HARVARD

HARVARD
LAW REVIEW
VOL. XLI 1928
APRIL, 1928 No 6.
N06.

CONTRACTS
CONTRACTS OF INDEMNITY
INDEMNITY AND THE STATUTE
OF FRAUDS

A whether
A RULE of law is a statement of uniformity of behavior,
RULE of law is a statement of uniformity of behavior,
of planets or atoms or men- a statement by which
whether of planets or atoms or men - a statement by which
their future behavior can be predicted
predicted with reasonable assurance.
Many
Many such statements
statements turn out to be inaccurate
inaccurate or even wholly
worthless,
worthless, for predictions
predictions do not always come true. If
If the stated
rule is part of the common law, it purports to represent
represent past expe-
expe-
rience, and is based
based upon a uniformity of action by judicial
judicial and
and
executive
executive officers
officers of the state. ItIt enables
enables one to predict like ac-
tion in the future by such officers. That such predictions
predictions have
some measure of accuracy
accuracy is witnessed by the fact that a large
legal
legal profession can make a living, not only as advocates in a liti-
gation
gation but also as advisory counsel to prevent litigation and to lay
such a foundation
foundation that future litigation
litigation will be successful.
successful. IfIf the
stated rule is statutory law, it purports to direct human
it purports human behavior
behavior
for the future, and again enables
enables one to predict the action of judi-
cial and executive officers. These
These predictions also have a certain
certain
amount of accuracy, an amount that should should increase as the statute
grows older and its effect upon judicial and executive action be-
comes a part of experience.
In
In the case of the common law rules new and disturbing ele-
ments continually appear, turning old rules that once were a
sound basis of prediction into empty and lifeless formulas or
worse. Ordinarily the change occurs slowly; and acute lawyers lawyers
who know the life around them as well as mere verbal formulas formulas
can take the changes
changes into account in making their advisoryadvisory

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 HARVARD LAW REVIEW
HARVARD LAW REVIEW

predictions for clients. Statutory rules in the beginning usually

create certainty; with experience the illusion van-
create an illusion of certainty;
ishes. Safe prediction as to the exact operation must
operation of the statute must
await actual experience
experience in its application. ItIt is always true that
along the boundaries of its application the statutory rule varies
recreated exactly the same as a common law rule, and for
and is recreated
the very same reasons. This is not judicial judicial usurpation; it is
merely
merely inevitable
inevitable necessity.'
necessity.1
The Statute of Frauds has now been a part of the law of the
land for one quarter of a millenium. It It has been interpreted and
applied
applied by the courts in tens of thousands of cases. Surely there
have been experience enough to create uniformity and
experience and time enough
to make prediction a pleasure. It It is safer, however, merely to say
that they have sufficed to destroy the illusion. The legislative
legislative
words usually are, "No "No action shall be brought whereby to
. ." If
charge. . .." prevent the "bringing"
If this was meant to prevent "bringing" ofof
actions, how great the disappointment!
disappointment! The bulky contents of
contents of
reports and the digests suggest that an action has in fact been
the reports been
promise" of
brought in almost every instance where a " special promise" of
prescribed classes has been made and has not been performed,
the prescribed performed,
as well as in great numbers of cases where
where the alleged promise has
not been made at all. In the latter cases the statute may have
11 In Hanau v.
In Hanau v. Ehrlich, [11ii] 22 K.
Ehrlich, [19II] K. B. io56, 1069,
B. 1056, Buckley, L.
io69, Buckley, L. J.,
J., said: "1It is
said: "It is
now two centuries ascertain the meaning of
centuries too late to ascertain of s. 4 by applying
applying one's own
mind independently interpretation of its language. Our task is a much
independently to the interpretation much more
humble one; it is to see how that section
section has been expounded in decisions and how
case." No doubt the same could
the decisions apply to the present case." could be said of almost
almost
any written constitution or statute, but usually with a lesser lesser degree
degree of truth.
In Jennings, [1910]
In Reeve v. Jennings, [r9IO] 2 K. B. 522, 529, Coleridge, L. J., said: "The
B. 522, "The
Statute of Frauds has been much buffeted about by decisions, but its life is not quite
buffeted about
extinct." In the case before statute made the promise
before him he held that the statute promise unen-
unen-
forceable.
forceable.
SMITH, CONTRACTS
Smirra, (1847) 32,
CONTRACTS (1847) commenting upon Lord Nottingham's
32, commenting statement
Nottingham's statement
statute was worth a subsidy, observes: "
that every line of the statute Every line has cost
"Every
subsidy, for it is universally admitted
a subsidy, admitted that no enactment
enactment of any Legislature
Legislature ever
ever
became the subject of so much litigation."
This provision comes to us from the original statute
""This statute of frauds, 29 Car. II, of
II, of
which it has been said by an enthusiast that every
which every line was worth a subsidy,
subsidy, and by
a cynic every line has cost
cynic that every cost a subsidy
subsidy to interpret. The latter statement has
been gaining force as the ingenuity of greedgreed has, through centuries, been
been strained
strained to
to
escape this apparently
escape provision, until its application
apparently plain provision, application is now surrounded by
such a cloud of decisions as to defy exhaustive examination." McCord
exhaustive examination." McCord v. Edward
Hines
Hines Lumber Co., 124 124 Wis. 509, 102 N. W. 334,
5IO, 102
509, 510, (19o5).
334, 335 (1905).

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 CONTRACTS
CONTRACTS OF INDEMNITY AND STATUTE OF
AND STATUTE OF FRAUDS
FRAUDS 6911
69

safeguard for the innocent

been an added safeguard innocent against the dishonest;
in the former cases it offers a possible refuge
refuge for contract
contract break-
statute was meant as a basis for predicting the be-
ers. If the statute
havior of plaintiffs and their lawyers, the best that we can say of
havior of
legislature is that it "meant
the legislature "meant well."
welL" Of course, it is possible
to assert that but for the statute cases would have
statute many more cases
especially fraudulent ones; no one can prove what
been brought, especially
would have been had there been no statute. It It is at least as cer-
tain that but for the statute there would have been fewer broken
promises and less litigation.22
meant to lay a basis not for predicting
If the legislature meant
If predicting the be-
havior
havior of plaintiffs but for predicting the behavior of judges when
actions are brought
brought on the special
special promises
promises described in the
disappointment is also very great. There is much
statute, the disappointment much
conflict and lack of uniformity. Two conflicting tendencies
tendencies have
been evident hundred and fifty years. One of
evident for the whole two hundred of
these is to regard the statute as a great and noble preventive
preventive ofof
fraud and to apply it against the plaintiff with a good conscience
cases where no doubt exists that the defendant made the
even in cases
promise with which he is charged.
charged.'3 The other and much more
would find to have
frequent one is to enforce promises that a jury would

2 "He rests
2 "He rests his defence on
his defence the statute
on the statute of frauds, which
of frauds, which probably
probably generates as
generates as
many frauds as it prevents." Lamborn
prevents." Lamborn v. Watson, 6 Har. & 3.
& J. 252,
252, 255 (Md. 2824).
1824).
"The whole argument is grounded
"The grounded on the interpretation
interpretation of the Statute of Frauds,
that unfortunate misguided application of which has been the cause of
unfortunate statute, the misguided
so many frauds. Like any other statute, it is to be read with common sense and and
understanding." Bacon, V. C.,
understanding." Worthington, 38 L. T. (N.
C., in Morgan v. Worthington, s.)443,
(N. s.) 443,
445 (1 (1878).
8 78 ).
33 As might be expected,
expected, Lord Kenyon was all allfor aa strict application.
application. InIn
Chater v. v.Beckett,
Beckett, 7 T.R.
7 T. R. 201, "I lament extremely
(1797), he said: "I
201, 204 (1797), extremely that ex-
ceptions were ever introduced in construingconstruing the statute of Frauds; it is isaa very
beneficial statute and if the Courts had at first abided
beneficial abided by the strict letter
letter of the
act it would have prevented a multitude of suits that have since been brought."
Woollam v. Hearn, 77 Ves. 211,
In Woollam 2II, 218 William Grant said: "Thinking,
(1802), Sir William
218 (1802), "Thinking,
as I do, that the Statute has been already already too much broken
broken in upon by supposed
supposed
exceptions, I shall not go farther in receiving and giving effect to parol
equitable exceptions, parol
evidence, than I am forced by precedent." century later, the Privy
precedent." But more than a century
Council held in direct conflict with his decision and did not even mention the case.
Council
United States v. Motor Trucks, Ltd., [1924] A. C. 196. 196.
In Dunphy v. Ryan, 116 II6 U. S.
S. 491,498 (1886), Woods, J., said: "The
491, 498 (1886), "The statute
of frauds is founded in wisdom and has been justified by long experience." experience." ButBut
he added: "" Courts
Courts of equity, to prevent
prevent the statute from becoming instrument
becoming an instrument
of fraud, have in many instances
instances relaxed provisions.!
relaxed its provisions."

