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.
2 Orrell v. Coppock, 26 L. J. Ch. 269.
3 Fish v. Thomas, 5 Gray (Mass.) 45. See Headrick v. Wiseheart, 57 Ind. 129.
4 Taylor v. Hillyer, 3 Blackf. (Ind.) 433; Wagnon v. Clay, 1 A. K. Marsh. (Ky.) 257. In Georgia Co. v. Castleberry, 49 Ala. 104, the mere fact that a corporation was composed of the same persons as had formerly made up a partnership was held insufficient to make the corporation liable on the promise of its president to pay a debt of the firm.
5 McGill v. Dowdle, 33 Ark. 311.
6 Trustees of Free Schools v. Flint, 13 Met. (Mass.) 539; Rogers v. Waters, 2 Gill & J. (Md.) 64; Wyman v. Gray, 7 Harr. & J. (Md.) 409; Searight v. Payne, 2 Tenn. Ch. 175; Home National Bank v. Waterman 134 111. 461.
§ 165. The general principle, prevailing in all the cases under this branch of the Statute of Frauds, is, that wherever the defendant's promise is in effect to pay his own debt to the plaintiff, though that of a third person may be incidentally discharged, the promise need not be in writing. To this principle is often referred the common class of cases where the holder of a bill or note transfers it to his creditor, in entire or partial satisfaction of his debt, with a verbal undertaking as to its value or collectibility. Upon this undertaking, the creditor, as is well settled, can maintain an action, if the note turn out to be worth less than the holder had thus virtually warranted it to be.3 The decision of the
1 Peabody v. Harvey, 4 Conn. 119; Huntington v. Harvey, 4 Conn. 124.
2 Uhler v. Farmers' Nat. Bank, 64 Pa. St. 406. And see U. S. Bank v. Southard, 2 Harr. (N. J.) 473; Ashford v. Robinson, 8 Ired. (N. C.) Law, 114.
3 Lossee v. Williams, 6 Lans. (N. Y.) 228; Johnson v. Gilbert, 4 Hill (N. Y.) 178; Malone v. Keener, 44 Pa. St. 107; Barker v. Scudder, 56 Mo. 272; Wyman v. Goodrich, 26 Wisc. 21; Cardell v. McNiel, 21 N. Y. 336; Westcott v. Keeler, 4 Bosw. (N. Y.) 564; Mobile & Girard R. R. v. Jones, 57 Ga. 198; Bruce v. Burr, 67 N. Y. 237; Allen v. Eighmie, 21 Hun (N. Y.) 559; Milk v. Rich, 15 Hun (N. Y.) 178; Moore v. Stovall, 2 B. J. Lea (Tenn.) 543; Spann v. Cochrano, 63 Texas 240; Morris v. Gaines, 82 Texas 255; Wilson v. Vass, 54 Mo. App. 221; Bates v. Sabin, 64 Vt. 511; Eagle Machine Co. v. Shattuck, 53 Wisc. 455; King v. Summit, 73 Ind. 312; Indiana Mfg. Co. v. Porter, 75 Ind. 428; Has-singer v. Newman, 83 Ind. 124; Darst v. Bates, 95 111. 493; Sheldon v. Butler, 24 Minn. 513; Milks v. Rich, 80 N. Y. 269; Clopper v. Poland, Supreme Court of Massachusetts in Dows v. Swett,1 however, seems to call for a somewhat more precise statement of the principle governing the class of cases mentioned, with which it may, at first sight, seem to be in conflict. In that case the defendant owed the plaintiffs $200 for goods sold, and had given them a due-bill for the amount. The defendant proposed to the plaintiffs that they should give him up the due-bill, upon his procuring one Robinson to make a promissory note in the plaintiff's favor, which note the defendant orally agreed that he would pay at maturity, if Robinson did not. The plaintiffs consented to the arrangement, and gave up the due-bill to the defendant, who handed them at the same time the note of Robinson, payable to their order. After Robinson's failure to pay the note at maturity, this suit was brought against the defendant upon his verbal promise. The judge in the Superior Court, who heard the case without a jury, had found for the plaintiff for the amount of the note with interest, "upon and by reason solely of the verbal promise," which promise "was not to be considered as collateral to the debt of another, but as creating an original obligation from the promisor, - a part of the mode and manner in which he was to pay his own debt." The judge refused to rule, at defendant's request, that the plaintiff could not recover, and exception taken to this refusal was sustained by the Supreme Court on the ground that, upon the facts shown, "the only direct liability was that of Robinson upon his note; and the oral promise of the defendant to pay that note, if Robinson did not, was a collateral promise to pay Robinson's debt, and as such within the Statute of Frauds." 1
12 Neb. 69; Crane v. Wheeler, 48 Minn. 207. See Little v. Edwards, 69 Md. 499. In Taylor v. Soper, 53 Mich. 96, this rule was extended to cover the warranty by a third party of a note offered by its holder in payment of purchase money. See also Wilson v. Hentges, 29 Minn. 102, where the same principle was applied to the assignment by the owners of letters patent to the purchasers thereof of a contract of third parties to make the patented article for a certain price, with a verbal undertaking of the sellers to furnish the articles at that price, if the third party failed to do so.
1 Dows v. Swett, 120 Mass. 322.
§ 165 a. In this case, then, although the promise of the defendant was made in the course of a transaction entered into for the purpose of paying his own debt, it was held to be within the statute. But the distinguishing feature of the case is in the fact that the defendant was not the owner or holder of the note, and consequently there was no transfer by him to the plaintiffs of any property of his in satisfaction of his debt; whereas the class of decisions first spoken of stands upon the doctrine that when the owner of a promissory note prevails upon another to accept it in lieu of so much money, by what is virtually a warranty of the money value of the note so transferred, the transaction is like that of the transfer of any other property, with a promise that, if the transferee cannot get a certain sum for it, the other will make up the deficiency.
§ 166. Turning now to the language of the statute as to the nature of the promise to which it applies, we observe that the words are "any special promise." This term "special" seems to have no other effect than to show that express promises are referred to, and not promises implied by law. To the latter, whatever their nature, the statute does not apply.2