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.
Barker v. Bucklin, 2 Demo (N. Y.) 45; Chitty on Contracts, 450; Lamp-son v. Hobart, 28 Vt. 697; Cross v. Richardson, 30 Vt. 641; Hassinger v. Newman, 83 Ind. 124; Birchell v. Neaster, 36 Ohio St. 331; White v. Rintoul, 108 N. Y. 222.
1 Nelson v. Boynton, 3 Met. (Mass.) 396, per Shaw, C. J. In another later case, decided in the Supreme Court of Massachusetts, we find the true principle applied upon the following facts. The plaintiff being the owner of a major part of the stock in an incorporated company, and holding a note of the company for 83,350, and being also indorsee on their notes for about 84,000, agreed with the defendant to transfer to him the shares and the note of $3,350; in consideration of which the defendant conveyed to him a certain farm, and verbally undertook to save him harmless on his indorsements. The plaintiff, having afterwards taken up the indorsed notes, brought his action against the defendant on his promise to save him harmless. It was contended that the promise was void by the statute. The court considered that, as a promise made to the debtor, the statute could, for that reason, have no application to it (ante, § 188), but held that, if it should be construed as a promise, the effect of which, if performed, would amount to a guaranty that the company as promisors should pay the notes and thus save the plaintiff from his liability thereon as indorser, still this would not, under the circumstances of the case, be within the statute. Chief Justice Shaw, delivering judgment, says: "Was he [the defendant] to take the plaintiff's to them; and though it may terminate in a liability to pay the debt of another, that is not the immediate object for which the consideration is given; and the case resembles in this respect those of Williams v. Leper, and Castling v. Aubert." l And in Wolff v. Koppel, in the Supreme Court of New York, Cowen, J. (whose opinion Baron Parke speaks of as a very able one, and adopts as expressing his own views upon the subject), takes the same ground, remarking that the contract of the factor in such a case has "an immediate respect to his own duty or obligation. The debt of another comes incidentally as a measure of damages." 2 The observation of Parke, B., that if the defendants in the case before him had merely, and without being connected with the sale, guaranteed the debt owing or performance of the contract by the third party for a percentage, doubtless their engagement would have required a writing, is especially noteworthy; for such a case would present the naked point of a new and independent consideration moving from the creditor to the guarantor, and thus the rule which has been referred to, that such a consideration of itself takes a guaranty out of the statute, is shown to be distinctly denied by this most respectable English authority.3
§ 213. Upon the principle just stated, the Court of Exchequer have recently settled the question, whether the guaranty of a factor selling on a del credere commission was within the statute, as a promise to answer for those to whom his sales were made. Parke, B., delivered the opinion of the court to the effect that it was not. "Doubtless," he said, "if they [the factors defendant] had for a percentage guaranteed the debt owing, or performance of the contract by the vendee, being totally unconnected with the sale, they would not be liable without a note in writing signed by them; but being the agents to negotiate the sale, the commission is paid in respect of that employment; a higher reward is paid in consideration of their taking greater care in sales to their customers, and precluding all question whether the loss arose from negligence or not, and also for assuming a greater share of responsibility than ordinary agents, namely, responsibility for the solvency and performance of their contracts by their vendees. This is the main object of the reward being given large interest in the stock and property of the Iron Company, constituting the natural fund out of which these indorsed notes were to be paid, without taking it subject to the incumbrances? Paying the debts of the company, after the defendant had become a shareholder of more than half, would in effect, and to the extent of his interest in those shares, enure to his own direct benefit. We are therefore of opinion, that this was a new and original contract between these parties, originating in a new consideration moving from the plaintiff to the defendant, in effect placing the funds in the hands of the defendant, out of which these notes, in due course of business, would be expected to be paid." Alger v. Scoville, 1 Gray 397. These cases are approved in Jepherson v. Hunt, 2 Allen (Mass.) 417. See also Fitzgerald v. Dressier, 7 C. B. n. s. 374. In Kingsley v. Balcome, 4 Barb. (N. Y.) 138, Sill, J., says: "The true rule is that the new ' original consideration spoken of must be such as to shift the actual indebtedness to the new promisor. So that as between him and the original debtor he must be bound to pay the debt as his own, the latter standing to him in the relation of surety." The Supreme Court of Indiana say the new consideration must be "of such a character that it would support a promise to the plaintiff for the payment of the same sum of money, without reference to any debt from another." Chandler v. Davidson, 6 Blackf. 367. Emerson v. Slater, 22 Howard 28. As to this rule for determining whether the statute applies, see post, § 214. See also Lookout Mt. R. R. v. Houston, 85 Tenn. 224.
§ 214. The difficulty which some of the cases decided since the earlier editions of this treatise have shown to exist in applying admitted rules, will justify a re-examination of those rules as they regard cases in which the original debtor remains liable. It is frequently said that, where the leading object of the defendant in agreeing to pay or answer for the third party's debt is to benefit himself, the statute does not apply.1 It is certainly true that in those cases where the promise of guaranty, although the original debt continues, is unaffected by the statute, the leading object of the defendant in making that promise will appear to be to benefit himself. But when we put it conversely, and attempt to set up the object of the defendant as a test of the application of the statute, we find that it does not practically answer that purpose. For what is a leading object as distinguished from a secondary one, in any sense in which a court can define or a jury ascertain it? And how can the object of making a promise be made the test of its legal obligation? We must come after all to the question, what state of facts implies, in law, the existence of such an object or purpose. Again, it is frequently said that considerations of a certain sort moving between the original creditor and the new promisor make the case one to which the statute does not apply; and this is sometimes said by courts which do not profess to recognize the notion which once prevailed, that "any new and independent consideration of benefit or harm moving between the newly contracting parties" takes the case out of the statute. But the application of the statute does not depend upon the question from whom the consideration moves, nor upon the question what sort of consideration it is; for the contract of guaranty, like every other contract, requires to be supported by a valid consideration, and one valid consideration, as such, is as good as another. "The question, indeed, is, What is the promise? Not, what the consideration for that promise is; for it is plain that the nature of the consideration cannot affect the terms of the promise itself, unless it be an extinguishment of the liability of the original party."1 So in a case in Pennsylvania,2 the Supreme Court say that it can make no difference that the new consideration moves from the promisee to the promisor, and the danger which the statute is intended to guard against exists, "no matter whence the consideration of the contract proceeded or to whom it