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 HARVARD
HARVARD LAW
LAW REVIEW

been in fact made, and if necessary to this end to narrow the oper-
ation of the statute.44 This narrowing of application
application was some-
times accompanied
accompanied by general words of encomium for the great great
statute; but in recent
recent years the courts nearly always say nothing
on the subject except what may be necessary
necessary to the business
business ac-
tually in hand, the enforcement of the promise. The narrowingnarrowing
process has been in part one of supposed interpretation
interpretation of lan-
guage and in part one of permitting the jury to determine the ap-
plication
plication of the statute by a general
general verdict under instructions
instructions
that do not in fact hamper the jury in its effort to do ""justice."
justice." 'I>
The statutory
statutory clause forbidding an action on a promise that"that "isis
In many
44 In cases the
many cases courts have
the courts have worked indefatigably to prevent
worked indefatigably prevent a defendant
defendant
from using the statute
statute to defeat
defeat the enforcement
enforcement of his promise.
promise. In Bader v.
Hiscox,
Hiscox, 188 Iowa 986,174986, 74 N. W. 565 (1919),
(1919), the plaintiff had been seduced by the
defendant's
defendant's son and had brought civil and criminal proceedings. The defendant
criminal proceedings. defendant
promised to convey
convey land to the plaintiff if she would marry marry the son and dismiss the
proceedings.
proceedings. The plaintiff
plaintiff fully performed
performed her part, and the court enforced the
defendant's
defendant's oral promise. To do this, the court avoided avoided the marriage
marriage clause by
holding that marriage
marriage waswas not the consideration because
because it was not the ""end end to bebe
attained" but was a mere necessary
attained" necessary""incident";
incident"; it avoided the land clause clause by
holding that full performance
performance of the consideration by the plaintiff took the case
out of the statute; and it avoided the clause dealing with defaults of another by the
bare assertion that "the "the defendant did not undertake to answer answer for the debt or or
default of his son. . .• . . The obligation
obligation assumed
assumed by him was primary and upon upon
his own credit."
credit." This
This was a most meritorious decision in a case where to apply the
statute would
would have done grave injustice. The antecedentantecedent decisions were
were such as to
enable the court to hurdle three different clauses of the statute, all three of which
different clauses
applicable to the defendant's
seem applicable defendant's promise.
5I> The South Carolina judges have shown some interesting changes changes of attitude
toward
toward the statute. "No "No statute has been so much, and, in my opinion, so justly
eulogized for its wisdom as the statute of Frauds. Frauds. This branch
branch of itit tends to re-re-
press evil practices
practices which would otherwise spring up to the insecurity insecurity of all. But But
for the salutary influence
influence of this statute, thousands would tumble into ruin by
having their estates
estates taken from them to answer answer for the debts, defaults, and mis-
carriages of others. So far therefore from believing that this branch of the statute
of Frauds has a tendency to produce injustice and wrong, I think it it the only
only
bulwark
bulwark of security to shield men from those evils which the statute was intended intended
remedy." Leland v. Creyon, Ii McCord 100,
to remedy." ioo, 105
iog (S.
(S. C. 1821).
1821).
In Hillhouse
Hillhouse v. Jennings, 60 S. C. 373, 380, 38 S. E. 599,
6o S. 599, 601 (igo), the court
6o (IgoI), court
said: "Hard
"Hard cases arise when when this provision of our law is applied; but this Court Court
does not make make the law, but itit does enforce itit in sorrow over its rigor in some
instances."
instances." The South Carolina court court has avoided some of its sorrow sorrow by largely
nullifying
nullifying the statutory provision affecting promises to answer answer for the debt
debt of an-
other
other person. It It has sustained
sustained a verdict for the plaintiff on the oral oral promise
promise of a
landlord to guarantee
guarantee payment of money loaned to his tenant. Farmers Bank Bank v. v.
Eledge, 126
Eledge, S. C.
126 S. 517, 120
C. 517, E. 362 (1923);
S.E.362
120 S. Gaines v.
(1923); Gaines Durham, 124
v. Durham, 124 S.
S. C. 435, 117
II7
S. E. 732 732 (1923).
(1923).

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 OF INDEMNITY AND STATUTE
CONTRACTS OF OF FRAUDS
STATUTE OF FRAUDS 693

performed within the space of one year"

not to be performed year" has been so
interpreted as not to apply to contracts where where either party can
perform his own part within one year although the other
and does perform other
cannot,66 or to contracts
cannot, contracts that can on any remote contingency be
performed within a year but that in fact have been in course course of of
performance for a great
performance great many years before bringing suit. suit.'1 In
hundreds of cases a defendant has been held on his oral
many hundreds
instructing the jury
promise to answer for the debt of another by instructing
" credit" was given to him and
defendant is bound if " sole credit"
that the defendant
none to the third person.88 Under such an instruction, if the jury
promise was made and relied upon, a verdict is
believes that the promise
rendered for the plaintiff and sustained on appeal. There is more
instruction given to the jury.
variation in the form of instruction
or less variation
It is these conflicting tendencies
It that may be in part responsible
tendencies -that
indemnity; but
for the conflict that exists in regard to promises of indemnity; but
it is also in part due to differences in definition of the word "in-
"in-
demnity" and to mental confusion arising out of the complexity
demnity" complexity
of legal relations in cases involving at least three parties and often
more than three. The statute itself does not contain the word
indemnity" ; it does not say"
""indemnity" say " any special promise
promise to indemnify
indemnify
another." A promise of indemnity is within the statute only in
another." in
case it is held to be a promise to answer for the debt or default of of
another person. When will it be so held?
indemnity is not
In the first place, it is clear that a promise of indemnity not
within the statute if there is no duty owed by a third person to the
promisee that would be discharged by the performance
performance of the new
performance of which would discharge the new
promisor, or the performance
promisor. Thus, if A says to B: "If
promisor. "If you will buy 100 ioo shares
shares ofof
X stock, I will indemnify
X promise is not
loss," A's promise
indemnify you against loss," not
within the statute, since there is no third person who owes any-
66 DoneIIan v.
DoneIIan Read, 33 B.
v. Read, B. & Ad. 899
& Ad. 899 (1832); Diamond v.
(1832); Diamond v. Jacquith,
Jacquith, 14 Ariz. II9,
14 Ariz. "ig,
125 Pac. 712,
712, L. R. A. I916D
1916D 880 (1912);j Bird v. Bilby, 202
88o (1912) 202 Mo. App. 212, 215
212, 215
(1919) ; Pierce v. Paine's Estate, 28 Vt. 34 (1855).
S. W. 909 (1919); (1855)·
1 Warner
7 Warner v. Texas & & Pacific R. R., 164 U. S. 418 (1896) (1896) (contract
(contract enforced
enforced
after 1313 years); Quirk v. Bank of Commerce, 244 244 Fed. 682 (C. i917)
(C. C. A. 6th, 1917)
(service Saltry, 163 Ky. 481, 173
(service for life) ; Myers v. SaItry, II38 (1915) (to rear and
S. W. 1138
173 S.
educate a child)
educate child)..
8 Hammond
8 Hammond Coal Co. v.
Coal Co. v. Lewis,
Lewis, 248 Mass. 499,
248 Mass. 499, 143 N. E.
143 N. E. 309 (1924); Hines
309 (X924); Hines
&
& Smith Co. v. Green, 121 i2i Me. 478, x18 At]. 296
II8 At!. 296 (1922); Grafflin, 31 Md.
(1922); Myer v. Grafflin,
(1869);; Simpson v. Penton, 2 Cr. & M. 430
350 (1869) (1834);; Darnell v. Tratt, 2 C. &
430 (1834) & P.
82 (1825).
(1825).

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 HARVARD LAW REVIEW
HARVARD LAW

thing to B, the promisee.99 The The same reason applies to promises

officer who seizes goods at the promisor's re-
indemnify an officer
to indemnify
quest,10 defends a suit in which the promisor
quest,'" or one who brings or defends promisor
has some interest,"
interest,l1 or one who is induced to make an entry or a
-that may turn out to be tortious.
user that 12
tortious." A promise to a debtor or or
other obligor to pay his debt or save him harmless from his obli-
statute."13
indemnity not within the statute.
gation is a promise of indemnity
promise of indemnity is
Secondly, it is equally clear that a promise
within the statute creditor of some third person
statute if it is made to a creditor person
person's benefit
and for that person's accommodation, and if perform-
benefit and accommodation,
ance by either person or the new promisor will discharge
either the third person discharge
the duty of the other to the creditor. In In such a case the wordword in-
sense of "
exactly the sense
demnify is being used in exactly guarantee" or "be
" guarantee" " be
surety for." Such use of the term is not bad English, although it it
ought to be avoided in law. Thus, if S says to C: "Lend
"Lend money
against loss," the promise of S 1is4 a
to P and I will indemnify you against
promise to answer for P's C and
P's debt to C and is within the
is within statute.14
the statute.

