author:
SANDSTROM, Justice.
      VANDE WALLE, Chief Justice, KAPSNER, MARING, Justice,

text:
    2005 ND 47
    Danni Jane SWEENEY, n/k/a Danni Jane Lynch, Plaintiff and Appellee v. David James SWEENEY, Defendant and Appellant.
    No. 20040142.
    Supreme Court of North Dakota.
    March 4, 2005.
    Rehearing Denied April 6, 2005.

      Irvin B. Nodland, P.C., Bismarck, N.D., for plaintiff and appellee.
    Charles L. Neff, Neff, Eiken & Neff, P.C., Williston, N.D., for defendant and appellant.
   SANDSTROM, Justice.

[¶ 1] David’ Sweeney appealed from a district court judgment, entered upon remand by this Court, denying his request for litigation costs and attorney fees. We hold the trial court abused its discretion in denying Sweeney’s request for costs and attorney fees, under N.D.C.C. § 14-09-24, against Danni (Sweeney) Lynch for her willful and persistent denial of Sweeney’s visitation rights with their child. We reverse and remand for entry of an award of reasonable costs and attorney fees to ■David Sweeney under N.D.C.C.- § 14r-09-24:

I

[IT 2] The parties were married in Minnesota in 1989, and there is only one child from their marriage. In 1990, Lynch filed for divorce in Minnesota and moved permanently with the child to North Dakota. The original Minnesota divorce decree, entered in 1991, granted custody of the child to Lynch with reasonable visitation for Sweeney. Because of difficulties in exercising visitation under the original decree, the parties participated in mediation, and Sweeney subsequently moved the Minnesota court to enforce his visitation rights. In 1994, the Minnesota court entered a Second Amended Judgment that contained a detailed visitation schedule. That Minnesota judgment was filed as a foreign judgment in this state to allow enforcement in Williston, where Lynch and the child were living.

[¶ 3] In 1997,- a guardian ad litem was appointed for the child to facilitate and supervise visitation and to advise whether unsupervised visitations would be appropriate. After meeting with the child and supervising a few visits, the guardian ad litem withdrew, citing interference and non-cooperation by Lynch and her family and friends.

[¶4] The trial court held -evidentiary hearings in September 1998 and August 2000. Lynch sought restrictions on Sweeney’s visitation with the child. Sweeney sought a change of custody and an award of costs and attorney fees on the basis of Lynch’s willful and persistent interference with visitation, and her unsubstantiated allegations of abuse by Sweeney against the child.

[¶ 5] The trial court decided Lynch should retain custody, but the court specifically noted that this was Lynch’s final opportunity to recognize and facilitate Sweeney’s visitation rights. The parties filed cross appeals. This Court affirmed the denial of the motion to change custody, but reversed and remanded for additional findings and a redetermination of Sweeney’s request for costs and attorney fees:

[U]nder N.D.C.C. § 14-09-06.5, a trial court must award reasonable attorney’s fees and court costs if it finds that an allegation of harm to the child is false and was not made in good faith. Under N.D.C.C. § 14-09-24, a trial court must award reasonable attorney’s fees and costs if it finds there has been willful and persistent denial of visitation rights by the custodial parent.
If the triggering factors in the statutes are present, the court must award costs and reasonable attorney’s fees. The court failed to make findings on the triggering factors, but awarded partial costs as a sanction, taking into consideration Danni’s ability to pay. It is unclear from these findings and conclusions whether the court correctly applied the appropriate legal standards in determining whether to award costs and attorney’s fees under the statutes. Accordingly, we reverse the denial of attorney’s fees and the award of costs and remand for the trial court to make more explicit findings and to award reasonable attorney’s fees and costs in accordance with the statute if the triggering factors are present.

Sweeney v. Sweeney, 2002 ND 206, ¶¶ 18, 21, 654 N.W.2d 407. Upon remand the trial court determined the triggering factors had not been met and again refused to award attorney fees under either statute.

[¶ 6] The district court had jurisdiction under N.D. Const, art. VI, § 8, and N.D.C.C. § 27-05-06. The appeal was timely under N.D.R.App.P. 4(a). This Court has jurisdiction under N.D. Const, art. VI, § 6, and N.D.C.C. §§ 28-27-01 and 28-27-02.

II

[¶ 7] On appeal, Sweeney asserts the trial court erred in refusing to award him attorney fees against Lynch under N.D.C.C. §§ 14-09-06.5 and 14-09-24. On appeal, this Court will not overturn a trial court’s decision regarding attorney fees unless the appellant affirmatively establishes the trial court abused its discretion. See Hendrickson v. Hendrickson, 1999 ND 37, ¶ 14, 590 N.W.2d 220. The court’s underlying findings of fact will be upheld unless clearly erroneous under N.D.R.Civ.P. 52(a). In re Estate of Gleeson, 2002 ND 211, ¶ 21, 655 N.W.2d 69.

A

[¶ 8] Section 14-09-06.5, N.D.C.C., provides:

Allegation of harm to child — Effect. If the court finds that an allegation of harm to a child by one parent against the other is false and not made in good faith, the court shall order the parent making the false allegation to pay court costs and reasonable attorney’s fees incurred by the other parent in responding to the allegation.

Under this statute, when the court finds a parent has made allegations that the other parent has caused harm to a child and those allegations were not made in good faith, the court must order the parent making the false allegations to pay court costs and reasonable attorney fees incurred by the other parent in responding to the allegations. Sweeney, 2002 ND 206, ¶ 18, 654 N.W.2d 407.

[¶ 9] On March 28, 2001, the trial court made the following findings relevant to this issue:

As to these new allegations raised by Danni with this Court that David may have sexually abused [the child], the evidence presented by Danni was that one time David and [the child] took a shower together where during said shower, [the child] did out of curiosity touch David’s penis, which event was recounted by David to Danni. The Court finds that such event does not establish'any sexual abuse by David -of [the child], and accordingly, this Court finds David has not at any time committed any sexual abuse involving [the child].
Danni was the person who made allegations ... that David had engaged in sexually inappropriate conduct and mental harm involving [the child], all of which did contribute to the increased expenses and protracted nature of this litigation.

[¶ 10] In its order upon remand, the trial court made the following finding relevant to this issue:

[A] review of the voluminous files do not set forth significant'reference to allegations of harm to [the child] by David Sweeney. To this Court, that question was and is a non-issue. Notwithstanding some general reference by the Court in prior orders to the contrary, I specifically find that no “allegation of harm to the child by one parent against the other” was made as contemplated by NDCC 14-09-06.5,

[¶ 11] Lynch alleged Sweeney harmed their child by allowing the young boy to touch his father’s privates while the two of them were taking a shower together. The court found the conduct did occur but did not constitute sexual abuse or harm to the child. In making its subsequent finding that there was no trigger for the award of costs and attorney fees under N.D.C.C. § 14-09-06.5, the court implicitly found that the allegation was made in good faith. Under N.D.R.Civ.P. 52(a), this Court will not reverse a trial court’s finding of fact unless it is clearly erroneous. Hogan v. Hogan, 2003 ND 105, ¶ 6, 665 N.W.2d 672. A finding of fact is clearly erroneous if it is induced-by an erroneous view of the law, if there is no evidence to support it, or if, after review of the evidence, this Court has a definite and firm conviction a mistake has been made. Id. Because an incident of sexual nature did occur, we conclude the trial court’s finding that Lynch’s allegation of abuse was made in good faith is not clearly erroneous. We further conclude, therefore, the trial court did not abuse its discretion in refusing to award attorney fees under N.D.C.C.' § 14-09-06.5.

B

[¶ 12] Section 14-09-24, N.D.C.C., provides:

Interference with visitation — Attorney’s fees- — Enforcement remedies and tools. In any proceeding in which child visitation is properly in dispute between the parents of a child, the court shall award the noncustodial parent reasonable attorney’s fees and costs if the court determines there has been willful and persistent denial of visitation rights by the custodial parent with respect to the child. The court may use any remedy that is available to enforce a child support order and which is appropriate to enforce visitation.

Under this statute, the trial court must award reasonable attorney fees and costs to the noncustodial parent if it determines there has been willful and persistent denial of visitation rights by the custodial parent. Sweeney, 2002 ND 206, ¶ 18, 654 N.W.2d 407.

[¶ 13] On March 28, 2001, the trial court made the following findings relevant to this issue:

This Court finds that since the birth of the child, the mother, Danni, has engaged in a continued course of conduct which minimized, limited, and obstructed David’s relationship with [the child]. Such conduct included failing to allow David reasonable access to the child; failure to follow the visitation orders of the Minnesota court; and failing to implement visitation orders of this Court.
Although Danni justifies her actions based on perceived danger to the child from the father, there have been no facts presented which could serve as a basis for fear of danger.
When visitations between David and [the child] did occur, Danni often intruded directly or indirectly with phone calls, observers present, or other devices which may have conveyed the impression to [the child] that the visits were dangerous, or displeasing to Danni. The child’s current attitude towards the father is consistent with a successful conveyance of that message.
[Although it appears that significant grounds exist for a change of custody, I decline changing custody at this time in order to allow Danni a final opportunity to fulfill her obligations under the law as a custodial parent which require her to recognize, facilitate, and enforce, rather than obstruct, the visitation rights held by David with the child.

[¶ 14] Notwithstanding those prior findings, the trial court, upon remand by this Court, denied Sweeney’s request for costs and attorney fees under N.D.C.C. § 14-09-24, stating: “the Court at this time does not find that the triggering provisions of NDCC 14-09-24 have been shown.” The court explained the rationale underlying its decision to not award Sweeney costs or attorney fees:

Trial courts do not exist in vacuums. They are aware of the consequences of their decisions, whether a decision will result in fixing a situation or making it worse.
This Court is aware that the current remedy in place has had the desired result. Visitation is occurring; the child is getting a reasonable opportunity to benefit from contact with both parents, each of whom has significant positives to offer. The hard feelings between the parties have been pushed aside by each parent sufficiently to allow the desired and required result. The addition of a significant burden to one party or the other at this stage of the relationship would tend to exacerbate an already delicate situation.
Trial courts often must balance the effects of the decision. Although we are not free to ignore the law, we are entitled to make factual findings which are consistent with making a situation work.

