6 Breach and Damages 6 Breach and Damages

6.1 Jacob & Youngs, Inc. v. Kent 6.1 Jacob & Youngs, Inc. v. Kent

230 N.Y. 239
129 N.E. 889

JACOB & YOUNGS, Inc.,

v.

KENT.

Court of Appeals of New York.
Jan. 25, 1921.

Action by Jacob & Youngs, Incorporated, against George E. Kent. From an order of the Appellate Division (187 App. Div. 100,175 N. Y. Supp. 281), reversing judgment for defendant entered on verdict directed by the court and granting new trial, defendant appeals.

Order affirmed and judgment absolute directed in favor of plaintiff.

McLaughlin, Pound, and Andrews, JJ., dissenting. [890]
[230 N.Y. 239]Appeal from Supreme Court, Appellate Division, First department.
[230 N.Y. 240]Henry W. Hardon, of New York City, for appellant.

Frederick Hulse and Cornelius J. Sullivan, Jr., both of New York City, for respondent.

 

CARDOZO, J.

 

The plaintiff built a country residence for the defendant at a cost of upwards of $77,000, and now sues to recover a balance of $3,483.46, remaining unpaid. The work of construction ceased in June, 1914, and the defendant then began to occupy the dwelling. There was no complaint of defective performance until March, 1915. One of the specifications for the plumbing work provides that--

‘All wrought-iron pipe must be well galvanized, lap welded pipe of the grade known as ‘standard pipe’ of Reading manufacture.'

The defendant learned in March, 1915, that some of the pipe, instead of being made in Reading, was the product of other factories. The plaintiff was accordingly directed by the architect to do the work anew. The plumbing was then encased within the walls except in a few places where it had to be exposed. Obedience to the order meant more than the substitution of other pipe. It meant the demolition at great expense of substantial parts of [230 N.Y. 241]the completed structure. The plaintiff left the work untouched, and asked for a certificate that the final payment was due. Refusal of the certificate was followed by this suit.

The evidence sustains a finding that the omission of the prescribed brand of pipe was neither fraudulent nor willful. It was the result of the oversight and inattention of the plaintiff's subcontractor. Reading pipe is distinguished from Cohoes pipe and other brands only by the name of the manufacturer stamped upon it at intervals of between six and seven feet. Even the defendant's architect, though he inspected the pipe upon arrival, failed to notice the discrepancy. The plaintiff tried to show that the brands installed, though made by other manufacturers, were the same in quality, in appearance, in market value, and in cost as the brand stated in the contract-that they were, indeed, the same thing, though manufactured in another place. The evidence was excluded, and a verdict directed for the defendant. The Appellate Division reversed, and granted a new trial.

[1] We think the evidence, if admitted, would have supplied some basis for the inference that the defect was insignificant in its relation to the project. The courts never say that one who makes a contract fills the measure of his duty by less than full performance. They do say, however, that an omission, both trivial and innocent, will sometimes be atoned for by allowance of the resulting damage, and will not always be the breach of a condition to be followed by a forfeiture. Spence v. Ham, 163 N. Y. 220, 57 N. E. 412,51 L. R. A. 238; Woodward v. Fuller, 80 N. Y. 312; Glacius v. Black, 67 N. Y. 563, 566;Bowen v. Kimbell, 203 Mass. 364, 370, 89 N. E. 542,133 Am. St. Rep. 302. The distinction is akin to that between dependent and independent promises, or between promises and conditions. Anson on Contracts (Corbin's Ed.) § 367; 2 Williston on Contracts, § 842. Some promises are so plainly independent that they can never [230 N.Y. 242]by fair construction be conditions of one another. Rosenthal Paper Co. v. Nat. Folding Box & Paper Co., 226 N. Y. 313, 123 N. E. 766;Bogardus v. N. Y. Life Ins. Co., 101 N. Y. 328, 4 N. E. 522. Others are so plainly dependent that they must always be conditions. Others, though dependent and thus conditions when there is departure in point of substance, will be viewed as independent and collateral when the departure is insignificant. 2 Williston on Contracts, §§ 841, 842; Eastern Forge Co. v. Corbin, 182 Mass. 590, 592, 66 N. E. 419; Robinson v. Mollett, L. R., 7 Eng. & Ir. App. 802, 814; Miller v. Benjamin, 142 N. Y. 613, 37 N. E. 631. Considerations partly of justice and partly of presumable intention are to tell us whether this or that promise shall be placed in one class or in another. The simple and the uniform will call for different remedies from the multifarious and the intricate. The margin of departure within the range of normal expectation upon a sale of common chattels will vary from the margin to be expected upon a contract for the construction of a mansion or a ‘skyscraper.’ There will be harshness sometimes and oppression in the implication of a condition when the thing upon which labor has been expended is incapable of surrender because united to the land, and equity and reason in the implication of a like condition when the subject-matter, if defective, is in shape to be returned. From the conclusion that promises may not be treated as dependent to the extent of their uttermost minutiae without a sacrifice of justice, the progress is a short one to the conclusion that they may not be so treated without a perversion of intention. Intention not otherwise revealed may be presumed to hold in contemplation the reasonable and probable. If something else is in view, it must not be left to implication. There will be no assumption of a purpose to visit venial faults with oppressive retribution.

Those who think more of symmetry and logic in the development of legal rules than of practical adaptation to the attainment of a just result will be troubled by a classification[230 N.Y. 243]where the lines of division are so wavering and blurred. Something, doubtless, may be said on the score of consistency and certainty in favor of a stricter standard. The courts have balanced such considerations against those of equity and fairness, and found the latter to be the weightier. The decisions in this state commit us to the liberal view, which is making its way, nowadays, in jurisdictions slow to welcome it. Dakin & Co. v. Lee, 1916, 1 K. B. 566, 579. Where the line is to be drawn between the important and the trivial cannot be settled by a formula. ‘In the nature of the case precise boundaries are impossible.’ 2 Williston on Contracts, § 841. The same omission may take on one aspect or another according to its setting. Substitution of equivalents may not have the same significance in fields of art on the one side and in those of mere utility on the other. Nowhere will change be tolerated, however, if it is so dominant or pervasive as in any real or substantial measure to frustrate the purpose of the contract. Crouch v. Gutmann, 134 N. Y. 45, 51,31 N. E. 271,30 Am. St. Rep. 608. There is no general license to install whatever, in the builder's judgment, may be regarded as ‘just as good.’ Easthampton L. & C. Co., Ltd., v. Worthington, 186 N. Y. 407, 412,79 N. E. 323. The question is one of degree, to be answered, if there is doubt, by the triers of the facts (Crouch v. Gutmann; Woodward v. Fuller, supra), and, if the inferences are certain, by the judges of the law (Easthampton L. & C. Co., Ltd., v. Worthington, supra). We must weigh the purpose to be served, the desire to be gratified, the excuse for deviation from the letter, the cruelty of enforced adherence. Then only can we tell whether literal fulfillment is to be implied by law as a condition. This is not to say that the parties are not free by apt and certain words to effectuate a purpose that performance of every term shall be a condition of recovery. That question is not here. This is merely to say that the law will be slow to impute the purpose, in the silence of the parties, where the significance [230 N.Y. 244]of the default is grievously out of proportion to the oppression of the forfeiture. The willful transgressor must accept the penalty of his transgression. Schultze v. Goodstein, 180 N. Y. 248, 251,73 N. E. 21;Desmond-Dunne Co. v. Friedman-Doscher Co., 162 N. Y. 486, 490,56 N. E. 995. For him there is no occasion to mitigate the rigor of implied conditions. The transgressor whose default is unintentional and trivial may hope for mercy if he will offer atonement for his wrong. Spence v. Ham, supra.

[2] In the circumstances of this case, we think the measure of the allowance is not the cost of replacement, which would be great, but the difference in value, which would be either nominal or nothing. Some of the exposed sections might perhaps have been replaced at moderate expense. The defendant did not limit his demand to them, but treated the plumbing as a unit to be corrected from cellar to roof. In point of fact, the plaintiff never reached the stage at which evidence of the extent of the allowance became necessary. The trial court had excluded evidence that the defect was unsubstantial, and in view of that ruling there was no occasion for the plaintiff to go farther with an offer of proof. We think, however, that the offer, if it had been made, would not of necessity have been defective because directed to difference in value. It is true that in most cases the cost of replacement is the measure. Spence v. Ham, supra. The owner is entitled to the money which will permit him to complete, unless the cost of completion is grossly and unfairly out of proportion to the good to be attained. When that is true, the measure is the difference in value. Specifications call, let us say, for a foundation built of granite quarried in Vermont. On the completion of the building, the owner learns that through the blunder of a subcontractor part of the foundation has been built of granite of the same quality quarried in New Hampshire. The measure of allowance is not the cost of reconstruction. ‘There may be [230 N.Y. 245]omissions of that which could not afterwards be supplied exactly as called for by the contract without taking down the building to its foundations, and at the same time the omission may not affect the value of the building for use or otherwise, except so slightly as to be hardly appreciable.’ Handy v. Bliss, 204 Mass. 513, 519, 90 N. E. 864,134 Am. St. Rep. 673. Cf. Foeller v. Heintz, 137 Wis. 169, 178, 118 N. W. 543,24 L. R. A. (N. S.) 321; [892] Oberlies v. Bullinger, 132 N. Y. 598, 601,30 N. E. 999; 2 Williston on Contracts, § 805, p. 1541. The rule that gives a remedy in cases of substantial performance with compensation for defects of trivial or inappreciable importance has been developed by the courts as an instrument of justice. The measure of the allowance must be shaped to the same end.

The order should be affirmed, and judgment absolute directed in favor of the plaintiff upon the stipulation, with costs in all courts.

McLAUGHLIN, J.

 

I dissent. The plaintiff did not perform its contract. Its failure to do so was either intentional or due to gross neglect which, under the uncontradicted facts, amounted to the same thing, nor did it make any proof of the cost of compliance, where compliance was possible.

Under its contract it obligated itself to use in the plumbing only pipe (between 2,000 and 2,500 feet) made by the Reading Manufacturing Company. The first pipe delivered was about 1,000 feet and the plaintiff's superintendent then called the attention of the foreman of the subcontractor, who was doing the plumbing, to the fact that the specifications annexed to the contract required all pipe used in the plumbing to be of the Reading Manufacturing Company. They then examined it for the purpose of ascertaining whether this delivery was of that manufacture and found it was. Thereafter, as pipe was required in the progress of the work, the foreman of the subcontractor would leave word at its [230 N.Y. 246]shop that he wanted a specified number of feet of pipe, without in any way indicating of what manufacture. Pipe would thereafter be delivered and installed in the building, without any examination whatever. Indeed, no examination, so far as appears, was made by the plaintiff, the subcontractor, defendant's architect, or any one else, of any of the pipe except the first delivery, until after the building had been completed. Plaintiff's architect then refused to give the certificate of completion, upon which the final payment depended, because all of the pipe used in the plumbing was not of the kind called for by the contract. After such refusal, the subcontractor removed the covering or insulation from about 900 feet of pipe which was exposed in the basement, cellar, and attic, and all but 70 feet was found to have been manufactured, not by the Reading Company, but by other manufacturers, some by the Cohoes Rolling Mill Company, some by the National Steel Works, some by the South Chester Tubing Company, and some which bore no manufacturer's mark at all. The balance of the pipe had been so installed in the building that an inspection of it could not be had without demolishing, in part at least, the building itself.

I am of the opinion the trial court was right in directing a verdict for the defendant. The plaintiff agreed that all the pipe used should be of the Reading Manufacturing Company. Only about two-fifths of it, so far as appears, was of that kind. If more were used, then the burden of proving that fact was upon the plaintiff, which it could easily have done, since it knew where the pipe was obtained. The question of substantial performance of a contract of the character of the one under consideration depends in no small degree upon the good faith of the contractor. If the plaintiff had intended to, and had, complied with the terms of the contract except as to minor omissions, due to inadvertence, then he might be allowed to recover the contract price, less the amount [230 N.Y. 247]necessary to fully compensate the defendant for damages caused by such omissions. Woodward v. Fuller, 80 N. Y. 312; Nolan v. Whitney, 88 N. Y. 648. But that is not this case. It installed between 2,000 and 2,500 feet of pipe, of which only 1,000 feet at most complied with the contract. No explanation was given why pipe called for by the contract was not used, nor that any effort made to show what it would cost to remove the pipe of other manufacturers and install that of the Reading Manufacturing Company. The defendant had a right to contract for what he wanted. He had a right before making payment to get what the contract called for. It is no answer to this suggestion to say that the pipe put in was just as good as that made by the Reading Manufacturing Company, or that the difference in value between such pipe and the pipe made by the Reading Manufacturing Company would be either ‘nominal or nothing.’ Defendant contracted for pipe made by the Reading Manufacturing Company. What his reason was for requiring this kind of pipe is of no importance. He wanted that and was entitled to it. It may have been a mere whim on his part, but even so, he had a right to this kind of pipe, regardless of whether some other kind, according to the opinion of the contractor or experts, would have been ‘just as good, better, or done just as well.’ He agreed to pay only upon condition that the pipe installed were made by that company and he ought not to be compelled to pay unless that condition be performed. Schultze v. Goodstein, 180 N. Y. 248, 73 N. E. 21; Spence v. Ham, supra; Steel S. & E. C. Co. v. Stock, 225 N. Y. 173, 121 N. E. 786;Van Clief v. Van Vechten, 130 N. Y. 571, 29 N. E. 1017;Glacius v. Black, 50 N. Y. 145, 10 Am. Rep. 449;Smith v. Brady, 17 N. Y. 173, and authorities cited on [893] page 185, 72 Am. Dec. 442. The rule, therefore, of substantial performance, with damages for unsubstantial omissions, has no application. Crouch v. Gutmann, 134 N. Y. 45, 31 N. E. 271,30 Am. St. Rep. 608;Spence v. Ham, 163 N. Y. 220, 57 N. E. 412,51 L. R. A. 238.

[230 N.Y. 248]What was said by this court in Smith v. Brady, supra, is quite applicable here:

‘I suppose it will be conceded that every one has a right to build his house, his cottage or his store after such a model and in such style as shall best accord with his notions of utility or be most agreeable to his fancy. The specifications of the contract become the law between the parties until voluntarily changed. If the owner prefers a plain and simple Doric column, and has so provided in the agreement, the contractor has no right to put in its place the more costly and elegant Corinthian. If the owner, having regard to strength and durability, has contracted for walls of specified materials to be laid in a particular manner, or for a given number of joists and beams, the builder has no right to substitute his own judgment or that of others. Having departed from the agreement, if performance has not been waived by the other party, the law will not allow him to allege that he has made as good a building as the one he engaged to erect. He can demand payment only upon and according to the terms of his contract, and if the conditions on which payment is due have not been performed, then the right to demand it does not exist. To hold a different doctrine would be simply to make another contract, and would be giving to parties an encouragement to violate their engagements, which the just policy of the law does not permit.’ (17 N. Y. 186, 72 Am. Dec. 422).

I am of the opinion the trial court did not err in ruling on the admission of evidence or in directing a verdict for the defendant.

For the foregoing reasons I think the judgment of the Appellate Division should be reversed and the judgment of the Trial Term affirmed.

HISCOCK, C. J., and HOGAN and CRANE, JJ., concur with CARDOZO, J.

 

POUND and ANDREWS, JJ., concur with McLAUGHLIN, J.


 

Order affirmed, etc.

6.2 Gibson v. City of Cranston 6.2 Gibson v. City of Cranston

Diane GIBSON, Plaintiff, Appellant, v. CITY OF CRANSTON, et al., Defendants, Appellees.

No. 94-1375.

United States Court of Appeals, First Circuit.

Heard Sept. 7, 1994.

Decided Oct. 3, 1994.

*733Lauren E. Jones, with whom Jones Associates, Providence, RI, Daniel V. McKinnon, and McKinnon & Harwood, Pawtucket, RI, were on brief, for appellant.

William F. Holt, Asst. City Sol., Cranston, RI, for appellees.

Before SELYA, Circuit Judge, ALDRICH, Senior Circuit Judge, and BOUDIN, Circuit Judge.

SELYA, Circuit Judge.

This appeal arises out of Dr. Diane Gibson’s short and stormy stay as superintendent of schools in Cranston, Rhode Island. It stands as a vivid illustration that some of life’s most instructive lessons are learned in the classroom of adversity. After educating ourselves about the facts of the case, the applicable law, and the proceedings below, we conclude that the district court correctly refused to give the plaintiffs case a passing grade.

I. BACKGROUND

Because the trial court took this case from the jury and terminated it by means of an instructed verdict, we summarize the facts adduced below in the light most congenial to appellant’s claims.

In early 1989, while serving as Assistant Superintendent of Schools in Waterloo, Iowa, plaintiff-appellant Diane Gibson applied for a job as school superintendent in Cranston. The school committee (the Committee) interviewed her twice (once publicly and once privately) and eventually offered her the post. On August 21, 1989, she met in Rhode Island with members of the Committee concerning her employment contract (the Contract). The parties signed it the next day.

The Contract contained 11 sections, counting the preamble, spread over eight pages. It specified a term that ran from October-1, 1989 to June 30, 1992. The Contract contained various clauses related to professional growth, compensation, contract renewal, salary adjustments, termination for cause, and resignation. It also provided for such miscellaneous items as certification, annual medical examinations, and disability protection. Article III described the superintendent’s duties, stating that she

shall be the chief administrator and agent of the Cranston schools and have charge of the administration of the schools under the direction of the Committee. In this capacity she shall implement, among other things, all policies approved by the Committee, provide for efficient administration of the system and provide for the performance evaluation of all administrators, teachers, and quality of the education provided.

The same article stated that the parties’ “respective rights and responsibilities ... shall be as specified in Chapter 2 of Title 16 of the [Rhode Island General Laws].”

Article VI of the Contract has particular pertinence in this litigation. By its terms, the article obligated the Committee to assess in writing the Superintendent’s overall performance at least annually. The format and procedure for the evaluation were to be decided upon by the parties no later than 60 days after the Contract’s effective date. Once an evaluation emerged, the Committee and the Superintendent were to meet for discussion of it; specifically, the Contract indicated that a meeting dedicated to this purpose would be held between February 15 and March 15 of each contract year. The evaluation was to be used in determining “if the Superintendents’s Contract is renewed/not renewed.” To this end, Article VI also contained a non-exclusive list of factors to be considered in the evaluation process and required that the end product describe in reasonable detail “specific instances of strengths and commendations as well as spe-*734eifíe instances of any unsatisfactory performance.”

At the end of the first 60 days of her reign, Dr. Gibson had not heard from the Committee regarding the evaluation process. She brought the matter to the attention of Stephen Dambruch, the Committee’s chairman. Dambruch suggested that appellant develop and disseminate a proposed evaluation form. On December 4, 1989, appellant complied. On March 1, 1990, Dambruch notified the Committee that an evaluation was due between February 15 and March 15 of each year. Five of the nine Committee members responded on the form appellant had prepared. Two other members wrote letters commenting upon appellant’s performance. Two Committee members kept their own counsel. In any event, the Committee never composed a unified performance evaluation.

This lollygagging took place during a period of considerable turmoil. In January 1990 the Committee voted to restructure the public schools, only to reverse itself two months later.1 Spurred in part by this dramatic about-face, appellant requested that the Committee provide her with a written statement of its goals. Although a meeting was held to discuss this request, the Committee never complied with it.

In March 1990 appellant became aware that the school system had improperly paid health benefits on behalf of former employees. She brought this matter to the Committee’s attention. Dambruch and his colleagues commissioned an ad hoe committee (the AHC) to mull the problem. The AHC sought to exclude appellant from its deliberations. To compound this contretemps, an assistant city solicitor wrote to Dambruch on June 8, 1990 suggesting that the AHC might be illegally infringing on the Superintendent’s administrative prerogatives and might lack the legal authority necessary to arrange for an audit of the school system’s records. Eventually, the Committee retained a certified public accountant. Although the accountant completed a study of the situation, the Committee never provided appellant either with the accountant’s report or with any feedback regarding the accountant’s recommendations.

Cranston held a municipal election in November of 1990. The electoral results significantly affected the Committee’s composition. A member suggested that appellant’s evaluation be completed before the newly elected members took office. The Committee scheduled a special meeting for this purpose, but appellant resigned before the meeting could be held. In her letter of resignation, dated December 28, 1990, appellant accused the Committee of violating the Contract by not providing a proper evaluation and statement of goals, and by infringing on the scope of her autonomy as superintendent.

All was serene for well over a year. On June 10, 1992, however, appellant, then a citizen and resident of North Carolina, sued for breach of contract in a Rhode Island state court. She claimed that the City of Cranston, acting through the Committee, disregarded duties owed under the contract, and she sought damages including the balance of her salary and benefits for the period from January 1, 1991 through June 30, 1992.2 Noting the existence of diversity jurisdiction, 28 U.S.C. § 1332 (1988), Cranston removed the case to federal district court, see 28 U.S.C. § 1441 (1988).

In due course, Chief Judge Lagueux empaneled a jury and trial commenced. At the close of the appellant’s case, Cranston moved for a judgment as a matter of law.3 The district judge assumed arguendo that Cran-ston had not fulfilled its contractual commit*735ments, but ruled that, even so, the evidence did not permit a rational jury to find a breach of sufficient materiality as to allow appellant to cease performance and recover damages for the balance of the unexpired term. This appeal followed.4

II. STANDARD OF REVIEW

When confronted with a motion for judgment as a matter of law, whether at the end of a plaintiffs case or at the close of all the evidence, a trial court must scrutinize the proof and the inferences reasonably to be drawn therefrom in the light most amiable to the nonmovant. See Rolon-Alvarado v. Municipality of San Juan, 1 F.3d 74, 76 (1st Cir.1993); Wagenmann v. Adams, 829 F.2d 196, 200 (1st Cir.1987). In the process, the court may not consider the credibility of witnesses, resolve conflicts in testimony, or evaluate the weight of evidence. See Wagenmann, 829 F.2d at 200. A judgment as a matter of law may be granted only if the evidence, viewed from the perspective most favorable to the nonmovant, is so one-sided that the movant is plainly entitled to judgment, for reasonable minds could not differ as to the outcome. See Rolon-Alvarado, 1 F.3d at 77.

