Summary

John McLean Babcock v. Wyman — Opinion of the Court

It is clear that the statute cannot constitute a bar in the present case. Courts of equity apply the statute by analogy to cases at law; but in this case, the trust being established, there was no adverse possession in favor of which the statute could run. The possession was consistent with the intentions of the parties, until the fraud was discovered, in 1851. Nor can the statute bar the right of the complainant to the proceeds of the land, as Babcock was bound to apply these to the payment of interest on the debt, and in discharge of the principal.
Source: Wikisource

John McLean Babcock v. Wyman — Opinion of the Court

So, where an estate was purchased in the name of one person, and the consideration came from another, a resulting trust may be established by parol-and in all cases where there is a resulting trust.
In Hayworth v. Worthington, (5 Black., 361,) it was held that parol evidence is admissible to prove that a bill of sale of goods, absolute on its face, was intended by the parties to be only a mortgage. The court say these decisions are founded upon the assumption that the admission of such evidence is necessary for the prevention of fraud.
Source: Wikisource

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