[¶ 15] Section 14-09-24, N.D.C.C., mandates that the court award reasonable attorney fees and costs when there has been “willful and persistent denial of visitation rights” by a custodial parent. Despite its previous findings that Lynch had pursued a “continued course of conduct which minimized, limited, and obstructed” Sweeney’s relationship with the child, the court refused to comply with the statute’s mandate to award Sweeney costs and attorney fees. The court’s explanation for refusing to award attorney fees under this statute is not that the triggering factors of willful and persistent denial of visitation had not occurred, but rather that the parties’ relationship had improved and the court did not want to jeopardize the situation by imposing “a significant burden” on Lynch. The court’s statement that it is “entitled to make factual findings which are consistent with making a situation work” demonstrates that the trial court was working backwards to reach a result and was using its factual findings to get there. By doing so, the court misapplied the statute and ignored its mandate to award reasonable costs and attorney fees when willful and persistent denial of visitation has occurred. The court’s explanation for its decision quite clearly shows the court believed that if it followed the law and awarded costs and attorney fees to Sweeney, the parties might not continue to cooperate and their relationship as the child’s parents could further deteriorate. When the language of a statute is clear, the court cannot ignore that language under the pretext of pursuing its spirit or for objectives other than adhering to the legislative intent as expressed by the law’s unambiguous terms. N.D.C.C. § 1-02-05; Skiek v. North Dakota Workers Comp. Bureau, 2002 ND 85, ¶12, 643 N.W.2d 721. While the trial court may have had good intentions, it cannot ignore the law out of fear that one or both parties might respond unfavorably or act inappropriately as a result of the court’s proper decision in awarding costs and attorney fees under the statute. See Aaron v. Cooper, 257 F.2d 33, 38 (8th Cir.), affd, 358 U.S. 1, 78 S.Ct. 1399, 1401, 3 L.Ed.2d 5, 19 (1958) (a person may not be denied enforcement of rights to which he is entitled because of action taken or threatened in defiance of such rights); Orleans Parish Sch. Bd. v. Bush, 242 F.2d 156 (5th Cir.1957) (the fact that a school might be closed if the court enforces desegregation requirements is no reason for not enforcing the law); Allen v. County Sch. Bd. of Prince Edward Co., Va., 249 F.2d 462, 465 (4th Cir.1957). It is the duty of the court to follow the law as it is written in all cases under all circumstances, without fear and without regard to public clamor or personal consequences. Ex parte Ruef 8 CaLApp. 468, 97 P. 89, 90 (1908).

[¶ 16] A trial court cannot enter findings so as to “tie the reviewing court’s hands.” Bergstrom v. Bergstrom, 296 N.W.2d 490, 494 (N.D.1980). Although the trial court made a conclusory finding that the triggering provisions of N.D.C.C. § 14-09-24 had not been met, the court’s prior specific findings that there had been continued interference with visitation and its subsequent explanation that it was attempting to avoid upsetting a “delicate situation” severely discredits the court’s conclusory finding that the triggers were not met.

[¶ 17] After reviewing the record and the trial court’s explanation for its decision upon remand, we are left with a firm and definite convictioh that the court’s finding the triggers were not met for an award of costs and attorney fees under N.D.C.C. § 14-09-24 was induced by an erroneous view of the law and is clearly erroneous. We therefore conclude the trial court abused its discretion in denying Sweeney’s request for costs and attorney fees under N.D.C.C. § 14-09-24.

Ill

[¶ 18] We hold the trial court did not abuse its discretion in denying Sweeney’s request for costs and attorney fees under N.D.C.C. § 14-09-06.5. We further hold, however, that the trial court abused its discretion in refusing to award costs and attorney fees under N.D.C.C. § 14-09-24, and we reverse apd\f emand with directions the court award reasonable costs and attorney fees to David Sweeney under that statute.

[¶ 19] WILLIAM A. NEUMANN, JJ., concurs.

VANDE WALLE, Chief Justice,

concurring.

[¶ 20] The award of attorney fees in a divorce action has long been held by this Court to be a matter for the discretion of the trial court. Mosher v. Mosher, 16 N.D. 269, 113 N.W. 99 (1907); N.D.C.C. § 14-05-23. It is a discretion I believe this Court, as an appellate court, ought to give free rein. Even when attorney fees are sought for an appeal to this Court, we have stated that although we have concurrent jurisdiction with the trial court to award attorney fees on appeal, the trial court is in the better position to rule on the motion for attorney fees. E.g., Heller v. Heller, 367 N.W.2d 179 (N.D.1985).

[¶ 21] However, in the case of interference with visitation, the Legislature has deemed the issue to be so serious that the discretion of the trial court to award attorney fees has been curbed and, where there is willful and persistent denial of visitation rights by the custodial parent, the Legislature requires the trial judge to award reasonable attorney fees and costs. N.D.C.C. § 14-09-24. Ordinarily, the principal standards for an award of attorney fees are the need of one party and the ability to pay of the other party, e.g., Pozamsky v. Pozamsky, 494 N.W.2d 148 (N.D.1992), but under the statute, even that standard is not applicable where one party interferes with the visitation of the other party.

[¶ 22] Here, I agree with the majority opinion that there was interference with visitation such as to require the award of attorney fees under N.D.C.C. § 14-09-24. It seems apparent the trial court does not wish to further alienate the parties by an award of attorney fees but is rather interested in building a positive relationship to the benefit of the child. But the statute does not allow for the exercise of such discretion either by the trial court or this Court on appeal. I regret we did not conclude that when this matter was before us in Sweeney v. Sweeney, 2002 ND 206, 654 N.W.2d 407. However, there the request for attorney fees was not only for interference with visitation but also for making bad faith, false accusations of harm to a child, under N.D.C.C. § 14-09-06.5. We could not clearly understand the trial court’s factual determinations and remanded for clarification. The majority now affirms the trial court’s findings that the accusations were not made in bad faith and awards no attorney fees under that section. I believe we have no choice but to order an award of attorney fees under N.D.C.C. § 14-09-24.

[¶ 23] I concur in the majority opinion.

[¶ 24] GERALD W. VANDE WALLE, C.J.

KAPSNER,

Justice, concurring in the result.

[¶ 25] I concur in the result. I write separately because I fear the reasoning of the majority opinion suggests more than is necessary by its reliance on school desegregation and bail cases in paragraph 15.

[¶ 26] Section 14-09-24, N.D.C.C., is a statutory directive that imposes consequences in the form of attorney fees and costs on a custodial parent who willfully and persistently interferes with visitation rights of the noncustodial parent. I believe the majority opinion properly applies the statutory directive to the facts of this case. However, it is only a statutory directive and it is one the legislature could change tomorrow if the legislature felt that the purposes sought to be served were not well served by its continuing existence. Therefore, I do not join in any implication that the claim of noncustodial parents to get attorney fees and costs under N.D.C.C. § 14-09-24 rises to the level of the constitutional rights asserted in the federal cases or the California case cited in paragraph 15 of the majority opinion.

[¶ 27] The requirement to impose attorney fees and costs is clearly directed in the statute.

The interpretation of a statute is a question of law for the court to decide. In construing statutes, our duty is to ascertain the Legislature’s intent. The Legislature’s intent initially must be sought from the language of the statute as a whole. We construe words in a statute in their plain, ordinary, and commonly understood sense. If the statutory language is clear and unambiguous, we do not disregard that language under the pretext of pursuing legislative intent, because the intent is presumed clear from the face of the statute.

Singha v. N.D. State Board of Medical Examiners, 1998 ND 42, ¶ 16, 574 N.W.2d 838 (internal citations omitted); N.D.C.C. § 1-02-05.

[¶ 28] MARY MUEHLEN MARING, J„ concurs.

MARING, Justice,

concurring in the result.

[¶ 29] I concur in the result only. The majority opinion does not fully address the requirement of a finding of both “willful” and “persistent” interference with child visitation before awarding reasonable attorney’s fees and costs under N.D.C.C. § 14-09-24.

[¶ 30] Willful “is a word of many meanings, with its construction often influenced by its context.” Black’s Law Dictionary 1599 (6th ed.1990) (citation omitted). “A willful act may be described as one done intentionally, knowingly, and purposely, without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly, or inadvertently.” Id.

[¶ 31] In the criminal context, N.D.C.C. § 12.1-02-02(1) provides that for the purposes of Title 12.1, N.D.C.C., the Criminal Code, a person engages in conduct:

e. “Willfully” if he engages in the conduct intentionally, knowingly, or recklessly.

N.D.C.C. § 12.1-02-02(l)(e). Also defined in that section are the following:

a. “Intentionally” if, when he engages in the conduct, it is his purpose to do so.
b. “Knowingly” if, when he engages in the conduct, he knows or has a firm belief, unaccompanied by substantial doubt, that he is doing so, whether or not it is his purpose to do so.
c. “Recklessly” if he engages in the conduct in conscious and clearly unjustifiable disregard of a substantial likelihood of the existence of the relevant facts or risks, such disregard involving a gross deviation from acceptable standards of conduct, except that, as provided in section 12.1-04-02, awareness of the risk is not required where its absence is due to self-induced intoxication.

N.D.C.C. § 12.1-02-02(l)(a), (b), and (c). We have said section 12.1-02-02 applies only to crimes or offenses described in Title 12.1. State v. Goetz, 312 N.W.2d 1, 11 (N.D.1981).

[¶ 32] In the tort context, “willful misconduct” has been defined by our Court as “knowledge of a situation requiring the exercise of ordinary care and diligence to avert injury to another; ability to avoid resulting harm by ordinary care and diligence in the use of the means at hand; and the omission of such care and diligence to avert threatened danger when to an ordinary person it must be apparent that the result likely would prove disastrous to another.” Stokka v. Cass Cty. Elec. Coop., Inc., 373 N.W.2d 911, 916 (N.D.1985) (quoting Van Omum v. Otter Tail Power Co., 210 N.W.2d 188, 202 (N.D.1973)).

[¶ 33] An employee may be held liable in the employee’s personal capacity for acts or omissions of the employee which constitute “reckless or grossly negligent conduct, or willful or wanton misconduct” under N.D.C.C. § 32-12.1-04(3). We have held, in this context, that “[w]illful and wanton actions are ‘[r]eekless, heedless, malicious; characterized by extreme recklessness or foolhardiness; recklessly disregardful of the rights or safety of others or of consequences.’ ” Nelson v. Gillette, 1997 ND 205, ¶ 27, 571 N.W.2d 332 (quoting Black’s Law Dictionary 1582 (6th ed.1990)).

[¶ 34] In cases such as the one at bar, which requests a change of custody based on the custodial parent’s “willful and persistent” denial or interference with the noncustodial parent’s visitation rights, we have affirmed a trial court’s decision to modify custody where there is evidence of egregious violations of specific court ordered visitation, evidence of an intransigent attitude against visitation rights, and alienating behavior by the custodial parent. See Anderson v. Resler, 2000 ND 183, 618 N.W.2d 480; and Hendrickson v. Hendrickson, 2000 ND 1, 603 N.W.2d 896. We have emphasized that frustration of visitation alone does not constitute a sufficient change in circumstances to warrant modification of custody. Sweeney v. Sweeney, 2002 ND 206, ¶ 11, 654 N.W.2d 407. We have held that there must be a finding that the efforts to frustrate visitation had worked against the best interest of the child. Id. Therefore, in the context of “willful and persistent” denial or interference with visitation in a change of custody proceeding, we have considered a custodial parent’s intentions and motives for interfering with visitation.

