S054626, Opinion — McDowell Welding & Pipefitting v. US Gypsum Co.

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Argued and submitted November 7, 2007, decision of Court of Appeals affirmed in
part and reversed in part; judgment of circuit court affirmed in part and reversed
in part, and case remanded to circuit court for further proceedings
September 18, 2008

McDOWELL WELDING & PIPEFITTING, INC.,
an Oregon corporation,
Petitioner on Review,

v.

UNITED STATES GYPSUM COMPANY,
a Delaware corporation;
Port of St. Helens,
an Oregon municipal corporation;
BE&K Construction Co., Inc.,
an Alabama corporation,
Respondents on Review,
and
E C COMPANY,
dba Electrical Construction Co.,
Defendant.

UNITED STATES GYPSUM COMPANY,
a Delaware corporation;
BE&K Construction, Co., Inc.,
an Alabama corporation,
and Port of St. Helens,
an Oregon municipal corporation,
Respondents on Review,
v.

McDOWELL WELDING & PIPEFITTING, INC.,
an Oregon corporation,
Petitioner on Review.
(CC 01-2126; CA A125459; SC S054626)
193 P3d 9

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CJS, Juries § 39.

# En Banc

On review from the Court of Appeals .*

James T. McDermott, of Ball Janik LLP, Portland, argued
the cause and filed brief for petitioner on review. With him on
the brief were Bruce H. Cahn and Aaron D. Goldstein.

Daniel K. Reising, of Fucile & Reising LLP, Portland,
argued the cause and filed the brief for respondents on review
United States Gypsum Company and BE&K Construction
Co., Inc.

No appearance for respondent on review Port of St.
Helens.

Walter J. Ledesma, of Klein, Hand and Ledesma, P.C.,
Woodburn, filed the brief for amicus curiae Oregon Trial
Lawyers Association.

Janet Metcalf, Assistant Attorney General, Salem, filed
the brief for amicus curiae State of Oregon.

KISTLER, J.

The decision of the Court of Appeals is affirmed in part
and reversed in part. The judgment of the circuit court is
affirmed in part and reversed in part, and the case is
remanded to the circuit court for further proceedings.

\* Appeal from Columbia County Circuit Court, Ted E. Grove, Judge. 209 Or
App 441, 149 P3d 173 (2006).

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# KISTLER, J.

Plaintiff brought this action, alleging that defen-
dants had failed to pay for work that plaintiff had done on a
construction project. Defendants denied that allegation and
alleged, as an affirmative defense, that plaintiff had agreed
to release its claims against defendants in return for defen-
dants paying plaintiff $896,000. Defendants also counter-
claimed for specific performance of that settlement agree-
ment. On defendants' motion, the trial court bifurcated the
trial and agreed to try defendants' counterclaim for specific
performance of the settlement agreement before trying plain-
tiff's claims for breach of the construction contract.

The primary question that this case presents is
whether plaintiff has a state constitutional right to a jury
trial on the factual issues that defendant's counterclaim
raised. The trial court concluded that plaintiff had no such
right and, sitting as the trier of fact, found that plaintiff had
accepted defendants' offer to settle its claims and entered
judgment accordingly. A divided Court of Appeals affirmed
the trial court's judgment. McDowell Welding & Pipefitting v.
US Gypsum Co., 209 Or App 441, 149 P3d 173 (2006). We
allowed plaintiff's petition for review and now affirm the
Court of Appeals decision on plaintiff's jury trial claim but
reverse its decision on a subsidiary issue regarding prejudg-
ment interest.

The relevant facts can be summarized briefly.
Defendant United States Gypsum (US Gypsum) was con-
structing a new plant in Columbia County. Defendant BE&K
Construction Co. (BE&K) was the general contractor on that
project. BE&K subcontracted with plaintiff to perform work
on the project. During construction, defendants asked plain-
tiff to perform additional tasks, over and above plaintiff's con-
tractual obligations, and defendants promised to pay plaintiff
for doing so. After plaintiff completed its work on the project,
the parties disagreed over the amount that defendants owed
for the additional work that plaintiff had performed.

Plaintiff filed this action against defendants, alleg-
ing breach of contract and related claims. All of plaintiff's

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claims arose out of the modification to the construction con-
tract. BE&K's answer included an affirmative defense cap-
tioned "Compromise and Settlement," alleging that plaintiff
had agreed to settle its claims against defendants. Specifi-
cally, defendants alleged:

"112.

"On February 22, 2001, Dan McDowell, President and
owner of [plaintiff], agreed to a settlement of all the claims
against BE&K and US Gypsum in connection with the US
Gypsum construction project.

