Nugent v. Wolfe , 1886 Pa. LEXIS 526 ( 1886 )

Mr. Justice Sterrett

delivered the opinion of the court, February 1st, 1886.

If the verbal agreement, which plaintiff offered to prove, is within the supplement of 1855 to the Statute of Frauds and Perjuries, there was no error in rejecting’ the testimony, nor in entering judgment of non-suit. The supplement declares: “ No action shall be brought whereby.....to charge the defendant upon any special promise to answer for the debt or default of another, unless the agreement upon which such action shall be brought or some memorandum or note thereof shall be in writing and signed by the party to be charged therewith, or some other person bv him authorized " : P. L., 308.

Plaintiff gave in evidence the record of two judgments in favor of the First National Bank of Ravenna, one dated January, 1876, against Powers & Co., and the other, March, 1877, against himself as bail for stay of execution on the first mentioned judgment. He then offered to prove, in substance, that in February, 1876, defendant Wolfe requested him to become bail for stay of execution ; and, in consideration of his agreeing to do so, promised and undertook to indemnify and save him “harmless from any loss or liability, and from paying anything by reason of his so going security;” that, relying on said promise and undertaking of defendant, he did become bail for stay of execution on the judgment against Powers & Co. This offer was objected to on the ground that the agreement was not in writing as required by the statute, and the proposed testimony was excluded by the court. In the same connection it was admitted that Powers & Co. became insolvent, that plaintiff was compelled to pay the judgment, then amounting to $1,499.74, and that defendant, though often requested, had not paid any portion thereof. The question thus presented is, whether the alleged agreement-which plaintiff was not permitted to prove is within the clause of the supplement above quoted.

The clause in question is copied, substantially, from the fourth section of the English Statute, 29 Charles II., chap. 3, which, with slight changes in phraseology, has been generally adopted in this country. During the more than two centuries since its original enactment, the construction of this section, and its application to various forms of contract, have been constantly the subject of contention; and on no question, perhaps, has there been greater diversity and contrariety of judicial decision, in this as well as in the parent country. Cases of real or apparent hardship have repeatedly led courts to put a strained and unnatural construction on what appears to be a plain and easily comprehended act, passed for the purpose of preventing the commission of fraud and perjury. Tf time would permit, a review of the many conflicting and irreconcilable decisions that, from time to time, have been rendered, and the refined distinctions upon which they have been based, would be interesting; but the undertaking would be too great, and withal not specially profitable.

It is very evident that the statute was not intended to apply except in cases where, in addition to the promisor and promisee, there is also a third party to whose debt or undertaking the agreement of the promisor relates, and not even then unless the liability of the third party continues. In other words, the agreement, to be within the purview of the statute, must in a certain sense be a collateral and not an original undertaking. Independently of the debt or liability of the third party, there must, of course, be a good consideration for the collateral or subordinate agreement, such for example as a benefit or advantage to the promisor or an injury to the promisee. It is difficult, if not impossible, to formulate a rule by which to determine in every case whether a promise relating to the debt or liability of a third person is or is not within the statute; but, as a general rule, when the leading object of the promise or agreement is to become guarantor or surety to the promisee, for a debt for which a third party is and continues to be primarily liable, the agreement, whether made before or after, or at the time with the promise of the principal, is within the statute, and not binding unless evidenced by writing. On the,other hand, when the leading object of the promisor is to subserve some interest or purpose of his own, notwithstanding the effect is to pay or discharge the debt of another, his promise is not within the statute.

As was said by Mr. Justice Strong in Maule v. Bucknell, 50 Pa. St. 39, 52, “It is undoubtedly true that a promise to answer for. the debt or default of another is not within the statute, unless it be collateral to a continued liability of the original debtor. If it be a substitute, an agreement by which the debt of another is extinguished, as where the creditor gives up his claim on his original debtor, and accepts the new promise in lieu thereof, it need not be in writing. And, as the cases referred to show, it may be unaffected by the statute, though the original debt remains, if the promisor has received a fund pledged, set apart, or held for payment of the debt. But, except in such eases, and others perhaps of a kindred nature, in which the contract shows an intention of the parties that the new promisor shall become the principal debtor, and the old debtor become but secondarily liable, tbe rule, it is believed, may be safely stated, that while the old debt remains the new must be regarded as not an original undertaking, and therefore within the statute. At least this may be stated as a principle generally accurate. In William’s Saund. 211, note, it is said: The question whether each particular case comes within the clause of the statute or not, depends not on the consideration for the promise, but on the fact of the original party remaining liable, coupled with the absence of any liability on the part of the defendant or his property, except such as arises from his express promise.”

If one says to another, “deliver goods to A. and I will pay you,” the verbal promise is binding, because A., though he receives the goods, is not responsible to the party who furnishes them. But, if instead of saying, “I will pay you,” he says, “ I will see you paid,” or “I will pay you if he does not,” or uses words equivalent thereto, showing that the debt is, in the first instance, the debt of A., the undertaking is collateral, and not valid unless in writing. In these latter cases, the same consideration, viz: the consideration of the promise of the principal is a good consideration for the promise of the surety or collateral promisor. The credit is given as well upon the original consideration of the principal as the collateral promise of the surety, and is a good consideration for both: Nelson v. Boynton, 44 Mass. 396, 400. Other applications of the principles above stated might be suggested, but it is unnecessary to do so.

In the case before us the only consideration, for the alleged agreement, disclosed by plaintiff’s offer, is the disadvantage to him, the risk he incurred by becoming bail for stay of execution on the judgment against Powers & Co. If they failed to pay their debt, then in judgment, at the expiration of the stay, he thereupon became fixed, for the amount thereof. In consideration of the risk or contingent liability thus assumed by plaintiff at defendant’s request, the latter promised and agreed to pay the judgment or see that it was paid by Powers & Co., and thus save plaintiff from the necessity of paying the same. In other words, defendants specially promised, for a good and valid consideration, to answer for the default of Power & Co., in not paying the judgment at expiration of the stay. Such is the nature and character of the agreement on which plaintiff claimed to recover, and it appears to come within the letter as well as the spirit of the clause under consideration. If it is not an agreement to answer for the debt or default of Powers & Co., it would be difficult to say what it is. Their liability to the bank still remained. The only consideration moving between the promisor and promisee, as claimed by the latter, is the risk he incurred in becoming bail for Powers & Co. There is no testimony, nor was any offered, to show that defendant had any personal interest in the judgment on which bail was entered, or that he held property or funds that should have been applied to the payment thereof. So far as appears, it was the proper debt of Powers & Co., and the substance of defendant’s agreement is that he would see that they paid it ; and, if they failed to do so, he would pay it for them. It was literally a promise to answer for the default of Powers & Co. Plaintiff’s liability as bail for stay was merely collateral to the debt in judgment, and had in contemplation nothing but the payment thereof to the bank.

Without pursuing the subject further, we are satisfied the alleged promise of defendant is within the statute, and cannot be enforced, because it is not in writing. Our own cases are in accord with this view: Allshouse v. Ramsay, 6 Whart., 331; Shoemaker v. King, 40 Pa. St., 107; Miller v. Long, 45 Id., 350; Maule v. Bucknell, supra; Townsend v. Long, 77 Pa. St., 143.

The object of the statute is protection against “fraudulent practices commonly endeavored to be upheld by perjury,” and it should.be enforced according to its true intent and meaning, notwithstanding cases of great hardship may result therefrom. There never was a time in the history of our jurisprudence when the necessity for such a statute was greater than now, when persons in interest, as well as parties to the record, are generally competent witnesses.

Judgment affirmed.