HOFER v. Mark V. Heier, Defendant (2026)

[¶1] Plaintiff Michael Hofer appeals from a district court judgment entered after a bench trial in favor of defendants Daniel Paulson and Mark Heier. We hold the court did not err in concluding the statute of frauds provisions in N.D.C.C. § 9-06-04(2) and (5) did not apply, and in concluding and declaring the alleged Oral Assumption Agreement was valid and enforceable. We affirm.

I

[¶2] In August 2016, Hofer and Paulson were partners in approximately 15 different business entities. While some of their businesses had additional third-party owners, one of the entities Hofer and Paulson solely owned was Imaging Solutions, Inc. (“ISI”), formed in 1997. Hofer and Paulson were the sole shareholders of ISI. A few years after ISI's formation, Heier joined ISI's staff and was eventually elevated to ISI's chief financial officer. Heier became knowledgeable about ISI and other businesses Hofer and Paulson owned.

[¶3] The district court found ISI at times helped finance other businesses in which Hofer and Paulson had interests. Three of these businesses were MagTec Energy, LLC; Imaging Solutions Healthcare, LLC; and AZ Holdings. These businesses, however, “ultimately failed or performed poorly.” Hofer and Paulson subsequently individually assumed these entities’ debts to ISI— allowing ISI to keep the loans to each company as an asset on ISI's books, but now owed to ISI by ISI's sole shareholders. By 2016, Paulson's debt to ISI totaled $1,887,768 (“$1.9M debt”), and Hofer's debt to ISI totaled $4,276,913 (“$4.3M debt”). The court found that during this period, Paulson and Hofer were each receiving significant financial amounts from ISI—approximately $500,000 in 2016 through salary, management fees, and distributions. However, one of Hofer's business ventures struggled, and Hofer sought to refinance debt. The court found that Paulson was concerned with refinancing in light of Hofer's greater debt of $4.3M to ISI and that Paulson thus desired to separate his business interests from Hofer's interests.

[¶4] In about August 2016, Paulson and Hofer began negotiating the separation of their business interests and entity ownership, referred to by the parties and the district court in this matter as the “Takeout.” The court found Paulson and Hofer decided to communicate with each other through Heier and have Heier involved in the Takeout, including calculating the various businesses’ valuations. The court found that within a short period the parties largely reached agreement on terms and that Paulson and Hofer expected attorney David Hauff would draft the documents for the Takeout. The court found that in an August 8, 2016 email addressed to Hauff and copied to Hofer and Paulson, Heier requested Hauff prepare a comprehensive agreement taking Paulson out of multiple companies Paulson and Hofer owned and providing for a $380,400 payment to Paulson. Among other things, the court also found that, “[i]n an attachment, Heier listed the $1.9M Debt owed by Paulson and immediately after it noted: ‘Transfer to MJH,’ which are Hofer's initials.”

[¶5] The district court found “[a]t some point, the parties reached complete agreements for the Takeout.” The court found that “Paulson and Hofer had each spoken with Heier”; that “[a]lthough Hofer agreed to assume the $1.9M Debt, Hofer stated he would not pay an additional $400,000 to cover a potential tax burden Paulson could incur because of Hofer's assumption of the debt”; and that “Hofer and Paulson each relayed (through Heier) to the other his consent to Hofer assuming the $1.9M Debt.” The court found that Hauff drafted a Master Redemption Agreement that had initially included ISI. The court further found, however, that after Heier observed Hofer could benefit through “tax positioning” from Paulson departing ISI at the end of 2016, ISI was taken out of the Master Redemption Agreement; and found that Heier made other revisions to the Master Redemption Agreement, which were minor and caused no advantage or disadvantage to anyone. The court found Heier did not assert Hauff had “blessed” the final version of the Master Redemption Agreement. Hofer and Paulson each signed the Master Redemption Agreement, and neither ever expressed any objections to its terms.

[¶6] The district court found Paulson and ISI entered into a separate ISI Redemption Agreement, but that it was not established who drafted this agreement. The agreement provided for release of Paulson from liability for ISI debt, indemnified Paulson for claims stemming from a collateral matter in dispute, and constituted the entire agreement, i.e., was fully integrated, as to Paulson and ISI. Hofer signed the agreement, but only as ISI's president; Hofer was not a party to the agreement. The court found that “[a]lthough they do not agree on interpretation of some terms in the agreement, neither party expressed any objections to the existence of any terms.”

[¶7] The district court found the Takeout was accomplished through multiple agreements, “including the Oral Assumption Agreement, the Master Redemption Agreement, the ISI Redemption Agreement, and agreements with third-party owners.” The court found Hofer and Paulson were not parties to every agreement, nor were business entities or third-party owners parties to every agreement, and Hofer and Paulson each acquired sole ownership of some businesses. The court found Paulson, through his acquisitions, obtained the intended approximately $2 million in value, including a $370,000 “true-up” payment, from Hofer. Regarding ISI, Hofer became the sole shareholder and remained its president.

[¶8] The district court found that throughout the Takeout, including negotiations and agreement, neither Heier nor Paulson deceived or harmed Hofer. The court specifically found, “[t]hrough his discussions, Heier confirmed that Paulson and Hofer understood their agreement included Hofer assuming the $1.9M Debt.” The court also found, in conjunction with accomplishing the Takeout, ISI and Paulson entered into an employment agreement under which Paulson would receive a $60,000 annual salary for a term of 60 months. Both Hofer, as ISI's president, and Paulson signed the employment agreement; neither expressed any objections to its terms.

