Free Appendix - District Court of California - California

Case 5:07-cv-04808-JF

Document 60-4

Filed 07/25/2008

Page 1 of 60

EXHIBIT 6

1219457.1

\lla

Case 5:07-cv-04808-JF

Document 60-4

Filed 07/25/2008

Page 2 of 60

239 Cal.App.2d 664 239 Cal.App.2d 664,48 Cal.Rptr. 901 239 CaI.App.2d 664

Page i

P"Conderback, Inc. v. Standard Oil Co. of Cal., Western Operations

been dictated to plaintifts offce manager by
defendant's representative, that plaintiff signed the

CaI.App.I.Dist. CONDERBACK, INCORPORATED, Plaintiff and Respondent,
v.

letter assuming it referred to finality of that particular biling, that defendant's check given in payment did
not indicate its tender as final payment, that

STANDARD OIL COMPANY OF CALIFORNIA, Defendant and Appellant. Civ. No. 22563.
District Cour of Appeal, First District, Division I, California.
Jan.

defendant made further payments, and that defendant had given plaintiff an "open-ended" purchase order
subject to markups in accordance with customary

business practice over a long period.
æ Accord and Satisfaction § I8--Evidence. Though compromise offers are not admissible in

27, 1966.

evidence as such, in an action to recover the balance
allegedly due on a constrction contract claimed by

HEADNOTES
il Building Contracts § 4--Licensing of Contractors-

plaintiff to be based on cost plus markup formulas applied to various items, the court properly held that
discussions between the parties as to the markup

-Persons Required to Be Licensed.

defendant would be wiling to pay and plaintiff
would be willing to accept was relevant to whether the parties had reached an accord and satisfaction as
to the amounts due.
~ Building Contracts § 31--Evidence.

One who offers, undertakes or contracts in this state to construct or demolish a building, project or other improvement located outside California does not thereby become a contractor within this state subject to the Contractors' License Law (Bus. & Prof. Code, § 7000 et seq). Nor does the fact of the principal
place of his business being in California necessarily

In an action to recover amounts allegedly due on a constrction contract, plaintifts theory of the case
that its compensation was to be determined according
to a pricing formula in line with customary past

compel a different conclusion.
See Cal.Jur.2d, Building and Constrction
Contracts, § 26.

m Accord and Satisfaction § 20--Questions of Fact.
Whether an agreement amounts to an accord and
satisfaction is a question of the parties' intent and

practices did not justify admission of what were apparently offers by defendant to compromise a
pending dispute and the admission of such evidence

was error, though not prejudicial error.
(1 Building Contracts § 31--Evidence.

therefore a question offact. See CaI.Jur.2d, Accord and Satisfaction, § 47; Am.Jur.2d. Accord and Satisfaction, § 4.
Q) Accord and Satisfaction § 22--Appeal.

Evidence of similar contracts between the same
parties establishing a custom, habit or continuing course of business dealing is admissible to show that

Unless there is a lack of evidence to support a finding
as to whether an agreement amounted to an accord

and satisfaction, the determination of this issue by the trier of fact wil not be disturbed on appeaL.
il Accord and Satisfaction § 19--Evidence.

on a particular occasion a thing was done as usual, and in an action to recover the balance allegedly due
on a constrction contract, where it was shown that

defendant conducted its initial discussions and
solicited estimates in line with projected budgeting in
substantially the same manner as it had previously,
the rule did not become inapplicable though the

In an action to recover the balance allegedly due on a
constrction contract, the jury could reasonably

conclude that in accordance with the parties' past practices expenses would be biled until plaintiff
recovered costs and that the parties did not agree a certain invoice was the final biling where it was shown that reference in a letter to final billing had

contract involved a project much larger than previous jobs.
æ Building Contracts § 31--Evidence.

In an action to recover the amount allegedly due

(Q 2008 Thomson Reuters/West. No Claim to Orig. U.S. Govt. Works.
73

Case 5:07-cv-04808-JF
239 Cal.App.2d 664

Document 60-4

Filed 07/25/2008

Page 3 of 60
Page 2

239 Cal.App.2d 664, 48 Cal.Rptr. 90 I
239 Cal.App.2d 664

under a constrction contract, evidence of the part's

course of dealing in the past was admissible to show
their tre intent as to various bilings alleged by

(( Appeal and Error § 875(l)--Briefs--Pointing Out

Errors.
In urging insuffciency of the evidence, appellant

defendant to be "final" bilings and to give them a
meaning to which they were reasonably susceptible.
(2 Depositions § 28--Use in Evidence-Admissibility--Part of Deposition.

must do more than merely reassert its trial position.

(W Building Contracts § 30--Evidence. In an action to recover the balance allegedly due on a
constrction contract, substantial evidence supported

Though defense counsel, after reading into evidence part of plaintifts deposition testimony in response to
a certain question, objected to admission of the

a finding that the parties' contract was based on a
series of negotiations interpreted by their prior course of dealings, rather than on a firm bid by plaintiff,
where it was shown that the letter allegedly setting forth plaintifts firm bid arose out of an earlier request

omitted part on the ground that it revealed the
deponent's secret intent, and was conclusionary, not

responsive and not relevant, plaintifts counsel, on
redirect or at any other appropriate time during

for estimated costs that defendant required only for
budgetar reasons, that the letter was ignored after it was sent with respect to changes in the project and not accepted as a letter agreement by defendant until

plaintiffs case, would have been entitled to read the
objectionable portion where it had a bearing on the
testimony already read. (Code Civ. Proc" & 1854.)

See CaI.Jur.2d, Depositions, § 62; Am.Jur.2d.
Depositions and Discovery, & 108.

the project was almost completed, and that defendant would not have stopped the project had the letter not
been sent.

(( Depositions § 28--Use II Evidence-Admissibility--Part of Deposition.

Where defense counsel read part of plaintifts
deposition testimony into evidence, it was within the
trial judge's sound discretion to require defense

il Building Contracts § 35--Damages. In an action to recover the balance allegedly due

under a contract for constrction of a fair exhibit,
which plaintiff was to maintain and dismantle,

counsel to read all of plaintifts answer to a particular question to obviate immediately any false or distorted impression the jur might receive from a fragmentary introduction.

plaintiff could not use an alleged breach by defendant in refusing to permit plaintiff to dismantle the project
as a basis for recomputing the charge for
maintenance by using a markup formula, where
plaintiff had been paid in full for all maintenance

(( Accord and Satisfaction § 20--Instrctions.

Instrctions on accord and satisfaction correctly stated the law where the jury was required to
determine the existence of accord and satisfaction
fTom all the surrounding circumstances, both oral and

services under a separate agreement.

(W Building Contracts § 30--Evidence. In an action to recover the balance allegedly due on a
constrction contract for a fair exhibit, though

written, to decide whether there was a meeting of the
minds between the parties, and to find whether both

defendant showed that the initial correspondence
between the parties did not mention a markup on the design fee, the markup was allowable where the jury accepted plaintifts general theory that the markup was based on a prior course of dealing between the
parties and there was testimony that the markup was
to be applied at the end of

parties knew and intended a final settlement and
whether each knew and understood the settlement terms.
il Appeal and Error § 875(2), 1144(2)--Briefs-Pointing Out ErrorsPresumptions--Suffciency of

the job.