9
9 v. Moss,
Kilbride v.
Kilbride Cal. 432,
113 Cal.
Moss, II3 432, 45 Pac. 812
45 Pac. 812 (1896); Merchant v.
(1896); Merchant v. O'Rourke, iii
O'Rourke, III
351, 82 N.
Iowa 35I, N. W.
W. 759 (i90o); West v.
759 (1900); 163 Ky. 561, 174
v. King, 163 S. W.
174 S. W. II
ii (1915);
(i9i5);
Green Brookins, 23 Mich. 48 (1871);
Green v. Brookins, (1871); Trenholm v. Kloepper, 88 Neb. 236, 129
Trenhoim v.
N. W. 436 (I91I)
(19II) (promise
(promise to pay back Patrick v. Barker, 78
price) ; Patrick
back the purchase price)
Neb. 823,
823, II2
112 N.
N. W. (1907); Crook
W. 358 (1907); Crook v.v. Scott, 65 App. Div. 139, 139, 72 N.
N. Y.Y. Supp.
Supp.
516 (190), aff'd, 174
(1901), aff'd, 174 N. Y. 520,
N. Y. 52o, 66 N.N. E. (19°3); Moorehouse
II06 (i9o3);
E. iio6 Moorehouse v. v. Crangle,
Crangle,36 36
Ohio St. 130 (188o); Clement v.
(188o) ; Clement v. Rowe, 3333 S. D. 499, 146 N.
499, 146 W. 700
N. W. 700 (914)
(1914);; Bain
v. Lovejoy, 234 S.
v. Lovejoy, S. W. io96
1096 (Tex. 1921);
1921); Lingelbach
Lingelbach v. Luckenbach, x68
v. Luckenbach, 168 Wis. 481,
Wis. 481,
170 N. W.
,7o N. 7II (1919)
W. 711 (1919) (promise to buy the shares back back at the same price).
price).
A promise to indemnify one who gives over promisor to invest is
over money to the promisor is
not a guaranty
guaranty if the investment does not consistconsist of a loan to a third person. The
same is true if
same if the promise is made to induce an investmentinvestment to be made by the
himself. See Partin v.
plaintiff himself. v. Prince, 159 N.N. C. 553,
553, 75 S.S. E. i080 (1912).
E. 1080 (1912).
10 Lerch v.
l0 Lerch 67 Cal.
Gallup, 67
v. Gallup, Pac. 322
595, 88 Pac.
Cal. 595, (1885) ; Stark
322 (1885); Stark v. Raney, 18
v. Raney, 18 Cal.
Cal. 622
622
(1861) ; Tarr
(i86i); Tarr v.v. Northey, 17 Me. 113 II3 (1840);
(840); McCartney
McCartney v. v. Shepard, 21 Mo. 573
Coleman, iI South. 26
(I855); Thompson v. Coleman,
(1855); 216 (N. J. i8i8); Mays
J. 1818); Joseph, 34
Mays v. Joseph, 34
Ohio St. 22 (1877).
(1877).
Marcy v. Crawford,
11 Marcy
11 Crawford, 16 i6 Conn. 549 (I844) Smith, 73 Iowa
(1844);; Wilson v. Smith, Iowa 429,
429,
35 N. W. 506 (1887); Goodspeed v. Fuller, 46 Me. 14i 141 (858);
(1858); Knight v. Sawin,
66 Me. 361 (1830); Wells v.
(383o); Wells v. Mann, 45 N. N. Y.
Y. 327 (1871);
(187); Evans v. v. Mason,
Mason, Ii Lea
Lea
26 (Tenn. 1878); Dorwin v. Smith, Smith, 35 Vt. 69 (1862); Adams v. Dansey, 6 Bing.
(1862); Adams
506 (i83o).
(1830).
12 Marcy v. Crawford,
12 Crawford, 16 Conn. 549 (1844) (844) (entry to try title); Weld Weld v.
Nichols, 17 Pick. 538 (Mass. 1836) 1836) (user of party Allaire v. Ouland, 2
party wall); Allaire
Johns. Cas. 52 (N. Y. 1800) (entry).
i8oo) (entry).
18 Conkey v.
"s Conkey v. Hopkins,
Hopkins, 1717 Johns. II3
113 (N. Y. 181
(N. Y. 9).
i81g).
'4 In Mallet
14 Mallet v. Bateman, L. R. iI C. P. 163, 17, (1865),
163, 171 (1865), the court said: "That"That

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 CONTRACTS OF
CONTRACTS OF INDEMNITY
INDEMNITY AND STATUTE OF
OF FRAUDS 695

however, that presents special

There is one type of case, however, special diffi-
culties and that has resulted in much conflict of decision. This is
promise to indemnify one who is a surety, a guarantor, or bail for
a promise
illustrations: A says to S,
a third person. The following are illustrations:
Indorse P's
( I) ""Indorse
(i) you
P's note to C as surety and I will indemnify you";
(2) "Guarantee
(2) "Guarantee P's P's debt to C and I will save you harmless";
harmless" ;
"Lend P your credit in the purchase of goods from C and I
(3) "Lend
(3)
nothing." In cases
will see that you lose nothing." clear
cases like these the clear
weight of authority is that A's promise is not within the statute; 1515

engagement by which the buyers of the goods are not to be

is, in substance, an engagement
indemnify the seller against their default.
defendant is to indemnify
exonerated, but the defendant
That contract within the Statute
That is clearly a contract Statute of Frauds." See also Bennighoff v.
Robbins, 54 Mont. 66, i66 Pac. 687 (1917).
66, 166 (1917).
15 Godden
15 Godden v. v. Pierson,
Pierson, 42
42 Ala. 370 (1868)
Ala. 370 (but see
(1868) (but Posten v.
see Posten v. Clem, infra note
Clem, infra note
16);; Reed v. Holcomb, 31 Colin.
16) Conn. 360 (1863); Smith v. Delaney, Delaney, 64 Conn. 264, 29 29
McCormick v. Boylan, 83 Conn.
(2894); McCormick
Atl. 496 (1894);
Atl.496 Conn. 686,
686, 78 Atl.
Ath. 335 (1910) (Com-
(igo) (Com-
pare Clement's Appeal, 52 Conn. 464 (1885),
pare particularly bad decision, inade-
(1885), a particularly inade-
considered.);; Clark v. Toney, 17 Ga. App. 8°3,
quately considered.) 803, 88 S. 69o (1916);
S. E. 690 Res-
(1916) ; Res-
seter v. Waterman,
Waterman, 151 i69, 37 N. E. 875 (1894)
i51 Ill. 169, (stating that the principal
(x894) (stating
Stoltenberg v. Johnson, 163 Ill.
indemnity); Stoltenberg
debtor owed the plaintiff no duty of indemnity);
App. 422 (19II);
ApP.422 Anderson v. Spence,
(I911); Anderson Spence, 72 Ind. 325 (i88o);; Mills v. Brown, II
315 (1880) 3[ Iowa
Iowa
314 (i86o);
(1860) ; Patton
Patton v. Mills, (1878) ; Dunn v. West, 5 B. Mon. 376 (Ky.
Mills, 21 Kan. 163 (1878);
Chamberlain, 8 B. Mon. 276 (Ky. 1848);
1845); Lucas v. Chamberla:in,
1845); 1848); George v. Hoskins, 17 17
Ky. L. R. 63, 30 S. W. 406 (1895); (1895); Dyer v. Staggs,Staggs, 217 Ky. 683, 683, 290
290 S.S. W.
(1927); Smith
494 (1927); Smith v. Sayward, 5 Me. 504 (1829); Alger v. Scoville, Scovile, Ii Gray
391 (Mass. Aldrich v. Ames, 99 Gray 76 (Mass. 1857);
1854); Aldrich
(Mass. 1854); 2857); Hawes v.
Murphy, 191 Mass.
Murphy, Mass. 469, 78 N. E. io9 (1906); Boyer v. Soules, 105 Mich.
109 (i9o6);
32, 62 N. W. 1000
31, iooo (895);
(1895); Fidelity & & Casualty Co. v. Lawler, 64 Minn. 144, i44, 66
66
Esch v. White, 76 Minn. 220, 78 N. W. lII4
(1896); Esch
N. W. 143 (1896); 114 (1899); Minick
(x899); Minick
(1894) ; Holmes v. Knights, 10
Neb. 516, 59 N. W. 795 (r894);
v. Huff, 41 Neb. ro N. H. 175 (1839)
(1839); ;
Demeritt v. Bickford, 58 N. H. 523 Warren v. Abbett, 65 N. J.
(1879); Warren
523 (1879); J. L. 99, 46
Atl. 575 (1900);
(I9OO); Cortelyou v. Hoagland, 4o 40 N. J. J. Eq. Ii (1885) (overruled in
(x885) (overruled
Hartley v. Sandford, 66 N. J. L. 627, 50
Hartley Atl. 454 (900));
5o Ath. (1901»; Chapin v. Merrill,Merrill, 4
Wend. 657 (N. Y. 1830); 1830) ; Barry v. Ransom, 12 (1855); Sanders v. Gil-
22 N. Y. 462 (1855); Gil-
5g N. Y. 250 (1874)
lespie, 59 (1874) ; Tighe v. Morrison, II6 116 N. Y. 263, 22 N. E. 164
263, 22 (1889)
264 (1889)
(a good discussion); Jones v. Bacon, 245 N. Y. 446, 40 N. E. 216 (1895);
Bacon, 145 (1895); Rose v.
Wollenberg, 31 Ore. 269,
Wollenberg, 269, 44 Pac. 382 (1896) reviewed); Alphin v.
(cases well reviewed);
(1896) (cases
Lowman, lIS 115 Va. 441, 1029 (1913)
442, 79 S. E. 1029 Wolverton v. Davis, 85
(overruling Wolverton
(1913) (overruling
Va. 64, 6 S. E. 619 (1888»;
Va. (1888)); Faulkner v. Thomas, 48 W. Va. 148, 35 35 S.S. E. 915
(i9oo) semble; Shook v. Vanmater, 22 Wis. 532 (1868);
(1900) (x868); Vogel v. Melms,
Melms, 32 31 Wis.
306 (1872) ; Thomas v. Cook, 88 B. & C. 728
306 (1872); 728 (1828); Reader v. Kingham,
(1828) ; Reader Kingham, 13 23 C. B.
(N. (1862); Wildes v. Dudlow, L. R. 19
(N. S.) 344 (1862); 29 Eq. 198 (2874); In
298 (1874); In re Bolton,
Bolton,
8 T. L. R. 668 (2892);(1892); Guild & & Co. v. Conrad, [1894] [1894] 2 Q. B. 885; Harburg
India Rubber Comb Co. v. Martin, [1902] [2902] I1 K. B. 778, semble.
Equitable Surety Co.,
In Hall v. Equitable Co., 126 Ark. 535, 192 S. W·32
535, 191 (29x7), the court
W. 32 (1917), court
held that a defendant who had promised to indemnify a surety was not himself himself a

