IN THE MATTER OF THE RIGHT OF THE OWNER OF AN EQUITABLE In 1862, B. was the legal owner of a lot with improvements in Memphis, Tennessee, on which the sum of $17.50 direct tax were assessed December 8, 1863, under the acts of August 5, 1861 (12 Stat., 304), and June 7, 1862 (Id., 422); and, to pay said tax, the lot was sold June 21, 1864, to H., for $600, which was paid into the Treasury, being $566.80 in excess of "the tax, costs, charges, and commissions." December 22, 1865, B., in consideration of $6,000, conveyed the lot with the usual covenants of warranty to A., to whom H., in consideration of $925, quitclaimed said lot in March, 1873. June 9, 1877, A. applied to the Treasury Department for payment of said sum of $566.80, alleging, that prior to June in 1862, B. verbally agreed to convey said lot to him, A., for $6,000, to be paid on delivery of the conveyance, and gave him possession as such purchaser, but failed to execute such conveyance until December 22, 1865, as stated; which does not recite any prior verbal contract. B., whose residence is unknown, has no notice of this application, which is supported by affidavits. The act of August 5, 1861 (12 Stat., 304, sec. 36), provides that: "The surplus of the proceeds of the sale [in such case], after satisfying the tax, costs, charges, and commissions, shall be paid to the owner of the property, or his legal representatives." Held: 1. That, inasmuch as B. is not estopped by any written or record evidence from asserting a claim for the surplus proceeds of said tax-sale, A., the claimant, not having the legal title to said lot at the time of the sale, and so not the legal title to the claim now made, is not entitled to said surplus proceeds; accounting officers not generally recognizing claimants, whose rights exist only in equity and not at law. 2. That accounting officers will give effect to recitals in written instruments, and to estoppels when they operate per se to transfer the legal title to a claim by opera tion of law, and are evidenced by conclusive matter of record or by writings, which have the legal effect to transfer title. 3. But that such officers cannot generally give effect to disputable allegations of fact, from which, when judicially ascertained, an estoppel in pais might arise. 4. That the claimant does not, on the facts stated, present a case, which in equity gives him a right to payment, even if such case could be considered by accounting officers. 5. That a statute applies to cases clearly within its spirit and purpose although not within its letter, but does not apply to cases within its letter, when clearly not within its spirit and purpose. 6. That, where a new right, or the means of acquiring it, is given by statute, and the means also of enforcing it is therein prescribed, parties claiming thereunder are confined to the statutory mode of redress. 7. That no appeal lies from the decision of the First Comptroller to the Secretary of the Treasury, on the rejection by the Comptroller of a claim for surplus proceeds of a direct-tax-sale. The act of August 5, 1861 (12 Stat., 294, sec. 8), laid a direct tax upon the several States and Territories, and District of Columbia, and (Id., 304, sec. 36) authorized public officers to collect it by public sales of "so much of the [real] property" subject to such tax as might be necessary. This act (Id.,) then provides, that: "The surplus of the proceeds of the sale, after satisfying the tax, costs, charges, and commissions, shall be paid to the owner of the property, or his legal representatives, or if he or they cannot be found, or refuse to receive the same, then such surplus shall be deposited in the Treasury of the United States, to be there held for the use of the owner or his legal representatives, until he or they shall make application therefor to the Secretary of the Treasury, who, upon such application, shall, by warrant on the Treasury, cause the same to be paid to the applicant." The act of June 7, 1862 (12 Stat., 422), makes provisions to execute the former act. The act of March 3, 1883 (22 Stat., 595), provides, that: "The Secretary of the Treasury is hereby authorized and directed to cause to be audited by the proper accounting officers of the Treasury and paid the claims of the original owners of lands which were sold for non-payment of United States direct taxes, for the surplus proceeds of the same, under the provisions of the act of August fifth, eighteen hundred and sixty-one, and for such purpose the sum of one hundred and ninety thousand dollars, or so much thereof as may be necessary, is hereby appropriated." In 1862, Euclid Borland was the legal owner in fee of the north 23 feet of lot four, block 19, in the city of Memphis, Tennessee, with a valuable building thereon, producing rents and profits. December 3, 1863, a direct tax was, under the act of June 7, 1862 (12 Stat., 422), assessed against said real estate to the amount of $17.50; and notice was given by publication, that the direct-tax commissioners were ready to receive payment. By force of section 2 of this act, and of the President's proclamation of July 1, 1862 (12 Stat., 1266), the tax became a lien on real estate at said last-named date. June 21, 1864, at a direct-tax sale by virtue of said act, said real estate was sold to Ruel Hough for $600, which sum was deposited in the Treasury. December 22, 1865, Bor land, by deed, "in consideration of $6,000, in hand paid " by Matthias App, did "give, grant, bargain, sell, and convey" to him said real estate in fee-simple, and did covenant that the grantor "is well seized of the premises * in fee-simple and has good right ful power to convey the same, and that the same is free from grants, sales, liens, taxes, charges, and against all persons all incumbrances Then there is added: "But the above warranty is only to extend to the refunding of the above purchase money