Evidence.
The appellate court presumes that the evidence

sustains each finding of fact, and appellant has the burden to demonstrate no substantial evidence supports challenged findings by setting forth in his

(1 Damages § 34--Recovery ofInterest. Under Civ. Code, & 3287, interest cannot be awarded

prior to judgment when the amount of damages
cannot be ascertained except on conflicting evidence. The rationale of the rule is that a defendant who does
not know the amount he owes and who cannot
ascertain it except by accord or judicial process

brief all material evidence, not merely his own
proofs.

cannot be in default for not paying.

(Q 2008 Thomson Reuters/West. No Claim to Orig. U.S. Govt. Works. 74

Case 5:07-cv-04808-JF
239 Cal.App.2d 664 239 Cal.App.2d 664,48 Cal.Rptr. 901 239 CaI.App.2d 664

Document 60-4

Filed 07/25/2008

Page 4 of 60
Page 3

the main issue dealing with the terms of the
Q. Damages § 42--Recovery of Interest-Computation--Building Contracts.
In an action to recover the balance allegedly due

agreement entered into by the parties. The jury
returned a verdict in favor of Conderback in the

amount indicated above. This appeal followed.

under a constrction contract, the allowance of interest prior to judgment was improper where plaintiff, who was presumably familiar with both its
own data and pricing formula, arrived at different results in computing the amount owed by defendant
and it was not clear that defendant was able to

FN I The special interrogatories were: "I. Did the parties agree between themselves in

July or August of 1962 as to the total

amount due Conderback, Inc. for the
erection of the building and the constrction and installation of displays in the building at the Seattle World's Fair; 2. Did the parties
agree between themselves in January, 1963,

ascertain the exact amount due fTom data submitted.

SUMMARY
APPEAL fTom a judgment of the Superior Court of
the City and County of San Francisco. Edward

as to all sums due Conderback for all work
done by Conderback, Inc. for Standard Oil at the Seattle World's Fair."
At all times here material, Conderback was a

Molkenbuhr, Judge. Modified and affrmed.
Action to recover the balance of money allegedly due
on a contract to construct and maintain a fair exhibit.
Judgment for plaintiff

California corporation engaged in the business of

modified and affrmed.

building advertising exhibits. FN2It had been organized in 1957 and had its principal place of
business in San Francisco. All of its capital stock was
owned by Marinus van der Woert and Edward
Railsback, its president and vice- president

COUNSEL

Pilsbur, Madison & Sutro, Francis R. Kirkham, Thomas E. Haven and Anthony P. Brown for
Defendant and Appellant. FitzSimmons & Petris, Edward R. FitzSimmons and Roderic Duncan for Plaintiff and Respondent.
SULLIV AN, P. 1.

respectively. Prior to the formation of Conderback
Railsback had been continuously employed in th~ exhibit business since 1935 and had personally done work for Standard since 1939. Van der Woert had worked in the exhibit display business since 1946 and during that time on exhibits for Standard. Both men had been employees together in the same exhibit building firm and were able to acquire some of the accounts, including that of Standard, when the firm ceased doing business.

Defendant Standard Oil Company of California
(Standard) appeals fTom a judgment entered upon a
jury verdict in favor of plaintiff Conderback,

Incorporated (Conderback) in the sum of

$154,374.45 with interest and costs.
The action was brought to recover the balance

FN2 Conderback suspended business
activities in July 1963, approximately two months after the commencement of this action on May 13, 1963. It was not a going
business at the time of

allegedly due on a contract for the constrction
designing, maintenance and dismantling of Standard'~

exhibit at the Seattle World's Fair in 1962. There
were two jur trials. On defendant's motion, the cause

triaL.

first proceeded to trial on the issues raised by the
separate defenses of account stated, accord and

satisfaction and compromise and release set forth

From the time they organized Conderback, Railsback and van der Woert had continuous business dealings
with the advertising department of Standard

*668 in defendant's answer and in the crosscomplaint. (Code Civ. Proc" & 597.)8y their negative answers to two special interrogatories submitted to them, FNI the jury in substance found that the parties

approximately 90 percent of the time with either M: A. Mattes, the advertising manager, or Jeff Kersh, an

employee in the department. From 1960 until it
suspended its operations, Conderback did over 300 jobs for Standard's advertising department. Among these were Standard's exhibits at the California State Fair, which Conderback built each year. Railsback

had not agreed between themselves at either of the times therein specified as to what was the total

amount then due Conderback. The cause then
proceeded to a second trial before a different jury on

(Q 2008 Thomson Reuters/West. No Claim to Orig. U.S. Govt. Works.
75

Case 5:07-cv-04808-JF
239 Cal.App.2d 664 239 Cal.App.2d 664, 48 Cal.Rptr. 901 239 CaI.App.2d 664

Document 60-4

Filed 07/25/2008

Page 5 of 60
Page 4

considered Standard to be one of Conderback's better accounts. However, prior to the Seattle World's Fair

latter's representatives that they could handle the job

job, the largest job *669 done by Conderback for
Standard was at the Portland Centennial involving an expenditure of about $40,000. The Seattle job was 10

since much of the work would be subcontracted.
Mattes was told that because Conderback was a small

company and the project was a large one,
Conderback would have to bil Standard in advance of any expenditures. Mattes selected Conderback to
do the job. There were no other competitive

times larger than any job Conderback had done for
anyone.

bidders. *670

In their years of working together on more than 300 jobs, there had never been any litigation between Conderback and Standard over the former's bilings.
According to their customary way of working

together, Conderback would "be notified that there was a job coming up and we had a certain budget to adhere to. We would then come back to the shop and design within this budget and endeavor to hold the
budget price that they had given us." An estimate

During these preliminary discussions Mattes advised Conderback that his department had authority for a budget of $230,000 for the Rfoject "plus a 10 per cent
discretionar factor." 40n July 6, 1961,
Conderback wrote to Mattes: "Confirming our
discussions ... we believe the exhibit as presented,

would be given through the use of a basic formula
but at the end of the job an adjustment would usually

including tentative individual displays, can be constrcted, with minor modifications, for the
$230,000.00 budget plus the 10% override." FN5This

be made based on the same formula to take care of
changes and additions. FN3This applied to so-called
"time and material" business as distinguished fTom

letter was signed by both van der Woert and
Railsback and underneath said signatures contained the language "Accepted By Standard Oil Company of
California" with space provided for signature and

"bid" business which was biled at the bid price.
There was testimony that Conderback's methods of
estimating and biling were discussed with Standard

date. Mattes acknowledged acceptance on the same date. Railsback testified that the letter-contract of

and that the latter was well aware of them. The
increase of the markup on subcontracted work (see
fu. 3, ante) had also been discussed with Standard

July 6, 1961, was entered into on the basis of the
budgeted amount. The next day, July 7, 1961,

Standard, through Mattes, issued its purchase order to

who had assured Conderback that this so- called agency markup should and could be used.
FN3 In general outline, Conderback's

Conderback for "Century 21 Exhibit-Seattle," covering exhibit building and displays, but silent as
to any specified price. FN6 At this time there were no

plans in existence.

standard formula which it had used over the years consisted of the following principal

FN4 This followed a letter of June 15, 1961,

factors: (a) the cost of labor plus a 100
percent markup plus an additional markup
for fringe benefits; (b) the cost of materials

fTom Conderback to Mattes offering an
"estimated quotation for budgeting purposes only" of$275,194.
FN5 The letter further stated that "any major changes fTom building model or additional

plus a 50 percent markup; (c) the cost of
subcontracted work plus a 10 percent

markup "as a rule," subsequently changed to
17.625 percent as an "agency markup"

mechanical displays, we are sure you wil
understand, wil be confirmed in writing and subject to negotiation" and presented a plan
for payment consisting of "a blanket

customarily paid agencies by Standard when they supervised subcontractors.