Because granting a judgment as a matter of law depends upon the legal sufficiency of the evidence, appellate review is plenary. See Jordan-Milton Mach., Inc. v. F/V Teresa Marie, II, 978 F.2d 32, 34 (1st Cir.1992). It is incumbent upon the court of appeals to apply precisely the same criteria that constrain the trial court. See Rolon-Alvarado, 1 F.3d at 77. Moreover, the standard of review affords no place for any deference to the district court’s view anent state-law questions. See Salve Regina Coll. v. Russell, 499 U.S. 225, 238, 111 S.Ct. 1217, 1224-25, 113 L.Ed.2d 190 (1991).

III. ANALYSIS

The substantive law of Rhode Island governs in this diversity case. Under Rhode Island law, a contracting party may cease performance and seek damages if the other contracting party commits a breach that is “material,” see, e.g., Philip Carey Mfg. Co. v. General Prods. Co., 89 R.1.136, 151 A.2d 487, 493 (1959), or that “goes to the essence of the contract,” Aiello Constr., Inc. v. Nationwide Tractor Trailer Training & Placement Corp., 122 R.I. 861, 413 A.2d 85, 87 (1980). Some courts and commentators have cast the standard in terms of a “total” breach as opposed to a “partial” breach, with only the former justifying termination of a contract. See, e.g., Lovink v. Guilford Mills, Inc., 878 F.2d 584, 586-87 (2d Cir.1989); Arthur L. Corbin, Corbin on Contracts § 946, at 809 (1951). Because we believe these terms constitute various ways of saying the same thing, we will use them interchangeably.5

Appellant invites us to rule that materiality is always a question of fact, thereby eliminating the possibility of a directed verdict where, as here, the issue is disputed. We decline the invitation. While the state supreme court has indicated that, in this context, materiality “is- essentially a factual *736question,” and that its resolution ordinarily “requires consideration of all the pertinent evidence and the conduct and relationship of the parties,” Dunne Leases Cars & Trucks, Inc. v. Kenworth Truck Co., 466 A.2d 1153, 1160 (R.I.1983), the first part of this statement is a generalization, and, like most generalizations, it admits of exceptions. Though questions of materiality are usually to be determined by the trier of fact, in this ease the jury, the rule is not universal. As is true of virtually any factual question, if the materiality question in a given case admits of only one reasonable answer (because the evidence on the point is either undisputed or sufficiently lopsided), then the court must intervene and address what is ordinarily a factual question as a question of law.

The task of delineating which particular breaches may justify an injured party ceasing performance and bringing an action for damages is demanding, but the case law affords some insights. In Aiello, for example, the plaintiff, a contractor, sued a property owner for nonpayment of installments due under a construction contract. The Rhode Island Supreme Court upheld a finding that the defendant’s failure to pay installments as they came due went to the essence of the contract and, therefore, excused further performance by the plaintiff. See Aiello, 413 A.2d at 87. In Dunne, the court upheld a finding that a dealer committed a material breach of its franchise agreement with a truck manufacturer by failing to honor its promise to separate its leasing activities from its dealership operation. See. Dunne, 466 A.2d at 1159. In its opinion, the court emphasized the presence of evidence that the leasing activities adversely impacted the truck dealership in the areas of parking, cleanliness, parts sales, and service. See id. at 1158. On this basis, the court concluded that the dealer’s breach might be deemed material even though the dealer regularly achieved its sales quota under the franchise agreement.6 See id. at 1159.

Despite the insights that can be gleaned from these cases, the Rhode Island courts thus far have not precisely defined what constitutes a material breach. Nonetheless, we believe that the proper analysis is informed by certain commentaries and decisions from outside Rhode Island. See Michelin Tires (Canada), Ltd. v. First Nat’l Bank, 666 F.2d 673, 682 (1st Cir.1981) (“In the absence of a definitive ruling by the highest state court, a federal court may consider analogous decisions, considered dicta, scholarly works, and any other reliable data tending convincingly to show how the highest court in the state would decide the issue at hand, taking into account the broad policies and trends so evinced.”) (citation and internal quotation marks omitted). The Restatement is an especially helpful source of guidance because Rhode Island courts frequently turn to the Restatement to fill gaps in state law. See, e.g., Bibby’s Refrig., Heating & Air Cond. Inc. v. Salisbury, 603 A.2d 726, 729 (1992); Durapin, Inc. v. American Prods., Inc., 559 A2d 1051, 1059 (1989). The Restatement lists five factors that may be considered in determining whether a breach is material.7 Other commentators have espoused slightly different sets of relevant factors for use in determining materiality, such as the extent to which the contract has been performed at the time of the breach, the willfulness vel *737non of the breach, and the degree of seriousness attributable to the breach, expressed in quantitative terms. See 2 E. Allan Farnsworth, Farnsworth On Contracts § 8.16, at 442 (1990); J. Calamari & J. Perillo, Contracts 408-09 (2d ed. 1977). We believe that when the occasion arises, the Rhode Island Supreme Court will adopt some variant of these tests to determine the materiality of a breach of contract.8 In our view, the test will concentrate on factors such as those listed in the Restatement, with special emphasis, in the employment context, on the extent to which the alleged breach interferes with the duties and benefits flowing from the contract in its entirety. We need not dice matters too finely, however, for appellant’s proof can meet neither the Restatement standard nor any reasonable variant of it. We explain briefly.

While a material breach of an employment contract need not completely frustrate the entire purpose of the contract, it must be so important that it makes continued performance by the plaintiff virtually pointless, see Lovink, 878 F.2d at 587. Thus, if Cranston refused to pay appellant, or, conversely, if appellant completely withheld her services for no valid reason, the ensuing breach would reach the essence of the Contract.

But that is not what transpired here. We think it is readily apparent that, under the stringent standard that obtains, the Committee’s alleged breaches of the Contract are, as a matter of law, not material. The superintendent’s job encompasses a complex and varied set of responsibilities. Under a provision of the Rhode Island General Laws, which is incorporated into the Contract by explicit reference, the post includes a vast array of administrative, supervisory, managerial, and policymaking functions. See R.I.Gen.Laws § 16-2-11 (1988), reprinted in the appendix. This elaborate compendium of responsibilities, complemented by the multifarious provisions of the Contract itself, put appellant’s grievances into proper perspective. And so viewed, we are unable to see how a reasonable jury could find that the Committee’s conduct involved matters of sufficient significance to constitute a material breach.

Appellant’s flagship claim pirouettes around the Committee’s failure to provide her with a unified evaluation. Given the admitted feedback that appellant received from a majority of the individual Committee members, we cannot discern how the failure to reduce the feedback to a unified evaluation or the other shortcomings in the evaluation process could be deemed a material breach. Without the evaluation, appellant was still able to carry out virtually all of her responsibilities. She still received the overwhelming majority of the benefits to which the Contract entitled her. Her mere testimony that without the evaluation provision she would not have signed the employment agreement cannot make this otherwise unremarkable provision into one that “goes to the essence of the contract.” Salo Landscape & Constr. Co. v. Liberty Elec. Co., 119 R.I. 269, 376 A.2d 1379, 1382 (1977). The determination of materiality, like other aspects of contract interpretation, must be based largely on a standard of objective reasonableness rather than purely subjective belief. Cf. John F. Davis Co. v. Shepard Co., 71 R.I. 499, 47 A.2d 635, 637 (1946) (noting that the “true question” in determining the intention of the parties is “not what intention existed in the minds of the parties, but what intention is expressed by the language used”) (internal quotation marks omitted); Pahlavi v. Palandjian, 809 F.2d 938, 945 (1st Cir.1987) (commenting that “contracting parties are bound by objective manifestations and expressions, not subjective expectations”). In other words, a party cannot transmogrify a provision that, from an objective standpoint, has only marginal significance into one of central salience by the simple expedient of saying in retrospect that she believed it to be very important.

Here, notwithstanding plaintiff’s post hoc rationalization, the Committee’s failure to provide a unified evaluation seems much *738more a matter of form than of substance. It did not in any way shrink plaintiff’s major duties or deprive her of the principal benefits of her contractual bargain. Nothing about the failure betokens bad faith or an unfair course of conduct. And the sockdolager is that, at the time Dr. Gibson resigned, there was a high likelihood that the Committee would soon cure its breach by providing an evaluation; a special meeting for this purpose was scheduled to occur less than one week after she precipitously resigned.

Appellant’s fallback position is that the Committee never furnished her with a written statement of goals. But appellant had ample contact with the Committee and its members to get a sense of the school system’s objectives. Thus, as with the first alleged breach, this failure did not interfere significantly with either her duties or her benefits under the Contract. Consequently, it could not be deemed a material breach.

Finally, appellant alleges that the Committee infringed upon her administrative responsibilities. She offers two incidents to illustrate her contention: a Committee member’s action in sending a questionnaire directly to the faculty, see supra note 1, and the AHC’s attempt to exclude her from its deliberations. Given the minor nature of these supposed infractions and their subsequent resolution, no reasonable jury could find that they constitute a material breach.

IV. CONCLUSION

We need go no further. Considering all the evidence in the light most hospitable to plaintiff, no reasonable jury could find that the Committee’s alleged breaches of the Contract gutted it. Consequently, the court below did not err in granting judgment as a matter of law.

Affirmed.

APPENDIX

16-2-11. General powers and duties of superintendent. — (a) The superintendent of schools employed in accordance with the provisions of this chapter shall, under the direction of the school committee, have the care and supervision of the public schools and shall be the chief administrative agent of the school committee. The superintendent shall have such duties as are defined in this section and elsewhere in this title and other such duties as may be determined by the school committee from time to time, and shall perform such other duties as may be vested in him or her by law. In addition to the care and supervision of public schools and the appointment of employees of the district it shall be the duty of the superintendent:

(1) To implement policies established by the school committee.

(2) To recommend educational plans, policies and programs to meet the needs of the district.

(3) To recommend policies governing curriculum, courses of instruction, textbooks and transportation of students.

(4) To comply with provisions of federal and. state law and local charter provisions and ordinances.

(5) To have administrative responsibility for the school system.

(6) To oversee the care, control, and management of school facilities and equipment.

(7) To appoint all school department personnel with the consent of the school committee.

(8) To administer the personnel function of the school department consistent with personnel standards, policies, and the table of organization established by the school committee.

(9) To provide for the evaluation of department personnel.

(10) To prepare a school budget for consideration by the school committee.

(11) To authorize purchases consistent with the adopted school budget, policies and directives of the school committee, and applicable municipal policies, ordinances, and charter provisions.

(12) To be responsible for keeping the records of the school system.

(13) To report to the school committee on a regular basis the financial condition of the school system.

*739(14) To be responsible for discipline in the school system.

(15) To evaluate all schools within the school system and to report to the school committee the conformity with regulations of the board of regents and the policies, programs, and directives of the school committee.

(16) To report to the school committee on the operation of the school system, including an annual report on the district’s progress.

(17) Nothing in this section shall be deemed to limit or otherwise interfere with the rights of teachers and other school employees to collectively bargain pursuant to chapters 9.3 and 9.4 of title 28, or to allow any school superintendent to abrogate any agreement reached by collective bargaining.

(b) If at any time during the fiscal year the superintendent of schools determines, or is notified by the town chief charter officer or treasurer, that the estimated school expenses may exceed all revenue appropriated by the state or town or otherwise for public schools in the town, the superintendent of schools shall recommend to the school committee and shall in order to provide for continuous regular public school operations consistent with the requirements of § 16-2-2 without regard to financial conditions subsequently report to the town treasurer and chief charter officer what action will be taken to prevent an excess of expenditures, encumbrances, and accruals over revenues for public schools in the town.

6.3 Sackett v. Spindler 6.3 Sackett v. Spindler

[Civ. No. 23343.

First Dist., Div. One.

Jan. 30, 1967.]

SHELDON SACKETT, Plaintiff, Cross-defendant and Appellant, v. PAUL R. SPINDLER, Defendant, Cross-complainant and Respondent.

*224Vincent Hallman, Carl B. Shapiro, Patrick Sarsfield Hallinan and LeRoy W. Rice for Plaintiff, Cross-defendant and Appellant.

Kahle, Adams & Ever ton and Douglass M. Adams for Defendant, Cross-complainant and Respondent.

MOLINARI, P. J.

Plaintiff and cross-defendant, Sheldon Sackett, appeals from the judgment of the trial court determining that he take nothing on his complaint for money had and received and further awarding defendant and cross-complainant, Paul Spindler, $34,575.74 plus interest on his cross-complaint against Sackett for breach of contract. Sackett’s contentions on appeal are as follows: (1) the evidence reveals no “actionable breach” on his part; (2) damages were ineor*225rectly computed; (3) certain evidence was improperly excluded; (4) the trial court’s findings as to mitigation of damages by Spindler are not supported by the evidence; and (5) the trial court erred in awarding interest to Spindler.

The Record

As of July 8, 1961 Spindler was the owner of a majority of the shares of S & S Newspapers, a corporation which, since April 1, 1959, had owned and operated a newspaper in Santa Clara known as the Santa Clara Journal. In addition, Spindler, as president of S & S Newspapers, served as publisher, editor, and general manager of the Journal. On July 8, 19611 Spindler entered into a written agreement with Saekett whereby the latter agreed to purchase 6,316 shares of stock in S & S Newspapers, this number representing the total number of shares outstanding. The contract provided for a total purchase price of $85,000 payable as follows: $6,000 on or before July 10, $20,000 on or before July 14, and $59,000 on or before August 15. In addition the agreement obligated Saekett to pay interest at the rate of 6 percent on any unpaid balance. And finally, the contract provided for delivery of the full amount of stock to Sackett free of encumbrances when he made his final payment under the contract.

Sackett paid the initial $6,000 installment on time and made an additional $19,800 payment on July 21. On August 10 Sackett gave Spindler a check for the $59,200 balance due under the contract; however, due to the fact that the account on which this check was drawn contained insufficient funds to cover the check, the check was never paid. Meanwhile, however, Spindler had acquired the stock owned by the minority shareholders of S & S Newspapers, had endorsed the stock certificates, and had given all but 454 shares to Sackett’s attorneys to hold in escrow until Sackett had paid Spindler the $59,200 balance due under the contract. However, on September 1, after the $59,200 cheek had not cleared, Spindler reclaimed the stock certificates held by Sackett’s attorney.

Thereafter, on September 12 Spindler received a telegram from Sackett to the effect that the latter “had secured payments our transaction and was ready, willing and eager to transfer them” and that Saekett’s new attorney would contact Spindler’s attorney. In response to this telegram Spindler, by return telegram, gave Sackett the name of Spindler’s attorney. Subsequently, Sackett’s attorney contacted Spind*226ler’s attorney and arranged a meeting to discuss Sackett’s performance of the contract. At this meeting, which was held on September 19 at the office of Sackett’s attorney, in response to Sackett’s representation that he would be able to pay Spindler the balance due under the contract by September 22, Spindler served Saekett with a notice to the effect that unless the latter paid the $59,200 balance due under the contract plus interest by that date, Spindler would not consider completing the sale and would assess damages for Sackett’s breach of the agreement. Also discussed at this meeting was the newspaper’s urgent need for working capital. Pursuant to this discussion Saekett on the same date paid Spindler $3,944.26 as an advance for working capital. However, Saekett failed to make any further payments or to communicate with Spindler by September 22, and on that date the latter, by letter addressed to Saekett, again extended the time for Sackett’s performance until September 29. Again Saekett failed to tender the amount owing under the contract or to contact Spindler by that date, the next communication between the parties occurring on October 4 in the form of a telegram by which Saekett advised Spindler that Sackett’s assets were now free as a result of the fact that his wife’s petition to impress a receivership on his assets had been dismissed by the trial court in which divorce proceedings between Saekett and his wife were pending; that he was “ready, eager and willing to proceed to . . . consummate all details of our previously settled sale and purchase”; and that the decision of the trial court dismissing his wife’s petition for receivership “will clear way shortly for full financing any unpaid balance.” Accordingly, Saekett, in this telegram, urged Spindler to have his attorney contact Sackett’s attorney “regarding any unfinished details.” In response to this telegram Spindler’s attorney, on October 5, wrote a letter to Sackett’s attorney stating that as a result of Sackett’s delay in performing the contract and his unwillingness to consummate the agreement, “there will be no sale and purchase of the stock. ...” Following this letter Sackett’s attorney, on October 6, telephoned Spindler’s attorney and offered to pay the balance due under the contract over a period of time through a “liquidating trust.” This proposal was rejected by Spindler’s attorney, who, however, informed Sackett’s attorney at that time that Spindler was still willing to consummate the sale of the stock provided Saekett would pay the balance in cash or its equivalent. No tender or offer of cash or its *227equivalent was made and Sackett thereafter failed to communicate with Spindler until shortly before the commencement of this action.

Beginning during the period scheduled for Sackett’s performance of the contract Spindler found it increasingly difficult to operate the paper at a profit, particularly due to the lack of adequate working capital. In an attempt to remedy this situation Spindler obtained a loan of approximately $4,000 by mortgaging various items of personal property owned by him. In addition, in November, Spindler sold half of his stock in S & S Newspapers for $10,000. Thereafter, in December, in an effort to minimize the cost of operating the newspaper, Spindler converted the paper from a daily to a weekly. Finally, in July 1962 Spindler repurchased for $10,000 the stock which he had sold the previous November and sold the full 6,316 shares for $22,000, which sale netted Spindler $20,680 after payment of brokerage commission.

Breach, of Contract

Sackett contends that the evidence reveals no “actionable breach” on his part. The basis of his argument is that despite his failure to tender over half of the purchase price for the stock of S & S Newspapers, his duty to consummate the contract was discharged by Spindler’s conduct in two respects, namely, Spindler’s “rescission” of the purchase agreement as a result of his reclamation of the stock certificates from Sackett’s attorney on September 1 and Spindler’s “repudiation” of the contract on October 5.

To begin with, the undisputed evidence shows that of the $85,000 due from Sackett to Spindler under the purchase agreement the total amount which the former paid to the latter up to the time of trial was $29,744.26. Moreover, the purchase agreement reveals that Sackett’s promise to pay Spindler $85,000 was an unconditional one once the respective dates on which the payments were due had arrived. Accordingly, since the trial court found that it was not impossible for Sackett to perform the subject contract either by virtue of his illness and hospitalization or his pending divorce litigation, it is clear that his failure to tender the balance due under the contract constituted a breach of the agreement, a breach being defined as an unjustified or unexcused failure to perform all or any part of what is promised in a contract. (Rest., Contracts, §§ 312, 314, pp. 462, 465.) The question remains, therefore, as to whether Sackett’s duty to consummate the contract *228or to respond to Spindler in damages for the former’s failure to perform the subject contract was in any way discharged by Spindler’s conduct.

With regard first to Spindler’s reclaiming of the stock which he had previously delivered to Sackett’s attorney to hold in escrow until Sackett paid the balance due under the contract, Sackett argues that under the Uniform Stock Transfer Act (Corp. Code, §§2450 through 2486), which was in effect at the time of the transactions involved in this action,2 Spindler’s delivery of the endorsed shares of stock to Sackett’s attorney served to transfer title to these shares (Corp. Code, § 2466), and that by subsequently reclaiming the shares of stock Spindler effected a rescission of the purchase agreement and thus barred himself from being able to recover damages for Sackett’s breach of the contract.

In response to this contention we note initially that although former Corporations Code, section 2466 provided that ‘ ‘ Title to a certificate and to the shares represented thereby can be transferred ... (a) By delivery of the certificate endorsed either in blank or to a specified person by the person appearing by the certificate to be the owner of the shares represented thereby,” it is apparent that delivery of such endorsed stock certificates into escrow does not constitute a transfer of title to the stock within the purview of this section. Moreover, even if such delivery did constitute a transfer of title to the stock, a subsequent reclaiming of the stock certificates would not work a rescission of the contract pursuant to which the stock certificates were delivered into escrow. The procedure by which a unilateral rescission of a contract is effected is set forth in Civil Code, section 1691, as follows: ”... to effect a rescission a party to the contract must promptly . . . (a) Give notice of rescission to the party as to whom he rescinds; and (b) Restore to the other party everything of value which he has received from him under the contract or offer to restore the same upon condition that the other party do likewise. ...” Spindler did neither of these acts in connection with his withdrawal of the stock certificates from escrow on September 1. Rather, even after that date he continued to affirm the contract and to urge Sackett to perform it. Thus, it is clear that Spindler neither intended to rescind the contract as of September 1 nor took any action *229which could effect such a rescission.3 Secondly, with regard to Sackett’s claim that Spindler "repudiated” the contract on October 5, it is clear that the letter which Spindler’s attorney wrote to Sackett’s attorney on that date informing the latter that as a result of the "many delays” on the part of Sackett "there will be no sale and purchase of the [newspaper] stock” constituted notification to Sackett that Spindler considered his own duty of performance under the contract discharged as a result of Sackett's breach of the contract and that Spindler was thereby terminating the contract and substituting his legal remedies for his contractual rights. Such action was justifiable on Spindler’s part if, but only if, Sackett’s breach could properly be classified as a total, rather than a partial, breach of the contract. (Rest., Contracts, § 313, p. 464; 4 Corbin on Contracts, § 946, p. 809.) If, on the other hand, Sackett’s breach at that time was not total so that Spindler was not entitled to consider himself discharged under the contract, then Spindler’s action would constitute an unlawful repudiation of the contract, which would in turn be a total breach of the contract sufficient to discharge Sackett from any further duty to perform the contract. (6 Corbin on Contracts, § 1253, pp. 7, 13-16.)

