This section is from the book "A Treatise On The Construction Of The Statute Of Frauds", by Causten Browne. Also available from Amazon: A treatise on the construction of the Statute of frauds.
§ 79. It seems to be essential to our obtaining a clear understanding of the policy and spirit of this part of the Statute of Frauds, which concerns the proof of trusts in real estate, that we first of all compare it with other sections in which the subject of title in real estate is treated; namely, the fourth, which forbids an action upon any verbal contract for the sale of lands, and the first and third, which generally forbid the creation or transfer in proesenti of an estate in lands.
§ 80. The States of Kentucky, Virginia, North Carolina1 and Texas,2 while substantially re-enacting the fourth section, have altogether omitted the seventh from their legislation. In the first of these States, where an agreement was made between two parties, that one of them should make a purchase of land for the joint benefit of both, and one made the purchase, and it was then agreed that the other should advance half the money and be equally interested in the purchase, it was argued that, in order to carry the transaction into effect, it should be considered as a trust, and not as a contract for a sale of half the land, because, in the latter view, the fourth section would prevent any remedy upon it. The court said: "If the trust is considered as created by the agreement of the parties, if it does not come within the letter, that liberality of construction . . . which is alone calculated to prevent the mischiefs intended to be prevented by the statute emphatically requires it should be brought within the influence of the statute." Then, after remarking that a trust arising by implication of law from existing facts and circumstances is always excepted from the operation of the statute, the court adds: "It is evident the trust in the present case, if it can be so denominated, is one created by contract, and is consequently within the statute."1 The same court, upon another occasion, where land had been conveyed by one party to another in trust for the grantor, and upon an agreement that the grantee should reconvey to any one to whom the grantor might afterwards sell, treated the transaction as a contract for land, and, there being no written evidence of the arrangement, denied relief in equity on the ground of the statute.2 Here was apparently a clear case of trust, to which the court applied the section which in terms extends to mere contracts for the purchase or sale of land. In Virginia, on the other hand, where the statute stands in the same way, the seventh section being omitted and the fourth retained, it has been said (in a case, however, where the point was not directly presented), that the latter would not apply to a trust created verbally, which would accordingly be good in that State; and the court based its opinion on the simple fact of the legislature's omission of the trust section and retention of the other, as conclusive of its design to allow a trust to be proved without writing; adverting also to the circumstance that in England it was thought necessary to enact the seventh section expressly providing for trusts, although the fourth section of the statute of Charles contained larger language than the corresponding section of the Virginia statute; namely, that the former included contracts for "any interest in or concerning land," words which were wanting in the latter.8
1 Pittraan v. Pittman, 107 N. C 159. 3 Gardner v. Ruudell, 70 Texas, 453.
1 Parker v. Bodley, 4 Bibb, 103.
2 Chiles v. Woodson, 2 Bibb, 71.
3 Bank of the United States v. Carrington, 7 Leigh, 566. See Gardner v. Rnndell, 70 Texas, 453; Reed v. Howard, 71 Texas, 204.
§ 81. In Pennsylvania,1 the three first sections of the English statute, with the omission from the second of the final clause relating to the reservation of rent in short leases, were re-enacted in 1772. In 1855, so much of the fourth section as concerns promises of executors, and promises to answer for the debt, etc., of another, was substantially adopted; and in the next year the seventh section was added. Until then, the courts of that State made a distinction between cases where the grantor at the time of the conveyance verbally declared the trust, and cases where the grantee declared it himself, paying the money which is the price of the land. In the former, it was held that a confidence arose which it would be unconscientious for the grantee to violate, and which would constitute that species of express parol trust which it was the object of the Pennsylvania statute to sustain. In the latter, it was held that the transaction amounted to a mere contract to make a conveyance hereafter, upon which contract, on account of the omission of the fourth section, the courts would allow a remedy in damages; while, on account of the retention of the first three sections, they would not generally decree a specific execution of it, as that would work indirectly a conveyance of land without writing. Or, briefly, it would seem the rule in that State was that if the purchaser of an estate verbally declared that he held it in trust, the statute as to conveyances applied; but if the grantor declared that he conveyed it in trust, the statute did not apply.2 With this reservation as to what is to be considered a declaration of trust, the courts of Pennsylvania uniformly held, in conformity with those of Virginia, and in opposition to those of Kentucky, that, in the absence of any re-enactment of the seventh section of the statute of Charles, a verbal declaration of trust was valid and would be enforced.1 And, notwithstanding that the first section in their statute provides that no estate, etc., made or created without writing shall have any greater force either at law or in equity than an estate at will, it was held that its "obvious design . . . was, to prevent an equitable estate from being transferred, and the design of the seventh section was to prevent a trust estate from being created by parol." 2 Without assuming to harmonize these apparently discordant views of the mutual relation of the several portions of the statute in question, it may be remarked that it is difficult to understand the difference between creating an equitable estate by parol, and reserving by parol an equitable estate in land which is granted absolutely by deed; and that, consequently, the reservation of a trust for himself or for a third party by a grantor of land, at the time of the conveyance, should seem to be properly covered by any statute which contains (as does that of Pennsylvania) sections equivalent to the first of the statute of Charles; while, on the other hand, any trust declared by the grantee of land in favor of a third person, for value received or to be received from him, is hardly distinguishable from an agreement that the latter shall hold the equitable title in the land, and, as such, would naturally be embraced by the fourth section of the statute of Charles, without regard to any provision expressly covering trusts.3 We pass, however, to the examination of the seventh section as it stands.