The Seattle World's Fair was scheduled to open on
April 21, 1962. In the spring of 1961, Railsback and

advance progress biling substantiated
within 30 days" to be made on the first of
each month, payment thereon on the 10th of

van der Woert met with Mattes, advertising manager
of Standard, to discuss the possibilty of having

the month, and "detailed billing for the
payment ... by the end of the month." There is testimony that these arrangements were made because Conderback did not have "the cash load to finance this job."

Conderback handle Standard's exhibit at the Fair.
Mattes inquired as to whether the project was beyond

the "scope" of Conderback and was assured by the

(Q 2008 Thomson Reuters/West. No Claim to Orig. U.S. Govt. Works.

76

Case 5:07-cv-04808-JF
239 Cal.App.2d 664 239 Cal.App.2d 664, 48 Cal.Rptr. 901 239 CaI.App.2d 664

Document 60-4

Filed 07/25/2008

Page 6 of 60
Page 5

total authorized expenditures of $307,518.12.

FN6 This purchase order is attached to and incorporated by reference in plaintifts

FN7Standard then requested a firm bid on the amount

amended complaint which alleges the
delivery thereof on July 7, 1961, defendant's

required to finish the job. In reply Conderback on February 26, 1962, sent Standard "our firm bid" for
the Century 21 Exhibit in the sum of $351,587.20

promise to pay for labor, material and
expenses, plus amounts for overhead and

based on the detailed breakdown furnished in its letter of February 12, 1962. FN8Standard accepted and

profit, and the delivery on August 10, 1961, of a modification (request for adjustment) of such order. Plaintifts amended complaint is based solely upon such purchase order and modification.
Conderback started work almost immediately. To

confirmed this "firm bid" by its letter of March 23,
1962. FN9*672

FN7 The letter stated in part: "At the
inception of this project, we offered our
original estimate to you for $275,000.00.

This was subsequently formalized in writing
for $253,000.00 and we undertook the
project. Since starting the project there has

design Standard's building at the Fair, it retained one Tepper who was to work directly with Railsback and

van der W oert, but who soon "bypassed" them at Mattes' request and worked with the latter who approved the building and all exhibits before Conderback saw them. Conderback also retained an
architect and an engineer and entered into a number
of subcontracts for the performance of the

been a series of changes and additions to the
project. To date we have written and verbal
approval for the following changes and additions" in the amount of $307,518.12 including "Formal estimate" of $253,000

constrction work. The subcontractors biled
Conderback for the work done and the latter in tur
eventually biled Standard for the same *671 amounts

(apparently $230,000 plus the i 0 percent override). It concluded: "The changes and additions listed on the above and preceding
pages have materially increased our original

plus a markup for the supervision of the work
involved.
The concept of the Century 21 Exhibit as designed

estimate to you for the entire exhibit. It is
hoped that these changes and additions can

be negotiated and approved as soon as
within the limits of the initial budget of $230,000
soon started changing and continued to change up to and even after the Fair opened in April 1962. These changes were made principally by Mattes. At first
possible so that our delivery date will not be impaired." (Italics added.)

FN8 The letter concluded: "The price is
based on designs and details as planned as
o/February 12, 1962. Any major changes or
additions requested to the project wil be

Conderback did not challenge his decisions but
finally at the beginning of 1962 the matter "was so
far out of hand that ... (Conderback) could never

catch up," since it had no control of the budget or the design or the coordination between them. When
Railsback raised some question about completing on time the work as modified, Mattes replied "Let's get

negotiated and confirmed to you in writing before expense is incurred." (Italics added.)

the job done, we wil worr about that later."
At about this time-February i

FN9 This is made the basis of Standard's first affrmative defense and of all four
counts of its cross-comp laint.

962-the parties realized

that the job had already cost more than the initial
budget figure of $230,000. Standard thereupon

The Fair exhibit opened on time. During the next two

requested fTom Conderback a written estimate of the
total cost of the job. According to Standard's

months, Standard made several requests for a final billing. On June 15, 1962, Conderback's van der
Woert wrote Mattes attaching "our breakdown sheets covering expenses incurred by our Company to June
i, 1962." Explaining "over-budget expenditures," FNJO Conderback requested an opportnity to meet

Whitmore, this was required for budgetary reasons. In compliance with the request, Conderback wrote to
Standard on February 12, 1962, giving an itemized breakdown of costs and noting that to date there were

with Mattes and "to negotiate the outcome of these

expenditures." "Actual costs as of 6-1-62" were

(Q 2008 Thomson Reuters/West. No Claim to Orig. U.S. Govt. Works. 77

Case 5:07-cv-04808-JF
239 Cal.App.2d 664
239 Cal.App.2d 664, 48 Cal.Rptr. 90 I
239 Cal.App.2d 664

Document 60-4

Filed 07/25/2008

Page 7 of 60
Page 6

scheduled at $520,134.17 of which $344,465.31 was noted as "paid." Conderback requested payment "at
this time" of $137,405.49, which did not include

FNII Attached schedules showed

balance of maintenance costs, dismantling costs or
State of

Washington sales tax.
FN I 0 This was attibuted to: (1)

$418,759.32 as of July 16, 1962, plus the "Additional Requested" and invoiced of
$39,848.87 producing a grand total of $458,608.19, of which $411,259.32 had

been paid.

Conderback's inability to coordinate design
with estimated budget; (2) numerous

changes to exhibits, art and copy; (3)
necessity of quoting in "our February 12,

FN 12 This letter to Mattes fTom van der Woert was embraced within the first special
interrogatory at the first trial (see fu. I,

1962 budget quotation" on many exhibits not then in final design concept.
There ensued a number of meetings between the representatives of the parties. In the meantime

ante). It read: "Regarding our invoice

21000-11, dated July 26, 1962, the amount wil cover final billng for the erection of the
building and constrction and installation of the displays within the exhibit building. The
amount does not include maintenance,
dismantling, sales tax, additional design

Conderback was rceiving invoices after June I-the
cutoff date of their June 15 billng. Standard

indicated that it was not wiling to discuss these latter
invoices at the time. On June 30, 1962, Conderback's

fees, nor additional changes to the exhibit
since June I, 1962." (Italics added.) Andrew Leong, offce manager and

van der Woert wrote to Mattes attaching "schedules
covering costs... to June i, 1962, maintenance costs

accountant for Conderback, gave the
following explanation at the first trial as to how the letter came to be written: On
August 2, 1962, Standard's Whitmore

for the exhibit to October 26, 1962, and costs

incurred during the month of June" but holding in abeyance design fees and sales tax. Total actual costs
to June I, 1962, were therein scheduled at

telephoned him and requested such a letter,

$525,134.17, of which the same amount was noted
paid as in the June 15 schedule and $109,762.23 was
number of

even dictating the first sentence. Whitmore

the "additional requested." The paries agreed upon a the items for which Conderback thereupon
invoiced Standard on July II, 1962, in the sum of

gave no indication that this was the
agreement of the principals and at the time
both Railsback and van der Woert were out of the offce. Leong had the letter tyed and

$66,794.0 I and was paid. On July 26, 1962,

Conderback again invoiced Standard for specified
items totallng $39,848.87. FN11The invoice was not

placed on van der Woert's desk for
signature. Van der Woert then signed the
of

designated a final biling. Eventually Standard agreed
to pay the invoice. Standard's Whitmore testified at
the first trial that he wanted a reassurance fTom

letter assuming that it referred to the finality that particular biling.