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69 6
696" HARVARD LAW
HARVARD LAW REVIEW
REVIEW
16 and some law
but
but a good many decisions have have been contra,l6
been contra,
writers agree with them."
writers agree them.11
The majority
The majority decisions already cited are
decisions already supported by many
are supported many
cases holding that one who becomes
cases surety on the oral promise
becomes a surety
indemnify him can enforce that promise. 188 In
co-surety to indemnify
of a co-surety In
is usually bound
true that the promisor usually bound
this case it is true to the credi-
surety and
surety therefore was not
and therefore not discharged by the failure surety to
failure of the surety to sue his
his
principal at the
principal defendant's request. This
the defendant's This isis a correct
correct holding.
Of course a promise
promise by principal debtor
by the principal himself to indemnify
debtor himself indemnify his surety
is not within
within the statute, for it is a promise of
the statute, performance that the
of a performance the law would
would
require of him even if he made
require promise, and no third
made no promise, under obligation
third party is under obligation
promisee. See
to the promisee. Robertson v. Wilhoite, 157
See Robertson 157 Ky. 58,58, 162
162 S. W. 563 (1914);
563 (1914);
Brannon, 137 Ga.
Kaigler v. Brannon,
Kaigler Ga. 36,
36, 7272 S.
S. E. 40040" (911) principal to
(promise of principal
(19II) (promise to
Potter v. Brown,
agent); Potter
indemnify his agent); Brown, 35 Mich.Mich. 274 (1877).
(1877).
16 Posten v.
16 v. Clem, 2o1
201 Ala. 529,529, 78 So 883, 883, iI A. L. R. 381 38, (i918);
(1918); May v. v.
Williams, 6i 61 Miss. (1883); Craft v. Lott, 87 Miss.
Miss. 125 (1883); Miss. 590, (19o6);
590, 40 So. 426 (19°6);
Bissig v. Britton, 59 Mo. (1875);; Hurt v. Ford, 142
Mo. 204 (1875) 142 Mo. 283,283, 44 S.S. W. 228,
228,
oI)
41 L. R. A. 823 823 (1898); Hartley v. Sandford, 66 N. J. L. 627, go
(1898); Hartley AtI. 454 (I9
50 AU. (19°1);;
Draughan
Draughan v. Bunting, 99 Ired. L. 10 1848);; Easter v. White, 12 Ohio St. 2X9
io (N. C. 1848) 219
(1861)
(i86);; Nugent
Nugent v. Wolfe, III Pa. 471,
IIi Pa. 471, 4 Atl. IS i5 (1886); Penna. Knitting
(1886); Bayard v. Penna.
Mills, 137 AU. 910
137 AtI. 9io (Pa. 1927)
1927) ; Simpson v. Nance,Nance, iI Spear 4 (S. (S. C. 1842); Mace)'
Macey
v. Childress, 2 Tenn. Ch. 438 438 (1875).
(1875).
17 WILUSTON,
11 WILSTON, CONTRACTS
CONTRACTS (1920)
(1920) §§ 482; ARNOLD,
ARNOLD, OUTLINE OF or SURETYSHIP
SuRTasmp' ANI) AM)
GuARANTr
GUARANTY (1927)(1927) §§ 65-74.
65-74-
Holding the view supported herein, see SrRARNS, SuRTYsm (1922)
STEARNS, SURETYSHIP (1922) § 33;33;
COSTIGAN,
COSTIGAN, CASES ON ON CONTRACTS
CONTRACTS (1921)
(1921) 1254,
1254, n.n. 18;
18; BISHOP,
BISHOP, CONTRACTS (2d (2d ed.
1907)
1907) § 1265; ANSON, CONTRACTS
CONTRACTS (Corbin's
(Corbin's ed.ed. 1924)
1924) § 97; 2 STREET,
STREET, FOUNDATIONS
FOUNDATIONS
OF LEGAL I86; Burdick, Suretyship
(I9o6) 186;
LAriT'c" (1906)
LEGAL LIABILITY Suretyship and Statute of Frauds.
and the Statute Frauds
(1920) 20 COL. L. REv.
(1920) Rv. 153; Steinmeu, Contracts of
Steinmetz, Contracts Guaranty and Indemnity and
oj Guaranty
Credit Insurance
Credit Insurance (1910) A1.I. L.
(191o) 44 Am:. L. REV. 736. And see BROWNE, STATrTE STATUTE OF FRAUDS
Or FRAUDS
(5th ed. 1895)
1895) § 162.
162.
Jones v. Shorter, xI Ga. 294 (1846); Horn v.
's Jones
18 v. Bray, 5151 Ind. 555 (1875)
Ind. 555 (1875)
(overruling Brush v. Carpenter, 6 Ind. 78 (1854»;
(overruling (1854)); Hoggatt v. Thomas, 35 3S La.
Ann. 298 (1883); Blake v. v. Cole, 22 Pick. 97 (Mass. 1839); 1839); Weeks v. 176
v. Parsons, 176
Mass. 570, 58 N. N. E. 157 (19°°); Boyer v.
357 (igoo); v. Soules, 105 Mich. 31, 31, 62 N.
N. W. 1000xooo
(1895); Noyes v. Ostrom, II3 113 Minn. III,ii, 129 N. W. 142 (1910); Apgar v. Hiler,
142 (igio);
(1854); Wilson v. Hendee, 74 N. J. L. 640, 66 AU.
N. J. L. 812 (1854);
24 N. Ati. 413 (19°7);
(,907))
Barry v. Ransom, 12 N. Y. 462 (1855) Maxwell, 28 Ohio St. 383 (1876)
(1855);; Ferrell v. Maxwell, (1876) ;
Rose v. Wollenberg, 31 Ore. 269, 44 Pac. 382 (1897)
v. WoIlenberg, (1897);; Mickley v. Stocksleger, 10 io
(189i); Anderson
Pa. Cty. Ct. 345 (1891); Anderson v. v. Peareson, 2 Bailey 107 (S. C. 1831); Sloan Sloan
v.
v. Gibbes,
Gibbes, 56 56 S. C. 480, 35 S. E. 408 (1899) (1899) (prior indorser was was allowed to hold
subsequent indorser on parol promise promise that he would be co-surety); Clevenger v.
Commercial
Commercial Bank, 183 S. W. W. 65 (Tex. 1916)I916);; Alphin v. Lowman, lIS 115 Va. 441, 79 79
S. E. 1029 (1913) (overruling Wolverton v. Davis, 85 Va. 64, 6 S. E. 619
X029 (1913)
(1888)); Handsaker v.
(1888»; v. Pedersen, 71 71 Wash. 218,218, 128 Pac. 230 (1912); Thomas v. v.
Cook, 8 B. & Contra: Posten v.
(1828). Contra:
& C. 728 (1828). v. Clem, 201 Ala. 529, 78 78 So. 883
(I918); Bissig v. Britton, 59
(1918); .9 Mo. 204 (1875);(1875); Draughan Bunting, 9 Ired. L.
Draughan v. Bunting, L.
io (N.
10 (N. <;:.
4 . 1848).
1848).

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 OF INDEMNITY AND STATUTE
CONTRACTS OF STATUTE OF FRAUDS 697

tor to pay the whole debt, although his duty to a co-surety co-surety is
merely to pay his pro rata rata share; but it is also true that the prom-
isee is a surety for another person who owes to such promisee the
duty of exoneration and indemnity. Direct support is also found
in most of the cases dealing with promises to indemnify bail.
These are discussed separately
separately below.
accommodation indorser has power
An accommodation power to limit the extent of his
undertaking with respect to any prior indorser or any subsequent subsequent
one with notice. He can make himself a surety for other in-
dorsers instead of a co-surety with them, thus making it their duty
to indemnify him without any promise on their part.19 19
Where he
has such power, his signing in reliancereliance on the other indorser's
indorser's oral
promise to indemnify him should have the agreed effect, wholly wholly
irrespective
irrespective of the Statute
Statute of Frauds. Indeed it has been held
that if one surety signs at the mere request request of another
another this makes
it the duty of that other to indemnify him.220" Such a holding is a
clear authority for the rule that an express promise to indemnify indemnify
is not within the statute.
In certain contracts of "reinsurance"
certain contracts " reinsurance" the problem
problem is also in-
volved, although not actually discussed. In the cases cases previously
cited herein, the surety (8) (S) originally became such at the request
request
of the promisor (A),
(A), and in return for the promise of A to indem-
nify and save him harmless. It It is not unusual, however, for a
surety company
company that has alreadyalready executed its surety bond to ""re- re-
insure"
insure" a part or all of its risk with another surety company.
" reinsurance"
The "reinsurance" contract, like other undertakings
undertakings of surety
companies, is nearly
nearly always in writing, so that the question of the
Statute of Frauds seldom arises; but the promise of the reinsuring
surety made to the antecedent
antecedent surety has been held not to be
within the statute. 221' This is in spite of the fact that the promisee
promisee
is an ordinary surety for some other person as principal,
principal, with full
rights of exoneration
exoneration and reimbursement
reimbursement against that person. It It
" reinsurer "
seems quite clear that the " reinsurer" should not have the pro-