[¶9] “Sometime later,” three Written Assumption Agreements were created, under which Hofer assumed the $1.9M debt and which contained the “stamped” signatures of Hofer and Paulson. The district court found the drafter of these written agreements was unproven and the agreements served as “working papers” within ISI for the debt assumption. The court found that Paulson and Hofer did not authorize the use of their signatures or know the written agreements existed at the time of their creation; that neither Paulson nor Heier created or caused the creation of the written agreements or knew of their existence until approximately 2022; and that Hofer learned of their existence at some point before Paulson and Heier. The court ultimately held the Written Assumption Agreements were invalid.

[¶10] The district court found that, after the parties agreed to the Takeout, ISI's financial documents in 2017 “properly reflected” Hofer had assumed the approximately $1.9M debt, adding that debt “to the total amount then showing as due from Hofer and eliminating any amount due from Paulson”; in late July 2017, Hofer, through ISI, issued a $370,000 check to Paulson as the final agreed-upon “true-up” amount in the Takeout; and that same year, Hofer “used ISI to complete an $11M refinance enabling him to take $6.5M out of ISI to cover personal expenses including debts.” The court found that ISI's financial records since 2017 continued to reflect the $1.9M debt, formerly due from Paulson, had been added to the amount due from Hofer and that Hofer received a binder on a monthly basis containing documents evidencing his assumption of the $1.9M debt. The court found a reasonable inference showed Hofer had “at least once” seen a financial document entry showing his assumption of the $1.9M debt, before his alleged discovery of the Written Assumption Agreements in 2022.

[¶11] For about six years after the Oral Assumption Agreement, both Paulson and Hofer acted in accordance with the agreement. The district court found Paulson never paid or applied distributions from his remaining companies to pay the $1.9M debt, never discussed the $1.9M debt with Hofer or anyone else, had no interests in ISI and received no benefits other than employment from ISI, and did not save or earmark funds to cover the $1.9M debt. The court found Paulson acted consistently with the belief Hofer had assumed the $1.9M debt.

[¶12] The district court found that, meanwhile, Hofer remained ISI's president and knew payments were being made—via ISI staff actions—on the $1.9M debt by issuing distributions from a Hofer-owned company and applying them to the debt. The court specifically rejected testimony that Hofer would not have known about such “payment plan” as not credible and outweighed by more reliable evidence. The court instead found a reasonable inference showed Hofer was aware of the payment plan's existence under the circumstances, including Hofer's position as ISI's president and sole shareholder, his recurring reviews of his financial position, his monthly receipt of financial statements reflecting his assumption of the $1.9M debt, and his actual notice and agreement to the assumption from the outset. Hofer, through ISI, employed and paid Paulson until March 2021. The court found neither Hofer nor anyone else at ISI sought payment from Paulson, discussed the $1.9M debt with Paulson, or asserted Paulson still owed the debt. The court found, “Hofer and others at ISI knew that Hofer had assumed the debt and acted at all times consistently with that knowledge.”

[¶13] The district court found Hofer's stance changed in 2022 when Hofer asserted he noticed the Written Assumption Agreements while “rifling” through documents for estate planning purposes. Hofer testified that this is when he first saw the Written Assumption Agreements and first learned the $1.9M debt Paulson owed to ISI had been transferred to him. The court found Hofer “then claimed that he had not agreed to assume the $1.9M Debt.” The court found his claim was not credible.

[¶14] In May 2023, Hofer commenced this action alleging Heier and Paulson prepared written assumption agreements under which Hofer assumed approximately $1.9M debt that Paulson owed to ISI; alleging Heier and Paulson caused Hofer's stamped signature to be placed on the written agreements without his knowledge and approval; and alleging six counts for relief. Four months later, Hofer filed an amended complaint, alleging Heier and Paulson improperly transferred the $1.9M debt; alleging the defendants’ acts included “the preparation of, or allowing to be on the books of ISI,” the Written Assumption Agreements; and including eight counts: “(I) fraud/deceit/misrepresentation; (II) constructive fraud; (III) breach of fiduciary duty; (IV) civil conspiracy; (V) rescission; (VI) declaratory judgment; (VII) tortious interference with business; and (VIII) unjust enrichment.”

[¶15] Paulson and Heier answered and denied Hofer's claims. Paulson also asserted a counterclaim against Hofer asserting five counts: “(1) declaratory judgment finding that ‘the 2016 Agreement, the ISI Redemption Agreement, and their terms are valid and enforceable and [Hofer] properly assumed the [$1.9M Debt] under the 2016 Agreement’; (2) reformation of the 2016 Agreement; (3) assumption of obligation; (4) unjust enrichment; and (5) equitable estoppel.” After denying the parties’ summary judgment motions, the district court held a six-day bench trial in November 2024.

[¶16] In its February 2025 order for judgment, the district court made extensive findings of fact based on the evidence presented at trial and concluded the evidence established Hofer and Paulson validly entered into an Oral Assumption Agreement, in which Hofer agreed to assume Paulson's $1.9M debt to ISI as part of the Takeout agreements. Based on its findings, the court declared the Written Assumption Agreements invalid; declared an Oral Assumption Agreement valid and that Hofer had assumed $1.9M debt Paulson owed to ISI; dismissed Hofer's claims for breach of fiduciary duty, civil conspiracy, tortious interference with business, constructive fraud, unjust enrichment, rescission, and fraud, deceit, or misrepresentation; dismissed Paulson's other counterclaims; and awarded Paulson and Heier statutory costs and disbursements as prevailing parties. A judgment was entered, and Hofer appealed.

