Filed 1/23/20 by Clerk of Supreme Court

IN THE SUPREME COURT

STATE OF NORTH DAKOTA

2020 ND 6

Michael McDougall and Bonita McDougall, Plaintiffs and Appellants

v.

AgCountry Farm Credit Services, PCA, Defendant, Third-Party Plaintiff,

and Appellee

and

Any person in possession, and All persons

unknown, claiming any estate or interest in,

or lien or encumbrance upon, the real estate

described in the Third Party Complaint, Third-Party Defendants

No. 20190140

Appeal from the District Court of Towner County, Northeast Judicial District, 

the Honorable Donovan J. Foughty, Judge.

AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.

Opinion of the Court by VandeWalle, Justice.

Kip M. Kaler (argued) and Patrick J. Sinner (appeared), Fargo, ND, for

plaintiffs and appellants.

John D. Schroeder, Grand Forks, ND, for defendant, third-party plaintiff and 

appellee.
1

McDougall v. AgCountry Farm Credit Services, PCA

No. 20190140

VandeWalle, Justice.

[¶1] Michael and Bonita McDougall (“McDougalls”) appealed from a 

judgment dismissing their deceit and unjust enrichment claims against 

AgCountry Farm Credit Services, PCA and granting summary judgment in 

favor of AgCountry on its claims to enforce assignment of rents and to foreclose 

a mortgage. We conclude the district court erred by concluding the 

McDougalls’ deceit claim was precluded by the statute of frauds. We reverse

the judgment as to the deceit and unjust enrichment claims, affirm the 

judgment on the remaining claims, and remand. 

I

[¶2] The McDougalls owned agricultural property (“home quarter”) described 

as:

The North half of the Southeast Quarter (N1/2SE1/4) and the 

South Half of the Northeast Quarter (S1/2NE1/4), Section Twentyfive (25), Township One Hundred Sixty-two (162), Range Sixtyseven West (67W) 5th P.M., Towner County, ND.

The McDougalls’ son and daughter-in-law, Kent and Erica McDougall, owned 

the home quarter at one time, but sold the property to the McDougalls in 2011. 

The McDougalls alleged Kent and Erica McDougall continued to use and live 

on the property after the 2011 sale. 

[¶3] Kent and Erica McDougall conducted a farming operation and received 

some of the financing for the farming operation from AgCountry. In 2015 and 

2016, Kent and Erica McDougall sought to refinance their debt through 

AgCountry and to borrow additional funds. The McDougalls alleged Kent and 

Erica McDougall’s AgCountry loan officer, Dean Aanderud, told Kent and 

Erica McDougall that he was working on refinancing their existing loans and 

obtaining a new loan and that the prospects for receiving financing “looked 

good.” The McDougalls further alleged that Aanderud advised Kent and Erica 

McDougall that they needed a loan extension to continue working on the 
2

refinancing and suggested they offer more collateral to secure their debt and

that Kent McDougall agreed to speak to the McDougalls about transferring the 

home quarter to use as collateral with the understanding that AgCountry 

would agree to lend additional funds. The McDougalls claimed Kent and Erica 

McDougall’s loans became delinquent and AgCountry executives internally 

expressed concern about the delinquencies and its ability to be paid for the 

existing debt.

[¶4] On March 31, 2016, Kent and Erica McDougall signed various loan 

agreement modifications for their AgCountry loans, which extended the 

installment payments on some of the loans and the maturity dates on other

loans. They also signed a mortgage on most of the home quarter to secure the 

loans. On April 5, 2016, the McDougalls transferred the home quarter to Kent 

and Erica McDougall. The McDougalls alleged Kent McDougall called 

AgCountry on April 6, 2016, to check on the progress of the refinancing and 

the new loan and learned Aanderud no longer worked at AgCountry. They 

alleged that on April 7, 2016, an AgCountry executive told Kent and Erica 

McDougall “we should have had this discussion a long time ago and been sat 

down to talk about our financial situation” and “things weren’t looking good.” 

On April 7, 2016, Kent and Erica McDougall deeded the home quarter back to 

the McDougalls. 

