Clark & Wadsworth v. Jones

CLOPTON, J.

W. C. Wright was indebted to plaintiffs for lumber furnished to be used in building a - house, which he had contracted with defendant to build for two thousand dollars, payable in five installments, the last of which, being for five hundred dollars, was payable on completion of the house according to the plans and specifications. The first claim of plaintiffs is, that in July, 1884, the defendant promised the plaintiffs’ agent, if they would not file a lien against the house for their claim, he would pay the same out of the next payment due Wright. The promise was not in writing. The instructions of the court present the question, whether the promise is within the statute of frauds, which requires “every special promise to answer for the debt, default or miscarriage of another,” to be in writing, expressing the consideration, and signed by the party sought to be charged. The doctrine which distinguishes between an original promise — a new debt of the promisor — and a collateral undertaking — a guarantee or suretyship for the debt of a third person, is often difficult of application; but there are some tests, which may be regarded of controlling, though not conclusive consideration. The true test appears to be, whether the undertaking of the promisor was essentially a new debt of his own, while the payment of the third person’s debt was a collateral or incidental consequence, or was the latter its principal and direct purpose. — Bishop on Contr. §§ 12, 63. Generally, any promise to pay another person’s debt, which is not discharged or released by the terms of the promise, or other contemporaneous arrangement, is within the statute. To this rule there are exceptions. A party may make a valid oral contract, which operates to create a new debt of his own, if founded on a new and independent consideration, though the effect of the payment is to pay another’s debt. In order, however, to have this effect, the essence of the new undertaking must be the payment of the promisor’s own debt, by paying the debt of a third person.

The consideration relied on to support the promise of defendant, and to constitute it his own debt, is the forbearance *? of plaintiffs to file a lien for their claim. The plaintiffs had no lien on the property, and surrendered none. They were sub-contractors, and if they had filed the statement required to obtain a lien, they could only have subjected any unpaid balance in the hands of defendant, and would have acquired, a lien on the property to secure the payment of the same only to that extent. — Code, 1876, § 3444. The forbearance to file a lien was not of benefit to the defendant, and filing it would not have operated a detriment to him, in the legal acceptance of the terms. If filed, he could not have been made liable to pay more or otherwise than as provided by his contract. The plaintiffs would not have a lien to which his interest was subordinate. There being no agreement or understanding that the debt of Wright should be discharged or postponed, the undertaking of defendant did not constitute a new and substantive debt of his own, to which the payment of Wright was collateral or incidental, but rather the principal purpose. Forbearance to enforce a demand against the original debtor by suing out an attachment, it has been held, does not constitute an original promise on a new and independent consideration, so as to take it out of the operation of the statute of frauds, although the promisor had at the time a lien for -advances subordinate to the lien of the promisee for rent. — Westmoreland v. Porter, 75 Ala. 453 . It is said: “The essential and real function of such new agreement, however, is to pay a new debt contracted by the promisor, upon a new consideration of benefit to himself, and moving from the promisee; and, although this becomes his own debt, he agrees to discharge it by paying a debt due by another, which is a mere incident of the transaction.” Though the forbearance to file the lien may be a sufficient consideration to support a promise to pay the debt of Wright, such promise is required by the statute of frauds to be in writing, expressing the consideration.

Plaintiffs further claim, that the defendant promised Wright to assume and pay their demand, and the claims of others, in consideration that he would surrender his contract. This promise, not having been made to the plaintiffs, or to any person representing them, is not within the statute of frauds. A promise by a person to pay the debt of another, if made to him, and supported by a new consideration, is valid, though not in writing. Undoubtedly, the parties to a contract, before a breach, may rescind at pleasure, and their mutual assent is a sufficient consideration, There is evidence *132 tending to show that Wright had committed a breach of the contract by abandoning it before the alleged rescission, and it is undisputed that it had become impossible for him to complete the house. An agreement made to prevent the breach of a contract, or, after the breach, to assume and pay the liabilities of the contractor, without other consideration than the mere agreement to rescind, is nudum pactum. Burkham v. Mastin, 54 Ala. 122 . But if Wright, at the time of the rescission, left funds in the hands of defendant, from which he promised to pay the demands of plaintiffs, such promise would have been supported by a new and independent consideration, and the plaintiffs could have maintained an action thereon.

.If such had been the hypothesis of the charge, in reference to this promise, requested by plaintiffs, it should have been given; but framed as it is, it was properly refused. It is an uncontroverted fact, that Wright surrendered his contract August 14th, 1884. The charge bases the validity of the promise, and the liability of the defendant, on the rescission and an indebtedness existing more than a month previously — July 10, 1884. There was evidence tending to show that no indebtedness existed at the time of the surrender of the contract. In order to support a promise to retain the money and pay the demand of plaintiffs, there must have been an indebtedness at the time the contract was rescinded, from which the defendant promised to pay their claim — thus constituting a promise to pay his own debt by paying the debt of Wright. The charge ignored the evidence of a previous payment of the indebtedness existing in July, and also of a breach of the contract before its rescission. It is abstract, and calculated to mislead.

The rulings of the court are in accord with these views.

Affirmed.

STONE, O. J.

I differ from my brothers in this case. As I understand it, the promise was an original one, based on a valuable new consideration, of detriment to the promisee. Rutledge v. Townsend, 38 Ala. 706 . That promise was not made dependent on Wright’s failure to pay. It was a promise that Jones would pay, not a guaranty that Wright would pay. Wright’s debt cut no figure in the case, except that it fixed the amount Jones agreed to pay. And the fact that Wright owed a debt of the same amount can make no difference. It is frequently the case, that on a new promise, *133 supported by a new consideration, a second debtor becomes liable to pay the debt o£ another, without cancelling the obligation of that other. Dunbar v. Smith, 66 Ala. 490 , and Coleman v. Hatcher, 77 Ala. 217 , were cases of that kind. In neither of these cases had the original debt been cancelled. Young v. Hawkins, 74 Ala. 370 , is another case which asserts the doctrine very fully. In neither of them was the contract so executed as to meet the requirements of the statute of frauds, if they fell within its influence. Yet, the contract in each case was held valid. As I understand the principle, it is as follows: Wherever the promise is to pay absolutely, not as surety of another, nor as guarantor that another will pay, and the promise is supported by a valuable consideration moving from the promisee, or to the promisor, this is not within the statute of frauds, because it is not a promise to pay the debt of another. The fact that such payment incidentally discharges a debt for which another is bound, can not vary the nature of the contract, or convert the original, absolute promise into one of mere suretyship. — Browne Stat. Frauds, (4th Ed.) § 212; Nelson v. Boynton, 3 Metc. (Mass.) 396.