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.
3 5 Vin. Ab. 523. And see Sir George Maxwell's case, cited in Whit-bread v. Brockhurst. 1 Bro. C. C. 409; Crocker v. Higgins, 7 Conn. 342; Teague v. Fowler, 56 Ind. 569; Langford v. Freeman, 60 Ind. 46. So in Walker v. Walker, 2 Atk. 99, where Lord Hardwicke says: "Suppose a fraud consisted not merely in refusing to do what he agreed, but in deceiving the plaintiff out of his property. And the case is analogous to that put by Lord Macclesfield, as falling within the rule, where one agreement in writing is proposed and drawn, and another fraudulently and secretly brought in and executed in lieu of the former.
§ 441 a. This doctrine, that courts of equity have power to declare a deed, absolute on its face, to be a mortgage, upon parol proof that the conveyance was in reality only a security for the payment of a debt of the grantor to the grantee, has been discussed by the Supreme Court of Massachusetts, with especial reference to the application of the Statute of Frauds. The case was that of Campbell v. Dearborn,1 and presented the following state of facts. The plaintiff had a written contract from one Tirrill for the conveyance of a lot of land to himself upon payment of a certain sum, in pursuance of which Tirrill executed the conveyance to the plaintiff, who paid the purchase price with money lent him by the defendant, and about the same time executed to the defendant an absolute deed of the property. The bill alleged that this conveyance to the defendant was understood and intended by the parties to it to be only a security for the money advanced to the plaintiff to enable him to carry out his purchase from Tirrill, and prayed that the plaintiff might be allowed to redeem by payment of the amount lent him by the defendant, and the latter be decreed thereupon to convey the premises back to the plaintiff. The answer denied that any loan was ever made, and relied upon the Statute of Frauds as an answer to any of the alleged oral agreements, person who advances money should, after he has executed [received] the absolute conveyance, refuse to execute the defeasance, will not this court relieve against such fraud?" See also Arnold v. Cord, 16 Ind. 177; Mc-Burney v. Wellman, 42 Barb. (N. Y.) 390, affirmed sub nomine Dodge v. Wellman, 43 How. Pr. 427; Leahey v. Leahey, 11 Mo. App. 413; Chambers v. Butcher, 82 Ind. 508; Union Insurance Co. v. White, 106 111. 67; Armes v. Bigelow, 3 Mc Arthur (D. of C.) 442. See also § 95 ante. 1 Campbell v. Dearborn, 109 Mass. 130.
1 Blodgett v. Hildreth, 103 Mass. 484; Miller v. Blackburn, 14 Ind. 62; Moore v. Moore, 38 N. H. 382; Collins v. Tillou, 26 Conn. 368; Sturtevant v. Sturtevant, 20 N. Y. 39. See Haigh v. Kaye, L. R. 7 Ch. App. 469, however, in limitation of this doctrine.
2 Lance's Appeal, 112 Pa. St. 456.
§ 441 b. It is to be noticed that the rule, as laid down in Campbell v. Dearborn, does not allow the enforcement of an oral agreement,2 but merely allows it to be proved when, taken as a fact, and in connection with the other circumstances of the case, it affords sufficient ground for a court of equity to reform the instrument, by construing it according to what has been proved to be the true character of the transaction, viz., a security for the payment of a debt. If this does not appear, and the oral agreement relied upon is within the Statute of Frauds, a court of equity is as powerless as a court of law to disregard the statute, if relied upon by a defendant who is not by his conduct equitably estopped to insist upon it.3
§ 441 c. In the case of Glass v. Hulbert,4 also in the Supreme Court of Massachusetts, the plaintiff sought, by bill in equity, to have the defendant decreed, inter alia, to convey to him certain land which he alleged was included in the oral contract of sale, or represented by the defendant to be so included, but omitted from the deed; and to have the deed reformed so as to include the land in question. "Such a reformation," says Wells, J., in delivering the opinion of the court dismissing the bill, "not only requires a description of the subject-matter of the sale, different from the express terms of the oral contract, but would enlarge the effect and operation of the deed, as a conveyance. It involves the transfer of the legal title to land not covered by the deed already given. It requires a new deed to be executed and delivered by the defendant to the plaintiff. Whether that deed shall embrace the entire subject of the alleged contract of purchase, with a corrected description to make it conform to facts and abuttals as they were represented to be, or merely convey the seventeen acres omitted from the deed already given, the order for its execution will enforce the specific performance of a contract for the sale of lands, for which there exists no memorandum, note, or other evidence in writing signed by the party to be charged there-with. As to the seventeen acres in dispute, the obligation to convey them rests solely in the oral contract. The defendant denies any contract which includes them. The plaintiff seeks to establish such a contract by parol evidence, and enforce it." The opinion then proceeds to enumerate and discuss those circumstances which, when proved, operate as an equitable estoppel upon the defendant and prevent him from relying upon the statute when called upon to perform according to his agreement. This will be taken up later1 in the discussion of the foundation upon which such jurisdiction in courts of equity rests.
1 See Pond v. Eddy, 113 Mass. 149; McDonough v. Squire, 111 Mass. 217; Sweetzer's Appeal, 71 Pa. St. 264; Danzeisen's Appeal, 73 Pa. St. 65; Klein v. McNaraara, 54 Miss. 90; Odell v. Montross, 68 N. Y. 499; Jones v. Guaranty Co., 101 U. S. 622. The rule cannot be extended to allow parol proof of an oral agreement, made after an absolute conveyance, to turn it into a mortgage. This is obviously in derogation of the Statute of Frauds. Richardson v. Johnsen, 41 Wisc. 100; Armor v. Spalding, 14 Col. 302; Booth v. Hoskins, 75 Cal. 271; Landers v. Beck, 92 Ind. 49; Alford v. Wilson, 26 S. W. Rep. (Ky.) 539; Bender v. Zimmerman, 26 S. W. Rep. (Mo.) 973. Nor -will it apply where the rights of third parties have intervened. Pancake v. Cauffman, 114 Pa. St. 113.