Summary of Peevyhouse v. Garland Coal & Mining Company, P.2d 109 (Okla. 1962), cert. denied, 375 U.S. 906
FACTS: Plaintiffs [Willie and Lucille Peevyhouse] sued the Defendant [Garland Coal and Mining Company] for damages for breach of contract. Plaintiffs owned a farm containing coal and leased the premises to Defendant for 5 years, allowing Defendant to strip-mine on the property. Defendant specifically agreed to perform certain restorative work at the end of the lease period, with an estimated cost [by expert witnesses] of approximately $29,000. Plaintiffs sued for only $25,000.
During the trial, it was stipulated by both parties that all agreements in the contract had been fully performed, except the restorative work. Plaintiffs introduced expert testimony as to the amount and nature of the work to be completed, while Defendant introduced expert testimony as to the “diminution in value" of the plaintiffs’ farm [about $300].
HISTORY: In the trial case, the jury returned a verdict for the Plaintiffs for $5,000 – a fraction of the cost of performance, but more than the total value of the Plaintiffs’ farm. Plaintiffs appeal and Defendant cross-appeals.
ISSUE: Are the Plaintiffs entitled to specific performance of the contract?
RULING: No. The Supreme Court of Oklahoma modified and affirmed the jury’s award of $5000 to $300, the cost of the difference in market value of the Plaintiffs’ farm had the restorative work been done. There was, however, a dissenting opinion that the proper measure of damages should have been the cost of specific performance.
RATIONALE: The court found that the economic benefit to lessor by full performance of the work would have been grossly disproportionate to the cost of performance; therefore, the damages were limited to the diminution of value to the farm. The amount of $5000 awarded in the original trial case was more than the total value of the farm. The diminution in value of the farm, resulting from non-performance by the Defendant, was only $300.
RULE: Citing the Restatements, there would have been unreasonable economic waste if damages were awarded for specific performance, and that the expenditure for the restorative work would have been disproportionate to the end to be attained [value rule].
In the dissenting opinion, it was argued that Garland Coal & Mining Company was fully aware of their contractual obligations, they benefited from the mining of the coal, and made no attempt to even substantially perform. Therefore the Plaintiffs were entitled to specific performance of the contract.