
    Edward B. Pryor et al., Individually and as Trustees, etc., Plaintiffs, v. The City of Buffalo, Defendant.
    (Supreme Court, Brie Special Term,
    September, 1908.)
    Vendor and purchaser: Title and incumbrances — Easements: Waiver of performance or defects — Waiver of defects by accepting deed.
    Where the Legislature, after granting the franchise of a right of way across a public canal to a railroad, company, abandoned the canal and conveyed it to a municipality which, by a deed containing no covenants of title or for quiet possession or against incumbrances, conveyed the same to plaintiff by a deed by which it was mutually agreed and understood that, in case the party of the first part “shall not give good title and possession to the whole or any part of the premises, and of and to the rights and privileges herein set forth, then, within twelve months from the date hereof, the parties of the second part, upon a reconveyance of said premises * * * shall receive the entire purchase price,” and at the time of the delivery of the deed it was known by both parties thereto that a right of way existed and was in use by the railroad company, the grantees under the deed are entitled to refuse to take the land.
    The acceptance of the deed with a knowledge of the existence of the right of way, which was an easement that interfered with both title and possession, was not a waiver of any rights the grantees might have to reject the title.
    The city having advertised a sale of the premises “ free and clear of all liens and incumbrances,” the grantees had a right to rely upon the agreement to give good title and possession; and it was the duty of the city to specially except the easement from the operation of the deed, instead of agreeing to give “good title,” if it did not intend to remove the easement.
    The occupation of a portion of • the premises by the railroad company under legislative authority constituted such a material defect in title and failure to give possession as entitled the grantees to a return of their purchase money under the terms of the deed,
    Action to compel acceptance of a reconveyance of real estate and return of the purchase money because of failure of title.
    
      Moot, Sprague, Brownell & Marcy, for plaintiff.
    Louis E. Desbecker and Samuel E. Moran, for defendant.
   Marcus, J.

The deed given hy the city of Buffalo to the plaintiffs contains no covenants of title or for quiet possession or against incumbrances. It does contain an agreement providing for reconveyance and return of the purchase money in case of failure to give good title and possession. No point seems necessary to discuss other than the effect of this agreement.

The plaintiffs contend as a basis for their claim that the city of Buffalo should be compelled to accept a reconveyance of the property in question on account of the provision contained in the deed as follows:

“ It is mutually agreed and understood that in case the party of the first part (City of Buffalo), shall not give good title and possession to the whole or any part of the premises, and of and to the rights and privileges herein set forth, then, within twelve months from the date hereof, the parties of the second part, upon a reconveyance of said premises * * * shall receive the entire purchase price *• * *»

The tracks of the New York Central and Hudson River railroad and its predecessors in interest occupied a portion of the premises conveyed for upwards of fifty years.

At the time of the delivery of the deed by the city to the plaintiffs it was known by both parties that a right of way existed and was in use by the New York Central and Hudson River railroad.

What legal rights the railroad had in crossing the canal seems to have been a matter of doubt and uncertainty to all parties interested other than the railroad itself which strenuously insisted on its vested rights and, at all times during the negotiations which led to the sale, served notice to that effect upon the city authorities.

We start then upon this inquiry with the knowledge of both parties to the deed of the existence of the New York Central tracks over the canal admitted, and the same knowledge at ' the time negotiations for its purchase were commenced.

The existence of a right of way of a railroad over the premises in question is such an easement as interferes with both title and possession.

Does the fact that the plaintiffs knew at the time they accepted the deed of the existence of such right of way affect their contention?

Must they be presumed to have made the purchase in reference thereto?

Did they waive any rights they might have had to reject the title when they accepted the deed with knowledge of the existence of the incumbrance ?

The city earnestly contends that the agreement to accept a reconveyance and return the purchase money if it shall not give good title and possession ” is a conditional agreement which is to become operative only on the happening of a subsequent event, or the ascertainment of something undetermined at the time of its execution, and that it in no way relates to a defect in title which was known to the parties at the time the deed was executed; further, that the agreement to refund becomes senseless, if it is made to refer to a known defect, while restricting its operation to unknown defects and incumbrances which the purchaser shall learn exist in the title intermediate the accepting of the deed and the time fixed for reconveyance, makes the agreement clear and forceful. In other words, that the agreement was not intended to cover known incumbrances.

It is further urged that the agreement does not provide that, if the city shall not give good title and possession ” within a year, the purchasers shall be entitled to the purchase price; but that, if the city shall not give good title and possession,” then, within a year, the purchasers may reconvey. This is construed by the city to mean that, if the city shall not by its deed, and at the time of giving the deed, give and convey to the purchasers a good title, the purchasers may inform themselves as to the nature of the title and determine whether or not they shall retain the property, and in the meantime no duty of any kind with reference to the title rests upon the city.