II

[¶17] On appeal, Hofer argues the district court erred as a matter of law in concluding there was an enforceable Oral Assumption Agreement under which the $1.9M debt owed by Paulson to ISI was assumed by, or transferred to, Hofer. He argues the court erred in declaring the $1.9M debt assumption or transfer was not required to be in writing under North Dakota's statute of frauds, N.D.C.C. § 9-06-04(2) and N.D.C.C. § 9-06-04(5); erred in concluding the doctrine of part performance applied and that part performance removed the $1.9M debt assumption or transfer from the statute of frauds; and erred in concluding consent to the Oral Assumption Agreement was communicated by Paulson and Hofer to the other.

[¶18] In an appeal from a bench trial, the district court's findings of fact are reviewed under the clearly erroneous standard of review and its conclusions of law are fully reviewable. Sargent Cnty. Water Res. Dist. v. Beck, 2023 ND 230, ¶ 6, 999 N.W.2d 175; N.D.R.Civ.P. 52(a). A finding of fact is clearly erroneous if it is induced by an erroneous view of the law, if no evidence exists to support the finding, or if, on the entire record, we are left with a definite and firm conviction a mistake has been made. Knudson v. Kyllo, 2012 ND 155, ¶ 9, 819 N.W.2d 511. “A district court's choice between two permissible views of the weight of the evidence is not clearly erroneous, and simply because we may have viewed the evidence differently does not entitle us to reverse the district court.” Id. We do not reweigh conflicts in the evidence. Id. In a bench trial, this Court will not second-guess the district court on its credibility determinations. Moody v. Sundley, 2015 ND 204, ¶ 9, 868 N.W.2d 491; N.D.R.Civ.P. 52(a)(6).

[¶19] On appeal, Hofer does not challenge the district court's extensive findings of fact on grounds that no evidence supports them. Rather, he asserts that his issues present questions of law, subject to de novo review; and, if applicable, the district court's findings were “induced by an erroneous view of the law” or this Court “will be convinced a mistake has been made.” Although Hofer contends the district court's determination that Hofer and Paulson formed and agreed to the terms of the Oral Assumption Agreement is a conclusion of law, this Court has said, “[t]he existence of an oral contract is a question of fact.” In re Est. of Thompson, 2008 ND 144, ¶ 10, 752 N.W.2d 624; see also Kuntz v. Kuntz, 1999 ND 114, ¶ 7, 595 N.W.2d 292 (“Intent and the existence of an oral contract are questions of fact.” (quoting Ehrman v. Feist, 1997 ND 180, ¶ 12, 568 N.W.2d 747)). Statutory interpretation, however, presents a question of law and is fully reviewable on appeal. Kost v. Kraft, 2011 ND 69, ¶ 11, 795 N.W.2d 712.

III

[¶20] Hofer argues the district court erred in concluding there was an Oral Assumption Agreement that was not subject to North Dakota's statute of frauds.

[¶21] Section 9-06-02, N.D.C.C., provides that all contracts may be oral, except those required by statute to be in writing. Hofer contends both N.D.C.C. § 9-06-04(2) and N.D.C.C. § 9-06-04(5) required the $1.9M debt assumption or transfer to be in writing. Section 9-06-04, N.D.C.C., provides in relevant part:

The following contracts are invalid, unless the same or some note or memorandum thereof is in writing and subscribed by the party to be charged, or by the party's agent:

․

2. A special promise to answer for the debt, default, or miscarriage of another, except in the cases provided for in section 22-01-05.

․

4. An agreement or promise for the lending of money or the extension of credit in an aggregate amount of twenty-five thousand dollars or greater.

5. An agreement or promise to alter the terms of repayment or forgiveness of a debt that is in an aggregate amount of twenty-five thousand dollars or greater.

[¶22] When interpreting a statute, the primary objective is to ascertain the intention of the legislation. Kost, 2011 ND 69, ¶ 11, 795 N.W.2d 712. Words in a statute are given their plain, ordinary, and commonly understood meaning, unless defined by statute or unless contrary intention plainly appears. N.D.C.C. § 1-02-02. Statutes are construed as a whole and are harmonized to give meaning to related provisions. N.D.C.C. § 1-02-07. The language of a statute must be interpreted in context and according to the rules of grammar, giving meaning and effect to every word, phrase, and sentence. N.D.C.C. §§ 1-02-03 and 1-02-38(2). “We construe statutes to give effect to all of their provisions, so that no part of the statute is rendered inoperative or superfluous.” Kost, ¶ 11 (citing N.D.C.C. § 1-02-38(2) and (4)).

A

[¶23] Hofer argues N.D.C.C. § 9-06-04(2) required the $1.9M debt assumption or transfer to be in writing.

[¶24] Section 9-06-04(2), N.D.C.C., provides that “[a] special promise to answer for the debt, default, or miscarriage of another, except in the cases provided for in section 22-01-05,” is invalid unless it is in writing. See also N.D.C.C. § 22-01-01(2) (defining “guaranty” as “a promise to answer for the debt, default, or miscarriage of another person”). This language has sometimes been referred to as the “guaranty clause” to the statute of frauds, 9 Williston on Contracts § 22:1 (4th ed. May 2026 Update), or the “suretyship provision” or “surety provision,” 37 C.J.S. Frauds, Statute of § 8 (April 2026 Update) (“The provision requires written evidence when one person promises to pay the debt of another, because there is a temptation for a promisee, in a case where the real debtor has proved insolvent or unable to pay, to enlarge the scope of the promise, or to torture mere words of encouragement and confidence into an absolute promise.”).

