[¶ 1] John and Lila Erickson appeal the district court’s judgment dismissing them constructive fraud action against Catherine Erickson. We affirm, concluding John and Lila Erickson did not present evidence showing Marshall Erickson misled them into entering a 1998 contract for deed.
I
[¶ 2] John and Lila Erickson were married in 1956 and live on a family farm near Wilton, North Dakota. Three children were born of the marriage, with their son Marshall Erickson being the youngest. Marshall Erickson was married in 1981. The marriage produced a son before ending in divorce in 1996. In 1998, John and Lila Erickson sold their farm to Marshall Erickson by a contract for deed. The farm consisted of 1,585 acres, and the purchase price was $390,000. The contract for deed reserved a life estate for John and Lila Erickson, and a performance clause required John and Lila Erickson to convey the farm to Marshall Erickson by warranty deed when he satisfied his obligations under the contract. Affidavits submitted by John and Lila Erickson state, “Our intent is and always has been to keep this farm in the family. Marshall told us that this was his intent as well.”
[¶ 3] In 2002, Marshall Erickson executed a will leaving his interest in the farm to John and Lila Erickson. In 2005, Marshall Erickson married Catherine Burke-Erickson. No prenuptial agreement was signed, but John Erickson claims that Marshall Erickson assured such a contract would be entered to ensure the farm stayed in the family.
[¶ 5] In December 2008, John and Lila Erickson sued Catherine Erickson for rescission of the 1998 contract for deed, alleging her predecessor, Marshall Erickson, constructively defrauded them into entering the 1998 contract for deed. The district court granted Catherine Erickson’s motion for summary judgment, concluding John and Lila Erickson’s action failed because a constructive fraud claim cannot lie unless it is shown “that the person claiming constructive fraud was misled in entering the contract.” John and Lila Erickson timely filed this appeal.
II
[¶ 6] John and Lila Erickson argue summary judgment dismissal of their constructive fraud claim was inappropriate because genuine issues of material fact exist concerning whether Marshall Erickson misled them into entering the 1998 contract for deed. John and Lila Erickson argue rescission is the appropriate remedy under Title 9 of the North Dakota Century Code. The standard of review for summary judgment is well-established, and this Court has explained:
“Summary judgment is a procedural device for the prompt resolution of a controversy on the merits without a trial if there are no genuine issues of material fact or inferences that reasonably can be drawn from the undisputed facts, or if the only issues to be resolved are questions of law. Johnson v. Nodak Mut. Ins. Co.,2005 ND 112 , ¶ 9,699 N.W.2d 45 . A party moving for summary judgment must show there are no genuine issues of material fact and the case is appropriate for judgment as a matter of law. Green v. Mid Dakota Clinic,2004 ND 12 , ¶ 5,673 N.W.2d 257 . On appeal, we view the evidence in the light most favorable to the opposing party, and that party must be given the benefit of all favorable inferences. Ruggles v. Sabe,2003 ND 159 , ¶ 2,670 N.W.2d 356 . We review a district court’s decision to grant summary judgment de novo on the entire record. Fetch v. Quam,2001 ND 48 , ¶ 8,623 N.W.2d 357 .”
Witzke v. City of Bismarck,
[¶ 7] In North Dakota, a valid contract must have capable and consenting parties, a lawful object and sufficient cause or consideration. N.D.C.C. § 9-01-02. The parties’ consent must be free, mutual and communicated by each to the other. N.D.C.C. § 9-03-01. A party’s apparent consent is not free when it is obtained through fraud, and fraud can be either actual or constructive. N.D.C.C. §§ 9-03-03(3) and 9-03-07.
[¶ 8] Persons alleging actual or constructive fraud seek to invalidate contracts by arguing consent was not freely obtained.
See
N.D.C.C. § 9-03-01(1) (parties’ consent to a contract must be free); § 9-03-03(3) (consent is not free when ob
“Constructive fraud ... rests upon presumption and rests less upon furtive intent than does [actual] fraud. It is presumed from the relation of the parties to a transaction or from the circumstances under which it takes place.”
[¶ 9] John and Lila Erickson argue the 1998 contract for deed should be rescinded because Marshall Erickson misled them into entering the contract by: 1) indicating his intent was to keep the farm in the family during negotiations leading to the 1998 contract for deed, 2) executing a 2002 will devising the farm to John and Lila Erickson and 3) promising before his second marriage that his future wife would sign a prenuptial agreement. Constructive fraud exists:
“1. In any breach of duty which, without an actually fraudulent intent, gains an advantage to the person in fault or anyone claiming under that person, by misleading another to the other’s prejudice or to the prejudice of anyone claiming under the other; or
“2. In any such act or omission as the law specially declares to be fraudulent without respect to actual fraud.”
N.D.C.C. § 9-03-09. Because constructive fraud negates a party’s apparent consent to the formation of a contract, the claim can succeed only if a party was misled before or while entering a contract.
See, e.g., Asleson v. West Branch Land Co.,
[¶ 10] Further, Marshall Erickson’s stated plan was to keep the farm in the family and there is no evidence his statements were misrepresentations.
See Witzke,
Ill
[¶ 11] The district court’s judgment dismissing John and Lila Erickson’s constructive fraud claim is affirmed.