[¶ 35] The American Law Institute, in Principles of the Law of Family Dissolution: Analysis and Recommendations § 2.19 (2002), recognizes that if a court finds a parent intentionally and “without good cause” interfered persistently with the other parent’s access to the child, the court should order an appropriate remedy, which may include an award of court costs and reasonable attorney’s fees. “Good cause is established when a parent reasonably thinks his or her actions or failures to act are necessary to protect the child or the parent, or when compliance is simply impossible.” Id. at cmt. e. “A parent may act in good faith even if the concern giving rise to the action turns out to be unfounded, as long as the action was reasonable at the time it was taken in light of the parent’s available information.” Id. See also A.L.I., Principals of the Law of Family Dissolution: Analysis and Recommendations § 2.11 (2002) (providing a “good-faith exception” to the imposition of limiting visitation provisions for a parent who interferes with access to the child).

[¶ 36] In the present case, the trial court found in its March 28, 2001, findings of fact, conclusions of law, and order for judgment that there was no sexual abuse by the father of his son. It also found that although the mother justified her actions based on a perceived danger to the child from the father, no facts were presented that could serve as a basis for danger to the child from the father. Finally, the trial court found:

The Court has made several findings recounting how [the mother] has persistently interfered with the visitations of father and child since the child’s birth. It is not clear to the Court whether such actions are based upon an intentional plan of interference, or whether such activities relate to a degree of selfishness and/or overprotectiveness.

In summary, the trial court found the conduct alleged had occurred, but that it was not abuse and the father was not a danger to his son. On remand, it further found that, because the incident of allowing the young son to touch his father’s private parts did occur, the mother’s allegation of sexual abuse was made in good faith.

[¶ 37] I would recognize a good-faith defense to an award of costs and attorney’s fees when a parent fails to make a child accessible for visitation in order to protect the child from sexual or physical abuse by the other parent or when the action is taken in the good-faith belief that it is necessary for the child’s safety. I do believe, however, that a parent relying on a good cause defense must initiate legal proceedings as quickly as reasonably possible to have a court adjudicate whether the parent’s actions are justified. An interfering parent cannot continue to take self-help measures in these circumstances beyond what is reasonably necessary to protect the child.

[¶ 38] I concur in the result of this case, because even if some of the mother’s actions were based on a good-faith belief that she needed to protect the safety of her child, there is evidence of other acts that amount to obstruction of visitation without good motive. I would, however, instruct the trial court on remand to award reasonable attorney’s fees and costs only for those actions which were both willful and persistent and not for those which the trial court finds were done in good faith to protect her child.

[¶ 39] MARY MUEHLEN MARING


source: Caselaw Access Project

author: NEUMANN, Justice. GERALD W. VANDE WALLE, C.J.

license: Public Domain

text:
    2005 ND 51
    Stephan T. LARSEN, Petitioner and Appellant v. NORTH DAKOTA DEPARTMENT OF TRANSPORTATION, Respondent and Appellee.
    No. 20040158.
    Supreme Court of North Dakota.
    March 4, 2005.
    Rehearing Denied April 6, 2005.

      William D. Schmidt, Schmitz & Schmidt, Bismarck, ND, for petitioner and appellant.
    Andrew Moraghan, Assistant Attorney General, Bismarck, ND, for respondent and appellee.
   NEUMANN, Justice.

[¶ 1] Stephan Larsen appeals from a district court judgment affirming an order of the North Dakota Department of Transportation (“DOT”) suspending his driver’s license for a period of two years. We reverse and remand, concluding N.D.C.C. § 39-20-04.1(1) does not authorize a suspension of Larsen’s license for two years.

I

[¶ 2] On November 15, 2003, Larsen was arrested for driving under the influence of alcohol. An Intoxilyzer test showed Larsen had a blood alcohol content of .19 percent. Larsen’s license had previously been suspended, while he was a juvenile in 2000, for driving under the influence of alcohol. Larsen had a blood alcohol content of .05 percent in the 2000 incident.

[¶ 3] After receiving notice from DOT that his license would be suspended for the 2003 incident, Larsen requested a hearing. The hearing officer ordered that Larsen’s license be suspended for two years under N.D.C.C. § 39-20-04.1(l)(d). Larsen appealed to the district court, arguing that N.D.C.C. § 39-20-04.1(1) only authorized suspension of his license for 365 days. The district court affirmed DOT’s order suspending his license for two years, and Larsen has appealed to this Court.

II

[¶ 4] Judicial review of a decision to suspend a driver’s license is governed by the Administrative Agencies Practice Act, N.D.C.C. ch. 28-32. Kiecker v. North Dakota Dep’t of Transp., 2005 ND 23, ¶ 7, 691 N.W.2d 266. Under N.D.C.C. § 28-32-46, the district court must affirm an order of an administrative agency unless it finds any of the following are present:

1. The order is not in accordance with the law.
2. The order is in violation of the constitutional rights of the appellant.
3. The provisions of this chapter have not been complied with in the proceedings before the agency.
4. The rules or procedure of the agency have not afforded the appellant a fair hearing.
5. The findings of fact made by the agency are not supported by a preponderance of the evidence.
6. The conclusions of law and order of the agency are not supported by its findings of fact.
7. The findings of fact made by the agency do not sufficiently address the evidence presented to the agency by the appellant.
8. The conclusions of law and order of the agency do not sufficiently explain the agency’s rationale for not adopting any contrary recommendations by a hearing officer or an administrative law judge.

On an appeal from a district court’s ruling on an administrative appeal, this Court reviews the agency order in the same manner. N.D.C.C. § 28-32-49; Ringsaker v. Workforce Safety & Ins. Fund, 2005 ND 44, ¶ 9.

[¶ 5] The interpretation of a statute is a question of law, which is fully reviewable on appeal. Johnson v. North Dakota Dep’t of Transp., 2004 ND 148, ¶ 5, 683 N.W.2d 886. When an appeal involves interpretation of a statute, this Court will affirm the agency’s order unless it finds that the order is not in accordance with the law. Id.

Ill

[¶ 6] The sole issue presented on appeal is whether N.D.C.C. § 39-20-04.1(1) authorizes a two-year suspension of Larsen’s license under the facts of this case. Larsen concedes a suspension of his license is appropriate, but argues the suspension should be for only 365 days.

[¶7] Section 39-20-04.1(1), N.D.C.C., authorizes the director of DOT to suspend an operator’s license when a person has driven while under the influence of alcohol:

a.For ninety-one days if the person’s driving record shows that, within the five years preceding the date of the arrest, the person has not previously violated section 39-08-01 or equivalent ordinance or the person’s operator’s license has not previously been suspended or revoked under this chapter and the violation was for an alcohol concentration of at least eight one-hundredths of one percent by weight and under eighteen one-hundredths of one percent by weight.
b. For one hundred eighty days if the operator’s record shows the person has not violated section 39-08-01 or equivalent ordinance within five years preceding the last violation and the last violation was for an alcohol concentration of at least eighteen one-hundredths of one percent by weight.
c. For three hundred sixty-five days if the person’s driving record shows that, within the five years preceding the date of the arrest, the person has once previously violated section 39-08-01 or equivalent ordinance or the person’s operator’s license has once previously been suspended or revoked under this chapter with the last violation or suspension for an alcohol concentration under eighteen one-hundredths of one percent by weight.
d. For two years if the person’s driving record shows that within the five years preceding the date of the arrest, the person’s operator’s license has once been suspended, revoked, or issuance denied under this chapter, or for a violation of section 39-08-01 or equivalent ordinance for an alcohol concentration at least eighteen one-hundredths of one percent by weight or if the person’s driving record shows that within the five years preceding the date of arrest, the person’s operator’s license has at least twice previously been suspended, revoked, or issuance denied under this chapter, or for a violation of section 39-08-01 or equivalent ordinance, or any combination thereof, and the suspensions, revocations, or denials resulted from at least two separate arrests with the last violation or suspension for an alcohol concentration of under eighteen one-hundredths of one percent by weight.
e. For three years if the operator’s record shows that within five years preceding the date of the arrest, the person’s operator’s license has at least twice previously been suspended, revoked, or issuance denied under this chapter, or for a violation of section 39-08-01 or equivalent ordinance, or any combination thereof, and the suspensions, revocations, or denials resulted from at least two separate arrests and the last violation or suspension was for an alcohol concentration of at least eighteen one-hundredths of one percent by weight.

[¶ 8] Larsen’s Intoxilyzer test showed a blood alcohol content of over .18 percent. He also had a prior suspension for an offense with a blood alcohol content of .05 percent. DOT argues that this falls within the first part of N.D.C.C. § 39-20-04.1(l)(d), and authorizes a two-year suspension of Larsen’s license.

[¶ 9] The portion of the statute relied upon by DOT authorizes a two-year suspension of an operator’s license

if the person’s driving record shows that within the five years preceding the date of the arrest, the person’s operator’s license has once been suspended, revoked, or issuance denied under this chapter, or for a violation of section 39-08-01 or equivalent ordinance for an alcohol concentration at least eighteen one-hundredths of one percent by weight....

DOT argues that the statute is inartfully drafted, but essentially concedes that, if read literally, this provision focuses upon the blood alcohol content of the prior offense, not the current offense. However, DOT argues that, to make the entire statute logically consistent, we should read additional punctuation and language into the statute so that a two-year suspension is authorized when a person has a prior suspension and the current offense involves a blood alcohol content of .18 percent or greater. Specifically, DOT argues we should add a comma and the words “with the last violation” after the words “equivalent ordinance” in the first part of N.D.C.C. § 39 — 20—04.1(l)(d), so that the relevant portion of the statute would read:

For two years if the person’s driving record shows that within the five years preceding the date of the arrest, the person’s operator’s license has once been suspended, revoked, or issuance denied under this chapter, or for a violation of section 39-08-01 or equivalent ordinance!, with the last violation] for an alcohol concentration at least eighteen one-hundredths of one percent by weight....

[¶ 10] DOT is asking this Court to rewrite the statute for the legislature. This Court’s primary objective when interpreting a statute, however, is to ascertain the legislative intent, which must be sought initially from the language of the statute itself. E.g., State v. Higgins, 2004 ND 115, ¶ 13, 680 N.W.2d 645; Ralston v. Ralston, 2003 ND 160, ¶5, 670 N.W.2d 334; Kjolsrud v. MKB Mgt. Corp., 2003 ND 144, ¶ 7, 669 N.W.2d 82. If the language of a statute is clear and unambiguous, the letter of the statute cannot be disregarded under the pretext of pursuing its spirit, because legislative intent is presumed clear from the face of the statute. N.D.C.C. § 1-02-05; Ralston, at ¶5; Kjolsrud, at ¶ 7.

