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 Hawley v. Moody, 24 Vt. 603. See Nugent v. Teachout, 67 Mich. 571.
§ 118 a. The rule that where one person pays money or performs services for another upon a contract void under the Statute of Frauds, he may recover the money upon a count for money paid, or recover for the services upon a quantum meruit, applies only to cases where the defendant has received and holds the money paid or the benefit of the services rendered; it does not apply to cases of money paid by the plaintiff to a third person in execution of a verbal contract between the plaintiff and defendant such as by the Statute of Frauds must be in writing. Such payment is not a payment to the defendant's use in the sense of the rule. It is a payment to his use, only if he chooses to abide by the contract, and it is his right to refuse to do that. In a case in the Supreme Court of the United States,1 where the verbal agreement relied upon in set-off by the defendant, was that the defendant should buy certain land from a third party and pay for it, and should then convey one-third of it to the plaintiff who should pay one-third of the purchase-money, and the defendant performed by buying the land and paying for it and tendering the plaintiff a deed of one-third of it, and, against the defence of the Statute of Frauds, contended that he was entitled to recover back the price of defendant's share as for money paid to the plaintiff's use, the defendant's claim in set-off was disallowed because of the Statute of Frauds. The Court say: "There is no implied contract on which the cross-action can rest, for the law implies a contract only to do that which the party is legally bound to perform. As the express contract set up by the defendant was void under the statute, the plaintiff was not bound in law to accept the deed tendered him by the defendant or pay the purchase-money. The defendant paid no money to or for the plaintiff. The money paid out by him was to enable him to perform his contract with the plaintiff. He paid it out for himself and for his own advantage. The plaintiff has received neither the money nor land from the defendant. Neither reason nor justice dictate that he should pay the defendant the price of the land, and therefore the law implies no provision to do so. The cross-action cannot, therefore, be sustained on any supposed implied promise of the plaintiff."
1 Souch v. Strawbridge, 2 C. B. 808; King v. Brown, 2 Hill (N. Y.) 485; Burlingame v. Burlingame, 7 Cowen (N. Y.) 92; Shute v. Dorr, 5 Wend. (X. Y.) 204; Hambell v. Hamilton, 3 Dana (Ky.) 501; Davenport v. Gentry, 9 B. Mon. (Ky.) 427; Sims v. McEwen," 27 Ala 184; King v. Welcome, 5 Gray (Mass.) 41; In re Kessler's Estate, 59 N. W. Rep. (Wise.) 129; Wonsettler v. Lee, 40 Kansas 367; McCrowell v. Bussou, 79 Va. 290; Baker Bros. v. Lanter, 68 Md. 64; Cohen v. Stein, 61 Wise. 508; Ellis v. Cary, 74 Wise. 176; Schoonover v. Vachon, 121 Ind. 3; Cadman v. Markle, 76 Mich. 448; Moore t'. Horse Nail Co., 76 Mich. 606; Frazer v. Howe, 106 111. 563; McElroy v. Ludlum, 32 N. J. Eq. 828; Buckingham v. Ludlum, 37 N. J. Eq. 137; Lapham v. Osborne, 20 Nevada 168; Koch v. Williams, 82 Wisc. 186; Smith v. Lotton, 5 Ind. (App. Ct.) 177. See Knowlman v. Bluett, L. R. 9 Exch. 307; Kimmins v. Oldham, 27 W. Va. 258; Terrell v. Frazier, 79 Ind. 473. In Britain v. Rossiter, L. R. 11 Q. B D. 123, plaintiff appears to have sued for breach of a contract of employment, not for the value of his services; see Snelling v. Huntingfield, 1 C. M. R. 20, which Britain v. Rossiter apparently follows.
2 Williams v. Bemis, 108 Mass. 91; King v. Welcome, 5 Gray (Mass.) 41. Upon a state of facts similar to that in this last case, a contrary decision was given in Mack v. Bragg, 30 Vt. 571; but the reasoning in King v. Welcome seems thorougniy convincing, and the doctrine expounded there to be the better one. See a further discussion of this, post, § 122 a. Salb v. Campbell, 65 Wisc. 405; Freeman v. Foss, 145 Mass. 301; Hartwell v. Young, 67 Hun (N. Y.) 472.
§ 119. Where one party has entered upon land under a verbal contract for the purchase of it, and has made improvements on the land which enhance its value, a court of equity will compel the other party, who has repudiated the contract or become unable to perform it, to remunerate the former for those improvements.2 The right of recovery at law, on the other hand, for expenditures so made by the party entering, seems to exist only where the expenditures were made in pursuance of a stipulation in the contract;1 if they were made without any express stipulation that they should be made, and only for the plaintiff's benefit and in reliance upon the defendant's performing his engagement to convey the estate, the plaintiff has no recovery at law.2 In all cases where the plaintiff has been put in possession, whether of land or of any other property, the profits he has derived from the use and enjoyment of it in the mean time should be deducted from the sum he is to recover for his expenditures made on the faith of the contract.3
1 Dunphy v. Ryan, 116 U. S. 491.
2 Findley v. Wilson, 3 Litt. (Ky.) 390; Thompson v. Mason, 4 Bibb (Ky.) 195; Bellamy v. Ragsdale, 14 B. Mon. (Ky.) 364; Vaughan v.
§ 120. It has been determined in Tennessee, that the advance of money upon a verbal contract for land creates no lien upon the land itself for the repayment of the sum advanced, and that a court of chancery is not authorized to decree a sale of the land for that purpose.1 But the general rule of law appears to be, that if the vendor cannot make a title, and the purchaser has paid any part of the purchase-money, he has a lien for it on the estate, although he may have taken a distinct security for the money advanced;2 and it would seem that the rule should equally apply where the vendor, though able to make a title, refuses to do so. It has been, it is true, decided that, where a purchase cannot be enforced on account of its illegality by statute, there is no lien; for such a lien would, to that extent, be giving to the purchaser the benefit of the illegal contract.3 But it may be replied that the contracts we are now considering are not made illegal by the Statute of Frauds, and it will be seen hereafter that the benefit of them is in a variety of ways given to the parties, notwithstanding the statute. The decision in Tennessee is opposed by the opinion of the courts in Kentucky, where in one case it is declared to be well-settled that the purchaser has a lien for his money advanced in payment for an estate which he cannot keep, as well as for his improvements made thereon while he supposed it to be his own.4