Same - Promise To Answer For Debt, Default, Or Miscarriage Of Another

40. The following points should be noted:

(a) The debt, default, or miscarriage must be that of "another person," and, therefore, for the statute to apply,

(1) There must be either a present or prospective primary liability of a third person for which the promisor agrees to answer. He must not himself be or become primarily liable.

21 BELLOWS v. SOWLES, 57 Vt. 164. 52 Am. Rep. 118, Throckmorton, Cas. Contracts, 56. And see Feblinger v. Wood, 134 Pa. 517, 19 Atl. 74G; Wales v. Stout, 115 N. Y. 638, 21 N. E. 1027; Mackin v. Dwyer, 205 Mass. 472, 91 N. E. 893; Blake v. Robinson, 129 Iowa, 196, 105 N. W. 401. Bee "Frauds, Statute of" Dec. Dig. (Key-No.) §§ 7-12; Cent. Dig. §§ 1-12.

22 Stebblna V. Smith, 4 Pick. (Mass.) 07: Pratt v. Humphrey, 22 Conn. 317. Bee "Frauds, statute of," Dec. Dig. (Key-No.) §§ 7-12; Cent. Dig. §§ 7-12.

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(2) The liability of the third person, therefore, must continue.

(b) A promise which contemplates payment out of the debtor's property in the hands of the promisor is not within the statute.

(c) Nor is a promise to the debtor to pay his debt.

(d) Nor, according to the weight of authority, does the statute apply where the leading object of the promisor is to subserve some purpose of his own, and his promise is merely incidental.

(e) By the weight of authority a contract of indemnity is not within the statute, although if the promise is to answer for another's debt, it is within the statute, notwithstanding it is in the form of a contract of indemnity.

"Debt, Default, or Miscarriage"

The words "debt, default, or miscarriage" include all liabilities of a third person, however they may arise, and therefore include liabilities arising out of a wrong or tort, as well as those arising out of contract.23 They also include prospective as well as existing ' liabilities. "If the future primary liability of a principal is contemplated as the basis of the promise of a guarantor, such promise is within the statute of frauds, precisely as it would be if the liability existed when the promise was made."24 Nor does it matter that the debt or obligation of the third party is voidable by him.25

"Of Another Person"

The promise contemplated by the statute is a promise to answer for the debt, default, or miscarriage of "another person;" or, in other words, a contract of guaranty or suretyship. The statute does not apply to original promises or undertakings, though the benefit accrues to another than the promisor. There must be three parties in contemplation, - a person who is actually or prospectively liable to another person, and a third person who promises the creditor to answer for the debt or liability; or, in other words, a creditor, a principal debtor, and a guarantor of the debt, or surety.26 This distinction is well illustrated by an old case in which it was held that a promise to pay if the promisee will lend money to a third person is within the statute, but a promise to pay if the promisee will pay money to a third person is without.27 Although there is considerable conflict among the courts in their construction of this clause of the statute, the following rules for determining whether a contract comes within it are established by the weight of authority:

23 Kirkham v. Marter, 2 Barn. & Ald. 613, 18 E. C. L. 212, 21 Rev. Rep. 416; Turner v. Hubbell, 2 Day (Conn.) 457, 2 Am. Dee. 115; Mountstephen v. Lake-man, L. R. 7 Q. B. 202. A promise, however, to give notice to another before settling with a third party who is indebted to the promisee is not within the statute. Towne v. Grover, 9 Pick. (Mass.) 306. See "Frauds, Statute of," Dec. Dig. (Key-No.) § 14,; Cent. Dig. § 14.

24 Mead v. Watson, 57 Vt. 426. And see Matson v. Wharam, 2 Term R. 80; Matthews v. Milton, 4 Yerg. (Tenn.) 576, 26 Am. Dec. 247. See "Frauds, Statute of," Dec. Dig. (Key-No.) § 14; Cent. Dig. § 14.

25 Dexter v. Blanchard, 11 Allen (Mass.) 365; Brown v. Farmers' & Merchants' Nat. Bank, 88 Tex. 265, 31 S. W. 285, 33 L. R. A. 359 and note. Contra, King v. Summitt, 73 Ind. 312, 38 Am. Rep. 145. See "Frauds, Statute of," Dec. Dig. (Key-No.) §§ 14, 15; Cent. Dig. §§ 14-16.

(a) There must be either a present or prospective liability of a third person for which the promisor agrees to answer.28 If the promisor becomes himself primarily, and not collaterally, liable, the promise is not within the statute, though the benefit from the transaction accrues to a third person.29 If, for instance, two persons come into a store, and one buys, and the other, to gain him credit, promises the seller, "If he does not pay you, I will," this is a collateral undertaking, and must be in writing; but if he says, "Let him have the goods, and I will pay," or "I will see you paid," and credit is given to him alone, he is himself the buyer, and the undertaking is original.30 In other words, whether the promise in such a case is need not be in writing.34 To take the promise out of the statute, the original debtor's release must be absolute. If the creditor may still hold him liable at his option, the promise must be in writing.35 Novations fall within this class of agreements.

26 NUGENT v. WOLFE, 111 Pa. 471, 4 Atl. 15, 56 Am. Rep. 291, Throckmorton, Cas. Contracts, 62. See "Frauds, Statute of," Dec. Dig. (Key-No.) § 21; Cent. Dig. § 88.

27 Butcher v. Andrews, Comberbach, 473 (Holt, C. J.). See "Frauds, Statute of," Dec. Dig. (Key-No.) §§ 20, 21; Cent. Dig. §§ 82, 88.

28 Mease v. Wagner, 1 McCord (S. C.) 395. See "Frauds, Statute of," Dec. Dig. (Key-No.) § 15; Cent. Dig. §§ 15, 16.

29 Hargreaves v. Parsons, 13 Mees. & Wels. 561; Baldwin v. Hlers, 73 Ga. 739; Morris v. Osterhout, 55 Mich. 262, 21 N. W. 339; De Witt v. Root, 18 Neb. 507, 26 N. W. 3G0. Where an agent has become liable to his principal by leuding money contrary to Instructions, his guaranty of the loan is not within the statute. Crane v. Wheeler, 48 Minn. 207, 50 N. W. 1033. A promise by a married woman to pay her parent for her support was held a promise to pay her husband's debt. Perkins v. Westcoat, 3 Colo. App. 33S, 33 Pac. 139. See "Frauds, Statute of," Dec. Dig. (Key-No.) § 28; Cent. Dig. §§ 18, 19.