Whether a breach of contract is total or partial depends upon its materiality. (Rest., Contracts, § 317, p. 471.) In determining the materiality of a failure to fully perform a promise the following factors are to be considered: (1) The extent to which the injured party will obtain the substantial benefit which he could have reasonably anticipated; (2) the extent to which the injured party may be adequately compensated in damages for lack of complete performance; (3) the extent to which the party failing to perform has already partly performed or made preparations for performance; (4) the greater or less hardship on the party failing to perform in terminating the contract; (5) the wilful, negligent, or innocent behavior of the party failing to perform; and (6) the greater or less uncertainty that the party failing to perform will perform the remainder of the contract. (Rest., Contracts, § 275, pp. 402-403.) In the instant ease, although *230Sackett had paid part of the purchase price for the newspaper stock and although his delay in paying the balance due under the contract could probably be compensated for in damages, we are of the opinion that Spindler was justified in terminating the contract on October 5 on the basis that despite Sackett’s “offers” to perform and his assurances to Spindler that he would perform, it was extremely uncertain as to whether in fact Sackett intended to complete the contract. In addition, in light of Spindler’s numerous requests of Sackett for the balance due under the contract, the latter’s failure to perform could certainly not be characterized as innocent; rather it could be but ascribed to gross negligence or wilful conduct on his part.

The facts in the instant case are similar to those in Coughlin v. Blair, 41 Cal.2d 587 [262 P.2d 305], There the plaintiffs purchased a lot from the defendants, who, in the deposit receipt evidencing the sale, agreed to install utilities and to pave the road to the subject lot within one year from the date of the agreement. On May 30, 1949, the date that performance was due under the contract, the utilities had not been installed nor had the road been paved. During the following year the plaintiffs wrote several letters to the defendants demanding performance. The defendants, however, did not perform their obligations nor did they repudiate the contract. Ultimately, on May 24, 1950, the work still not having been done, the plaintiffs brought an action for general damages based on the difference in value of the property with and without the performance promised in the contract and for special damages. In affirming the judgment of the trial court insofar as it awarded the plaintiffs general damages, the Supreme Court considered whether, in view of the defendants’ assertion that they intended to perform their obligations under the contract in the future, the trial court’s award of damages to the plaintiffs allowed them a double recovery, that is, both the improvements and damages for failure to secure the improvements. In this context the Supreme Court pointed out that if the defendants ’ breach was total, the plaintiffs could recover all their damages, past and prospective, in one action and that a judgment for the plaintiffs in such an action would absolve the defendants from any duty to perform the contract. The Supreme Court then proceeded to consider whether the plaintiffs were entitled to treat the defendants’ breach as total as of the date of the commencement of the action and concluded that “Although defendants had not expressly repudiated the con*231tract, their conduct clearly justified plaintiffs’ belief that performance was either unlikely or would be forthcoming only when it suited defendants’ convenience.” Under these circumstances it was held that the plaintiffs were not required to endure that uncertainty or to await the defendants’ convenience but were justified in treating the defendants’ nonperformance as a total breach of the contract. (Pp. 599-600 ; see also Gold Min. & Water Co. v. Swinerton, 23 Cal.2d 19, 29-30 [142 P.2d 22]; Walker v. Harbor Business Blocks Co., 181 Cal. 773,780-781 [186 P. 356].)

Similarly, in the instant case although Sackett at no time repudiated the contract and although he frequently expressed willingness to perform, the evidence was such as to warrant the inference that he did not intend to perform the subject contract. Certainly, the state of the record was such as to justify the conclusion either that it was unlikely that Sackett would tender the balance due or that he would do so at his own convenience. Spindler was not required to endure the uncertainty or to await Sackett’s convenience and was therefore justified in treating the latter’s nonperformance as a total breach of the contract. Accordingly, we conclude that the letter which Spindler’s attorney wrote to Sackett’s attorney on October 5 did not constitute an unlawful repudiation of the contract on Spindler’s part, was therefore not a breach of the contract by him, and thus did not discharge Sackett’s duty to perform the contract or, alternatively, to respond to Spindler in damages.

In any event, even if Spindler was not justified in treating Sackett’s breach as total as of October 5, the latter’s contention that his duty to perform was discharged by Spindler ’s repudiation of the contract as of that date is untenable. Since Spindler was not obligated to perform his promise at that time due to Sackett’s failure to tender the balance due under the contract, Spindler’s repudiation was, at best, anticipatory in nature. Its effect was nullified by Sackett’s disregard of it and his treating the contract as still in force as evidenced by his attempt, through his attorney, to arrange an alternative method of financing the balance due under the agreement. (See Cook v. Nordstrand, 83 Cal.App.2d 188, 195 [188 P.2d 282]; Rest., Contracts, § 319, p. 481.) Moreover, Spindler’s repudiation was itself retracted by his attorney who, on Spindler’s behalf, told Sackett’s attorney in the same conversation at which the latter suggested an alternative method of financing that Spindler was still willing to eonsum*232mate the sale provided Sackett would pay the balance due in cash or its equivalent. Such a retraction constitutes a nullification of the original effectiveness of the repudiation. (Rest., Contracts, § 319, p. 481.)

Measure of Damages

As revealed in the findings of fact in the instant case, the $34,575.74 award of damages to Spindler was calculated by subtracting from the $85,000 contract price all sums of money received by him from Sackett ($29,744.26) and Spindler’s net proceeds from his subsequent sale of the stock in July 1962 ($20,680). Sackett contends that the trial court erred in measuring damages by the difference between the contract price for the stock and the price at which Spindler ultimately resold the stock to a third party and that the proper measure of damages in the instant case should instead have been the difference between the price which Sackett agreed to pay for the stock and its value at the date of the breach. In addition, Sackett argues that even assuming the trial court used the correct measure of damages it erred in its computation of damages under this measure. In this regard he contends that since, under his contract with Spindler, he not only agreed to pay Spindler $85,000 but also agreed to assume the liabilities of the newspaper, which at the time of the agreement amounted to $201,849.33, and since under Spindler’s sale of the stock in 1962 the buyer was also to assume the newspaper’s liabilities, which at that time were approximately $219,844.63, the increase in liabilities during this interval, i.e., $17,995.30, constituted “gross income” to Spindler and “should have been deducted from the judgment as money which had been received by the seller.” We concern ourselves initially with the question of what measure of damages was appropriate in the instant ease.

Sackett concedes that under the holding of Porter v. Gibson (1944) 25 Cal.2d 506, 511-514 [154 P.2d 703], the provisions of the Uniform Sales Act (Civ. Code, §§ 1721-1800),4 which was in effect at the time of the subject transaction, are not applicable to a sale of corporate stock.5 (See also Franck v. J. J. Sugarman-Rudolph Co. (1952) 40 Cal.2d 81, 87-88 [251 P.2d 949].) Accordingly, section 1784 of the Uniform Sales Act providing that the seller’s measure of damages for the buyer’s breach of a contract to purchase goods is the *233difference between the contract price and the market price at the time of the breach is not applicable in the instant case. While under the holding of the Porter case the provisions of the Uniform Sales Act are not applicable to a sale of corporate stock, that case, in holding that upon the vendee’s breach of a contract to purchase stock when the title to it had passed the vendor may retain the stock for the vendee and sue for the purchase price, applied the law applicable to sales of personal property as that law is articulated in Cuthill v. Peabody (1912) 19 Cal.App. 304 [125 P. 926]. Moreover, since the principles of the Cuthill case, as applied by Porter, were approved in Franck, we deem them applicable here.

The Cuthill case, decided prior to the adoption of the Uniform Sales Act, was an action by the vendor of shares of stock against the vendee to recover the purchase price of the stock, which the vendee had contracted to purchase. In considering whether such a remedy was available to the vendee, the appellate court applied to sales of corporate stock the provisions of the Civil Code and rules of law in cases dealing with personal property, as those rules existed before the adoption of the Sales Act. Based upon those principles, the court in Guthill concluded that since the title to the stock had passed, the vendor could sue for the purchase price. However, in its opinion, the court articulated the rule that where title to corporate stock has not passed, the vendor, upon the refusal of the vendee to accept the stock and pay the agreed price therefor, cannot sue for the purchase price but is compelled to recoup his loss, if any, solely by an action for damages founded upon a breach of the vendee’s contract to accept and pay for the property. (P. 308.) In this regard, Guthill noted that the applicable remedy, under the general rule, is that ‘1 The vendor may treat and keep the property as his own, and recover from the vendee the difference between the contract price and the market price at the time and place of delivery [citations].” (P. 308.)

Cuthill, suggests, by a mere citation of section 3311 which was then in force, and without any discussion of the applicability of that section, that the applicable remedy, upon the vendee’s breach of a contract for the purchase of property to which title has not passed, is that provided for in that statute. Section 3311 provided, essentially, that the measure of damages for the buyer’s breach of a contract to accept and pay for personal property where title was not vested in the purchaser and the property was not resold in the manner *234provided by section 30496 is the difference between the price which the purchaser agreed to pay and the value of the property to the seller. That section was qualified by section 3353, which provided that the value of the property to a seller is deemed to be the price obtainable therefor in the market nearest to the place at which the property should have been accepted by the buyer and at such time after the breach of the contract as would have sufficed, with reasonable diligence, for the seller to effect a resale.7 (See Willson v. Gregory, 2 Cal.App. 312, 314 [84 P. 356]; Meyer v. McAllister, 24 Cal. App. 16, 17 [140 P. 42]; Lillie v. Weyl-Zucherman & Co., 45 Cal.App. 607, 610 [188 P. 619]; California P. G. Assn. v. Herspring, 60 Cal.App. 503, 511-512 [213 P. 518]; Hill v. McKay, 94 Cal. 5, 17-18 [29 P. 406] ; Hewes v. Germain Fruit Co., 106 Cal. 441, 446-447 [39 P. 853] ; and see Royer v. Carter (1951) 37 Cal.2d 544, 549 [233 P.2d 539].)

In 1931 when the Legislature adopted the Uniform Sales Act, it repealed section 3311. Section 3353, however, was retained and still remains in the Civil Code. In Boyer, which was an action for breach of a contract to purchase realty, section 3353 was held to be inapplicable to real property on the basis that its language suggests that it is limited to sales of personal property. Accordingly, the Supreme Court concluded that since section 3353 has no application to the sales of real property, the applicable rule in cases involving sales of real property, in the light of the provisions of section 3307,8 was the general rule which required that damages be computed as of the date of the breach of the agreement to purchase the property. (Pp. 549-550.) In Honey v. Henry’s Franchise Leasing Corp. (1966) 64 Cal.2d 801 [52 Cal.Rptr. 18, 415 P.2d 833], a case involving a contract to purchase real and personal property, the Supreme Court, although it sent the case back to the lower court for retrial on the issue of damages because the vendor repossessed some of the property before trial and it was ‘“impossible to determine from the *235record whether the value of all the property at the time of the trial was equal to its value at the time of the breach plus any consequential damages that may have been incurred” (p. 805), reiterated the rule of the Boyer case and the interpretation which it had, in that case, placed on section 3307. We note, moreover, that while Honey involved both real and personal property, and while its holding turned essentially on the interpretation of section 3307, which applies only to real property, the Supreme Court in that case made no distinction between real and personal property.

The Royer case, moreover, specifically noted that section 3353 was invoked by the courts before the adoption of the Uniform Sales Act to define the term “value to the seller” as used in former section 3311. Although section 3353 is still extant and has now been specifically restricted to cases involving personal property, it is doubtful that it now has any efficacy in view of the repeal of section 3311, which section it was intended to qualify. Since section 3353 comes into play when the “value of property to a seller” is to be utilized in estimating damages, it would have no applicability to personalty which came within the purview of the Uniform Sales Act, the measure of damages for the buyer’s breach of a contract to purchase goods under section 1784 being the difference between the contract price and the market price at the time of the breach.9 We conclude, therefore, that insofar as corporate stock is concerned we are, by virtue of the repeal of section 3311, relegated to the general rule articulated in Cuthill that where title to the stock has not passed, the measure of damages for breach of a contract to accept and pay for the stock is the difference between the contract price and the market price at the time and place of delivery.

It is the general rule, both under the Uniform Sales Act and apart from it, that where the title to goods has not passed to the buyer and the seller has the property in his possession or under his control, the measure of damages upon the buyer’s refusal to accept and pay for goods for which there is an available market is, in the absence of special circumstances, the difference between the contract price and the market or current price or value at the time and the place where the goods ought to have been delivered and accepted, or, if no time is fixed for acceptance, then at the time of the refusal to accept. (78 C.J.S. Sales, § 478, p. 137; see Southern *236Pac. Mill Co. v. Billiwhack etc. Farm (1942) 50 Cal.App.2d 79, 87 [122 P.2d 650].) As used in this measure, the words “market price” and “market value” mean the same thing, that is, the price or value of the article as established or shown by sales in the way of ordinary business; the price at which goods are freely offered in the market to all the world. (Southern Pac. Mill Co. v. Billiwhack etc. Farm, supra, p. 88; Kings County Packing Co. v. Sunland Sales etc. Assn. (1929) 100 Cal.App. 126, 133 [279 P. 1036]; 78 C.J.S., supra, p. 138.)

The above-stated measure of damages, however, does not ordinarily apply when there is no market available at the time and place of performance. In such eases resort may be had to the market value of the goods at the nearest available market; and in the absence of an available market, it has been held that the measure of damages may be the difference between the contract price and the value of the goods as best as can be ascertained, or the difference between the contract price and the best offer that can be obtained for the goods, or the difference between the contract price and the price obtained on a resale, or the actual damages naturally and directly resulting from the buyer’s breach. (78 C.J.S., supra, § 478(c) and cases cited; and see Los Angeles Coin-O-Matic Laundries v. Harow, 195 Cal.App.2d 324, 331-335 [15 Cal.Rptr. 693]; and see subd. (2) of former § 1784 and Com. Code, § 2708.) Moreover, even where there is an available market, ‘ ‘ The general rule that the measure of damages is the difference between the contract price and the market value is not a hard-and-fast rule, but may be varied if circumstances require it; and it will not be followed where a better method of measuring loss or damages is available under the circumstances.” (78 C.J.S., supra, p. 138; see subd. (3) of former § 1784; Com. Code, § 2708; and see Los Angeles Coin-O-Matic Laundries v. Harow, supra.)

It is apparent from the foregoing principles that the measure of damages applied by the trial court in the instant case, namely, the difference between the contract price and the net amount of $20,680 received by Spindler from the resale in July 1962, was proper under the circumstances of this case since the record contains evidence from which the trial court could properly conclude that there was no available market for the stock at the time of Sackett’s breach. We refer to the testimony of Joseph Snyder, a newspaper broker, to the effect that because the prospective sale of the newspaper by Spindler to Sackett had been publicized in the local newspaper, the former would have great difficulty making a resale *237of the newspaper after the latter’s failure to consummate the purchase agrément, and that Spindler was in fact extremely fortunate to sell his stock in July 1962. In view of this evidence which tends to show the unavailability of a market for the stock at the time of the breach, we conclude that the trial court was entitled to use the resale price in determining Spindler’s damages. Finally, we need not consider whether the trial court, in using the resale price to measure Spindler’s damages, should have valued the stock after the breach at $20,000 based upon the sale which Spindler made of one-half of the stock for $10,000 in November 1961. The fact that the trial court used the ultimate net sale price of $20,680 to determine the value of the stock served only to benefit Sackett since a comparison of these two figures show that the value of the stock had increased by the time of the second sale.

Having concluded that the trial court applied the correct measure of damages in the instant case, we consider Sackett’s argument that in computing damages under this measure the trial court should have taken into consideration the fact that the liabilities of the newspaper increased some $17,995.30 during the one-year period between the time he agreed to purchase Spindler’s stock and the sale of the stock which the latter ultimately effected. This contention is without merit for the reason that both agreements of sale involved an exchange of the stock of S & S Newspapers for a fixed amount of money, in the one ease $85,000 and in the other $22,000. The newspaper’s liabilities at each of these times, or more properly the relationship of its liabilities to its assets, was obviously a primary factor in determining the amount which each buyer was willing to pay for the stock and was thus reflected in the contract price of the stock at each date. To this extent the increase in the newspaper’s liabilities was necessarily and properly considered by the trial court in awarding damages to Spindler. Any separate or additional consideration by the trial court of the increase in liabilities would have been improper.

Evidence As to the Value of the Stock at the Date of Breach

Based upon his contention that the proper measure of damages in the instant case should have been the difference between the contract price for the stock and the value of the stock at the date of breach, Sackett contends that the trial court erred in excluding evidence concerning the value of the stock as of the date of breach. The evidence which Sackett *238claims the court erroneously excluded was not directed to the value of the stock as of the date of the breach, but, rather, to the value of the business as of October 5. This evidence was sought to be elicited from Spindler on cross-examination. The record discloses that Spindler, when queried as to the value of the business as of October 5, testified that he did not know its value as of that date, but that it was less than the $85,000 which Sackett had agreed to pay. The objection which the trial court sustained was to an argumentative question by Sackett’s counsel as to whether Spindler agreed with Snyder ’s testimony that the value of a weekly newspaper was the annual gross of the business. The objection was sustained on the ground that the question assumed a fact not in evidence on the basis that Snyder had not so testified. Although the colloquy which followed between court and counsel elicited a statement from the court that it deemed the value of the business two or three weeks after July 8, the date of the sale, as immaterial, the record is unclear as to whether the trial court understood that Sackett’s counsel was attempting to show by his argumentative question the value of the stock as of the date of the breach. While the subject was not pursued after the colloquy, we cannot say from a perusal of the record that the trial court foreclosed Sackett’s counsel from making the showing he now asserts he was precluded from making.

Mitigation of Damages

The trial court specifically found that Spindler “spent all reasonable efforts in minimizing damages to plaintiff . . .” and that “The diminution in value of the ‘S & S Newspapers’ ’ business after September 9, 1961 and the consequent diminution in value of the corporate stock in ‘S & S Newspapers’ after September 9, 1961 was directly caused by the conduct of plaintiff ... in breaching the aforesaid contract of July 8, 1961 and plaintiff [’s] . . . failure to pay to defendant . . . the entire purchase price on or before October 5, 1961.” Sackett contends that these findings are not supported by the evidence.

! It is well established in California that a party injured by a breach of contract is required to do everything reasonably possible to minimize his own loss and thus reduce the damages for which the other party has become liable. (Valencia v. Shell Oil Co., 23 Cal.2d 840, 844 [147 P.2d 558]; Johnson v. Comptoir etc. D’Exportation, 135 Cal.App.2d 683, 689 [288 P.2d 151]; Hunter v. Croysdill, 169 Cal.App.2d 307, 318 [337 P.2d 174].) From this rule it follows that a person *239who has been injured by a breach of contract cannot recover damages for detriment which he could have avoided by reasonable effort and without undue expense. (Hunter v. Croysdill, supra; Murphy v. Kelly, 137 Cal.App.2d 21, 31 [289 P.2d 565]; Valencia v. Shell Oil Co., supra.) The question of whether the injured party has acted reasonably in mitigating damages is one of fact. (Jegen v. Berger, 77 Cal.App.2d 1, 11 [174 P.2d 489].) Accordingly, where, as in the instant case, the trial court has made findings of fact to the effect that the injured party has acted reasonably in minimizing his damages, this finding must be upheld on appeal if the record contains any substantial evidence in support of such finding.

In the instant case it is clear that the record contains ample evidence tending to show that Spindler acted reasonably in minimizing damages. Firstly, in order to improve the financial condition of the newspaper he made several efforts to raise working capital for the business. This he did by personally borrowing money for additional capital and by selling one-half of his stock. In addition, he cut costs by changing the newspaper from a daily to a weekly paper. Sackett argues that after Spindler had determined that Sackett had breached the contract, Spindler did not list the newspaper for sale with a broker nor did he take any other steps to sell the newspaper. However, according to Snyder’s testimony, such action on the part of Spindler would have been futile since it would be almost impossible for him to sell the newspaper after the publicized sale to Sackett had fallen through. In addition, since the record reveals that, the financial condition of the newspaper immediately after Sackett’s breach was worse than its financial condition approximately one year later, it is apparent that Spindler’s damages would have been greater if he had been able to sell the stock at an earlier date. Finally, Sackett contends that Spindler was required to accept Sackett’s so-called “offer” of October 4 in order to minimize damages. However, Sackett’s telegram of October 4 contained no tender of performance, but only an expression of willingness to proceed to consummate the sale as soon as the release of his assets from threatened receivership in his divorce action would permit “full financing” of the unpaid balance.

The Propriety of the Interest Award

In addition to awarding Spindler damages in the amount of $34,575.74, the trial court awarded him interest on that sum *240at 6 percent from September 29 to the date of entry of judgment. Sackett contends that this award of interest was error. With this contention we agree. Section 3287 provides for the inclusion of interest in an award of damages as follows: “Every person who is entitled to recover damages certain, or capable of being made certain by calculation, and the right to recover which is vested in him upon a particular day, is entitled also to recover interest thereon from that day, except during such time as the debtor is prevented by law, or by the act of the creditor from paying the debt. ...” (See Axell v. Axell, 114 Cal.App.2d 248, 255-256 [250 P.2d 182].) In Maurice L. Bein, Inc. v. Housing Authority, 157 Cal. App.2d 670, 686 [321 P.2d 753], the applicable principle is stated as follows: “As a general rule interest in the form of damages is not allowed prior to rendition of judgment on an unliquidated claim or on the amount of a demand which cannot be ascertained either from the face of the contract or by reference to a well-established market value.” (See also Tomlinson v. Wander Seed & Bulb Co., 177 Cal.App.2d 462, 476 [2 Cal.Rptr. 310]; see also Axell v. Axell, supra, 256; Lineman v. Schmid, 32 Cal.2d 204, 212 [195 P.2d 408, 4 A.L.R.2d 1380].) These principles preclude Spindler ’s recovery of interest in the instant case for two reasons. In the first place, since Saekett did not expressly repudiate his agreement with Spindler, the exact date of breach for the purpose of calculating interest is not certain. Secondly, since there was no available market at the time of the breach, the court was required to determine the market price based upon other factors. It follows, therefore, that since Spindler’s damages could not be made certain without this determination of market value by the court, interest was not properly awarded to him.

