This section is from the book "Popular Law Library Vol3 Contracts Agency", by Albert H. Putney. Also see: Popular Law-Dictionary.
The second class of promises which the fourth section of the original statute required to be in writing were those to answer for the debt, default or miscarriage of another person. In order for this statute to apply in the case of a promise of this character, it is necessary that there should be a legal and binding obligation to the party to whom the promise is made, from some third party.22 It is the settled rule, that where the agreement to pay the debt of another is original and independent, it is not within the statute of frauds; and the agreement may be regarded as original, and not within the statute, although it directly involves the interests of or concerns a third party, or may relate to an act, or the performance thereof, by one not a party to the contract.23
This provision of the statute has never been held to apply in the case of recognizances;24 but it does include promises to answer for the liability of a third party arising in tort.25
20 McKeany.
21 Long vs. Rodman, 58 Ind., 58;
Baker vs. Fuller, 61 Me., 152;
Wales vs. Stuart. 115 N. Y., 638; 21 N. E., 1027. 23 Buchanan vs. Moran, 67 Conn.,
83; Boos vs Hinkle, 18 Ind.
App., 509; 40 N. E., 383; Jefferson vs. Hunt, 2 Allen, 417; Stewart vs. Patton, 65 No. App., 21; Denton vs. Jackson, 106 111., 433. 23 Resseter vs. Waterman, 15 I11., 169.
If credit is given in the first place to the promisor, the contract to pay is not within the scope of the statute, even although the thing of value, which was the consideration for the promise went to a third party; but if the party giving the thing of the value makes a charge against the promisor and the party receiving the property, then the agreement of the promisor is a collateral one, and must be in writing.26
If anything of value is given to the promisor for his promise the contract is not one within the statute.27
Many of the important cases on the subject as to what contracts are, and what contracts are not, within the scope of this provision, are well summed up in the decision in the case of Voris vs. Star City Building and Loan Association28 in the following words:
'The first objection urged to the complaint is well taken, if the promise or guaranty of appellant was made for the benefit of a third person, for then it would come within the express inhibition of the statute of frauds and perjuries. If, however, it was a promise or guaranty made for the benefit of the appellant, it must be considered as an original promise, and binding. In Beaty vs. Grim, 18 Ind., 131, it was held that an agreement made by the sellers of a contract for the delivery of hogs in reference to the performance by them of its stipulations, in the event of the failure of the original contracting parties, was not within the statute of frauds, and could be enforced. And so a verbal guaranty of a note that it is genuine, and its maker able to pay it, made by the assignor to the assignee at the time of the assignment and delivery, based upon a sufficient consideration, is a binding and valid obligation. King vs. Summitt, 73 Ind., 312. The point we are now discussing is clearly and forcibly stated in Board of Com'rs of Gibson Co. vs. Cincinnati Steam-Heating Co., 128 Ind., 241, 27 N. E. 612, by Elliott, J., as follows: 'Where the owner of property undertakes to pay for work and materials to be subsequently done and furnished by a sub-contractor in order to secure the completion of a building, where the principal contractor has failed to carry on the work, the promise is an original one, and not within the statute of frauds. This principle is intrinsically just, and its enforcement does not in the slightest degree tend to the mischief the statute of frauds and perjuries was intended to prevent.' In Emerson vs. Slater, 22 How 43, the Supreme Court of the United States said: 'But whenever the main purpose of the promisor is not to answer for another, but to subserve some pecuniary or business purpose of his own, involving either a benefit to himself or damage to the other contracting party, his promise is not within the statute, although it may be in form a promise to pay the debt of another, and although the performance of it may incidentally extinguish that liability.' In Horn vs. Bray, 51 Ind., 555, it was held that 'Where a party who is surety for the maker of a note procures others to sign as sureties, by promising to indemnify them and save them harmless, such promise is an original undertaking, not within the statute of frauds, and may be proved by parol.' It has been held in New York that where a third party represented that the note of another was good, that it would be paid at maturity, that he would guaranty that it would be paid at maturity, and it proved that it was not good, and was not paid at maturity, such guaranty was an original promise, and could be enforced. Bruce vs. Burr, 67 N. Y., 237. In some jurisdictions it is held to be a presumption of law that, if any direct benefit to the promisor is the object sought to be obtained by his promise, he must be understood to intend an original undertaking, which is not within the statute. Westmoreland vs. Porter, 75 Ala., 452; Chapline vs. Atkinson, 45 Ark., 67; Lerch vs. Gallup, 67 Cal., 595; 8 Pac, 322.
