The words of the statute "special promise to answer for the debt, etc., of another" may fairly be supposed to have been used to distinguish the liability of one who had become a debtor irrespective of contract from the liability of one who had made himself liable in special assumpsit. The statute therefore does not invalidate obligations imposed by law, without a promise in fact, to satisfy the debt of another.65
So where property has been put in the hands of another under an agreement to apply it to the payment of a debt or debts, a promise to the creditor to make such an application in his favor is not within the statute. The duty of the promisor is that of a trustee and does not depend upon a special promise.66 If, however, the promisor undertakes not merely to apply the property in Ms hands, but taking the risk of its sufficiency promises the creditor absolutely to pay his claim, the case is none the less within the statute because the promisor expects to reimburse himself from the property in his hands.67 Such a case must be sharply distinguished from one where the new promisor has received property not simply as an indemnity against possible liability but has purchased it and has assumed as part of the price the obligation of paying certain debts of the grantor.68 It is essential for the validity of an oral promise that it shall not exceed in scope the obligation which the law imposes upon the promisor irrespective of his promise. Accordingly a promise to perform immediately a duty which will rest upon the promisor only in the future is within the statute.69
65Sage v. Wilcox, 6 Conn. 81, 85; Allen v. Pryor, 3 A. K. Marsh. 305, 306; Pike v. Brown, 7 Cuah. 133, 136; Peek v. Powell, 156 N. G. 553, 557, 73 So.234.
66Andrews v. Smith, 2 C. M. 4 R. 627; Goddard v. Mockbee, 5 Crunch, C. C. 666; Hitchcock v. Lukens, 8 Port. 333; Woodruff v. Scaife, S3 Ala. 152, 3 So. 311; Lucas v. Payne, 7 Cal. 92; Mclntue v. Schiffer, 31 Col. 246, 72 Pac. 1056; Hamill v. Hall, 4 Colo. App. 290, 35 Pan. 927; Ledbetter v. McGhees, 84 Ga. 227, 10 S. E. 727; Prather v. Vineyard, 9 111. 40 (see also Power v. Rankin, 114 111. 52, 29 N. E. 185); Hilton v. Dinsmore, 21 Me. 410; Mitts v. McMorran, 64 Mich. 664, 31 N. W. 521, 85 Mich. 94, 48 N. W. 288; Deal v. Bank, 79 Mo. App. 262, 178 S. W. 258; Dilts v. Parke, 4 N. J. I.. (1 South.) 219; May v. National Bank, 9 Hun, 108; Phelps v. Rows, 76 Hun, 414, 27 N. Y. 8. 89; Scberaer v. Muirhead, 84 N. Y. S. 159;
Draughan v. Bunting, 9 Ired. 10; Mason v. Wilson, 84 N. C. 61, 37 Am. Rep. 612; Peele v. Powell, 156 N. C. 553, 557, 73 So. 234; Stoudt v. Hine, 45 Pa. 30; Dock v. Boyd, 93 Pa. 92; Smith v. Exchange Bank, 110 Pa. 508, 1 Atl. 760; Fehlinger v. Wood, 134 Pa. 517, 524, 19 Atl. 746; Peck v. Goff, 18 R. I. 94, 25 Atl. 690; Fullam v. Adams, 37 Vt. 391; Pirie v. Granite Sav. Bank & Trust Co., 91 Vt. 304, 100 Atl. 676; Johnson v. Bank of Sun Prairie, 155 Wis. 603, 145 N. W. 178. But see contra Few v. Hilsman, 18 Ga. App. 207, 89 S. E. 79.
67 Hughes v. Lawson, 31 Ark. 613; Temple v. Bush, 76 Conn. 41, 56 Atl. 557; Jackson v. Rayner, 12 Johns. 291; Belknap v. Bender, 75 N. Y. 446, 31 Am. Rep. 476; Ackley v. Parmenter, 98 N. Y. 425, 50 Am. Rep. 693; First Nat. Bank v. Chalmers, 144 N. Y. 432, 435, 39 N. E. 331; McKenrie v. Nat. Bank, 9 Wash. 442, 37 Pac. 668. In Becker p. Krank, 75 N. Y. App. Div.
But a new promise which does not go beyond the trustee's legal duty, is outside the statute. If property has been turned over to the new promisor to hold upon trust and not simply upon a revocable agency, the fact that the trust contemplates that the property shall be reduced to cash before payment is made to the creditor who is the beneficiary of the trust, should not invalidate an oral promise to make payment according to the terms of the trust even though the promise is made prior to the liquidation of the property. An oral promise to pay in any event is within the statute unless the trustee has become liable; but such a promise to pay on a particular contingency if a trust existing at the time of the promise requires that the trustee shall pay on that contingency, is unobjectionable.70
Indeed, even though the promisor has not received property of the debtor at the time he makes the promise, his undertaking is not within the statute, if confined to paying from property which the promisor may receive applicable to the debt in question.71 The matter may be summarized by saying that when performance of the promise cannot involve a payment out of the promisor's own funds or property, the promise is not within the statute, for the promisor is not in any true sense agreeing to answer for the debt of another. On the other hand, a promise to apply towards the payment of a debt of another a particular fund belonging to the promisor is as fully within the statute as an absolute promise without reference to a fund.72
191, 194, the court said: "No case is cited, nor have 1 been able to find any, holding that a mere security by way of mortgage or otherwise given to indemnify one who promises to pay the debt of another in case he does pay it makes such promise an original undertaking between the creditor and promisor, so as to take the case out of the Statute of Frauds."
68 As to such cases, see infra, Sec. 478.
69 In Belknap v. Bender, 75 N. Y. 446, 462, the court said: "Suppose a voluntary assignee of an insolvent debtor after he has taken possession of the property assigned, but before he has converted it into money, and before the duty to pay has arisen, promises without any further or new consideration to pay the debt of one of the preferred creditors, could such a promise be enforced? Suppose one takes a conveyance of real estate from a debtor upon the agreement with him that he will rent it, and accumulate the rent for ten years, and then pay the net amount to his creditors, and the next day without any new consideration he promises at once to pay the creditors, could such a promise be enforced?" See also to the same effect First Nat. Bank v. Chalmers, 144 N. Y. 432, 435, 39 N. E. 331.
70 Hitchcock v. Lukens, 8 Port. 333; Armstrong v. First Nat. Bank (Mo. App), 195 S. W. 562; Phelps v. Howe, 75 Hun, 414, 27 N. Y. S. 89; Mason v. Wilson, 84 N. C. 51,37 Am. Rep. 612.