The Collaborative International Dictionary of English v.0.48:

Wall-eyed \Wall"-eyed`\, a. [Icel. valdeyg[eth]r, or vagleygr;
   fr. vagl a beam, a beam in the eye (akin to Sw. vagel a
   roost, a perch, a sty in the eye) + eygr having eyes (from
   auga eye). See Eye.]
   Having an eye of a very light gray or whitish color. --Booth.
   [1913 Webster]

   Note: Shakespeare, in using wall-eyed as a term of reproach
         (as "wall-eyed rage," a "wall-eyed wretch"), alludes
         probably to the idea of unnatural or distorted vision.
         See the Note under Wall-eye. It is an eye which is
         utterly and incurably perverted, an eye that knows no
         pity.
         [1913 Webster]