FRAUD – RIGHTS OF ACTION AND DEFENSES:

STATUTE OF FRAUDS DOES NOT PRECLUDE

THE ASSERTION OF A DECEIT CLAIM
Irish Oil & Gas, Inc. v. Riemer,
2011 ND 22, 794 N.W.2d 715

ABSTRACT

The North Dakota Supreme Court held the statute of frauds is not a
defense to a tort claim for deceit, even when the underlying damages
resulted from an unenforceable contract. Early English common law
allowed a claimant to prevail on a breach of contract action using oral
testimony alone. As a result, many fraudulent contracts were being
enforced. To remedy this situation, in 1677, the English Parliament enacted
An Act for Prevention of Frauds and Perjuries, commonly known as the
statute of frauds. The statute required certain contracts to be evidenced by
writing, otherwise the contract would be unenforceable. Contract and tort
law were intertwined as one cause of action until the Court of the King’s
Bench distinguished the two claims in its decision in Pasley v. Freeman in
1789.
By the nineteenth century United States courts began to develop their
own common law. The states, however are still divided on how the statute
of frauds applies to an action in deceit. Some state courts combine contract
law and tort law, which in essence allows the statute of frauds to be used as
a defense to a deceit claim. While other states find contract law and tort
law are separate, and do not allow the statute of frauds to defend an action
for deceit. This was an issue of first impression in North Dakota. The
North Dakota Supreme Court, in its holding in Irish Oil & Gas, Inc. v.
Riemer, concluded contract law and tort law are distinct, and therefore, the
statute of frauds does not preclude the assertion of a deceit claim.
744 NORTH DAKOTA LAW REVIEW [VOL. 87:743

I. FACTS ........................................................................................ 744

II. LEGAL BACKGROUND .......................................................... 746
A. EARLY ENGLISH LAW FOR CONTRACTS AND TORTS ........... 746
1. Assumpsit: The Remedy for Breach of Contract ........... 746
2. Derry v. Peek: Proof of Fraud ...................................... 747
B. THE PROBLEM AND SOLUTION TO ORAL PROMISES: AN
ACT FOR PREVENTION OF FRAUDS AND PERJURIES............. 749
1. The United States Adopts the Statute of Frauds ............. 749
2. Applying the Statute of Frauds to a Tort Claim ............. 750
III. ANALYSIS ................................................................................. 752
A. NORTH DAKOTA SUPREME COURT HOLDS THE STATUTE
OF FRAUDS DOES NOT BAR A TORT ACTION FOR DECEIT .. 752
1. Fraud or Deceit .............................................................. 752
2. The Cause of Action ....................................................... 753
3. The Jurisdictional Divide: Using the Statute of Frauds
as a Defense to a Tort Claim in Deceit .......................... 753
a. Essential Element of the Claim ............................... 754
b. Indirect Enforcement of an Oral Contract ............... 755
c. Admissibility of Oral Testimony ............................. 756
d. Perpetration of Fraud ............................................... 756
IV. IMPACT...................................................................................... 757
V. CONCLUSION ........................................................................... 758

I. FACTS
In January and February 2008, Irish Oil & Gas, Inc. (“Irish Oil”)
entered into oil and gas leases with the “Riemers”1 for a single parcel of
land they owned jointly.2 A Letter Agreement in Lieu of a Draft for Oil and
Gas Lease Bonus Consideration accompanied each lease, offering a bonus

1. The parties to the lawsuit, collectively known as the “Riemers” are: Gerald C. Riemer,
Doris E. Riemer, Lillie J. Riemer, and Joanne Johnson. Irish Oil & Gas, Inc. v. Riemer, 2011 ND
22, 794 N.W.2d 715.
2. Id. ¶ 2, 794 N.W.2d at 716.
2011] CASE COMMENT 745

consideration payment to be made within sixty days and a one-sixth royalty

payment.3
On March 24, 2008, Gerald C. Riemer (“Riemer”) called Irish Oil and
spoke with the company’s landman, Clarence Hertz.4 Riemer asked why
the first bonus payment had not yet arrived.5 T.P. Furlong, the vice
president for Irish Oil, called Riemer on March 25, 2008, stating there were
title issues and requested an extension of time to pay the bonus
consideration.6 Riemer gave Irish Oil the impression he was the advocate
for the family, and he allegedly gave approval for the extension.7 T. P.
Furlong mailed a letter memorializing the conversation he had with Riemer
on March 25, 2008.8 Riemer did not respond to the letter.9
On April 30, 2008, the Riemers signed an oil and gas lease with
Continental Oil Company for the mineral rights which had been leased to
Irish Oil.10 On May 26, 2008, Irish Oil sent Riemer a check for
$10,640.00.11 Riemer sent the check back to Irish Oil with a note stating,
“sorry I leased it to another company.”12
On October 6, 2008, Irish Oil sued the Riemers for breach of the leases,
and on September 1, 2009, requested leave to amend the complaint to add a
claim against Riemer for deceit.13 All parties filed motions for Summary
Judgment.14 The district court denied Irish Oil’s motion to amend its

