Producers Lumber & Supply Co. v. Olney Building Co. case brief

Producers Lumber & Supply Co. v. Olney Building Co.
Property Law Case Brief

Subject: Mistaken Builder.

Case Overview:
Producers Lumber Supply Company (P) sued Olney Building Company (D) for demolishing a building the latter had mistakenly erected on the former’s land.

Case Facts:
-Producers Lumber Supply Company (“Producers”) purchased a plot of land from Olney Building Company (“Olney”) so that the owners of Producers could build a house on that land.
-Olney subsequently began building a house on the said land under the mistaken belief that the land was still Olney’s property.
-The house had almost been completed when Producers discovered that the unauthorized construction had taken place.
-The parties attempted to reach an amicable resolution of the problem, but negotiations ultimately failed.
-Olney then demolished the house, causing Producers to sue for its value.

Issue:
Should one who mistakenly builds a house on another’s land be held liable for the value of that house if he demolishes it without the landowner’s consent?

Holding:
One who mistakenly builds and then demolishes such a house should be held liable.

Case Analysis:
Under normal circumstances, a court will grant equitable relief by allowing the builder to remove the building if such removal can be carried out without damage to the land or the building. If removable is impossible, then the court may grant the landowner the choice to pay the builder for the improvement to the land and thereby gain possession of the building. Alternatively, the builder may purchase the land from the owner.

The mistaken builder, however, is not permitted to demolish the building unilaterally. Such demolition amounts not only to impermissible self-help but also to economic waste. The builder must compensate the landowner for such waste. In this case, Olney is additionally liable for punitive damages because it demolished the house with malice.

Dissenting Opinion:
The law, as it currently stands, allows a builder who mistakenly improves the land of another to retain possession of the improvement. The builder has the right to demolish the improvement as long as it pays for any consequential damage to the land. The majority has not demonstrated any rule to the contrary. Furthermore, Producers tried to drive an unconscionable bargain after it realized Olney’s disadvantageous position. There is simply no reason to impose upon Olney the so-called compensatory damages for the value of the house.

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