Nevertheless, after these events upon which Standard
based its claim of final settlement, said defendant

Conderback that it was the final payment on the

building and exhibits. Railsback on the other hand testified that he attended all the meetings, that he never heard of such a statement and that it was not a condition of the payment of either the July II or the

paid $1,871.80 to Conderback, most of which

July 26 invoice. Defendant's claim is that it
specifically conditioned its agreement to pay the July
26 invoice on the receipt of an *673 assurance fTom

represented charges for work done prior to May 28, 1962. Additionally, on September 14, 1962, van der Woert wrote to Mattes "listing the developments to
date regarding the following unpaid accounts."

FNI3Eventually in the fall of 1962, Conderback settled

Conderback that this was the final biling and that
such assurance was received in the form of
Conderback's letter of August 2, 1962. FNI2Standard

its obligations with the designer and its sales tax
liabilty to the State of Washington. Although the

paid the full amount of the July 26 invoice. There

was no indication on the check that it was in final payment.

parties differ as to the basic contract under which the work was being done, they appear to agree that under either of their respective theories, the total amount to
be paid by Standard to Conderback could not be

arrived at until the above two liabilities had been

(Q 2008 Thomson Reuters/West. No Claim to Orig. U.S. Govt. Works. 78

Case 5:07-cv-04808-JF
239 Cal.App.2d 664

Document 60-4

Filed 07/25/2008

Page 8 of 60
Page 7

239 Cal.App.2d 664,48 Cal.Rptr. 901
239 CaI.App.2d 664

determined.

had decided to defer discussion with Standard of the application "of our formula to the costs that we had
incurre . ... ai s ac an van er W oert, with

FN 13 This letter referred to three
subcontractors and Tepper, the designer. It concluded by stating that Conderback had
never included the amounts fTom the first

. d" FNI7R .1 b k d d .

the help of an outside auditor, then started "to re-

audit this job on a complete and thorough basis" in

the latter part of January and the first part of
February. In early March 1963, they contacted Mattes and asked for an opportnity to present their final
bilL. A meeting was held at which Conderback

three to Standard "in our final billing. We feel that if the explanations are satisfactory,
we wil negotiate with them."
In December 1962, van der Woert telephoned

submitted and left with Standard for its examination
all of the work sheets of the reaudit together with

Whitmore, advising that there were some additional
bils. FNI40n January *674 9, 1963, Conderback sent
a list totallng $25,878.21, including the sales tax

their supporting data. Other discussions followed

with Standard's representatives. There was testimony
that the manager of Standard's purchase and stores

liability of $19,842.11 and thus representing

departent indicated that after the $230,000 limit of

additional items of $6,036.10. FNI5Whitmore testified

the original purchase order had been passed, the job
should have been handled on a cost-plus-:ixed-fee

that he telephoned van der Woert and told him the
items Standard would pay; that Conderback then sent an invoice therefor which Standard returned because

basis. Conderback indicated it merely wanted its
existing formula applied. At one point, Standard's

it did not contain the words "final biling," and that on January 21, 1963, Conderback sent an acceptable
invoice. FNl6Standard paid the sum of$2,025.13.

representatives offered a 17.625 percent markup on *675 some of the overall costs of the job which would give Conderback an additional $7,000. Upon
its refusal, Mattes telephoned Railsback and "offered

FNI4 According to Whitmore, whose

testimony is relied upon by both parties on this point, van der Woert said there were a number of items previously understood not to be Standard's responsibilty which van der
Woert had not been able to negotiate with
subcontractors in Seattle. He inquired whether Whitmore "would meet with him
and discuss whether or not Standard would

a different formula that amounted to $28,000" which was also rejected. Conderback insisted that it wanted its existing formula, which, according to Railsback's

testimony, "would have been in the vicinity of
$664,000." Conderback then demanded payment of
said sum less approximately $494,000 theretofore paid. The demand was rejected and the present action
commenced. FNl8

be wiling to pick up some of these costs
because he was going to be stuck with them, and I said yes, I would meet with him, ..." After the meeting, Whitmore requested van
der Woert to send a list of

FN 17 According to plaintifts contentions

made at the pretrial conference and
plaintifts evidence at trial, the sum to be
paid plaintifffor the completion of

the entire

the items.

job was to be computed by the following formula: (1) the amount paid by plaintiff to
its subcontractors plus a 17.625 percent

FNI5 The list not in the form of an invoice
was captioned: "Standard Oil Company
Final Billng Century 21 World's Fair."

markup for supervision; (2) plaintifts own
labor costs plus 100 percent markup, plus
19.8 percent of said labor costs to cover

FNI6 In the sum of $3,110.19 (later
adjusted) and captioned "Re: Standard Oil Company of California final billing, Century 21, World's Fair."

fTinge benefits, plus an additional 10 percent

on the total sum; (3) plaintifts own cost of materials plus a markup of 50 percent; (4)

miscellaneous direct expenditures, e.g.,
fTeight and telephone, plus a 10 percent

By this time, Conderback's Leong, who had run an audit on the Fair job, had left the company. Railsback

had been hospitalized with a serious ilness unti
January 3, 1963, and the two Conderback officers

markup; and (5) expenses of plaintifts offcers while in Seattle at $200 a day each (compare customary formula of plaintiff as outlined in fu. 3, ante). Railsback testified that by agreement between the parties, the

(Q 2008 Thomson Reuters/West. No Claim to Orig. U.S. Govt. Works.

79

Case 5:07-cv-04808-JF
239 Cal.App.2d 664

Document 60-4

Filed 07/25/2008

Page 9 of 60
Page 8

239 Cal.App.2d 664, 48 Cal.Rptr. 90 I

239 CaI.App.2d 664

above formula was to be applied to the
contract entered into.

