Peevyhouse v. Garland Coal & Mining Co.

382 P.2d 109 (Okl.1962), cert. denied, 375 U.S. 906 (1963).

Dawson, pp. 19-20


Facts: The plaintiff leased half their farm to the defendant for strip mining.  Part of the agreement was that the mining company would fill in the pits and smooth out the land.  The defendant breached.  It would have cost $29,000 to fill in the pits, but doing so would have only increased the value of the land by $300.  At trial, the plaintiff was awarded $5,000.


Issue: To what damages is the plaintiff entitled?


Rule: Expectation damages cap the amount a plaintiff can recover for breach.


Analysis: The Oklahoma Supreme Court said that the “remedial” work agreed upon in the contract was merely “incidental”.  They relied on the fact that $5,000 puts the plaintiff in a better position than performance would have done.


The dissenting opinion, citing Groves, says that the $29,000 cost was foreseeable at the time of contract formation and should be awarded to the plaintiff.


Conclusion: The Oklahoma Supreme Court reduced the damages to $300.




This question seems to really be asking if the decision in Groves will change the incentives of parties to a contract such that breach will occur less often.  I think the ruling creates an incentive to perform a contract even when such performance is not economically efficient.  I don’t think that’s necessarily a positive result, because we’re in the world of contracts and not torts.


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