and interest, should the title fail, and no further." March, 1873, Hough, by deed, in consideration of $925, paid by App, quit-claimed said premises in fee-simple to App. January 28, 1874, App conveyed the premises with warranty to J. T. Brady. June 9, 1877, App made a sworn statement, which was filed in the Treasury Department August 25, 1882; and he made and filed another sworn statement June 26, 1883, corroborated in some respects by an affidavit of another person-all tending to prove, that in 1862, and prior to June, one O'Neil represented himself to App as agent of Borland, then in New Orleans, but without any written evidence of authority, when it was mutually agreed that Borland would sell and convey said real estate to App for $6,000, to be paid on delivery of the deed, and that App should, as he did then, take and continue possession of this real estate, receiving the profits thereof and paying local taxes; but that nothing was heard from Borland until in 1865, when the latter asked App if he was still willing to carry out said contract, and, App assenting, Borland made the deed of December 22, 1865, and received the consideration, $6,000. In the statement filed August 25, 1882, App asked the Secretary of the Treasury to refund to him, App, the surplus proceeds of the direct-tax sale. The deed from Borland to App does not recite any prior contract. Borland, whose residence is unknown, has no notice of the pending of this claim. Hon. Charles Chesley, Solicitor of Internal Revenue, in a learned opinion, advised the Commissioner of Internal Revenue "that the claim should be allowed." From which opinion the following extract is taken: "The Tennessee statute of frauds, concerning contracts for the sale of lands is as follows: 'No action shall be brought upon any contract for the sale of lands, tenements, or hereditaments, or the making of any lease thereof for a longer term than one year, unless the promise or agreement upon which such action shall be brought, or some memoraudum or note thereof shall be in writing, and signed by the party to be charged therewith, or some other person by him thereunto lawfully authorized.' This is essentially the same as the English statute upon which the statutes of frauds in force in most of the States in this country are based. The rulings of the English chancery courts, that a part performance of a parol contract for the sale of lands may take the case out of the statute of frauds, are followed by the United States Supreme Court and by chancery courts of most of the States, and specific performance of such a contract is ordinarily decreed by them where the purchaser has entered into possession under the agreement, with the knowledge and assent of the vendor, with a clear and unequivocal reference to the agreement and with a view of its performance, and has made improvements upon the property on faith of the promised conveyance, or, on that faith, has done some other act or incurred some other obligation in respect to it, such as having leased it to other parties, or has devoted it to some special use, which part performance would work a loss and a fraud upon him unless the agreement is carried into complete execution. A parol contract for the sale of land is not void. It is simply voidable. The vendor may avoid it by setting up the statute of frauds. But he is at liberty to waive his rights to that defense and consummate his agreement, and, unless he insists upon the defense, a court of chancery will compel him to comply with the terms of his contract, even though there has been no part performance. The Supreme Court of Tennessee, however, has refused to follow the English rule, and holds that equity cannot except cases out of the statute which are embraced by its words, if the statute is pleaded in defence. (Sheid v. Stamps, 2 Sneed, 172; Patton v. McClure, Mart. & Y., 333; Pepkin v. Jones, 1 Humph., 325; Ridley v. McNairy, 2 Id 174). App, therefore, could not have enforced specific performance through the Tennessee courts, if Borland had set up the statute in defense. Possibly he might have enforced it in some other State, if at any time the courts of another State had obtained jurisdiction of both himself and Borland. When a court of equity has jurisdiction of the parties, it may, in its discretion, compel him in whom the title is vested to convey lands lying beyond its jurisdiction, and may enforce the conveyance by attachment for contempt; but in such a case it is the act of the party and not the decree of the court that affects the title. The decree is not in rem but in personam. But whether the court in a State where the English rule prevails, having jurisdiction of both App and Borland, would, against a plea of the statute, have entered a decree requiring Borland to convey, is extremely doubtful, in view of the rulings of the court of Tennessee where the lands lie and where the contract itself was entered into Application to a court of equity to decree the specific performance of contracts are addressed to its sound and reasonable discretion. Such relief is not a matter of absolute right. It is a matter resting in the discretion of the court to be exercised upon a consideration of all the circumstances of each particular case. The probabilities that App could ever have enforced specific performance of the contract against a plea of the statute seem too remote to sustain his claim of having been the owner of the land at the time of the tax-sale. Unless, therefore, his other position can be maintained, his claim should probably be rejected. The claimant's second point, and the one on which he chiefly relies, is, that the deed given by Borland in 1865 related back to the date of the parol contract and made App owner of the land on and after that date. A party that enters into a valid parol contract for the purchase of lands becomes at once the equitable owner. The