The judgment is modified by deleting therefrom the award of interest from September 29,1961 to the date of the entry of judgment. As so modified, the judgment is affirmed. Respondent Spindler to recover costs.

Sims, J., and Bray, J.,* concurred.

Appellant’s petition for a hearing by the Supreme Court was denied March 29, 1967. Sullivan, J., did not participate therein.

6.4 Khiterer v. Bell 6.4 Khiterer v. Bell

Opinion

*1 A patient who proves breach of a contract for professional dental services, but does not also prove personal or economic harm, may recover only nominal damages for the breach.
Inna Khiterer began treating with Dr. Mina Bell in October 2001. The treatment included root canal therapy on two teeth and the fabrication and fitting of crowns for those teeth, as well as the fabrication and fitting of a replacement crown for a third tooth. The crowns were fitted in June 2002, and, after several broken appointments, Ms. Khiterer last saw Dr. Bell in December 2002. Ms. Khiterer treated with another dentist the following summer, and, according to her testimony at trial, learned that the crowns with which she was fitted by Dr. Bell were not fabricated in accordance with their agreement. Specifically, the crowns were made totally of porcelain, rather than of porcelain on gold as they, allegedly, should have been.
Ms. Khiterer's complaint in this Small Claims Part action alleges “defective services rendered and breach of contract”. Advised prior to trial that any claim in the nature of dental malpractice required expert proof (see Mevorah v. King, 303 A.D.2d 657, 657–58 [2d Dept 2003]; Davis v. Levine, 4 Misc.3d 143[A], 2004 N.Y. Slip Op 51101[U], *2 [App Term 2d and 11th Jud Dists]; Tyler v. Krones, 2 Misc.3d 129[A], 2003 N.Y. Slip Op 51709[U], *1 [App Term, 9th and 10th Jud Dists] ), Ms. Khiterer elected to proceed on her breach of contract claim only.
“A breach of contract claim in relation to the rendition of medical or dental services by a physician or dentist will withstand a test of its legal sufficiency only when based upon an express special promise to effect a cure or accomplish some definite result.” (Clarke v. Mikail,238 A.D.2d 538, 538 [2d Dept 1997]; see also Robins v. Finestone, 308 N.Y. 543, 546 [1955].) A contract cause of action might be based upon a “specific promise to deliver [a] baby without administration of blood” (see Nicoleau v. Brookhaven Memorial Hospital Center, 201 A.D.2d 544, 545 [2d Dept 1994]; a “special contract” by a dentist “to remove every part of [extracted] teeth from every part of the [patient's] body” (see Keating v. Perkins, 250 AD 9, 10 [1st Dept 1937]; a “promise” by a dentist to return the fee paid for “bridge and crown work” if the patient was “dissatisfied” (see Aymar v. Bloomingdale, 157 NYS 837, 837 [App Term, 1st Dept 1916] ); and a “special agreement” by a plastic surgeon “to employ a different method than plastic surgeons use” (see Paciocco v. Acker, 121 Misc.2d 342, 342 [Sup Ct, Nassau County 1983] ).
The agreement alleged here, for dental services including root canal therapy and the fabrication and fitting of crowns made of porcelain on gold, had as its predominant purpose the furnishing of services, and is, therefore, governed by the general law of contracts and not by Article 2 of the Uniform Commercial Code. (See Perlmutter v. Beth David Hospital, 308 N.Y. 100, 106 [1954]; Betro v. GAC Intern., Inc., 158 A.D.2d 498, 499 [2d Dept 1990]; Goldfarb v. Teitelbaum, 149 A.D.2d 566, 567 [2d Dept 1989].) As will appear, however, the result would be the same in any event.
*2 Ms. Khiterer testified that, because she had previously been fitted with crowns made of porcelain on gold (actually an 86% gold alloy, as Dr. Bell explained), she requested that the three crowns that she would receive from Dr. Bell also be made of porcelain on gold. Ms. Khiterer also offered the testimony of a friend, Sergei Leontev, who said that he was present during a conversation between Ms. Khiterer and Dr. Bell, and heard Dr. Bell assure Ms. Khiterer that she would be receiving three “golden-based crowns”. Mr. Leontev also testified that he made a similar agreement with Dr. Bell that was later changed to all-porcelain crowns.
Dr. Bell testified that she had no independent recollection of any conversation with Ms. Khiterer about the composite material for the crowns. She testified further that an all-porcelain crown was therapeutically superior to a crown containing any metal, including the gold alloy, because the presence of metal created a risk of patient reaction. The cost to her, she said, of an all-porcelain crown and a porcelain-on-metal crown is the same, but the cement that binds the all-porcelain crown is more expensive.
Dr. Bell presented a copy of Ms. Khiterer's chart, showing an entry for the first visit on October 21, 2001 of “crowns metal-free”. Impressions for the crowns, however, were apparently taken seven months later on May 30, 2002. Ms. Khiterer presented a summary of all treatment she received from Dr. Bell, handwritten by Dr. Bell, showing the notations for two teeth “rct / post / crown / pfm” and for one additional tooth “pfm”. Dr. Bell explained that “rct” stood for “root canal therapy” and that “pfm” stood for “porcelain fused metal”. She maintained that “pfm” was shorthand for any crown no matter the composition, but did not satisfactorily explain the then-redundant notation “crown/pfm”.
The Court finds that the contract between Ms. Khiterer and Dr. Bell called for crowns made of porcelain on gold, but that the crowns with which Ms. Khiterer was fitted were made of all porcelain. There is no evidence that Dr. Bell intentionally substituted all porcelain for porcelain on gold. Intent is not required, of course, for a breach of contract, but, as will appear, it may affect the remedy for the breach. Dr. Bell pointed to an entry in Ms. Khiterer's chart for June 5, 2002, the date the crowns were fitted, that reads, “Patient satisfied w/ esthetic (sic ) cementation”, as evidence that Ms. Khiterer was satisfied with the all-porcelain crowns. But the entry cannot bear that weight, particularly in light of the evidence that Ms. Khiterer could not and did not know that the crowns were all porcelain until her teeth were x-rayed by her successor dentist.
The damages recoverable in a contract action against a doctor or dentist “are restricted to payments made and to the expenditures for nurses or medicines or other damages that flow from the breach.” (Robins v. Finestone, 308 N.Y. at 546 [quoting Colvin v. Smith, 276 AD 9, 10[3d Dept 1949].) The precise scope of this damage formula is not entirely clear. (See Sullivan v. O'Connor, 363 Mass 579, 584–85, 296 N.E.2d 183, 187 [1973].) It would include the amount of the fee paid or due to the doctor or dentist, but, as the decisions make clear, would not include “pain and suffering.” (See Semel v. Culliford, 120 A.D.2d 901, 902–03 [3d Dept 1986]; Mitchell v. Spataro, 89 A.D.2d 599, 599 [2d Dept 1982][“pain and suffering and other noneconomic loss”]; Paciocco v. Acker, 121 Misc.2d at 344 [“actual economic loss damage”].) It would be seem, therefore, that Ms. Khiterer would be entitled to recover as damages at least the fee she paid to Dr. Bell for the fabrication and fitting of the three crowns. The opinions, however, appear to assume that there had not been substantial performance of the contract by the doctor.
*3 Developed in the context of construction contracts, the substantial performance doctrine allows the contractor to recover or retain the contract price for the work, with a deduction for the cost of completion or correction to contract requirements. (See James E. McMurray Enterprises, Inc. v. Frohlich, 309 A.D.2d 836, 837 [2d Dept 2003]; Teramo & Co., Inc. v. O'Brien–Sheipe Funeral Home, Inc., 283 A.D.2d 635, 637 [2d Dept 2001].) The doctrine is applicable to employment contracts (see Hadden v. Consolidated Edison Co. of New York, Inc., 34 N.Y.2d 88, 96 (1974), real estate brokerage agreements (see Kaye v. Greenspan, 118 A.D.2d 831, 832 [2d Dept 1986] ), and leases (see Vanguard Diversified, Inc. v. Review Co., 35 A.D.2d 102, 105 [2d Dept 1970] ), and no reason suggests itself for not applying the doctrine as well to contracts for medical or dental services.
As articulated by Judge Cardozo in his seminal opinion in Jacob & Youngs v. Kent (230 N.Y. 239 [1921] ), “The courts never say that one who makes a contract fills the measure of his duty by less than full performance. They do say, however, that an omission, both trivial and innocent, will sometimes be atoned for by allowance of the resulting damage, and will not always be the breach of a condition to be followed by a forfeiture” (id., at 241). The doctrine is required by justice, so as not “to visit venial faults with oppressive retribution” (see id., at 242), and “[t]he transgressor whose default is unintentional and trivial may hope for mercy if he will offer atonement for his wrong” (id., at 244). But “[t]he willful transgressor must accept the penalty of his transgression.” (Id.) “The interrupted work may have been better than called for in the plans. Even so, there can be no recovery if the contractor willfully and without excuse has substituted something else.” (Buccini v. Paterno Construction Co ., 253 N.Y. 256, 258–59 [1930]; see also Hadden v. Consolidated Edison Co. of New York, Inc., 34 N.Y.2d at 98 n 9 [“treating willfulness ... as one of several factors to be considered in determining whether ... performance is substantial” when subject contract is “divisible”].)
“[C]onveying a benefit upon a party does not ipso facto constitute substantial performance.” (Joson Iron Works, Inc. v. Staten Island Majors Realty Corp, 1998 U.S. App LEXIS 22043, *7 [2d Cir][applying New York law].) “A contractor is not entitled to compensation from an owner even for improvements which benefit the owner unless that is a benefit for which an owner agreed to pay.” (Nieman–Irving & Co. v. Lazenby, 263 N.Y. 91, 94 [1933].)
“Substitution of equivalents may not have the same significance in fields of art on the one side and in those of mere utility on the other.” (Jacob & Youngs v. Kent, 230 N.Y. at 243; see also Lyon v. Belosky Construction Inc., 247 A.D.2d 730, 732 [3d Dept 1998][“the aesthetic appearance of the home, both inside and out, was of utmost importance to the plaintiffs”]; Ferrari v. Barleo Homes, Inc., 112 A.D.2d 137, 138 [2d Dept 1985][“the small difference in the thickness of the floors created by the substitution was not noticeable”].) “Nowhere will change be tolerated, however, if it is so dominant or pervasive as in any real or substantial measure to frustrate the purpose of the contract ... There is no general license to install whatever, in the builder's judgment, may be regarded as ‘just as good’... We must weigh the purpose to be served, the desire to be gratified, the excuse for deviation from the letter, the cruelty of enforced adherence.” (Jacob & Youngs v. Kent, 230 N.Y. at 243 [quoting Easthampton Lumber & Coal Co. v. Worthington, 186 N.Y. 407, 412 [1906].)
*4 Where substantial performance has been rendered, the remedy is the cost of completion or correction, unless that cost “is grossly and unfairly out of proportion to the good to be attained. When that is true, the measure is the difference in value.” (Id., at 244; see also Ferrari v. Barleo Homes, Inc., 112 A.D.2d at 137–38 [awarding “difference in value between the contract materials and the substituted materials actually utilized”].) The “difference in value rule” is applied to avoid “economic waste”. (See Bellizzi v. Huntley Estates, Inc., 3 N.Y.2d 112, 115 [1957]; Lyon v. Belosky Construction Inc., 247 A.D.2d at 731.) But where the defect in performance is substantial, the cost of completion or correction will be awarded “notwithstanding the relatively small fee ... charged for services rendered.” (See id., at 732.)
Here, as already noted, there is no evidence that Dr. Bell intentionally substituted all porcelain for porcelain on gold as the material from which Ms. Khiterer's crowns were to be fabricated. The all-porcelain crowns were clearly suitable functionally for the intended purpose; indeed, there is no evidence to contradict Dr. Bell's opinion that they were better. Nor was there evidence to contradict her testimony of economic equivalence, and Ms. Khiterer testified that the fee she was charged by Dr. Bell was significantly less than the fee she had been quoted by other dentists. There is no evidence of physical harm to Ms. Khiterer from the all-porcelain crowns; although she testified that two of the crowns have been replaced by porcelain-on-gold crowns, there was no evidence that the replacement was necessitated by the composition of the all-porcelain crowns. And Ms. Khiterer was satisfied with the all-porcelain crowns from an aesthetic perspective.
If, therefore, there is to be a determination that Dr. Bell did not substantially perform her contract with Ms. Khiterer—or, to put it differently, that her performance was substantially defective it must rest on recognition of a patient's right to control, without qualification, any material that would become part of her body. The only decision of which this Court is aware that seems relevant to the issue suggests that the contract action against a doctor or dentist does not extend that far.
In Semel v. Culliford (120 A.D.2d 901), the patient alleged that the doctor “fail[ed] to accomplish what he specifically undertook and agreed to do, take out all of the wire sutures” that had been implanted in the patient during previous open-heart surgery (see id., at 902).The court held that, “[a]s drafted”, the patient's contract cause of action could not withstand the doctor's motion for summary judgment. (See id.) Although the court saw “an issue of fact concerning the extent of the surgery [the doctor] actually contracted to perform”, the only damage said to have been sustained is ... pain and suffering items of injury not obtainable in a contract action.” (See id.)
*5 Tort cases concerning lack of consent to medical treatment address a somewhat similar issue. “Every human being of adult years and sound mind has a right to determine what shall be done with his own body; and a surgeon who performs an operation without his patient's consent, commits an assault, for which he is liable for damages.” (Schloendorff v. Society of New York Hospital, 211 N.Y. 125, 129–30 [1914].) But, if the patient “fail[s] to prove any damages causally related to her lack of consent”, she may recover only nominal damages. (See Garzione v. Vassar Brothers Hospital, 36 A.D.2d 390, 393 [1st Dept 1971], aff'd 30 N.Y.2d 857 [1972]; Barnette v. Potenza, 79 Misc.2d 51, 56–57 [Sup Ct, Nassau County 1974].)
And so, when a patient sued her dentist because “the wrong tooth had been extracted”, but “the tooth that was extracted was badly diseased and should have been extracted”, a judgment for the patient could not stand. (See Doniger v. Berger, 241 AD 23, 23, 26 [1st Dept 1934].) The court noted that “no injurious results to the patient were proved” and “no special contract was made.” (Id., at 26.) A dissenting judge disagreed on the latter issue, finding proof of a “breach of a special contract resulting in a trespass.” (See id. [O'Malley, J, dissenting].) He would have allowed damages “predicated ... upon the additional expense [the patient] would be required to incur for contemplated bridge work by reason of the absence of the tooth extracted.” (See id., at 27–28.) There was no suggestion of an award of general damages, unrelated to proof of physical or economic harm.
Whether the form of action is contract or tort, “the inquiry must always be, what is an adequate remedy to the party injured”; “the law awards to the party injured a just indemnity for the wrong which has been done him, and no more.” (Baker v. Drake, 53 N.Y. 211, 220 [1873]; see also Campagnola v. Mulholland, Minion & Roe, 76 N.Y.2d 38, 42 [1990].) The tort cases for lack of consent to medical treatment support a conclusion that an invasion of the interest to control one's body is not compensable beyond an award of nominal damages, in the absence of proof of other harm, presumably including, in an appropriate case, emotional harm. (See Hawkins v. Brooklyn–Caledonian Hospital, 239 A.D.2d 549, 553 [2d Dept 1997].)
The Court concludes that Dr. Bell's breach of her contract with Ms. Khiterer, fitting her with all-porcelain crowns rather than porcelain-on-gold crowns, was not substantial, so as to warrant a return of her total fee. An award based upon the cost of replacement (which, in any event, has not been established by competent evidence) would be “grossly and unfairly out of proportion to the good to be obtained.” (See Jacob & Youngs v. Kent, 230 N.Y. at 244.) And, under the circumstances here, the “difference in value rule” yields an award of only nominal damages, to which Ms. Khiterer is entitled upon proof of breach of contract. (See Manhattan Savings Institution v. Gottfried Baking Co., 286 N.Y. 398, 400 [1941]; Magu Realty Company v. Spartan Concrete Corp., 239 A.D.2d 469, 470 [2d Dept 1997].)
*6 The Court's analysis and conclusion are supported by an analysis of Ms. Khiterer's claim, and the conclusion that would be reached, under Article 2 of the Uniform Commercial Code. The contract description of the goods, porcelain-on-gold crowns, would constitute “an express warranty that the goods shall conform to the description.” (See UCC § 2–313[1][b].) Ms. Khiterer could reject the crowns if they “fail[ed] in any respect to conform to the contract.” (See UCC § 2–601.) But Ms. Khiterer's use of the crowns for approximately two years would constitute acceptance of them (see UCC § 2–606 [1][c] ); and, consistent with the substantial performance doctrine in general contract law, Ms. Khiterer could revoke her acceptance of the crowns only if the “non-conformity substantially impair[ed] [their] value” (see UCC § 2–608 [1].) Without a substantial impairment of value, Ms. Khiterer's acceptance would stand, and she would be obligated to pay for the crowns “at the contract rate”. (SeeUCC § 2–607[1].) She would retain a claim for damages, however, measured by the “difference ... between the value of the goods accepted and the value they would have had if they had been as warranted.” (See UCC § 2–714 [2].) Applying that formula, her damages would be nominal.
Judgment is awarded to Ms. Khiterer for $10.00, plus disbursements.