[¶25] As an exception to N.D.C.C. § 9-06-04(2), section 22-01-05 provides when a promise to answer for another's debt is “deemed” the promisor's “original obligation” and need not be in writing. See also N.D.C.C. § 22-01-04 (“Except when a guaranty is deemed an original obligation as provided in section 22-01-05, a guaranty must be in writing and signed by the guarantor, but the writing need not express a consideration.”); 9 Williston on Contracts § 22:6 (“A promise subject to the provision of the statute relating to a promise to answer for the debt of another is often said to be ‘collateral’ whereas the courts often refer to a promise not within the scope of the guaranty clause as ‘original.’ ”). Hofer argues none of the exceptions under section 22-01-05 apply in this case and section 22-01-05 is not applicable to the threshold issue of whether a “special promise to answer for the debt” of another applies to an assumption agreement.

[¶26] Here, the district court concluded N.D.C.C. § 9-06-04 did not apply to the oral assumption of debt in this case, i.e., the Oral Assumption Agreement. The court did not apply an exception in section 22-01-05, but found Hofer's purported oral agreement to assume Paulson's debt to ISI was not a “guaranty,” as contemplated under section 9-06-04(2). The court instead found the oral agreement was an assumption of the debt involving a promise to substitute oneself for another and become the sole debtor, such that the assumer is not answering for the debt of another but is liable for the promisor's own debt.

[¶27] In Dakota Bank and Trust Co. v. Funfar, this Court explained the difference between a “guaranty,” as defined by statute, and an “assumption” of a debt:

A “guaranty” is “a promise to answer for the debt, default, or miscarriage of another person.” Section 22-01-01(1), N.D.C.C. On the other hand, one who assumes a mortgage debt becomes primarily liable for the debt. Morris v. Twichell, 63 N.D. 747, 249 N.W. 905, 909 (1933).

443 N.W.2d 289, 290-91 (N.D. 1989); compare Black's Law Dictionary 846 (12th ed. 2024) (defining “guaranty” as “[a] promise to answer for the payment of some debt, or the performance of some duty, in case of the failure of another who is liable in the first instance; a collateral undertaking by one person to be answerable for the payment of some debt or performance of some duty or contract for another person who stands first bound to pay or perform”), with Black's Law Dictionary 153 (12th ed. 2024) (defining “assumption” as “[t]he act of taking (esp. someone else's debt or other obligation) for or on oneself; the agreement to so take ”).

[¶28] This Court has said determining whether a party's statements constitute a personal guaranty is “the exclusive function of the trier of fact, the trial court.” Ned Nastrom Motors, Inc. v. Nastrom-Peterson-Neubauer Co., 338 N.W.2d 64, 69-70 (N.D. 1983) (citing Nelson v. TMH, Inc., 292 N.W.2d 580, 583 (N.D. 1980); State Bank of Towner, Inc. v. Rauh, 288 N.W.2d 299, 305 (N.D. 1980)). We further said the trial court's determination on whether the parties’ statements “constitute an oral guaranty or assumption of debt is a finding of fact which we will not disturb unless it is clearly erroneous.” Funfar, 443 N.W.2d at 291 (emphasis added) (citing N.D.R.Civ.P. 52(a); Baker Mfg. Co. v. Kramer Sheet Metal, 371 N.W.2d 149, 152 (N.D. 1985) (oral guaranty); Sec. State Bank v. Schultz, 350 N.W.2d 40, 42 (N.D. 1984) (oral assumption of debt)).

[¶29] In Funfar, this Court affirmed the district court's finding the defendant had “assumed” a mortgage debt, becoming the principal debtor, and was not a “guarantor.” 443 N.W.2d at 290-91. In doing so, the Court rejected applying the “leading object” rule to decide whether an oral guaranty had been given. Id. at 291. The Court held that, instead, “the rule is used for determining whether an oral guaranty is excepted from the statute of frauds” and that our caselaw requires “an oral guaranty must be in existence before the ‘leading object’ rule is germane.” Id. (citing Baker Mfg., 371 N.W.2d at 152; Ned Nastrom Motors, 338 N.W.2d at 69; Rauh, 288 N.W.2d at 307; Austford v. Smith, 196 N.W.2d 413, 416 (N.D. 1972)). This Court concluded the “leading object” rule was inapplicable because the court's finding of “no oral guaranty” was not clearly erroneous. Id.

[¶30] In response to Hofer's argument that the district court misapplied N.D.C.C. § 9-06-04(2), Paulson relies on GBJ Corp. v. Eastern Ohio Paving Co., 139 F.3d 1080 (6th Cir. 1998). The court in GBJ Corp., applying similar statutory language under New York law, also distinguished between a promise to answer for a debt and an agreement to assume a debt: “While the Statute of Frauds refers to promises to answer for a debt, however, this case concerns a bilateral agreement to assume a debt. The latter, a common sort of business deal, can be enforced without a writing. The former, a suretyship, cannot.” Id. at 1086 (cleaned up). The court explained:

The statute provides that a “special promise to answer for the debt, default or miscarriage of another” may not be enforced unless it is in writing. Generally, the statute applies to circumstances in which the promisor has acted as surety of another (see 3 WILLISTON, CONTRACTS [3d ed.], § 475; RESTATEMENT, CONTRACTS 2D, § 112)․ We deal here with plaintiff's claim that defendant's promise is not within the statute because the promisor owed plaintiff an independent duty to pay. As to such promises, it has been stated that “[i]f, as between the promisor and the original debtor, the promisor is bound to pay, the debt is his own and not within the statute. ‘Contrariwise if as between them the original debtor still ought to pay, the debt cannot be the promisor's own and he is undertaking to answer for the debt of another.’ ” (Witschard v. Brody & Sons, 257 N.Y. 97, 177 N.E. 385 [(1993)], quoting 1 WILLISTON, CONTRACTS, § 472.) In the latter case the promise is unenforceable in the absence of some memorandum.