"113.

"The settlement provided for US Gypsum to pay [plain-
tiff] the total of $896,000, including direct payments to
[plaintiff's] unpaid subcontractors and suppliers, in
exchange for a release of the claims [that plaintiff] is now
pursuing against BE&K.

"114.

"The agreement reached between the parties on
February 22, 2001 was a compromise of [plaintiff's] dis-
puted and unliquidated claims against US Gypsum and
BE&K."

BE&K also included a counterclaim captioned
"Declaratory Judgment and Specific Performance of
Settlement Agreement." That counterclaim stated: "As
alleged above, on February 22, 2001, the parties reached a
compromise and settlement of [plaintiff's] claims."

BE&K filed a motion asking the trial court to bifur-
cate the proceedings and try its counterclaim before trying
plaintiff's claims against it. BE&K reasoned that, if the trial
court found that plaintiff had agreed to settle its claims, that
determination would obviate the need to try plaintiff's breach
of contract claims against BE&K and US Gypsum. BE&K
also argued that, because its counterclaim sought specific
performance, the court rather than a jury should resolve the
factual issues that the counterclaim raised. The trial court
granted BE&K's motion.

After the trial court granted BE&K's motion, plain-
tiff filed a demand for a jury trial, which BE&K moved to

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strike. BE&K reasoned that, because its counterclaim was
equitable, plaintiff had no right to a jury trial on the counter-
claim. The trial court granted BE&K's motion to strike plain-
tiff's jury trial demand and, sitting as the trier of fact, found
that plaintiff had accepted defendants' offer to settle its
claims in return for defendants' promise to pay plaintiff
$800,000.1

Based on its resolution of defendants' counterclaim,2
the trial court entered a limited judgment directing defen-
dants to tender $800,000 to the court clerk and directing
plaintiff, after defendants tendered that sum, to execute
releases of its claims against defendants. After the trial court
entered the limited judgment, defendants tendered $800,000
to the court clerk and then moved for summary judgment on
plaintiff's claims against them. The trial court granted defen-
dants' motion and entered a general judgment that dismissed
plaintiff's claims with prejudice.

On appeal, plaintiff argued, among other things,
that the trial court had erred in denying its jury demand on
the question whether it had accepted defendants' settlement
offer. As noted, a divided Court of Appeals affirmed. The
majority started from the proposition that plaintiff had not
assigned error to the trial court's ruling bifurcating the trial
and agreeing to try defendants' counterclaim first. McDowell
Welding & Pipefitting, 209 Or App at 445-46. Rather, plain-
tiff had assigned error only to the trial court's ruling striking
plaintiff's demand for a jury trial. Id.3 On that issue, the
majority explained that this court and the Court of Appeals

1 Although defendants alleged that they promised to pay plaintiff $896,000 in
return for plaintiff's promise to release its claims against them, defendants proved
and the trial court found that defendants had promised to pay only $800,000.

2 After plaintiff filed its complaint, US Gypsum filed for bankruptcy and the
case proceeded only against BE&K. Midway through the proceeding, the bank-
ruptcy court lifted the automatic stay. US Gypsum adopted BE&K's pleadings and
participated in the bifurcated trial on what became both defendants' counterclaim.

3 The Court of Appeals majority understood the dissent to be arguing that Arti-
cle I, section 17, which guarantees the right to a jury trial in civil cases, required
the trial court to try plaintiff's claims before defendants' counterclaim. Starting
from that understanding, the majority found it significant that plaintiff had not
assigned error to the ruling bifurcating the trial and agreeing to try plaintiff's
claims second. See McDowell Welding & Pipefitting, 209 Or App at 446 ("[T]he 'big
picture' questions raised and resolved by the dissent simply are not in play.").

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have held that there is no constitutional right to a jury trial
on a claim for specific performance of a settlement agree-
ment. Id. at 447. It followed, the majority reasoned, that the
trial court had correctly denied plaintiff's jury demand for a
trial on that claim. Id.

The dissent took a different tack. The dissent did not
disagree that plaintiff had no right to a jury trial on defen-
dants' counterclaim. The dissent, however, would have held
that plaintiff had a right to a jury trial on defendants' affir-
mative defense; that is, the dissent concluded that defen-
dants' affirmative defense would have been legal rather than
equitable when the Oregon Constitution was adopted.4 Id. at
473 (Armstrong, J., dissenting). Following the reasoning in
Beacon Theatres, Inc. v. Westover, 359 US 500, 79 S Ct 948,
3 L Ed 2d 988 (1959), the dissent would have held that, when
a legal claim (defendants' affirmative defense) and an equi-
table claim (defendants' counterclaim) share common factual
issues, Article I, section 17, of the Oregon Constitution
requires courts to try the legal claim before the equitable one.
209 Or App at 461-63 (Armstrong, J., dissenting).5 It fol-
lowed, the dissent reasoned, that the trial court erred in
trying defendants' counterclaim before their affirmative
defense.