3. Id. ¶ 2. The letter stated,

Irish Oil & Gas, Inc. is interested in acquiring an oil and gas lease on the above
referenced mineral interest, which you appear to own mineral interest, and is offering
a bonus consideration payment of $160.00 per acre, for a primary term of five years,
and a 1/6th royalty in the event of production . . . . Within 60 days upon receipt of the
signed lease, and subject to approval of title, with right of payment extension of 30
additional days, in the event of title curative issues, from expiration of original 60
days, you will receive a check in the amount of $10,640.00. On January 15, 2009 you
will receive the balance of bonus consideration in the amount of $10,640.00. Id.
4. Id. ¶ 3.
5. Id.
6. Id.
7. Id. ¶ 4, 794 N.W.2d at 717.
8. Id. ¶ 3. The letter stated:
Please accept our apologies for the delay. . . . We through examination of title have
encountered title issues . . . we will have to further examine documents. . . . This may
take as long as the first of June, but if it takes longer than June 15th we will contact
you to either extend the time to pay or release our leases of record. [I]f this does not
correctly memorialize our conversation please feel free to contact me. . . . Id.
9. Brief for Respondent at 5, Irish Oil & Gas, Inc. v. Riemer, 2011 ND 22, 794 N.W.2d 715,
(No. 20100064).
10. Irish Oil & Gas, Inc., ¶ 4, 794 N.W.2d at 717.
11. Id.
12. Id. Lillie J. Riemer also voided a check she received from Irish Oil after May 17, 2008.
Id.
13. Id. ¶ 5.
14. Id.
746 NORTH DAKOTA LAW REVIEW [VOL. 87:743

complaint, concluding no valid modification of the leases were made and

any dispute over the facts related to the modification was irrelevant.15 The
district court held the provision in the lease requiring judicial determination
of a breach was not applicable to the circumstances.16 The district court
granted Riemers’ motions for Summary Judgment, dismissing Irish Oil’s
complaint with prejudice.17

II. LEGAL BACKGROUND

A. EARLY ENGLISH LAW FOR CONTRACTS AND TORTS

Deceit occurs when a party willfully or recklessly misleads another
party to act on a false claim.18 The early English courts were highly
controversial with regard to deceit claims for contractual breaches.19 In one
of the earliest recorded cases, the Court of Common Pleas held a
contractual matter may be converted, after the fact, into a claim for deceit.20
Later, in 1415, the same court held “if this action [breach of promise] is
maintained, one shall have trespass for breach of any covenant in the
world.”21 In 1423, the Justices were unanimous holding there could be no
cause of action for the breach of an oral promise.22

1. Assumpsit: The Remedy for Breach of Contract

In early medieval common law, claims seeking the repayment of a debt
or other matters could only be pursued through a writ of debt.23 Covenant
was not applicable to oral promises, and the promise was not the heart of
the theory for the action in debt.24 An action in debt was available to
plaintiffs “who orally promised to pay,” and in cases “in which no promise
had been made at all.”25 The “attendant circumstances . . . were the basis of
the legal obligation,” not the promise itself.26

15. Id. ¶ 6.
16. Id. ¶ 8.
17. Id. ¶ 9, 794 N.W.2d at 718.
18. SIR FREDERICK POLLOCK, BART., THE LAW OF TORTS: A TREATISE ON THE LAW OF
TORTS IN OBLIGATIONS ARISING FROM CIVIL WRONGS IN THE COMMON LAW 348 (1894).
19. See, James Barr Ames, The History of Assumpsit, in Select Essays in Anglo-American
Legal History 155, 160 (Committee of the Association of American Law Schools ed., 1909).
20. Id. at 161.
21. Id. at 160.
22. Id.
23. 4 CAROLINE N. BROWN, CORBIN ON CONTRACTS § 12.1, at 2 (Joseph M. Perillo ed,
(1997).
24. Id.
25. Id.
26. Id.
2011] CASE COMMENT 747

By the middle of the sixteenth century, lawyers had created an action in

assumpsit.27 Assumpsit is a common law legal remedy for breach of
promise or breach of contract.28 Under assumpsit, oral promises were
enforced and judgment could be obtained by the “oral testimony of
witnesses.”29 The Queen’s Bench expanded assumpsit, allowing a cause of
action “without an express promise.”30 For many years these judgments
were reversed by the Exchequer Chamber; however, “the Queen’s Bench
refused to be bound by these reversals.”31 Slades Case32 has been credited
with the origin of actions on assumpsit, and it put an end to the conflicts
between the Queen’s Bench and Exchequer Chamber.33 However, an
action in assumpsit fostered perjury by “excluding the best evidence, the
testimony of parties, their spouses and other interested persons . . . [and]
jurors were permitted to reach conclusions based on personal notions or
capricious concerns.”34 The English Parliament addressed the issue in 1677
when it enacted “An Act for Prevention of Frauds and Perjuries.”35
Prior to 1789, an action for deceit was tied together with an action for
breach of contract.36 The original writ from 1201 was only applicable
“where a legal procedure had been misused to petitioner’s detriment.”37
However, later remedies included “actual damages caused by
fraudulent . . . transactions.”38 In 1789, the decision in Pasley v. Freeman39
separated the two actions, making it possible for a party in contract to sue a
third party outside the contract for deceit.40

2. Derry v. Peek: Proof of Fraud

The line of cases from Pasley in 1789 to Derry v. Peek41 in 1889
established early precedent for proof of fraud.42 In 1801, the Court of the

