## Facts

- Buyers entered an installment contract to purchase a farm and home for $22,000, payable in $1,000 annual installments, and agreed to pay taxes.
- Buyers paid $6,680 but failed to make the second year’s principal payment and informed sellers they could not perform.
- Sellers offered to defer the $1,000 principal if buyers paid taxes and interest; buyers again indicated they would not meet the contract.
- Sellers retook possession when the property was unoccupied; the contract allowed sellers, upon default, to retake the property and retain payments as liquidated damages.
- Evidence showed substantial damage to the house and property during the two years buyers occupied the premises.
- The trial court treated sellers’ recovery as limited to actual damages (two years’ rental value plus physical damage) and awarded buyers $2,119.94 as the amount paid beyond those damages.

## Issues

1. Whether defaulting purchasers may obtain restitution of payments exceeding the seller’s actual damages when the contract authorizes forfeiture of payments as liquidated damages upon default and repossession.
2. Whether equity should refuse to enforce the forfeiture clause because the resulting loss to the buyers is unconscionable.

## Decision

- The Utah Supreme Court reversed the judgment for the buyers and awarded costs to the sellers.
- The court held the buyers were not entitled to restitution of any portion of the $6,680 paid.
- The court enforced the contract provision allowing sellers to retake the property and retain all payments as liquidated damages because the forfeiture was not unconscionable.
- The court rejected the trial court’s approach of recalculating damages and requiring a refund of payments exceeding actual damages.

## Legal Principles

- Contractual forfeiture/liquidated-damages remedies in installment land contracts will be enforced unless enforcement would be unconscionably harsh.
- Equity may relieve against forfeiture only when the result “shocks the conscience”; it does not provide a general right of defaulting purchasers to recover payments beyond the seller’s actual loss.
- A court should not convert a valid liquidated-damages clause into an actual-damages-only remedy absent a showing of unconscionability.
- Prior precedent allowing equitable relief from forfeiture is limited to extreme facts and does not authorize routine restitution whenever payments exceed measured damages.

## Conclusion

The court enforced the parties’ liquidated-damages/forfeiture clause after the buyers’ default, holding that restitution is unavailable absent a showing that the forfeiture is unconscionable; therefore, the sellers could retain all payments and repossess the property.


Carlson v. Hamilton, 332 P.2d 989 (Utah 1958)