Court Opinion

ID: 9663151
Source: CourtListenerOpinion
Date Created: 2023-08-23 23:29:29.836663+00
Date Added: 2024-06-11T18:14:44.440471
License: Public Domain

FOSHEIM, Justice
(concurring in result).
As the majority opinion indicates, this Court has embraced various standards regarding the equitable estoppel doctrine. The cases can essentially be separated into three categories: (1) Those stemming from Somers v. Somers, 27 S.D. 500, 131 N.W. 1091 (1911), which merely require that the party sought to be estopped must have “in some manner misled the party in whose favor the estoppel is sought.” Id., 131 N.W. at 1093. See also, e.g., Estate of Williams, 348 N.W.2d 471, 475-76 (S.D.1984); L.R. Foy Constr. v. Spearfish Sch. Dist. No. 40-2, 341 N.W.2d 383, 386 (S.D.1983); Western Cas. & Sur. v. American Nat’l Fire Ins. Co., 318 N.W.2d 126, 128 (S.D.1982); Farmers Elevator Co. of Elk Point v. Lyle, 90 S.D. 86, 91, 238 N.W.2d 290, 293 (1976); Kelly v. Gram, 73 S.D. 11, 24, 38 N.W.2d 460, 466 (1949). (2) Those stating that “false representations or concealment of material facts must exist.” Taylor v. Tripp, 330 N.W.2d 542, 545 (S.D.1983); Northwest Realty Co. v. Colling, 82 S.D. 421, 432, 147 N.W.2d 675, 682 (S.D.1966); Cromwell v. Hosbrook, 81 S.D. 324, 329, 134 N.W.2d 777, 780-81 (S.D.1965). (3) Those requiring proof of “fraud ... or such gross negligence ... as to amount to constructive fraud.” Spitzer v. Spitzer, 84 S.D. 147, 152, 168 N.W.2d 718, 721 (1969). See also Lambert v. Bradley, 73 S.D. 316, 320-21, 42 N.W.2d 606, 609 (1950); Kraft v. Corson County, 72 S.D. 396, 398, 34 N.W.2d 838, 839 (1948); Kraft v. Corson County, 71 S.D. 382, 384-85, 24 N.W.2d 643, 644 (1946). After acknowledging the various versions, however, the majority opinion proceeds to sidestep and sweep them all under the rug. This in effect is telling our lawyers and trial judges that the correct equitable estoppel * standard is (1), (2), or (3). Does this foster stability? How then are clients to be advised or juries instructed? We should not leave our attorneys and Judges in doubt as to the law in South Dakota.
My preference is for the second standard as expressed in Taylor, supra:
In order to constitute an equitable es-toppel, [also known today as] estoppel in pais, false representations or concealment of material facts must exist; the party to whom it was made must have been without knowledge of the real facts; th[e] representations or concealment must have been made with the intention that it should be acted upon; and the party to whom it was made must have relied thereon to his prejudice or injury. There can be no estoppel if any of these essential elements are lacking, or if any of them have not been proved by clear and convincing evidence.
Id., 330 N.W.2d at 545, quoting Cromwell, 134 N.W.2d at 780-81. See also, Williams, 348 N.W.2d at 477 (Fosheim, C.J., dissenting); 3 Pomeroy Equity Jurisprudence § 805 at 191 (5th ed. 1941); 28 Am.Jur.2d Estoppel and Waiver § 35 (1966). Federal courts have adopted this formulation as the correct statement of the doctrine in South Dakota. In re Sepco, Inc., 36 BR 279, 286 (D.S.D.1984); Canton Lutheran Church v. Savik, 507 F.Supp. 873, 879 (D.S.D.1981).
In my opinion, however, the false representation or concealment standard is so similar to our definition of actionable fraud as defined in Northwest Realty Co. v. Colling that the two may be considered synonymous. In that case we held:
Essential elements to establish actionable fraud are ‘generally speaking, that a representation was made as a statement of fact, which was untrue and known to be untrue by the party making it, or else recklessly made; that it was made with intent to deceive and for the purpose of inducing the other party to act upon it; and that he did in fact rely on it and was *901induced thereby to act to his injury or damage.’ (citations omitted).
147 N.W.2d at 683. See also, Spitzer, 168 N.W.2d at 721. Standards two (2) and three (3) may be treated as requiring proof of fraud.
The significance of standard one (1) versus standards two (2) and three (3) relates to pleadings and proof. Fraud is a defense which must be set forth affirmatively. SDCL 15-6~8(c). We have repeatedly held that fraud is never presumed nor lightly inferred and that the burden of establishing fraud rests on the party who seeks to rely on it for affirmative relief or as a defense to an action. E.g., Spitzer, 168 N.W.2d at 721; Northwest Realty, 147 N.W.2d at 683; City of Vermillion v. Hugener, 75 S.D. 106, 111, 59 N.W.2d 732, 735 (1953); Breneman v. Aune, 73 S.D. 478, 481, 44 N.W.2d 219, 220-21 (1950).
Since we remand for a trial in which the trial court must apply the doctrine of equitable estoppel, we should settle this uncertainty. However, since I agree that a material factual issue as to fraud exists, I hereby concur in the result.

 Equitable estoppel should be distinguished from other types of estoppel such as promissory es-toppel or estoppel by deed. For an explanation of the difference between the former two, see Farmers Elevator Co. of Elk Point v. Lyle, 90 S.D. 86, 238 N.W.2d 290 (1976).