27. See, Ames, supra note 19, at 157.

28. BLACK’S LAW DICTIONARY 51 (3d ed. 2006).
29. BROWN, supra note 23, § 12.1, at 3.
30. Ames, supra note 19, at 163.
31. Id.
32. (1602) 76 Eng. Rep. 1072 (K.B.); 4 Co. Rep. 91 a, 92 b.
33. Ames, supra note 19, at 163. “[T]he final triumph of [the Queen’s Bench] is signalized
by Slade’s Case . . . . All the judges of England resolved . . . ‘every contract . . . implied an
assumpsit.’” Id.
34. BROWN, supra note 23, § 12.1, at 4.
35. George N. Stepaniuk, The Statute of Frauds as a Bar to an Action in Tort for Fraud, 53
FORDHAM L. REV. 1231, 1231 (1985).
36. FOWLER V. HARPER ET AL., HARPER, JAMES AND GRAY ON TORTS 443 (3d ed. 2006).
37. 9 STUART M. SPEISER ET AL., THE AMERICAN LAW OF TORTS § 32:3, at 211 (1992).
38. Id.
39. (1789) 100 Eng. Rep. 450 (K.B.) 450; S.T.R. 51.
40. HARPER, supra note 36, at 443-44.
41. (1889) L.R. 14 App. Cas. 337 (Eng.).
748 NORTH DAKOTA LAW REVIEW [VOL. 87:743

King’s Bench held the defendant must know of the falsity of his statement
in order to be held liable for the plaintiff’s injuries.43 Thirty years later the
Court of Common Pleas used the term “fraud in law,” holding a defendant
may be guilty of fraud if he or she knew the representations were false,
regardless of malicious intent.44 In 1832, the Court of the King’s Bench
held the law requires a person to knowingly make a false representation
with the intent to induce another person to act on the promise, and that the
person incurs damage from relying upon the misrepresentation.45 Ten years
later the Court of Exchequer held the defendant liable for the injuries even
if the defendant did not know his representation was false.46 In 1879, the
Court of Appeals held the misrepresentation must have been made with
malice.47
In 1889, the House of Lords put an end to the conflicting rulings on
actions for deceit through its holding in Derry.48 First, the court defined
fraud as, “a false representation . . . made knowingly, or without belief in its
truth, or recklessly, without caring whether it be true or false.”49 Next, it
held a careless statement may be evidence of fraud, but the statement alone
is not sufficient to meet the plaintiff’s burden of proof.50 Finally, the court
established the elements required to prove fraud.51 However, Derry has
been rejected by many of the American courts, specifically the element
requiring intent to deceive.52

42. Derry, L.R. 14 App. Cas. at 369.

43. Haycraft v. Creasy, (1801) 102 E.R. 303 (Eng.).
44. Foster v. Charles, (1830) 7 Bing 105, 106 (Eng.).
45. Polhill v. Walter, (1832) 110 Eng. Rep. 43 (K.B.), 46, 3 B. & Ad. 114, 123 (Eng.).
46. Taylor v. Ashton, (1843) 11 M. & W. 401 (Eng.).
47. Arkwright v. Newbold, (1879) 17 Ch. D. 301 (Eng.).
48. Derry v. Peek, (1889) L.R. 14 App. Cas. 337, 374 (Eng.).
49. Id. at 337.
50. Id. at 369.
51. Id. at 374. The established elements are:
First, in order to sustain an action of deceit, there must be proof of fraud, and nothing
short of that will suffice. Secondly fraud is proved when it is shewn [sic] that a false
representation has been made (1) knowingly, or (2) without belief in its truth, or (3)
recklessly, careless whether it be true or false . . . . Thirdly, if fraud be proved, the
motive of the person guilty of it is immaterial.
Id.
52. See Hanson v. Ford Motor Co., 278 F.2d 586, 591 (8th Cir. 1960) (stating “an intent
to deceive is no longer necessary”); Nielsen v. Adams, 388 N.W.2d 840, 843 (Neb. 1986) (noting
the court has not consistently used “intent to deceive” as an element of fraud); William L. Prosser,
Misrepresentation and Third Persons, VAND. L. REV. 231, 235 (1966) (stating the American
courts held “that the deceit action would lie for negligent statements”).
2011] CASE COMMENT 749

B. THE PROBLEM AND SOLUTION TO ORAL PROMISES: AN ACT FOR

PREVENTION OF FRAUDS AND PERJURIES
Under the law of assumpsit, it was easy to “create” a cause of action.53
Oral promises were being enforced on the strength of oral testimony, and
granting fraudulent actions was common.54 Parties to a lawsuit were not
allowed to testify as witnesses; therefore, the only way to establish the
validity of an oral contract was to have a third party act as a witness. 55 In
response to this problem, the English Parliament enacted “An Act for
Prevention of Frauds and Perjuries.”56
An Act for Prevention of Frauds and Perjuries, commonly known as
the statute of frauds, was enacted in 1677.57 There were twenty-four
sections dealing with leases, conveyances of land, wills, trusts, contracts,
and executions of judgments.58 Sections four and seventeen ultimately
“declared that certain types of oral promises should not be enforceable at
all.”59 The Act was enacted to stop corruption in the legal system.60