[¶ 11] We have specifically held that “[t]his Court will not add words or additional meaning to a statute.” First Union Nat’l Bank v. RPB 2, LLC, 2004 ND 29, ¶ 17, 674 N.W.2d 1; see also Haggard v. Meier, 368 N.W.2d 539, 541 (N.D. 1985). The challenged language of N.D.C.C. § 39 — 20—04.1(1)(d) is plain on its face, and provides for a two-year suspension if the operator’s license has previously been suspended, revoked, or issuance denied “for an alcohol concentration at least eighteen one-hundredths of one percent by weight.” The language clearly indicates a two-year suspension is authorized if the prior offense, not the current offense, involved a blood alcohol content of .18 percent or greater. We cannot ignore the plain language of the statute under the pretext of pursuing some unexpressed legislative intent, nor can we add words or phrases which the legislature did not include. In construing a statute, we must presume the legislature said all that it intended to say. Selzler v. Selzler, 2001 ND 138, ¶ 18, 631 N.W.2d 564; Johnson v. North Dakota Workers’ Comp. Bureau, 539 N.W.2d 295, 298 (N.D.1995).

[¶ 12] We decline DOT’s invitation to rewrite the statute, and we conclude that N.D.C.C. § 39 — 20—04.1(l)(d) does not authorize a two-year suspension under the facts of this case. Because Larsen concedes he is subject to a 365-day suspension under N.D.C.C. § 39-20-04.1(l)(c), which is the next-longest suspension available under the statute, we need not address application of the other parts of the statute.

rv

[¶ 13] We reverse the judgment affirming DOT’s order suspending Larsen’s license for two years, and we remand for entry of judgment reversing DOT’s order and directing entry of an order suspending Larsen’s license for 365 days.

[¶ 14] MARY MUEHLEN MARING, CAROL RONNING KAPSNER, and DALE Y. SANDSTROM, JJ„ concur.

GERALD W. VANDE WALLE, C.J.

I concur in the result.


author: GILBERTSON, Chief Justice. ZINTER, Justice SABERS, Justice

text:
    2005 SD 18
    John Carl HARRIMAN a/k/a Jack Harriman, Plaintiff and Appellant, v. UNITED DOMINION INDUSTRIES, INC.; United Dominion Industries, Limited; United Dominion Holdings, Inc.; Feterl Mfg. Co.; Core Industries, Inc. and SPX, Defendants and Appellees.
    Nos. 23142, 23143.
    Supreme Court of South Dakota.
    Considered on Briefs Nov. 15, 2004.
    Decided Feb. 2, 2005.
    Rehearing Denied March 8, 2005.

      Michael E. Unke, Salem, South Dakota, Attorney for plaintiff and appellant.
    Michael L. Luce, Cheryle Wiedmeier Gering of Davenport, Evans, Hurwitz and Smith, Sioux Falls, South Dakota, Attorneys for defendants and appellees.
   GILBERTSON, Chief Justice.

[¶ 1.] John Carl Harriman entered into an oral agreement to sell service bodies for Feterl Manufacturing. The duration of the contract was never discussed by the parties. United Dominion Industries, Inc. (UDI) purchased Feterl Manufacturing and sought to reduce Harriman’s commission structure. Dissatisfied with UDI’s final commission proposal, Harriman resigned and brought suit alleging a joint venture between the parties, the wrongful termination of a permanent employment contract, fraud and deceit. At a jury trial on the matter, Harriman prevailed on his claim of wrongful termination of a permanent employment contract and was awarded past and future damages. The verdict was reversed on UDI’s motion for judgment notwithstanding the verdict. The trial court held the agreement between Harriman and Feterl Manufacturing was within the statute of frauds, and Harri-man’s claim failed for lack of a writing containing essential terms and signed by Feterl Manufacturing. Affirmed.

FACTS AND PROCEDURE

[¶ 2.] In 1988, John Carl Harriman (Harriman) began negotiating with United Dominion Industries, Inc.’s (UDI) predecessor, Feterl Manufacturing Company (Feterl Manufacturing), to produce and sell a line of service bodies. Harriman proposed Feterl Manufacturing would manufacture the service bodies based on detailed line drawings, plans and photos of two models provided by Harriman. Harri-man would be responsible for product development and all sales, and would be compensated on a commission basis. After several meetings, Feterl Manufacturing and Harriman entered into an oral agreement on August 10, 1988 and at that time Harriman filled out- an employment application.

[¶ 3.] The terms of the agreement between Harriman and Feterl. Manufacturing were never fully developed or reduced to writing. The oral agreement called for Harriman to be paid commissions on the difference between the price each unit was sold for and the net sales price. Harri-man began work on August 22, 1988. From August 22, 1988, until 1997, Harri-man was the sales representative for service bodies. He also contributed ideas and expertise in designing several new service body models. He also participated in Feterl Manufacturing’s health, dental and retirement plans, and was listed as an employee for Internal Revenue Service purposes.

[¶ 4.] The duration of the employment agreement was never discussed by the parties. Several documents in Feterl Manufacturing’s possession, including W-2 statements and accounting department records, detailed some of the terms of the agreement including how the commission rate was structured. However, none of the documents contained any reference to the duration of the employment agreement.

[¶ 5.] In July of 1997 a series of corporate changes began in which Feterl Manufacturing was sold first to UDI, then a merger between UDI and SPX was executed, and finally the company was acquired by Feterl Acquisition Corporation n/k/a Feterl Manufacturing Corporation. At each successive sale, Harriman’s commission structure was altered. The final alteration of the commission structure occurred in December 1999, and resulted in Harriman resigning from Feterl Manufacturing in February 2000.

[¶ 6.] On February 18, 2000, Harriman filed suit against UDI. In his complaint, Harriman alleged a joint venture between the parties, the wrongful termination of a permanent employment contract, fraud and deceit. In its answer UDI contended Harriman was an employee-at-will subject to discharge at any time, and that Harri-man’s claim was barred by the statute of frauds.

[¶ 7.] On May 21, 2001, UDI moved for summary judgment based on Harriman’s status as an employee-at-will who was terminable at any time, and that the statute of frauds barred recovery. UDI’s motion was denied by the trial court. It its opinion letter, the court noted that the denial was necessary as factual disputes relating to whether or not the employment agreement fell under the statute of frauds needed to be fully developed and determined at trial.

[¶8.] Harriman moved for summary judgment on the issues of (1) whether there was an initial contract between Fet-erl Manufacturing and Harriman separate and apart from any employer/employee relationship and (2) fraud and breach of contract. The trial court, the Honorable Boyd L. McMurchie presiding, granted the motion for summary judgment on the issue of the separate contract. Judge McMurchie denied the motion as to the claim of fraud and breach of contract.

[¶ 9.] Trial on the matter commenced August 18, 2003, before the Honorable David R. Gienapp. The trial court instructed the jury that Harriman had to prove that the contract entered into by the parties was either an agreement to enter into a permanent employment contract, or an agreement to enter into a joint venture. To prove a joint venture, the trial court instructed the jury that Harriman had to establish all six of the following:

The Plaintiff has the burden of proving each of the elements of a joint venture which are:
1) an intent to enter into a joint venture,
2) an agreement, express or implied, among members of a group,
3) a common purpose to be carried out by the group,
4) a joint pecuniary interest in that purpose,
5) an equal right to a voice in the direction and control of the group, and
6) a right to share in the profit and a duty to share in the losses.
If the Plaintiff fails to prove one or more of these elements, your verdict must be for the Defendants on the joint venture claim.

On the issue of a joint venture, the jury found five of the six elements were present, but not the fifth element of “an equal right to a voice in the direction and control of the group.” Therefore the jury found no joint venture existed. The jury returned a verdict for Harriman against UDI on the issue of breach of a permanent employment contract, and awarded past damages of $586,359.43 and future damages of $121,240. UDI moved for directed verdict, which was denied.

[¶ 10.] UDI filed a motion for judgment notwithstanding the verdict (j.n.o.v.) contending the contract claim was barred by the statute of frauds. In its memorandum opinion, the trial court noted the issue was raised by UDI’s pre-trial motion for summary judgment, but genuine issues of material fact were in dispute prior to trial that required denying UDI’s motion at that time. The trial court noted that there was no dispute between the parties that the original agreement between Harriman and Feterl Manufacturing was to enter into an oral contract. The trial court determined there was insufficient evidence presented at trial to support the jury’s verdict that the contract was for lifetime or permanent employment. Instead, the evidence indicated the contract was tied to other contingencies that extended the period of the contract beyond one year. The trial court concluded that the contract fell within the statute of frauds. Due to the absence of a writing signed by UDI or its predecessors denoting the duration of the contract, Harriman’s claim was barred by the statute of frauds. UDI’s motion for j.rno.v. was granted.

[¶ 11.] Harriman appealed two issues:
1. Whether the trial court erred when it granted UDI’s motion for judgment notwithstanding the verdict on UDI’s assertion that the statute of frauds, SDCL 53-8-2(1), bars Harri-man’s contract claim.
2. Whether the trial court erred when it instructed the jury that all six elements of a joint venture must exist in order for Harriman to prevail on that issue.

By notice of review, UDI appealed the following:

3. Whether UDI was the employer of Harriman;
4. Whether Harriman was an employee-at-will;
5. Whether Harriman is estopped from claiming he was an employee; and
6. Whether Harriman proved all of the elements of a contract.

STANDARD OF REVIEW

[¶ 12.] This Court’s standard of review on motion for judgment notwithstanding tbe verdict (j.n.o.v.) is well settled. Bridge v. Karl’s Inc., 538 N.W.2d 521, 523 (S.D.1995) (citation omitted). “We review the testimony and evidence in a light most favorable to the verdict or the nonmoving party, ‘then without weighing the evidence [we] must decide if there is evidence which would have supported or did support a verdict[.]’ ” Gilkyson v. Wheelchair Exp., Inc., 1998 SD 45, ¶ 7, 579 N.W.2d 1, 3 (citing Bland v. Davison County, 1997 SD 92, ¶ 26, 566 N.W.2d 452, 460 (quoting Sabag v. Continental, 374 N.W.2d 349, 355 (S.D.1985))). We review the trial court’s ruling on j.n.o.v. by the abuse of discretion standard. Id. (citation omitted). “The trial court’s decisions and rulings on such motions are presumed correct and this Court will not seek reasons to reverse.” Veeder v. Kennedy, 1999 SD 23, ¶ 25, 589 N.W.2d 610, 617 (quoting Border States Paving, Inc., v. S.D. Dep’t of Transp., 1998 SD 21, ¶ 10, 574 N.W.2d 898, 901) (citations omitted).

