Attempts which have been made to differentiate new promises according to the character of the consideration given by the promisee have either been bo broadly inclusive as to cover in effect all kinds of consideration which would be valid at common law; or have distinguished between beneficial consideration received by the new promisor, and other legal considerations; or have still further restricted the kind of consideration essential for the validity of an oral promise, to the release of property held by the creditor as security and released by him to the promisor.26l But the distinction most vital in principle has not generally been observed. That distinction is between a consideration which is given and received as the equivalent of the debt, payment of which is promised; and, on the other hand, a consideration which is given merely as the equivalent for the risk which the promisor may run in being compelled to pay, either in the first place or ultimately, a debt due from another, and which that other, if solvent, can be compelled to pay either to the creditor or to the new promisor, if the latter is first charged. This distinction may be illustrated by several kinds of bargains:
26k In McCord v. Edward Hines Lumber Co., 124 Wis. 509, 102 N. W. 334, the court said: "The promise is void unless in writing. There are many dicts and some decisions indicating that this result may be escaped if there is a new consideration for the guaranty, or if such consideration consist of benefit to the guarantor. The statute, however, recognises no such exception, There must, on general principles, be new consideration for the promise of indemnity in any event to render it valid, written or unwritten; hence to say that the existence of such consideration alone takes the promise out of the statute is to deny the statute any force whatever. 1 Brandt, Suretyship (2d ed.), Sec. 60. Again, there are statements in the cases to support evasion of the statute if the leading object of the promisor is to benefit himself, or if the creditor principally relies on the guarantor. All such statements are misleading. None of such considerations will of themselves prevent the application of the statute if the promise is really to answer for the debt of another." These words were quoted with approval in Drovers' Deposit Nat. Bank v. Tichenor, 200 Fed. 318, 320. 26l See supra, Sec. 472.
1. The new promisor may propose to purchase property or rights and in return for them pay the debt as the price. Such a bargain presupposes that the consideration received is the equivalent, or bo regarded, of the debt. It is obvious that the creditor will never furnish consideration to this amount for a new promise. He already has the original promise, and if he is to furnish consideration equal in value to the amount of the debt, he will prefer to get not simply a new promise but the promise of a new debt, equal in amount to the old indebtedness. The debtor, however, or one acting in his interest, may be entirely willing to give the promisor consideration equal in value to the debt in return for the promisor's agreement to discharge it; and where such a bargain is made, the tatter's promise to pay the debt may be, and as matter of fact is, sometimes made to the debtor, sometimes to the creditor, and sometimes to both. Promises of this type are not within the statute.26m
26m This line of thought was followed in the opinion in Fullam v. Adams, 37 Vt. 391, 401.
"It is not true that in every esse where the promise is founded upon a new consideration moving wholly between the parties to the guaranty, the promise is taken out of the statute. It depends upon the transaction itself, the general object and purpose, or, as Lord Mansfield expressed it, on the ret gestoe. If the leading purpose and object be to guaranty, or become responsible for the payment of a third person's debt, then the promise is within the statute although it may be founded upon a consideration directly between the parties. It is almost impossible to imagine a case where a promise to pay the debt of another, for which he remains liable, upon a consideration moving wholly from the creditor and in which the debtor has no concern; where the leading object and purpose can be any other than to make the promisor the surety or guarantor of the debt. In such case no duty or obligation is imposed on the promisor as between him and the debtor; his obligation is wholly to the creditor, and rests entirely upon his promise or contract with him. It is scarcely reasonable to suppose one would part with a consideration belonging wholly to himself, where the value was equal to the amount of a debt due him from another, even to obtain the promise of a third person to pay it. If the consideration for the promise is much lees in value than the amount of the debt, it would afford a strong presumption that reliance was placed to some extent upon the chances that the debtor would pay it himself, and therefore the promisor not be called upon at all upon his undertaking. But the strong reason given why it is not a guaranty and a collateral prom-
2. It is equally possible, however, for a new promisor, who is seeking only his own business advantage, to promise to pay the creditor the debt due him from another, for a small present consideration advantageous to the promisor, if in addition thereto it is either agreed in fact or necessarily involved as matter of law that the new promisor on paying the debt shall become owner of a claim for that amount against the original debtor. It is cases of this latter kind which give rise to the greatest difficulty.
(3) finally, the new promisor may ask and receive as the onsideration for his promise something which is of no advantage to himself, but which he desires in order to help another.
Promises of which the consideration falls under the first heading are unquestionably outside the statute. Promises which fall within the third heading are equally clearly within the statute. On principle it would seem that promises which fall in the second class are also promises to answer for the debt of another. It may be questioned whether the statute has not been construed too narrowly in giving effect to any oral promise of this type. Undoubtedly, however, most jurisdictions do concede effect to some such promises: the requirement in some jurisdictions being that some beneficial consideration shall have moved directly to the promisor as distinguished ise is, that it should be treated as a purchase of the consideration, and when payment is made it is really paying for property purchased, or whatever else the consideration may be. But if so, then when he has made the payment he has only paid for what he received of the creditor, and the debt is just as much due as before, and may be collected by the creditor of the debtor, and neither would payment, of the original debt by the debtor afford any protection to the party making the new promise from paying for what he has purchased of the creditor. But if the parties in entering into the new contract really contemplate a sale of property from one to the other, or the performance of services by one for the other for a stipulated price to be paid, it is scarcely comprehensible why the contract should assume the form of a promise to pay the debt of another, and especially where the amount of such debt is unknown and unliquidated. As stated earlier in this opinion, if this was the real transaction it would have nothing to do with the statute, because really it would have nothing to do with the debt of another. But in such case the purpose and intent is clear to enter into a contract to guaranty or answer for the debt of another, and what is paid or done as a consideration is for that purpose simply, and to call it a purchase and sale is a simple perversion of those terms." from the debtor; in other jurisdictions that the consideration, whatever its character, shall have been sought for the business advantage of the promisor.26n
It is probable also that most jurisdictions would hold that any promise, where the consideration is of this sort, falls within the statute if it is in terms conditional on a prior default by the original debtor.