Id. at 1086 (quoting Martin Roofing, Inc. v. Goldstein, 60 N.Y.2d 262, 469 N.Y.S.2d 595, 457 N.E.2d 700, 701 (1983)). The court further explained this distinction's rationale:

The purpose of the rule is evidentiary, to avoid perjury, and incidentally to serve as a cautionary measure to avoid ill-considered actions (3 WILLISTON, CONTRACTS [3d ed.], § 452; FARNSWORTH, CONTRACTS, § 6.3; RESTATEMENT, CONTRACTS 2D, § 112). In most oral contracts, a writing is not required because the promisor has received something and the circumstances show probable liability. When a party promises to answer for the debt of another, however, the benefit to the promisor is not apparent and so the promise, if it is to be enforceable under the statute, must either be evidenced by writing or plaintiff must prove it is supported by a new consideration moving to the promisor and beneficial to him and that the promisor has become in the intention of the parties a principal debtor primarily liable. Thus, it was plaintiff's burden within this rule to produce evidence showing a consideration moving to defendant and showing that the parties intended, as ascertained from the language used and from all the facts and circumstances surrounding the transaction (Clark v. Howard, 150 N.Y. 232, 44 N.E. 695 [(1896)]), that an independent contract was created between them which obligated defendant to satisfy the corporation's debt in any event.

Id. (quoting Martin Roofing, at 701, 469 N.Y.S.2d 595, 457 N.E.2d). We agree with the rationale in GBJ Corp. and conclude it is consistent with this Court's prior distinction between a “guaranty” and an “assumption of a debt” in Funfar.

[¶31] Here, the district court found there was an oral assumption of debt under these facts and circumstances, which was not covered as a “guaranty” under N.D.C.C. § 9-06-04(2). Although the district court found the Written Assumption Agreements contained “some errors” and declared them to be invalid, the court also found that these agreements “otherwise accurately reflected the Oral Assumption Agreement entered by Paulson and Hofer, i.e., Hofer's assumption of the $1.9M Debt” (emphasis added) and “[t]he primary substance of the Written Assumption Agreements was orally agreed to.” However, although ISI was named as a party to the invalid Written Assumption Agreements, the district court did not find that ISI was a party to the Oral Assumption Agreement.

[¶32] Importantly, in response to Paulson's request for a declaration “that the 2016 Agreement, ISI Redemption Agreement, and their terms are valid and enforceable, and that [Hofer] properly assumed [the $1.9M Debt] under the 2016 Agreement,” the district court held:

As determined above, Paulson has established that he and Hofer validly entered the Oral Assumption Agreement, and that it is enforceable. Paulson is entitled to a declaration accordingly.

The ISI Redemption Agreement, though, did not involve Hofer individually or appear to reference the $1.9M Debt owed to ISI. The agreement was entered only by ISI and Paulson. ISI is not a party to this case, so declaratory relief cannot be entered regarding a contract it entered. See N.D.C.C. § 32-23-11. Regardless, such relief appears unnecessary based on resolution of the Oral Assumption Agreement between the existing parties.

(Emphasis added and footnote omitted.)

[¶33] Courts have held, however, that statute of frauds provisions like N.D.C.C. § 9-06-04(2) apply only to promises made to a creditor, not where the promise to answer for the debt is made to the debtor himself. See, e.g., First Natl. Bank of Omaha v. iBeam Sols., L.L.C., 61 N.E.3d 740, 759 (Ohio Ct. App. 2016); Ex parte Ramsay, 829 So. 2d 146, 154-55 (Ala. 2002); Steinberger v. Steinberger, 252 A.D.2d 578, 676 N.Y.S.2d 210, 211 (N.Y. App. Div. 1998); Magrann v. Epes, 646 So. 2d 760, 761-62 (Fla. Dist. Ct. App. 1994). Keeping in mind the statute's purpose, courts “have construed the statute of frauds to be limited to promises made to the creditor.” 9 Williston on Contracts § 22:3 (4th ed. May 2026 Update); see Murphy v. Hanna, 37 N.D. 156, 164 N.W. 32, 39 (1917) (“The statute is generally construed to be applicable to that situation in which the defendant promisor undertakes to pay a debt that a third person owes to the promisee, and to whose obligation the defendant's promise is collateral.”); see also 4 Corbin on Contracts § 15.12 (2025) (“If the promise to pay or otherwise answer for another's debt or default to a third person is made to the debtor rather than the creditor, it is not within the statute.”); 72 Am. Jur. 2d Statute of Frauds § 131 (May 2026 Update) (“A promise by one person, although he or she is in no way liable for an existing debt, made to the debtor for an adequate consideration, to discharge the debt, is not regarded as a promise to answer for the debt of another within the meaning of the Statute of Frauds.”); 37 C.J.S. Frauds, Statutes of § 24 (April 2026 Update) (“An oral promise to the debtor to discharge the debt is not within the statute of frauds.”); Restatement (Second) of Contracts § 123 (1981) (“A contract to discharge a duty owed by the promisee to a third person is not within the Statute of Frauds as a contract to answer for the duty of another.”).

