract itself set out the accounting procedure to be employed and that Hanna, by “expensing” 216 items worth some $1,400,000 which should have been capitalized, failed to follow the contract procedure. Alternatively, the government contends that should the court find the accounting provisions of the contract ambiguous and conclude that resort to some external standard is necessary to interpret the contract, then that standard should be the “generally accepted accounting practice” provided for under Article VI of the contract. 1 Under the government’s alternate theory 201 Items worth some $1,373,000 were incorrectly expensed because “generally accepted accounting practice” would not have permitted that to be done.

Hanna rejects the government’s primary contention that the contract spells out its own accounting procedure and has agreed throughout this controversy that the properly applicable accounting standard is that of “generally accepted accounting practice.” There is a million dollar difference, however, between Hanna’s definition of the “generally accepted accounting practice” referred to in Article VI and the definition urged by the government. Hanna contends that “generally accepted accounting practice” under the contract means generally accepted accounting practice in the smelting industry. The government’s position is that the expression “generally accepted account practice” speaks for itself and does not refer to accounting practice unique to the smelting industry.

The difference is significant because the smelting industry follows the peculiar accounting practice of treating a smelter as a single capital unit and expensing the cost of replacement parts and even capital improvements, regardless of their usefulness, unless such replacements or improvements materially increase the capabilities or value of the entire smelter considered as a whole. Generally accepted accounting practice outside of the smelter industry would, of course, generally capitalize long-lived replacements and improvements. It is not contested in this litigation that, outside of the smelting industry 201 of the disputed items which Hanna expensed, in the amount of *949 some $1,373,000, would properly have been capitalized.

I concur with the district court and this court that the accounting provisions of the contract are ambiguous and that because of this ambiguity the contract must be interpreted in light of “generally accepted accounting practice” as that term is used in the instant contract. I cannot, however, agree with the conclusion of the district court, concurred in by this court, that the parties by their use of that language “intended to apply accounting practices common to the smelting industry.”

The record does not reflect any intention on the part of Hanna, at the time the contract was negotiated, to apply smelter accounting. The evidence presented by both parties regarding the lengthy negotiations leading up to the final draft of the contract indicates that the government was particularly concerned that it retain some check on the amount of money spent by Hanna in constructing the smelter. Hanna’s initial draft of the language which became Article VI 1(c) of the contract provided that capital advances were to be available for “such replacements, additions, or improvements of the Facility which are deemed necessary or advisable by the Contractor. * * * ” The government negotiators objected that this proposal would give Hanna the unrestricted right to construct any kind of facility it desired. As a result, Article VI 1(c) of the contract as finally agreed to provided that capital advances were to be available, “for such replacements or improvements of the Facility which are agreed by the Contractor and the Government to be necessary or advisable * * (Emphasis added.) Hanna admits in its brief that the requirement of government consent to expenditures for replacements and improvements was added to the language of Article VI 1(c) to meet the government’s demand that it have control over such expenditures.

The court’s interpretation of the contract ignores this history of the contract negotiations and renders substantially meaningless the final language of Article VI 1(c). For under “smelting accounting” the expenditures for replacements and improvements over which the government insisted it have control are almost always expensed rather than capitalized. If smelter accounting was to be applied, Hanna could (as it did in fact) charge such expenditures to “Working Capital Advances” under Article VI 2 rather than to “Capital Advances” under Article VI 1 and thereby avoid altogether the control provision which the government was careful to include in Article VI1 (c). The Court’s application of smelter accounting to the contract thus puts the government right back in the position it refused to accept when it rejected Hanna’s original contract draft. It is inconceivable to me that the government “intended” to give away under the guise of accounting procedure the control over expenditures for replacements and improvements which it insisted upon — and obviously thought it had gained — throughout lengthy contract negotiations.

The application of smelter accounting to the contract was, of course, greatly advantageous to Hanna, 2 and correspondingly disadvantageous to the government. If Hanna had the use of smelter accounting in mind when negotiating the contract, Hanna must also have known that that idea was exactly contradictory to the government’s insistence that it retain control over expenditures for replacements and improvements. If smelter accounting was to be the applicable *950 accounting procedure, the government’s signing of the contract containing Article VI 1 (c) was an irrational act on the part of the government’s contracting officials. Hanna had no reason to believe that, after the long and careful negotiations leading up to the final draft of the contract, the government officials at the last moment before signing, lost their reason. I can imagine no circumstances under which a tribunal, asked to interpret a contract, as to the meaning of which the parties disagree, can properly, by its interpretation impose upon one of the parties an agreement which he never, while in his right mind, would have made.

