Groves v. John Wunder Co.
205 Minn. 163, 286 N.W. 235 (Minn. 1939)
Groves owned some rocky land
that wasn't suitable for very much. He signed a contract with a gravel
company named Wunder to lease the land (for $105k), remove gravel, and
regrade the land so it was flat and level (and then useable for houses or
Wunder paid money and took the
gravel, but did not level the land. Groves sued for breach of contract.
Wunder breached the contract
on purpose because they calculated it was too expensive to level the
The land, if improved would
be worth only $12k more than was before the contract, while it would cost
$60k to level the land.
The Trial Court found for
Groves and awarded $12k. Groves appealed.
That's the expectation
Also known as benefit of
The Appellate Court reversed
the damage award and said that since it would cost $60k to level the land,
Wunder had to pay $60k.
The Appellate Court found
that the standard should be cost of completion.
The Court found that the
fact that leveling the land is not cost effective is irrelevant.
The Court noted that the
fact it was a willful breach is important (although the trial judge did
not find that to be the case).
There was a strong dissent.
The dissent argued that the difference
in value should be awarded, not the cost
The dissent argued that
Groves would become enriched beyond the contract if they were awarded
Compare this case to Peevyhouse
v. Garland which agreed with the
In this case, Groves wanted
money (aka monetary damages).
However, a plaintiff could instead seek specific performance which means that they don't want the money,
they want them to do the work.
Groves never leveled the
land, even though he won the big $$$.
Probably because it would
be a waste of his $60k to level land that would only produce $12k in
return. Groves wasn't dumb.
Both the majority and the
dissent in this case applied the benefit of the bargain concept, but applied it differently.
Should courts award cost
to completion, or difference
in value? In most cases, they are
the same. There is no 'black letter' answer.
Courts tend to consider 3
Amount of the
disproportion. The less the disproportion, the more willing they are to
award cost to completion.
The extent to which the
contract is subjective and personal vs. commercial. If the person cares
about the completion, as opposed to a business deal, they are more
likely to award cost to completion.
The willfulness of the
breach. The more willful the breach, the more likely to award cost