[¶34] Since the application of this statute of frauds provision “has been confined to promises made to the creditor, a promise by one person, although he or she is in no way liable for an existing debt, made to the debtor for a sufficient consideration to discharge the debt is not regarded as a promise to answer for the debt of another within the meaning of the statute and may be enforced by the debtor.” 9 Williston, supra, § 22:4 “Under a rule generally prevailing in many jurisdictions, the contract of a third person with a debtor to pay the latter's debt may be enforced by the creditor as a third-party beneficiary; the creditor is held to acquire a new and direct right against the new promisor.” Id.; see also 4 Corbin, supra, § 15.12 (“Not only can the promisee maintain suit upon the oral promise, but the creditor can also, suing as a creditor beneficiary of the contract.”).

[¶35] Therefore, under these facts and circumstances, because this case involves an assumption of debt and not a guaranty, and because the Oral Assumption Agreement, as found by the district court, to assume the $1.9M debt is between Hofer, individually, and Paulson, ISI's debtor, we conclude the district court did not err in holding N.D.C.C. § 9-06-04(2) did not apply to the Oral Assumption Agreement.

B

[¶36] Hofer argues N.D.C.C. § 9-06-04(5) required the $1.9M debt assumption or transfer to be in writing.

[¶37] Here, the district court concluded N.D.C.C. § 9-06-04(5), “[a]n agreement or promise to alter the terms of repayment or forgiveness of a debt that is in an aggregate amount of twenty-five thousand dollars or greater,” did not apply to the oral assumption of debt in this case. The court found: “No terms of repayment were changed by the assumption. Nor were terms of debt forgiveness changed (or involved).” (Emphasis added.)

[¶38] Hofer argues the statute of frauds provision in N.D.C.C. § 9-06-04(5) provides a separate and distinct basis from N.D.C.C. § 9-06-04(2), requiring the oral transfer or assumption agreement to be in writing. He argues the plain meaning of section 9-06-04(5) applies to the $1.9M debt assumption or transfer here. Relying on a dictionary definition of “alter,” he contends the transfer or assumption of the $1.9M debt was made “different without changing into something else” as the debt was still owed to ISI. See Merriam-Webster's Dictionary 35 (11th ed. 2005) (defining “alter” as “to make different without changing into something else”).

[¶39] Hofer further argues the district court erred as a matter of law in holding N.D.C.C. § 9-06-04(5) inapplicable because the court did not engage in any analysis under rules of statutory construction, did not cite authority in concluding the provision did not apply when “no terms of repayment were changed by the assumption,” and erred in using the word “change” in its analysis. He contends the operative word is “alter” rather than “change” and, further, there was a “change” in the repayment terms of Paulson's $1.9M debt owed to ISI because it was “changed” to be paid by Hofer. He argues the court's decision ignores the purpose of the statute of frauds and section 9-06-04(5) applies to “an agreement” without limitation, not only to an agreement between a creditor and a debtor.

[¶40] Paulson argues, however, N.D.C.C. § 9-06-04(5) does not require the Oral Assumption Agreement to be in writing and the district court's factual findings establish Hofer has ignored the statute's purpose. He also argues under the statute's plain language, what must be “altered” are the “terms of repayment,” relying on a dictionary definition of “terms.” See, e.g., Merriam-Webster's Dictionary 1289 (11th ed. 2005) (defining “terms” as “provisions that determine the nature and scope of an agreement”). Paulson contends that changing the person who owes the debt does not change the “provisions that determine the nature or scope of an agreement,” but rather only changes who is responsible for those terms, as the district court held in stating “[n]o terms of repayment were changed by the assumption.”

[¶41] In 1991, the legislature added subsection (5) to N.D.C.C. § 9-06-04. See 1991 N.D. Sess. Laws ch. 94 (S.B. 2081). The parties have presented competing arguments on the meaning of the phrase “to alter the terms of repayment or forgiveness of a debt.” When a statute's language is ambiguous or of doubtful meaning, a court may resort to extrinsic aids to determine the legislation's intent, “including the object sought to be obtained, the circumstances under which the statute was enacted and the legislative history.” Fargo Educ. Ass'n v. Fargo Pub. Sch. Dist., 2024 ND 201, ¶ 9, 13 N.W.3d 749.

[¶42] Based on the legislation's history, subsection (5) of N.D.C.C. § 9-06-04 was intended to be the “reciprocal” or “flip side” of subsection (4). See Hearing on S.B. 2081 Before the House Judiciary Comm., 52nd N.D. Legis. Sess. (Feb. 11, 1991) (printed testimony of Calvin Rolfson, Legis. Counsel, N.D. Bankers Ass'n and N.D. League of Savings Insts.). Rolfson testified that while any agreement for the lending of money or extension of credit in an aggregate amount of $25,000 or more must be in writing under N.D.C.C. § 9-06-04(4), “there is currently no provision in law that discusses what happens where there is a purported forgiveness of a debt in an amount of $25,000 or greater.” Id. He continued:

This bill is merely the flip side of subsection 4 of section 9-06-04. If it is wise to have contracts for the lending of money in significant amounts to be in writing, it is certainly equally wise to require that significant forgiveness of that same debt also be in writing.

Id. (emphasis added). The Senate Standing Committee Minutes also reflect some differences in interpretation when comparing testimonies of Greg Bickle with Cal Rolfson and Al Wolf:

Greg Bickle, State Bar Assoc.: The Bar Assoc. is in favor of the bill. It's appropriate legislation which relates to the statute on [sic] frauds and enlarges it to include any contract that has anything to do with altering the terms of the payment of [sic] forgiveness of the debt in the amount of at least $25,000 or larger.

