This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
If the circumstances are such as to create an implied trust, a breach of a contract to carry out such trust is often called fraud in equity.1 In such cases, however, the fraud is really the failure to carry out the trust, a duty existing independent of contract, and not the breach of the contract. Thus where property is conveyed by one to another in whom he reposes trust and confidence, as by son to mother,2 mother to son,3 husband to wife,4 wife to husband,5 or to any person in whom actual trust and confidence are reposed,6 for the purpose of carrying out a trust, equity will enforce a contract to carry out such trust. This question is affected by the statute of frauds.7 If the contract is oral and unenforceable as a contract, the attempt to save the rights of the injured party on the theory that such breach of contract is fraud is frequently made; and unless some such theory is invoked successfully, such party can, at best, recover only the value of what he parted with.
7 Kremer v. Lewis, 137 Minn. 368, 163 N. W. 732.
8 A was B's agent with exclusive right to sell a certain tract of land at a specified commission. B represented to A that he would not sell such tract, and thereby induced A to surrender such contract. B had in fact sold such tract already. This was held fraud: Dobinson v. McDonald, 92 Cal. 33, 27 Ac. 1098.
9 Dashiel v. Harshman, 113 la. 283, 85 N. W. 85.
10 Cowan v. Curran, 216 111. 598, 75 N. E. 322.
11 Crompton v. Beedle, 83 Vt. 287, 30 L. R. A. (N.S.) 748, 75 Atl. 331.
12 Crompton v. Beedle, 83 Vt. 287, 30 L. R. A. (N.S.) 748, 75 Atl. 331.
13 See ch. LXXVII, and ch. LXXXIV.
1 California. Brison v. Brison, 75 Cal. 525, 7 Am. St. Rep. 189, 17 Ac. 689; same case, 90 Cal. 323, 27 Ac. 186; Hannah v. Canty, 175 Cal. 763, 167 Ac. 373.
Illinois. Rice-Stix Dry Goods Co. v. Albrecht, 273 111. 447, 113 N. E. 66.
Kansas. Newell v. Newell, 14 Kan. 202.
Kentucky. Taylor v. Fox, 162 Ky. 804, 173 S. W. 154.
Maine. Androscoggin County Savings Bank v. Tracy, 115 Me. 433, 99 Atl. 257.
New York. Wood v. Rabe, 96 N. Y. 414, 48 Am. Rep. 640.
Oklahoma. Rees v. Egan, - Okla. - , 166 Ac. 1038.
Virginia. Matney v. Yates, 121 Va. 506, 93 S. E. 694.