(citation), in a proceeding to enforce an arbitration award (citation), or even on
appeaL. (Citation.)" (Lewis & Oueen v. N M
Ball Sons (1957) 48 Cal.2d 141, 148 (308

FN 18 On May 31, 1963, the amended
complaint prayed for judgment in the sum of $171,026.80 ($665,400.85 less $494,374.05
paid).
Standard's first attack is aimed at the very heart of

P.2d 7131.
Section 7028 of the Business and Professions Code
FN20 makes it "unlawful for any person to engage in

the

the business or act *676 in the capacity of a

judgment. It contends that Conderback could not bring or maintain the present action since it was
acting in the capacity of a contractor in California

contractor within this State without having a license therefor, ..." (Italics added.) Section 7030 at all times
material herein provided: FN21 "Any person who acts

without being duly licensed. FNl9In substance

defendant argues that all negotiations and
correspondence leading up to the contract between

in the capacity of a contractor without a license is guilty of a misdemeanor." (Italics added.) Section
7026 of said code defines contractor as follows: "The

the parties, the contractual arrangements themselves and certain contracts between Conderback and the designer, architect and engineer of the project all took
place in San Francisco, where the principals herein

term contractor for the purposes of this chapter is synonymous with the term 'builder' and, within the meaning of this chapter, a contractor is any person,

who undertakes to or offers to undertake to or
purports to have the capacity to undertake to or
submit a bid to, or does himself or by or through

and the other persons mentioned all had their respective offces. At the same time Standard admits, as it must, that the building which was the subject of
the project was intended to be, and in fact was,

others, construct, ... or demolish any building, ... or
other strcture, project, development or improvement, or to do any part thereof, including the erection of scaffolding or other strctues or works in

constrcted outside of the State of California and in the State of Washington and has conceded both in its briefs and at oral argument that its contention is confined to and is predicated solely upon those acts

connection therewith. The term contractor includes subcontractor and specialty contractor." (Italics
added.)
FN20 Hereafter unless otherwise indicated

of Conderback which occurred in the State of
California.
FN 19 This issue was not raised by the

all section references are to the Business and
Professions Code.

pleadings or designated as an issue in

dispute in the interlocutory pretrial
conference order made before the first triaL.

At the start of the first trial it was asserted in

FN21 Section 7030 was repealed in 1963
and in substance incorporated within section 7028, which was amended at the same time.

a trial memorandum fied by defendant. It
was thereafter raised in defendant's motion for a judgment notwithstanding the verdict

(necessarily made after the second trial) upon denial of which the court stated: "It is my opinion and the Court finds that plaintiff
did not have to possess a California

Section 7031 provides: "No person engaged in the
business or acting in the capacity of a contractor,

may bring or maintain any action in any court of this
State for the collection of compensation for the performance of any act or contract for which a

Contractor's license for the performance of

the work in the State of Washington; ..." Although the issue was timely raised below, "It is immaterial that the parties, whether by inadvertence or consent, even at the trial do not raise the issue. The court may do so of its own motion when the testimony produces evidence of ilegality. (Citation.) It is not too late to raise the issue on motion for new trial

license is required by this chapter without alleging and proving that he was a duly licensed contractor at

all times during the performance of such act or
contract." (Italics added.)

Conderback concedes, and the record shows, that it was not a licensed contractor in California at any
time. Its basic position is that the California

Contractors' License Law (Bus. & Prof. Code, &S

(Q 2008 Thomson Reuters/West. No Claim to Orig. U.S. Govt. Works.

80

Case 5:07-cv-04808-JF
239 Cal.App.2d 664

Document 60-4

Filed 07/25/2008

Page 10 of 60
Page 9

239 Cal.App.2d 664, 48 Cal.Rptr. 901 239 Cal.App.2d 664

7000-7145) does not extend to construction outside
of California although it has not squarely met

purose of the Contractors' License Law have been

defendant's argument that Conderback's acts within the state were done in the capacity of a contractor so

expressed in other cases. (See Loving & Evans v. Blick (1949) 33 Cal.2d 603, 609 (204 P.2d 23);
Franklin v. Nat C. Goldstone Agencv (1949) 33

as to make the law operative against it. Neither of the

parties has cited, nor have we found, any case
involving a similar question.

Ca1.2d 628, 632 (204 P.2d 371; Fraenkel v. Bank of
America ((953) 40 Ca1.2d 845, 848 (256 P.2d 5691;
Bowline v. Gries (1950) 97 Cal.App.2d 741, 743 (il

It is clear at the outset, as indeed defendant seems to concede, that where a state in the proper exercise of its police power enacts statutes, such as those now
before us, regulating a business and requiring a

license to be obtained by anyone engaged therein (Rilev v. Chambers (1919) 181 Cal. 589, 592-593
(185 P. 855, 8 A.L.R. 4181; Drummev v. State Board
of Funeral Directors (1939) 13 Cal.2d 75, 79 (87
P.2d 848); In re Fuller (1940) 15 Cal.2d 425, 428-

P.2d 8061; Bierman v. Hazstrom Constr. Co. (1959) 176 Ca1.App.2d 77 1. 775 (i Ca1.Rptr. 826,82 A.L.R. 14241; G & P Electric Co. V. Dumont Constr. Co. (1961) 194 Cal.App.2d 868, 879-880 (15 Ca1.Rptr. 7571; Steinbrenner v. J A. Waterbury Constr. Co. (1963) 212 Cal.App.2d 661. 666 (28 Cal.Rptr. 2041.)
In Bowline, supra, the cour said: "The underlying

431 (i 02 P.2d 3211:*677 Rosenblatt v. California State Board of Pharmacy (1945) 69 Cal.App.2d 69.
72-73 (158 P.2d 199); Dovle v. Board of Barber

purpose of the contractor's license law is to protect the general public respecting strctural improvements to real propert wherein special skill, training and ability are required." (97 Ca1.App.2d 741, 743.) In

Fraenkel, supra, it *678 was said: "That law was
enacted for the safety and protection of the public

Examiners (1963) 219 Ca1.App.2d 504, 509-510 Ql Cal.Rptr. 3491), the exercise of this regulatory power
is necessarily limited to activities carried on within

against imposition by persons inexperienced in

contracting work, and for the prevention of
fTaudulent acts by contractors resulting in loss to

the territorial limits of such state. (See generally, 53 C.J.S., Licenses, § 6, pp. 464-469; 33 AmJur.,
Licenses, §§ 7-8, pp. 330-332.) Therefore it seems to

subcontractors, materialmen, employees, and owners
of strctues. (Citations.)" (40 Ca1.2d at p. 848.) The

same objective of promoting the "safety and
protection of the public" by prohibiting

us that the purose of any given regulatory statute

must be examined in the perspective of such
constitutional principle.

In the much cited case of Howard v. State of
California (1948) 85 Ca1.App.2d 361, 365-366(163

inexperienced persons from engaging in contracting work had been emphasized by the Supreme Court in its previous decisions in Gatti V. Highland Park Builders. Inc. (1946) 27 Cal.2d 687, 690 (166 P.2d
2651 and Loving & Evans V. Blick, supra.

P.2d Ii), it was said: "The purpose of the act is to
guard the public against the consequences of

Examined in the context of these cases, the concern
for the public inherent in the statute centers upon

incompetent workmanship, imposition and deception.
In order to procure a license an applicant is required

to make a showing of good character and of a degree of experience and general knowledge of the building, health, safety and lien laws of this state, and of the
rudimentary administrative principles of the

building done in California and practices of the building trades in this state (Howard V. State of
California. supra. 85 Ca1.App.2d 361, 366): it focuses upon all those who may be involved in such
building-subcontractors, materialmen, employees and

contracting business, as the board deems necessary
for the safety and protection of the public. (§§ 7068,

owners (Fraenkel V. Bank or America. Sl/lra. 40
Cal.2d 845. 848): and it is thus the motivating