Cal Rolfson, ND Bankers Assoc.: He testified in support of the bill. The bill adds a 5th subsection to 9-06-04. SB 2081 is the reciprocal of subsection 4.

Al Wolf: This bill is not limited to banks; it's for the benefit of both parties; it invokes a proper level of burden of [proof] and creates a fairer playing field. The bill speaks to primary issues between parties.

Hearing on S.B. 2081 Before the Senate Judiciary Comm., 52nd N.D. Legis. Sess. (Jan. 21, 1991).

[¶43] Here, the language of N.D.C.C. § 9-06-04(5) specifically applies to “[a]n agreement or promise to alter the terms of repayment or forgiveness of a debt.” (Emphasis added.) In the context of N.D.C.C. § 9-06-04(4), we have previously said that a contract's “essential or material” terms include “the identity of the parties”:

Oral contracts that, in aggregate, loan over $25,000 must be in writing, and if not, are unenforceable under the statute of frauds. N.D.C.C. § 9-06-04(4). “A writing ‘must contain all the essential or material conditions and terms of the contract,’ ” which includes “the identity of the parties, the subject matter of the agreement, and express consideration.” Trosen v. Trosen, 2014 ND 7, ¶ 12, 841 N.W.2d 687. “To satisfy the statute of frauds, the essential terms of the agreement must be in writing, and the contract cannot rest partly in writing and partly in parol.” Id. at ¶ 14.

Roth v. Meyer, 2024 ND 113, ¶ 43, 9 N.W.3d 469. As the “reciprocal” or “flip side” of subsection (4), it is axiomatic that under subsection (5), an essential or material “term of repayment” would also include the “identity of the parties.”

[¶44] A term of repayment of a debt would necessarily include the identity of the debtor. But it must also include the party holding the debt. See Shift Servs., LLC v. Ames Savage Water Sols., LLC, 2023 ND 237, ¶ 9, 999 N.W.2d 210 (“Modifications of a contract generally require mutual assent of the parties.”); see also N.D.C.C. §§ 9-09-05, 9-09-06; 17A Am. Jur. 2d Contracts § 496 (May 2026 Update) (“[P]arties to an existing contract may, by mutual assent, modify it, provided the modification does not violate the law or public policy, and provided that there is consideration for the new agreement or that it satisfies a statute or is made under circumstances making consideration unnecessary.”). To conclude that an assumption agreement between only the original debtor and a third party modifies the original debt with a nonconsenting holder of the debt would improperly collapse two distinct contracts, with distinct sets of parties, into one. See Rosenberg v. Son, Inc., 491 N.W.2d 71, 75 (N.D. 1992) (stating both original parties to a contract “must mutually assent to the discharge of the obligor from any further liability on the original contract”). We therefore agree with Paulson's argument, albeit for a different reason, that changing the person who owes the debt under these circumstances did not change “the provisions that determine the nature and scope of an agreement” but “merely changes who is responsible for those terms.”

[¶45] As discussed, the district court specifically found:

The Takeout was accomplished through multiple agreements, including the Oral Assumption Agreement, the Master Redemption Agreement, the ISI Redemption Agreement, and agreements with third-party owners. Hofer and Paulson were not parties to every agreement. Nor were business entities or third-party owners parties to every agreement. Hofer and Paulson each acquired sole ownership of some businesses. Paulson's acquisitions were such that he obtained the intended approximately $2M in value—through the addition of a “true-up” payment of $370K from Hofer. With regard to ISI, Hofer became the sole shareholder and remained its president. Throughout the Takeout (including negotiations and agreement), neither Heier nor Paulson deceived or harmed Hofer. Through his discussions, Heier confirmed that Paulson and Hofer understood their agreement included Hofer assuming the $1.9M Debt.

As part of the Takeout, the Oral Assumption Agreement between Hofer and Paulson provided that Hofer assumed the $1.9M debt that Paulson owed to ISI. This did not alter Paulson's debt obligation to ISI for the $1.9M debt. Rather, the court specifically found ISI's financial documents reflected Hofer had assumed the $1.9M debt, adding the debt “to the total amount then showing as due from Hofer and eliminating any amount due from Paulson.” We therefore conclude the district court did not err as a matter of law in concluding N.D.C.C. § 9-06-04(5) did not apply and in holding the Oral Assumption Agreement was valid and enforceable.

[¶46] Under these facts and circumstances, N.D.C.C. § 9-06-04(5) did not apply and the Oral Assumption Agreement, as found by the district court, was not invalid nor barred by N.D.C.C. § 9-06-04(5).

IV

[¶47] Because the district court did not err in concluding the statute of frauds did not apply to the Oral Assumption Agreement, we need not address the court's alternative holding that, even if the statute of frauds did apply, the parties’ performances, consistent only with the agreement, “would remove the Oral Assumption Agreement from invalidity.”

V

[¶48] Hofer argues the district court erred in holding Hofer expressed consent to the $1.9M debt transfer or assumption through a third party, i.e., Heier.

[¶49] The existence of an oral contract is a question of fact, subject to the clearly erroneous standard under N.D.R.Civ.P. 52(a). Est. of Thompson, 2008 ND 144, ¶ 10, 752 N.W.2d 624; Kuntz, 1999 ND 114, ¶ 7, 595 N.W.2d 292; GeoStar Corp. v. Parkway Petroleum, Inc., 495 N.W.2d 61, 66 (N.D. 1993). “The requisites for a valid contract are parties capable of contracting, consent, a lawful object, and sufficient consideration.” Est. of Thompson, ¶ 11 (citing N.D.C.C. § 9-01-02). “The parties’ consent must be free, mutual, and communicated to each other.” Id. (citing N.D.C.C. § 9-03-01). “A legally enforceable contract, whether oral or written, requires mutual acceptance and understanding of the terms” by the parties. GeoStar Corp., at 66.