6.5 K&G Construction Co. v. Harris 6.5 K&G Construction Co. v. Harris

Opinion

PRESCOTT, Judge.
Feeling aggrieved by the action of the trial judge of the Circuit Court for Prince George's County, sitting without a jury, in finding a judgment against it in favor of a **452 subcontractor,1 the appellant, the general contractor on a construction project, appealed.
The principal question presented is: Does a contractor, damaged by a subcontractor's failure to perform a portion of his work in a workmanlike manner, have a right, under the circumstances of this case, to withhold, in partial satisfaction of said damages, an installment payment, which, under the terms of the contract, was due the subcontractor, unless the negligent performance of his work excused its payment?
The appeal is presented on a case stated in accordance with Maryland Rule 826 g.
The statement, in relevant part, is as follows:
‘* * * K & G Construction Company, Inc. (hereinafter called Contractor), plaintiff and counter-defendant in the Circuit Court and appellant herein, was owner and general contractor of a housing subdivision project being constructed (herein called Project). Harris and Brooks (hereinafter called Subcontractor), defendants and counter-plaintiffs in the Circuit Court and appellees herein, entered into a contract with Contractor to do excavating and earth-moving work on the Project. Pertinent parts of the contract are set forth below:
*308 ‘Section 3. The Subcontractor agrees to complete the several portions and the whole of the work herein sublet by the time or times following:
“(a) Without delay, as called for by the Contractor.
“(b) It is expressly agreed that time is of the essence of this contract, and that the Contractor will have the right to terminate this contract and employ a substitute to perform the work in the event of delay on the part of Subcontractor, and Subcontractor agrees to indemnify the Contractor for any loss sustained thereby, provided, however, that nothing in this paragraph shall be construed to deprive Contractor of any rights or remedies it would otherwise have as to damage for delay.
“Section 4. (b) Progress payments will be made each month during the performance of the work. Subcontractor will submit to Contractor, by the 25th of each month, a requisition for work performed during the preceding month. Contractor will pay these requisitions, less a retainer equal to ten per cent (10%), by the 10th of the months in which such requisitions are received.2
“(c) No payments will be made under this contract until the insurance requirements of Sec. 9 hereof have been complied with.
“Section 5. The Contractor agrees--
“(1) That no claim for services rendered or materials furnished by the Contractor to the Subcontractor shall be valid unless written notice thereof is given by the Contractor to the Subcontractor during the first ten days of the calendar month following that in which the claim originated.
“Section 8. * * * All work shall be performed in a workmanlike manner, and in accordance with the best practices.
*309 “Section 9. Subcontractor agrees to carry, during the progress of the work, * * * liability insurance against * * * property damage, in such amounts and with such companies as may be satisfactory to Contractor and shall provide Contractor with certificates showing the same to be in force.' **453
‘While in the course of his employment by the Subcontractor on the Project, a bulldozer operator drove his machine too close to Contractor's house while grading the yard, causing the immediate collapse of a wall and other damage to the house. The resulting damage to contractor's house was $3,400.00. Subcontractor had complied with the insurance provision (Sec. 9) of the aforesaid contract. Subcontractor reported said damages to their liability insurance carrier. The Subcontractor and its insurance carrier refused to repair damage or compensate Contractor for damage to the house, claiming that there was no liability on the part of the Subcontractor.
‘Contractor gave no written notice to Subcontractor for any services rendered or materials furnished by the Contractor to the Subcontractor.
‘Contractor was generally satisfied with Subcontractor's work and progress as required under Sections 3 and 8 of the contract until September 12, 1958, with the exception of the bulldozer accident of August 9, 1958.
‘Subcontractor performed work under the contract during July, 1958, for which it submitted a requisition by the 25th of July, as required by the contract, for work done prior to the 25th of July, payable under the terms of the contract by Contractor on or before August 10, 1958. Contractor was current as to payments due under all preceding monthly requisitions from Subcontractor. The aforesaid bulldozer accident damaging Contractor's house occurred on August 9, 1958. Contractor refused to pay Subcontractor's requisition due on August 10, *310 1958, because the bulldozer damage to Contractor's house had not been repaired or paid for. Subcontractor continued to work on the project until the 12th of September, 1958, at which time they discontinued working on the project because of Contractor's refusal to pay the said work requisition and notified Contractor by registered letters of their position and willingness to return to the job, but only upon payment. At that time, September 12, 1958, the value of the work completed by Subcontractor on the project for which they had not been paid was $1,484.50.
‘Contractor later requested Subcontractor to return and complete work on the Project which Subcontractor refused to do because of nonpayment of work requisitions of July 25 and thereafter. Contractor's house was not repaired by Subcontractor nor compensation paid for the damage.
‘It was stipulated that Subcontractor had completed work on the Project under the contract for which they had not been paid in the amount of $1,484.50 and that if they had completed the remaining work to be done under the contract, they would have made a profit of $1,340.00 on the remaining uncompleted portion of the contract. It was further stipulated that it cost the Contractor $450.00 above the contract price to have another excavating contractor complete the remaining work required under the contract. It was the opinion of the Court that if judgment were in favor of the Subcontractor, it should be for the total amount of $2,824.50.
‘* * * Contractor filed suit against the Subcontractor in two counts: (1), for the aforesaid bulldozer damage to Contractor's house, alleging negligence of the Subcontractor's bulldozer operator, and (2) for the $450.00 costs above the contract price in having another excavating subcontractor complete the uncompleted work in the contract. Subcontractor filed a counter-claim for recovery of work of the value*311 of $1,484.50 for which they had not received payment and for loss of anticipated profits on **454 uncompleted portion of work in the amount of $1,340.00. By agreement of the parties, the first count of Contractor's claim, i. e., for aforesaid bulldozer damage to Contractor's house, was submitted to jury who found in favor of Contractor in the amount of $3,400.00. Following the finding by the jury, the second count of the Contractor's claim and the counter-claims of the Subcontractor, by agreement of the parties, were submitted to the Court for determination, without jury. All of the facts recited herein above were stipulated to by the parties to the Court. Circuit Court Judge Fletcher found for counter-plaintiff Subcontractor in the amount of $2,824.50 from which Contractor has entered this appeal.’
The $3.400 judgment has been paid.
It is immediately apparent that our decision turns upon the respective rights and liabilities of the parties under that portion of their contract whereby the subcontractor agreed to do the excavating and earth-moving work in ‘a workmanlike manner, and in accordance with the best practices,’ with time being of the essence of the contract, and the contractor agreed to make progress payments therefor on the 10th day of the months following the performance of the work by the subcontractor.3 The subcontractor contends, of course, that when the contractor failed to make the payment due on August 10, 1958, he breached his contract and thereby released him (the subcontractor) from any further obligation to perform. The contractor, on the other hand, argues that the failure of the subcontractor to perform his work in a workmanlike manner constituted a material breach of the contract, which justified his refusal to make the August 10 payment; and, as there was *312 no breach on his part, the subcontractor had no right to cease performance on September 12, and his refusal to continue work on the project constituted another breach, which rendered him liable to the contractor for damages. The vital question, more tersely stated, remains: Did the contractor have a right, under the circumstances, to refuse to make the progress payment due on August 10, 1958?
The answer involves interesting and important principles of contract law. Promises and counter-promises made by the respective parties to a contract have certain relations to one another, which determine many of the rights and liabilities of the parties. Broadly speaking, they are (1) independent of each other, or (2) mutually dependent, one upon the other. They are independent of each other if the parties intend that performance by each of them is in no way conditioned upon performance by the other. 5 Page, The Law of Contracts, ¶ 2971. In other words, the parties exchange promises for promises, not the performance of promises for the performance of promises. 3 Williston, Contracts (Rev. Ed.), ¶813, n. 6. A failure to perform an independent promise does not excuse non-performance on the part of the adversary party, but each is required to perform his promise, and, if one does not perform, he is liable to the adversary party for such non-performance. (Of course, if litigation ensues questions of set-off or recoupment frequently arise.) Promises are mutually dependent if the parties intend performance by one to be conditioned upon performance by the other, and, if they be mutually dependent, they may be (a) precedent, i. e., a promise that is to be performed before a corresponding promise on the part of the adversary party is to be performed, (b) subsequent, i. e., a corresponding promise that is not to be performed until the other party to **455 the contract has performed a precedent covenant, or (c) concurrent, i. e., promises that are to be performed at the same time by each of the parties, who are respectively bound to perform each. Page, op. cit., ¶¶ 2941, 2951, 2961.
Professor Page, op. cit., ¶2971, says there are three classes of independent promises left: (1) those in which the acts to be performed by the respective parties are, by the terms of the *313contract, to be performed at fixed times or on the happening of certain events which do not bear any relation to one another; (2) those in which the covenant in question is independent because it does not form the entire consideration for the covenants on the part of the adversary party, and ordinarily forms but a minor part of such consideration; and (3) those in which the contract shows that the parties intended performance of their respective promises without regard to performance on the part of the adversary, thus relying upon the promises and not the performances (Cf. Brown v. Fraley, 222 Md. 480, 161 A.2d 128).
In the early days, it was settled law that covenants and mutual promises in a contract were prima facie independent, and that they were to be so construed in the absence of language in the contract clearly showing that they were intended to be dependent. Williston, op. cit., ¶816; Page, op. cit., ¶¶2944, 2945. In the case of Kingston v. Preston, 2 Doug. 689, decided in 1774, Lord Mansfield, contrary to three centuries of opposing precedents, changed the rule, and decided that performance of one covenant might be dependent on prior performance of another, although the contract contained no express condition to that effect. Page, op. cit., ¶2946; Williston, op. cit., ¶817. The modern rule, which seems to be of almost universal application, is that there is a presumption that mutual promises in a contract are dependent and are to be so regarded, whenever possible. Page, op. cit., ¶2946; Restatement, Contracts, ¶ 266. Cf. Williston, op. cit., ¶812.
1While the courts assume, in deciding the relation of one or more promises in a contract to one or more counter-promises, that the promises are dependent rather than independent, the intention of the parties, as shown by the entire contract as construed in the light of the circumstances of the case, the nature of the contract, the relation of the parties thereto, and the other evidence which is admissible to assist the court in determining the intention of the parties, is the controlling factor in deciding whether the promises and counter-promises are dependent or independent. Page, op. cit., ¶2948; Williston, op. cit., ¶824. Pollak v. Brush Electric Ass'n, 128 U.S. 446, 9 S.Ct. 119, 32 L.Ed. 474; Bryne v. Dorey, 221 Mass. 399, 109 N.E. 146;*314 Rosenthal Paper Co. v. National Folding Box & Paper Co., 226 N.Y. 313, 123 N.E. 766. Restatement, Contracts, ¶¶258261.4
2Considering the presumption that promises and counter-promises are dependent and the statement of the case, we have no hesitation in holding that the promise and counter-promise under consideration here were mutually dependent, that is to say, the parties intended performance by one to be conditioned on performance by the other; and the subcontractor's promise was, by the explicit wording of the contract, precedent to the promise of payment, monthly, by the contractor. In Shapiro Engineering Corp. v. Francis O. Day Co., 215 Md. 373, 380, 137 A.2d 695, we stated that it is the general rule that where a total price for work is fixed by a contract, the work is not rendered divisible by progress payments. It would, indeed **456 present an unusual situation if we were to hold that a building contractor, who has obtained someone to do work for him and has agreed to pay each month for the work performed in the previous month, has to continue the monthly payments, irrespective of the degree of skill and care displayed in the performance of work, and his only recourse is by way of suit for ill-performance. If this were the law, it is conceivable, in fact, probable, that many contractors would become insolvent before they were able to complete their contracts. As was stated by the Court in Measures Brothers Ltd. v. Measures, 2 Ch. 248: ‘Covenants are to be construed as dependent or independent according to the intention of the parties and the good sense of the case.’
3We hold that when the subcontractor's employee negligently damaged the contractor's wall, this constituted a breach of the subcontractor's promise to perform his work in a ‘workmanlike manner, and in accordance with the best practices.’ Gaybis v. Palm, 201 Md. 78, 85, 93 A.2d 269; Johnson v. Metcalfe, 209 Md. 537, 544, 121 A.2d 825; 17 C.J.S. Contracts § 515; Weiss v. Sheet Metal Fabricators, 206 Md. 195, 203, 110 A.2d 671. And there can be little doubt that the breach *315 was material: the damage to the wall amounted to more than double the payment due on August 10. Speed v. Bailey, 153 Md. 655, 661, 662, 139 A. 534. 3A Corbin, Contracts, § 708, says: ‘The failure of a contractor's [in our case, the subcontractor's] performance to constitute ‘substantial’ performance may justify the owner [in our case, the contractor] in refusing to make a progress payment * * *. * * * If the refusal to pay an installment is justified on the owner's [contractor's] part, the contractor [subcontractor] is not justified in abandoning work by reason of that refusal. His abandonment of the work will itself be a wrongful repudiation that goes to the essence, even if the defects in performance did not.' See also Restatement, Contracts, § 274F. H. McGraw & Co. v. Sherman Plastering Co., D.C.Conn., 60 F.Supp. 504, 512, affirmed 2 Cir., 149 F.2d 301; De Forest Radio Tel. & Tel. Co. v. Triangle Radio Supply Co., Inc., 243 N.Y. 283, 153 N.E. 75; Lander v. Samuel Heller Leather Co., 314 Mass. 592, 50 N.E.2d 962; Norwood Paper Co. v. Columbia Paper Bag Co., 4 Cir., 185 F. 454;Bradley v. King, 44 Ill. 339, and compare Williston, op. cit., §§ 805, 841 and 842. Professor Corbin, in § 954, states further: ‘The unexcused failure of a contractor to render a promised performance when it is due is always a breach of contract * * *. Such failure may be of such great importance as to constitute what has been called herein a ‘total’ breach. * * *. For a failure of performance constituting such a ‘total’ breach, an action for remedies that are appropriate thereto is at once maintainable. Yet the injured party is not required to bring such action. He has the option of treating the non-performance as a ‘partial’ breach only * * *.' In permitting the subcontractor to proceed with work on the project after August 9, the contractor, obviously, treated the breach by the subcontractor as a partial one. As the promises were mutually dependent and the subcontractor had made a material breach in his performance, this justified the contractor in refusing to make the August 10 payment; hence, as the contractor was not in default, the subcontractor again breached the contract when he, on September 12, discontinued work on the project, which rendered him liable (by the express terms *316 of the contract) to the contractor for his increased cost in having the excavating done-a stipulated amount of $450. Cf. Keystone Engineering Corp. v. Sutter, 196 Md. 620, 628, 78 A.2d 191.
45The appellees suggest two minor points that may be disposed of rather summarily. They argue that the contractor ‘gave no written notice to subcontractor for any services rendered or materials furnished by the contractor to the subcontractor,’ in accordance with the terms of the contract. It is apparent that the contractor's claim against the subcontractor for ill-performance did not involve, in any way, **457 ‘services rendered or materials furnished’ by the contractor; hence, the argument has no substance. They also contend that the contractor had no right to refuse the August 10 payment, because the subcontractor had furnished the insurance against property damage, as called for in the contract. There is little, or no, merit in this suggestion. The subcontractor and his insurance company denied liability. The furnishing of the insurance by him did not constitute a license to perform his work in a careless, negligence, or unworkmanlike manner; and its acceptance by the contractor did not preclude his assertion of a claim for unworkmanlike performance directly against the subcontractor.
Judgment against the appellant reversed; and judgment entered in favor of the appellant against the appellees for $450, the appellees to pay the costs.

All Citations

223 Md. 305, 164 A.2d 451

Footnotes

There are two appellees; the statement of the case refers to them as ‘subcontractor.’ We shall do likewise.
This section is not a model for clarity.
The statement of the case does not show the exact terms concerning the remuneration to be paid the subcontractor. It does not disclose whether he was to be paid a total lump sum, by the cubic yard, by the day, or in some other manner. It does state that the excavation finally cost the contractor $450 more than the ‘contract price.’
For a discussion of Sergeant Williams' note to the case of Pordage v. Cole, 1 Wms. Saunders 319, relating to the construction to be given promises and counter promises, see Williston, op. cit., ¶¶819, 820, 821, 822; Page, op. cit., ¶2947.

6.6 Lyon v. Belosky Construction, Inc. 6.6 Lyon v. Belosky Construction, Inc.

Mary C. Lyon et al., Respondents, v Belosky Construction, Inc., et al., Appellants.

[669 NYS2d 400]

Cardona, P. J.

Appeal from a judgment of the Supreme Court (Ellison, J.), entered November 11, 1996 in Chemung County, upon a decision of the court in favor of plaintiffs.

In October 1993, plaintiff Mary C. Lyon and her sister, plaintiff Martha Clute, entered into a contract with defendant Belosky Construction, Inc. for the construction of a custom home in the City of Elmira, Chemung County, at a base cost of $247,000 with approximately $42,000 in additional features. Lyon, who is a resident of South Carolina, retained an architectural firm in South Carolina to prepare the design drawings. Upon Belosky’s advice, plaintiffs retained defendant Kirk Vieselmeyer, a professional engineer, to, inter alia, prepare construction documents and conduct periodic inspections to insure that the home was constructed in conformity with the drawings.

Construction commenced in November 1993. In April 1994, plaintiffs became aware of a problem with a dormer over the main entrance of the home. The dormer was removed and rebuilt. Plaintiffs, however, found the rebuilt dormer unsatisfactory and directed Belosky to remove it. The home was subsequently completed with the exception of the interior and exterior of the main entrance. After moving into the home, plaintiffs learned that the roof had been centered over the library rather than the living room as represented in the drawings resulting in a change in the roof proportions and enlargement of the overhang over the main entrance. In addition, the entrance pillars could not be used in the manner depicted in the drawings.

*731Plaintiffs subsequently commenced this action against defendants for breach of contract. In their respective answers, defendants raised, inter alia, the affirmative defense of economic waste claiming that damages, if any, should be based upon the diminution in value of the structure rather than the value of replacement. Following a nonjury trial, Supreme Court found that defendants had breached their respective contracts and plaintiffs were entitled to damages in an amount necessary to replace the roof so as to bring it in conformity with the drawings. Supreme Court awarded plaintiffs judgment in the sum of $73,182.66, the agreed-upon cost of replacement including costs and interest. Defendants appeal.

We affirm. As a general rule, the proper measure of damages in cases involving the breach of a construction contract is “the difference between the amount due on the contract and the amount necessary to properly complete the job or to replace the defective construction, whichever is appropriate” (Sherman v Hanu, 195 AD2d 810; see, Attardo v Petosa, 240 AD2d 607, 608; Rivers v Deane, 209 AD2d 936). Where, however, “the contractor’s breach was unintentional and constituted substantial performance in good faith” (Roudis v Hubbard, 176 AD2d 388, 389), and remedying the defective performance would result in unreasonable economic waste (see, City School Dist. v McLane Constr. Co., 85 AD2d 749, 750, lv denied 56 NY2d 504), damages should be based upon “the difference between the value of the property as constructed and the value if performance had been properly completed” (American Std. v Schectman, 80 AD2d 318, 321, lv denied 54 NY2d 604; see, Bellizzi v Huntley Estates, 3 NY2d 112, 115).

It is undisputed that the defect in the main entrance, including the overhead dormer, was due to the misalignment of the roof which was constructed under the supervision and control of Belosky and purportedly overseen by Vieselmeyer. Belosky hired a framer to frame the roof but testified that he did not personally inspect the roof to insure that it and the dormer complied with the drawings. In fact, Belosky admitted that he had little experience reading drawings and relied upon the framer to whom he had subcontracted the work to make sure the home was constructed properly. Vieselmeyer, who was specifically hired to inspect the construction to make sure that it complied with the drawings, did not discover the problem with the roof until after he took certain field measurements at the request of plaintiffs’ architect. By this time, however, the dormer had already been rebuilt and removed, and the entire roof had been shingled. Inasmuch as plaintiffs’ expert testified *732that the misalignment of the roof should have been discovered when problems with the dormer became apparent, the evidence supports Supreme Court’s finding that defendants, at the very least, acted negligently in failing to detect the problem.

In addition, there is evidence that, under the circumstances presented here, the defect was substantial. Plaintiffs contracted to build a custom home at significant expense which, in fact, exceeded the fair market value of the home as completed per the drawings. Because they were away from the work site during most of the construction, plaintiffs retained and relied upon various professionals to assist them in successfully completing the project. It is clear from the record that the aesthetic appearance of the home, both inside and out, was of utmost importance to plaintiffs. Our review of the photographs of the home as constructed compared with the design drawings convinces us that plaintiffs did not get the benefit of their bargain and that requiring defendants to remedy the problem would not, under these particular circumstances, result in unreasonable economic waste. Accordingly, we find that Supreme Court applied the appropriate measure of damages (see, City School Dist. v McLane Constr. Co., 85 AD2d 749, 750-751, supra; cf., Jacob & Youngs v Kent, 230 NY 239). Lastly, inasmuch as the evidence establishes that Vieselmeyer’s breach of contract was a proximate cause of the damages sustained by plaintiffs, Supreme Court properly awarded judgment against him notwithstanding the relatively small fee he charged for services rendered to plaintiffs.

Mercure, White, Spain and Carpinello, JJ., concur.

Ordered that the judgment is affirmed, with costs.

6.7 Peevyhouse v. Garland Coal & Mining Co. 6.7 Peevyhouse v. Garland Coal & Mining Co.

Willie PEEVYHOUSE and Lucille Peevyhouse, Plaintiffs in Error, v. GARLAND COAL & MINING COMPANY, Defendant in Error.

No. 39588.

Supreme Court of Oklahoma.

Dec. 11, 1962.

Modified and Rehearing Denied March 26, 1963.

Second Rehearing Denied May 28, 1963.

*110McConnell & Hanson, W. H. McConnell, Oklahoma City, for plaintiffs in error.

Looney, Watts, Looney, Nichols & Johnson, Tom D. Capshaw, Oklahoma City, for defendant in error.

JACKSON, Justice.

In the trial court, plaintiffs Willie and Lucille Peevyhouse sued the defendant, Garland Coal and Mining Company, for damages for breach of contract. Judgment was for plaintiffs in an amount considerably less than was sued for. Plaintiffs appeal and defendant cross-appeals.

In the briefs on appeal, the parties present their argument and contentions under several propositions; however, they all *111stem from the basic question of whether the trial court properly instructed the jury on the measure of damages.

Briefly stated, the facts are as follows: plaintiffs owned a farm containing coal deposits, and in November, 1954, leased the premises to defendant for a period of five years for coal mining purposes. A “strip-mining” operation was contemplated in which the coal would be taken from pits on the surface of the ground, instead of from underground mine shafts. In addition to the usual covenants found in a coal mining lease, defendant specifically agreed to perform certain restorative and remedial work at the end of the lease period. It is unnecessary to set out the details of the work to be done, other than to say that it would involve the moving of many thousands of cubic yards of dirt, at a cost estimated by expert witnesses at about $29,000.00. However, plaintiffs sued for only $25,000.00.

During the trial, it was stipulated that all covenants and agreements in the lease contract had been fully carried out by both parties, except the remedial work mentioned above; defendant conceded that this work had not been dune.

Plaintiffs introduced expert testimony as to the amount and nature of the work to be done, and its estimated cost. Over plaintiffs’ objections, defendant thereafter introduced expert testimony as to the “diminution in value” of plaintiffs’ farm resulting from the failure of defendant to render performance as agreed in the contract— that is, the difference between the present value of the farm, and what its value would have been if defendant had done what it agreed to do.

At the conclusion of the trial, the court instructed the jury that it must return a verdict for plaintiffs, and left the amount of damages for jury determination. On the measure of damages, the court instructed the jury that it might consider the cost of performance of the work defendant agreed to do, “together with all of the evidence offered on behalf of either party”.

It thus appears that the jury was at liberty to consider the “diminution in value” of plaintiffs’ farm as well as the cost of “repair work” in determining the amount of damages.

It returned a verdict for plaintiffs for $5000.00 — only a fraction of the “cost of performance”, but more than the total value of the farm even after the remedial work is done.

On appeal, the issue is sharply drawn. Plaintiffs contend that the true measure of damages in this case is what it will cost plaintiffs to obtain performance of the work that was not done because of defendant’s default. Defendant argues that the measure of damages is the cost of performance “limited, however, to the total difference in the market value before and after the work was performed”.

It appears that this precise question has not heretofore been presented to this court. In Ardizonne v. Archer, 72 Okl. 70, 178 P. 263, this court held that the measure of damages for breach of a contract to drill an oil well was the reasonable cost of drilling the well, but here a slightly different factual situation exists. The drilling of an oil well will yield valuable geological information, even if no oil or gas is found, and of course if the well is a producer, the value of the premises increases. In the case before us, it is argued by defendant with some forcé that the performance of the remedial work defendant agreed to do will add at the most only a few hundred dollars to the value of plaintiffs’ farm, and that the damages should be limited to that amount because that is all plaintiffs have lost.

Plaintiffs rely on Groves v. John Wunder Co., 205 Minn. 163, 286 N.W. 235, 123 A.L.R. 502. In that case, the Minnesota court, in a substantially similar situation, adopted the “cost of performance” rule as-opposed to the “value” rule. The result was to authorize a jury to give plaintiff damages in the amount of $60,000, where the real estate concerned would have been worth only $12,160, even if the work contracted for had been done.

*112It may be observed that Groves v. John Wunder Co., supra, is the only case which has come to our attention in which the cost of performance rule has been followed under circumstances where the cost of performance greatly exceeded the diminution in value resulting from the breach of contract. Incidentally, it appears that this case was decided by a plurality rather than a majority of the members of the court.