24 Gay vs. State, 7 Kan., 394. 25 Hayes vs. Burkham, 51 Ind., 130; Baker vs. Morris, 33 Kan., 580. 26 Schoenfeld vs. Brown, 78 I11.,
487; Barry vs. Law, 89 Fed., 582.
27 Harding vs. Jasper, 14 Cal., 642.
28 20 Ind. App., 630; 50 N. E., 779.
"From a review of many authorities, gathered from a number of the states, we feel fully justified in saying that, wherever there is in existence an obligation on the part of another, a promise to perform that obligation, if he does not, or to guaranty his performance, is not within the statute of frauds, if it is made upon a new consideration inuring to the benefit of the promisor, although the former obligation is not extinguished, provided the chief purpose of the promisor is to obtain a benefit to himself. Thornton vs. Williams, 71 Ala., 555; Westmoreland vs. Porter, supra; Chapline vs. Atkinson, supra; Lerch vs. Gallup, supra; Williamson vs. Hill, 3 Mackey, 100; Mathers vs. Carter, 7 III., App. 225; Borchsenius vs. Canutson, 100 III., 82; Clifford vs. Luhring, 69 III., 401; Powers vs. Rankin, 114 I11., 52, 29 N. E. 185; Fears vs. Story, 131 Mass., 249; Fitzgerald vs. Morrisey, 14 Neb., 198, 15 N. W. 233; Whitehurst vs. Hyman, 90 N. C, 487; Jefferson Co. vs. Slagle, 66 Pa. St. 202; Merriman vs. McManus, 102 Pa. St. 102; Railroad Co. vs. Houston, 86 Tenn., 224, 2 S. W. 36; Muller vs. Riviere, 59 Tex., 640; Spann vs. Cochran, 63 Tex., 240. See also 1 Daniel Neg. Inst., Sec. 739a; 2 Daniel, Neg. Inst., Sec. 1761-1763; Bell bd. Dagg., 60 N. Y., 528; Ross vs. Terry, 63 N. Y., 613; Malone vs. Keener, 44 Ps. St. 107; Huntington vs. Wellington, 12 Mich., 10; Brown vs. Curtiss, 2 N. Y., 225; Cardell vs. McNiel, 21 N. Y., 336; Fowler vs. Clearwater, 35 Barb., 143; Dauber vs. Backney, 38 Barb., 432; Bruce vs. Burr, supra. How much more forcibly must the rule announced apply if the promise or guaranty is made where there is no valid or binding obligation, as in this case. Here the sole benefit arising from appellant's promise or guaranty inured to him. It could not, in the very nature of things, inure to the township, the payment of whose pretended and fraudulent warrants were guaranteed, for the township was not bound by them. "In the case before us, appellant's promise was to answer for a pretended debt of another, which was not enforceable, which in fact was void, and no debt at all, and hence it was not a promise to answer for the debt of another, but by the promise the appellant became the original debtor, and the obligation became his own. King vs. Summitt, supra. Another principal which clearly takes appellant's promise without the statute is that the person or party for whom the promise was made was not liable on the pretended warrants. See Downey vs. Hinchman, 25 Ind., 453; Crosby vs. Jeroloman, 37 Ind., 264; Ellison vs. Wisehart, 29 Ind., 315; it was said: The general rule running through almost all the cases is that, if the third person is not liable, then the undertaking is not within the statute. This doctrine is exemplified in the great number of cases which hold that a promise to answer for the debt or default of an infant or feme covert is not within the statute, because there is no third person bound.'
 
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