On review, plaintiff renews its argument that the
trial court erred in striking its demand for a jury trial. As we
understand plaintiff's argument, it entails two separate but

4 In reaching that conclusion, the dissent observed that the settlement agree-
ment, as alleged, could be either an executory accord or a substituted contract. 209
Or App at 470 (Armstrong, J., dissenting). The dissent noted that, when the Oregon
Constitution was adopted, an executory accord could be enforced only in equity
while a substituted contract was a legal defense. Id. at 468. Applying certain evi-
dentiary presumptions and resolving perceived ambiguities in favor of a jury trial,
the dissent would have held that defendants' affirmative defense alleged a substi-
tuted contract, not an executory accord, and thus presented a legal claim to which
the state constitutional right to a jury trial attached. Id. at 472-73.

5 The dissent refers to defendants' affirmative defense as if it were part of
plaintiff's claims and also refers to trying plaintiff's claims before trying defen-
dants' counterclaim. See, e.g., 209 Or App at 463 (Armstrong, J., dissenting). As
explained below, defendants' affirmative defense is not part of plaintiff's claims;
rather, it is a defense to those claims and arises out of a separate agreement. The
relevant comparison, for the purposes of Beacon Theatres, is between defendants'
affirmative defense and their counterclaim, and we understand the dissent's rea-
soning ultimately to turn on that comparison.

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related questions. The first question is whether plaintiff had
a state constitutional right to a jury trial on defendants' coun-
terclaim for specific performance of the settlement agree-
ment. If plaintiff did not have a right to a jury trial on the
counterclaim, the remaining question is whether plaintiff
had a right to a jury trial on defendants' affirmative defense
(which also is based on the settlement agreement) and, if it
did, whether the trial court should have tried the affirmative
defense to a jury before trying the counterclaim to the court.
We begin with the question whether plaintiff had a right to a
jury trial on defendants' counterclaim.

Two provisions of the Oregon Constitution bear
on that question. Article I, section 17, of the Oregon
Constitution provides: "In all civil cases the right of Trial by
Jury shall remain inviolate." Article VII (Amended), section
3, provides in part that, "[i]n actions at law, where the value
in controversy shall exceed $750, the right of trial by jury
shall be preserved." Reading those provisions together, this
court has explained that Article I, section 17, "guarantees a
jury trial 'in those classes of cases in which the right [to a jury
trial] was customary at the time the [Oregon] [C]onstitution
was adopted or in cases of like nature.'" Lakin v. Senco
Products, Inc., 329 Or 62, 69, 987 P2d 463 (1999) (quoting
Molodyh v. Truck Insurance Exchange, 304 Or 290, 295, 744
P2d 992 (1987)). The right to a jury trial, however, does not
extend to cases that would have been tried to an equity or an
admiralty court in 1859. See State v. 1920 Studebaker
Touring Car et al, 120 Or 254, 259, 261-62, 251 P 701 (1927).

To determine whether a claim is legal or equitable,
the court looks to the pleadings. See Thompson v. Coughlin,
329 Or 630, 637-38, 997 P2d 191 (2000) (test for determining
whether jurisdiction is in law or equity generally turns on the
nature of the relief sought in the pleadings); Huebner v.
Chinn, 186 Or 508, 519, 207 P2d 1136 (1949) (in deciding
whether Article I, section 17, jury trial right applies, court
must "determine whether the pleadings presen[t] a cause of
equitable [or legal] cognizance"). The label that a party places
on a claim is not necessarily dispositive. See Thompson, 329
Or at 638 (so holding). For example, the plaintiff in
Thompson sought an accounting to resolve a dispute among
partners, which is ordinarily an equitable claim that would

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not entitle a party to a jury trial. However, in determining
whether the plaintiff's claim should have been tried to a jury,
this court explained that it had long recognized that, when
"adequate relief may be obtained in law, * * * equitable juris-
diction will not be invoked." Id. Because the "accounting"
that the plaintiff sought in Thompson involved only two
transactions, the court concluded that a legal action provided
adequate relief, that the plaintiff's claim was not equitable,
and that the trial court had erred in denying the plaintiff's
demand for a jury trial. Id. at 640.

