Court Opinion

ID: 9740066
Source: CourtListenerOpinion
Date Created: 2023-08-26 20:27:18.945854+00
Date Added: 2024-06-11T07:24:15.883097
License: Public Domain

JUSTICE LYTTON, specially concurring: I I write separately to discuss the general and widely recognized trend to abandon the preexisting debt requirement. Since the decisions in Williams v. Corbet, 28 Ill. 262 (1862), and Hartley Bros. v. Varner, 88 Ill. 561 (1878), were decided in the mid 1800s, the law on the applicability of the statute of frauds has seen significant change. As noted by the majority, today it is generally agreed that a “special” promise within the statute may be made prior to or simultaneously with the creation of the principal obligation, and may be offered as an inducement to the creditor to enter into a contract with the principal debtor. Brown & Shinitzky Chartered v. Dentinger, 118 Ill. App. 3d 517 (1983); Evans v. Owens, 30 Ill. App. 2d 114 (1961) (abstract of op.); 9 R. Lord, Williston on Contracts § 22:14, at 276-77 (4th ed. 1999); but cf. Publishers Advertising Associates, Inc., 747 F.2d 1076; Ricci v. Reed, 169 Ill. App. 3d 1062 (1988) (for statute of frauds to apply, there must be an existing debt at time of the alleged guarantor’s promise). The history of the concept of a preexisting debt, in itself, discloses that it is not a deep-rooted doctrine, but a legal device used at the turn of the twentieth century to reach a desired conclusion or to avoid a seeming wrong. Restatement (Second) of Contracts § 116, Comment a, at 300 (1981). However, the language of the statute contains no preexisting debt requirement. It does not distinguish between an antecedent debt and a debt created subsequent to the promise. See 740 ILCS 80/1 (West 2004). Based on the statute’s plain language, a promise to answer for the default or miscarriage of another comes within its purview without regard to the time when the promise was made. Kossick v. United Fruit Co., 166 F. Supp. 571 (S.D.N.Y. 1958), rev’d on other grounds, 365 U.S. 731, 6 L. Ed. 2d 56, 81 S. Ct. 886 (1961); see also Restatement (Second) of Contracts § 116, Reporter’s Note, at 301 (1981) (section stating that enforceable promise to pay-debt of another must be in writing is based on former section 184, but limitation in former section 184 to an antecedent debt is eliminated). Furthermore, the policy underlying the statute of frauds urges the conclusion that its application should not be limited to cases in which the original debt preexisted the promise to pay it. The object of the statute is to require higher and more certain evidence to charge a third party with a debt when that third party does not receive the substantial benefit of the transaction. The statute is meant to provide greater security against fraudulent demands which, if met, would discharge the original debtor. Eddy v. Roberts, 17 Ill. 505 (1856). Those protections and safeguards are necessary whether the promise was made “prior to or simultaneously with the creation of the principal obligation,” or “offered as an inducement to the creditor to enter into a contract with the principal debtor.” 9 R. Lord, Williston on Contracts § 22:14, at 277 (4th ed. 1999). If anything, the promisor should be entitled to greater protection where the debt is incurred after the promise is made. Promisors of a preexisting debt are aware of the amount of debt and can prepare for the likelihood of liability. Promisors who agree to pay a debt that has yet to arise may be exposed to limitless liability. The timing of the promise should not limit the statute’s application. I therefore believe that Caterpillar’s oral promise to pay should fall within the statute of frauds regardless of when it was made. II Thus, I agree with Brown & Shinitzky Chartered that an oral contract to guarantee the debt of another violates the statute of frauds and is unenforceable unless it is founded upon a new and independent consideration passing between the newly contracting parties and independent of the underlying debt. Brown & Shinitzky Chartered, 118 Ill. App. 3d 517. However, determining whether an oral promise is a special promise within the statute or whether the promise is independent of the underlying debt is not easily accomplished. Historically, courts adopted a basic test to analyze whether an oral promise to pay constituted a special promise within the statute. If the promise was original and independent of a debt or liability of another person, it was not within the statute. If the promise was collateral, the statute applied. McKinney v. Armstrong, 97 Ill. App. 208 (1901); Lake View Hospital Ass’n & Training School for Nurses v. Nicholson, 202 Ill. App. 205 (1916). Only a collateral promise fell within the meaning of the term “special” promise as used in the statute. Bonner & Marshall Co. v. Hansell, 189 Ill. App. 474 (1914). The terms “original” and “collateral” do not appear anywhere in the statute and have been used by courts more as a convenient mode of expression rather than a meaningful interpretation. The use of these terms precedes the statute. They were part of the terminology applicable to a common law action of debt. Bullen v. Morrison, 98 Ill. App. 669 (1901). An original promise would give rise to an action of debt; “whereas a collateral promise, though it might be a binding contract upon which assumpsit would lie because a detriment had been incurred by the plaintiff at the defendant’s request, could not be the basis of debt.” 9 