Smestad v. Harris
796 N.W.2d 662
N.D.2011Background
- Harris appeals a judgment awarding Smestad $30,025 plus interest for loans Smestad alleges she made to Harris during their 18-month relationship.
- Relationship spanned spring 2007 to late 2008; Smestad moved into Harris’s home; Harris owned Oasis Water Systems, Inc.; Smestad worked as an engineering technician and had a part-time job.
- Smestad used two checking accounts to write checks to Harris, Oasis, and others on Harris’s behalf.
- Smestad claimed the funds were loans with an understanding of repayment; Harris contends the payments were compensation for work on properties.
- District court found Smestad credible, awarded $30,025, and dismissed Harris’s counterclaims; court did not address statute of frauds defenses in its final ruling.
- On appeal, the court reverses in part, affirms in part, and remands for equitable relief considerations.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether an oral loan agreement existed for the $30,025. | Smestad; Harris denied loans claims. | Harris; loans were not loans, but compensation. | Oral loan agreement found; but unenforceable under statute of frauds. |
| Whether the oral agreement is enforceable despite statute of frauds. | Equitable consideration allows enforcement when promisor benefits. | Statute of frauds bars enforcement for loans over $25,000. | unenforceable under N.D.C.C. § 9-06-04(4). |
| Whether the district court's findings are clearly erroneous and supported by the evidence. | Smestad’s credibility supported the award. | Harris’s version should have been given credence. | Findings not clearly erroneous; credibility determinations upheld. |
| Whether Smestad should be allowed equitable relief on remand. | Requests equitable relief if warranted. | Remand necessary to address equitable relief issues. | Remanded to consider equitable relief consistent with Rule 63. |
| Whether Harris proved his counterclaims or damages. | Counterclaims unsatisfied. | Counterclaims should proceed if facts support. | Counterclaims not proven; damages not shown. |
Key Cases Cited
- Oster v. First State Bank, 500 N.W.2d 593 (N.D. 1993) (aggregate loans exceed $25,000; statute of frauds applies to oral loan agreements)
- Kuntz v. Kuntz, 595 N.W.2d 292 (N.D. 1999) (oral agreement; statute of frauds applicability)
- Jerry Harmon Motors, Inc. v. First Nat’l Bank & Trust Co., 472 N.W.2d 748 (N.D. 1991) (statute of frauds and enforceability concepts discussed)
- Nelson v. TMH, Inc., 292 N.W.2d 580 (N.D. 1980) (promisor directly benefits; equitable relief considerations)
- Erickson v. Brown, 2008 ND 57, 747 N.W.2d 34 (N.D. 2008) (adequate remedy at law and equitable relief interplay)