In arguing that, under Thompson, it is entitled to a
jury trial on defendants' counterclaim, plaintiff does not dis-
pute that "suits in equity, including suits for specific perform-
ance of contracts, are ordinarily to be tried to a court without
a jury and that the constitutional right to trial by jury does
not apply to suits in equity." See Phillips v. Johnson, 266 Or
544, 549, 514 P2d 1337 (1973) (so holding). Plaintiff argues,
however, that specific performance is available only when the
remedy at law is inadequate and that, in this case, defen-
dants have an adequate remedy at law. Cf. Thompson, 329
Or at 638-40 (reaching a similar conclusion regarding the
plaintiff's request for an accounting). In plaintiff's view, a
declaratory judgment that the parties had entered into a set-
tlement agreement would suffice to give effect to the settle-
ment agreement, that claim would have been cognizable at
law, and the equitable remedy of specific performance there-
fore was not necessary. It follows, plaintiff concludes, that the
trial court erred in denying its demand for a jury trial despite
the fact that defendants sought specific performance of the
settlement agreement.

We note, as an initial matter, that plaintiff's argu-
ment is at odds with this court's practice. This court repeat-
edly has entertained suits for specific performance of settle-
ment agreements without suggesting that resort to equity
was unnecessary because the parties had an adequate rem-
edy at law. See Michel v. ICN Pharmaceuticals, 274 Or 795,
797, 549 P2d 519 (1976) (determining on de novo review, in a
suit for specific performance of a settlement agreement,
whether the parties had entered into an enforceable settle-
ment agreement); Brown v. Denton, 257 Or 161, 162, 477 P2d

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710 (1970) (same); Chambers v. Zipper, 225 Or 333, 334, 357
P2d 1105 (1960) (same). Those decisions, however, did not
expressly consider the argument that plaintiff raises here.
And, while those decisions may suggest an answer, we hesi-
tate to give them controlling effect without examining the
premises of plaintiff's argument more closely. See Coast
Range Conifers v. Board of Forestry, 339 Or 136, 148-49, 117
P3d 990 (2005) (declining to give controlling effect to an
unconsidered assumption in a prior decision). We accordingly
turn to the question that the dissenting opinion in the Court
of Appeals addressed-whether an action to enforce the set-
tlement agreement that defendants alleged would have been
cognizable in law or equity when the Oregon Constitution
was adopted.

As we discuss more fully below, a settlement agree-
ment may take one of three forms: an executory accord, an
accord and satisfaction, or a substituted contract. As we also
discuss below, when the Oregon Constitution was adopted,
only a court of equity would enforce an executory accord. The
law courts would not enforce executory accords because they
suspended the underlying obligation; they did not discharge
it. By contrast, an accord and satisfaction and a substituted
contract discharged the underlying obligation, albeit for dif-
ferent reasons, and both were enforceable in the law courts.
It follows that the question whether the agreement that gave
rise to defendants' counterclaim would have been cognizable
in law or equity turns, at least initially, on whether it is an
executory accord, an accord and satisfaction, or a substituted
contract. We first describe the distinctions among those types
of settlement agreements before considering which type of
settlement agreement defendants alleged.

An executory accord is "an agreement for the future
discharge of an existing claim by a substituted performance."
Arthur Linton Corbin, 6 Corbin on Contracts § 1268, 71 (2d
ed 1962). Usually, an executory accord is a bilateral agree-
ment; the debtor promises to pay an amount in return for the
creditor's promise to release the underlying claim. When the
parties enter into an executory accord, the underlying claim
"is not [discharged] until the new agreement is performed.
The right to enforce the original claim is merely suspended,

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and is revived by the debtor's breach of the new agreement."
Savelich Logging v. Preston Mill Co., 265 Or 456, 462, 509
P2d 1179 (1973).

Because an executory accord does not discharge the
underlying claim but merely suspends it, the law courts
refused to allow it to be pleaded as a bar to the underlying
claim. See Samuel Williston, 15 Williston on Contracts
§ 1842, 520 (3d ed 1972) (describing basis for that conclu-
sion); Smith v. Foster, 5 Or 44, 46 (1873) (executory accord
was not cognizable as a defense at law); Ford v. Beech, 116
Eng Rep 693, 698-701 (1848) (same). Only the equity courts
would enforce executory accords. See 6 Corbin on Contracts
§ 1273 (so stating); Very v. Watkins, 18 Ark 546, 552 (1857),
aff'd, 64 US 469, 16 L Ed 522 (1860) (recognizing that execu-
tory accords were "strictly of equitable cognizance"); Beech v.
Ford, 68 Eng Rep 85, 88 (1848) (holding that, unlike the law
courts, equity courts could give effect to executory accords;
they could suspend the underlying obligation and then revive
it if the debtor breached his or her promise).