[¶5] In 2018, the McDougalls sued AgCountry, requesting the district court 

declare the mortgage on the home quarter is void. They also sought damages 

on claims of deceit, conversion, estoppel, and unjust enrichment. The 

McDougalls claimed AgCountry asked Kent and Erica McDougall for 

additional collateral to refinance their debt and advance a new loan knowing 

the only other collateral they may have access to was the property owned by 

the McDougalls, AgCountry created a scheme to acquire that property, and

AgCountry knew or should have known it would not refinance their debt or 

make a new loan. The McDougalls alleged that AgCountry made 

misrepresentations to Kent and Erica McDougall intending those 

communications be relayed to the McDougalls to persuade them to make the 

home quarter available to AgCountry as additional collateral and that the 

McDougalls relied on AgCountry’s misrepresentations. 
3

[¶6] AgCountry answered and counterclaimed, seeking to foreclose the 

mortgage on the property and enforce an assignment of rents arising from the 

property.

[¶7] AgCountry moved for summary judgment, arguing the McDougalls’ 

claims failed as a matter of law based on the undisputed material facts. 

AgCountry argued the McDougalls’ claims were barred by a prior judgment in

an adversary proceeding in Kent and Erica McDougall’s bankruptcy action

under the doctrines of res judicata or collateral estoppel. They also argued that 

the claim for deceit should be dismissed because AgCountry did not make any 

misrepresentations to the McDougalls and the claim was precluded by the 

statute of frauds and that the claim for unjust enrichment should be dismissed 

because the McDougalls have adequate remedies at law and AgCountry’s 

actions were justified. AgCountry argued it was entitled to summary judgment 

on its claims.

[¶8] The McDougalls responded and also moved for summary judgment. 

They argued res judicata and collateral estoppel do not preclude their claims,

their deceit claim was not barred by the statute of frauds, and summary 

judgment should be granted in their favor based on the prior determination of 

facts by the bankruptcy court. They also argued that AgCountry committed 

deceit by making assertions it had no reasonable grounds to believe were true

or by suppressing the truth and that they justifiably relied on AgCountry’s 

misrepresentations.

[¶9] After a hearing, the district court granted summary judgment in favor of 

AgCountry on all of the McDougalls’ claims, concluding the McDougalls’ claims 

were not barred by collateral estoppel, but the McDougalls could not prove two 

elements of their unjust enrichment claim and the statute of frauds barred

their deceit claim. The court also granted summary judgment in favor of 

AgCountry to foreclose the mortgage on the home quarter and for assignment 

of rents for 2017 and 2018. The court reserved ruling on the assignment of 

rents for 2016. After briefing from the parties, the court entered an order on 

the reserved issues, concluding AgCountry was not seeking an award of rent 

for 2016. Judgment was entered.
4

II

[¶10] Our standard of review for summary judgments is well established:

Summary judgment is a procedural device under 

N.D.R.Civ.P. 56(c) for promptly resolving a controversy on the

merits without a trial if there are no genuine issues of material

fact or inferences that can reasonably be drawn from undisputed

facts, or if the only issues to be resolved are questions of law. The

party seeking summary judgment must demonstrate there are no

genuine issues of material fact and the case is appropriate for

judgment as a matter of law. In deciding whether the district court

appropriately granted summary judgment, we view the evidence

in the light most favorable to the opposing party, giving that party

the benefit of all favorable inferences which can reasonably be

drawn from the record. A party opposing a motion for summary

judgment cannot simply rely on the pleadings or on unsupported

conclusory allegations. Rather, a party opposing a summary

judgment motion must present competent admissible evidence by

affidavit or other comparable means that raises an issue of

material fact and must, if appropriate, draw the court’s attention

to relevant evidence in the record raising an issue of material fact.

When reasonable persons can reach only one conclusion from the

evidence, a question of fact may become a matter of law for the

court to decide. A district court’s decision on summary judgment is

a question of law that we review de novo on the record.

