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H. P. Droher & Sons v. Toushin - 250 Minn. 490, 85 N.W.2d 273 (1957)

Rule:

Where there is a substantial good-faith effort to perform the contract but there are defects of such a nature that the contract has not been performed according to its terms, which defects can be remedied without the destruction of a substantial part of the building, the owner is entitled to recover the cost of making the work conform to the contract. But where it appears that the cost of remedying the defects is grossly disproportionate to the benefits to be derived therefrom, the owner is entitled to recover the difference between the value of the property as it would have been if the contract had been performed according to its terms and the value in its condition as constructed.

Facts:

The landowners hired the contractor to build their house according to plans. The contractor sought to recover for labor and materials, but the landowners recovered for damages on their counterclaim for the contractor's failure to perform the work to specifications. The landowners' claim arose from a heavy rainstorm, which caused the basement to flood, apparently through basement windows that had been left open. The floodwater damaged the landowners' personal property. Plaintiff commenced this action to recover the balance due on the construction contract, and the landowners claimed that the house was not constructed according to the plans and specifications under the parties' contract, including grading of the lot, which contributed to the flooding.

Issue:

Did the landowners produce evidence supporting the award of damages by the trial court?

Answer:

No

Conclusion:

On appeal, the court reversed. The court ordered a new trial on the issue of damages for failure to construct the house in a workmanlike manner according to plans and specifications on the condition that the contractor consent to waive taxation of costs and disbursements on appeal. The evidence was not sufficient to sustain the trial court's findings on the value of the house if properly constructed. The court ruled that the evidence sufficiently supported the trial court's finding that the yard was not graded to specifications, which caused water to drain towards and into the house. The court ruled that the evidence sustained the finding that the house was not built in a workmanlike manner. The court ruled that in view of the extensive damage which would have occurred as a result of any effort to correct the defects, the difference-in-value theory was properly applied.

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