"9 Chapeze
19 Chapeze v. Young, 87 Ky. 476, 476, 99 S. W. 399 (1888);
(1888); Oldham
Oldham v. Broom, 28
28
Ohio St. 41
Ohio St. (1875); Houck
41 (1875); Houck v. Graham,
Graham, 123123 Ind. 277, 24 N. E. !I3
277, 24 (i89o); Cray-
113 (1890); Cray-
thorne
thorne v. Swinburne, 14 Yes.Ves. 160
i6o (1807).
(1807).
20 Turner v.
20 Turner v. Davies,
Davies, 22 Esp.
Esp. 479 (1796).
479 (1796).
21 National Surety
21 National Co. v.
Surety Co. v. Equitable
Equitable Surety Co., 242
Surety Co., 242 S. W. 109
S. W. 1o9 (Mo. App.
(Mo. App.
1922).
1922).

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 HARVARD
HARVARD LAW
LAW REVIEW

tection of the Statute of Frauds, although by a technical

technical interpre-
tation of the statute brought within it.22
statute his promise can be brought 22

, A bail bondsman is a surety; and a promise to indemnify

indemnify him
against
against loss by reason of his going bail is in almost all respeots
respects
like a promise to indemnify other kinds of sureties.223" Indeed,
there is no difference
difference whatever
whatever in the case of a bail bondsman
bondsman in
a civil case, although a bail bond in a civil case is not so common
common
as it once was in the days of imprisonment
imprisonment for debt. All the de-
cisions are to the effect that a promise to indemnify S if he will go
cisions
bail for P in a civil case brought against P by C is not within the
statute. This is true even though we assume
assume that in such cases P
is bound to exonerate
exonerate and to reimburse S, just as in other cases
cases of
of
suretyship.
The same result is reached in the case of a bail bondsman
bondsman in
criminal cases. A promise to indemnify
indemnify the bondsman
bondsman is not not
within the statute. This may be supported, however, on a ground
,within
not applicable to civil bail cases. It It has been held, though not not
universally, that if S bails out P in a criminal case, S has no right
right
that P shall exonerate
exonerate or reimburse him in case of P'sP's default inin
appearance;
appearance; this is on the ground that P is in S's custody and the
public
public welfare requires that S should have the utmost interest in
surrendering P back into custody of officers of the law for trial.
The policy of this rule may be regarded as doubtful, particularly
particularly
in cases where a cash deposit is accepted
accepted as the equivalent of a
personal bond of a surety. But in any jurisdiction holding that
bondsman has no right against the person for whom he
the bail bondsman

22 Of course,
22 Of course, both
both surety companies
companies receive
receive a beneficial
beneficial premium
premium as compen-
compen-
sation for the risk undertaken;
undertaken; but this has not yet been
been held to take their promises
out of the statute. See Commonwealth
Commonwealth v. Hinson, 143 I43 Ky. 428, I36136 S.
S. W. 9I2,
912,
L. R. A. I917B 139 (i9i);
I9I7B I39 (I9II); Everley
Everley v. Equitable Surety Co., 19o Ind. 274, 130
Co., I90 I30
N. E. 227 (1921) ; Stratton
227 (I92I); Stratton v. Hill, 134
I34 Mass. 27 (I883)
(1883) (for $50 paid, defendant
(for $5o defendant
guaranteed title to a horse
horse sold by another);
another) ; Lang v. Henry, 54 N. H. 57 (I873).
(1873).
It
It would not be surprising if the courts turntum about
about and reverse
reverse the rule of these
cases.
23 As in other indemnity cases, a promise to indemnify the bondsman
23 bondsman is re-
garded as a promise
promise to a debtor, not to a creditor, and not within the statute.
Aldrich v. Ames, 99 Gray 76 (Mass. I857);1857); Keesling v. Frazier, zi 185, 2I
II99 Ind. IS5, 21
(1889); Gonzalez v. Garcia, I79
N. E. 552 (I889); 179 S. W. 932 (Tex. Civ. App. App. 1915);
I9I5);
McCormick v. Boylan, 83 Conn. 686, 686, 78 At.
Atl. 335 (i9io) ; Anderson
335 (I9IO); Anderson v. Spence, 72
Ind. 315 (i88o).
Ind.3I5 (I880). See
See also Perley v. Spring, I2
12 Mass. 297 (I8I5).
(i815). Contra:
Contra: May v. v.
61 Miss. I25
Williams, 6I (1883).
125 (I883).

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 CONTRACTS
CONTRACTS OF INDEMNITY
INDEMNITY AND
AND STATUTE
STATUTE OF FRAUDS 699

goes
goes bail,
bail, it is certain
certain that a promise
promise to
to indemnify
indemnify the bail bail bonds-
statute.244
man is not within the statute.
In
In the case
case of a promise
promise to indemnify
indemnify a surety it it is obvious that
that
the party
the party who is promised indemnity,
promised indemnity, here called S, is himself a
promisor. At the the request of AA and for the benefit
benefit of P, he makes
a promise
promise to C to answer for the debt debt or default of P. He is a
surety
surety for P so far as concerns
concerns the Statute
Statute of Frauds. The diffi-
culty, with
with respect
respect to the promise
promise of AA to indemnify
indemnify S, is this: the
promisee
promisee S is both an obligorobligor and an obligee.
obligee. His position as an
obligor
obligor is the more obvious
obvious one; andand it is this fact that may
may have
largely influenced the majority
largely influenced majority decisions. A's A's promise to indem-
nify S is clearly a promise
promise made to a debtor
debtor or obligor
obligor to paypayoror
otherwise
otherwise save him from having having to perform a duty duty that he is un-
dertaking at A'sA's request. If this were the whole story, the prob-
lem would be easy. But it is possible that S may be an obligee obligee
also, as well as an obligor. One who is a surety for another has,
under ordinary circumstances,
circumstances, a right against the principal that that
the latter shall exonerate
exonerate him and save him utterly harmless. The
principal's
principal's duty of exoneration
exoneration is regarded
regarded as existing from the
very
very moment that the surety becomes
becomes bound as such;2255 and when
bound when
the surety's duty to the creditor has maturedmatured and payment is due
he can get a decree
decree against the principal ordering him to pay the
creditor and thus to save the surety from having to pay.26 pay. 26 Fur-
thermore, if the surety has to pay the creditor, or to render other
performance
performance on the principal's account, the principal at once be-
comes the surety's
surety's debtor for the amount paid and the surety can can
get judgment for full reimbursement.
reimbursement. These facts show, assum- 27
discussion S
cases under discussion
ing that in the cases S is surety for
truly aa surety
is truly for P,
P,21
that A's promise to S is a promise to one who is also an obligee or or
creditor; and hence in one aspect A's promise promise is a promise to a
24 Cripps
2-1 Cripps v.
v. Hartnoll,
Hartnoll, 44 Best
Best &
& S.
S. 4I4
414 (I863);
(1863); Holmes
Holmes v. Knights, IO
v. Knights, io N. H.
N. H.
175 (1839).
I75 ( I839)·
25 See Appleton
25 See Appleton v.
v. Bascom,
Bascom, 33 Mete.
Metc. I69169 (Mass.
(Mass. I84I).
1841). This
This means merely that
means merely that
the operative facts have nearly all occurred at that time. Before aa legal sanction sanction
is available to the surety, further time must elapse and and the principal must default
default
performance of his duty to
in performance to the creditor.
26 See
26 See AMEs,
AmEs, CASES
CASES ON
ON SURETYSHIP
SURTYsHI (I90I)(1901) 583
583 et
et seq.
seq.
There is
27 There
21 is some
some doubt
doubt whether
whether SS is is in
in all
all respects
respects aa surety
surety for
for P,
P, as
as will
will be
be
indicated below. See infra,
indicated infra, pp. 705--<l6.
705-o6. S may not have any right against against P. But
But
the matter will first be discussed on the assumption that S has such a right, an
assumption that is usually made in discussions of of this problem.