1. The United States Adopts the Statute of Frauds

The United States adopted only six of the original twenty-four
provisions of the statute of frauds.61 Individual states have adopted the
statute, but generally have made changes to the provisions.62 For instance,
North Dakota has adopted classes b, d, and e, and added two additional
provisions: an agreement to lend money in aggregate of $25,000, and an
agreement to alter a contract for payment of money in aggregate of
$25,000.63 Montana, on the other hand, adopted classes b, c, d, and e, and
added an agreement authorizing an agent to purchase or sell real estate.64

53. BROWN, supra note 23, § 12.1, at 4.

54. Stepaniuk, supra note 35, at 1231.
55. St. Ansgar Mills, Inc. v. Streit, 613 N.W.2d 289, 293 (Iowa 2000).
56. Stepaniuk, supra note 35, at 1231.
57. Id.
58. An Act for Prevention of Frauds and Perjuries, 1677, 29 Car II c. 3 §§ 1-24 (Eng.).
59. BROWN, supra note 23, § 12.1, at 5.
60. Stepaniuk, supra note 35, at 1232.
61. RESTATEMENT (SECOND) OF CONTRACTS § 110 (1981). The classes of contracts within
the statute of frauds are:
(a) a contract of an executor or administrator to answer for a duty of his
decedent . . . (b) a contract to answer for the duty of another . . . (c) a contract made
upon consideration of marriage . . . (d) a contract for the sale of an interest in
land . . . (e) a contract that is not to be performed within one year from the making
thereof . . . . Id.
62. Id.
63. N.D. CENT. CODE § 9-06-04 (1943).
64. MONT. CODE ANN. § 28-2-903 (2009).
750 NORTH DAKOTA LAW REVIEW [VOL. 87:743

The Montana statute further states evidence of the agreement “is not
admissible without the writing or secondary evidence of the writing’s
contents.”65

2. Applying the Statute of Frauds to a Tort Claim

Courts have held permitting an action of deceit for a promissory
statement would in some cases violate the policy of the statute of frauds.66
If the contract is not in writing there is no valid breach, and therefore, no
duty was created in the defendant.67 Fraud cannot be predicated upon acts in
which the party is not obligated by law to do.68 The policy behind the
statute of frauds is to prevent fraudulent claims.69 If the court allows the
action for deceit based on an oral promise, which should have been written,
the court would be enforcing a contract which is in violation of the statute
of frauds.70 However, when the statute of frauds is used to bar the
enforcement of a true oral contract it actually “sanctions fraud by allowing
wrongdoers to break their oral promises with impunity.”71 Therefore, an
action in tort would be an appropriate remedy despite the statute of frauds.72
Many states recognize the potential for injustice associated with the
statute of frauds prohibiting a legitimate action for deceit.73 Massachusetts
has held when factual misrepresentations constitute a wrong, rather than a
mere breach of promise, and start a chain of events which lead to loss, “the
promisor may be estopped from raising the Statute of Frauds as a
defense.”74 New Hampshire allows parol evidence so long as the court does
not enforce the terms of the contract, but instead recognizes an
“independent and distinct” claim exists.75 Furthermore, New Hampshire
has held barring an action in deceit merely because the statute of frauds is
being raised as a defense would “foster an injustice,” not further the policy
of the statute.76 Oregon allows the oral testimony because it is not being
used “to establish an agreement, but to prove fraud.”77 Rhode Island

65. Id. § 28-2-903(2).

66. W. Page Keeton, Fraud – Statements of Intention, TEX. L. REV. 185, 201 (1937).
67. Franklin Ins. Co. v. Humphrey, 65 Ind. 549 (Ind. 1879).
68. Id.
69. Keeton, supra note 66, at 201.
70. Id.
71. Stepaniuk, supra note 35, at 1232.
72. Id.
73. Id.
74. Hurwitz v. Bocian, 670 N.E.2d 408, 412 (Mass. App. Ct. 1996).
75. Morgan v. Morgan, 47 A.2d 569, 571 (N.H. 1946).
76. Munson v. Raudonis, 387 A.2d 1174, 1176 (N.H. 1978).
77. Burgdorfer v. Thielemann, 55 P.2d 1122, 1125 (Or. 1936).
2011] CASE COMMENT 751

overruled more than ninety years of precedent when the state supreme court
held the statute of frauds does not apply to a tort claim in deceit.78 The
court further concluded to use the statute in this manner would sanction
injustice rather than prevent it.79
Despite this trend, some states are still concerned courts will indirectly
enforce an unenforceable contract by granting the plaintiff a cause of action
in tort.80 The court cannot allow the plaintiff to maintain a tort claim in
which the damages are essentially the same as the breach of contract.81
Florida courts have held the statute of frauds is a bar to actions “seeking
indirectly to enforce oral contracts, including actions for fraud and
deceit . . . ” even when the defendant did not intend to honor the oral
promise.82 However, under Florida law, a cause of action for deceit is
allowed when the plaintiff can prove separate damages resulting from the
fraud.83 Indiana courts “resist efforts by a plaintiff to get around limitations
imposed by contract law by recasting a breach as a tort . . . .”84 Utah will
allow the action so long as the “gravamen of the action” is for tort and not
breach of contract.85
The states have made an attempt to apply the statute of frauds in
accordance with its original purpose; however, treating it as an absolute bar
to present evidence extends beyond the scope. It is important to note, the
English Parliament did not intend for the statute to act as a complete
defense to evidence of a fraud.86 Applying the statute as a complete
defense creates more fraud than it prevents.87 In order to stop this misuse,
the courts should allow the plaintiff to present evidence of a fraud even
when that evidence is an oral promise.88 If the statute is to “remain a
credible deterrent against fraud” the states must reach a balancing point to
prevent an unlawful contract, while also allowing a separate action in tort.89

