Heikkila v. Carver

378 N.W.2d 214 (1985)

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Heikkila v. Carver

South Dakota Supreme Court
378 N.W.2d 214 (1985)

  • Written by Whitney Kamerzel , JD

Facts

Howard and Reino Heikkila (plaintiffs) sold their ranch to Russell and Norma Carver (defendants) under an installment contract. The contract reserved the Heikkilas 90 percent of the property’s mineral rights and included a liquidated-damages clause that fixed the amount of damages if a default occurred to the amount of the Carver’s equity at the time of the default. The clause stated that damages were fixed at this amount because actual damages upon a breach could not be easily estimated. Russell Carver was experienced in real estate transactions, and he reviewed the contract and helped negotiate the liability amount in the liquidated-damages clause. The Carvers were late on their installment payment by 11 days, and the Heikkilas notified the Carvers that foreclosure would be initiated if payment was not made within 60 days. The Carvers did not pay in time, and the Heikkilas brought suit against the Carvers for foreclosure. The trial court found that the liquidated-damages clause was not an unenforceable penalty clause and awarded the Heikkilas the property back, including $400,000 worth of improvements the Carvers made to it, and the Carvers’ $319,345.47 installment and interest payments. The Carvers appealed.

Rule of Law

Issue

Holding and Reasoning (Fosheim, C.J.)

Dissent (Henderson, J.)

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