ENGINEERING CONTRACTORS v. AMBER STEEL COMPANY INC (1978)

OPINION

STATEMENT OF THE CASE

Respondent, a general contractor, filed a complaint “for breach of oral contract and negligence” against appellant, a subcontractor. The action arose out of a bid by appellant to install reinforcing steel (rebar) in the construction of a waste water treatment plant in Fresno County. Respondent included appellant's bid in its master bid which was accepted by the sanitation district, the builder. Respondent's first cause of action sought damages of $102,660, alleging that appellant had refused to perform in accordance with its bid. In the second cause of action, respondent sought the same damages, based upon appellant's negligence in mistakenly computing the amount of its bid.¹ Appellant answered the complaint denying the allegations and alleging rescission and estoppel among its affirmative defenses.

Appellant demanded a jury trial. The trial court denied the request on the ground that the action was essentially in equity. The case was tried before the court and an advisory jury, the jury only deciding the issue of reasonable reliance. The jury found that respondent had justifiably relied to its detriment on appellant's bid. The trial court adopted the jury's finding and issued its findings of fact, conclusions of law and judgment in favor of respondent and against appellant in the sum of $102,620 together with interest and costs. Appellant filed a timely appeal.

DENIAL OF RIGHT TO JURY TRIAL

The trial court erred in denying appellant a jury trial. The California Constitution provides: “Trial by jury is an inviolate right and shall be secured to all, . . . ” (Cal.Const., art. I, s 16.) Because the right is that existing at common law at the time our Constitution was adopted, a jury trial is a matter of right in a civil action at law but not in equity. (People v. One 1941 Chevrolet Coupe (1951) 37 Cal.2d 283, 231 P.2d 832; see Code Civ.Proc., s 592.) Whether a cause of action is in law or equity is determinable from the common law as it existed at the time of its adoption by this state and in the light of modifications which have taken place under our own system. (Philpott v. Superior Court (1934) 1 Cal.2d 512, 516, 36 P.2d 635; Southern Pac. Transportation Co. v. Superior Court (1976) 58 Cal.App.3d 433, 436, 129 Cal.Rptr. 912; Paularena v. Superior Court (1965) 231 Cal.App.2d 906, 911, 42 Cal.Rptr. 366.) As stated in Philpott v. Superior Court, supra, 1 Cal.2d at pp. 515-516, 36 P.2d at p. 637:

“ . . . (T)he courts of equity are reaching into new fields of operation and the courts of law are encroaching upon the former territory of the courts of equity. This thought was expressed by Lord Redesdale as quoted in the case of Spect v. Spect (88 Cal. 437, 26 P. 203) (citation), as follows: ‘The distinction between strict law and equity is never in any country a permanent distinction. Law and equity are in continual progression, and the former is constantly gaining ground upon the latter. A great part of what is now strict law was formerly considered as equity, and the equitable decisions of this age will unavoidably be ranked under the strict law of the next.’ (Citations.)”

In deciding whether an action is in law or in equity, the trial court is not bound by the form of the action but should look to the nature of the rights involved and the relief sought, as determined from the pleadings and facts of the case. (Bettencourt v. Bank of Italy, Etc., Assn. (1932) 216 Cal. 174, 179, 13 P.2d 659; overruled on other grounds by Pacific Western Oil Co. v. Bern Oil Co. (1939) 13 Cal.2d 60, 69, 87 P.2d 1045; Southern Pac. Transportation Co. v. Superior Court, supra, 58 Cal.App.3d 433, 436, 129 Cal.Rptr. 912; Paularena v. Superior Court, supra, 231 Cal.App.2d 906, 911-912, 42 Cal.Rptr. 366.)

Respondent argues that although its complaint was labeled “for breach of oral contract and negligence” its pleadings and proof nonetheless indicate that the relief sought was not for breach of contract but for equitable wrongdoing pursuant to section 90 of the Restatement of Contracts, which provides:

“A promise which the promisor should reasonably expect to induce action or forebearance of a definite and substantial character on the part of the promissee and which does induce such action or forebearance is binding if injustice can be avoided only by enforcement of the promise.”