7069.) Wilful breaches of contract and other wilful and fTaudulent acts, causing material injury to another, furnish grounds for suspension or revocation of a license. (§§ 7109-7119.) ... The statute in
question expresses the judgment of the Legislature
that the prospect of having to pay damages for

influence in the policing of such work and practices for the protection of all concerned. Thus, as the above

authorities point out, the law requires that an
applicant for a contractor's license "show such degree of knowledge and experience in the classification applied for, and such general knowledge of the building, safety, health and lien laws of the State and
of the administrative principles of the contracting

incompetence, fTaud and breach of contract, is not an

adequate deterrent from wrongful practices in the
building trades." Substantially the same views on the

and protection of

business as the board deems necessary for the safety the public" (italics added; § 7068 as

(Q 2008 Thomson Reuters/West. No Claim to Orig. U.S. Govt. Works.
81

Case 5:07-cv-04808-JF
239 Cal.App.2d 664

Document 60-4

Filed 07/25/2008

Page 11 of 60
Page i 0

239 Cal.App.2d 664, 48 Cal.Rptr. 901 239 CaI.App.2d 664

amended in 1963) and makes detailed provision for
the investigation of the acts of contractors and for

reasonably intended that since they were subject to the Contractors' License Law, there was thereupon
imposed upon the Contractors' State License Board

disciplinary proceedings in connection therewith. (§§ 7090-7124.1.) Among the causes and grounds for
discipline (§§ 7107-7120) is the "Wilful or
deliberate disregard and violation of the building
laws of the state, or of any political subdivision

(&& 7000; 7011-7013; 7090-7098) the insuperable burden of investigating and passing upon the building
practices of such persons all over the world.

thereof, or of the safety laws or labor laws or
compensation insurance laws or Unemployment

Basically, Conderback is in no different position.

Insurance Code of the state, or violation by any
licensee of any provision of the Health and Safety

(D We hold that where, as in the instant case, a
person offers, undertakes or contracts in this state to constrct or demolish a building, project or other

Code or Water Code, ..." (Italics added.) (§ 7110 as
amended in 1965.)

improvement located outside of California, such
person does not thereby become one engaged in the
business or acting in the capacity of a contractor

In our view, it was not the purpose of the Legislature in enacting the Contractors' License Law to bring within its ambit a person who, not otherwise engaged
in the contracting business in California, merely

within this state so as to be subject to the Contractors'

License Law. Nor does the mere fact that, as here,
such person's principal place of business is in

enters into negotiations or contracts in this state for a

California necessarily compel a different conclusion.

constrction work or project in another state or
foreign countr. The purose of the law is to*679
protect the public in California against incompetent

Defendant refers us to *680Lewis & Oueen v. N. M
Ball Sons (1957) 48 Cal.2d 141 (308 P.2d 7131. as

and dishonest persons who do, or offer, undertake or contract to do, building in this state or represent that they have the capacity for such work in California.
This objective of the law is insured by inspecting

authority for its proposition that the site of the actual constrction work is immaterial since plaintiff did

much of the administrative work for the Seattle
project in San Francisco. But defendant takes the

their building practices in this state and holding them
accountable for a wilful disregard of California

emphasized language of Lewis & Queen out of its context. That case involved physical work of
constrction within California and the point of the

building and other laws. The above purose and
objective are not subserved by making subject to the
license law those persons who do not contemplate

language relied upon by defendant was that in respect to such work it was intended by the Legislature that

any construction work in California but merely enter into negotiations and contracts here for constrction work to be done outside the jurisdiction of California and beyond the reach of its building laws. By way of

the parter-contractor who had charge of the
administrative functions of the business should

qualify under the law just as much as the parter-

contractor who supervised the actual work of
constrction. There is nothing inconsistent between

ilustration, the legislative purpose would not be
furthered in the instant case if we were to hold that a
contractor duly licensed by the State of Washington would be required to have a California contractor's license before he could meet, negotiate and contract

this holding and the conclusion we have reached

herein.
Standard next contends that according to the

with Standard at the latter's offces in San Francisco
for the construction of Standard's exhibit at the

undisputed evidence the parties after the completion
of the job reached an agreement as to the amounts

World's Fair in Seattle. We ventue to say that many corporations of national and international size and scope of operations with executive and administrative
offces located in this state negotiate and contract
here for the constrction of buildings and projects in

due Conderback which Standard promptly paid and that Conderback is bound by "the account stated by it and by the accord and satisfaction reached." It wil be

other states and in foreign countries. It could not have
been reasonably intended by the Legislature that alI

persons thus dealing with such corporations would be
required to qualify for and obtain a California

recalled that these and other special defenses were the subject of the first trial at which a jury returned a verdict rejecting them. It is now urged that there is no evidence supportive of such verdict and that this case is controlIed by Potter v. Pacific Coast Lumber Co,
(I

951) 37 Cal.2d 592 r234 P.2d 161 and Creighton v.

contractor's license. Nor could it have been

Gregory (1904) 142 Ca1. 34 (75 P. 569). Although

(Q 2008 Thomson Reuters/West. No Claim to Orig. U.S. Govt. Works.
82

Case 5:07-cv-04808-JF
239 Cal.App.2d 664 239 Cal.App.2d 664,48 Cal.Rptr. 901
239 Cal.App.2d 664

Document 60-4

Filed 07/25/2008

Page 12 of 60
Page Ii

Standard broadly states that aU three of its special defenses are established on the record, it confines its argument and authorities to the defense of accord and
satisfaction.
This defense is defined by Civil Code sections 1521

Conderback's witnesses, Standard's Whitmore

dictated the crucial opening sentence of the letter to Conderback's offce manager giving no explanation that this understanding had been reached between the
parties and thereafter van der Woert signed the letter
on the assumption that it referred to the finality of

the

and 1523: "An accord is an agreement to accept, in
extinction of an obligation, something different fTom
or less than that to which the person agreeing to

particular biling. FN22Standard's check did not

indicate it was tendered in full and final payment.

accept is entitled." "Acceptance, by the creditor, of
the consideration of an accord extinguishes the

FN22 Conderback's invoice of July 26,
1962, set forth a column of 16 items, with

obligation, and is called satisfaction." (2) The question whether an agreement amounts to an accord and satisfaction is one of the intention of the paries and is therefore a question of fact. (LafJpGifford Co. v. Muscov Water Co. (1913) 166 CaI. 25,
27 (134 P. 9891; Dietl v. Heisler (961) 188

amounts of biling for only six items, the
columnar spaces opposite the others being

left blank. The six items biled totalled
$39,848.87. Attached to the invoice are

detailed schedules covering the same 16
items with a series of columns headed

"Amount as of 7/16/62," "Additional
Requested," "Total," "Amount Paid," "Amount Requested," "Amount to be
Biled." The invoiced amount of $39,838.87

Cal.App.2d 358, 363 rlO Cal.Rptr. 5871; DunlafJ V. Bellah (1960) 184 Cal.App.2d 579, 585 (7 CaI.Rptr. 7661; Moore V. Satir (949) 92 Cal.App.2d 809, 812

(207 P.2d 8351; D. E. Sanford Co. v. Corv Glass etc.
Co. (948) 85 Cal.App.2d 724, 730 (194 P.2d 1271;
*681 Owens v. Noble (946) 77 Cal.App.2d 209, 215

appears as a footing in the columns "Additional Requested" and "Amount

Requested."

