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.
§ 214 b. The simplest illustration of it is in that class of cases where the defendant owes a third party, and the third party owes the plaintiff, and by agreement between the three parties the defendant is to pay the amount of his debt directly to the plaintiff, although the third party remains liable to the plaintiff; the promise of the defendant, being really a promise seems to be irreconcilable with this doctrine. The facts were these. Davis, being a large creditor of a silver mining company, and having given an order for silver which the company had been paid for by Davis, but had not delivered to him, the mine, by agreement between the company and Davis, was to be put under the management of Patrick by a power revocable by Davis only; in pursuance of this power, and upon the promise of Davis to pay him for doing so, Patrick mined and transported and delivered to Davis the silver which had been ordered by him from the company. Davis refused to pay, and set up the Statute of Frauds, stating that his promise to pay Patrick was collateral to the obligation of the mining company to pay him. The evidence tended strongly to show that Patrick gave credit solely to Davis: but still the company was not released from its obligation. The court held the defendant's agreement to be not within the statute, because "the promisor had a personal, immediate, and pecuniary interest in the transaction," and was therefore a party "to be benefited by the performance of the promise"; that "the promise, though operating upon the debt of the third party, was also and mainly for the benefit of the promisor." The transaction between Davis and Patrick seems to have been simply that Patrick agreed to do work for Davis, and Davis, in consideration of that work, agreed to pay him for it and also for past work, the company being also liable to the same extent. The court cites no cases in support of its decision except Emerson v. Slater, 22 How. 43. which has been already considered, ante, § 212, note and § 214. Winn v. Hilver, 43 Mo. App 139, is similar to Davis v. Patrick ,and decided in the same way. 1 Williams's Saunders, 211, note.
§ 214 c. The case of Furbish v. Goodnow, in Massachusetts, demands examination under this head. According to the report, one Redding was indebted to the plaintiff on a promissory note, and by agreement between the plaintiff and Redding and the defendants, Redding conveyed certain real estate to the defendant, and, as part of the consideration therefor, the defendant promised to pay the plaintiff the amount of the note. If the substance of the transaction was, as it appears to have been, that the defendant became indebted to Redding in the amount which Redding owed to the plaintiff, and, by agreement between the three, the defendant was to pay that amount directly to the plaintiff, the Statute of Frauds by an unbroken course of decisions (unless Curtis v. Brown 3 be an exception) fails to apply. It was held, however, that it did apply. There is no allusion in the opinion to the question whether the defendant's promise was not in effect to pay his own debt. The court say, in the first place, that "if the principal and immediate object of the transaction is to benefit the promisor, not to secure the debt of another person, the promise is considered not as collateral to the debt of another, but as creating an original debt from the promisor, which is not within the statute, although one effect of its payment may be to discharge the debt of another."1 We have already (ante, § 214) remarked upon the inadequacy of this rule for determining whether the statute applies. But the court say farther: "When the original debtor remains liable, yet if the creditor, in consideration of the new promise, releases some interest or advantage relating to or affecting the original debt, and enuring to the benefit of the new promisor, his promise is considered as a promise to answer for his own debt, and the case is not within the statute. But if no [such] consideration moves from the creditor to the new promisor [the defendant], and the original debtor still remains liable for the debt, the fact that the promisee [the plaintiff] gives up something to that debtor, or that a transfer of property is made or other consideration moves from that debtor to the new promisor [the defendant] to induce the latter to make the new promise, does not make this promise the less a promise to answer for the debt of another; but, on the contrary, the fact that the only new consideration either enures to the benefit of that other person [the original debtor], or is paid by him to the new promisor [the defendant], shows that the object of the new promise is to answer for his debt." It is certainly true that if the creditor, in consideration of the new promise, release some interest or advantage relating to or affecting the original debt and enuring to the benefit of the new promisor, the statute does not apply; and that, notwithstanding such release, if it does not enure to his benefit the statute does apply. But why is this? It is because where the release enures to his benefit the substance of the transaction is a purchase by him of the interest or advantage so released, at the price of the amount of the original debt; so that he becomes, as such purchaser, a debtor himself to the plaintiff to the same amount; and his promise in effect is to pay his own debt, although expressed as an agreement to pay that of the original debtor. On the other hand, where the interest or security released does not enure to the benefit of the new promisor, he incurs no debt. The release is a sufficient consideration for his promise to pay the debt of the original debtor, but that is not enough to prevent the application of the statute. Now, if this explanation of these cases is the right one, the next question is, Does the same rule apply to a defendant's promise to pay his own debt, whether it be to pay it to his own creditor or to the nominee of that creditor? In the cases of a release of an interest or security relating to the debt, which release enures to the benefit of the new promisor, it is his own creditor that he agrees to pay. In the case of Furbish v. Goodnow it was the nominee of his own creditor that the defendant agreed to pay. What is the difference? If there be none, it is difficult to see on what ground the decision in Furbish v. Goodnow can rest.1