Defendant relies principally upon Sandy Valley & E. R. Co., v. Hughes, 175 Ky. 320, 194 S.W. 344; Bigham v. Wabash-Pittsburg Terminal Ry. Co., 223 Pa. 106, 72 A. 318; and Sweeney v. Lewis Const. Co., 66 Wash. 490, 119 P. 1108. These were all cases in which, under similar circumstances, the appellate courts followed the “value” rule instead of the “cost of performance” rule. Plaintiff points out that in the earliest of these cases (Bigham) the court cites as authority on the measure of damages an earlier Pennsylvania tort case, and that the other two cases follow the first, with no explanation as to why a measure of damages ordinarily followed in cases sounding in tort should be used in contract cases. Nevertheless, it is of some significance that three out of four appellate courts have followed the diminution in value rule under circumstances where, as here, the cost of performance greatly exceeds the diminution in value.

The explanation may be found in the fact that the situations presented are artificial ones. It is highly unlikely that the ordinary property owner would agree to pay $29,000 (or its equivalent) for the construction of “improvements” upon his property that would increase its value only about ($300) three hundred dollars. The result is that we are called upon to apply principles of law theoretically based upon reason and reality to a situation which is basically unreasonable and unrealistic.

In Groves v. John Wunder Co., supra, in arriving at its conclusions, the Minnesota court apparently considered the contract involved to be analogous to a building and construction contract, and cited authority for the proposition that the cost of per-r formance or completion of the building as contracted is ordinarily the measure of damages in actions for damages for the breach of such a contract.

In an annotation following the Minnesota case beginning at 123 A.L.R. 515, the annotator places the three cases relied on by defendant (Sandy Valley, Bigham and Sweeney) under the classification of cases involving “grading and excavation contracts”.

We do not think either analogy is strictly applicable to the case now before us. The primary purpose of the lease contract between plaintiffs and defendant was neither “building and construction” nor “grading and excavation”. It was merely to accomplish the economical recovery and marketing of coal from the premises, to the profit of all parties. The special provisions of the lease contract pertaining to remedial work were incidental to the main object involved.

Even in the case of contracts that are unquestionably building and construction contracts, the authorities are not in agreement as to the factors to be considered in determining whether the cost of performance rule or the value rule should be applied. The American Law Institute’s Restatement of the Law, Contracts, Volume 1, Sections 346(1) (a) (i) and (ii) submits the proposition that the cost of performance is the proper measure of damages “if this is possible and does not involve unreasonable economic waste”; and that the diminution in value caused by the breach is the proper measure “if construction and completion in accordance with the contract would involve unreasonable economic waste”. (Emphasis supplied.) In an explanatory comment immediately following the text, the Restatement makes it clear that the “economic waste” referred to consists of the destruction of a substantially completed building or other structure. Of course, no such destruction is involved in the case now before us.

*113On the other hand, in McCormick, Damages, Section 168, it is said with regard to building and construction contracts that “ * * * in cases where the defect is one that can be repaired or cured without undue expense” the cost of performance is the proper measure of damages, but where “ * * * the defect in material or construction is one that cannot be remedied without an expenditure for reconstruction disproportionate to the end to be attained” (emphasis supplied) the value rule should be followed. The same idea was expressed in Jacob & Youngs, Inc. v. Kent, 230 N.Y. 239, 129 N.E. 889, 23 A.L.R. 1429, as follows :

“The owner is entitled to the money which will permit him to complete, unless the cost of completion is grossly and unfairly out of proportion to'the good to be attained. When that is true, the measure is the difference in value.”

It thus appears that the prime consideration in the Restatement was “economic waste”; and that the prime consideration in McCormick, Damages, and in Jacob & Youngs, Inc. v. Kent, supra, was the relationship between the expense involved and the “end to be attained” — in other words, the “relative economic benefit”.

In view of the unrealistic fact situation in the instant case, and certain Oklahoma statutes to be hereinafter noted, we are of the opinion that the “relative economic benefit” is a proper consideration here. This is in accord with the recent case of Mann v. Clowser, 190 Va. 887, 59 S.E.2d 78, where, in applying the cost rule, the Virginia court specifically noted that “ * * * the defects are remediable from a practical standpoint and the costs are not grossly disproportionate to the results to be obtained” (Emphasis supplied).

23 O.S.1961 §§ 96 and 97 provide as follows :

Ҥ 96. * * * Notwithstanding the provisions of this chapter, no person can recover a greater amount in damages for the breach of an obligation, than he would have gained by the full performance thereof on both sides
“§ 97. * * * Damages must, in all cases, be reasonable, and where an obligation of any kind appears to create a right to unconscionable and grossly oppressive damages, contrary to substantial justice no more than reasonable damages can be recovered.”

Although it is true that the above sections of the statute are applied most often in tort cases, they are by their own terms, and the decisions of this court, also applicable in actions for damages for breach of contract. It would seem that they are peculiarly applicable here where, under the “cost of performance” rule, plaintiffs might recover an amount about nine times the total value of their farm. Such would seem to be “unconscionable and grossly oppressive damages, contrary to substantial justice” within the meaning of the statute. Also, it can hardly be denied that if plaintiffs here are permitted to recover under the “cost of performance” rule, they will receive a greater benefit from the breach than could be gained from full performance, contrary to the provisions of Sec. 96.

An analogy may be drawn between the cited sections, and the provisions of 15 O.S.1961 §§ 214 and 215. These sections tend to render void any provisions of a contract which attempt to fix the amount of stipulated damages to be paid in case of a breach, except where it is impracticable or extremely difficult to determine the actual damages. This results in spite of the agreement of the parties, and the obvious and well known rationale is that insofar as they exceed the actual damages suffered, the stipulated damages amount to a penalty or forfeiture which the law does not favor.

23 O.S.1961 §§ 96 and 97 have the same effect in the case now before us. In spite of the agreement of the parties, these sections limit the damages recoverable to a reasonable amount not “contrary to substantial justice”; they prevent plaintiffs from recovering a “greater amount in damages for the breach of an obligation” than *114they would have “gained by the full performance thereof”.

We therefore hold that where, in a coal mining lease, lessee agrees to perform certain remedial work on the premises concerned at the end of the lease period, and thereafter the contract is fully performed by both parties except that the remedial work is not done, the measure of damages in an action by lessor against lessee for damages for breach of contract is ordinarily the reasonable cost of performance of the work; however, where the contract provision breached was merely incidental to the main purpose in view, and where the economic benefit which would result to lessor by full performance of the work is grossly disproportionate to the cost of performance, the damages which lessor may recover are limited to- the diminution in value resulting to the premises because of the non-performance.

We believe the above holding is in conformity with the intention of the Legislature as expressed in the statutes mentioned, and in harmony with the better-reasoned cases from the other jurisdictions where analogous fact situations have been considered. It should be noted that the rule as stated does not interfere with the property owner’s rght to “do what he will with his own” Chamberlain v. Parker, 45 N.Y. 569), or his right, if he chooses, to contract for “improvements” which' will actually have the effect of reducing his property’s value. Where such result is in fact contemplated by the parties, and is a main or principal purpose of those contracting, it would seem that the measure of damages for breach would ordinarily be the cost of performance.

The above holding disposes of all of the arguments raised by the parties on appeal.

Under the most liberal view of the evidence herein, the diminution in value resulting to the premises because of nonperformance of the remedial work was $300.00. After a careful search of the record, we have found no evidence of a higher figure, and plaintiffs do not argue in their briefs that a greater diminution in value was sustained. It thus appears that the judgment was clearly excessive, and that the amount for which judgment should have been rendered is definitely and satisfactorily shown by the record.

We are asked by each' party to modify the judgment in accordance with the respective theories advanced, and it is conceded that we have authority to do so. 12 O.S.1961 § 952; Busboom v. Smith, 199 Okl. 688, 191 P.2d 198; Stumpf v. Stumpf, 173 Okl. 1, 46 P.2d 315.

We are of the opinion that the judgment of the trial court for plaintiffs should be, and "it is hereby, modified and reduced to the sum of $300.00, and as so modified it is affirmed.

WELCH, DAVISON, HALLEY, and JOHNSON, JJ., concur.

WILLIAMS, C. J., BLACKBIRD, V. C. J., and IRWIN and BERRJ, JJ., dissent.

IRWIN, Justice

(dissenting).

By the specific provisions in the coal mining lease under consideration, the defendant agreed as follows:

“* * * “7b Lessee agrees to make fills in the pits dug on said premises on the property line in such manner that fences can be placed thereon and access had to opposite sides of the pits.
“c Lessee agrees to smooth off the top of the spoil banks on the above premises.
“7d Lessee agrees to leave the creek crossing the above premises in such a condition that it will not interfere with the crossings to be made in pits as set out in 7b.
* * * * * *
“7f Lessee further agrees to leave no shale or dirt on the high wall of said pits. * * * ”

*115Following the expiration of the lease, plaintiffs made demand upon defendant that it carry out the provisions of the contract and to perform those covenants contained therein.

Defendant admits that it failed to perform its obligations that it agreed and contracted to perform under the lease contract and there is nothing in the record which indicates that defendant could not perform its obligations. Therefore, in my opinion defendant’s breach of the contract was wilful and not in good faith.

Although the contract speaks for itself, there were several negotiations between the plaintiffs and defendant before the contract was executed. Defendant admitted in the trial of the action, that plaintiffs insisted that the above provisions be included in the contract and that they would not agree to the coal mining lease unless the above provisions were included.

In consideration for the lease contract, plaintiffs were to receive a certain amount as royalty for the coal produced and marketed and in addition thereto their land was to be restored as provided in the contract.

Defendant received as consideration for the contract, its proportionate share of the coal produced and marketed and in addition thereto, the right to use plaintiffs’ land in the furtherance of its mining operations.

The cost for performing the contract in question could have been reasonably approximated when the contract was negotiated and executed and there are no conditions now existing which could not have been reasonably anticipated by the parties. Therefore, defendant had knowledge, when it prevailed upon the plaintiffs to execute the lease, that the cost of performance might be disproportionate to the value or benefits received by plaintiff for the performance.

Defendant has received its benefits under the contract and now urges, in substance, that plaintiffs’ measure of damages for its failure to perform should be the economic value of performance to the plaintiffs and not the cost of performance.

If a peculiar set of facts should exist where the above rule should be applied as the proper measure of damages, (and in my judgment those facts do not exist in the instant case) before such rule should be applied, consideration should be given to the benefits received or contracted for by the party who asserts the application of the rule.

Defendant did not have the right to mine plaintiffs’ coal or to use plaintiffs’ property for its mining operations without the consent of plaintiffs. Defendant had knowledge of the benefits that it would receive under the contract and the approximate cost of performing the contract. With this knowledge, it must be presumed that defendant thought that it would be to its economic advantage to enter into the contract with plaintiffs and that it would reap benefits from the contract, or it would have not entered into the contract.

Therefore, if the value of the performance of a contract should be considered in determining the measure of damages for breach of a contract, the value of the benefits received under the contract by a party who breaches a contract should also be considered. However, in my judgment, to give consideration to either in the instant action, completely rescinds and holds for naught the solemnity of the contract before us and makes an entirely new contract for the parties.

In Goble v. Bell Oil & Gas Co., 97 Okl. 261, 223 P. 371, we held:

“Even though the contract contains harsh and burdensome terms which the court does not in all respects approve, it is the province of the parties in relation to lawful subject matter to fix their rights and obligations, and the court will give the contract effect according to its expressed provisions, unless it be shown by competent evidence proof that the written agreement as executed is the result of fraud, mistake, or accident.”

*116In Cities Service Oil Co. v. Geolograph Co. Inc., 208 Okl. 179, 254 P.2d 775, we said:

“While we do not agree that the contract as presently written is an onerous one, we think the short answer is that the folly or wisdom of a contract is not for the court to pass on.”

In Great Western Oil & Gas Company v. Mitchell, Okl., 326 P.2d 794, we held:

“The law will not make a better contract for parties than they themselves have seen fit to enter into, or alter it for the benefit of one party and to the detriment of the others; the judicial function of a court of law is to enforce a contract as it is written.”

I am mindful of Title 23 O.S.1961 § 96, which provides that no person can recover a greater amount in damages for the breach of an obligation than he could have gained by the full performance thereof on both sides, except in cases not applicable herein. However, in my judgment, the above statutory provision is not applicable here.

In my judgment, we should follow the case of Groves v. John Wunder Company, 205 Minn. 163, 286 N.W. 235, 123 A.L.R. 502, which defendant agrees “that the fact situation is apparently similar to the one in the case at bar”, and where the Supreme Court of Minnesota held:

“The owner’s or employer’s damages for such a breach (i. e. breach hypothesized in 2d syllabus) are to be measured, not in respect to the value of the land to be improved, but by the reasonable cost of doing that which the contractor promised to do and which he left undone.” .

The hypothesized breach' referred to states that where the contractor’s breach of a contract is wilful, that is, in bad faith, he is not entitled to any benefit of the equitable doctrine of substantial performance.

In the instant action defendant has made no attempt to even substantially perform. The contract in question is not immoral, is not tainted with fraud, and was not entered into through mistake or accident and is not contrary to public policy. It is clear and unambiguous and the parties understood the terms thereof, and the approximate cost of fulfilling the obligations could have been approximately ascertained. There are no conditions existing now which could not have been reasonably anticipated when the contract was negotiated and executed. The defendant could have performed the contract if it desired. It has accepted and reaped the benefits of its contract and now urges that plaintiffs’ benefits under the contract be denied. If plaintiffs’ benefits are denied, such benefits would inure to the direct benefit of the defendant.

Therefore, in my opinion, the plaintiffs were entitled to specific performance of the contract and since defendant has failed to perform, the proper measure of damages should be the cost of performance. Any other measure of damage would be holding for naught the express provisions of the contract; would be taking from the plaintiffs the benefits of the contract and placing those benefits in defendant which has failed to perform its obligations; would be granting benefits to defendant without a resulting obligation; and would be completely rescinding the solemn obligation of the contract for the benefit of the defendant to the detriment of the plaintiffs by making an entirely new contract for the parties.

I therefore respectfully dissent to the opinion promulgated by a majority of my associates.

SUPPLEMENTAL OPINION ON REHEARING

JACKSON, Justice.

In a Petition for Rehearing, plaintiffs Peevyhouse have raised certain questions not presented in the original briefs on appeal.

*117They insist that the trial court excluded ■evidence as to the total value of the premises concerned, and, in effect, that they have not had their “day in court”. This argument arises by reason of the fact that their farm consists not merely of the 60 acres covered by the coal mining lease, but ■includes other lands as well.

Plaintiffs originally pleaded two causes of action against the defendant mining company. The first one was for damages for breach of contract; the second one was for damages to the water well and borne of plaintiffs, because of the use of excessively large charges of dynamite or blasting powder in close proximity to the home and well.

Numbered paragraph 2 of plaintiffs’ petition alleges that they own and live upon 60 acres of land which are specifically described. This is the only land described in the petition, and there is no allegation as to the ownership or leasing of any other lands.

Page 4 of the transcript of evidence reveals that near the beginning of the trial, plaintiff Peevyhouse was asked a question concerning improvements he had made to his property. His answer was “For one thing I built a new home on the place in 1951, and along about that time I was building a pasture. And I would say ninety percent of this 120 acres is in good grass.” (Emphasis supplied.) Mr. Watts, defense counsel, then objected “to any testimony about the property, other than the 160 acres”. (It is obvious that he means “60” instead of “160”.) Further proceedings were as follows:

“The Court: The objection will be sustained as to any other part. Go ahead.
“Mr. McCornell (attorney for plaintiffs) : Comes now the plaintiff and dismisses the second cause of action without prejudice.”

It thus appears that plaintiffs made no complaint as to the court’s exclusion of evidence concerning lands other than the 60 acres described in their petition.

Pages 7 and 8 of the transcript show that later during direct examination of Mr. Peevyhouse, the following occurred:

“Q. (By Mr. McConnell) Now, Mr. Peevyhouse, I ask you to step down here and I ask you if you are familiar with this sketch or drawing?
⅜ ⅝ ⅜ ⅝ ⅜ ⅜
“A. Yes. I’ve got about 40 acres here, and here would be 20, and there would be 20 on this sketch. And I’ve got leased land lying in here, 80 acres. “Mr. Watts: If your Honor please, I object to anything except the 60 acres involved in this lawsuit.
“The Court: Sustained.
“Q. (By Mr. McConnell) Will you point out to the jury, the boundary line shown of your property?
* * * * * *
“A. That blue is where the water is actually standing at the present time. Up until a short time ago this area here cáme over that far. And this spring all of it would run, come in here out this way and through here, spreading over this land and all below it. And at the present time this is washed out here.
“Mr. Watts: If your Honor please, I object to that as not the proper measure of damages.
“The Court: The obj ection will be sustained.”

This testimony of Mr. Peevyhouse is difficult for us to follow, even with the exhibits in the case before us. However, no complaint was made by plaintiffs, or any suggestion that the court was in error in excluding this testimony.

The defendant offered the testimony of five witnesses in the trial court; four of them testified as to “diminution in value”. They were not cross examined by plaintiffs.

In their motion for new trial, plaintiffs did not complain that they had been prevented from offering evidence as to the diminution in value of their lands; on the *118contrary, they affirmatively complained of the trial court’s action in admitting evidence of the defendant on that point.

In the original brief of plaintiffs in error (Peevyhouse) filed in this court there appears the following language at page 4:

“ * * * Near the outset of the trial plaintiffs dismissed their second cause of action without prejudice: further, it was stipulated * * *. It was further stipulated that the only issue remaining in the lawsuit was the proof and measure of damages to which plaintiffs were entitled * * (Emphasis supplied.)

In the answer brief of Garland Coal & Mining Co., at page 3, there appears the following language:

“Defendant offered evidence that the total value of the property involved before the mining operation would be $60.00 per acre, and $11.00 per acre after the mining operation (60 acres at $49.00 per acre is $2940.00). Other evidence was that the property was worth $5.00 to $15.00 per acre after the mining, but before the repairs; and would be worth an increase of $2.00 to $5.00 per acre after the repairs had been made (60 acres at $5.00 per acre is $300.00) (Tr. 96-97, 135, 137-138, 138-141, 143-145, 156, 158).”

At page 18 of the same brief there is another statement to the effect that the “amount of diminution in value of the land” was $300.00.

About two months after the answer brief was filed in this court, plaintiffs filed a reply brief. The reply brief makes no reference at all to the language of the answer brief above quoted and does not deny that the diminution in value shown by the record amounts to $300.00. On the contrary, it contains the following language at page 5:

“ * * * Plaintiffs in error pointed out in their initial brief that this evidence concerning land values was objectionable as being incompetent and refused to cross-examine or offer rebuttal for the reason that they did not choose to waive their objections to the competency of the evidence by disproving defendant in error’s allegations as to land values. We strongly urged at the trial below, and still do, that market value of the land has no application * *

Our extended reference to the pleadings, testimony and prior briefs in this case has not been solely for the purpose of showing that plaintiffs failed to complain of the court’s rulings. Our purpose, rather, has. been to demonstrate the plan and theory upon which plaintiffs tried their case below, and upon which they argued it in the prior briefs on appeal.

The whole record in this case justifies the conclusion that plaintiffs tried their case upon the theory that the “cost of performance” would be the sole measure of damages and that they would recognize no other. In view of the whole record in this case and the original briefs on appeal, we conclude that they so tried it with notice that defendant would contend for the “diminution in value” rule. The testimony to which they specifically refer in the petition for rehearing shows that the trial court properly excluded defendant’s evidence concerning lands other than the 60 acres described in the petition because such evidence was not within the scope of the pleadings. At no time did plaintiffs ask permission to amend their petition, either with or without prejudice to trial, so as to describe all of the lands they own or lease, and no evidence was admitted which could broaden the scope of the petition.

Plaintiffs’ petition described 60 acres of land only; plaintiffs offered no evidence on the question of “diminution in value” and objected to similar evidence offered by the defendant; their motion for new trial contained no allegation that they had been prevented from offering evidence on this question; in their reply brief they did not controvert the allegation in defendant’s answer brief that the record showed a “dim*119inution in value” of only $300.00; and in view of the stipulation they admittedly made in the trial court, their statement in petition for rehearing that the court’s instructions on the measure of damages came as a “complete surprise” and “did not afford them the opportunity to prepare and introduce evidence under the ‘diminution in value’ rule” is not supported by the record.

We think plaintiffs’ present position is that of a plaintiff in any damage suit who has failed to prove his damages — opposed by a defendant who has proved plaintiff’s damages; and that plaintiffs’ complaint that the record does not show the total “diminution in value” to their lands comes too late. It is well settled that a party will not be permitted to change his theory of the case upon appeal. Knox v. Eason Oil Co., 190 Okl. 627, 126 P.2d 247.

Also, plaintiffs’ expressed fear that by introducing evidence on the question of “diminution in value” they would have waived their objection to similar evidence by defendant was not justified. Vogel v. Fisher et al., 203 Okl. 657, 225 P.2d 346; 53 Am.Jur. Trial, Sec. 144.

It is suggested in a brief of amici curiae that our decision in this case has resulted in an impairment of the obligation of the contract of the parties, in violation of Article 1, Section 10, of the Constitution of the United States, and in that connection the only case cited is Sturges v. Crowninshield, 4 Wheat 122, 17 U.S. 1229, 4 L.Ed. 529 (1819). In their brief, amici curiae quote language from the Lawyer’s Edition notes of Mr. Stephen K. Williams, in which he summarized the “points and authorities” of one of the counsel appearing before the U. S. Supreme Court.

Sturges v. Crowninshield was an early case in which the Supreme Court considered the power of a state to enact bankruptcy laws, and the extent, if any, to which such power is limited by Article 1, Section 10 of the Constitution. The contracts concerned consisted of promissory notes executed in March, 1811, and the bankruptcy law under which the promisor claimed a discharge was not enacted until April 3, 1811. In a memorable opinion written by Chief Justice Marshall, the court held that insofar as the bankruptcy law purported to discharge the obligations of contracts executed before its enactment, it was unconstitutional and void.