N.D. Private Investigative & Sec. Bd. v. TigerSwan, LLC, 2019 ND 219, ¶ 8,

932 N.W.2d 756 (quoting Heartland State Bank v. Larson, 2019 ND 129, ¶ 7, 

927 N.W.2d 407).

III

[¶11] The McDougalls argue the district court erred in dismissing their deceit 

claim. They contend the statute of frauds does not apply to preclude their 

claim.

[¶12] Under N.D.C.C. § 9-10-03, “[o]ne who willfully deceives another with 

intent to induce that person to alter that person’s position to that person’s 
5

injury or risk is liable for any damage which that person thereby suffers.” 

Deceit is defined as:

1. The suggestion as a fact of that which is not true by one who

does not believe it to be true;

2. The assertion as a fact of that which is not true by one who has

no reasonable ground for believing it to be true;

3. The suppression of a fact by one who is bound to disclose it, or

who gives information of other facts which are likely to mislead or

want of communication of that fact; or

4. A promise made without any intention of performing.

N.D.C.C. § 9-10-02. Deceit requires the misrepresentation of facts, suppression

of facts, misleading another, or promising without intending to perform. 

Schneider v. Schaaf, 1999 ND 235, ¶16, 603 N.W.2d 869. Proof of actual 

damage proximately caused by the misrepresentation or nondisclosure is an 

essential element of a deceit claim. Id.

[¶13] In granting summary judgment in favor of AgCountry and dismissing

the McDougalls’ deceit claim, the district court relied on Irish Oil & Gas, Inc. 

v. Reimer, 2011 ND 22, 794 N.W.2d 715, and concluded the statute of frauds

precludes the deceit claim. The court explained, “It is clear here that alleged 

promise is an oral agreement to loan money in excess of $25,000.00 in exchange 

for the Home Quarter mortgage, which falls under the statute of frauds.” The 

court said a majority of this Court held in Irish Oil that the “use of a deceit 

claim to defeat the statute of frauds cannot stand.” The court concluded:

There is no dispute [the McDougalls’] claim relies on alleged 

oral promises made by AgCountry to [Kent and Erica McDougall] 

that fall under the statute of frauds in a contract context. After 

extensive review of the decision in Irish Oil, and finding no 

subsequent cases which shed more light on this issue, this Court 

concludes, as a matter of law, [that] which would prevent a breach 

of contract claim by [Kent and Erica McDougall], should also bar 

[the McDougalls’] deceit claim, particularly as title to real property 

is involved. 

[¶14] In Irish Oil, 2011 ND 22, ¶¶ 2-6, 794 N.W.2d 715, an oil and gas lessee 

sued the lessors for breach of the leases, the lessee moved to amend its 
6

complaint to add a deceit claim against one of the lessors related to an alleged 

oral agreement, and the district court denied the motion to amend the 

complaint. This Court issued a divided decision in reviewing the district court’s 

denial of the lessee’s motion to amend its complaint. The Court’s opinion 

discussed a split in jurisdictions on the issue of whether the statute of frauds

bars a deceit claim when it precludes a breach of contract claim. Id. at ¶¶ 39-

50. Two justices agreed they would reverse the district court’s decision because

the statute of frauds is a rule of evidence that gives rise to a defense in a 

contract action but does not preclude a deceit claim because it is not an action 

on the contract. Id. at ¶ 51. 

[¶15] In two separate dissenting opinions, three justices agreed to affirm the 

district court’s denial of the motion to amend. Irish Oil, 2011 ND 22, ¶¶ 65-

75, 794 N.W.2d 715. The author of this opinion dissented from the Court’s 

opinion and stated that he would affirm the judgment, explaining he was 

“particularly concerned about the use of a deceit claim to defeat the statute of 

frauds with regard to written instruments involving the title to real property.” 

Id. at ¶ 65 (Justice Sandstrom concurred). Justice Kapsner also dissented, 

stating the proposed deceit claim was an “end-run around the statute of frauds”

and the lessee was a sophisticated dealer in mineral leases, who had a simple 

solution available by getting a written modification of the leases. Id. at ¶ 72. 

A majority of the Court affirmed the district court’s denial of the lessee’s 

motion to amend its complaint. 