As an alternative ground of decision, the district court held that the government was estopped by acquiescence from challenging expenditures in the amount of some $320,000 incurred by Hanna after January 1, 1968. The district court found that the government auditors knew of the disputed accounting practices by the end of 1957 but failed to protest at that time or at any time prior to expiration of the contract. The government’s silence, the district court concluded, led Hanna to continue using the disputed accounting practices and should now bar the government’s subsequent challenge of those practices.

The government does not deny that its auditors knew by 1958 that Hanna was using the disputed accounting practices. The government contends, however, that estoppel is inapplicable here because Hanna did not detrimentally change its position in reliance upon the government’s silence.

Detrimental reliance is, of course, an essential element of estoppel. 3 Pomeroy, Equity Jurisprudence (5th ed.) pp. 191-192; Hampton v. Paramount Pictures Corp., 279 F.2d 100, 104 , 84 A.L.R.2d 454 (9th Cir. 1960). It is not disputed that Hanna had adopted its practice of expensing rather than capitalizing replacements and improvements before the government auditors learned of the practice. There was, consequently, no change of position by Hanna in the usual sense as a result of the government’s failure to protest earlier. The district court, however, relying upon Mahoning Investment Co. v. United States, 3 F.Supp. 622 , 78 Ct.Cl. 231 (1933), cert, denied 291 U.S. 675 , 54 S.Ct. 526 , 78 L.Ed. 1064 (1934), concluded that a change of position was unnecessary where acquiescence is the ground for estoppel for in such a situation the party ‘relies” by continuing his established practice.

The question remains here, however, as to whether such “reliance” was detrimental to Hanna. In Mahoning, plaintiff corporations agreed with the Internal Revenue Service that a certain tax assessment was proper and paid the tax. After the statutory period, during which the government might have reassessed the tax, had run, plaintiffs sued for a refund alleging that improper procedures had been followed in collecting the tax. Plaintiffs were estopped to assert the admitted illegality of the collection procedure because of the obvious prejudice to the government if a refund were to be allowed after the statute of limitations on reassessment had run.

No such prejudice is present here. Hanna argues that if the government had objected to its accounting procedures in 1958, Hanna might have been able to work out an acceptable procedure at that time or might have refrained from making some of the disputed expenditures which it subsequently made. That Hanna might have done something different if the government had spoken sooner is not the kind of detrimental reliance upon which an estoppel is based. Hanna might also have stood by its position then as it does now rather than refrain from making capital expenditures for equipment which it would upon expiration of the contract in 1961 be able to acquire for 7%% of cost or admit there was anything wrong with the procedure under which it had, by 1958, already expensed replacements and improvements in the amount of some $841,- *951 000. This kind of speculative hindsight affords no grounds for an estoppel.

I would allow the government the full amount of the 201 items improperly ex-pensed under generally accepted accounting practice outside of the smelting industry and would adjust accordingly the amount found owing the government under that part of the court’s opinion dealing with the reformation issue.

. (1) Upon the Contractor’s written request, the Government will make advances (hereinafter called “Capital Advances”) of the entire amount up to a total of $22,-000,000 * * * required (a) to test the process [in Prance], (b) to construct, equip, design and rebuild the Pacility contemplated by Article IV * * *, (c) for such replacements or improvements of the Pacility which are agreed by the Contractor and the Government to be necessary or advisable during the period of this Contract, and (d) for such other necessary and so agreed upon expenditures which, in accordance with generally accepted accounting practice, are capitalized.

(2) Upon the Contractor’s written request from time to time * * * the Government will advance to the Contractor sums (hereinafter called “Working Capital Advances”) representing its reasonable minimum working capital requirements [so long as the amount outstanding does not exceed $2,800,000]. * * * Working Capital Advances may be requested and used by the Contractor to pay any costs and expenses hereunder of the Contractor * * * not covered by Capital Advances * * *.

. The contract gave Hanna the option to purchase the smelter for its own commercial use at the end of the contract period for a sum equal to 7% per cent of the total “Capital Advances” advanced to Hanna under Article VI 1 of the contract. Using smelter accounting, Hanna was able to purchase over a million dollars worth of replacements and improvements without seeking the government’s approval and upon subsequent exercise of the purchase option to escape paying anything for the property so purchased.