This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
(4) Some courts hold that if A's promise rests on a new consideration, distinct from C's liability the statute does not apply, whether the consideration is a benefit to the promisor or a detriment to the promisee.1 Some of the states which adopt this theory have done so as an extension of the theory discussed in the preceding section, where such extension is made necessary to uphold the promise sought to be enforced. This principle is sometimes invoked where strictly it is not necessary. Thus where B bought an engine of C, under a guaranty as to its quality and a promise to deliver it, and at C's request B made his note for such machine payable to A, A guaranteeing performance of C's contract, B could set up C's breach in an action by
7 Graves v. Shulman, 59 Ala. 406.
1 Chapline v. Atkinson, 45 Ark. 67; 55 Am. Rep. 531; Hughes v. Lawson, 31 Ark. 613; Kurtz v. Adams, 12 Ark. 174; Craft v. Ken-drick, 39 Fla. 90; 21 So. 803; Car-raher v. Allen, 112 la. 168; 83 N. W. 902; Creel v. Bell, 2 J. J. Mar. (Ky.) 309; Dearborn v. Parks. 5 Greenl. (Me.) 81; 17 Am. Dec. 206; Jones v. Hardesty, 10 G. & J. (Md.)
404; 32 Am. Dec. 180; Swayne v. Hill, 59 Neb. 652; 81 N. W. 855; Leonard v. Vredenburgh, 8 Johns. (N. Y.) 29; 5 Am. Dec. 317; White-hurst v. Hyman, 90 X. C. 487; Cooper v. Chambers, 4 Dev. L. (N. C.) 261; 25 Am. Dec. 710; Tindal v. Touchberry, 3 Strobh. (S. C.) 177; 49 Am. Dec. 637; Templeton v. Bas-com, 33 Vt. 132.
A.2 If this theory is literally enforced, every contract of guaranty made after the original debt is incurred is unaffected by the statute; since at Common Law it must be supported by a consideration, which if the original debt has been already incurred must necessarily be a new and distinct consideration; and under this theory the statute requires nothing more. The statute can, therefore, apply only to cases where the liability as guarantor was incurred at the same time as the liability of the principal debtor. For these reasons this theory may be said to be discredited by modern decisions and the states which have entertained it are passing into the second or third classes.3