Once the promised performance occurs, the accord
has been executed or satisfied and the underlying claim is
discharged, resulting in an accord and satisfaction. See State
ex rel. v. Funk, 105 Or 134, 152, 199 P 592, 209 P 113 (1922)
(explaining accord and satisfaction); 6 Corbin on Contracts
§ 1276 at 115 (same).6 Because an accord and satisfaction dis-
charges the underlying claim, that defense is legal, not equi-
table. 6 Corbin on Contracts § 1276 at 115; see Smith, 5 Or at
46 (explaining that the defendant's allegations were insuffi-
cient to allege a bar to a legal action because the defendant had
alleged an executory accord, not an accord and satisfaction).

6 An accord and satisfaction may occur in one of two ways:

"The two parties may first make an accord executory, that is, a contract for
the future discharge of the existing claim by a substituted performance still to
be rendered. When this executory contract is fully performed as agreed, there
is said to be an accord and satisfaction, and the previously existing claim is dis-
charged. It is quite possible, however, for the parties to make an accord and
satisfaction without any preliminary accord executory or any other executory
contract of any kind. [For example, a] debtor may offer the substituted per-
formance in satisfaction of his debt and the creditor may receive it, without any
binding promise being made by either party."

6 Corbin on Contracts § 1276 at 115-16 (footnote omitted); see also Coover v. G & J
Electric, 285 Or 247, 249-50, 590 P2d 720 (1979) (describing two types of accord and
satisfaction).

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Finally, the parties may enter into a substituted con-
tract; that is, the parties may agree to substitute the new
agreement for the underlying obligation. 6 Corbin on
Contracts § 1293 at 185. A substituted contract differs
from an executory accord in that the parties intend that
entering into the new agreement will immediately discharge
the underlying obligation. See Eagle Industries, Inc. v.
Thompson, 321 Or 398, 408-12, 900 P2d 475 (1995) (summa-
rizing law regarding substituted contracts and novations);
Ohlson v. Steinhauser, 218 Or 532, 539, 315 P2d 136, 346 P2d
87 (1959) (distinguishing substituted contracts from execu-
tory accords); 6 Corbin on Contracts § 1293 at 185-88
(describing substituted contracts).7 A substituted contract
discharges the underlying obligation and could be asserted as
a bar to an action at law. See Samuel Williston, Accord and
Satisfaction, 17 Harv L Rev 459, 467 (1904).

With that background in mind, we turn to the ques-
tion whether defendants pleaded an executory accord, an
accord and satisfaction, or a substituted contract. Here,
defendants alleged that they agreed to pay plaintiff $896,000
in exchange for a release of plaintiff's claims against them.
Defendants did not allege that they had paid plaintiff the
promised sum-an allegation necessary for an accord and
satisfaction. See Harding v. Bell, 265 Or 202, 210, 508 P2d
216 (1973) (holding that, when one party contends that they
discharged the prior obligation, "complete cancellation of the
prior obligation is an essential element of [the] defense and
must be pleaded by clear expression, not vague allusion");
Smith, 5 Or at 46 (party failed to allege satisfaction and thus
failed to state a cognizable defense to a legal action). Nor did
they allege that, by entering into the settlement agreement,
they extinguished the underlying obligation-an allegation
necessary to allege a substituted contract. See Abrahamson
v. Brett, 143 Or 14, 24, 21 P2d 229 (1933) (noting that one
essential requisite of a substituted contract is "the extin-
guishment of the old contract"); cf. Harding, 265 Or at 210

7 Corbin explains that:

"[t]he reason that [an executory accord] is not in itself at once operative as a
discharge of the claim is that the agreement does not so provide. If it does so
provide, it operates accordingly and is a substituted contract."

6 Corbin on Contracts § 1269 at 75.

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(cancellation of the prior obligation must be pleaded by clear
expression). Rather, defendants alleged that plaintiff agreed
to release its claims only after defendants made the promised
payment. In short, defendants alleged an executory accord.8

As noted, the dissenting opinion in the Court of
Appeals reached a different conclusion. Applying certain evi-
dentiary presumptions, the dissent concluded that it was
ambiguous whether defendants had alleged an executory
accord or a substituted contract, an ambiguity that the dis-
sent would have resolved in favor of the right to a jury trial.
The difficulty with the dissent's reasoning is that the Oregon
Rules of Civil Procedure require a party to allege ultimate
facts. See Davis v. Tyee Industries, Inc., 295 Or 467, 476, 668
P2d 1186 (1983) (describing Oregon's fact pleading require-
ment). In this case, defendants alleged the elements of an
executory accord. They did not allege the one key element,
"the extinguishment of the old contract," that distinguishes a
substituted contract from an executory accord. Abrahamson,
143 Or at 24 (noting that one essential requisite of a substi-
tuted contract is "the extinguishment of the old contract"); see
Harding, 265 Or at 210 (stating that pleading requirement).
Without that allegation, there is no ambiguity: Defendants
alleged an executory accord, not a substituted contract.