(175 P.2d 2411:Caroenter v. Pacific States S. & L.
Co. (1937) 19 Cal.App.2d 263, 268 r64 P.2d 1102,66

P.2d 6561; Everhardy V. Union Finance Co. (1931)

115 Cal.App. 460, 466 rr P.2d 10241.) (l) Unless there is a lack of evidence to support the finding of the trier offact, its determination of this issue wil not
be disturbed on appeaL. (Everhardy V. Union Finance
Co., supra;Kinkle V. Fruit Growers SUfJplv Co.

A second and more significant consideration however is the fundamental issue raised by the parties as to the exact nature of their contractual arrangements. As we
have set forth above, Standard's evidence was

directed to establishing its central thesis that the work was being done on the basis of Conderback's firm bid

of February 12, 1962, plus the costs of *682 any
changes or additions thereafter occurring to be
negotiated between the parties. Conderback's

, 112 (146 P.2d 81; Moore V. Satir, supra;Dunlap v. Bellah, supra.)
(1944) 63 CaI.App.2d 102

(1) In the instant case, the evidence pertinent to the
events and transactions allegedly constituting the

evidence, on the other hand, was directed to supporting its position that in accordance with the
customary business methods employed by the parties
over a long period of time, Standard had given

accord and satisfaction was in conflct. In the first
place, as we have seen, Standard's witnesses

Conderback for the Fair Exhibit what amounted to an
"open-ended" purchase order to which Conderback's

maintained that it agreed to pay the invoice of July 26, 1962, only on condition it receive "reassurance" that it was the final payment on the building and

customary formula was to be applied in calculating
the amount due. (See fus. 3, 17, ante.)Thus the

exhibits and that such reassurance was given by
Conderback in its letter of August 2, 1962 (see fu. 12,
ante). On the other hand, Conderback's witness

divergent theories of case advanced by the evidence
of the respective parties pervade and affect the

subsidiary issue of accord and satisfaction.
Conderback's evidence on the main issue of the case, to the effect that the firm bid of February 12, 1962, had been superseded by the many additions and changes and that Conderback was to be compensated under an open-ended purchase order by application of a pricing formula, establishes that aU expenses were

Railsback testified that he attended aU of the
meetings out of which the accord is supposed to have arisen and that there was no condition affxed to the payment of the invoice. Conderback also introduced
testimony explaining how the letter of August 2

happened to be sent (see fu. 12, ante). According to

(Q 2008 Thomson Reuters/West. No Claim to Orig. U.S. Govt. Works.
83

Case 5:07-cv-04808-JF
239 Cal.App.2d 664

Document 60-4

Filed 07/25/2008

Page 13 of 60
Page 12

239 Cal.App.2d 664, 48 Cal.Rptr. 90 I
239 Cal.App.2d 664

to be computed and biled fTom time to time and

necessarily supports the inference that a biling for an "additional requested" amount was not a final billing for the project as a whole.

don't think that they should get into any offers made by Standard." Plaintifts counsel stated that "this isn't a settlement negotiation" and "We are not asking for
offers." The court observed that in considering

Events transpiring after the alleged accord and satisfaction of July and August 1962 fall into the
same pattern of plaintifts evidence. As to these, there was evidence that in September 1962 Standard made

whether or not there was a settlement in July or August 1962, the jury could consider what transpired thereafter and overrled the objection. The witness
thereupon testified as set forth in the footnote. FN23 At

the second trial the same evidence was admitted over
defendant's objection that it was "an offer of

a further payment to Conderback; that in the same month the latter sent Standard a list of developments relating to unpaid accounts; that in December 1962
the parties had discussions in connection with

settlement." Plaintifts counsel stated "This isn't an

offer of settlement. This is introduction now of a
different formula after years of dealing." Standard

additional bils, quite apart fTom the tax liabilty; and
that Standard made a payment in February 1963.
From all of the foregoing evidence introduced by

now claims it was prejudiced before both juries.

Conderback, the jury could reasonably conclude that
the parties did not agree that the July 26 invoice was

FN23 Railsback testified: "In the meeting the day before they had offered us-this group of nine people, as I recall, had offered
us a 17.625 markup on the over-alI cost of

to be a final biling and that its payment by Standard was to constitute full payment for the building and exhibits, but could conclude that the various items of

the job. This amounted to, well, none on the

overall costs on some balance of it. It
amounted to $7,000, which we refused. Mr. Mattes calIed the ensuing morning, called

expense were to be biled fTom time to time until Conderback, in accordance with the parties'
customary practices in the past, had been paid for all costs of the project.

me personalIy and offered a different
formula that amounted to $28,000, which I also refused."

The Potter and Creighton cases relied upon by defendant do not declare rules of law different from
those set forth by us herein. They are distinguishable

The rule is well established that offers in compromise
are not admissible in evidence as such. (Peovle ex

rel. Devt. of Public Works v. Forster (1962) 58
Cal.2d 257.263 (23 Cal.Rptr. 582,373 P.2d 6301 and

on their own facts from the case before us and hold that upon evidence which is neither in conflct nor
reasonably susceptible of conflcting inferences the

cases cited therein; Code Civ. Proc., & 2078; 4
Wigmore on Evidence (3d ed.) § 1061, p. 28; Witkin,
Cal. Evidence (1958) p. 182; McCormick on

respective creditors therein knew or of necessIty*683

must have known that payment was in fulI
satisfaction of all amounts claimed to be due.

Evidence, pp. 157-158,539.)

We turn to consider defendant's three claims of error in the admission of evidence.
(~) i. At the first trial on the separate defenses

As we think the trial judge properly held at the first trial, evidence of discussions between the parties in 1963 was relevant on the issue then before the jury whether there had been an accord (see fu. i, ante) of

and satisfaction between them in July or August

Railsback testified on direct examination concerning
discussions had with Mattes in the spring of 1963

1962. (See *684Owens v. Noble. suvra. 77
Cal.App.2d 209, 215.) Plaintifts counsel there stated that his purpose in introducing such evidence was not to elicit evidence of offers in compromise. At no time
did defendant's counsel request an instrction to the

about Conderback's most recent biling and the

formula applicable to it. Railsback was then asked if Mattes approached him with a new formula of his

own to which defendant's counsel interposed that
"possibly we are getting into objectionable area" and "whether or not Standard offered to help these people

jury limiting the purpose for which the evidence

might be considered. (See Hatfield v. Lev Brothers
(1941) 18 Ca1.2d 798. 8 io (117 P .2d 8411; Daf!fett v.
Atchison. T. & s. F. Rv. Co. (I957) 48 Ca1.2d 655,

out to a certain extent in April would be a matter which would be excluded fTom evidence" and "I

665-666 (313 P.2d 5571.) In any event, the first trial

(Q 2008 Thomson Reuters/West. No Claim to Orig. U.S. Govt. Works.

84

Case 5:07-cv-04808-JF
239 Cal.App.2d 664

Document 60-4

Filed 07/25/2008

Page 14 of 60
Page 13

239 Cal.App.2d 664, 48 Cal.Rptr. 901 239 CaI.App.2d 664

was limited to the issues raised by the special

defenses. In our view, the admission of the evidence at the first trial was not error.
(2) The problem at the second trial is a more diffcult one since, as we have said, plaintifts theory of case
was that it was to be compensated according to a

rather interpreted them by showing the true intent of
the parties and giving the instrments a meaning to

which they were reasonably susceptible. It was
admissible for such purpose. (Parsons v. Bristol
DevelolJment Co. (1965) 62 Cal.2d 86 i. 865 (44

pricing formula and in line with customary practices in the past. In our view, this theory did not justify the

Cal.Rptr. 767,402 P.2d 8391; Hulse V. Juilard Fancv Foods Co. (1964) 61 Cal.2d 571. 573 r39 Cal.Rptr. 529. 394 P.2d 651; Coast Bank V. Minderhout (1964)

admission of what were apparently offers to compromise the then pending dispute and the
admission of such evidence was error.

