It is often said that a new promise is presumptively within the Statute of Frauds unless the original debt is discharged. As all the authorities admit that there are cases where this presumption is inapplicable, the test is not valuable unless some rule can be given indicating when the presumption does not apply.
The importance of the discharge of the original obligation is this: If the new promisor as well as the original promisor is liable, whatever may be the form of the promisor in substance, one of these three situations must exist: (1) the new promisor must become surety for the old obligor, (2) the old obligor must have become surety for the new promisor, or (3) both parties must be beneficially interested bo that each is surety for the other as to a portion of the obligation. Therefore, unless the original obligor falls back into the position of surety, the new promise is either in whole or in part to pay the debt of another, if the original obligation still exists.
It is submitted, therefore, that on principle the test whether the original debt is discharged should be applicable unless the new promisor has assumed the debt as his own; that is, unless he has come into the position of primary obligor and the original debtor has fallen into the position of a surety, the promise should be held within the Statute. In fact, the law both of England and of the United States has narrowed the boundaries of the statute somewhat more closely than this.
In England, the surrender of property by the creditor, and in many jurisdictions in the United States not only this but any new consideration beneficial to the new promisor and received by him, is sufficient to validate an oral promise, although the original debt has not been discharged.16