The same situation does not exist here. 23 O.S.1961 §§ 96 and 97, cited in our original opinion, were a part of the Revised Laws of 1910 (R.L.1910) Sections 2889 and 2890) and have been in force, in this state, in unchanged form, since that codification was adopted by the legislature in 1911. The lease contract concerned in the case now before us was not executed until 1954.

Nor do we agree that our decision itself (as opposed to the statutes cited therein as controlling) impairs the obligations of the contract concerned. It may be conceded that at one time there was respectable authority for the proposition that the “contract” clause was violated by a judicial decision which overruled prior decisions, upon the strength of which contract rights.had been acquired. In this connection, it should be noted that our decision overrules no prior holdings of this court upon which the contracting parties could be said to have relied. Even if it did,

“ * * * it is now definitely and authoritatively settled that such prohibition in federal and state constitutions relate to legislative action and not to judicial decisions. Thus, they do not apply to the decision of a state court, where such decision does not expressly, or by necessary implication, give effect to a subsequent law of tire state whereby the obligation of the contract is impaired. * * * ” 16 C.J.S. Constitutional Law § 280.

To the same effect, see 12 Am.Jur. Constitutional Law, Sec. 398.

Our decision herein overrules no prior holdings of this court, and it does not give effect to a subsequent law of this state. It therefore cannot be said to impair the *120obligations of the contract of the parties here concerned.

The petition for rehearing is denied.

HALLEY, V. C. J., and WELCH, DAVISON and JOHNSON, JJ., concur.

BLACKBIRD, C. J., and WILLIAMS, IRWIN and BERRY, JJ., dissent.

6.8 Groves v. John Wunder Co. 6.8 Groves v. John Wunder Co.

FRANK M. GROVES v. JOHN WUNDER COMPANY AND OTHERS.1

April 21, 1939.

No. 31,916.

*164John P. Devaney, Louis B. Schwarts, and Bleecher & Babcock, for appellant.

Fowler, Youngquist, Furber, Taney é Johnson, for respondent.

Stone, Justice.

Action for breach of contract. Plaintiff got judgment for a little over $15,000. Sorely disappointed by that sum, he appeals.

In August, 1927, S. J. Groves & Sons Company, a corporation (hereinafter mentioned simply as Groves), owned a tract of 24 acres of Minneapolis suburban real estate. It was served or easily could be reachéd by railroad trackage. It is zoned as heavy industrial property. But for lack of development of the neighborhood its principal value thus far may have been in the deposit of sand and gravel which it carried. The Groves company had a plant on the premises for excavating and screening the gravel. Near by defendant owned and Avas operating a similar plant.

In August, 1927, Groves and' defendant made the involved contract. ’ For the most part it Avas a lease from Groves, as lessor, to defendant, as lessee; its term seven years. Defendant agreed to remove the sand and gravel and to leave the property “at a uniform grade, substantially the same as the grade now existing at the roadway * * on said premises, and that in stripping the overburden s " * it will use said overburden for the purpose of maintaining and establishing said grade.”

Under the contract defendant got the Groves screening plant. The transfer thereof and the right to remove the sand and gravel made the consideration moving from Groves to defendant, except that defendant incidentally got rid of Groves as a competitor. On defendant’s part it paid Groves $105,000. So that from the outset, on Groves’ part the contract was executed except for defend*165ant’s right to continue using the property for the stated term. (Defendant had a right to renewal which it did not exercise.)

Defendant breached the contract deliberately. It removed from the premises only “the richest and best of the gravel” and wholly failed, according to the findings, “to perform and comply with the terms, conditions, and provisions of said lease * * with respect to the condition in which the surface of the demised premises was required to be left.” Defendant surrendered the premises, not substantially at the grade required by the contract “nor at any uniform grade.” Instead, the ground was “broken, rugged, and uneven.” Plaintiff sues as assignee and successor in right of Groves.

As the contract was construed below, the finding is that to complete its performance 288,495 cubic yards of overburden would need to be excavated, taken from the premises, and deposited elsewhere. The reasonable cost of doing that was found to be upwards of $60,000. But, if defendant had left the premises at the uniform grade required by the lease, the reasonable value of the property on the determinative date would have been only $12,160. The judgment was for that sum, including interest, thereby nullifying plaintiff’s claim that cost of completing the contract rather than difference in value of the land was the measure of damages. The gauge of damage adopted by the decision was the difference between the market value of plaintiff’s land in the condition it was when the contract was made and what it would have been if defendant had performed. The one question for us arises upon plaintiff’s assertion that he was entitled, not to that difference in value, but to the reasonable cost to him of doing the work called for by the contract which defendant left undone.

Defendant’s breach of contract was wilful. There was nothing of good faith about it. Hence, that the decision below handsomely rewards bad faith and deliberate breach of contract is obvious. That is not allowable. Here the rule is well settled, and has been since Elliott v. Caldwell, 43 Minn. 357, 45 N. W. 845, 9 L. R. A. 52, that where the contractor wilfully and fraudulently varies from the terms of a construction contract he cannot sue *166thereon and have the benefit of the equitable doctrine of substantial performance. That is the rule generally. See Annotation, “Wilful or intentional variation by contractor from terms of contract in regard to material or work as affecting measure of damages.” 6 A. L. R. 137.

Jacob & Youngs, Inc. v. Kent, 230 N. Y. 239, 243, 244, 129 N. E. 889, 891, 23 A. L. R. 1429, is typical. It was a case of substantial performance of a building contract. (This case is distinctly the opposite.) Mr. Justice Cardozo, in the course of his opinion, stressed the distinguishing features. “Nowhere,” he said, “will change be tolerated, however, if it is so dominant or pervasive as in any real or substantial measure to frustrate the purpose of the contract.” Again, “the willful transgressor must accept the penalty of his transgression.”

In reckoning damages for breach of a building or construction contract, the law aims to give the disappointed promisee, so far as money will do it, what he was promised. (9 Am. Jur., Building and Construction Contracts, § 152.) It is so ruled by a long line of decisions in this state, beginning with Carli v. Seymour, Sabin & Co. 26 Minn. 276, 3 N. W. 348, where the contract was for building a road. There was a breach. Plaintiff was held entitled to recover what it would cost to complete the grading as contemplated by the contract. For our other similar cases, see 2 Dunnell, Minn. Dig. (2 ed. & Supps.) §§ 2561, 2565.

Never before, so far as our decisions show, has it even been suggested that lack of value in the land furnished to the contractor who had bound himself to improve it any escape from the ordinary consequences of a breach of the contract.

A case presently as interesting as any of our own is Sassen v. Haegle, 125 Minn. 441, 147 N. W. 445, 446, 32 L.R.A.(N.S.) 1176. The defendant, lessee of a farm, had agreed to haul and spread manure. He removed it, but spread it elsewhere than on the leased farm. Plaintiff had a verdict, but a new trial was ordered for error in the charge as to the measure of damages. The point was thus discussed by Mr. Justice Holt [125 Minn. 443]:

*167“But it is also true that the landlord had a perfect right to stipulate as to the disposal of the manure or as to the way in which the farm should be worked, and the tenant cannot evade compliance by showing that the farm became more valuable or fertile by omitting the agreed work or doing other work. Plaintiff’s pleading and proof Avas directed to the reasonable value of performing what defendant agreed but failed to perform. Such reasonable cost or value was the natural and proximate damages. The question is not Avhether plaintiff made a Avise or foolish agreement. He had a right to have it performed as made, and the resulting damage, in case of failure, is the reasonable cost of performance. Whether such performance affects the value of the farm was no concern of defendant.”

j Even in case of substantial performance in good faith, the resulting defects being remediable, it is error to instruct that the measure of damage is “the difference in value betAveen the house as it was and as it would have been if constructed according to contract.” The “correct doctrine” is that the cost of remedying the defect is the “proper” measure of damages. Snider v. Peters Home Bldg. Co. 139 Minn. 413, 414, 416, 167 N. W. 108.

Value of the land (as distinguished from the value of the intended product of the contract, which ordinarily will be equivalent to its reasonable cost) is no proper part of any measure of damages for Avilful breach of a building contract. The reason is plain.

The summit from which to reckon damages from trespass to real estate is its actual value at the moment. The OAvner’s only right is to be compensated for the deterioration in value caused by the tort. That is all he has lost.2 But not so if a contract to improve the same land has been breached by the contractor who refuses to do the work, especially where, as here, he has been paid in advance. The summit from which to reckon damages for that Avrong is the hypothetical peak of accomplishment (not value) Avhich would *168have been reached had the work been done as demanded by the contract.

The owner’s right to improve his property is not trammeled by its small value. It is his right to erect thereon structures which will reduce its value. If that be the result, it can be of no aid to any contractor who declines performance. As said long ago in Chamberlain v. Parker, 45 N. Y. 569, 572:

, “A man may do what he will with his own, * * * and if he chooses to erect a monument to his caprice or folly on his premises, and employs and pays another to do it, it does not lie with a defendant who has been so employed and paid for building it, to say that his own performance would not be beneficial to the plaintiff.”

To the same effect is Restatement, Contracts, § 846, p. 576, Illus-' trations of Subsection (1), par. 4.

Suppose a contractor were suing the owner for breach of a grading contract such as this. Would any element of value, or lack of it, in the land have any relevance in reckoning damages? Of course not. The contractor would be compensated for what he had lost, i. e., his profit. Conversely, in such a case as this, the owner is entitled to compensation for what he has lost, that is, the work or structure which he has been promised, for which he has paid, and of which he has been deprived by the contractor’s breach.

To diminish damages recoverable against him in proportion as there is presently small value in the land would favor the faithless contractor. It would also ignore and so defeat plaintiff’s right to contract and build for the future. To justify such a course would require more of the prophetic vision than judges possess. This factor is important Avhen the subject matter is trackage property in the margin of such an area of population and industry as that of the Twin Cities.

For purposes of measuring damages for breach of construction contracts, those with municipal corporations (see City of St. Paul v. Bielenberg, 164 Minn. 72, 204 N. W. 544) are no exception to the general rule. No sound reason is assigned why they should be. We have seen no case indicating their supposed exceptional character *169as a factor of decision. If these so-called public contracts were in the suggested special category for measuring damages, a municipal corporation would be dealt with more favorably than the ordinary litigant. But courts cannot be more generous with one class of litigants than with another. Such partiality runs counter to the law’s demand for equal treatment of litigants who stand on the same footing both as to right and as to remedy.

The geneology of the error pervading the argument contra- is easy to trace. It begins with Seely v. Alden, 61 Pa. 302, 100 Am. D. 642, a tort case for pollution of a stream. Besulting depreciation in value of plaintiff’s premises, of course, was the measure of damages. About 40 years later, in Bigham v. Wabash-Pittsburg T. Ry. Co. 223 Pa. 106, 72 A. 318, the measure of damages of the earlier tort case was used in one for breach of contract, without comment or explanation to show why. That case was followed in Sweeney v. Lewis Const. Co. 66 Wash. 490, 119 P. 1108, and Sandy Valley & Elkhorn Ry. Co. v. Hughes, 175 Ky. 320, 194 S. W. 344, with no thought given to the anomaly of using in a case in contract a standard ordinarily applicable only in cases of tort. The Washington case, by the way, is sui generis. The contract was to waive damages for the lowering of a street grade. So it adopted as matter of express contract the measure of damages applicable in cases of trespass.

It is at least interesting to note Morgan v. Gamble, 230 Pa. 165, 79 A. 410, decided two years after the Bigham case. The doctrine of substantial performance is there correctly stated, but'plaintiff Avas denied its benefit because he had deliberately breached his building contract. It was held that:

“Where a building contractor agrees to lay an extra strong lead water pipe, and he substitutes therefor an iron pipe, he will be required to allow to the owners in a suit upon the contract, not the difference [in value] between the iron and lead pipes, but the cost of laying a lead pipe as provided in the agreement.”

To show how remote any factors of value were considered, it was also held that:

*170“Where a contractor of a building agrees to construct two gas lines, one for natural gas, and one for artificial gas, he will not be relieved from constructing both lines, because artificial gas was not in use in the town in which the building was being constructed.”

The objective of this contract of present importance was the improvement of real estate. That makes irrelevant the rules peculiar C"fo damages to “chattels, arising from tort or breach of contract. Crowley v. Burns Boiler & Mfg. Co. 100 Minn. 178, 187, 110 N. W. 969, 973, dealt with a breach of contract for the sale of a steam boiler. The court observed:

“If the application of a particular rule for measuring damages to given facts results in more than compensation, it is at once apparent that the wrong rule has been adopted.”

That is unquestioned law, but for its correct application there must be ascertainment of the loss for which compensation is to be reckoned. In tort, the thing lost is money value, nothing more. But under a construction contract, the thing lost by a breach such as we have here is a physical structure or accomplishment, a promised and paid for alteration in land. That is the “injury” for which the law gives him compensation. Its only appropriate measure is the cost of performance.

It is suggested that because of little or no value in his land the owner may be unconscionably enriched by such a reckoning. The answer is that there can be no unconscionable enrichment, no advantage upon which the law will frown, when the result is but to give one party to a contract only what the other has promised; particularly where, as here, the delinquent has had full payment for the promised performance.

It is said by the Bestatement, Contracts, § 346, Comment b:

“Sometimes defects in a completed structure cannot be physically remedied without tearing down and rebuilding, at a cost that would be imprudent and unreasonable. The law does not require damages to be measured by a method requiring such economic waste. If no such waste is involved, the cost of remedying the defect is the *171amount awarded as compensation for failure to render the promised performance.”

The “economic waste” declaimed against by the decisions applying that rule has nothing to do with the value in money of the real estate, or even with the product of the contract. The waste avoided is only that which would come from wrecking a physical structure completed, or nearly so, under the contract. The cases applying that rule go no further. Illustrative are Buchholz v. Rosenberg, 163 Wis. 312, 156 N. W. 946; Burmeister v. Wolfgram, 175 Wis. 506, 185 N. W. 517. Absent such waste, as it is in this case, the rule of the Restatement, Contracts, § 316, is that “the cost of remedying the defect is the amount awarded as compensation for failure to render the promised performance.” That means that defendants here are liable to plaintiff for the reasonable cost of doing what defendants promised to do and have wilfully declined to do.

It follows that there must be a new trial. The initial question will be as to the proper construction of the contract. Thus far the case has been considered from the standpoint of the construction adopted by plaintiff and acquiesced in, very likely for strategic reasons, by defendants. The question has not been argued here, so we intimate no opinion concerning it, but we put the question whether the contract required removal from the premises of any •overburden. The requirement in that respect was that the overburden should be used for the purpose of “establishing and maintaining” the grade. A uniform slope and grade were doubtless required. But whether, if it could not be accomplished without removal and deposit elsewhere of large amounts of overburden, the contract required as a condition that the grade everywhere should be as low as the one recited as “now existing at the roadway” is a ■question for initial consideration below.

The judgment must be reversed with a new trial to follow.'

So ordered.

Julius J. Olson, Justice (dissenting).

The situation here is unfortunate to the litigants as well as to this court in that because of the absence of two of the justices the *172prevailing opinion represents but a minority of its full membership. But the court as such must go on transacting its business. The general rule is that a “majority of the members of a court is a quorum sufficient for the transaction of business and the decision of cases.” Hence a majority of the quorum necessarily must prevail. Am. Jur., Courts, §§ 57, 58; 15 C. J. pp. 965, 966, [§ 362] D; and see Hunt v. Ward, 193 Minn. 168, 258 N. W. 145, 259 N. W. 12.

There is no case directly in point in this state. My own notion has been that to reverse the trial court a clear majority of the whole court was necessary. (And this view has been shared by many of our lawyers judging from petitions for reargument that have recently come before us where the court was evenly divided due to the illness of Mr. Justice Hilton.) This notion of mine was probably unfounded; hence what has been said is not to be taken as in any way disparaging the value and binding effect of the prevailing opinion. One vrould much rather go along therewith than be opposed thereto if performance of duty as one sees it did not compel otherwise.

The involved lease provides that the granted premises were to be used by defendant “for the purpose of removing the sand and gravel therefrom.” The cash consideration was $105,000, plus defendant’s covenant to level and grade the premises to a specified base. There was no segregation or allocation of the cash consideration made applicable to any of the various items going into the deal, and the instrument does not suggest any sum. as being representative of the cost of performance by defendant of the leveling and grading process. Nor is there any finding that the contractor “wil-fully and fraudulently” violated the terms of its contract. All that can be said is that defendant did nothing except to mine the sand and gravel purchased by it and deemed best suited to its own interest and advantage. No question of partial or substantial performance of its covenant is involved since it did nothing in that behalf. The sole question here is whether the rule adopted by the court respecting recoverable damages is wrong. The essential facts, not questioned, are that—

*173“The fair and reasonable value as of the end of the term of said lease, May 1, 1981, of performing the said work necessary to put the premises in the condition in which they were required by the terms of said lease to be left, is the sum of $60,898.28,” and that if defendant “had left said premises at a uniform grade as required by said lease, the fair and reasonable value of said premises on May 1, 1931, would have been the sum of $12,160.”

In that sum, plus interest from May 1, 1931, plaintiff was awarded judgment, $15,053.58. His sole contention before the trial court and here is that upon these findings the court, as a matter of law, should have allowed him the cost of performance, $60,893.28, plus interest since date of the breach, May 1, 1931, amounting to more than $76,000.

Since there is no issue of fact, we should limit our inquiry to the single legal problem presented: What amount in money will adequately compensate plaintiff for his loss caused by defendant’s failure to render performance?

When the parties entered into this contract each had a right to rely upon the promise of full and complete performance on the part of the other. And by “performance” is meant “such a thorough fulfilment of a duty as puts an end to obligations by leaving nothing more to be done.” McGuire v. J. Neils Lbr. Co. 97 Minn. 293, 298, 107 N. W. 130, 132.

But the “obligation of the contract does not inhere or subsist in the agreement itself proprio vigore, but in the law applicable to the agreement, that is, in the act of the law in binding the promisor to perform his promise. When it is said that one who enters upon an undertaking assumes the legal duties relating to it, what is really meant is that the law imposes the duties on him. A contract is not a law, nor does it make law. It is the agreement plus the law that makes the ordinary contract an enforceable obligation.” 12 Am. Jur., Contracts, § 2.

There is here no room for dispute as to contract obligation; therefore it is the duty of the court to enforce its terms “without a *174leaning in either direction,” the parties being “on an equal footing” and as such “were free to do what they chose.” Id. § 226.

Another principle, of universal application, is that a party is entitled to have that for which he contracted, or its equivalent. What that equivalent is depends upon the circumstances of each case. If the effect of performance is such that the defective part “may be remedied without the destruction of any substantial part of the benefit which the owner’s property has received by reason of the contractor’s work, the equivalent to which the owner is entitled is the cost of making the work conform to the contract.” 9 Am. Jur., Building and Construction Contracts, § 152. Here, however, defendant did nothing. As such plaintiff “is entitled to be placed, in so far as this can be done by money, in the same position he would have occupied if the contract had been performed.” But “his recovery is limited to the loss he has actually suffered by reason of the breach; he is not entitled to be placed in a better position than he would have been in if the contract had not been broken.” 15 Am. Jur., Damages, § 43. The measure of damages “is not affected by the financial condition of the one entitled to the damages”; nor may there be included in the assessment of damages “the motive of the defendant in breaking” his contract, compensatory damages alone being involved. In such a case the measure is “the same whatever the cause of the breach, regardless of whether it was due to mistake, accident, or inability to perform or was wilful and malicious.” Id. § 48. Liability in damages has for its basis the value of the promised performance to the promisee, not what it would cost the promisor in completing performance. Guardian Trust Co. v. Brothers (Tex. Civ. App.) 59 S. W. (2d) 343, 345, and authorities cited. Plaintiff as the injured party is entitled to have compensation for all injuries sustained by him due to defendant’s default. But he is only entitled to recover “actual pecuniary compensation,” and this is true “whether the action is on contract or in tort,” there being here no circumstances warranting allowance of exemplary damages. 8 E. C. L. § 8, pp. 431, 432, and cases cited under notes 16, 17, and 18.

*175“Since one who has been injured by the breach of a contract or the commission of a tort is entitled to a just and adequate compensation for such injury and no more, it follows that his recovery must be limited to a fair compensation and indemnity for his injury and loss. And so in no case should the injured party be placed in a better position than he would be in had the wrong not been done, or the contract not been broken. The defendant may therefore show that, notwithstanding his default, the plaintiff has suffered no damages. And if any circumstances exist which mitigate the injury, they must be considered and taken into account.” 8 R. C. L. § 9, pp. 434-435, and cases under notes 9, 10, 11, and 12.

That the subject matter here involved was one within the proper scope of contractual obligation, and its purpose entirely lawful, is obvious. Plaintiff, as owner of the tract upon which the work was to be done, had the undoubted right to insist upon that kind of contract and to its performance. We are not concerned with whether he exercised economic wisdom or displayed lack thereof. Defendant agreed to do the work for what is conceded to have been a legally sufficient consideration. It must either perform or pay plaintiff for all damages by him suffered. In City of St. Paul v. Bielenberg, 164 Minn. 72, 74-75, 204 N. W. 544, 545, this court held that:

“The measure of damages for the defendant’s breach of his contract by a total failure to perform is the cost of performance. [Citing cases.]
“It is urged by the defendant that his failure to perform his contract has not harmed the city, for, as he claims and as is perhaps true, the grading from Winifred street to George street will not be of use on account of the topography of the vicinity until the avenue is graded to Congress street. The action is on contract. The measure of damages is the contract measure. The plaintiff was entitled to that for which it contracted. It is no defense that it contracted for something which is not now beneficial to it.”