61 Cal.2d 31 i. 3 15 (38 Cal.Rptr. 505. 392 P.2d 2651; Imbach v. Schultz (1962) 58 Cal.2d 858, 860 (27 Cal.Rptr. 160, 377 P.2d 272); Code Civ. Proc" &
i 860; Rest., Contracts. & 235(d).)

However, even assuming that the admission of the
evidence at the first trial was error, neither such error

(2) 3. At the first trial defendant's counsel read into evidence portions of the testimony of Railsback given
at a deposition taken by defendant in which the

nor the error at the second trial appears to us to be
prejudicial in the light of the entire record. (PeolJle v.

witness was asked to explain alleged discrepancies in
costs in various documents already before the jury. Railsback testified that he could not explain in detail without records but could explain "in generalities." In
the course of this explanation he stated in the

Watson (1956) 46 Cal.2d 818, 836 (299 P.2d 2431.)

(1) 2. At the first trial evidence was admitted, over defendant's objection, to the effect that prior to 1960 plaintiff had lost money on several jobs it had done
for Standard and that in some cases Standard paid

deposition that because of Conderback's need for

funds, "we would take and let go, things we were
negotiating at that moment ... to get some money that would keep us going until next time. Having had past
experience, long years of past experience with

plaintiff more money on being apprised of the loss. This evidence of a course of dealing in the past was offered to show the contractual arrangements in the instant matter and to negate the existence of a firm

Standard I felt sure this would be adjusted fairly and
squarely in the ultimate negotiations that followed
jobs of

bid contract. Evidence of other similar contracts
between the same parties establishing a custom, habit or continuing course of business dealing is admissible as showing that on a particular occasion the thing was

this nature."

done as usuaL. (Roberts Distributinz Co. v. KayeHalbert Corp. (1954) 126 Cal.App.2d 664, 676 (272

P.2d 8861: 2 Wigmore, op. cit., § 377, p. 307;
McCormick, op. cit., p. 347; 31A C,J.S., Evidence, §
180, pp. 457-458.) We cannot agree with Standard

The deposition testimony then continued: "Q. (By defendant's counsel) And you say you prepared this thing and let go of certain sums, is that right? A. Yes, that is right."

that this rule became inapplicable in the instant case

because the Seattle project was much larger than
previous jobs. The record indicates that in respect to

Upon the request of plaintifts counsel and the order of the court, defendant's counsel was then required, over his objection, to read the rest of the last answer
as set forth in the footnote. FN24

the Seattle job Standard conducted its initial
discussions and solicited estimates in line with

projected budgeting in substantially the same manner
as it had on previous occasions. *685

FN24 Mr. Brown, defendant's counsel, then
read the following complete answer: "Yes,

that is right. Putting them off, may I say,
putting off certain sums or certain portions
of certain sums, hoping that and trsting that

(~) Defendant also argues, without citation of any
cases, that even though the above evidence is deemed

proper as showing a prior course of dealing, it was
nevertheless inadmissible since it contradicted the express provisions of the "final" billings. Considering
the bilings as instrments of a contractual nature,

they would do as we had previously been on

jobs of this nature. I said that this fell into
four general areas."

nevertheless the evidence did not contradict but

Defendant contends that the admission of the rest of
the *686 answer was error since the witness' "secret

(Q 2008 Thomson Reuters/West. No Claim to Orig. U.S. Govt. Works.
85

Case 5:07-cv-04808-JF
239 Cal.App.2d 664
239 Cal.App.2d 664, 48 Cal.Rptr. 90 I
239 CaI.App.2d 664

Document 60-4

Filed 07/25/2008

Page 15 of 60
Page 14

intent" was conclusionary, not responsive and

irrelevant. However, the objectionable portion of the answer had some bearing upon the testimony already

(1) Standard further complains that the court's

instructions to the first jury on accord and satisfaction

read and plaintifts counsel, upon redirect
examination or at any other appropriate time during

compounded the claimed error since, while stating
that accord and satisfaction depended on the mutual
intention of the parties, it failed to state that such

plaintiffs case, would have been entitled to read such
portion into evidence himself. (Code Civ. Proc.. &

intention must be determined by the words and
actions of the parties and that subjective motives

1854; FN25 RosenbeYf! v. Wittenborn (1960) 178

must be disregarded. The point is without *687 merit.
An examination of the instrctions referred to FN26

Cal.App.2d 846. 852 (3 Cal.Rptr. 4591 and

authorities there colIected; Witkin, op. cit., pp. 677678; McCormick, op. cit., p. 132; cf. Zibbell v.
Southern Pac. Co. (I911) 160 Cal. 237, 250 (116 P.

5131; Bacon V. Grosse ((913) 165 Cal. 481, 490 LUl
P. 10271.)

satisfies us that they are correct statements of the law and that, contrary to defendant's claim, they do state that the intention of the parties "must be determined

fTom all the circumstances, both oral and written"
(italics added). We do not see how the jury could

have been misled into believing that they were to
FN25 Code Civ. Proc.. & 1854, provides:
consider also the secret intentions of Railsback.

"When part of an act, declaration,
conversation, or writing is given in evidence
by one part, the whole on the same subject

FN26 The instrctions in question are: "You
are instrcted that question of the existence

may be inquired into by the other; when a letter is read, the answer may be given; and

when a detached act, declaration,
conversation, or writing is given in

of an accord and satisfaction depends upon the intention of the parties, which must be
determined fTom all the surrounding

evidence, any other act, declaration,
conversation, or writing, which is necessary to make it understood, may also be given in evidence."

circumstances, both oral and written. There must be a meeting of the minds between the

parties to an accord, whether there was an accord in this case, is a question for you as
jurors to decide."
"For there to be a valid accord and

(lQ) It was also within the sound discretion of the
trial judge to require defendant's counsel to read all of
the answer in order to obviate immediately any false

satisfaction you must find that both parties knew and intended that a final settlement was taking place and that each knew and
understood the terms of

or distorted impression the jur might receive fTom a

the settlement."

fTagmentary introduction. McCormick states the
applicable rule in this situation as follows: "(T)he
prevailng practice seems to permit the proponent to

Standard next contends that there is no evidence to

prove any relevant part that he desires. It seems, however, that to guard against the danger where it
exists of an ineradicable false first impression, the

support the verdict of $154,374.45 or any part
thereof. The gist of the argument in support of this point seems to be this: that the so-called "firm" bid of

adversary should be permitted to invoke the court's

February 26, 1962, constituted the contract between

discretion to require the proponent to prove so much as relates to the fact sought to be proved, that is, all
that is relevant to explain or is needed in interpreting

the parties and the jury by its verdict in effect
disregarded the firm bid and re-evaluated the job on a time and materials basis. Standard seems content to
confine its argument to these assertions and within

the part proved." (McCormick, op.cit., pp. 131-132.)

The trial cour did not abuse its discretion in the
instant cas