vendor becomes the trustee of the vendee and stands seized of the property for his benefit. The equitable estate of the vendee is alienable, descendable, and devisable, in like manner as real estate held by a legal title, and he is owner of the property with reference to all benefits and losses (2 Story, Eq. Jur., §§ 789-790; Lewis v. Hawkins, 23 Wall., 119). A parol contract for the sale of real estate is a valid one unless, and until one of the parties sets up the statute of frauds. The right to plead the statute is a privilege personal to the parties to the agreement. A stranger cannot plead it. If the parties do not insist upon the defense, a court of equity will decree specific performance (2 Story, Eq. Jur., § 755; Crawford v. Woods, 6 Bush, 200; Harrison v. Johnson, 3 Metc., Ky., 583; Flagg v. Mann, 2 Sumner, 528, and authorities there cited). A deed given by one in consummation of his parol contract for the sale of lands, as against himself and his heirs, relates back to the date of his contract (2 Story, Eq. Jur., § 75; Minns v. Morse et als., 15 Ohio, 568; Clary's heirs v. Marshall's heirs, 5 B. Monroe, 269, et seq). In this last case the court says: 'It has been repeatedly determined by this court, that a parol contract for the sale or lease of land for a longer term than a year is not void. The statute withholds the right of action to enforce such contract, but allows its operative effect as a shield of defense, and if subsequently perfected by deed, such deed will have relation back to the original of the parol contract, so as to overreach an intermediate executory sale to a stranger. The vendor may avoid it by pleading or relying upon the statute; yet he is left at liberty to waive his right to defense and consummate the contract, and cannot be deprived of his election to do so by a stranger. Though a vendor is not legally bound to fulfill his contract by a conveyance, yet a moral duty rests upon him to convey, and a moral right in the vendee to ask a conveyance; and if the former chooses to waive his legal right, in the obedience to the dictates of his moral duty, by conveying or furnishing written evidence of his obligation to convey, a stranger to the contract has no right to complain, nor to preclude him from this discharge of his moral duty, in whole or in part, upon the terms of the original parol contract, or upon terms which he may choose to exact, and which the vendee or sub-purchaser may be willing to concede.' In Minns v. Morse et als., in which the question seems to have been whether the sale under a levy on an execution should be confirmed, it was held, on a similar course of reasoning, that a conveyance of land made in consummation of the grantor's prior parol agreement cannot be defeated by a judgment rendered after the making of a contract, but before the execution of the conveyance. In announcing its decision the court, speaking of the parties that had made the parol agreement and given the deed, said: In such cases the parol contract is the basis of the decree, as it is also in all instances where part performance takes the contract out of the operation of the statute. Hence it would seem to follow that the parol contract to convey was voidable only and was binding upon the conscience; and if admitted and affirmed in answer would and must have been enforced by decree against Clark and Wiley at the date of respondent's judgment. They, therefore, in procuring the conveyance, only did voluntarily what a court of equity upon their own confession would have forced from them. Shall the act thus done in good faith, in performance of a moral duty arising from an express agreement, when executed, be less efficient than a judicial decree?' As soon as the parol contract was made Borland commenced holding the legal title as trustee of App, and continued so to hold it until his conveyance in 1865. App was, therefore, the equitable owner of the property at the time of its sale for taxes. The conveyance terminated the trust and the legal title to the land thereupon vested in App. If a chancery court having jurisdiction of the property and of the parties, had prior to the conveyance entered a decree for a specific performance of the parol contract, that decree would unquestionably have related back to the date of the contract, and would have made App the legal owner of the land from that date, and would also have entitled him to all the rights and benefits which had grown out of it during the life of the trust. Instead of compelling App to resort to the courts for the enforcement of his rights, Borland voluntarily gave him a deed of the land, regardless of his privilege under the statute, and gave it, as stated by himself at the time, with reference to and in consummation of his own prior parol contract. The deed contains no recital of this last-named fact, it is true. Neither, so far as it appears, did the deed in the Minns case. The testimony of App upon that point is clear and positive, and is corroborated by all the other facts and circumstances. I am convinced from the evidence in the case that in 1862 Borland entered into a parol contract with App to convey to him the land in question for six thousand dollars, to be paid on delivery of the deed; that in 1865 Borland gave him a deed of the property, and App paid him the stipulated consideration above named, and that the deed was given voluntarily, in pursuance of the said agreement of 1862 and in consummation of it. The owner of lands sold for direct taxes under the act of June 7, 1862, is entitled to the surplus of the proceeds of the sale after satisfying the tax, costs, charges, and commissions (United States v. Taylor, 104 U. S., 216), and his right to apply for and receive it under the provisions of section 36 of the act of August 5, 1861, is neither destroyed, transferred or in any way affected by his purchase of the tax-title and |