[¶16] This case is different than Irish Oil. The McDougalls do not allege they 

had a contract with AgCountry. They are a third party to the alleged promise. 

The McDougalls claim AgCountry falsely represented to Kent and Erica 

McDougall that it would give them a new operating loan if they had more 

collateral and AgCountry never had any intention of performing the promise. 

The McDougalls claim AgCountry knew Kent and Erica McDougall did not 

have any other collateral and it made the misrepresentations about the new 

operating funds with the intent to induce the McDougalls to transfer the home 

quarter to Kent and Erica McDougall so the property could become additional 

collateral to secure existing debt to AgCountry. The McDougalls claim they

relied on AgCountry’s misrepresentations and were deceived into transferring 
7

the home quarter. Their deceit claim is based on an alleged deliberate 

misrepresentation of fact. The McDougalls are not seeking to enforce the 

alleged promise either directly or indirectly through the deceit claim. They are 

not requesting the court order AgCountry to lend Kent and Erica McDougall 

more funds. The McDougalls are seeking damages for reliance on the alleged 

misrepresentations, not enforcement of the agreement. 

[¶17] “The purpose and intent of the statute of frauds is to prevent fraud and 

perjury, and the statute should not be used as a defense where the effect would 

be to accomplish a fraud or to enable a party to enrich himself unjustly at the 

expense of another.” Wilhelm v. Berger, 297 N.W.2d 776, 779 (N.D. 1980); see 

also Smestad v. Harris, 2012 ND 166, ¶ 13, 820 N.W.2d 363. Under N.D.C.C. 

§§ 9-10-01, 9-10-02(4), and 9-10-03, “a promise made without any intention of

performing it which does not meet the requirements of a contract between the 

parties may nevertheless satisfy the requirements of deceit, and the victim of 

that deceit may recover for any damage suffered.” Delzer v. United Bank of 

Bismarck, 527 N.W.2d 650, 653 (N.D. 1995). Extra-contractual statements, 

such as a promise of a future loan or to restructure a current loan, made 

without any intent of performing may be a basis for a claim of deceit. See State 

Bank of Kenmare v. Lindberg, 471 N.W.2d 470, 474 (N.D. 1991).

[¶18] This is consistent with other states that have recognized the statute of 

frauds may preclude some fraud or deceit claims. See 61 N.Y. Jur. 2d Frauds, 

Statute of § 322 (2019) (stating “where an oral contract unenforceable under 

the Statute of Frauds is made without intention of performance for the purpose 

of inducing the other party to act or refrain from acting to its damage, an action 

in fraud may be based thereon as long as the defrauded party does not seek to 

enforce the alleged oral agreement.”); Channel Master Corp. v. Aluminum Ltd. 

Sales, Inc., 151 N.E.2d 833, 836 (N.Y. 1958) (stating a tort action depends on 

the deliberate misrepresentation of fact relied on by the plaintiff to their 

detriment, and the policy of the statute of frauds is not directed at cases of 

dishonesty in making a promise). See also Stine v. Sanders, 987 S.W.2d 289, 

295 (Ark. Ct. App. 1999); Tenzer v. Superscope, Inc., 702 P.2d 212, 218-19 (Cal. 

1985). If the McDougalls are able to present sufficient evidence to meet the 

elements of a claim of deceit and AgCountry is allowed to assert the statute of 
8

frauds to preclude that claim, the purpose of the statute of frauds would be 

defeated.

[¶19] The district court granted summary judgment dismissing the 

McDougalls’ deceit claim because the court concluded the statute of frauds 

precluded the claim as a matter of law. We conclude the statute of frauds does 

not preclude the McDougalls’ deceit claim and the court erred in its conclusion 

of law. There are genuine issues of material fact about the elements of the

deceit claim, and the court erred in granting summary judgment.

IV

[¶20] The McDougalls argue the district court erred by dismissing their unjust 

enrichment claim. 

