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.
1 Caballero v. Slater, 23 L. J. C. P. 68.
2 Hawes v. Armstrong, 1 Bing. N. R. 761.
3 Stadt v. Lill, 9 East 348; 8. c. at nisi prius, nom. Stapp v. Lill, 1 Camp. 242; Church v. Brown, 21 N. Y. 315; Benedict v. Sherill, Hill & D. (N. Y.) 219; Williams v. Ketchum, 19 Wisc. 231; Young v. Brown, 53 Wisc. 333; City Bank v. Phelps, 86 N. Y. 484.
4 Ante, § 191. " order to procure, the giving of credit to the principal debtor, the consideration of the latter's engagement enures to, and sustains, that of the guarantor also. But if the words used are such that the court cannot by any effort of construction pronounce that they import either a debt already incurred or a credit to be thereafter allowed, the memorandum must be held insufficient, if no other means of arriving at the consideration be afforded by it.1 Again, the following memorandum: "I, the undersigned, do hereby agree to bind myself to be security to you for Mr. J. C, late in the employ of Mr. P., for whatever (while in your employ) you may entrust him with, to the amount of £50, in case of default to make the same good," signed by the defendant, was held sufficient. It was argued that the only consideration must be that the plaintiff was bound to take J. C. into his service; whereas by the agreement he might or might not be bound to do so or he might have already done so; consequently, there being no mutuality, the contract was not binding. But Chief Justice Tindal said: "I think you lay down your rule too largely. The written agreement must show the consideration, but it need not show 'mutuality.' If you can by reasonable construction collect from it the consideration, it is enough. In this case, it rather appears from the words of the contract, mentioning C. as lately in the employment of another master, that he was not at the time of its date taken into the plaintiff's service. If so, it is clear that the plaintiff's doing so was the consideration of the defendant's promise; and if by fair construction we can, as it were, spell out from the contract that it was so, it is enough."2 So where the guaranty was in these terms: "1 do hereby agree to become surety for R. G., now your traveller, in the sum of £500, for all money he may receive on your account," it was held sufficient to sustain a declaration averring the consideration to be that the plaintiff would keep and continue the traveller in his service.1
1 Price v. Richardson, 15 Mees. & W. 539.
2 Newbery v. Armstrong, Moo. & M. 389. See also Kennaway v. Tre leavan, 5 Mees. & W. 498; Weldin v. Porter, 4 Houst. (Del.) 236.
§ 401. But a memorandum, "I hereby agree to remain with Mrs. Lees, . . . for two years from the date hereof, for the purpose of learning the business of a dressmaker," was held not binding, because it did not show that the plaintiff was bound on her part to teach the defendant that business.2 And so where one contracted in writing to work for the plaintiff, in his trade, and for no other person, during twelve months, and so on from twelve months to twelve months, until the employer should give notice of quitting; the writing was held insufficient. In the latter case, it was urged that an agreement on the master's part to pay might be inferred as the consideration; but Lord Denman, C. J., said: "I do not see how we can infer that as a consideration for his confining himself to the one employer, because any person with whom he worked would be obliged to pay him." 3
§ 402. Again, where a memorandum states the delivery of securities for the payment of money to the plaintiff by a third person, and at the same time contains an engagement to see them paid at maturity, it is held that a consideration for the engagement sufficiently appears, namely, the plaintiff's extending credit to a third person by accepting such securities.4
§ 403. A rule of construction, however, well established in the general law of evidence, but of comparatively recent application, it would seem, to questions of this nature, is often called to the aid of a memorandum of guaranty, where the terms used are ambiguous and may refer either to a preexisting liability of a third party to the creditor, or to one which is allowed to be incurred contemporaneously with and in confidence of the defendant's undertaking. This is the admission of parol evidence to show the circumstances of the parties at the time of contracting, in order to understand correctly the language they employ. Under this rule a memorandum of guaranty addressed to the plaintiffs, in the words, "In consideration of your being in advance to the third party," was sustained by parol evidence, showing that at the time of executing it no advance had been made.1 And in a case, so to speak, the converse of this, where the words were, "I hereby guarantee B.'s account with A.," etc.; it appearing that there was a pre-existing account to which the words could apply, it was held that the guaranty could not be sustained.2 The Supreme Court of New York, upon the authority of this latter case, have held a guaranty employing the same expression to be good, on its being proved by parol that there was an account between the plaintiff and the third party not existing when the guaranty was given, but contracted afterward; admitting at the same time, that if the words "your account" had necessarily implied a precedent account, the letter containing them would have been insufficient as not showing an available consideration.3 In a case in the Exchequer, the language of the memorandum was, "In consideration of your having released the above-named defendant from custody I hereby engage, within one month from this date, to pay you," etc. It appeared that the release was in fact given after the memorandum was made and accepted. The court held that the engagement might be construed to be, as it really was, prospective on the release, and that it might be read thus: "I hereby engage, etc., within one month, in consideration of your having then released," etc.4 So also in the same court, where the words were, "In consideration of your having advanced," etc., and it was proved that the advance was made after the memorandum.1 And so in the House of Lords, in a case where the action had been brought upon a memorandum containing this expression: "Entertaining the highest opinion of Mr. P. C. 's integrity, . . . we, therefore, hold ourselves responsible to you in the sum of £500 sterling, for his discharging faithfully and honestly any duty assigned to, or trust reposed in him," the memorandum was held sufficient; Lord Tenterden advising the Lords, "It appears that at the time when this letter was written, C. had no situation or employment under the defendants in error. The House, therefore, has a right to understand the letter as though it expressed a promise to be responsible for C. if the defendants in error would employ him."2 Under a statute of frauds which required the consideration of a contract to answer for the debt of another to be expressed in writing, a guaranty by a third person of a negotiable promissory note need not express any consideration if written upon the note before it is delivered, and first takes effect as a contract; but must, if written afterwards.8