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700 HARVARD
HARVARD LAW
LAW REVIEW

(S) to answer for the default of his debtor (P),

creditor (S) (P), a third
-third
person. In this respect the promise of A A appears to be within the
statute.
What is the solution of the difficulty? It It is believed that mere
mere
interpretation of the statute
logic and mere verbal interpretation statute afford no cer-
tain solution. ItIt must be solved chiefly
chiefly by a consideration
consideration of the
policies involved. In considering these policies,
policies, the writer ranges
unhesitatingly with the majority
himself unhesitatingly majority decisions: A's promise
should be held not to be within the statute. In reaching reaching this
influenced by the conclusion, based
result he may be somewhat influenced
upon a reading of many hundreds of cases, that the Statute of of
Frauds should now be regarded
regarded as mainly an in terrorem
terrorern statute
to cause important agreements
cause important agreements to be reduced
reduced to writing and
should be allowed to operate
operate as a technical
technical defense in actual cases
as seldom
seldom as is consistent
consistent with uniformity and a reasonable degree
reasonable degree
certainty of law. In view of the fact that most of the courts
of certainty
have already held that A's promise to indemnify
indemnify S for becoming
becoming
surety for P is not within the statute, lawyers can predict predict with
reasonable certainty
reasonable certainty for their clients; and the present type of case
generis, there is no harmful inconsistency
being sui generis, inconsistency in distinguish-
ing it from the ordinary
ordinary cases of suretyship
suretyship that fall within the
statute.
The first and most fundamental reason underlying the majority majority
decisions is that it is a horrid injustice to let the defendant
defendant escape
his duty to indemnify after inducing the plaintiff to undertake
the suretyship obligation
obligation for another person. If the courts have
classes of cases
seen reason in so many other classes narrow the opera-
cases to narrow opera-
tion of the statute in order to prevent contract
contract breakers from es-
caping the just penalty, there is certainly no less reason in the pres-
ent case where the promisee
promisee has been induced
induced by the promisor to to
bind himself for another person in whose welfare welfare he has no inter-
est and to do so on the sole credit of the promise of indemnity.
A second reason is that in these cases there is usually little dan-
ger of successful
successful perjury and fraud. If the defendant
defendant truthfully
circumstances will corroborate
denies making the promise the circumstances
him. The past relations
relations of the promisee with the person for whom whom
he becomes surety can be proved and compared with those between between
the promisor and such person. UsuallyUsually it appears that the prom-
isee did not have a sufficient motive for becoming
becoming surety for the

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 CONTRACTS OF
CONTRACTS lNDEMNITY AND STATUTE OF FRAUDS
OF INDEMNITY 7701
0I

other person in the absence

absence of indemnity
indemnity promised, but that the
promisor did have such a motive. The The"" mischief"
mischief" against
against which
which
the statute is supposed to be directed is less menacing
menacing in these cases
than in others to which the statute is applied.
A third reason is that the Statute of Frauds was drawn for the
protection
protection of persons in ~he the position of the plaintiff rather than
those in the position of the defendant. The plaintiff is the surety,
not the defendant. At the defendant's
defendant's request the plaintiff
plaintiff has
undertaken
undertaken to answer for the debt or default of another; and if it it
happens that that other person is under a duty to exonerateexonerate and
plaintiff, 8 this is a mere accidental accompaniment
indemnify the plaintiff,28 accompaniment
of and is caused by the defendant's
defendant's request and promise.
promise. The
defendant's
defendant's promise did not grow out of and was not caused by
the undertaking
undertaking of the other person to exonerate
exonerate and indemnify
the plaintiff, making
making the defendant's
defendant's promise a mere collateral
collateral ac-
companiment
companiment of that other's duty to exonerateexonerate and indemnify.
The plaintiff in signing as surety is not giving credit to another per-
son for whom the defendant
defendant is becoming
becoming a surety;
surety; instead, he is
becoming
becoming bound
bound to a creditor of that other person and is doing
so in sole reliance on the defendant's promise
promise to save him harm-
less from his undertaking. This is the aspect in which the trans-
action presents itself to both the plaintiff and the defendant; and
even if they know that the statute requires a surety's promise to to
be
b~ in writing, it does not occur occur to them that the defendant
defendant is a
surety for anybody
anybody or that his promise needs to be in writing.
The court should, and generally does, look at an agreement
agreement with
the eyes of the contracting
contracting parties themselves. In the present present
instance the parties do not ordinarily focus their minds on any
possible
possible duty of the third person (P) to exonerate
exonerate or indemnify
indemnify
the promisee
promisee (S); nor do they regard the defendant's
defendant's promise of of
indemnity as one to answer for the possible default of P to S. In-
stead, the promisor is asking S to becomebecome an obligor or debtor to
C, and it is S's duty to C that both partiesparties have in mind. AA is is
promising S to indemnify S with respect to his duty to C, C, not to
answer for P'sP's default to S.29
S.29 As stated above, P may be under a
28 As appears
28 As appears below, this is
below, this is not always the
not always the case; and if
case; and if it
it is not, the
is not, the only
only sup-
sup-
porting prop is knocked
knocked out from under the minority doctrine. See infra, 705-
infra, pp. 705-
06.
06.
Thus, in
29 Thus,
29 in Tighe v. Morrison,
Tighe v. Morrison, n6x6 N.
N. Y.
Y. 263, 268, 22
263, 268, 22 N. E. 164,
N. E. x64, 166
i66 (i889),
(1889),
the court said: "He
"He did not promise to pay the plaintiff if Dowdall did not pay

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702 HARVARD LAW REVIEW
HARVARD LAW REVIEW

exonerate S; but this duty is one of which the parties

legal duty to exonerate
are not even aware.
reimbursement after payment, as opposed to
Of the right of reimbursement to
before payment, the parties are much
exoneration before
the right of exoneration
more likely to be aware. But it is certain that the promise of in-
demnity to S should not be interpreted as a mere promise to an-
P's default in reimbursing S - a mere promise to reim-
swer for P's
burse S if P does not do so after S has been compelled compelled to
pay
payC.C.
A promise to indemnify and save harmless one who becomes becomes a
surety for another is very clearly more than a mere promise to to
reimburse the promisee if he has to pay. As the word is here used used
reimbursement; it is com-
indemnity is not mere reimbursement;
by the parties, indemnity
exoneration. A promisee who is obliged to sacrifice
plete exoneration. sacrifice his
property in order to raise money to discharge
property obligation is not
discharge an obligation not
saved "harmless" subsequent reimbursement
"harmless" by a mere subsequent reimbursement of the
money that he has paid. As said by Lord Justice Justice Lindley, in
v. Conrad," 0 the promise of the defendant to the plaintiff
Guild
Guild Conrad,s° plaintiff
batches of bills he, the defend-
that " if he would accept those batches
was that"
care that they should be met, and that he himself
ant, would take care
would provide funds to meet them." defendant's promise
them." If the defendant's
to S is a promise
promise that S shall never have to pay C,C, then it is
clearly not a promise to answer for the default of P in failing to
clearly to
reimburse S; and not being such a promise when it is made, it
reimburse it
does not become such a promise when it is broken. If S is com-
pelled to pay C, doubtless P will owe him a debt for money paid

Dowdall's failure to observe

consequence of Dowdall's
him, but, in substance, to pay him if in consequence
have to respond to the People."
plaintiff should have
the condition of the bond, plaintiff
In Dunn v. West, 5 B. Mon. 376, 383 (Ky. (Ky. 1845), "The plain-
I845), the court said: "The
tiff did not promise to pay West if his son did not pay him, but to pay him if if in
consequence of his son's failure original debt to another, West should
failure to pay the original should
have to pay that debt."
debt."
"Nor is it
"Nor it to answer for the default of Webster, [the principal] in not indem- indem-
nifying the plaintiff. It It has no reference to any dutyduty on the part of Webster to
should make default. That duty the defendant
indemnify the plaintiff, in case he should defendant
himself." Holmes v. Knights, IO
took upon himself." io N. H. 175,
I75, 18o (1839).
I80 (I839).
[1894] 22 Q. B.
so [I894]
30 B. 885, 896. The court further said: "In "In my opinion, therethere is
a plain
plain distinction between a promise to pay the creditor
distinction between debtor
creditor if the principal debtor
default in payment, and a promise to keep a person
makes default person who has entered, or is
indemnified against that liability
about to enter, into a contract of liability indemnified liability inde-
inde-
question whether a third person makes default or not."
pendently of the question
pendently not."

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 CONTRACTS
CONTRACTS OF INDEMNITY AND
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STATUTE OF
OF FRAUDS
FRAUDS 703

