American Standard, Inc. v. Schectman

Brief Fact Summary. Plaintiffs owned a piece of property that had been a pig iron manufacturing plant. Plaintiffs agreed to convey the building structures and most of the equipment on the property to Defendant for $275,000.00. Defendant promised to remove the equipment, demolish the structures, and grade the property.

Synopsis of Rule of Law. When Defendant’s nonperformance is the substantial purpose of the contract and Defendant did not substantially perform, damages shall be the cost of Defendant’s performance.

Facts. Plaintiffs own a piece of land near the Niagara River where, since the 1870s there had been a factory of some kind or another. It had several buildings as well as a blast furnace, and other industrial equipment. Plaintiff wanted to sell the land. Plaintiff agreed to convey to Defendant, a demolition and excavation contractor, all of the equipment on the land if he would remove all the equipment, demolish the structures and grade the land to a depth of one foot. Defendant did not grade the property to one foot, nor did he remove the foundations and other structures. Plaintiffs were able to sell the property for $183,000.00, which was $3000.00 below fair market value.

Issue. Should the trial court have instructed the jury that Plaintiffs damages should be calculated by subtracting the value Plaintiff’s property with Defendant’s performance from its value without Defendant’s performance?

Held. No.
In cases when the court has calculated the damages as being the difference between the value of the land with and without the defendant’s performance, were ones when the non-performance was not intentional and substantial performance was made, or the performance was only incidental to the purpose of the contract.
In this case, the facts show that Defendant did not substantially perform and the performance was the main purpose of the contract.

Discussion. The Court pointed out that a plaintiff has the right to contract for labor that will not improve the market value of the land. In cases when the defendant did not even substantially perform, plaintiff is entitled to the cost of defendant’s performance
Defendants knew, at the time the contract was made, what it would cost to do the remedial would. They could have taken that into account when the agreed to do the work. Defendant admits that Plaintiff insisted that the remedial work be done. Defendant did not even try to substantially perform. Defendant has reaped the benefit of the contract but Plaintiff is being denied the benefit Plaintiff expected to get from the contract. I believe Plaintiff is entitled to specific performance. Barring that, I believe Plaintiffs are entitled to the cost of specific performance.
In this case, damages for breach of cannot be more than the worth of the performance of the contract.