Respondent alleged that it relied upon the low bid submitted by appellant in making its bid to the district.

In Drennan v. Star Paving Co. (1958) 51 Cal.2d 409, 333 P.2d 757, our Supreme Court explained that a bid by a subcontractor to a general contractor is merely an offer for a bilateral contract and unless it is accepted by the general contractor or supported by other consideration there is no contract between the parties. The mere use of the bid by the contractor in formulating its general bid is not an acceptance of the offer. (Id. at p. 413, 333 P.2d 757.) However, the court recognized that a subcontractor had reason to expect that if its bid proved the lowest it would be used by the general contractor; thus, it induced “action . . . of a definite and substantial character on the part of the promissee.” (Id. quoting s 90, Rest., Contracts.) The court then held that the analogous rule which implies a subsidiary promise to keep an offer for a unilateral contract open (Rest., Contracts, s 45) is equally applicable to a subcontractor's bid. “Whether implied in fact or law, the subsidiary promise serves to preclude the injustice that would result if the offer could be revoked after the offeree had acted in detrimental reliance thereon. Reasonable reliance resulting in a foreseeable prejudicial change in position affords a compelling basis also for implying a subsidiary promise not to revoke an offer for a bilateral contract.” (Drennan, supra, at p. 414, 333 P.2d at p. 760.) Thus, reasonable reliance is merely a substitute for a consideration. “The very purpose of section 90 is to make a promise binding even though there was no consideration ‘in the sense of something that is bargained for and given in exchange.’ ” (Id. at p. 414, 333 P.2d at p. 760, citing 2 Corbin, Contracts (1950) s 634 et seq.)

We conclude from the analysis in Drennan v. Star Paving Co., supra, that respondent's action for damages for appellant's failure to perform its bid was an action at law entitling appellant to a jury trial. The fact that equitable principles were involved does not change the action to one at equity and deprive the appellant of his right to a jury trial. (Cf. Raedeke v. Gibraltar Sav. & Loan Assn. (1974) 10 Cal.3d 665, 674, fn. 4, 111 Cal.Rptr. 693, 517 P.2d 1157. Nor does the fact that appellant asserted the equitable defenses of rescission and estoppel preclude a jury trial on the legal issues raised in the complaint. (See Robinson v. Puls (1946) 28 Cal.2d 664, 665-666, 171 P.2d 430; Connell v. Bowes (1942) 19 Cal.2d 870, 123 P.2d 456; 4 Witkin, Cal.Procedure (2d ed. 1971) Trial, s 77, pp. 2911-2912; 41 Cal.Jur.3d, Jury, s 8, pp. 30-35.)

The wrongful denial of a jury trial to one entitled thereto is a miscarriage of justice per se and requires a reversal. (See People v. One 1941 Chevrolet Coupe, supra, 37 Cal.2d 283, 300, 231 P.2d 832; Cowlin v. Pringle (1941) 46 Cal.App.2d 472, 476-477, 116 P.2d 109; Farrell v. City of Ontario (1919) 39 Cal.App. 351, 359, 178 P. 740; 6 Witkin, Cal.Procedure (2d ed. 1971) Appeal, s 327, pp. 4304-4305; 41 Cal.Jur.3d, Jury, s 11, pp. 37-38.) Respondent's argument that appellant received a jury trial because an advisory jury was empaneled on the issue of reasonable reliance is unavailing. First, the issue of damages was tried by the judge on the basis of conflicting evidence after the jury had been discharged. This alone nullifies respondent's argument. Respondent's reliance on Pacific Western Oil Co. v. Bern Oil Co., supra, 13 Cal.2d 60, 70-71, 87 P.2d 1045, is misplaced. In that case, both the liability of the defendant and the precise amount of damages suffered by the plaintiff (subsurface trespass resulting from slant drilling of an oil well) was established as a matter of law. Here, the issue of liability was sharply disputed. Second, the advisory jury was not asked to consider all of the facts pertaining to appellant's liability. The only issue submitted to the jury was whether the respondent acted reasonably in relying on appellant's bid in computing its master bid for the construction of the project. The jury did not advise the court on the other findings made by the judge upon which appellant's liability was fixed. That these findings were based upon what appears to have been uncontroverted facts established at trial does not render harmless their exclusion from the jury's determination. A party entitled to a jury trial is entitled to have the jury return a general verdict or findings based upon all of the facts essential to liability. (Code Civ.Proc., s 624.)