Other cases upholding the general rule stated are, amongst many: County of Hennepin v. Richardson, 175 Minn. 60, 220 N. W. 432; *176Sampson v. Brince, 146 Minn. 101, 177 N. W. 933; City of Winona v. Jackson, 92 Minn. 453, 100 N. W. 368; Haney v. Ferck, 150 Minn. 323, 185 N. W. 397; Carli v. Seymour, Sabin & Co. 26 Minn. 276, 3 N. W. 348; Frank W. Coy Real Estate Co. v. Pendleton, 45 R. I. 477, 123 A. 562; Day v. City of Malvern, 195 Ark. 804, 114 S. W. (2d) 459, and cases cited in note 39 L.R.A.(N.S.) 591. See also Anderson v. Nordstrom, 60 Minn. 231, 61 N. W. 1132; Sassen v. Haegle, 125 Minn. 441, 147 N. W. 445, 52 L.R.A.(N.S.) 1176; McCormick, Damages, § 169, p. 650.

But, to be noted, in none of tlie cited cases was it made to appear that the cost of completion or construction would exceed the value of the property as and when completed. Public contracts are in a separate class, and as to these comment will be made later..

As .'the rule of damages to be applied in any given case has for its purpose compensation, not punishment, we must be ever mindful that, “if the application of a particular rule for measuring damages to given facts results in more than compensation, it is at once apparent that the wrong rule has been adopted.” Crowley v. Burns Boiler & Mfg. Co. 100 Minn. 178, 187, 110 N. W. 969, 973.

We have here then a situation where, concededly, if the contract had; been performed, plaintiff would have had property worth, in round numbers, no more than $12,000. If he is to be awarded damages in an amount exceeding $60,000 he will be receiving at least 500 per cent more than his property, properly leveled to grade by actual performance, ivas intrinsically worth Avhen the breach occurred. To so conclude is to give him something far beyond what the parties had in mind or contracted for. There is no showing made,-nor any finding suggested, that this property Avas unique, specially desirable for a particular or personal use, or of special valúe as to location or future use different from that of other property surrounding it. Under the circumstances here appearing, it seems clear that what the parties contracted for was to put the property in shape for general sale. And the lease contemplates just that, for by the terms thereof defendant agreed “from time to time, as the sand and gravel are removed from the various lots * * * leased, it will surrender said lots to the lessor” if of no further *177use to defendant “in connection with the purposes for which this lease is made.”

The theory upon which plaintiff relies for application of the cost of performance rule must have for its basis cases where the property or the improvement to be made is unique or personal instead of being of the kind ordinarily governed by market values. His action is one at law for damages, not for specific performance. As there was no affirmative showing of any peculiar fitness of this property to a unique or personal use, the rule to be applied is, I think, the one applied by the court. The cases bearing directly upon this phase so hold. Briefly, the rule here applicable is this: Damages recoverable for breach of a contract to construct is the difference between the market value of the property in the condition it was Avhen delivered to and received by plaintiff and what its market value would have been if defendant had fully complied with its terms. Bigham v. Wabash-Pittsburg T. Ry. Co. 223 Pa. 106, 72 A. 318; Sweeney v. LeAvis Const. Co. 66 Wash. 490, 119 P. 1108; Sandy Valley & Elkhorn Ry. Co. v. Hughes, 175 Ky. 320, 194 S. W. 344. It is interesting to note that in the Kentucky case the court reversed its former opinion found in 172 Ky. 65, 188 S. W. 894. Its reason for changing its mind is thus stated (175 Ky. 320-321) :

“In our original opinion we fixed as the measure of damages the reasonable cost of reducing the land from which the earth and stone Avere taken to the level of the railroad grade and in condition for building purposes. Upon a reconsideration of the question, we conclude that this measure of damages is incorrect. From plaintiffs’ avowal on the first trial it appears that it would cost at least $15,000.00 to do the work required by the contract, and from other testimony in the record it is by no means improbable that the cost would be far in excess of that sum. If this be true, the cost Avould iar exceed the market value of the entire farm. If the contract had been performed, plaintiff would have had a farm Avith the place from Avhich the earth and stone Avere taken reduced to the level of the railroad grade and in condition for building purposes. As the case stands, this provision of the contract has not been complied *178with. What, then, was plaintiff’s damage? Manifestly, not what it wotold cost to do the work, for, if the work had been done, plaintiff would not have received the cost of the work, but would have been benefited only to the extent that the work increased the market value of his land. We, therefore, conclude that the measure of damages is the difference between the market value of the farm in its present condition and what its market value would have been if the land from which the earth and stone were removed had been reduced to the level of the railroad grade and left in condition for building purposes.” (Italics supplied.)

The principle for which I contend is not novel in construction contract cases. It is well stated in McCormick, Damages, § 168, pp. 618, 619, as follows:

“In whatever way the issue arises, the generally approved standards for measuring the owner’s loss from defects in the work are two: First, in cases where the defect is one that can be repaired or cured without undue expense, so as to make the building conform to the agreed plan, then the owner recovers such amount as he has reasonably expended, or will reasonably have to spend, to remedy the defect. Second, if, on the other hand, the defect in material or construction is one that cannot be remedied without an expenditure for reconstruction disproportionate to the end to be attained, or without endangering unduly other parts of the building, then the damages will be measured not by the cost of remedying the defect, but by the difference between the value of the building as it is and what it would have been worth if it had been built in conformity with the contract.”

And the same thought was expressed by Mr. Justice Cardozo in Jacob & Youngs, Inc. v. Kent, 230 N. Y. 239, 244, 129 N. E. 889, 891, 23 A. L. R. 1429, 1433, thus:

“The owner is entitled to the money which will permit him to complete, unless the cost of completion is grossly and unfairly out of proportion to the good to be attained. When that is true, the measure is the difference in value.”

*179To the same effect is 5 Willistcm, Contracts (Rev. ed.) § 1368, p. 3825. (The supporting cases are found under note 12.) In Restatement, Contracts, § 346, p. 576, Illustrations of Subsection (1), par. 3, reads:

“A contracts with B to sink an oil well on A’s own land adjacent to the land of B, for development and exploration purposes. Other exploration wells prove that there is no oil in that region; and A breaks his promise to sink the well. B can get judgment for only nominal damages, not the cost of sinking the well.”

And in Guardian Trust Co. v. Brothers (Tex. Civ. App.) 59 S. W. (2d) 343, 346, a case in substance much like ours, the court said:

“The loss or injury actually sustained by the obligee, rather than the cost of performance by the obligor, is the proper measure of damages for the breach of a contract. When that well-established rule is departed from, compensatory damages become either punitive damages, because too much, or inadequate damages, because too little, and the fundamental purpose of compensatory damages is lost sight of.”

In Pedelty v. Wisconsin Zinc Co. 148 Wis. 245, 247, 252, 134 N. W. 356, 358, defendant contracted with plaintiffs for the privilege of—

“pumping and running waste water from their mine” across plaintiffs’ land. “In the course of defendant’s operations it caused waste material from the mill to pass with water in which it was held in suspense, into a small pond from which, from time to time, it caused the water and settlings, called ‘sludge,’ to flow to and the sludge to be deposited in great quantities, on plaintiffs’ land.”

The court stated the rule to be:

“The diminished value of the land by reason of the wrong, was the proper basis for the assessment [of damages]. The cost of removing the foreig.u. material, which appellant insists was the proper measure, Was-in fact evidentiary only. A situation might *180well be created such that the cost of restoration would exceed the value of the property originally, or as restored. In that case it could not be well said that such cost would be the measure of recoverable loss. The actual loss sustained is the just measure of reparation in any case.” (Italics supplied.)

If this were a case to recover damages for tortious injury the applicable rule is the difference in the market value and not the cost of restoring the premises to the former condition if such exceeds the diminution in value. Karst v. St. P. S. & T. F. R. Co. 23 Minn. 401; Ziebarth v. Nye, 42 Minn. 541, 547, 44 N. W. 1027. In Heath v. M. St. P. & S. S. M. Ry. Co. 126 Minn. 470, 475, 148 N. W. 311, 312, L. R. A. 1916E, 977, it was held that:

“The rental value plus the cost of restoration is the true measure of damages, in cases of continuing trespass, when it appears that this is less than the difference between the value of the premises before and immediately after the wrong.”

Other helpful cases are Elder v. Lykens Valley Coal Co. 157 Pa. 490, 27 A. 545, 37 A. S. R. 742; Harvey v. Sides Silver Mining Co. 1 Nev. 539, 90 Am. D. 510; Jones v. Gooday, 8 M. & W. 146; Annotation, 35 A. L. R. 1142, “III. Basis of computation,” where numerous cases are cited to the effect that, “the true measure of damages for a reparable injury is the cost of repairs, if such cost is not greater than the diminution in value of the premises.” Additional cases may be found under annotation, 17 L. R. A. 426; Armstrong v. City of Seattle, 180 Wash. 39, 38 P. (2d) 377, 97 A. L. R. 826 (annotation at p. 830). In Karst v. St. P. S. & T. F. R. Co. 22 Minn. 118, 123, this court said:

“For unlawful excavation and removal of his soil, a party is entitled to recover, not the cost of refilling, but the amount of the diminution of the value of the property by the excavation and removal, that being the amount of the injury directly resulting from the acts complained of.”

And is not that the most feasible measure in such a situation? It accomplishes the object to which damage law is directed, i. e.r *181toward full recompense to an injured plaintiff for his loss. If, then, the landowner received full compensation by this measure, why is he not also fully compensated by receiving the same amount in the case before us? Once it has been held that the market value wholly restores the landowner when his property is permanently damaged, it must be held that he is also entirely repaid by the same measure in our present situation. So it would seem that whether plaintiff’s damages are to be measured by the rule applicable to the theory of breach of contract cases or that of tortious conduct the extent of his recovery can be no greater than his actual loss. In either case he may not be heard to complain that because the equivalent to defendant’s performance will cost a larger amount than that, therefore he should receive such greater amount rather than his real loss.

Some comment is in order respecting cases cited in the prevailing opinion. Too much stress is laid upon Morgan v. Gamble, 230 Pa. 165, 79 A. 110, the implication being that this case in some fashion limits or impairs Bigham v. Wabash-Pittsburg T. Ry. Co. 223 Pa. 106, 72 A. 318. A careful reading of the two opinions dispels any notion of lack of complete harmony between them. In the Gamble case the contractor had agreed to place two gas lines in a building, one for natural, the other for artificial, gas. He failed to lay the gas line for the latter because only natural gas was available when the building was being erected. The trial court deemed the important question to be that of whether the contractor had substantially performed. On appeal the court was of the opinion that (230 Pa. 171-175, 79 A. 113-111)—

“over and beyond the question of substantial performance is whether the contract was complied with to the satisfaction of the owner. * * * The contract provides that the contractor shall furnish all the materials and perform all the work to the satisfaction of the owner. We have uniformly upheld such contracts and required their observance. Under a contract of that character it is the duty of the contractor to perform to the satisfaction of the owner, and that is the standard by which the sufficiency of the *182work is to be tested. It is not for the court or the jury to determine whether the work is being done in compliance therewith, but solely for the owner to determine, and with his decision the contractor must comply.” Of course the court limited the owner’s dissatisfaction to something not “prompted by caprice or bad faith or for the purpose of evading payment of the balance due the contractor. If the objections made by the owner are bona fide and not unreasonable or capricious they must be sustained.”

Nothing whatever was said in any way limiting the rule laid down in the former case. Chamberlain v. Parker, 45 N. T. 569, 572, 573, is also cited. There defendant had failed to drill a well, and suit to recover cost of performance promptly followed.

“The point to be considered,” said the court, “is, whether the plaintiff in any sense, actual or legal, has lost by the default of the defendant a sum equal to the expense of digging the well” (Italics supplied.)

A verdict for plaintiff for $2,700 was reversed on appeal because (Id. 574) “plaintiff was, upon the proof given, entitled to nominal damages only,” and “judgment absolute” was ordered for defendant. Sassen v. Haegle, 125 Minn. 441, 147 N. W. 445, 446, 52 L.R.A.(N.S.) 1176, is also much emphasized. The record there is:

Defendant had entered into a farm lease under the terms of which he “promised and agreed not to remove any straw or manure from said farm, but to spread upon said premises all manure made thereon.” Plaintiff’s claim for damages was stated in his complaint to be “that said manure and the spreading thereof was reasonably worth and of the value of” $93.75, and in that sum sought recovery under his first cause of action. Defendant’s answer admitted “that he did haul from said premises during the term of said lease twenty loads of manure. But he alleges that during the time he occupied said premises he hauled upon said premises and fed thereon a large amount,of feed raised upon other lands. And that from said feed manure was made to.a much greater extent and in amount than was 'hauled by this defendant from said .premises. And that the *183plaintiff suffered no damage thereby.” The testimony for plaintiff was: “Q. What was that manure and the spreading of it upon the land reasonably worth ? A. About $93.00 or $94.00, I thought, the spreading and hauling [to be worth].”

What this court was considering here was necessarily based upon the record before it. There is nothing in the facts in that case upon which plaintiff can build anything at all helpful to his contentions. The futility of quoting from any opinion without reference to the facts upon which it is based is here clearly apparent. Compare Meisch v. Safranski, 147 Minn. 122, 124, 179 N. W. 685, where defendant tenant had failed to fall-plow a certain part of the rented farm. The court said:

“The damage from the failure to plow was not permanent nor recurrent. The land had a use or rental value for 1919, though not plowed in the fall of 1918. The difference between that value and the value if plowed in 1918 measured plaintiff’s loss. We are accustomed to measure damages by comparing rental values in cases not dissimilar in principle. (Citing cases.) A correct measure of damages results in just compensation. That adopted, properly applied, does.”

No one doubts that a party may contract for the doing of anything he may choose to have done (assuming what is to be done is not unlawful) “although the thing to be produced had no marketable value.” (45 N. T. 572.) In Eestatement, Contracts, § 346, pp. 576, 577, Illustrations of Subsection (1), par. 4, the same thought is thus stated:

“A contracts to construct a monumental fountain in B’s yard for $5,000, but abandons the work after the foundation has been laid and $2,800 has been paid by B. The contemplated fountain is so ugly that it would decrease the number of possible buyers of the place. The cost of completing the fountain would be $4,000. B can get judgment for $1,800, the cost of completion less the part of price unpaid.”

*184But that is not what plaintiff’s predecessor in interest contracted tor. Such a provision might well have been made, but the parties did not. They could undoubtedly have provided for liquidated damages for nonperformance (2 Dunnell, Minn.. Dig. [2 ed. & Supps.] §§ 2536, 2537), or they might have determined in money what the value of performance was considered to be and thereby have contractually provided a measure for failure of performance.

The opinion also suggests that this property lies in an area where the owner might rightly look for future development, being in a so-called industrial zone, and that as such he should be privileged to «o hold it. This he may of course do. But let us assume that on May 1, 1934, condemnation to acquire this area had so far progressed as to leave only the question of price (market value) undetermined; that the area had been graded in strict conformity with the contract but that the actual market value of the premises Avas only $12,160, as found by the court and acquiesced in by plaintiff, what would the measure of his damages be? Obviously, the limit •of his recovery could be no more than the then market value of his property. In that sum he has been paid with interest and costs; and he still has the fee title to the premises, something he would not possess if there had been condemnation. In what manner has plaintiff been hurt beyond the damages awarded? As to him “economic Avaste” is not apparent. Assume that defendant abandoned the entire project without taking a single yard of gravel therefrom but left the premises as they Avere when the lease was made, could plaintiff recover damages upon the basis here established? The trouble with the prevailing opinion is that here plaintiff’s loss is not made the basis for the amount of his recovery but rather what it would cost the defendant. No case has been decided upon that basis until now. Plaintiff asserts that he knows of no rule “giving a different measure of damages for public contracts and for private contracts in case of nonperformance.” It seems to me there is a clear distinction to be drawn with respect to the application of the rule for recoverable damages in case of breach of a public works contract from that applicable to contracts between private parties. The construction of a public building, a sewer, *185drainage ditch, highway, or other public work, permits of no application of the market value doctrine. There simply is and can be no “market value” as to such. And for this cogent reason there can be but one rule of damages to apply, that of cost of completion of the thing contracted to be done. I think the judgment should be affirmed.

Holt, Justice.

I join in the foregoing dissent.

Mr. Justice Hilton, being incapacitated by illness, took no part.

Mr. Justice Loring took no part.

6.9 Hadley v. Baxendale 6.9 Hadley v. Baxendale

In the court of Exchequer, 1854.
9 Exch. 341.

            . . . At the trial before Crompton. J., . . . it appeared that the plaintiffs carried on an extensive business as millers at Gloucester; and that on the 11th of May, their mill was stopped by a breakage of the crank shaft by which the mill was worked. The steam-engine was manufactured by Messrs. Joyce & Co., the engineers, at Greenwich, and it became necessary to send the shaft as a pattern for a new one to Greenwich. The fracture was discovered on the 12th, and on the 13th the plaintiffs sent one of their servants to the office of the defendants, who are the well-known carriers trading under the name of Pickford & Co., for the purpose of having the shaft carried to Greenwich. The plaintiffs' servant told the clerk that the mill was stopped, and that the shaft must be sent immediately; and in answer to the inquiry when the shaft would be taken, the answer was, that if it was sent up by twelve o'clock any day, it would be delivered at Greenwich on the following day. On the following day the shaft was taken by the defendants, before noon, for the purpose of being conveyed to Greenwich, and the sum of 21. 4s. was paid for its carriage for the whole distance; at the same time the defendants' clerk was told that a special entry, if required, would be made to hasten its delivery. The delivery of the shaft at Greenwich was delayed by some neglect; and the consequence was, that the plaintiffs did not receive the new shaft for several days after they would otherwise have done, and the working of their mill was thereby delayed, and they thereby lost the profits they would otherwise have received.


            On the part of the defendants, it was objected that these damages were too remote, and that the defendants were not liable with respect to them. The learned Judge left the case generally to the jury, who found a verdict with ₤251. damages beyond the amount paid into Court.

 . . .

            The judgment of the Court was now delivered by

            ALDERSON, B. We think that there ought to be a new trial in this case; but, in so doing we deem it to be expedient and necessary to state explicitly the rule which the Judge, at the next trial, ought, in our opinion, to direct the jury to be governed by when they estimate the damages. . . .

            "There are certain established rules," this Court says, in Alder v. Keighley (15 M. & W. 117), "according to which they jury ought to find."  And the Court, in that case, adds: "and here there is a clear rule, that the amount which would have been received if the contract had been kept, is the measure of damages if the contract is broken."

            Now we think the proper rule in such a case as the present is this: - Where two parties have made a contract which one of them has broken, the damages which the other party ought to receive in respect of such breach of contract should be such as may fairly and reasonably be considered either arising naturally, i.e., according to the usual course of things, from such breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it.

Now, if the special circumstances under which the contract was actually made were communicated by the plaintiffs to the defendants, and thus known to both parties, the damages resulting from the breach of such a contract, which they would reasonably contemplate, would be the amount of injury, which would ordinarily follow from a breach of contract under these circumstances so known and communicated. But, on the other had, if these special circumstances were wholly unknown to the party breaking the contract, he, at the most, could only be supposed to have had in his contemplation the amount of injury which would arise generally, and in the great multitude of cases not affected by any special circumstances, from such breach of contract.

For, had the special circumstances been known, the parties might have specially provided for the breach of contract by special terms as to the damages in that case; and of this advantage it would be very unjust to deprive them. Now the above principles are those by which we think the jury ought to be guided in estimating the damages arising out of any breach of contract. It is said, that other cases such as breaches of contract in the non-payment of money, or in the not making a good title to land, are to be treated as exceptions to from this, and as governed by the conventional rule. But as, in such cases, both parties must suppose to be cognisant of that well-known rule, these cases may, we think, be more properly classed under the rule above enunciated as to cases under known special circumstances, because there both parties may reasonably be presumed to contemplate the estimation of the amount of damages according to the conventional rule.

 

Now, in the present case, if we are to apply the principles above laid down, we find that the only circumstances here communicated by the plaintiffs to the defendants at the time the contract was made, were, that the article to be carried was the broken shaft of a mill, and that the plaintiffs were the millers of that mill. But how do these circumstances shew reasonably that the profits of the mill must be stopped by an unreasonable delay in the delivery of the broken shaft by the carrier to the third person? Suppose the plaintiffs had another shaft in their possession put up or putting up at the time, and that they only wished to send back their broken shaft to the engineer who made it; it is clear that this would be quite consistent with the above circumstances, and yet the unreasonable delay in the delivery would have no effect upon the intermediate profits of the mill. Or, again, suppose that, at the time of the delivery to the carrier, the machinery of the mill had been in other respects defective, then , also, the same results would follow. Here it is true that the shaft was actually sent back to serve as a model for a new one, and that the want of a new one was the only cause of the stoppage of the mill, and that the loss of profits really arose from not sending down the new shaft in proper time, and that this arose from the delay in delivering the broken one to serve as a model. But, it is obvious that, in the great multitude of cases millers sending off broken shafts to third parties by a carrier under ordinary circumstances, such consequences would not, in all probability, have occurred; and these special circumstances were here never communicated by the plaintiffs to the defendants. It follow, therefore, that the loss of profits here cannot reasonably be considered such a consequence of the breach of contract as could have been fairly and reasonably contemplated by both the parties when they made this contract. For such loss would neither have flowed naturally from the breach of this contract in the great multitude of such cases occurring under ordinary circumstances, nor were the special circumstances, which, perhaps, would have made it a reasonable and natural consequence of such breach of contract, communicated to or known by the defendants. The Judge ought, therefore, to have told the jury, that, upon the facts then before them, they ought not to take the loss of profits into consideration at all in estimating the damages. There must therefore be a new trial in this case.