78. Bourdon’s Inc. v. Ecin Indus., Inc., 704 A.2d 747, 757 (R.I. 1997).
79. Id.
80. Classic Cheesecake Co., Inc. v. JPMorgan Chase Bank, N.A., 546 F.3d 839, 841 (7th Cir.
2008).
81. 37 AM. JUR. 2D Fraud and Deceit § 95 (2001).
82. The Mark Andrews of the Palm Beaches, Ltd. v. GMAC Commercial Mortg. Corp., 265
F.Supp.2d 366, 382 (S.D.N.Y. 2003).
83. Id.
84. Classic Cheesecake Co., Inc., 546 F.3d at 841.
85. Papanikolas v. Sampson, 274 P. 856, 860 (Utah 1929).
86. Stepaniuk, supra note 35, at 1231.
87. Id. at 1232-33.
88. Id. at 1247.
89. Id.
752 NORTH DAKOTA LAW REVIEW [VOL. 87:743

III. ANALYSIS

A. NORTH DAKOTA SUPREME COURT HOLDS THE STATUTE OF

FRAUDS DOES NOT BAR A TORT ACTION FOR DECEIT
Justice Crothers wrote the majority opinion in Irish Oil & Gas, Inc. v.
Riemer,90 to which Chief Justice VandeWalle, joined by Justice Sandstrom,
and Justice Kapsner wrote separate concurring and dissenting opinions.
The North Dakota Supreme Court held the statute of frauds is a rule of
evidence and does not act as a complete defense in a tort action.91 First, the
court addressed Riemers’ contention that a claim for deceit was inapplicable
to the situation.92 Next, the court determined whether the proposed
amended complaint would be successful.93 Finally, the majority analyzed
the reasoning in other jurisdictions in regard to the appropriate application
of the statute of frauds to a claim for deceit that arises out of a breach of
contract claim.94

1. Fraud or Deceit
The court began its analysis by rejecting the defendants’ argument that
a deceit claim is not applicable to the situation because Irish Oil and the
Riemers were parties to a contract.95 The court noted the difference
between an action in fraud (contractually related) and an action in deceit
(not contractually related).96 Irish Oil’s proposed amended complaint did
not seek damages under the terms of the contract.97 Instead, Irish Oil
sought damages against Riemer for injuries sustained when it relied upon
the extra-contractual statements made by Riemer.98 The court concluded
“the statute of frauds prevented [Riemer’s] oral promise from being a new
contract, and the lack of execution made modification of the existing

90. 2011 ND 22, 794 N.W.2d 715.

91. Irish Oil & Gas, Inc., ¶ 51, 794 N.W.2d at 729.
92. Id. ¶ 32, 794 N.W.2d at 723.
93. Id. ¶¶ 34-38, 794 N.W.2d at 724-25.
94. Id. ¶¶ 39-51, 794 N.W.2d at 725-29.
95. Id. ¶ 32, 794 N.W.2d at 723.
96. Id. ¶ 33; see Gunderson v. Havana-Clyde Mining Co., 133 N.W. 554, 555 (N.D. 1911);
see also, Erickson v. Brown, 2008 ND 57, ¶ 62, 747 N.W.2d 34, 53 (stating, “[f]raud is a claim
available to a contracting party seeking rescission due to ineffective consent.” Irish Oil & Gas,
Inc., ¶ 62, 794 N.W.2d at 731. “Deceit is a tort claim available when a party has breached an
obligation imposed by law to honestly deal with another party.” Id. ¶ 66, 794 N.W.2d at 732.
97. Brief for Petitioner at 7, Irish Oil & Gas, Inc. v. Riemer, 2011 ND 22, 794 N.W.2d 715,
(No. 20100064).
98. Id.
2011] CASE COMMENT 753

contract ineffective. Thus, no contractually related misrepresentation claim

(fraud) is available to Irish Oil.”99

2. The Cause of Action

The court considered Irish Oil’s proposed amendment, and determined
it was not futile because, “if proven, [it] would entitle the plaintiff to relief
against the defendant on some cognizable theory.”100 Irish Oil alleged
“Gerald Riemer had no intention of honoring his oral commitment to
modify the terms of the Bonus Agreement . . . ,” and “Gerald Riemer
intended for Plaintiff to rely on his fraudulent misrepresentation . . . .”101
The court noted “a promise made without any intention of performing” falls
within the North Dakota statute for deceit; therefore, both of the allegations
state a claim for relief under the law.102

3. The Jurisdictional Divide: Using the Statute of Frauds as a

Defense to a Tort Claim in Deceit
A person who makes a promise to perform, but has no intention to
honor the promise, is guilty of misrepresentation.103 An action in deceit can
be made regardless of whether the contract can be enforced.104 “The same
is true when the agreement is oral and made unenforceable by the statute of
frauds . . . .”105 The issue before the court was whether the statute of frauds
can serve as a defense in a non-contractual tort action.106 In its analysis, the
court applied four principles.107 First, was the oral agreement an “essential
element” to the deceit claim?108 Second, is the petitioner attempting to
indirectly enforce the oral contract?109 Third, can testimony of the oral

