
    WILLIAM P. BENSEL, et al., Exrs. &c., Plaintiffs and Appellants, v. HORATIO N. GRAY, Defendant and Respondent.
    I. Municipal Corporation Leases.
    1. Agreement to assign.
    
    O) Constitutes agreement to grant and assign an estate in
    THE DEMISED LAND FOR THE REMAINDER OF THE TERM, WHEN.
    1. When it contains a clause “with all and singular the premises therein mentioned and described, and the buildings thereon, with the appurtenances, to have and to hold the same' for and during all the rest, residue, and remainder yet to come of and in the term of years mentioned in said indenture of leases,”,with a covenant that the assigned premises are free from incumbrances.
    1. Incidents to such an agreement.
    Implied covenants.
    
      (a) Title.—A covenant that the vendors have a good title to the premises described in the lease, for the residue of the demised term, is to be implied.
    (5) Lessors' right.—A covenant that the corporation had the right and power to grant the estate and term in manner and form as in the lease expressed, is also to be implied. .
    2. Regularity and validity of lease; Burthen of proof.
    The burthen of proof is on the vendors, to show the regularity and validity of the lease.
    II. Tax sales—Invalid.
    The sales for the taxes of the years 1841, 1842, 1843, and the leases given thereon, and the sale for the years 1853 and 1854, and the leases given thereon, are invalid and void.
    HI. Title to lands.
    1. Possession, necessity of to sustain.
    
    
      (a) One of the cases in which it is not requisite.
    1. Where one traces a clear paper title from a conceded owner, and is in possession, it is unnecessary for him, as against one whose only claim is under a lease made by a municipal corporation on a sale for taxes, to show a possession prior to his by the conceded owner, or any subsequent grantee deriving title from such conceded owner.
    
      (a) This although he who claims under the tax lease had been in actual possession over twenty years, and the one claiming the fee had but recently entered upon the premises and obtained possession by putting the holder of the tax lease off his guard.
    
      IV. Vendor and vendee of bead estate.
    1. Estoppel as to setting dp defects in title.
    
    After a contract of purchase and sale of a lease, and of the demised premises for the unexpirfed term, the key of the house on the premises was delivered to the vendee, who held on to it until he had obtained the fee from the owner thereof, when he took visible possession.
    Held,
    that he was not estopped from setting up in an action by the vendor for the specific performance of the contract, that the lease was invalid and void.
    Before Speir and Freedman, JJ.
    
      Decided November 4, 1878.
    This action was brought to compel the specific performance of the following agreement:
    “ Know all men by these presents, that for and in consideration of the sum of five hundred dollars, lawful money of the United States, to us duly paid by Horatio N. Gray, we agree to sell, and by these presents do agree to grant, convey, assign, transfer and set over, unto the said Horatio IT. Gray, two indentures of leases, bearing date the second day of October, in the year one thousand eight hundred and forty-six, and November twenty-second, one thousand eight hundred and fifty-nine, made by the corporation of the city and county of New York, State of New York.
    “The conditions of this assignment are, said H. N. Gray to pay seven thousand dollars, and to assume the assessment of opening Lexington avenue; five hundred dollars to be paid on signing this agreement, fifteen hundred dollars on May 1st, ensuing, and bond and mortgage for five thousand dollars at three years, from May 1st, 1871, with all and singular the premises therein mentioned and described, and the buildings thereon, together with the appurtenances; to have and to hold the same unto the said Horatio N. Gray, his assigns, from the 1st day of May, for and during all the rest, residue and remainder yet to come of and in the term of years mentioned in the said indenture of leases, subject nevertheless to the rents, covenants, conditions and provisions therein also mentioned. And we do hereby covenant, grant, promise and agree, to and with the said H. ET. Gray, that the said assigned premises now are free and clear of and from all former and other gifts, grants, bargains, sales, leases, judgments, executions, back rents, taxes, assessments and incumbrances whatsoever.
    “In witness whereof, we have hereunto set our hands and seals this first day of April, one thousand eight hundred and seventy-one.
    “ WM. P. SEELEY, [l. s.] “WM. P. BENSEL, [l. s.j “ Executors.”
    
