Harvison v. Charles E. Davis & Associates, Inc., 310 Ark. 104, 835 S.W.2d 284 (Ark. 1992)
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- Citation: 310 Ark. 104, 835 S.W.2d 284 (1992) (No. 91-286).
- Court / Year: Arkansas Supreme Court, 1992.
- Topic tags: forfeiture | foreclosure | equitable_interest | substantial_equity
- Facts: The Harvisons sold approximately 10.76 acres in Washington County to Charles R. and Vera Howard under a contract for deed dated June 4, 1982 — a 10,000 down, the balance financed at 10% per annum. The contract contained a forfeiture clause: on a default lasting 30 days, the sellers could declare the entire balance due within 20 days, and if unpaid, retake possession without legal process and keep all payments as liquidated damages. The Howards paid for almost seven years — roughly 60% of the purchase price — then defaulted in 1989. The Harvisons hired attorneys (Davis and Watson), who foreclosed the contract rather than declaring forfeiture and repossessing. The Harvisons then sued the attorneys for legal malpractice, claiming the lawyers should have pursued forfeiture (keeping the land and the payments) instead of foreclosing.
- Holding: The attorneys were not negligent, because on the undisputed facts forfeiture was not an available remedy to the Harvisons. The court rested this on three combined factors, expressly identifying the third-party liens as the most significant: (1) the Howards had paid ~60% over ~7 years and the sellers “always accepted these payments, whether timely or untimely,” so the Howards “had acquired an equitable interest” and “principles of equity abhor a forfeiture of the Howards’ equitable interest under these circumstances, even when the contract expressly provides for the right of forfeiture” (citing triplett-v-davis-1964 and Humke v. Taylor, 282 Ark. 94 (1984)); (2) an IRS tax lien of 5,412.85 had attached to the Howards’ equitable interest, which the equity court had to consider; and (3) the land had appreciated from 115,000. “The combination of these three factors tipped the scales of equity in favor of the foreclosure sale.” The court added that “even in the absence of waiver, forfeiture would not have been a remedy available to the Harvisons,” the “most significant factor being the liens against the property.” Disposition: affirmed summary judgment for the attorney-defendants (4 justices; Hays and Brown, JJ., dissented; Newbern, J., not participating).
- Reasoning: Arkansas relieves against forfeiture of a defaulting installment-buyer’s equitable interest as an equitable, totality-of-circumstances matter — not by a categorical rule. The court was explicit that “forfeiture clauses are proper” and that whether to relieve against one is “strictly up to the Court” on the facts. Here the buyer’s substantial equity, the sellers’ acceptance of late payments, the appreciation, and above all the competing liens (which a forfeiture would have wiped out, handing the sellers a windfall) made foreclosure-with-an-accounting the equitable outcome. The holding does not establish that every substantially-paid Arkansas CFD must be foreclosed; it holds forfeiture was unavailable on these combined facts.
- Practical impact for CFD operators/buyers: The leading modern Arkansas illustration that a forfeiture clause can be defeated where the buyer has substantial equity, the seller has accepted late payments, and (decisively here) junior liens or other equities make forfeiture a windfall. It is not a flat rule that forfeiture is always barred by substantial equity — Arkansas still enforces valid forfeiture clauses in appropriate cases (White v. Page, 216 Ark. 632 (1950); Humke v. Taylor (1984) reaffirming that “none of our decisions has held that [such a forfeiture clause] is unconscionable or unenforceable”). It nonetheless reflects the Skendzel drift (skendzel-v-marshall-1973): operators cannot assume a “keep-the-land-and-the-money” forfeiture will survive equitable review once meaningful equity and competing interests exist.
- Cases cited: triplett-v-davis-1964 (238 Ark. 870); Humke v. Taylor (282 Ark. 94); plus procedural/summary-judgment authorities (Nixon, Cordes, Reagan, Dillard, Pinkston, Shamlin, Widmer). The dissent cites Moore Ford Co. v. Smith, 270 Ark. 340 (1980), and Freeman v. King, 10 Ark. App. 220 (1984), on waiver as a fact question.
- Good-law status: Good law; routinely cited in Arkansas land-contract disputes.
- Source (retrieved): Full opinion text retrieved from the Caselaw Access Project (Harvard CAP / static.case.law), 310 Ark. 104. https://static.case.law/ark/310/cases/0104-01.json · also indexed at https://www.courtlistener.com/opinion/1674397/harvison-v-charles-e-davis-assoc/ · Verified: 2026-06-10 (full opinion text read directly; holding refined to reflect the three-factor, lien-driven, totality basis and the 2-justice dissent).
Jurisdictions that follow / cite: arkansas
Disclaimer. Legal information, not legal advice. Confirm the opinion is still good law before relying on it.