99. Irish Oil & Gas, Inc., ¶ 33, 794 N.W.2d at 723.
100. Id. ¶ 35, 794 N.W.2d at 724.
101. Id. ¶ 37 (internal quotation marks omitted).
102. Id. ¶¶ 36-37; see N.D. CENT. CODE § 9-10-02 (1943).
103. Burgdorfer v. Thielemann, 55 P.2d 1122, 1125 (Or. 1936); see RESTATEMENT
(SECOND) OF TORTS § 530(1) (1977).
104. RESTATEMENT (SECOND) OF TORTS § 530 cmt. c.
105. Id.
106. Irish Oil & Gas, Inc., ¶ 39, 794 N.W.2d at 725.
107. Id. ¶¶ 39-51, 794 N.W.2d at 725-29.
108. See Hurwitz v. Bocian, 670 N.E.2d 408, 412 (Mass. App. Ct. 1996); Fericks v. Lucy
Ann Soffe Trust, 100 P.3d 1200, 1204 (Utah 2004).
109. See The Mark Andrews of the Palm Beaches, Ltd. v. GMAC Commercial Mortg. Corp.,
265 F.Supp.2d 366, 382 (S.D.N.Y. 2003); Fericks, 100 P.3d at 1205; Papanikolas v. Sampson,
274 P. 856, 859 (Utah 1929).
754 NORTH DAKOTA LAW REVIEW [VOL. 87:743

agreement be used to prove fraud?110 Fourth, will the statute of frauds

perpetrate a fraud when used as a defense in a tort action?111

a. Essential Element of the Claim

The statute of frauds does not bar all tort actions, only those in which
the oral contract is an “essential element” to the claim.112 “If the proof of
the promise . . . within the statute is essential to maintain it, there can be no
recovery unless the statute is satisfied.”113 “Where the oral contract . . . is a
mere circumstance or incident of a fraud it may be shown in an action in
tort for damages . . . .”114
For example, the parties enter into an oral agreement to purchase land,
in which the seller later refuses to perform. The essential element is the
transfer of property. The statute of frauds would prevent this action from
proceeding because the court would ultimately be enforcing an
unenforceable contract.115 In the alternative, parties to a written contract for
the sale of land, make an extra-contractual oral agreement to extend time
for the buyer to make the escrow payment. If the seller rescinds the
contract when the escrow payment is not made pursuant to the written
contract, the buyer can sue in tort on the oral promise because it is a mere
circumstance of fraud.116
The alleged oral promise made by Riemer to Irish Oil was a mere
circumstance of fraud. The parties had a written contract in which Irish Oil
would lease the Riemers land.117 The parties had an extra-contractual
agreement in which Riemer allegedly agreed to extend time for Irish Oil to
make the bonus payment.118 When Irish Oil did not make the payment per
the written contract terms, the Riemers rescinded the contract.119 The
essential element of the claim is not the written lease, it is the breached
promise.120

110. See Labarre v. Shepard, 84 F.3d 496, 500 (1st Cir. 1996); Burgdorfer v. Thielemann, 55
P.2d 1122, 1127-28 (Or. 1936); Bourdon’s, Inc. v. Ecin Indus., Inc., 704 A.2d 747, 756 (R.I.
1997).
111. See Munson v. Raudonis, 387 A.2d 1174, 1176 (N.H. 1978); Morgan v. Morgan, 47
A.2d 569, 571 (N.H. 1946); Bourdon’s, Inc., 704 A.2d at 756.
112. Fericks, 100 P.3d at 1204. See also Hurwitz, 670 N.E.2d at 412.
113. Fericks, 100 P.3d at 1204.
114. Id.
115 Id. at 1204-05.
116. Id.
117. Irish Oil & Gas, Inc. v. Riemer, 2011 ND 22, ¶ 2, 794 N.W.2d 715, 716.
118. Id. ¶ 31, 794 N.W.2d at 723.
119. Id. ¶ 4, 794 N.W.2d at 717.
120. Brief for the Petitioner, supra note 97, at 11.
2011] CASE COMMENT 755

b. Indirect Enforcement of an Oral Contract

The statute of frauds bars actions which seek to indirectly enforce an
oral contract.121 To proceed in a tort action the plaintiff must be able to
show the damages incurred are separate from the breach of contract. 122 For
example, a buyer who relies upon an oral agreement from a seller to extend
the payment date, would have two separate causes of action when the seller
does not perform, and the buyer loses the benefit of the contract and the
down payment.123 Under these circumstances, the seller did not breach the
contract; however, by dishonoring the oral promise, the seller injured the
buyer by the loss of the deposit and any financial gain from the sale.124 The
court would find the damages are separate from those incurred from the
breach of contract, and allow the buyer to recover in tort.125
The statute of frauds is a defense to a tort action if the court concludes
the gravamen of the action is for breach of contract; and therefore, a
disguised claim.126 For example, a buyer cannot sue the seller in tort for
failing to honor an oral promise to sell land when the damages are for the
value of the land not received.127 Seeking damages “equal in amount to the
difference in the actual value of the property . . . and the amount . . . to [be
paid] for it under the alleged promises . . . ” is a disguised claim.128 The
core of the action is breach of contract.129
Riemer’s alleged oral promise did not modify the written contract, and
Irish Oil’s complaint was not for breach of contract.130 There are two
separate complaints; one for breach of contract, and the other one for
deceit.131 Irish Oil’s original complaint was for breach of contract.132 The
lease agreement was written and met the statute of frauds requirements.133
The oral promise did not need to be evidenced by writing because it is not
the type of contract in which the statute requires a writing.134 Therefore, the