[¶ 13.] “We review jury instructions as a whole, and error is not reversible unless prejudicial.” Burhenn v. Dennis Supply Co., 2004 SD 91, ¶ 11, 685 N.W.2d 778, 782 (citing Buxcel v. First Fidelity Bank, 1999 SD 126, ¶ 13, 601 N.W.2d 593, 596). The party contending error has the burden of demonstrating the instruction given was in error and that the error was prejudicial. Knudson v. Hess, 1996 SD 137, ¶ 6, 556 N.W.2d 73, 75 (citing Sybesma v. Sybesma, 534 N.W.2d 355, 359 (S.D.1995)) (citation omitted). “Prejudicial error is that which in all probability must have produced some effect upon the jury’s verdict and is harmful to the substantial rights of the party assigning it.” Kjerstad v. Ravellette Publications, Inc., 517 N.W.2d 419, 426 (S.D.1994) (citing State v. Michalek, 407 N.W.2d 815, 818 (S.D.1987)).

ANALYSIS AND DECISION

[¶ 14.] 1. Whether the trial court erred when it granted UDI’s motion for j.n.o.v. on UDI’s assertion that the statute of frauds, SDCL 53-8-2(1), bars Harriman’s contract claim of permanent employment.

[¶ 15.] The statute of frauds is codified at SDCL 53-8-2. It provides in relevant part:

The following contracts are not enforceable by action unless the contract or some memorandum thereof is in writing and subscribed by the party to be charged or his agent, as authorized in writing:
(1) An agreement that by its terms is not to be performed within a year from the making thereof[.]

SDCL 53-8-2(1). The role of the statute of frauds is evidentiary in nature, and serves to remove uncertainty by requiring “written evidence of an enforceable obligation.” Jacobson v. Gulbransen, 2001 SD 33, ¶ 26, 623 N.W.2d 84, 90 (quoting Sabhari v. Sapari, 1998 SD 35, 576 N.W.2d 886, 893, n. 9). SDCL 58-8-2(1) does not “prohibit the making of a contract that by its terms is not to be performed within one year, but merely makes such contract invalid unless reduced to writing.” Tróvese v. O’Meara, 493 N.W.2d 221, 222 (S.D.1992) (quoting Brown v. Wisconsin Granite Co., 47 S.D. 635, 639, 201 N.W. 555, 556 (1924)).

[¶ 16.] Harriman contended that the contract entered into by the parties was for permanent employment. Harri-man testified that he believed he had a job at Feterl Manufacturing up until he elected to retire or the service body line was no longer profitable. In his deposition, Har-riman suggested his retirement would occur at age sixty-five. At trial he testified that he might have elected to continue to work until age seventy-five. Harriman gave his year of birth at his deposition as 1940, suggesting a contract of either seventeen or twenty-seven years in duration.

[¶ 17.] Leon Feterl, the owner of Fet-erl Manufacturing in 1988, testified at trial that the agreement between Feterl Manufacturing and Harriman was not permanent in nature, and that either party could have elected to terminate the relationship at any time. Feterl testified that the arrangement would have continued as long as it was profitable for Feterl Manufacturing and as long as Harriman liked the arrangement.

[¶ 18.] Harriman argued that these statements can be interpreted to mean that a contract for permanent or lifetime employment was intended by the parties. Harriman argued that because it was possible for Harriman to have died prior to the end of the first year of the contract, it was possible for the contract to be completed within one year of its making. Therefore, the contract would not fall within the statute of frauds.

[¶ 19.] There is no question that the parties entered into an oral contract. However, no duration or term was ever discussed at the initial meetings between Harriman and representatives of Feterl Manufacturing. Harriman was able to introduce several writings at trial that conclusively showed the commission structure, but no writings were introduced that showed the duration of the employment contract.

[¶ 20.] Even when viewed in the light most favorable to Harriman as the non-moving party, it is clear from the record that the parties did not intend a permanent or lifetime contract. Rather, the parties intended a contract of some unspecified term of years tied to contingencies other than Harriman’s lifetime. Because the contract was intended to be more than one year in duration, that is until Feterl Manufacturing or Harriman no longer liked the arrangement, or Harriman elected to retire, it falls within the statute of frauds. Lacking a writing signed by UDI or Feterl Manufacturing that contained the duration term, Harriman’s claim is barred by the statute of frauds.

[¶ 21.] 2. Whether the trial court erred when it instructed the jury that all six elements of a joint venture must exist in order for Harriman to prevail on that issue.

[¶ 22.] We recently set forth six elements necessary to establish a joint venture. A.P. & Sons Constr. v. Johnson, 2003 SD 13, ¶ 13, 657 N.W.2d 292, 295. These six elements include:

(1) an intent to enter into a joint venture;
(2) an agreement, express or implied, among members of the group; and
(3) a common purpose to be carried out by the group;
(4) a joint pecuniary interest in that purpose;
(5) an equal right to a voice in the direction and control of the group; and
(6) a right to share in the profits and a duty to share in any losses.

A.P. & Sons Constr., 2003 SD 13, ¶ 13, 657 N.W.2d at 295 (citing Stallings v. Owens, 2002 SD 63, ¶ 11, 646 N.W.2d 272, 278) (quoting Weins v. Sporleder, 1997 SD 111, ¶ 44, 569 N.W.2d 16, 28). All six elements must be met in order to establish the existence of a joint venture. Id. (citing Ethan Dairy Products v. Austin, 448 N.W.2d 226, 228 (S.D.1989)).

[¶ 23.] Harriman contends the trial court erred when it instructed the jury that all six elements had to exist in order to establish a joint venture. Harriman cites Stallings, 2002 SD 63, ¶ 11, 646 N.W.2d at 277 for the proposition that the trial court should have instructed that “most, if not all” of the elements had to be estabhshed. The language in Stallings does imply that all six elements need not be estabhshed. However, our holding in AP. & Sons Constr. makes it clear that all six elements must be satisfied in order to establish a joint venture. 2003 SD 13, ¶ 13, 657 N.W.2d at 295 (citing Ethan Dairy Products v. Austin, 448 N.W.2d 226, 228 (S.D.1989) (citing 48A CJS Joint Ventures § 10 (1981) (stating “usually all of these elements must be present for a joint venture to exist; but no one of the elements essential to the creation of a joint venture is alone sufficient to establish such.”))).

[¶ 24.] The trial court instructed the jury correctly on the six required elements of a joint venture, specifying that all six elements must exist. The trial court did not err, as it correctly stated the law for the jury. Absent error in the trial court’s instructions to the jury there can be no prejudicial error to Harriman.

[¶ 25.] It is not necessary to reach the issues appealed by UDI given our holdings in Issue 1 and Issue 2. Affirmed.

[¶ 26.] KONENKAMPand MEIERHENRY, Justices, concur.

[¶ 27.] ZINTER, Justice, concurs with a writing.

[¶ 28.] SABERS, Justice, dissents.

ZINTER, Justice

(concurring).

[¶ 29.] I concur because, by Harrimaris own admission, the oral agreement was to be performed over a period of time exceeding one year. Therefore, it was unenforceable under the statute of frauds.

[¶ 30.] Harriman relies on authorities holding that such agreements are outside the statute of frauds because they could be performed in less than one year if death or some other contingency arose. However, that was not the nature of Harriman’s claim. Harriman testified that the agreement was to continue until retirement or until the business was no longer profitable. Accordingly, Harriman’s expert witness proffered a damage calculation that involved ongoing damages for up to twenty-nine years, or until 2029. Similarly, Harri-man’s counsel argued to the jury that their expert witness “testified that he made computations for twenty-nine years.” Finally, the jury actually awarded damages sustained from March 19, 2000 through the 2003 trial, and for further damages to be incurred in the future. Thus, there can be no dispute that the agreement sued upon, however denominated, was “not to be performed within a year from the making thereof; ...” within the meaning of SDCL 53-8-2(1).

[¶ 31.] In Brown v. Wisconsin Granite Co., 47 S.D. 635, 640, 201 N.W. 555, 557 (1924), this Court did not permit a terminated employee “to recover for the time he did not work, and the bonus he claimed would have been due him at the end of [a one] year [oral contract because] the alleged contract [was] invalid under the statute [of frauds].... ” Similarly, other courts recognize that “[s]ince the parties understood [that the contract would not terminate] within one year, the Statute of Frauds required the agreement to be in writing.” Wior v. Anchor Industries, Inc., 669 N.E.2d 172, 174-175 (Ind. 1996) (holding that a contract of employment until retirement was within the statute of frauds even though death or other contingency could end the contract earlier than one year). See also Gebhard v. GAF Corp., 59 F.R.D. 504, 506 (D.D.C.1973) (guaranteeing employment until age 65 brought purported contract within statute of frauds); Gilliland v. Allstate Insurance Co., 69 Ill. App.3d 630, 26 Ill.Dec. 444, 388 N.E.2d 68 (1979) (holding an oral agreement to employ an individual until retirement fell within the statute of frauds and was unenforceable); Schroeder v. Texas Iron Works, Inc., 813 S.W.2d 483, 489 (Tex. 1991) (holding that understanding to be employed for another eight to ten years until retirement was within the statute of frauds and unenforceable); Molder v. Southwestern Bell Telephone Co., 665 S.W.2d 175, 177 (Tex.App.1983) (holding employee’s belief that he was contractually entitled to work for employer until retirement at age 65 meant that the contract fell within the statute of frauds).

[¶ 32.] The Indiana Supreme Court noted that a contrary ruling would “seriously undermine” the statute of frauds. Wior, 669 N.E.2d at 175. In fact,

[w]ere we to rule otherwise, the Statute of Frauds’ continued vitality in service contracts would be substantially eroded. Under the [contrary] analysis, any person with a service agreement intended to span a long period of time could avoid the writing requirement of the Statute of Frauds, since death could always occur within one year. Such a holding would seriously undermine the Statute of Frauds’ efficacy in encouraging written contracts and preventing fraud and perjury.

Id.

[¶ 33.] For these reasons, the trial court should be affirmed.

SABERS, Justice

(dissenting).

[¶ 34.] The majority opinion and special writing clearly establish that the agreement between Feterl Manufacturing Company and its successors and Harriman was within the statute of frauds because it could not be performed within one year. However, neither writing can see the forest for the trees and permits the statute of frauds to produce a fraud upon Harriman.

[¶ 35.] The defect in both writings is that they ignore the agreement and the facts, being blinded as they are by the technicalities of the statute of frauds. The facts are that: Harriman and Feterl Manufacturing Company operated for years under the agreement that the writings ignore. As documented by Feterl Manufacturing Company’s treasurer, Darrell Streflf, the agreement was set forth in Exhibit 15, a copy of which is attached. The agreement speaks for itself and was subscribed by the party to be charged, and is binding on its successors.

[¶ 36.] In addition, every paycheck ever written by Feterl Manufacturing Company and its successors was a document or agreement in writing, signed by the party to be charged. Incredibly, the trial court was correct in all of its rulings except on this same point:

In light of my ruling on the statute of frauds issue it is not absolutely necessary that I address the other issues raised by the Defendant [(UDI)], but anticipating a Supreme Court review of this case along with a possible notice of review submitted by the Defendants I will briefly address those issues and initially indicate that I would deny Defendant’s position as to the other six claimed reasons.