to P's
P's use; but the defendant's promise to indemnify S and save
him harmless is not to answer for this future debt of P; P; it is to
to
prevent it from ever existing. The performance
performance that the defend-
ant promises
promises is not one that will discharge
discharge this future debt of P
to S; instead, it will entirely
entirely prevent its existence.
existence. A promise
by the defendant that P shall never owe S a money debt is not a
promise to pay a money debt or to answer for a default
default of P.
Nearly all of the cases holding the minority view are weakened
weakened
considerations. Some of them rest on the early cases
by various considerations.
in England, New York, and Indiana that have been overruled.331
Others have themselves been overruled
overruled or have been distinguished
distinguished
for reasons that show no fundamental difference.
difference. 32 Still others
expressly
expressly indicate
indicate a desire to make a rigid application of the
statute that is out of harmony with the strong judicial current
current and
with the needs and social conditions of modern times. 33
33
conditions
31 See
31
Bissig v.
See Bissig Britton, 59
v. Britton, Mo. 204
59 Mo. 204 (1875)
(r875) (one
(one of
of the better reasoned
the better reasoned of
of the
the
minority cases); Hurt v.
minority cases); v. Ford,
Ford, 142
142 Mo. 283, 44 S.
Mo. 283, S.W. 228 (1897)
(1897) (bare statement
(bare statement
of the rule)
rule);; Easter v. White, 1212 Ohio St. 219
219 (1861).
(1861).
The following
32 The
32 following cases
cases have
have been overruled: Green
been overruled: Green v. Cresswell,
Cresswell, 10
io A. &
& E. 453
(1839) ; Kingsley v. Balcome,
(1839) BaIcome, 4 Barb. 131131 (N.
(N. Y. 1848)
1848) ;; Brush v. Carpenter,
Carpenter, 6 Ind.
Ind.
78 (185~);
(1854); Wolverton v. Davis, 85 Va. 64, 64, 66 S. (1888). Brand v. Whelan,
S.E. 619 (1888). Whelan,
r8 TIL
18 fI1. App. 186 (1885),
(1885), is not consistent with Resseter v. Waterman, 151 Is m.
Ill. 169,
37 N.
N. E. 875 (I894).
(1894).
The case of Easter v. White, 12 Ohio St. 219 (i86i), (1861), one of the best of the
minority cases,
cases, was distinguished in Ferrell v. Maxwell, 28 28 Ohio St. 383 (1876),
(1876),
holding that a promise
promise by one surety to indemnify his co-surety is not within the
statute. Hartley
Hartley v. Sandford, 66 N. J. L. L. 627,
627, So AU. 454 (igoi),
50 Atl. (1901), was distin-
guished the same way in Wilson v. Hendee, Hendee, 74 N. J. L. 640, 640, 66 Atl. 413 (19°7).
(1907).
Simpson v. Nance, Ii Spear 4 (S. (S. C. 1842), cannot be reconciled in principle with
C. 1842),
Sloan v. Gibbes, 56 S. S. C. 480, 35 S.S. E. 408 (i9oo),
(1900), or with Anderson
Anderson v. Peareson,
2 Bailey 107 1831). Nugent
(S.C. 1831).
207 (S. Nugent v. Wolfe, iii Pa. 471,
Wolfe, III 471, 4 AU.
Atl. IS
15 (1886),
(1886), was
distinguished in Mickley
Mickley v. Stocksleger, 10 ioPa. Cty. Ct. 345 (1891),(1891), a co-surety
case, and in Elkin v. Timlin, 151 Pa. 491, (1892), without discrediting
491, 25 AtI. 139 (1892),
it; in Nugent v. Wolfe, supra, the court cited five earlier cases, none of which was
clearly in point and two of which were practically overruled
overruled by a third.
In two states there have been changes
changes in the wrong
wrong direction. Cortelyou v.
Hoagland, 40 3. Eq. Ii (x885),
40 N. J. HarUey v. Sandford, 66 N. 3.
(1885), was overruled in Hartley J. L.
AtI. 454 (1901),
627, 50 AU. (i9oi), but the latter case was itself distinguished as indicated
indicated
above. Godden v. Pierson, 42 Ala. 370 (1868), (i868), was not followed in Posten v.
Clem, 2o
201 Ala. 529, 78 So. (i918), but
So. 883 (1918), but it was not overruled; instead the court
court
attempted a distinction, an attempt that was entirely incorrect
incorrect on the facts of the
earlier case. The later case followed a mere dictum in Brown v. Adams, Ii Stew.
Si
51 (Ala. 1827).
1827).
33 Sandford, 66 N. J.
33 Hartley v. Sandford, 3. L. 627, 631,
631, 50 Atl. (i9o), classifies the
AU. 454 (1901),
cases well, but rests upon a narrow interpretation
interpretation of the statute, saying: "Others
saying: "Others

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 HARVARD
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LAW REVIEW
7°4
The minority decisions in the indemnity
indemnity cases have in a few in-
stances been supported
supported as follows: The words of the statute are
"promise to
"promise to answer
answer for
for the debt .. .. .. of
the debt of another person."
person." They
do not say to whom that debt is owing. Now if AA asks S to be-
come surety for P on a debt to C and promises to indemnify S, A
clearly promising S to pay C. That is, person No. Ii is promis-
is clearly
ing NO.2
No. 2 to answer
answer for the debt or default of No. 4.3~
NO.33 to No. 4.34
So far as the mere words of the statute are concerned they may
not illogically
illogically be regarded
regarded as including
including this case. It It is very
doubtful, however, that there is much danger danger of perjury and fraud
in this sort of case; it is not
not""within
within the mischief"
mischief" aimed at by by
the statute. And at all events,
events, the cases are overwhelming
overwhelming to the
effect that a promise
promise is not within the statute unless it is to pay a
debt that some third person owes to the promisee, not a debt that
some third person owes to a fourth person; and the contrary con- con-
tention is hardly worth considering.
If the defendant's promise to indemnify S is made by him for
the reason that he was already
already bound to indemnify P as well, the
defendant requesting S to become surety for P as a part of of
the process of performing
performing his duty to P, the promise is not within
within
the statute. 355 The defendant is not a surety; instead, with respect
respect
to P he is the principal obligor. It It is equally certain, as has been
appear to have been induced
induced by the injustice
injustice of a refusal to enforce
enforce a promise on on
the strength of which the promisee incurred his liability, rather rather than by a readyready
purpose
purpose to execute the will of the legislature."
legislature." But did any legislature ever fore-
see these indemnity
indemnity cases and express its "will"
"will" concerning them?
concerning them?
Macey
Macey v. Childress, 2 Tenn. Ch. 438 better " to construe
(1875), says that it is better"
438 (I875), construe
the statute
statute rigidly"
rigidly" and "to
" to adhere to the letter
letter than to attempt to follow the
erring
erring spirit "; but the case involved other matters,
spirit"; matters, and the alleged promise
promise was
found not to havehave been made. Those who have heard that "the "the letter killeth"
killeth"
will hardly be moved by the court's argument.
In Simpson v. v. Nance,
Nance, iI Spear
Spear 4 (S.
(S. C. 1842),
I842) , the point
point is assumed, the discus-
discus-
sion being on other matters. Clement's Appeal, 52 Conn. 464 (I885), (i885), is not rec-
rec-
oncilable with McCormick
McCormick v. Boylan,
Boylan, 83 Conn. 686, 78 At!. AUt. 335 (Igio),
(I9IO), and it it
also erroneously
erroneously held that the promisor's attempt to carry out his oral promise
was in fraud of other creditors of the principal.
principal. In May v. Williams, 6I 6z Miss. I25
125
(I883), it was said that"
(1883), that "the
the statute ought not to be refined or frittered
frittered away."
away."
34 Easter
3~ Easter v. White, I2 Ohio St. 2I9
White, 12 219 (I86I)
(i86i) (one of two alternative views); views);
Nugent v.
Nugent v. Wolfe,
Wolfe, iii Pa. 471,
III Pa. 47I, 4 AtI.
At!. i5 (i886).
IS (I886).
35 Harrison
35 Harrison v. Sawtel, IO io Johns. 242 (N. (N. Y.
Y.. I8I3).
1813). In Smith v. Sayward, 5
Me. 504 (I829),
(1829), and Garner v. Hudgins, 46 Mo. 399 (870), the plaintiff
399 (I870), plaintiff became
became
surety
surety for one who was defendant's
defendant's agent and whom defendant
defendant was bound to
indemnif,.
mliemnify.

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 CONTRACTS
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STATUTE OF
OF FRAUDS
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stated above, that the defendant's

defendant's promise to indemnify S cannot
cannot
properly
properly be held to be within the statute in any case where P is
not bound to exonerate
exonerate or reimburse S. There are, indeed, some
decisions indicating
indicating that if S is induced to become
become surety for P inin
reliance
reliance solely upon the defendant's promise of indemnity, the
create no right of indemnity in S against P.36
law will create 36
A surety's
right of indemnity against his principal
principal is, in the absence
absence of an
actual agreement between
between them, quasi-contractual
quasi-contractual (that is, non-
contractual)
contractual) in character
character and is based on a theory of unjust en-
richment of P;
P; and in some cases it has been held that justice does
not require
require one who has directly
directly benefited
benefited by another's perform-
perform-
ance to reimburse
reimburse that other if he undertook the performance
performance
solely at the request of a third person and in reliance upon that that
person's promise of compensation indemnity.17 This is cer-
compensation or indemnity.3T
tainly a general rule in the law of quasi-contracts.
quasi-contracts. There is no
quasi-contractual
quasi-contractual duty of paying for benefits that are received as
an incident of the performance
performance of a contract between
between two other
persons.
persons. This seems to be applicable
applicable in the indemnity cases,
although no discussion of it has been found. If, without any
36 In Perley v. Spring, 12 Mass. 297 (1815),
36 (1815), the plaintiff
plaintiff had become
become bail for
for
one Dearborn
Dearborn on the defendant's
defendant's promise
promise to indemnify
indemnify and save him harmless,
Dearborn
Dearborn having deposited
deposited with the defendant sufficient
sufficient property to indemnify
indemnify
him. The court thought, perhaps perhaps rightly, that Dearborn
Dearborn owedowed no duty to the
plaintiff.
plaintiff. If so, the defendant
defendant was clearly
dearly not promising to answer
answer for any third
person's
person's default.
In Holmes v. Knights, 10 io N. H. 175, 178 (1839),
179, 178 (1839), the court said: "But
"But the case
does not find that Webster requested the plaintiff to recognize for him, or that the
plaintiff
plaintiff acted upon any such request. From the nature of the case, Webster must must
have assented that the plaintiff
plaintiff should become his surety;
surety; but mere assent, without
without
any request or promise,
promise, and when there was a request by a third party, and an an
express
express promise by him to indemnify,
indemnify, is not sufficient
sufficient to raise an implied promise."
promise."
In Tighe v. Morrison, II6 ri6 N. Y.Y. 263, 22 N. E. 164 (1889), the defendant,
164 (1889), defendant, being
being
one of two executors, asked the plaintiff to sign their executors' bond and promised promised
to save the plaintiff harmless. The defendant argued argued that his promise was in part part
to answer
to answer forfor the default of his co-executor, Dowdall; but the court said that the
plaintiff had
plaintiff had not signed
signed at Dowdall's request
request and that Dowdall owed the plaintiff
plaintiff
no duty of exoneration. See also Chapin v. Lapham, 20 Pick. 467 (Mass. 1838), 1838),
where the defendant promised to indemnify indemnify the plaintiff for becoming surety in
business
business for the infant son of the defendant. In Beaman Beaman v. Russell, 20 Vt. 205
(1848),
(1848), it was said
it was said that
that in the absence
in the absence ofof evidence
evidence the
the promisee will be
promisee will be presumed
presumed
to have no remedy against any third party.
37 Coleman
3T Coleman v. v. United States, 152
United States, U. S.
152 U. 96 (1894);
S. 96 (3894) ; Hatfield Special School Dist.
Hatfield Special
v. Knight,
v. Knight, II2 Ark. 83,
112 Ark. 83, 164 W. II37
S.W.
164 S. (1914); Cahill
1137 (1914); v. Hall,
Cahill v. Hall, 161
x61 Mass.
Mass. 512, 37
512, 37
N. E.
N. 573 (1894).
E. 573 (1894).

