This section is from the book "A Treatise On The Construction Of The Statute Of Frauds", by Causten Browne. Also available from Amazon: A treatise on the construction of the Statute of frauds.
§ 176. The case of D'Wolf v. Rabaud, decided by the in hand; but for the convenience of trade and commerce. Fides est servanda. An acceptance for the honor of the drawer shall bind the acceptor: so shall a verbal acceptance." In the absence of all explanation of, or even allusion to, his language at the first hearing, it is not to be supposed that his Lordship considered himself as being really inconsistent. The remarks just quoted seem to be justly applicable only to ordinary business securities, and not to engagements for the mere accommodation of others, on consideration of personal kindness. The decision of the Supreme Court of the United States in Townsley v. Sumrall, 2 Peters 170, proceeds upon the assumption that a verbal accommodation acceptance is within the statute, but holds that it is taken out of the statute by the circumstance that the party to whom the promise was made paid money upon the strength of it (though not to the promisor). This is an extreme application of the modern doctrine that a new and original consideration moving between the parties to a guaranty (or, as in this case, moving only from one of them though not to the other) takes it out of the statute; and as, in all cases of the making of a guaranty, the party to whom it is given of course parts with some value thereupon, it must be said with the utmost deference that it is difficult to see what is left of the Statute of Frauds, as it regards this class of contracts, if the rule is to be so applied.
1 This is discussed supra, §§ 159-162.
2 Thomas v. Welles, 1 Root 57. Compare Reader v. Kingham, 13 C. B. x. s. 344; Gay v. State, 7 Kans. 246.
United States Supreme Court, was this. The defendant, James D'Wolf (plaintiff in error), in consideration that Rabaud & Co., the plaintiffs below, would authorize George D'Wolf to draw upon them for 100,000 francs, undertook and promised that he would ship, for the account of George D'Wolf, on board such vessel as he (George D'Wolf) should direct, 500 boxes of sugar consigned to the plaintiffs at Marseilles. The draft was made and honored, but the defendant failed to ship the sugar, and this action was brought to recover damages therefor. It was insisted for the defendant that the memorandum in writing signed by him did not show any consideration, but the court decided that it did; so it will be perceived that the determination whether the promise was within the statute as to answer for George D'Wolf's debt, was not indispensable to the case. The court, however, in their opinion, delivered by Mr. Justice Story, entertain that question, and conclude that the promise would have been binding without any written memorandum, putting the case thus: "If A. agree to advance B. a sum of money, for which B. is to be answerable, but at the same time it is expressed upon the undertaking that C. will do some act for the security of A., and enter into an agreement with A. for that purpose, it would scarcely seem a case of a mere collateral undertaking, but rather, if one might use the phrase, a trilateral contract. The contract of B. to repay the money is not coincident with nor the same contract with C. to do the act. Each is an original promise, though the one may be deemed subsidiary or secondary to the other."1 It appears a little doubtful from this language whether the promise of James D'Wolf to ship the sugars to Rabaud & Co. was or was not regarded by the court as, in its effect and substance, a promise to be answerable for their being reimbursed the money advanced to George D'Wolf; although, from the admission in the opinion that it was concurrent with George's liability, it is to be inferred that it was so regarded. And it would seem that such was clearly its character. It was a promise by the defendant to put into the hands of the plaintiffs a fund out of which the debt of George D'Wolf to them should be satisfied.1 If the defendant had performed his promise, and George had afterwards failed to repay the money advanced, it would have been repaid out of that fund, as, so to speak, the representative of James's engagement.
1 D'Wolf v. Rabaud, 1 Pet. (U. S.) 500.
§ 176 a. In this case, it is difficult to see why the promise to furnish sugar to the plaintiffs to pay the third party's debt with, in case of his default, is not as much a promise "to answer for" that debt as a promise to furnish money for the same purpose would have been. The distinction suggested by the court between the guarantor's contract to pay the third party's debt, and his contract to do "some act for the security" of the creditor in case the third party fails to pay, seems quite unsubstantial. If the act which the guarantor is to do upon the third party's default is an act intended and adapted to make the creditor whole for that default, whether it be to pay money, or to provide property from which it may be paid, or to render service of any kind equivalent in value, the promise to do such act is a promise " to answer for " that default, and must be proved by writing under the Statute of Frauds.2
§ 177. But it is not every promise, by the fulfilment of which a creditor is placed in a position to secure his debt, that is within the statute. When the promise is to indorse the note of the debtor, or accept his draft for his accommodation, the promisor engages to place himself in a position where he may be compelled to pay the debt; and where the promise is to furnish to the creditor a fund out of which the debt is to be secured, the fund is, according to the expression we have ventured to use, the representative of his own engagement to pay if the principal debtor does not. But the result of the decisions appears clearly to be, that, unless the promisor himself or his property is ultimately to be made liable in default of the principal debtor, the statute does not apply. For instance, an engagement by one who owes a party about to be sued by another, that he will not pay over without giving notice to the plaintiff, in order that the latter may attach the debt by the trustee process, is not within the statute,1 nor a promise, by one who has receipted for attached property, that it shall be returned on demand;2 for the whole effect of the promise in either case is to place at the plaintiff's disposal the debtor's own property and not that of the promisor. Again, where the defendant promised to procure some one else to sign a guaranty of the debt, the Court of Common Pleas held it not to be within the statute;3 and although the decision was put upon another ground, the case appears to illustrate the principle under consideration; for the whole effect of the promise was that the creditor should have, not the promisor's, but a third party's obligation to rely upon as collateral to that of the original debtor. True, where in these several cases the promisor failed to keep his engagement, he was held to pay the damages sustained thereby, but not necessarily to the amount of the original debt; and if he had fulfilled his promise, he would not then have paid, or made himself liable to pay, the debt; which latter appears to be a conclusive test as to whether his promise was within the statute.