[¶50] Thus, “[t]o create an enforceable contract, there must be a mutual intent to create a legal obligation.” Lire, Inc. v. Bob's Pizza Inn Rests., Inc., 541 N.W.2d 432, 434 (N.D. 1995) (citing N.D.C.C. §§ 9-01-02, 9-03-01). “The parties’ mutual assent is determined by their objective manifestations, not their secret intentions.” Id. Under N.D.C.C. § 9-03-16, “[c]onsent is not mutual unless the parties all agree upon the same thing in the same sense.” Meuchel v. MR Props. LLC, 2024 ND 107, ¶ 25, 7 N.W.3d 291. See also N.D.C.C. § 9-03-17 (“Consent can be communicated with effect only by some act or omission of the party contracting by which the party intends to communicate it, or which necessarily tends to such communication.”); N.D.C.C. § 9-03-18 (“If a proposal prescribes any conditions concerning the communication of its acceptance, the proposer is not bound unless they are conformed to. In other cases any reasonable and usual mode may be adopted.”); N.D.C.C. § 9-03-20 (“Performance of the conditions of a proposal, or the acceptance of the consideration offered with a proposal, is an acceptance of the proposal.”).

[¶51] Hofer argues North Dakota law requires mutual consent to a contract that is properly communicated by one party to the other and that the district court's findings do not, as a matter of law, support a finding of consent by Hofer to transfer or assume the $1.9M debt. He contends the court erred in concluding under N.D.C.C. § 9-03-01(3) that nothing required the parties’ consent to be communicated directly to the other and the court erred in generally citing N.D.C.C. § 9-03-18. He asserts, as the court found, the parties agreed to have attorney Hauff draft the necessary documents for the Takeout, rather than entering into an oral contract. He further argues the court, in finding Hofer and Paulson communicated their mutual consent to the Oral Assumption Agreement through Heier, erred in concluding that was a “reasonable and usual mode” to provide consent. He argues the court's findings and approach violate N.D.C.C. § 9-03-21, requiring an “acceptance” to a contract must be “absolute and unqualified.”

[¶52] Here, the district court made specific findings of fact on Hofer's and Paulson's credibility and their mutual consent. At the outset of its findings, the court found Heier and Paulson were the most credible witnesses and Heier was the most credible witness regarding the Takeout and the Oral Assumption Agreement. The court explained, “[Heier's] demeanor, frankness, reasonableness, appearance, strength of recollection, and consistency throughout examinations (in conjunction with consideration of all the evidence) established his reliability.” The court found the evidence established the Oral Assumption Agreement was validly entered by Hofer and Paulson; neither Hofer nor Paulson provided reliable testimony regarding the Oral Assumption Agreement; and Heier's testimony alone was credible and sufficient and was bolstered by the circumstances surrounding the Oral Assumption Agreement.

[¶53] Regarding the parties’ mutual consent, the district court found the evidence established Heier was candid and did not improperly hesitate or evade questions; Heier's recollection was strong, especially on “key points” of his discussions with Hofer and Paulson; Heier reliably explained he spoke with both Paulson and Hofer and was certain—“positive”—each understood Hofer agreed to assume the $1.9M debt; and Heier credibly recounted Hofer indicated he would not pay an additional amount for Paulson's potential tax burden but still agreed to assume the $1.9M debt. The court specifically found Hofer and Paulson appropriately communicated their consent through Heier—”their longtime CFO, savvy in business and knowledgeable regarding the entities involved in the Takeout and each party's objectives.” The court found their decision to work through Heier “constituted a reasonable and usual mode of communication.”

[¶54] The district court's findings are presumptively correct. Brash v. Gulleson, 2013 ND 156, ¶ 10, 835 N.W.2d 798. This Court has said, “Had this court been the trier of fact, we may have viewed these facts differently. However, we cannot reverse for that reason alone.” Id. (citations omitted). “A finding is clearly erroneous only when, although there is some evidence to support it, the reviewing court on the entire evidence is left with a definite and firm conviction that a mistake has been made.” Id. On our review, we conclude evidence in the record supports the district court's findings. Moreover, the district court's findings of fact on the existence of the Oral Assumption Agreement between Hofer and Paulson, including the court's specific findings on the parties’ mutual consent and the witnesses’ credibility, are not clearly erroneous.

VI

[¶55] Relying on N.D.R.App.P. 35(a)(1) and (4), Hofer requests this Court to reverse the district court on the contract claims and “find,” as a matter of law, that the $1.9M debt was not transferred to or assumed by Hofer and that Paulson is still obligated to pay the debt to ISI. This Court does not make findings on appeal. We have affirmed the district court's finding of a valid Oral Assumption Agreement between Hofer and Paulson. However, as the district court also held, ISI is not a party to this case and “declaratory relief could not be entered regarding a contract [ISI] entered.”

VII

[¶56] We have considered Hofer's remaining arguments and determine they are either unnecessary for our decision or are without merit. We affirm the judgment.

Fair McEvers, Chief Justice.

[¶57] Lisa Fair McEvers, C.J. Jerod E. Tufte Jon J. Jensen Douglas A. Bahr Daniel J. Crothers, S.J.[¶58] The Honorable Daniel J. Crothers, S.J., sitting in place of Friese, J., disqualified.