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 HARVARD LAW
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REVIEW

agreement
agreement with P, P, the promisee (S) becomes a surety for P at A's A's
request and in return for A's promise
promise of indemnity, it may well be
that P owes to S no duty of exoneration
exoneration or indemnity. If If he does
does
not, there
there is no duty of a third person to S to which A's promise promise
can be collateral.
collateral. But the conclusion
conclusion that the promise
promise of indem-
nity is not within the statute is not at all dependent
dependent upon the ab-
sence of a right of exoneration
exoneration in the promisee against against a third
person.
Where one person
person buys goods for the benefit of another, the
beneficiary cannot be made to pay for the value so received unless
before delivery to him he expressly or tacitly promised to pay.
Sole credit
credit was given to the buyer, not to the beneficiary;
beneficiary; and the
obligation of the party for whose
seller must be content with the obligation
promise he contracted,
contracted, even though
though that obligation turns out to
be a broken
broken reed. It It has even
even been held that if the beneficiary
beneficiary
should, after delivery, expressly promise
expressly promise the seller to pay the price
consumed by him, he is promising
or value of the goods consumed promising to pay
the debt of another (the (the buyer)
buyer) and his promise is within the
statute."ss If
statute. If this is true of goods purchased,
purchased, it is equally true
performed
of services performed at the defendant's request but for the
defendant's
benefit
benefit of another. If If the promisee (S) (S) signed as surety for P Patat
the defendant's
defendant's request and on the ""sole credit " of the defendant,
sole credit"
it seems
seems doubtful that he should have any right against P. P. If If he
has not, there is no longer eveneven the most technical
technical ground for say-
ing that the defendant's
defendant's promise
promise of indemnity is within the
statute.
If the promise
If promise that the defendant
defendant makes to S is, as indicated
indicated
above, to answer
answer for and indemnify
indemnify against the obligation of the
obligation
promisee (S) to his creditor C, it should be and generally is held
not to be within the statute. The parties may, however, have a
different intention and make
different intention clear. Thus, if A
make that intention
makes the following promise to S, it it should be held to be within
the statute: "If
"If you will become surety for P on his debt to C, I
assure you that P will reimburse you if you have to pay and I will will
do so if he does not."
not." 39" This expresses clearly
clearly an intention to to
38
3S Hendricks v.
Hendricks v. Robinson,
Robinson, 56 Miss. 694
56 Miss. 694 (1879).
(1879).
89
39 This is on the assumption that P is bound to reimburse
reimburse S. Otherwise, the
promise will not be within the statute, even though it is in terms conditional upon
upon
non-payment by
non-payment by the
the third
third person. See Mease v. Wagner, Ii McCord 395 (S. (S. C.
Ledlow v. Becton,
1821); Ledlow Becton, 36
36 Ala. 596 (i86o).
(1860).

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OF FRAUDS
FRAUDS 707

answer for P'sP's default to S. The promise is is not aa promise to

"save harmless" ; and it is a promise
" save harmless" ; and it is a promise of indemnity only in the
4o
reimbursement." Doubtless the the same result should be
sense of reimbursement.
reached if the defendant should promise SS as follows:
follows: "Become
"Become
surety for P on his debt to C and II will guarantee that P will exon-
you." The conflict in the cases may be partly due to this
erate you."
possibility of giving two different interpretations to aa promise of
A to indemnify S: (1) (i) it may be a promise that S will not have
to pay C without reference to any duty of P to exonerate or reim-
burse; (2)
(2) it may be a promise that if Spays
S pays C and is not reim-
bursed by P the promisor A will reimburse him. The minority
cases usually give the second interpretation,
interpretation, however far removed
removed
parties.4
it may have been from the expressed intention of the parties.41.
Whether the Statute of Frauds does more harm than good is an
open question; but there is no doubt that the courts are taking all
cases out of its operation when they can give an apparently reason-
able ground for doing so. In the case of a promise to indemnify a
surety, there are grounds so reasonable, grounds that have ap-
pealed to so many courts and writers as sound, that there can be
little doubt that such a promise will continue to be held not within
the statute. The future behavior of courts can be predicted with
reasonable assurance.
Arthur L. Corbin.
Corbin.
YALE
YALE LAW
LAW SCHOOL.
SCHOOL.

40 In Green v. Cresswell, io A. & E. 453 (1839), the court said: "The promise
40 In Green v. Cresswell, IO A. & E. 453 (1839), the court said: "The promise
in effect is, 'If'If you will become
become bail for Hadley,
Hadley, and Hadley,
Hadley, by not paying or or
appearing, forfeits his bail bail bond, I will save you harmless
harmless from all the consequences
consequences
ofof your
your becoming
becoming bail.
bail. IfIf Hadley
Hadley fails to do what is right towards you, I will do
itit instead
instead of him.'"
him.''' In In the two sentences
sentences quoted the learned court has stated two
different
different undertakings. The The second
second sentence clearly
clearly states
states a mere promise to reim-
burse if Hadley does not do so; this promise is one of suretyship suretyship and is within the
statute. The first sentence,
sentence, on the other hand, is stated in the the form of of an indem-
indem-
nity against an
nity against an obligation undertaken
undertaken by the the promisee
promisee without any reference
whatever
whatever to any any obligation
obligation on thethe part of Hadley.
Hadley. A promise
promise in
in such
such a form
should be held not to be within within the statute, and
and itit is
is generally
generally so held.
After
After the
the principal
principal has
has defaulted
defaulted and
and the
the surety
surety has
has had
had judgment
judgment against
against him,
it is clear that the
it the principal then owes
owes a duty to the surety;
surety; and
and a promise
promise by an-
other
other person
person thereafter
thereafter to pay pay and
and indemnify
indemnify the surety is a promise to answer answer
for the default of the principalprincipal to his surety. Miller v. Denny, Denny, Ir5
'ii Wash.
Wash. 635,
635,
197
197 Pac.Pac. 936 (19 21 ).
936 (1921).
41 The
41 The view that the promise to indemnify
indemnify a bail bondsman
bondsman is a promise not
promise not
to
to save
save the bondsman
bondsman from having to pay the the state
state but to answer
answer for the principal's
principal's

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failure to reimburse
reimburse the bondsman after the latter
latter has paid the state
state is held in May
v. Williams, 6i
61 Miss. 126 (1883).
(1883). On such an interpretation,
interpretation, the promise
promise is within
the statute if the "principal"
"principal" is also bound to reimburse
reimburse the promisee; but such
an interpretation of the ordinary promise
promise to indemnify
indemnify a surety
surety is much too
narrow.
"Looked
"Looked at as res nova, it it seems indisputable that the defendant's promise
promise
was within the statute; it was to respond to the plaintiff in case the defendant's
defendant's
son should make
make default in the obligation which he would comecome under to the plain-
plain-
tiff as soon as the plaintiff became surety for him, an obligation
obligation either to pay the
debt for which the plaintiff
plaintiff was to be surety or to reimburse the plaintiff if he paid
it. In this statement
it. statement of the nature of the promise there is, I think, every element
every element
which seems
seems necessary to bring a case within the purview of the statute."
statute." Hartley
Sandford, 66 N. J. L. 627,
v. Sandford, 629, 5o
627, 629, AtI. 454, 455, 55 L. R. A. 206, 207 (9o).
50 Atl. (1901).
"The
"The principal is always liable to remunerate
remunerate his surety for all moneys paid
in his behalf, and if the promise be regarded as one to make good by repayment repayment
any loss incurred as surety for Wisner and others, still it it would only amount to
an undertaking
undertaking that if Wisner
Wisner and others should be in default in remunerating the
plaintiff as their surety, that the defendant
defendant would, in Wisner's and others'
others' stead,
answer for their default
default by saving the plaintiff from such
such loss."
loss." Bissig v. Britton,
59 Mo. 204, 213 ((1875).
1875).

HeinOnline -- 41 Harv. L. Rev. 708 1927-1928