121. The Mark Andrews of the Palm Beaches, Ltd. v. GMAC Commercial Mortg. Corp., 265
F.Supp.2d 366, 382-83 (S.D.N.Y. 2003).
122. Id.
123. See Fericks v. Lucy Ann Soffe Trust., 100 P.3d 1200, 1204 (Utah 2004).
124. See id. at 1202.
125. See id. at 1204.
126. The Mark Andrews of the Palm Beaches, Ltd., 265 F.Supp.2d at 382; see Papanikolas v.
Sampson, 274 P. 856, 860 (Utah 1929).
127. Papanikolas, 274 P. at 857.
128. Id. at 860.
129. Id.
130. Irish Oil & Gas, Inc. v. Riemer, 2011 ND 22, ¶ 51, 794 N.W.2d 715, 729.
131. Id. ¶ 5, 794 N.W.2d at 717.
132. Id.
133. Id.
134. See N.D. CENT. CODE § 9-06-04 (1943).
756 NORTH DAKOTA LAW REVIEW [VOL. 87:743

lower court would not indirectly enforce an unenforceable contract if it

allowed Irish Oil’s complaint for deceit.

c. Admissibility of Oral Testimony

The statute of frauds does not make the testimony of an oral promise
inadmissible if the purpose of the testimony is to prove fraud and not to
enforce a contract.135 The statute of frauds was enacted to stop the common
place enforcement of fraudulent contracts.136 The statute does not contain
any language in regard to the use of oral testimony.137 Furthermore, a
defendant may use the oral agreement in defense of its actions or
inactions.138
In Bourdon’s Inc. v. Ecin Industries, Inc.,139 the defendant relied upon
the plaintiff’s oral promise to use the defendant as a subcontractor to
manufacture mattresses and futons.140 The defendant relied on the promise
and purchased special equipment necessary to make the furniture.141 The
court allowed the defendant to admit the plaintiff’s oral promise into
evidence in order to support its defense.142 The defendant did not want to
enforce the oral contract, but to show why it defaulted on the loan payments
to the plaintiff.143 Similarly, Irish Oil intended to use Riemer’s oral
statement in its defense to show why it did not pay the bonus payment on
time.144 Under these circumstances, the statute of frauds would not bar the
oral testimony of the promise because it is not being used to enforce the
contract.

d. Perpetration of Fraud
The statute of frauds cannot be used as a defense when the defendant
intended to defraud the plaintiff at the commencement of the agreement.145

135. See Labarre v. Shepard, 84 F.3d 496, 501 (1st Cir. 1996) (holding “evidence of the
alleged oral agreement was admissible for purposes other than enforcing that agreement . . . .”);
see also Burgdorfer v. Thielemann, 55 P.2d 1122, 1125 (Or. 1936) (holding “in an action for
deceit . . . the statute does not have the effect of rendering inadmissible testimony of an oral
promise made with the fraudulent intent on the part of the promisor . . . .”).
136. Stepaniuk, supra note 35, at 1231.
137. An Act for Prevention of Frauds and Perjuries, 1677, 29 Car II c. 3 §§ 1-24 (Eng.).
138. See Bourdon’s Inc. v. Ecin Indus., Inc., 704 A.2d 747, 756 (R.I. 1997).
139. 704 A.2d 747 (R.I. 1997).
140. Bourdon’s Inc., 704 A.2d at 750.
141. Id.
142. Id. at 756.
143. Id. at 750.
144. Brief for the Petitioner, supra note 97, at 7.
145. Morgan v. Morgan, 47 A.2d 569, 571 (N.H. 1946); see also Keeton, supra note 66, at
201. “[I]t does not follow that in a case where the promisor was being dishonest at the time the
2011] CASE COMMENT 757

“If the speaker makes a promise and at the same time intends not to
perform . . . this is a proper basis for an action in deceit.”146 Applying the
statute of frauds defense here would “foster an injustice.”147 It would allow
the defendant to use the statute of frauds to “perpetrate a fraud.”148
In the case of Munson v. Raudonis,149 the decedent promised the
plaintiff “she would get everything after they died,” but prepared a will that
devised the estate between five people.150 A promise to transfer property
falls within the statute of frauds;151 however, the decedent did not intend to
keep her promise at the time she made it.152 The court held the defendant
could not use the statute of frauds as a defense because it would cause an
injustice.153
Irish Oil claimed when Riemer gave Irish Oil an extension to make the
bonus payment, he had no intention to honor the promise. 154 Furthermore,
he gave Irish Oil the impression he was speaking for the family.155 Irish Oil
relied upon Riemer’s statement to its detriment.156 The court found there
was factual support in the record of a conversation between Riemer and
Irish Oil, and the parties discussed an extension of time to make the bonus
payment.157 Therefore, the court will allow the claim to be pursued by Irish
Oil, and not let Riemer hide behind the statute.158