Plaintiff, for its part, does not argue that defendants
alleged a substituted contract rather than an executory
accord. Rather, plaintiff's brief touches on that issue only
once. Plaintiff argues that "there is no dispute that [plain-
tiff's] original cost-overrun claims against BE&K and US
Gypsum entitled [plaintiff] to a jury, including the factual
determination of the existence of the settlement agreement
alleged by BE&K and US Gypsum." The fact that plaintiff's
contract claims against defendants would have been cogni-
zable at law when the Oregon Constitution was adopted does

8 We note that the limited judgment that the trial court entered is consistent
with an executory accord and inconsistent with an accord and satisfaction and also
with a substituted contract. The limited judgment directed defendants to pay
$800,000 to the court clerk, which would have been unnecessary if defendants had
already satisfied their promise to pay that amount. Similarly, if the parties had
entered into a substituted contract, the court would not have conditioned plaintiff's
obligation to release its claims on defendants' payment of the funds to the court
clerk. Rather, plaintiff's release of its claims would have occurred when the parties
entered into the settlement agreement.

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not mean that an executory accord, asserted as defense, also
would have been cognizable at law. As explained above, pre-
cisely the opposite was true. When the Oregon Constitution
was adopted, an executory accord was not recognized as a
defense to an action at law. It could be enforced only in
equity. See Smith, 5 Or at 46 (executory accord not a defense
to an action at law on a note); Ford v. Beech, 116 Eng Rep at
701 (same). It necessarily follows that the substance of defen-
dants' counterclaim, as they have alleged it, sounded only in
equity without regard to the nature of the relief that they
sought. The trial court correctly rejected plaintiff's argument
that it had a constitutional right to a jury trial on an execu-
tory accord.

Plaintiff advances an alternative argument. It con-
tends that, even if it had no constitutional right to a jury trial
on defendants' counterclaim, it had a right to a jury trial on
defendants' affirmative defense. Plaintiff assumes that
defendants' affirmative defense presents a legal claim that
would have been tried to a jury in 1859. Plaintiff then reasons
that, in interpreting Article I, section 17, of the Oregon
Constitution, we should follow the United States Supreme
Court's interpretation of the Seventh Amendment in Beacon
Theatres; that is, plaintiff argues that, when a case includes
an equitable claim and a legal claim and those claims share
common factual issues, Article I, section 17, requires that a
court try the legal claim first in order to give effect to the par-
ties' right to a jury trial.

Plaintiff recognizes that the Seventh Amendment
does not apply to the states and that we interpret state con-
stitutional provisions independently of their federal counter-
parts. Plaintiff argues, however, that the Court's reasoning
in Beacon Theatres is persuasive and urges us to adopt that
reasoning in interpreting Article I, section 17. Applying that
reasoning, plaintiff argues that the trial court should have
tried defendants' affirmative defense to a jury before trying
defendants' counterclaim to the court.

The difficulty with plaintiff's argument is its prem-
ise. As explained above, both defendants' affirmative defense
and their counterclaim allege an executory accord and were
cognizable only in equity when the Oregon Constitution was
adopted. Contrary to the premise of plaintiff's argument, the

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trial court was not faced with a choice between trying a legal
defense before an equitable counterclaim. Rather, because
defendants' affirmative defense and their counterclaim were
both equitable, the principle that plaintiff urges us to adopt
from Beacon Theatres is inapposite.9

There is some suggestion in plaintiff's brief on the
merits that the reasoning in Beacon Theatres required the
trial court to try plaintiff's breach of contract claims, which
were concededly legal, before trying defendants' equitable
counterclaim. To the extent that plaintiff makes that argu-
ment, it fails for three reasons. First, the premise of Beacon
Theatres is that the legal and equitable claims share common
issues of fact. 359 US at 503-04. Plaintiff's breach of contract
claim, however, is factually separate from defendants' coun-
terclaim for specific performance of the settlement agree-
ment; the two claims arise out of separate agreements. Plain-
tiff's breach of contract claim arises from the modification to
the construction contract. Defendants' counterclaim, as well
as their affirmative defense, arises from the settlement
agreement. Without a common factual issue, Beacon
Theatres does not apply.