R. Lord, Williston on Contracts § 22:6, at 248 (4th ed. 1999). Using these terms in a statute of frauds analysis, while convenient, is not very helpful. More recently, courts recognized the difficulty in determining whether a promise is original or collateral and have attempted to define a more useful test. See Publishers Advertising Associates, Inc., 747 F.2d 1076; Swartzberg v. Dresner, 107 Ill. App. 3d 318 (1982). Some Illinois appellate courts have noted that the question is to be determined, “not from the particular words used, but from all of the circumstances of the transaction.” Ricci, 169 Ill. App. 3d at 1066; Publishers Advertising Associates, Inc., 747 F.2d at 1079. Courts from other jurisdictions have stated that the intention of the parties controls and should be ascertained from the words of the promise and the situation of the parties, as well as all of the circumstances surrounding the transaction. Eilertsen v. Weber, 198 Or. 1, 255 P.2d 150 (1953); Landmark Savings Bank, FS.B. v. Weaver-Bailey Contractors, Inc., 22 Ark. App. 258, 739 S.W2d 166 (1987). Perhaps the most common test for distinguishing promises that fall within the statute is the “leading object” or “main purpose” rule. Swartzberg, 107 Ill. App. 3d 318; Power Entertainment, Inc. v. National Football League Properties, Inc., 151 F.3d 247 (5th Cir. 1998); Restatement (Second) of Contracts § 116 (1981); see also Clifford v. Luhring, 69 Ill. 401 (1873) (making an early, general reference to the application of the “leading object” test). Under the “leading object” rule, a promise to pay the debt of another falls within the statute of frauds unless the main purpose of the promisor is to gain some advantage, or promote some interest or purpose of his own, and not to become a mere guarantor or surety of another’s debt. Swartzberg, 107 Ill. App. 3d 318. A slight or indirect possible advantage to promisors is insufficient to defeat the statute’s application. The expected advantage must justify the conclusion that the promisors’ main purpose in making the promise is to advance their own interests. Restatement (Second) of Contracts § 116, Comment b, at 300 (1981). In other words, unless promisors receive valuable consideration that moves directly to themselves, as distinguished from being benefitted by a consideration moving to the original debtor, the promise is within the statute. 9 R. Lord, Williston on Contracts § 22:20 (4th ed. 1999); Murto v. McKnight, 28 Ill. App. 238 (1888); Emerson v. Slater, 63 U.S. (1 How.) 28, 16 L. Ed. 360 (1859). As a practical matter, a promisor’s advantage must be served in a straightforward way in order for the leading object rule to apply. Graybar Electric Co. v. Sawyer, 485 A.2d 1384 (Me. 1985). While these various tests are all supported by authority, the “leading object” rule is the most meaningful and effective way of determining whether a promise is within the statute of frauds. I would follow the trend toward categorizing a promise as either collateral or original by application of the “leading object” rule. 9 R. Lord, Williston on Contracts §§ 22:11, 22:20 (4th ed. 1999). Rosewood argues that the statute of frauds does not apply in this case because the main purpose of Caterpillar’s promise was to promote its own interests. Rosewood claims that Caterpillar received a direct, substantial benefit because the goods and services furnished by Rosewood met Caterpillar’s statutory obligation under the Workers’ Compensation Act to provide treatment required due to Cook’s work-related injury. See 820 ILCS 305/8(a) (West 2004). Under section 8(a) of the Act, employers are required to provide and pay for all the “necessary medical services” required, limited to that which is “reasonably required” to treat the “accidental injury.” 820 ILCS 305/8(a) (West 2004). Rosewood’s assumption that Caterpillar is obligated to pay for Cook’s services is based on two legal conclusions: first, that Cook suffered a work-related accidental injury; and second, that the services Cook received were necessary and reasonably required. However, Cook’s workers’ compensation claim is still pending, and Caterpillar’s obligation to pay for Cook’s services is still in dispute. Any possible advantage to Caterpillar has not yet materialized and cannot defeat the statute’s application. Implicit in Rosewood’s argument is that, in consideration for Caterpillar’s payment, Rosewood could release Caterpillar from its obligation under the Act. However, Rosewood is legally incapable of providing such consideration. Cook, as the injured worker, is the only person entitled to receive the workers’ compensation benefits, and the Act expressly prohibits the assignment of those payments. See 820 ILCS 305/21 (West 2004). Thus, no consideration would flow between Caterpillar and Rosewood. Without sufficient consideration from Rosewood, it is difficult to conclude that Caterpillar’s main purpose in making the oral agreement was to promote its own pecuniary interests. See generally Gray-bar Electric Co., 485 A.2d 1384. Accordingly, the promise violates the statute of frauds and is unenforceable. Using this analysis, I would conclude that the trial court properly dismissed Rosewood’s complaint. Ill However, since our supreme court has not reexamined its analysis in Williams and Hartley Bros, since they were decided more than 125 years ago, I must reluctantly agree with the majority. Under the current state of the law, the statute of frauds does not bar Rosewood’s suit.