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.
§ 163. It was once held that if a verbal guaranty was prospective, that is, to answer for a debt, default, or miscarriage not yet incurred or suffered, the statute did not apply; because, at the time the defendant's promise was made, there was no existing liability on the part of another person to which it could be collateral. Such was the decision of Lord Mansfield in Mowbray v. Cunningham, where the promise was to be responsible for goods to be thereafter supplied to a third person.2 But in the following year, he appears to have distinctly abandoned that doctrine,3 and it has certainly never prevailed since. Buller, J., in a subsequent case, said that the authorities against it were not to be shaken; at the same time stating that, if it were a new question, the bearing of his mind would be the other way, for that Lord Mansfield's reasoning in Mowbray v. Cunningham had struck him very forcibly.4 There seems, however, to be what he was previously liable, only jointly with others, to pay, as in the case of a verbal engagement by one partner to pay a debt owing by his firm; here the statute does not require the promise to be in writing.1 And the same is true of the promise of one trustee to reimburse the cestui for the default of all;2 also of the promise of one of the owners of a ship to material men to pay their claim for materials for which the ship was responsible, and which was already, therefore, the promisor's debt sub modo.3 In the converse case of an individual debt owing by one partner, the verbal engagement of another partner to pay it would not be binding;4 although a ratification by the firm of a debt contracted without authority by one of its members in the firm name (such ratification being sufficient to make the firm originally liable, as if the authority had existed from the beginning) may undoubtedly be made by the conduct of the firm, or otherwise, without writing.6 Where a member of a corporate body assumes to pay its debts, his promise, if verbal, cannot be enforced, there being no pre-existing liability.6 It has been held that where an indorser who has been discharged, for instance, by the laches of the holder, renews his engagement verbally, this renewal is within the statute;1 but the better doctrine seems to be that, inasmuch as the promise made by an ordinary indorser is an original and independent promise to pay the sum named in the instrument, upon the contingency that the maker or acceptor fails to perform his engagement, the indorser's subsequent promise is but a waiver of the technical bar attaching to his former original liability, and should be treated as original likewise, and not covered by the statute.2
1 In re Tozer's Estate, 46 Mich. 299.
2 Mowbray (or Mawbray) v. Cunniugham, Hilary Term, 1773, cited in Jones v. Cooper, infra.
3 Jones v. Cooper, 1 Cowp. 227. See Parsons v. Walter, cited in Peckham v. Faria, 3 Dougl. 14, note; Mallet v. Bateman, L. R. 1 C. P. 163; Mountstephen v. Lakernan, L. R. 7 Q. B. 196, 202, per Willes, J.
4 Matson v. Wharam, 2 Term R. 80. The later doctrine prevails in the United States. Cahill v. Bigelow, 18 Pick. (Mass.) 369, which in this but little difficulty in considering the guaranty, in such an instance, as suspended until the debt to which it is to apply shall be actually incurred; a view in which these cases may be entirely reconciled with Read v. Nash; for there, not only was there no debt or liability incurred by any third party at the time of the defendant's engagement, but none was ever to be incurred after that time to which the defendant's engagement could attach.
§ 164. It is obvious that, if the guarantor was already personally liable to pay the debt, his engagement to pay it if a third person does not cannot afford him protection on the ground of the Statute of Frauds. Although in form perhaps a guaranty, it is virtually an engagement to pay his own debt, and is binding without writing.1 The same is true of those cases where the promise of the defendant is to pay respect overrules Perley v. Spring, 12 Mass. 297; Matthews v. Milton, 4 Yerg. (Tenu.) 579; Cole v. Hutchinson, 34 Minn. 410; Mead v. Watson, 57 Vt. 426. But see Tighe v. Morrison, 116 N. Y. 263.
1 Hoover v. Morris, 3 Ohio 76; Tarbell v. Stevens, 7 Iowa 163. In the case of Macrory v. Scott, 5 Exch. 907, a judgment by consent had been obtained by the plaintiff against the defendant on his agreement of suretyship for Scott Brothers, to secure the payment of money due from Scott Brothers to the plaintiff, and to be advanced by him to them. An arrangement was made between the plaintiff and defendant and Scott Brothers that they should be released from their liability for advances which had been already previously made, and that the plaintiff should make them further advances, for which the defendant agreed verbally that the judgment should stand as security. In an action on the judgment, after failure by Scott Brothers to repay these advances, it was contended by the defendant that his agreement to allow the judgment to stand as security therefor was within the Statute of Frauds. A majority of the court held that a certain writing made by the defendant was a sufficient memorandum of his agreement; but Parke, B., and Martin, B., took occasion to declare their opinion that the statute did not apply to the defendant's agreement. Parke, B., said that the case fell within the rule of Castling v. Aubert (vide, post §§ 202, 203). Martin, B., said: "It is not an undertaking to answer for the debt, default, or miscarriage of another, but an agreement that a certain existing obligation shall continue.^ Note, however, that the obligation of defendant to pay the judgment as surety for the old advances fell when the third party's liability for their advances was released.
1 Stephens v. Squire, 5 Mod. 205; Howes v. Martin, 1 Esp. 162; Files v. McLeod, 14 Ala. 611; Aiken v. Duren, 2 Nott & McC. (S. C.) 370; Durham v. Manrow, 2 N. Y. 541, per Strong, J.; Rice v. Barry, 2 Cranch (C. C.) 447; Hopkins v. Carr, 31 Ind. 260. See Batson v. King, 4 Hurl. & N. 739; Bundy v. Bruce, 61 Vt. 619; Weatherly v. Hardman, 68 Ga-592; Loring v. Dixon, 56 Texas 75.