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Skendzel v. Marshall (1973)

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Skendzel v. Marshall, 261 Ind. 226, 301 N.E.2d 641 (Ind. 1973)

Legal information, not legal advice. Verify against the cited opinion.

  • Citation: Skendzel v. Marshall, 261 Ind. 226, 301 N.E.2d 641 (1973), reh’g modified, 263 Ind. 337, 330 N.E.2d 747 (1975).
  • Court / Year: Supreme Court of Indiana, decided October 4, 1973 (opinion by Hunter, J.; Arterburn, DeBruler, Givan, and Prentice, JJ., concurring).
  • Topic tags: forfeiture · foreclosure · equitable_interest · remedies · substantial-equity-bar
  • Facts: Mary Burkowski sold real estate to the Marshalls (vendees) under a conditional land sale contract for **2,500 without interest. The contract contained a forfeiture clause: on a default continuing for 30 days, all monies paid would be forfeited and retained by the vendor as liquidated damages. The vendees paid **36,000) before their last payment on February 15, 1965, leaving $15,000 unpaid. Burkowski’s interest was assigned to the Skendzels (plaintiffs), who sued to enforce the forfeiture clause and recover possession. The trial court entered a negative judgment against the vendors; the Court of Appeals reversed, holding the vendees in default and finding no waiver of the forfeiture right. The Supreme Court granted transfer.
  • Holding: A forfeiture clause is unenforceable against a vendee who has acquired substantial equity in the property. The Court held that under a conditional land sale contract “the vendor’s interest … clearly constitutes a lien” upon the real estate, “should therefore be treated as such,” and is subject to the mortgage-foreclosure statute and its (then) one-year (later treated as six-month) redemption period rather than to forfeiture. Where the vendee has substantial equity, the vendor must foreclose the contract like a mortgage — judicial sale with the vendee credited for equity — instead of declaring a forfeiture. Here, forfeiting the Marshalls’ $21,000 was “inconsistent with generally accepted principles of fairness and equity.”
  • Reasoning: Equity abhors forfeitures. The Court reasoned that “a sale of land … where … the vendor retains the legal title” places the parties “substantially [in] the position of mortgagor and mortgagee” — the vendor holds “a lien for his purchase money.” Because “judicial foreclosure of a land sale contract is in consonance with the notions of equity developed in American jurisprudence,” and “[a] forfeiture — like a strict foreclosure at common law — is often offensive to our concepts of justice and inimical to the principles of equity,” the conditional vendee’s interest must be protected through foreclosure. The Court did not abolish forfeiture entirely: it remains “a logical and equitable remedy” against “an abandoning, absconding vendee,” and where “the vendee has paid a minimal amount on the contract at the time of default and seeks to retain possession while the vendor is paying taxes, insurance, and other upkeep.” The dividing line is substantial vs. minimal equity.
  • Disposition / 1975 rehearing: Transfer granted; remanded with instructions to enter a judgment of foreclosure on the vendors’ lien under the mortgage- foreclosure statute (per Ind. Trial Rule 69(C)), including unpaid principal with interest at 8% per annum, reimbursement of delinquent taxes paid (with 8% interest), and attorneys’ fees, all as liens, plus a stay of judicial sale to permit redemption and “any and all other equitable relief that the court deems just.” On rehearing, Skendzel v. Marshall, 263 Ind. 337, 330 N.E.2d 747 (1975), the Court confirmed the foreclosure remedy and emphasized the trial court’s broad equitable discretion in fashioning relief consistent with the mortgage analogy.
  • Practical impact for CFD operators/buyers: Skendzel is the lead national precedent for the doctrine that an installment land contract functions as a security device (a mortgage substitute), so a defaulting buyer with built-up equity cannot be summarily forfeited — the seller must foreclose. In Indiana practice, trial courts routinely apply Skendzel to deny forfeiture and order foreclosure whenever the vendee’s equity is more than minimal. For operators, this means forfeiture is a viable remedy only against early-stage defaults (minimal payments) or abandonment; once a buyer has paid down a meaningful share, the deal must be unwound through judicial foreclosure with the buyer’s equity protected.
  • Good-law status: Good law. As clarified on rehearing in 1975, Skendzel remains the controlling Indiana authority. It has been consistently followed — e.g., Oles v. Plummer, 444 N.E.2d 879 (Ind. Ct. App. 1983) (30.55% paid is “substantial and not a minimal amount under Skendzel”), and McLemore v. McLemore, 827 N.E.2d 1135 (Ind. Ct. App. 2005) (forfeiture disfavored; available only where the vendee abandoned the property or made minimal payments). Not overruled or superseded by statute.
  • Source (retrieved):

▸ For Sellers / Operators — This is the case that defines remedy risk on a defaulted land contract. In Indiana, and in every state that follows the Skendzel line, a forfeiture clause will not be enforced once the buyer holds substantial equity — courts convert the deal into a mortgage and make you foreclose, crediting the buyer for what they paid. Plan for it: forfeiture is realistically available only against an abandoning buyer or an early default with minimal payments; otherwise budget for judicial foreclosure and a redemption period. Drafting an aggressive forfeiture clause does not change this — equity overrides the clause. See forfeiture-vs-foreclosure and the indiana page.

▸ For Buyers — If you have paid a meaningful share of the price, Skendzel protects you: the seller generally cannot keep your payments and take the property by forfeiture. Your equity must be recognized through foreclosure with a chance to redeem.

Jurisdictions that follow / cite: indiana (controlling) · part of the national drift away from strict forfeiture alongside sebastian-v-floyd-1979 (Kentucky); compare each state’s classification in forfeiture-vs-foreclosure.

Disclaimer. Legal information, not legal advice. Skendzel turns on the buyer’s equity and the equities of each case; outcomes vary with the facts and the jurisdiction. Confirm the opinion is still good law and consult a licensed Indiana attorney before relying on it.

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