Property

Brief

Skendzel v. Marshall

Procedural History:

• Lower court ruled for the defendant.
• Appealed.
• Reversed.
• Appealed.
• Reversed and Remanded with Instructions.

Facts:

• December 1958, Burkowski, as vendor, entered into a land sale contract with March, as vendees.
• Contract provided for the sale of certain real estate for the sum of $36,000 with specifications as to the payment.
• The contract had a section about prepayments as well as a section about forfeiture and liquidation provisions.
• According to the contract:
  • All moneys and payments previously paid shall, at the option of the vendor without notice or demand, be and become forfeited and be taken and retained by the vendor as liquidated damages and thereupon this contract shall terminate.
• The vendor, Burkowski died in 1963.
• The plaintiffs in the current action are assignees of the decedent’s interests in this contract.
• All payments were doing fine until payments ceased after the payment made on 2.15.1965 and $15,000 remained to be paid.
• Plaintiffs are thus trying to enforce the forfeiture provision.
• The defendants however raised the defense of waiver.
• The applicable rule in this situations:
  • Where a contract for the sale and purchase of land contains provisions similar to those in the contract in the case at bar, the vendor may waive strict compliance with the provisions of the contract by accepting overdue or irregular payments…
• If forfeiture is enforced against the Defendants, they will forfeit the sum of $21,000.

Issue:

• Can forfeiture be enforced in this contract?

Holding:

• No. Reversed.

Reasoning:

• Forfeitures are generally disfavored by the law.
• Under the facts, a $21,000 forfeiture is clearly excessive and not a reasonable measure of damages.
• The vendee has acquired a substantial interest in the property, which, if forfeited, would result in substantial injustice.