(emphasis added). We must look at the trees to see the forest. We must not be blinded by the technicalities of the statute of frauds, and permit them to produce a fraud. See Jacobson v. Gulbransen, 2001 SD 33, ¶ 26, 623 N.W.2d 84, 90 (“The statute of frauds will not, however, be used to work an injustice.”). We need to simply review the facts for what they are.

[¶ 37.] The facts speak for themselves and clearly show that the agreement was substantially performed year after year after year. Every paycheck ever written by Feterl Manufacturing Company and its successors was a document or agreement “in writing and subscribed by the party to be charged.” SDCL 53-8-2. Therefore, the statute of frauds was complied with in every way and it was error to vacate the judgment in favor of Harriman for $586,359 in damages and $121,240 in future damages. We should reverse and remand and require reinstatement.

      . A service body is intended to be mounted onto a truck chassis, and generally includes some or all of the following components: a crane, compressor and a tool compartment.

      . The net sales price was computed at actual cost of materials plus ten percent, plus inbound freight, actual cost of direct labor, plus overhead, plus thirty-five percent office overhead and profit. In addition, Harriman was to receive fifty percent of the chassis mark up and fifty percent of the profit on parts.

      . Harriman’s final amended complaint was filed against UDI, Inc., United Dominion Industries, Limited, United Dominion Holdings, Inc., Feterl Mfg. Co., Core Industries, Inc., SPX, and Feterl Acquisition Corp., n/k/a Fet-erl Manufacturing Corp. The defendants were related through a complex corporate structure, and in the event a verdict was returned in favor of Harriman the jury was called upon to determine which of the corporate entities were liable for damages.

      . SDCL 53-8-2 also precludes enforcement of other types of agreements absent a writing, including an agreement in contemplation of marriage, an agreement for the sale of real estate or an interest in real estate longer than one year in duration, and certain types of agreements for the loan of money or for an extension of credit.

      . The underlying rationale for the statute of frauds may be found in the purposes for which the "Act for Prevention of Frauds and Perjuries” was adopted by the English Parliament in the late 1600s. Kiely v. St. Germain, 670 P.2d 764, 768 (Co. 1983) (citing An Act for Prevention of Fraud and Perjuries, 29 Car. 2, c. 3 (1677)). The statute was enacted to combat the perpetration of fraud via perjury. Id. Widespread perjury became a significant problem when English common law was changed to no longer preclude the enforcement of oral contracts. C.R. Klewin, Inc. v. Flagship Properties, Inc., 220 Conn. 569, 600 A.2d 772, 775 (1991) (citations omitted). At that time, English law allowed juries to decide a case based on their own personal knowledge rather than on the evidence introduced at trial. Id. The statute of frauds placed a limitation on this discretion by requiring a writing signed by the party against whom enforcement was sought. Id.

      At least three justifications are advanced for the continued use of the statute of frauds in modern times (1) as an evidentiary function to combat perjury, (2) for its cautionary effect of impressing upon the parties the significance of their agreement, and (3) as a channeling device that distinguishes enforceable contracts from unenforceable contracts. Wior v. Anchor Industries, Inc., 669 N.E.2d 172, 174 (Ind.1996) (citation omitted).

      . UDI asserts that Harriman testified (in a deposition) that the agreement was to last until his retirement. Although Harriman disputes UDI’s assertion with respect to trial testimony, this dispute is of no consequence because the record reflects that in either event, the contract was to be performed over a period of time exceeding one year.


author: TIEDE, Circuit Judge.

text:
    2005 SD 20
    EQUIPMENT SERVICE PROFESSIONALS, Plaintiff and Appellant, v. Keith DENOWH, Defendant and Appellee.
    No. 23120.
    Supreme Court of South Dakota.
    Considered on Briefs Nov. 15, 2004.
    Decided Feb. 9, 2005.

      John K. Nooney and Gregory J. Bernard of Thomas, Nooney, Braun, Solay & Bernard, Rapid City, South Dakota, Attorneys for appellant.
    Craig A. Pfeifle and Joseph Ashley Parr of Lynn, Jackson, Shultz & Lebrun, Rapid City, South Dakota, Attorneys for appel-lee.
   TIEDE, Circuit Judge.

[¶ 1.] Equipment Service Professionals, Inc. (ESP) sued Keith Denowh (Denowh) for collection of a promissory note executed by Denowh in favor of ESP. Denowh answered claiming that he tendered full payment under the promissory note by executing an assignment of his interest in a deferred compensation plan.' Both parties filed motions for summary judgment. The trial court granted summary judgment in favor of Denowh. ESP appeals. We reverse.

FACTS AND PROCEDURE

[¶ 2.] ESP is a South Dakota corporation with its principal place of business in Spearfish, South Dakota. James Swaby (Swaby) is the sole shareholder and owner of ESP. Swaby is also the sole shareholder and owner of JAS Enterprises, Inc. (JAS), a South Dakota corporation with its principal place of business in Rapid City, South Dakota. J & K Enterprises, Inc. (J & K), a South Dakota corporation with its principal place of business in Billings, Montana, is a wholly owned subsidiary of JAS. All three corporations, ESP, JAS and J & K do'business as Equipment Service Professionals. Each corporation is a commercial and residential HVAC ■ sales, installation and service business.

[¶ 3.] Denowh was employed by ESP as an HVAC technician from 1991 until 2003. On March 25, 1991, Denowh signed an agreement identified in the heading as:

EQUIPMENT SERVICE PROFESSIONALS, INC. NON-QUALIFIED DEFERRED COMPENSATION PLAN AND NONCOMPETITION AGREEMENT

However, the body of the agreement recited that it was between:

JAS Enterprises, Inc'., a South Dakota corporation doing business' at P.O. Box 816, Spearfish, South Dakota 57783, hereinafter referred to as “Corporation,” and Keith Denowh, hereinafter referred to as “Employee.”

The signature block identified the party to the agreement as JAS. It was signed by Swaby as president of JAS. An amendment to the agreement was signed on October 1, 1993 by Denowh and Swaby on behalf of JAS.

[¶ 4.] The deferred compensation agreement provided for the creation of a deferred compensation account into which contributions would be made by JAS. The money in the account was to be invested by JAS in such investments deemed appropriate by its Board of Directors. The account and all investments at all times remained in the name of JAS. and the property of JAS. The agreement provided that any liability of JAS to Denowh under the agreement was ah open account liability only. The agreement further provided that Denowh was prohibited from assigning or transferring any right or interest in the account. The agreement also provided in paragraph 6 that JAS had the right to reduce or setoff the balance of the account by the amount of any indebtedness of Denowh to JAS.

[¶5.] In 2000 Denowh began employment with J <& K in Billings, Montana. Denowh ended his employment in April 2003 and began his own HVAC company in Billings. Prior to terminating his employment, Denowh signed a promissory note in favor of ESP in the amount of $13,500 plus 8 percent interest per year. The promissory note secured the repayment of a $13,500 loan from ESP to Denowh. The promissory note was dated February 27, 2003 and provided for full payment of principal and interest by May 31, 2003.

[¶ 6.] On May 27, 2003, Denowh attempted to assign the balance of the deferred compensation account with JAS to ESP in satisfaction of the debt evidenced by the promissory note. In addition to the assignment, Denowh tendered a personal check in the amount of $278.24 to cover the interest accrued. Swaby, as president of ESP, returned the check and refused to accept the assignment of the deferred compensation account as satisfaction of the promissory note.

[¶ 7.] ESP initiated this action seeking payment under the promissory note. De-nowh answered, claiming that he timely tendered full payment of the principal and interest due under the promissory note by the assignment and tender of the check. Both parties moved the trial court for summary judgment alleging that there were no genuine issues of material fact. The trial court granted Denowh’s motion for summary judgment and ordered that ESP could access Denowh’s vested deferred compensation plan with JAS in the amount of $13,781.10, which amount represented the principal amount of the promissory note plus accrued interest from February 27, 2003 through May 31, 2003. ESP was further ordered to return the promissory note to Denowh marked “Paid in Full.” ESP appeals.

STANDARD OF REVIEW

[¶ 8.] “We recently stated that on appeal the grant or denial of summary judgment ‘requires this Court to determine whether genuine issues of material fact exist and whether legal issues were correctly decided.’ ” Vollmer v. Akerson, 2004 SD 111, ¶ 4, 688 N.W.2d 225, 227 (quoting Prunty Const., Inc. v. City of Canistota, 2004 SD 78, ¶5, 682 N.W.2d 749, 752). Questions of law are reviewed under the de novo standard. In re Engels, 2004 SD 97, ¶ 7, 687 N.W.2d 30, 32-33 (citing Martinmaas v. Engelmann, 2000 SD 85, ¶ 49, 612 N.W.2d 600, 611).

ANALYSIS AND DECISION

ISSUE

[¶ 9.] Whether the assignment of De-nowh’s rights in a deferred compensation account with JAS constitutes proper tender of payment due under a promissory note executed by Denowh in favor of ESP

[¶ lOJDenowhs sole defense to the action of ESP on the note is payment. Denowh has not asserted any claim of setoff, third party claim or counterclaim. JAS was never made a party to this action and Denowh never asserted any claim under the deferred compensation agreement against JAS. Denowh’s claim of payment is based upon the assignment by Denowh of his rights under a deferred compensation agreement with JAS. ESP argues that De-nowh could only satisfy his debt with the payment of money and that Denowh’s attempt to assign his rights in his deferred compensation account with JAS was not proper tender. ESP asserts that the set-off provisions given to JAS under the deferred compensation agreement do not apply because the promissory note was made with ESP while the deferred compensation agreement was entered into with JAS, a separate corporate entity. It argues that it is irrelevant that Swaby is president and sole shareholder of both entities because the promise to pay was made to ESP, not to Swaby or JAS. Further, ESP asserts that the terms of the deferred compensation agreement prevent the account from being assigned and limit the manner in which withdrawals may be made.

[¶ 11.] The - parties agree that there are no genuine issues of material fact and the issue presented is a legal question. Therefore, we review under the de novo standard of review with no deference to the trial court’s conclusions of law. Bayer v. PAL Newcomb Partners, 2002 SD 40, ¶ 8, 643 N.W.2d 409, 411 (citations omitted).

