KSupreme Court of Oklahoma, 1962draftborradorunverifiedsin verificar

Peevyhouse v. Garland Coal & Mining Co.

382 P.2d 109 (Okla. 1962)

A strip-mined farm, a $29,000 promise to restore it, and $300 in damages

In one lineEn una línea: Where the cost of performing promised remedial work grossly exceeds the resulting increase in value, damages are the diminution in value, not the cost of completion.Cuando el costo de la obra de remediación prometida excede groseramente el aumento de valor resultante, los daños son la disminución de valor, no el costo de ejecutarla.
RuleRegla: Damages for breach of a promise to perform work on land are ordinarily the cost of completion; but where the promise is incidental to the main purpose of the contract and the cost of completion is grossly disproportionate to the diminution in value caused by nonperformance, the measure is the diminution in value (compare R.2d § 348(2)).
Why this case is herePor qué está aquí este caso: The hardest remedies case in Part VII: when the cost of completing the promised work vastly exceeds the increase in value it would produce, courts split between cost of completion (what was promised) and diminution in value (economic waste). The professor's course outline flags the calculation of damages and its limits.
Procedural posturePostura procesal: Landowners sued the mining company for failing to perform remedial work promised in a lease; the jury awarded $5,000; the Supreme Court of Oklahoma reduced the award to $300, the diminution in the land's value, over a dissent.

Facts

The Peevyhouses leased their farm to Garland for strip mining, insisting on a clause requiring the company to restore the land (fill pits, grade) at the end of the lease. The company mined and left without doing the work, which would have cost about $29,000; the restoration would have increased the farm’s market value by about $300.

Procedural posture

Jury verdict of $5,000; the Supreme Court of Oklahoma reduced it to $300.

Issue

Whether damages are the cost of the promised restoration or the diminution in the land’s value.

Holding

Diminution in value. The restoration clause was incidental to the main purpose of the lease (mining), and the cost of completion was grossly disproportionate to the benefit.

Reasoning

The majority relied on the rule against economic waste and on cases (and a Restatement section) limiting damages where completion costs far exceed the value gained; it reasoned that the parties could not have intended the company to pay $29,000 to add $300 of value. The dissent would have enforced the bargain the landowners expressly made.

Rule (own words)

If fixing what was promised costs far more than it is worth and the promise was not the heart of the deal, you get the drop in value. Expect a fight about which promises are the heart of the deal.

What-ifs

The contract said: the restoration is of the essence and the lessee agrees to pay its full cost. Express allocation; cost of completion.
The land was the family homestead with evidence of personal value: subjective value may justify cost of completion under § 348 comment.
The company’s breach was willful and it saved $29,000: Groves-type reasoning may award cost of completion to deny the windfall.

Likely follow-upsRepreguntas probables

What is the strongest criticism of the majority?

The Peevyhouses bargained specifically for restoration (they refused the lease without it); treating the clause as incidental lets the company keep the benefit of a promise it priced into the deal, and $300 will not restore the farm. Later revelations about the court add to the criticism.

What does the Restatement do?

§ 348(2): cost of completion unless clearly disproportionate to the probable loss in value; the comment notes that a landowner's subjective value counts, which may favor the Peevyhouses.

What about Groves v. John Wunder?

Minnesota awarded the cost of completion ($60,000) where the land was worth $12,000 after grading, reasoning that a willful breacher should not profit; Peevyhouse is the counterexample.

cost of completion vs. diminution in value diminution in value expectation damages (R.2d § 347)economic waste

Compare withComparar con: Jacob & Youngs, Inc. v. Kent (companion), Groves v. John Wunder Co. (contrasts)

AssignedAsignado: 2026-11-19

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