MacIsaac & Menke Co. v. Freeman

The defendant appeals from a judgment in the amount of $6,700 in favor of the plaintiff in an action to recover damages caused by the defendant’s refusal to perform certain plumbing and steam-fitting work under a bid which he had submitted to the plaintiff.

In the early part of February 1958, the plaintiff, a licensed general contractor, was preparing a bid with respect to the construction of a structure designated as the Botany Building on the campus of the University of California at Los Angeles. Bids had to be submitted before 2 p. m. on February 7, 1958. J. D. McDonald, a construction estimator for the plaintiff, testified that the procedure ordinarily followed in such work was that selected subcontractors were asked to submit bids after an examination of the plans and specifications. Sheets M-l to M-21, inclusive, of the plans for the Botany Building showed the complete mechanical requirements; there was no separation of plans for plumbing, heating, ventilating, air conditioning, domestic refrigeration and steam fitting. In the specifications, section CC related to domestic refrigeration, section DD was entitled “Plumbing and Steamfitting,” while section EE bore the heading of “Heating, Ventilating and Cooling.” About a week or 10 days before the closing date

Frank Hess, a plumbing and heating contractor who testified as an expert witness on behalf of the defendant, said that steam fitting normally encompassed “the assembly of piping, conducting steam to various units and the fittings ... attached to the piping. ’ ’ He also testified to the practice within the construction industry as to the submission of bids by subcontractors to the general contractor. He stated that heating would include steam fitting. If a bid contains an exclusion, it is the common practice for the general contractor to ask what is meant thereby if any ambiguity has not been explained.

Roger E. Harrington, who was engaged in the plumbing, heating and air conditioning business, testified as an expert witness for the defendant. He stated that steam fitting or steam piping was normally classified as being in the category of heating, not of plumbing.

In rebuttal, the plaintiff called Richard J. Coe, who was in the plumbing and heating business, as an expert witness. Part of his testimony was as follows: “A. . . . You could say ‘Plumbing only, no heating,’ for the entire job, yes. Q. Well, you mean including—that would be excluding Section EE? A. Yes.” He further said that in bidding on section DD, the customary method would be to use the words “steam fitting,” rather than the word “heating,” in stating an exclusion. On

Cecil P. Smith, who was in the plumbing business, testified in rebuttal on behalf of the plaintiff. In response to questions as to the “customary procedure” with respect to bidding as to a section such as section DD, he stated: “Well, customary procedure, the wording ‘Plumbing only, no heating’ wouldn’t be customary either for this section or any other section without further explanation. ... If you had bid Section DD and said specifically that you were bidding Section DD, “Plumbing only, no heating,” it could refer to this section only. . . . Well, you keep saying two things here: one time you say ‘Plumbing only, no heating, ’ and then the next thing they refer to Section DD, ‘Plumbing only, no heating.’ It’s entirely two different things. . . . The statement, ‘Plumbing only, no heating,’ is a broad statement; it covers the whole book, perhaps, or we couldn’t know what it covers.” Later in the examination of the witness, the witness answered questions of the trial judge, as follows: “The Court : Then, the custom and usage in the industry under those circumstances if a bid is made bidding plumbing but no heating, what would that mean, if it means anything, under the custom and usage in the industry? The Witness: Just as a statement of that, not referring to this would mean just what it says: Plumbing only but no heating of any type. ... You have given me three words and said, ‘Is there a custom and usage involved in those three words?’ I can’t particularly pin them down to a custom and usage. Not without some further statement.”

Arthur F. Menke, president of the plaintiff corporation, testified as a rebuttal witness. Part of his testimony was that steam fitting does not encompass a whole heating system; in the instant case the steam fitting was ancillary to the heating system. He further stated in part: “The heating system is covered under . . . Section EE, and is largely duet work

Among the findings of fact of the trial court were the following: 1. The defendant knew that section DD included plumbing and steam fitting and did not include heating which was “classified under Section EE.” 2. “That plaintiff took and understood said telephone bid as a bid to do all the work and labor specified in Section DD of the Specifications, that is to say as a bid to do both the Plumbing and Steamfitting, and in reliance thereon did name and list defendant as its subcontractor for said work and did use the figures and sum provided to it by defendant in compiling and making its general bid for said job.” 3. “That in so doing plaintiff did reasonably rely upon the said bid of defendant and did reasonably understand, construe and interpret the same ... to be a bid on all work provided in Section DD of the Specifications. . . .” 4. “That defendant when he made his bid either knew or should reasonably have expected that plaintiff would understand, construe or interpret said bid as encompassing all of Section DD, including both Plumbing and Steamfitting, and that plaintiff would act reasonably in reliance on such understanding, construction, or interpretation of said bid as plaintiff subsequently did.”