[¶21] In McColl Farms, LLC v. Pflaum, 2013 ND 169, ¶ 18, 837 N.W.2d 359, 

we explained the doctrine of unjust enrichment:

Unjust enrichment is a broad, equitable doctrine which rests 

upon quasi or constructive contracts implied by law to prevent a 

person from unjustly enriching himself at the expense of another. 

To recover under a theory of unjust enrichment, the plaintiff must 

prove: (1) an enrichment, (2) an impoverishment, (3) a connection 

between the enrichment and the impoverishment, (4) the absence 

of a justification for the enrichment and impoverishment, and (5) 

the absence of a remedy provided by law. The theory may be 

invoked when a person has and retains money or benefits which in 

justice and equity belong to another. For a complainant to recover, 

it is sufficient if another has, without justification, obtained a 

benefit at the direct expense of the complainant, who then has no 

legal means of retrieving it. The essential element in recovering 

under the theory is the receipt of a benefit by the defendant from 

the plaintiff which would be inequitable to retain without paying 

for its value.

(Citations and quotations omitted). 

[¶22] The district court granted summary judgment dismissal of the 

McDougalls’ unjust enrichment claim. The court concluded evidence could 
9

show three of the five elements of unjust enrichment could be met, but the 

court stated it could not conclude that there was an absence of justification for 

the enrichment or that there was an absence of a remedy provided by law. The 

court concluded the repayment agreements for Kent and Erica McDougall’s

loans provided justification for the enrichment because the agreements 

extended the installment payments and maturity dates on the loans in 

exchange for the mortgage on the home quarter. The court also concluded 

there was not an absence of a remedy provided by law because the McDougalls 

could have a claim in Kent and Erica McDougall’s bankruptcy case or a claim 

for breach of the warranties contained in the deed conveying the home quarter 

back to the McDougalls.

[¶23] The McDougalls argue the two-month extension on Kent and Erica 

McDougall’s loans was not a justification for the enrichment and 

impoverishment because the extension did not benefit the McDougalls and did 

not have any value to Kent and Erica McDougall. They argue the repayment 

agreements stated the property offered as collateral would secure all existing 

and possible future debt and also promised efforts would be made to refinance 

all of the debt. The McDougalls claim there was evidence the brief extension 

of the loans did not have any value to Kent and Erica McDougall, including an 

email from Kent McDougall to AgCountry stating that an extension of the 

loans had no value to him without additional funds. The March 10, 2016, email 

from Kent McDougall to AgCountry stated they needed additional funds to care 

for their cattle; they had done everything they could to continue operating 

without additional funds, including maxing out their credit cards; and “It does 

no good for me to refinance and pay down the operating debt if nothing will be 

readvanced.” The McDougalls claim they only transferred the property on the 

promise of a new operating loan, they would not have transferred the property

without that promise, AgCountry had no intention of loaning any additional 

funds, and therefore there was no justification for the enrichment and 

impoverishment. 

[¶24] The unjust enrichment claim is an alternative claim, and it is possible 

the McDougalls may fail to prove any other potential claims, which would leave 

them without a remedy provided by law. See McColl Farms, 2013 ND 169, ¶ 
10

20, 837 N.W.2d 359. If the McDougalls are not successful on their deceit claim 

after a trial on remand, it is possible there would be an absence of a remedy at 

law and there may be sufficient evidence to support the unjust enrichment 

claim. 

[¶25] Viewing the evidence in the light most favorable to the McDougalls, we 

conclude genuine issues of material fact exist on the elements of the unjust 

enrichment claim. The district court erred by granting summary judgment. 

V 

[¶26] We have considered the remaining arguments and conclude they are 

either unnecessary to our decision or do not affect the outcome of the appeal. 

We conclude the district court erred by granting summary judgment dismissal 

of the deceit and unjust enrichment claims. We reverse that part of the 

judgment dismissing the deceit and unjust enrichment claims, we affirm the 

judgment on the remaining claims, and remand for further proceedings 

consistent with this opinion. 

[¶27] Gerald W. VandeWalle

 Daniel J. Crothers

 Lisa Fair McEvers

 Jerod E. Tufte

 Jon J. Jensen, C.J.