Finally, it is questionable whether an advisory jury can ever satisfy the constitutional right to a jury trial. Unlike a regular jury, an advisory jury does not decide the questions of fact.² Moreover, the tactics of counsel and the very psychology of the trial may well differ when an advisory jury is used. The clearly defined authority of the judge becomes blurred where he rather than the jury is the ultimate trier of the facts. The difficulty of showing prejudice, particularly where the judge follows the jury's advice, is the very reason for presuming prejudice how can it be determined with any degree of certainty that if the complaint in the present action had been fully tried by a regular jury, it would not have returned a verdict for appellant?

We cannot compromise a party's right to a jury trial. As the United States Supreme Court has stated, “Maintenance of the jury as a fact-finding body is of such importance and occupies so firm a place in our history and jurisprudence that any seeming curtailment of the right to a jury trial should be scrutinized with the utmost care.” (Beacon Theatres, Inc. v. Westover (1959) 359 U.S. 500, 501, 79 S.Ct. 948, 952, 3 L.Ed.2d 988 quoting Dimick v. Schiedt (1935) 293 U.S. 474, 486, 55 S.Ct. 296, 301, 79 L.Ed. 603. Cf. DePinto v. Provident Security Life Insurance Company (9th Cir. 1963) 323 F.2d 826, 837.) Just as a “Rose is a rose is a rose” (Gertrude Stein, Sacred Emily (1913), a jury trial is a jury trial. Nothing less will suffice.

WRONGFUL EXCLUSION OF CUSTOM EVIDENCE

For the guidance of the court and the parties on retrial, we conclude that appellant's proffered evidence of the custom and practice of a general contractor to disclose to a subcontractor the spread of the bid either in percentage or in dollars when the subcontractor's bid is substantially lower than the other bids should have been admitted. The trial court excluded this evidence on the ground that it “goes somewhat against human experience and certainly seems to contradict the whole theory of the secret bidding that is going on” and that it would invade the province of the jury. Nevertheless, the trial court allowed respondent to introduce evidence that it was not customary to disclose actual dollar figures on the spread of the bids. Appellant's evidence would have contradicted respondent's evidence to some extent and would have been helpful to the jury in determining the reasonableness of respondent's conduct. The truthfulness of the proposed evidence would have been a proper subject for cross-examination or impeachment but did not constitute a valid ground for exclusion.

The judgment is reversed.

As stated in the majority opinion, the appellant did not have the benefit of a jury determination of all of the issues of fact relative to liability, nor did he have such a determination on the issue of damages. It is therefore patent that he did not receive a jury trial, advisory or otherwise. Since denial of a jury trial is reversible per se, that disposes of the jury issue on the facts now before us. It is therefore unnecessary for us to face or answer the more difficult question of whether an advisory jury could ever satisfy the entitlement of a party to a jury as the ultimate finder of fact. Since the issue does not have to be decided, I believe it to be unwise to make pronouncements ex gratia on that issue. Accordingly, while I fully concur in the result, I do not concur in the opinion insofar as it discusses the broader issue of whether an advisory jury can ever satisfy the constitutional requirement of a jury as the ultimate finder of fact.

FOOTNOTES

1.  The second cause of action for damages bases on negligence was dismissed by respondent during trial.

2.  That the trial judge will sit as a “13th juror” when ruling on a motion for a new trial does not alter the fact that the jury, not the judge, decides the facts in the first instance. Trial judges seldom substitute their opinions for that of the jury on the weight of the evidence.

FRANSON, Associate Justice.

HOPPER, J., concurs.