The respondent relies upon the doctrine of promissory estoppel. In support of its position it cites Drennan v. Star Paving Co., 51 Cal.2d 409 [ 333 P.2d 757 ], a case involving the liability of a subcontractor under a bid. Therein the Supreme Court said, at pages 413-414: “Plaintiff contends, however, that he relied to his detriment on defendant’s offer and that defendant must therefore answer in damages for its refusal to perform. Thus the question is squarely pre

“Section 90 of the Restatement of Contracts states: ‘A promise which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise.’ This rule applies in this state. [Citations.]

“Defendant’s offer constituted a promise to perform on such conditions as were stated expressly or by implication therein or annexed thereto by operation of law. (See 1 Willis-ton, Contracts [3d ed.], § 24A, p. 56, § 61, p. 196.) Defendant had reason to expect that if its bid proved the lowest it would be used by plaintiff. It induced ‘ action ... of a definite and substantial character on the part of the promisee.’ . . . 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.

“The absence of consideration is not fatal to the enforcement of such a promise. . . . The very purpose of section 90 [of the Restatement of Contracts] 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.’ (See 1 Corbin, Contracts 634 et seq.) Reasonable reliance serves to hold the offeror in lieu of the consideration ordinarily required to make the offer binding.”

Consideration of the reasoning of the Drennan case leads to the conclusion that the core of the problem presented on this appeal is whether there is substantial support in the evidence for the finding of fact that in making its bid for the construction of the building the plaintiff “did reasonably rely upon the said bid of defendant and did reasonably understand, construe and interpret the same ... to be a bid for all work provided in Section DD of the Specifications.” It is, of course, true that “the power of an appellate court begins and ends with a determination as to whether there is any substantial evidence in the record to support the questioned finding,” even though the appellate court might

The record has been carefully reviewed. It affords no substantial support for a finding that the plaintiff acted reasonably in assuming that the defendant was submitting a bid on all of the work included in specification DD and in relying on that assumption in submitting its bid for the construction of the building. Mr. McDonald, plaintiff's construction estimator, testified that a week or 10 days before the closing date of the bids, an employee of the defendant obtained from the plaintiff the mechanical plans and also the specifications for section DD. That section was entitled “Plumbing and Steamfitting.” In orally submitting the defendant’s bid, the language used was: “Plumbing only. No heating.” Mr. McDonald was in a hurry and asked for no more definite statement of what that language was intended to include. He was aware that sometimes a bid related only to a part of a section of specifications. The defendant C. L. Freeman testified that steam fitting was normally classified by contractors in the Los Angeles area as being in the category of heating. Mr. Hess, testifying on behalf of the defendant, stated that heating would include steam fitting. Mr. Harrington, called as a witness by the defendant, said that steam fitting was normally classified as being in the category of heating, not plumbing. The plaintiff’s witness Coe testified that in bidding on section DD, the customary method would be to use the term “steam fitting” rather than “heating” in stating an exclusion, but on cross-examination he said that steam fitting was probably more often called heating than it was classified as being in the category of plumbing. He further testified that if he were to receive a bid from someone who had been given only section DD, which bid was expressed as “Plumbing only, no heating,” and such person was only bidding on section DD, he would have to construe that as meaning that the steam piping was excluded. Mr. Smith, a witness for the plaintiff, testified that “the wording ‘Plumbing only, no heating' wouldn’t be customary either for this section or any other section without further explanation.” Mr. Menke, the president of the plaintiff corporation, stated that the steam fitting was ancillary to the heating system. It is thus clear that Mr. McDonald, the plaintiff’s estimator, either

The judgment is reversed.

Shinn, P. J., and Vallée, J., concurred.

A petition for a rehearing was denied August 17, 1961, and respondent’s petition for a hearing by the Supreme Court was denied September 20, 1961.