That quote is only said during a quest, during the part where your character sneaks after a certain NPC who had been working on subverting the pact in ebonheart, work undone by a certain vestige during the prior part of the questline... when the NPC passes the nords he had before tried to convince not to aid the dark elves just before the stairs, that's how one of the recently reconvinced towards fightyness nords greets him.