The second reason follows from the first. If, as the
trial court found, plaintiff agreed to settle its claims (and
defendants subsequently performed their part of the settle-
ment agreement), then the executed settlement would obvi-
ate any need to try the factually separate question whether
plaintiff is entitled to prevail on the underlying agreement.
Trying plaintiff's claims for breach of the construction con-
tract first would serve no purpose if, as the trial court found,
plaintiff promised to release those claims as part of a later
settlement agreement.

Third, as the Court of Appeals majority observed
and as plaintiff has not disputed, plaintiff did not assign
error to the trial court's ruling bifurcating the trial and decid-
ing to try defendants' counterclaim for specific performance
of the settlement agreement before trying plaintiff's claims
against defendants. If plaintiff did not assign error to that

9 We express no opinion on whether the reasoning stated in Beacon Theatres
applies under Article I, section 17. This case does not require us to decide that
issue.

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ruling, then plaintiff necessarily failed to take the steps
necessary to pursue any argument that the trial court should
have tried its contract claims before trying defendants'
counterclaim. Having considered plaintiff's arguments, we
hold that Article I, section 17, of the Oregon Constitution did
not require the trial court to try either defendants' counter-
claim or their affirmative defense to a jury.

Plaintiff raises an alternative issue on review. Plain-
tiff argues that, if we affirm the trial court's ruling on its jury
trial claim, then we should reach the issue whether the trial
court erred in denying plaintiff prejudgment interest.
Regarding that issue, the trial court found that, on February
22, 2001, plaintiff agreed to release its claims against defen-
dants in return for a payment of $800,000. The parties also
agreed that, to the extent that plaintiff owed money to its
suppliers, defendants would issue joint checks to plaintiff
and its suppliers out of the $800,000 payment. Defendants
asked plaintiff to provide them with the suppliers' names and
the amount that plaintiff owed each supplier so that defen-
dants could prepare joint checks. Approximately a week
later, plaintiff repudiated the settlement agreement; plaintiff
took the position that the parties' discussions on February
22, 2001, had not resulted in a final, binding agreement.

When defendants submitted a proposed judgment to
the trial court, plaintiff objected because the judgment
entered in 2004 did not require defendants to pay prejudg-
ment interest on the $800,000 that defendants had promised
to pay plaintiff in 2001. The trial court overruled plaintiff's
objection, and the Court of Appeals affirmed that ruling with-
out discussion. McDowell Welding & Pipefitting, 209 Or App
at 444. On review, plaintiff renews its claim that the trial
court should have awarded it prejudgment interest.

Plaintiff's claim for prejudgment interest arises in a
different posture than many prejudgment interest claims.
Typically, the person from whom prejudgment interest is
sought has breached some duty; that is, the person has failed
to pay money when due or wrongfully retained money, and
prejudgment interest is available either under ORS 82.010 or
to remedy a breach of a fiduciary duty. See ORS 82.010(1)(a)
(authorizing prejudgment interest on "[a]ll moneys after they
become due"); ORS 82.010(1)(b) (authorizing prejudgment

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interest for "[m]oney received to the use of another and
retained beyond a reasonable time without the owner's
express or implied consent"); Stephan v. Equitable S & L
Assn., 268 Or 544, 573-74, 522 P2d 478 (1974) (providing for
recovery of interest as a remedy for a breach of a fiduciary
duty). In those cases, the person from whom prejudgment
interest is sought has breached a duty to pay or return money
and the question usually reduces to whether the amount due
is readily ascertainable. See, e.g., Public Market Co. v.
Portland, 171 Or 522, 625, 130 P2d 624, 138 P2d 916 (1943)
(holding that prejudgment interest is available on unliquidated
damages as long as the amount due is readily ascertainable).

This case arises in a different posture. In this case,
defendants did not breach any duty that they owed plaintiff
under the settlement agreement. Rather, plaintiff had repu-
diated the settlement agreement, excusing defendants from
fulfilling their promise to pay $800,000. See Howard v.
Thomas, 270 Or 6, 14-15, 526 P2d 552 (1974) (holding that,
when defendants refused to consummate sale, plaintiffs were
excused from making promised payment). Because defen-
dants had no obligation under the settlement agreement to
pay plaintiff, plaintiff may not recover prejudgment interest
under the usual theories; that is, plaintiff may not recover
prejudgment interest because defendants failed to pay
money when due or wrongfully retained plaintiff's funds. See
ORS 82.010(1)(a) and (b) (stating those grounds for recover-
ing prejudgment interest). Nor may plaintiff recover prejudg-
ment interest to remedy a breach of a fiduciary duty; defen-
dants did not breach any fiduciary duty they owed plaintiff.