[¶ 12.] “The general rule is that both the payment of and tender of payment of a debt must be in money, unless the parties agree otherwise, or the obligee consents to accept some other medium of payment.” 60 Am.Jur.2d Payment 21. See Dale v. Pelton, 365 N.W.2d 1, 3 (S.D. 1985) (holding that lessee’s promise to pay a cash rental by transferring cows to the lessor did not constitute “cash payment”). SDCL 57A-1-201(24) defines money as “a medium of exchange authorized or adopted by a domestic or foreign government and includes a monetary unit of account established by an intergovernmental organization or by agreement between two or more nations.” The promissory note executed by Denowh provided for payment of the sum of $13,500, with interest at 8 percent and that all payments made pursuant to the promissory note would be made payable to the payee, ESP. There was no agreement by ESP to accept as payment an assignment of the deferred compensation account between Denowh and JAS.

[¶ 13.] Denowh ignores the separate corporate status of ESP and JAS and instead portrays this dispute as one between himself and Swaby. However, neither the deferred compensation agreement nor the promissory note involved Swaby in his personal capacity. Denowh does not dispute that the deferred compensation agreement was executed with JAS and that the promissory note was made to ESP. He asserts that this is a distinction without a difference. However, Denowh has not asserted a claim to pierce the corporate veil of these entities. While JAS might have reserved the right to offset any indebtedness owed to JAS by Denowh against any amount owed to Denowh under the deferred compensation agreement, JAS was not a party to the promissory note or to this litigation. It is improper to ignore the separate corporate identity of these entities. See Federal Land Bank of Omaha v. Mogck, 66 S.D. 514, 286 N.W. 322, 323 (1939). The deferred compensation agreement granted the right of setoff to JAS to be exercised at its option. JAS is under no obligation to reduce the account balance to satisfy the indebtedness of Denowh to ESP under the promissory note and the trial court did not have jurisdiction to order a non-party, JAS, to do so. See Lang v. WPPO, 2004 SD 107, ¶ 19, 688 N.W.2d 403, 409. Additionally, the deferred compensation agreement with JAS specifically provides that the account is non-assignable and also limits the manner in which Denowh may withdraw money from the account.

[¶ 14.] The promissory note executed by Denowh was due in full on May 31, 2003. ‘To constitute a valid tender at common law, the party must have the money at hand, immediately under his control, and must then and there not only be ready and willing, but produce and offer, to pay the other party.’ ” Smith v. Egan, 35 S.D. 10, 13, 150 N.W. 290, 291 (1914) (quoting Stakke et al. v. Chapman, 13 S.D. 269, 272, 83 N.W. 261, 262 (1900)). See also 74 Am.Jur.2d Tender 7 (“A valid tender requires not only the readiness and ability to perform, but the actual production of the thing to be delivered.”) De-nowh did not have immediate use of the money in his deferred compensation account.

[¶ 15.] JAS also may have other defenses to any claim by Denowh under the deferred compensation agreement. ESP as assignee of Denowh would be subject to such defenses. See Gilbert v. United Nat. Bank, 436 N.W.2d 23, 25-26 (S.D.1989). JAS may be insolvent or otherwise unable or prohibited from making payment to Denowh under the agreement. The purported assignment factually and legally was not valid tender or payment.

CONCLUSION

[¶ 16.] Denowh does not have the right to assign his interest under the terms of the deferred compensation agreement. Any cash withdrawal from the account in an amount in excess of $5,000 is limited to monthly distributions over a twelve month period. Denowh sought to circumvent the terms of the deferred compensation agreement with JAS by obtaining a loan from ESP in the approximate amount of his deferred compensation account and then attempted to satisfy the promissory note with an assignment of the deferred compensation account. This was a “backdoor” attempt by Denowh to receive an immediate payout of the balance of his deferred compensation account contrary to the specific terms of the agreement.

[¶ 17.] Therefore, we reverse the trial court and find that as a matter of law Denowh did not make a valid tender under the promissory note. The trial court is directed to enter judgment in favor of ESP in the amount of the promissory note plus accrued interest through the date of the judgment.

[¶ 18.] GILBERTSON, Chief Justice, KONENKAMP, ZINTER and MEIERHENRY, Justices, concur.

[¶ 19.] TIEDE, Circuit Judge, for SABERS, Justice, disqualified.

      . HVAC is an acronym for "Heating, Ventilation, and Air Conditioning."

      . Paragraph 8 of the deferred compensation agreement provided:
      The Deferred Compensation Account represents an open account liability of the Corporation to the Employee. No rights or interest of the Employee in such account shall be assignable or transferable in whole or in part, either directly or by operation of law or otherwise, including, but not by way of limitation, execution, levy, garnishment, attachment, pledge, bankruptcy, or in any other manner, and no right or interest in his account shall be liable for, or subject to, any obligation or liability of such Employee, provided, however, that nothing in this paragraph shall prevent the Corporation from reimbursing itself for indebtedness incurred by the Employee in accordance with the provisions of Paragraph 6 above.

      . While there may be some dispute as to the actual balance of the deferred compensation account, the parties agree for purposes of this appeal that the balance exceeds the amount due under the promissory note and is fully vested.

      . The deferred compensation agreement provided:
      The Employee also shall have the right to cash distributions on the first day of the seventh month and on the first day of the first month of the Corporation calendar or fiscal year. Corporation shall have a specific form which must be submitted at least thirty (30) days prior to the requested cash distribution. The Corporation shall limit cash distributions of more than $5,000 to a distribution schedule allowing for equal monthly distributions over twelve (12) months.

      . The trial judge, in issuing its oral decision, acknowledged that “this is not an action of piercing the corporate veil at this point in any fashion.”


author: TICE, Circuit Judge. ZINTER, Justice

text:
    2005 SD 19
    JERKE CONSTRUCTION, INC., Plaintiff and Appellee, v. HOME FEDERAL SAVINGS BANK, Defendant and Appellant, and Matt Peck and Tank Testing, Inc., Defendants.
    No. 23028.
    Supreme Court of South Dakota.
    Considered on Briefs June 1, 2004.
    Decided Feb. 9, 2005.

      Michael B. Thompson, Sioux Falls, South Dakota-, Attorney for plaintiff and appellee.

      Rick Entwistle of Woods, Fuller, Shultz & Smith, Sioux Falls, South Dakota, Attorneys for defendant and appellant.
   TICE, Circuit Judge.

[¶ 1.] Home Federal Savings Bank, Inc. (Bank) appeals from an order entered against it in a declaratory judgment action initiated by Jerke Construction Corporation (Jerke). Jerke sought to establish its ownership of a bulldozer it had placed in the possession of Justin Peck (Peck), who in turn had offered the machine as collateral to Bank as security for a loan. Having concluded that no security interest attached to the machinery and that Jerke owned the bulldozer, the trial court ordered that Jerke was entitled to possession of the equipment. We affirm that order.

FACTUAL AND PROCEDURAL BACKGROUND

[¶ 2.] On December 4, 1995, Peck entered into a written agreement with Sweetman Corporation (Sweetman) to purchase a D-9 Caterpiller bulldozer (D-9) from Sweetman for $20,000. On December 12, 1995, Jerke provided a $6,000 check to Sweetman as a down payment on the D-9. On February 22, 1996, Jerke paid Diesel Machinery, Inc. $12,238.17 to fix the transmission on the D-9. On March 13, 1996, Jerke issued a check to Sweetman in the amount of $14,000 as the final payment on the D-9. Sweetman thereupon issued a bill of sale to Jerke for the D-9. In the spring of 1996, the D-9 was delivered to Peck. The D-9 remained in his possession from the time of the repair of the transmission until March 17, 1999, when Jerke physically took possession of the D-9.

[¶ 3.] Peck testified that the monies paid by Jerke were a loan to him in order that he might purchase the D-9. He further testified that it was agreed that he would reimburse Jerke by using the D-9 on Jerke jobs. This was referred to by Peck as a bartering agreement. Though Peck testified that he had completely reimbursed Jerke for the cost of the D-9, the records indicate that, at most, credit could be given by Jerke for somewhere between $14,000 and $18,000 for the work done by Peck. This was testified to by Peck.

[¶ 4.] Bank produced no evidence that Peck submitted billings or documents to Jerke indicating that his work with the D-9 was done to offset a financial obligation he owed to Jerke. The total amount paid out by Jerke for the D-9 and its repairs prior to delivery to Peck was $32,238.17. There was no written financing agreement in existence, nor was there any evidence presented as to what the terms of such an agreement might have been. No evidence at the trial established interest rates, methods of repayment, or a timeline for repayment of the alleged loan. No records suggested that Peck had an ownership interest in the D-9 other than the original purchase agreement between Peck and Sweetman.

[¶ 5.] Evidence clearly indicated that some work on behalf of Jerke was done with the D-9 under Peck’s supervision. The value of that work was considerably less, however, than the $32,238.17 that the D-9 originally cost Jerke. While Peck testified that he had used the D-9 for non-Jerke projects during his three year possession, he provided no details regarding those projects.

[¶ 6.] Peck was aware that Jerke received a bill of sale from Sweetman upon the final $14,000 payment. There was no evidence that he sought to obtain a bill of sale from Jerke for himself. Peck never claimed any income tax benefit for depreciation on the D-9 nor did he give any other indication in tax documents that the D-9 was his. He was aware of the fact that Jerke was declaring the D-9 as its property and was depreciating the D-9 for income tax purposes.

[¶ 7.] On March 9, 1999, Peck obtained a $400,000 loan from Bank secured by his assets. His list of assets included the D-9. At the time of the agreement with Bank, the D-9 was on Peck’s property. The only time the D-9 was observed by anyone connected with Bank was in December 1998. Bank never sought to obtain any evidence of ownership, such as a bill of sale, other than accepting the listing submitted by Peck at the time of the issuance of the loan. There was no evidence that Bank had any knowledge whatsoever of the original purchase of the D-9, nor of the use of the D-9 at any time. Bank did a UCC search of Peck’s property which was referred to at some points as a title search. In the course of the UCC search, no liens against the D-9 were found that named Peck as the owner. The only evidence Bank had of the D-9’s existence was the one observation in December 1998 and Peck’s listing of it in his application for the loan obtained on March 9, 1999. On March 17, 1999, Jerke’s employees serviced the D-9 on Peck’s property and then proceeded to remove it to Jerke’s property without Peck’s permission.

[¶ 8.] Subsequent to a court trial, the court found, among other things, that Jerke had merely given Peck naked possession of the D-9, and that he did not possess sufficient rights in the collateral to which a security interest could attach. Further, the court found that, contrary to Bank’s argument, Jerke was not estopped from challenging the validity of the security interest. On appeal, Bank argues that Peck owned the D-9 pursuant to the purchase agreement with Sweetman and a financing agreement with Jerke. Thus, it argues that Peck had sufficient rights in the collateral for a security interest to attach. Moreover, Bank argues that Jerke allowed Peck to appear to be the owner of the D-9 and should, therefore, be estopped from disputing the validity of the security interest.

Standard of Review

[¶ 9.] Our standard of review is well established:

We review the circuit court’s findings of fact under the clearly erroneous standard. Under this standard, we will only reverse when we “are left with a definite and firm conviction that a mistake has been made” after a thorough review of the evidence. We review conclusions of law under the de novo standard without reference to the circuit court.

