## Facts

- Sellers Richard Lee and Mildred Zinn agreed to sell a house and land in Preston County, West Virginia, to purchasers Samuel and Diana Stonebraker under an installment land contract dated October 2, 1978.
- The purchase price was $25,000, with a $1,500 down payment and the $23,500 balance payable in monthly installments of $189.09 at 9% interest.
- The contract required the purchasers to pay taxes and insurance and to maintain and repair the property.
- The contract included a forfeiture/liquidated-damages term stating that, upon the purchasers’ abandonment, the sellers could retain all amounts paid on the purchase price as liquidated damages.
- The Stonebrakers took possession in November 1978, made about twelve monthly payments, and in November 1979 notified the Zinns they could not afford repairs and payments; they vacated before December 1, 1979.
- By abandonment, the Stonebrakers had paid the $1,500 down payment plus twelve installments (about $3,768 total) while occupying the property for roughly one year.
- The Zinns remained responsible on their own deed of trust and, after abandonment, resumed ownership obligations and faced costs associated with re-marketing the property.
- In litigation originating in magistrate court and proceeding to circuit court, the Stonebrakers challenged the forfeiture clause as an unenforceable penalty and asserted a usury claim; the circuit court upheld the clause and dismissed the usury claim before jury consideration.

## Issues

1. Whether installment land contracts should be treated as functionally equivalent to deeds of trust, requiring foreclosure-type protections rather than contractual forfeiture remedies.
2. Whether a clause allowing sellers to retain all sums paid upon abandonment is an unenforceable penalty because it is grossly disproportional to the sellers’ actual damages.
3. Whether the transaction’s 9% interest rate and payment structure supported a claim of usury under West Virginia law.

## Decision

- The court declined to adopt a categorical rule equating installment land contracts with deeds of trust for purposes of remedies and procedures.
- The court affirmed enforcement of the liquidated-damages/forfeiture clause, concluding the retained payments were not grossly disproportional to damages and therefore did not operate as an unlawful penalty.
- The court affirmed dismissal of the usury claim, finding the record did not support a showing of usury.
- The circuit court’s judgment was affirmed.

## Legal Principles

- A liquidated-damages provision in an installment land contract is unenforceable as a penalty only when the amount retained is so grossly disproportional to damages actually incurred that enforcement would constitute an impermissible forfeiture.
- In assessing proportionality for retention of payments after abandonment, relevant considerations include loss of fair rental value, costs of sale, depreciation, attorney fees, and other directly related expenses caused by abandonment.
- Installment land contracts are not automatically recharacterized as deeds of trust; enforceability of remedies is evaluated under established contract doctrines, including the penalty/liquidated-damages distinction.

## Conclusion

The court held that installment land contracts are not generally subject to deed-of-trust foreclosure protections and enforced a forfeiture clause as valid liquidated damages where the amount retained after abandonment was not grossly disproportional to the sellers’ damages, while also affirming dismissal of a usury claim for lack of supporting evidence.


Stonebraker v. Zinn, 286 S.E.2d 911 (W. Va. 1982)