Plaintiff argues, however, that defendants had the
use of the $800,000 from the time that the parties entered
into the settlement agreement in 2001 until the court issued
its judgment in 2004. Plaintiff contends that conditioning the
judgment entered in 2004 on defendants' paying plaintiff in
2001 dollars fails to take into account the time value of
money, unjustly enriching defendants. Plaintiff reasons that,
once defendants chose to seek the benefits of the settlement
agreement and asked the trial court to order specific perform-
ance, the trial court should have conditioned plaintiff's
performance of the settlement agreement on defendants'

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payment of the agreed sum plus interest. See Wittick v.
Miles, 268 Or 451, 455, 521 P2d 349 (1974) (so requiring);
Restatement (Second) of Contracts § 358(1) (discussing trial
court's authority to condition the terms of an order requiring
specific performance of a contact).

Wittick is squarely on point and supports plaintiff's
argument. In Wittick, the plaintiffs sought specific perform-
ance of an earnest money agreement for the sale of land. 268
Or at 452. The plaintiffs had paid approximately one third of
the purchase price and were willing and able to pay the bal-
ance on the defendant's tender of the deed and title insur-
ance, as the earnest money agreement provided. Id. When
the defendant refused to tender the deed and repudiated the
contract, the plaintiffs brought an action for specific perform-
ance. Id. In upholding the plaintiffs' claim for specific per-
formance, this court explained that, as a condition of seeking
specific performance, plaintiffs would be required to pay the
amount of money still owing under the earnest money agree-
ment plus either interest or rents and profits (depending on
whether the plaintiffs were or were not in possession). Id. at
455. As this court explained, "[w]hatever adjustment needs
to be made between plaintiffs and defendant with respect to
interest and rents and profits can be made as part of the
decree." Id.

In Wittick and also in this case, the party seeking
specific performance of the agreement had not breached its
terms, and the party against whom enforcement of the agree-
ment was sought had repudiated it. In Wittick, even though
the plaintiff had not breached the agreement, this court held
that specific performance of the agreement should be condi-
tioned on plaintiff's paying the money due under the agree-
ment plus interest (or rents and profits). Once the plaintiffs
in Wittick chose to overlook the defendant's repudiation and
seek specific performance of the settlement agreement, pay-
ment of prejudgment interest was necessary to give the
defendant the benefit of the bargain that the plaintiffs chose
to enforce. It follows that, under the reasoning in Wittick, the
trial court should have conditioned its judgment granting

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specific performance of the settlement agreement on defen-
dants' paying $800,000 plus interest from the date of the
agreement.10

Defendants argue that, even if they otherwise would
be liable for prejudgment interest, they tendered payment to
plaintiff and thus cut off plaintiff's right to seek prejudgment
interest. See Bembridge v. Miller, 235 Or 396, 402-03, 385
P2d 172 (1963) (recognizing the effect of tender). Defendants
note that the trial court found that defendants "were ready,
willing and able to perform and plaintiff was denied access to
the money because of its wrongful refusal to perform under
the terms of the settlement agreement." To constitute a
tender of money, however, the money "must actually be pro-
duced and made available for the acceptance and appropria-
tion of the person to whom it is offered." Id. at 402. Alterna-
tively, "[a]n offer in writing to pay a particular sum of money
is, if not accepted, equivalent to the actual production
and tender of the money * * *. " ORS 81.010; see Bembridge,
235 Or at 402 (discussing that statute).

The trial court's findings do not show that defen-
dants tendered payment to plaintiff. Rather, as the trial
court found, the record reflects that the parties entered into a
settlement agreement, that defendants requested informa-
tion that would permit them to issue checks to plaintiff and
its suppliers in the future, and that defendants were pre-
pared to do so. The prospect, however, that payment might
occur at some point in the future is not sufficient to defeat
plaintiff's claim for prejudgment interest.

Because we conclude that plaintiff is entitled to pre-
judgment interest, we reverse the Court of Appeals decision
and the trial court's judgment on that issue so that the trial
court can determine that amount of prejudgment interest
owed and condition plaintiff's specific performance of the set-
tlement agreement on defendants' payment of $800,000 plus
interest. In all other respects, the Court of Appeals decision
and the trial court's judgment are affirmed.

10 Because the amount that defendants owe under the agreement is readily
ascertainable, that condition poses no bar to requiring payment of prejudgment
interest.

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The decision of the Court of Appeals is affirmed in
part and reversed in part. The judgment of the circuit court is
affirmed in part and reversed in part, and the case is
remanded to the circuit court for further proceedings.