American Bank & Trust v. Shaull, 2004 SD 40, ¶ 11, 678 N.W.2d 779, 783 (quoting In re Estate of Watson, 2003 SD 142, ¶ 9, 673 N.W.2d 60, 62).

ANALYSIS

ISSUE ONE

[¶ 10.] Whether Peck had rights in the collateral.

[¶ 11.] This case first requires us to examine the trial court’s determination of whether Peck possessed rights in the collateral to which Bank could attach a security interest. We have previously noted that under SDCL 57A-9-203: “To claim a valid, perfected security interest in collateral, the security interest must attach to the collateral. A security interest attaches when (1) there is an agreement that it attach; (2) value has been given by the secured party; and (3) the debtor has rights in the collateral.” First Nat. Bank of Philip v. Temple, 2002 SD 36, ¶ 22, 642 N.W.2d 197, 204.

[¶ 12.] The phrase “rights in the collateral” describes the range of transferable interests that a debtor may possess in property. For example, such rights may be as comprehensive as full ownership of property with legal title or as limited as a license. See id. at ¶ 23, 642 N.W.2d at 204. “Essentially, the debtor normally can only convey something once it has something and that something may be less than the full bundle of rights that one may hold in such- property.” Id. at ¶ 24, 642 N.W.2d at 204-205. Formal title is not required for a debtor to have rights in collateral. Id. An equitable interest can suffice. See In re Gelking, 754 F.2d 778, 781 (8th Cir.l985)(debtor possessed rights in collateral because he had equitable interest in airplane, even though he had not recorded his ownership interest). On the other hand, mere naked possession does not create “rights in the collateral.” Temple, 2002 SD 36 at ¶ 24, 642 N.W.2d at 204.

[¶ 13.] Against this background, this Court first addresses a key finding of fact, namely that Peck only had naked possession of the D-9. As already mentioned, naked possession cannot support a finding of rights in collateral. Hence, if the trial court’s finding on this question is correct, its conclusion that no security interest could attach to the D-9 must be upheld.

[¶ 14.] The record supports the finding that Peck only had naked possession of the D-9. As between Jerke and Peck, Peck’s-conduct consistently established an intent not to claim direct ownership of the D-9. Though he maintained possession of it from the effective date of purchase until removal after the security agreement was entered into, he did nothing else to establish or indicate a belief that he was the owner of the D-9. He never sought to have Jerke provide him with a bill of sale or other indicia of ownership, he never sought to confirm a financing agreement of any kind with Jerke and he- never claimed depreciation on the D-9 for income tax purposes. In addition, he never came close to paying the entire cost of the original acquisition of the D-9. Though he did on occasion use it for his personal interest, it appears to have been used more substantially for Jerke’s benefit. Also, Peck never provided notice of any kind to Jerke of the set-off he claimed for the work he performed with the D-9 until a document for the purpose of this case was prepared in January 1999.

[¶ 15.] In addition to these facts, Bank failed to prove that Peck possessed a contractual right to the D-9. Despite the existence of the document identifying Sweetman and Peck as the parties to the agreement for Peck’s purchase of the machine, Jerke subsequently wrote the check, received the bill of sale and claimed depreciation expenses on the equipment. This provided a prima facie showing that, notwithstanding the preliminary contractual document, Jerke became the owner of the D-9. Once that showing was made, the burden shifted to Bank to show that, by means of a financing agreement or otherwise, Peck possessed rights in the collateral. See Rohweder v. Aberdeen Production Credit Assoc., 765 F.2d 109, 113 (8th Cir. 1985)(once owner made prima facie showing of ownership of cattle, burden shifted to creditor to demonstrate that the debtor possessed sufficient rights in cattle for security interest to attach). Bank failed to meet the burden of showing that Peck had rights in the collateral.

[¶ 16.] The evidence demonstrated that Peck abandoned the preliminary contract with Sweetman. Bank failed to prove the terms of any sort of financing agreement between Peck and Jerke, including the exact amount of money involved, the interest rate and the time and terms of repayment. See Oivens v. Moyes, 530 N.W.2d 663, 665 (S.D.1995)(finding no loan contract existed where there was no understanding as to these terms) (quoting Wer-ner v. Norwest Bank, 499 N.W.2d 138 (S.D.1993)). Since the evidence regarding the alleged agreement was too vague to show that Peck possessed any contractual right in the D-9, that evidence was necessarily too vague to show that he had rights in the collateral to which a security interest could attach.

[¶ 17.] Based upon the foregoing, the trial court did not err in concluding that no security interest attached to the D-9 as Peck had only naked possession and nothing more.

ISSUE TWO

[¶ 18.] Whether Jerke should have been estopped from disputing the validity of the security interest.

[¶ 19.] Bank also argues that Jerke should have been estopped from disputing the existence of a valid security interest in the D-9. Generally, if an owner of property effectively allows a debtor to appear as the owner of that property, and that appearance misleads a creditor, the owner may be estopped to deny the effectiveness of a security interest taken on the property by the creditor. See Temple, 2002 SD 36 at ¶ 23, 642 N.W.2d at 204. As we have previously stated,

If the owner of collateral allows another to appear as the owner or to dispose of the collateral, such that a third party is led into dealing with the apparent owner as though he were the actual owner, then the owner will be estopped from asserting that the apparent owner did not have rights in the collateral.

Shaull, 2004 SD 40 at ¶ 16, 678 N.W.2d at 784 (quoting Pleasant View Farms, Inc. v. Ness, 455 N.W.2d 602, 604 (S.D.1990)). In that regard, “control rather than ownership of collateral determines a debtor’s rights to collateral.” Id.

[¶ 20.] Estoppel may not apply, however, if the allegedly misled creditor failed to make reasonable efforts to ascertain the ownership of the collateral. For example, in First National Bank of Omaha v. Pleasant Hollow Farm, 532 N.W.2d 60, 64 (S.D.1995), the court determined that estoppel prevented a party from disputing a bank’s security interest. The court noted in its decision that there was no showing that the bank “could have reasonably discovered” that a party other than the debtor possessed an interest in the property. Id. See also Rohweder, 765 F.2d at 113 (in general, the party asserting an estoppel must be without convenient access to knowledge contrary to the facts on which he relied).

[¶ 21.] The trial court determined in its conclusions of law that Jerke “did not allow Peck to appear as the owner of the [D-9] such [as] to mislead Home Federal.” The court also found that the bank representative had witnessed the D-9 sitting idly on Peck’s land, but that no evidence indicated that Bank had knowledge of Peck’s operation of the D-9 on Jerke jobs. In addition, the court found that Bank’s belief that Peck owned the D-9 was based primarily on Peck’s word. Moreover, in the trial court’s memorandum opinion, which was incorporated in the findings and conclusions, the court noted that “a more thorough investigation would have put Home Federal on notice of Jerke’s claim to the [D-9].” Consequently, the court concluded that estoppel was inapplicable.

[¶ 22.] Though this is denominated as a conclusion regarding the appearance of ownership, it is more properly characterized as a finding of fact. “This court has held that a fact found by the court although expressed as a conclusion of law will be treated on appeal as a finding of fact.” Johnson v. Petroleum Carriers, Inc., 90 S.D. 295, 297, 240 N.W.2d 114, 115 (1976).

[¶ 23.] The record supports the finding that Jerke did not allow Peck to appear as the owner. Bank unconvincingly asserts, in effect, that it was misled by the conduct of Jerke in leaving the D-9 with Peck for three years. Bank failed, however, to show anything more than its observation of the D-9 on Peck’s property three months before the loan was made, and that a UCC search discovered no liens on the machine. Under the circumstances of this case, the mere presence of the machinery on the property did not alone establish an estoppel.

[¶ 24.] This conclusion does not depart from our holding in Shaull, sitpra where a person who placed cattle on a debtor’s property was estopped from challenging the security interest in the livestock taken by a bank. While the debtor showed the bank representative the cattle on rough terra in rented or owned by the debtor, the decision does not explicitly discuss whether the representative witnessed any acts of control over the livestock. See id., 2004 SD 40 at ¶¶ 12-15, 678 N.W.2d at 783-84. However, the presence of livestock on one’s property, particularly in remote terrain, tends to imply the property owner’s active feeding, care and upkeep of the animals or a degree of control reinforcing the appearance of ownership of the livestock. By contrast, such implications do not necessarily result from the mere presence of an idle piece of machinery on a debtor’s property.

[¶ 25.] An equally important distinction between this case and Shaull is that the bank in Shaull made the effort to review the debtor’s tax return. See id., 2004 SD 40 at ¶ 13, 678 N.W.2d at 784. By contrast, the trial court here found that Bank’s investigation was inadequate and the record fails to indicate that Bank requested any physical evidence, such as an invoice, bill of sale, purchase agreement, or a tax return, to confirm or refute Peck’s claims of ownership of the D-9. Moreover, Bank observed the D-9 only once on Peck’s property. Under these circumstances, the UCC search did not suffice to show reasonable efforts to investigate Peek’s claims of ownership. See In re Hunt’s Pier Associates, 143 B.R. 36, 46 (1992)(true owner of carnival rides was not estopped from challenging validity of bank’s security interest when bank failed to ask for bill of sale from debtor who pledged rides as security, and where bank merely performed a UCC lien search).

[¶ 26.] The evidence supports the trial court’s finding that Jerke did not cause Peck to appear as the owner of the D-9. Therefore, the court did not err in concluding that estoppel did not apply.

[¶ 27.] Affirmed.

[¶ 28.] GILBERTSON, Chief Justice, KONENKAMP and MEIERHENRY, Justices, concur.

[¶ 29.] ZINTER, Justice, concurs with writing.

[¶ 30.] TICE, Circuit Judge, for SABERS, Justice, disqualified.

ZINTER, Justice

(concurring).

[¶ 31.] I concur and write to emphasize the vast degree of factual dispute in this case. A review of the entire record re-fleets that the testimony concerning purchase and ownership of the equipment was in total conflict. The testimony concerning estoppel was also hopelessly clouded by factual disputes concerning the physical location and use of the equipment after it left Sweetman. Even the physical evidence was so conflicting that it could have sustained findings in support of either party: Peck possessed the contract to purchase the equipment from Sweetman, while Jerke possessed the bill of sale from Sweetman. Under these circumstances, this appellate opinion cannot adequately replicate all of the facts in favor of each party’s theories. For all of these reasons, this case cannot provide meaningful precedent for future cases. In the end, the case involves nothing more than deciding which witness to believe. Because the trial court made that credibility determination after listening to the witnesses testify, we are in no position to second-guess its finding.

      . The trial court also included the finding of naked possession as a conclusion of law. As we discuss later in this opinion, determinations appropriately characterized as findings of fact will be treated as such on appeal, 'regardless of the trial court's characterization.