The evidence clearly shows that all parties other than the railroad company regarded the tracks as an unlawful encroachment, hut however it may have been regarded it can in no way control the force and effect of the plain terms of the deed. The fact that the plaintiffs knew at the time of the delivery of the deed of the existence of the right of way does not alter, diminish or nullify the provisions of the deed allowing them to reconvey in the event the city failed to give “ good title and possession;” for it was because of plaintiffs’ knowledge of the existence of the incumbrance that it must be presumed they took the agreement against it, expecting to have it removed or to be protected against the same. It was likely inserted in the deed because the Hew York Central was claiming vested rights. The mayor deplored the change in his communication in which the sale was approved — providing that, in case the city “ shall not give good title and possession ” to the whole and every part of the premises, then, within twelve months, the plaintiffs upon a reconveyance should receive the entire purchase price with interest—and stated he could see no “good reason why any agreement should have been made to pay them their money in any event.” These conditions no doubt were further insisted on by the purchasers because the city itself modified its original advertisement or offer after acceptance so that the purchasers should bear all consequential damages resulting from changes in grade crossing structures. It was then that the “ good title and possession ” clause came into existence, if the purchasers would complete the purchase upon the new terms proposed by the city, and that they might reconvey and- receive back the purchase price if the city failed; for the purchasers originally bid $901,000 for a quitclaim deed containing no condition for the return of ithe money on account of the failure of title or otherwise. But, whatever may have been the reasons for giving the “ good title and possession ” agreement, the deed contained the agreement and the plaintiffs had a right to rely upon it. It was the duty of the city to specially except the easement from the operation of the deed instead of agreeing to give “ good title and possession to the whole or any part of the premises ” if it did not intend to remove it. The city advertised to sell free and clear of all liens and incumbrances.” That was the effect of the agreement, notwithstanding the knowledge of the existence of the right of way by both parties to the deed.

By the terms of the agreement contained in the deed the plaintiffs are entitled to good title and possession,” which means a title valid in fact, which this is not, since the tracks affect not only the physical condition of the land, but affect and impair the title as well.

That twelve months were allowed in which to perfect title shows that something was to be done, or something left undone, that was known to both parties to the contract; otherwise the agreement providing for reconveyance and return of purchase money in case of failure to give “ good title* and possession ” is meaningless. The city was to do something in the twelve months; if it is said the plaintiffs were to do something that would contradict the terms of the agreement contained in the deed.

The effect of the agreement in the deed was to keep good, for the period of twelve months, the right of the purchasers to reject the property for defects in title or possession, notwithstanding the passing of the title and payment of the money. By the terms of the same deed it was agreed that, if such an event occurred, the plaintiffs should have their money returned upon a reconveyance of the property. The occupation of a portion of the premises by the Hew York Central under legislative authority constitutes such a material defect in title and failure to give possession as entitles the plaintiffs to a return of the purchase money under the terms of the deed.

Any question regarding waiver by acceptance of the, deed is entirely protected by the terms of the agreement contained therein.

It is true there are no covenants in the deed, but there is an agreement or contract that “ good title and possession ” should be given purchasers. This agreement means "something or nothing. The plaintiffs paid $901,000 for “good title and possession” to the whole and every part of the premises. They did not get what it was agreed they should have.

The constitutional provision referring to canals, that the Legislature “ shall not sell, lease or otherwise dispose ” is of no importance or consequence whatever in the determination of the question involved in this case.

The construction and operation of a railroad across a canal may not injuriously affect in any way the free and unobstructed use of it for the purposes of navigation and transportation. There is no inconsistency or incompatibility between the two public uses; both may well coexist and he exercised at the same time. The power of the Legislature to authorize the construction of railroad? over canals has never been questioned any more than the:-power to -grant rights to cross navigable rivers or other streams or ordinary highways.

The Legislature has never disturbed the Hew York Central in the full possession and enjoyment of its rights to cross the canal. The authority which granted it has never revoked it, and the conveyance by the State to the city never operated as an implied revocation. The conveyance was subject to whatever rights the Legislature .had conferred or vested in the railroad company and which existed at the time the city received the title. The filling up of the ditch and the abandonment of the canal did not operate as a revocation of the rights of the railroad company, for the road had the same rights it possessed whether the canal was filled up by the State or the city.

In its conveyance to the city the State merely transferred its legal title to the lands subject to the rights or burdens granted or imposed by itself.

Here then is a public canal; the Legislature granted the franchise of a right of way across it, then abandoned the canal and conveyed it to a municipality. The State never attempted to revoke, alter or modify the franchise in any way, but left it in full force and operation unimpaired.

The city entered into a contract to sell the land and to give “ good title and possession ” free and clear of all incumbrances.

The city expressly contracted to convey free of incumbrances and, as the right of way is clearly an incumbrance, the plaintiffs under their contract are entitled to refuse to take the land.

A reference may be had to determine what, if any, damage has come to the lands during the occupation of the same by the plaintiffs and any other question of damage that defendants desire to urge; same to be settled by the court.

Ordered accordingly.  