There is a lot of dramatic irony. Dramatic irony is when the reader knows something the character does not. Well montresor want to kill fortunato & fortunato doesn't know this. Montresor wants to kill fortunato because fortunato insulted montresor. Montresor has created two elements of dramatic irony here. On one hand, we understand that Fortunato, because of the unidentified "insult," has been fooled into believing that Montresor has not been offended by Fortunato's action. Also Montresor appears unaware that he has disclosed a serious character flaw. He appears to the reader as a man consumed by hatred and whose nature is deceitful--he smiles in the face of his friend even tho he is planning to destroy him. Verbal and dramatic irony combine again when Montresor "broke and reached him [Fortunato] a flagon of De Grave," which Fortunato drinks until it's gone. Poe is, of course, playing with words--the wine has a name that can be translated as "of the grave," another instance of verbal irony but, more important, another signal to the reader that Fortunato is an unaware walking dead…