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The language pertaining to the statute of frauds for leases in N.D. Cent. Code § 41-02.1-10(4)(c) is identical to the language for the statute of frauds for the sale of goods in N.D. Cent. Code § 41-02-08(3)(c), and the official comment for § 41-02.1-10 states it is modeled on U.C.C. § 2-201, with changes to reflect the differences between a lease contract and a contract for the sale of goods. Cases interpreting U.C.C. § 2-201 are equally applicable to U.C.C. § 2A-201. U.C.C. § 2A-201 should be liberally construed to expand commercial practices through custom and usage and a court's policy should be to sustain a contract whenever possible and not defeat it on technical grounds. Those comments are consistent with the plain language of the definition of "lease agreement" in N.D. Cent. Code § 41-02.1-03(1)(k), which contemplates consideration of course of dealing, usage of trade, or course of performance, and the language for the acceptance of leased goods in N.D. Cent. Code § 41-02.1-63, and when read in conjunction with the "received and accepted" language for the statute of frauds in N.D. Cent. Code § 41-02.1-10(4)(c), supports construing those provisions under the rationale of Hofmann.
Allen Kraft and Jim Kost formerly operated a custom combining partnership, Kost and Kraft Harvesting, and they ceased doing business as a partnership in the spring of 2003. Although they terminated their partnership in 2003, they continued to share equipment and work in 2003 and 2004. In May 2008, Kost sued Kraft to formally dissolve the partnership. Kost sought final disposition of the proceeds from the sale of that equipment and damages for Kraft's alleged conversion of a planter. Kraft counterclaimed, alleging that after the partnership was terminated in 2003, Kost entered into an oral lease agreement to pay Kraft fair rental value to use some of Kraft's combining equipment in 2003 and 2004. The district court granted summary judgment dismissal of Kraft's counterclaims, concluding the claimed oral lease agreements were not enforceable because they were not in writing and were not partially performed. The court also said Kraft’s counterclaims did not appear to have been properly disclosed during his bankruptcy proceedings and decided that failure precluded him from pursuing his claims in the present action. A jury thereafter returned a special verdict finding Kraft had not converted a planter and distributing to the parties the proceeds from Kost's sale of equipment at the auction sale. On appeal, Kraft argued that the district court erred in deciding his claimed oral agreements were not enforceable under the statute of frauds and his counterclaims could not be pursued in this action because they were not disclosed in his prior bankruptcy proceeding.
The supreme court found that the plain language of the definition of "lease agreement" in N.D. Cent. Code § 41-02.1-03(1)(k), which contemplated consideration of course of dealing, usage of trade, or course of performance, and the language for the acceptance of leased goods in N.D. Cent. Code § 41-02.1-63, and when read in conjunction with the "received and accepted" language for the statute of frauds in N.D. Cent. Code § 41-02.1-10(4)(c), supported construing those provisions under the rationale of Hofmann v. Stoller, 320 N.W.2d 786 (N.D. 1982). Anent the second issue, the court held that the record did not establish that the owner's bankruptcy proceeding had been closed or the bankruptcy trustee had been discharged, and the trustee, with approval by the bankruptcy court, assigned all the bankruptcy estate's interest in the litigation to the owner for $12,000. According to the court, Kost did not show that Kraft was precluded from pursuing his counterclaims in this action.