IV. IMPACT
The interpretation of the statute of frauds determines whether the
statute will bar a tort claim for deceit.159 The state courts have construed
the language of the statute in three ways: a substantive rule of law, a rule of
evidence, and a remedial rule.160 Montana and Minnesota apply the statute

contract was made, he should be permitted to hide behind the Statute of Frauds, or use the Statute
of Frauds itself as a means of perpetrating a fraud.” Id.
146. Munson v. Raudonis, 387 A.2d 1174, 1176 (N.H. 1978).
147. Id; see also Bourdon’s Inc. v. Ecin Indus., Inc., 704 A.2d 747, 757 (R.I. 1997) (stating
“invoking the Statute of Frauds in cases like the one at bar would exploit the statute as an engine
of fraud and would ‘sanction rather than prevent an injustice’”).
148. Munson, 387 A.2d at 1176.
149. 387 A.2d 1174 (N.H. 1978).
150. Munson, 387 A.2d at 1175.
151. RESTATEMENT (SECOND) OF CONTRACTS § 110(1)(d) (1981).
152. Munson, 387 A.2d at 1175.
153. Id. at 1176.
154. Brief for the Petitioner, supra note 97, at 8.
155. Id.
156. Id.
157. Irish Oil & Gas, Inc. v. Riemer, 2011 ND 22, ¶ 37, 794 N.W.2d 715, 724.
158. Id.
159. Stepaniuk, supra note 35, at 1237.
160. Id. at 1238-40.
758 NORTH DAKOTA LAW REVIEW [VOL. 87:743

as a substantive rule of law.161 As a substantive rule, an oral promise may

not be used to support any cause of action.162 North Dakota has
acknowledged the error in applying a blanket rule prohibiting oral
testimony to prove an element in a tort action, and has applied the statute as
a rule of evidence.163 The statute is a valid defense to a breach of contract
claim, but does not bar an action in fraud.164 Under the remedial rule,
courts allow oral evidence to show certain elements, for example, a promise
was made with fraudulent intent.165
The statute of frauds has been used to perpetrate fraud as much as
prevent it.166 To prevent this abuse in North Dakota the court set up four
guiding principles for future actions.167 One, the statute of frauds can bar
an action in deceit if the oral contract is the “essential element” to the
claim.168 Two, the statute of frauds will prohibit the use of oral testimony
that seeks to indirectly enforce the oral contract.169 Three, the statute of
frauds does not prevent the use of oral testimony necessary for the plaintiff
to prove fraud.170 Four, the statute of frauds cannot be used as a tool to
perpetrate a fraud.171
The North Dakota Supreme Court noted the prevalent rule among the
states is the statute of frauds is not a valid defense to a tort action. 172 The
statute of frauds is a defense in contractual disputes, and the courts should
not expand its scope to cover tort actions. The rule adopted by North
Dakota strikes an appropriate balance to this jurisdictional dispute by
preventing unlawful contracts, and allowing a separate action in tort.

V. CONCLUSION
The English Parliament intended for the statute of frauds to prevent
fraud,173 and the North Dakota Supreme Court adhered to this intent in its
holding in Irish Oil & Gas, Inc. v. Riemer.174 Riemer attempted to use the

161. Id. at 1238.

162. Id.
163. Id; see Irish Oil & Gas, Inc. v. Riemer, 2011 ND 22 ¶ 51, 794 N.W.2d 715, 729.
164. Stepaniuk, supra note 35, at 1239.
165. Id. at 1240.
166. Id. at 1232.
167. Irish Oil & Gas, Inc., ¶¶ 39-51, 794 N.W.2d at 725-29.
168. See discussion supra Part III.A.3.a; Irish Oil & Gas, Inc., ¶ 41, 794 N.W.2d at 725.
169. See discussion supra Part III.A.3.b; Irish Oil & Gas, Inc., ¶ 41, 794 N.W.2d at 725.
170. See discussion supra Part III.A.3.c; Irish Oil & Gas, Inc., ¶¶ 42-47, 794 N.W.2d at 726-
28.
171. See discussion supra Part III.A.3.d; Irish Oil & Gas, Inc., ¶¶ 42-43, 794 N.W.2d at 726.
172. Irish Oil & Gas, Inc., ¶ 39, 794 N.W.2d at 725.
173. Stepaniuk, supra note 35, at 1233.
174. Irish Oil & Gas, Inc., ¶ 51, 794 N.W.2d at 729.
2011] CASE COMMENT 759

statute of frauds as a defense to his alleged misrepresentation to Irish Oil. 175

The court concluded the statute prevented the alleged oral statement from
modifying the written contract.176 Additionally, the court held the statute
did not preclude Irish Oil’s assertion of the deceit claim, because an action
in tort is separate from an action for breach of contract.177

Christel Croxen*

175. Id. ¶ 32, 794 N.W.2d at 723.

176. Id. ¶ 51, 794 N.W.2d at 729.
177. Id.
* 2013 J.D. candidate at the University of North Dakota School of Law. Thank you to my
mother, Ruth Ruane, for her continual love and support, and to my friends, family, and professors
for their patience, support, and encouragement.