Habd bought Frostflow Lighthouse to live in with his wife and children. Several days after, noises began coming from the cellar, so he went to the town to buy some traps. Returning, he found his wife dead and a chaurus, which he killed. Habd assumed the Chaurus was a Daedric monster, never having encountered one before.
Desperate, he hoped to rescue his children, locking himself in the cellar so that the Chaurus couldn't get past him to the surface again, but was captured by the Falmer herders. By this time his son had been killed and his daughter had already been captured. His rescue attempt was a failure, and he contracted a fever thru chaurus poison. Delirious, he left an iron dagger to his daughter when he was taken away to become chaurus food.
The Dragonborn comes into the story too late to actually help the family, being left with a bitter revenge. However, picking up a clue before entering the cellar, you can at least make Habd's final request occur.
The Dragonborn may find his decomposed remains inside a Chaurus Reaper and throw them to the fire at the top of the beacon, so he can see the sea forever as he always wanted. This grants the Dragonborn the Sailor's Repose active effect.