    The leases referred to in the agreement were:
    1st. One dated October 3, 1848, for a term of fifty years, given on a sale for the taxes of 1841, 1842, 1843.
    2d. One dated November 23, 1861, for a term of five hundred years,' given on a sale for the taxes of 1853 and 1854.
    The complaint alleged that defendant, on or about May 1, 1871, received from plaintiffs under said agreement “ possession of said lot of land, and that thence hitherto he has retained possession of the same.”
    The prayer of the complaint was as follows :
    “ Wherefore they demand judgment against the defendant for the said $1,500, with interest thereon from May 1, 1871, and that he shall be compelled to execute and deliver to them a bond and mortgage-according to the requirements of the said agreement; and that as security for payment by him, according to the terms of the said agreement, these plaintiffs may have a lien upon the said indentures of lease and upon the said lot of land of which the following is a description : All that certain lot of land situated on the southerly side of Eighty-seventh street, between Third and Fourth avenues, containing in width in front and rear, twenty-five feet, six and two-thirds inches, and in depth on each side one hundred feet, eight and a half inches, and the improvements thereon ; and that in the event of failure by the defendant to pay for the same as aforesaid, the same may be sold by and under the direction of this court, the defendant being compelled to unite in such sale, and the proceeds thereof applied so far as necessary to such payment, and that for any deficiency these plaintiffs may have judgment against the defendant and that they may recover against him the costs of this action.”
    The answer as amended on the trial averred that the contract was one to convey a good and valid title to the premises therein referred to, for the full term of the leases described, and that the consideration paid and agreed to be paid by and in said contract was for said title; that plaintiffs had no title other than such as they derived under the tax leases mentioned in the agreement, which were void and worthless ; that there was no consideration for said agreement, and that defendant never received, entered into or took any claim, occupation, or possession of said land of or from the plaintiffs or any act of theirs according to, or under or by virtue of said agreement, or any agreement whatever with plaintiffs, but that he did take title and possession from the actual owner of the fee of said lands, of whom he purchased the same after plaintiffs had failed to give him a good and valid title thereto. It also averred the payment of the sum of $500, mentioned in the contract, and the sustaining of damages to the extent of $250, for examining the title, and of $500, for removing buildings, and preparing to take possession, which three several sums defendant prayed to counterclaim.
    On the trial it appeared that defendant was in possession, that the lot was a part of the Harlem common lands, and was conveyed by the Harlem common commissioners to Dudley Selden by deed recorded Lib. 194 of Conveyances, p. 44, and by Dudley Selden and wife to Isaac Adriance, by deed recorded in Lib. 291 of Conveyances, p. 594. It also appeared that Isaac Adriance had died, leaving a will by which he devised all his property real and personal to his wife, Margaret E. Adriance, which will was admitted to probate October 21,1862 ; and that Margaret E. Adriance, by deed dated August 1, 1871, and recorded in the Lib. 1175 of Conveyances, p. 672, for the consideration of $5,000, conveyed the lot in question to the defendant. There was no proof that Selden or Adriance ever went into actual possession of the lot; the evidence tended to show the contrary. There was conflict of evidence as to under whom and under what defendant entered and the manner of his entry.
    There was also evidence as to defects and irregularities in the levying of the taxes for which the premises were sold, in the proceedings for the sale, and in the compliance with the statutes requiring certain things to be done after the sale before the giving of a lease.
    The cause was tried at special term without a jury.
    The learned judge before whom it was tried, found, as matters of fact:
    “I. That the parties entered into the agreement in question.
    
      “II. That the said leases were irregular and defective, and that the requirements of the statute of 1843 were not complied with ; and that the proceedings taken to authorize the making of said leases on the part of the mayor, aldermen and commonalty were defective or irregular, in these respects, to wit: As to the first lease. 1. That there is no certificate of the comptroller of the fact of the service of the notice of redemption, as required by § 24, art. 3, c. 230, Laws 1843. 2. The notice of redemption, dated December 11,1849, signed by Gordon L. Ford, was unauthorized and invalid, and its service a nullity. 3. The taxes for payment of which the lot in this lease was sold were illegally assessed for the years in question, viz. : 1841 and 1842 and 1843. 4. No legal demand for the payment of the taxes for those years was or could be made. 5. The certificate of the assessors attached to the assessment roll and signed by them is not verified or sworn to (53 Af. T. 49). 6. No certificate of the assessors is attached to the assessment roll for the years 1842 and 1843. As to the second lease. 1. No order was taken by the comptroller for advertising the lands or tenements in said lease described, pursuant to § 1, art. 3, c. 230, Laws of 1843. 2. There was no publication of the delivery of the assessment rolls to the tax commissioners three times in each week, in newspapers in New York, employed by the corporation of said city, during the years 1853 and 1854. 3. The notices served requiring payment of the taxes for the years 1853 and 1854, were defective in form and substance and service, viz.: (1) It was not served upon the person from whom the tax was due, nor with sufficient time. (2) It did not specify the amount of the tax, (3) Nor the percentage to accrue thereon. (4) Nor that payment should be made on or before January 1. 4. The redemption notice of February 18, 1862, as served by Phineas 0. Kingsland, was irregular in form and false in substance. (1) It does not state for what £ taxes and ■ regular rents for Croton water ’ the premises were sold. (2) It does not state the name of the purchaser of the premises. (3) The notice recites that £ the' said premises have been conveyed to me,’ and is signed £ Eliza C. Kip.’ The conveyance was in fact to Wm. B. Peyton. (4) The notice recites that the premises were sold for taxes and Croton water rents upon the same, without stating for what year or years, and also recites the amount of the taxes and charges as $31.58, which is incorrect, as shown by the lease. 5. The sale for the year 1859 was irregular, and also the redemption notice. (1) Four lots were sold, of which one was illegal, as exempt from any sale. (2) Two of the lots were redeemed for $44.49, out of $88.98, for the four lots sold; the sale as to the other lot was canceled, leaving $22.24 against the lot in question. The redemption notice erroneously required payment of $31.58. 6. The demand of the forty-two per cent, upon $31.58 was unauthorized and invalid. 7. The premises were in occupation, but there is no proof of service of redemption notice upon the occupant by a person residing in the city of Kew York. 8. There is no proof of proper service of said notice upon the last assessed owner.
    £ 1 III. That the defendant did not enter into nor take possession of the premises in question, under the contract, but refused so to do when requested by the plaintiffs, and notwithstanding their offer of indemnity"; that the delivery of the key of the building situated thereon was not intended to be, and was not accepted as, a delivery of possession of the premises.
    “IV. That the defendant did take possession on or after July 15, 1871, under license and authority from Mrs. Margaret Adriance, the owner of the fee, and not otherwise, and that he afterwards acquired title to the said premises in fee by conveyance from her, dated August 1, 1871, ‘Exhibit E.’
    “V. That on or about April 1, 1871, the defendant paid to the plaintiffs the sum of $500 as part of the consideration of the said contract then executed.” .
    And found the following conclusions of law :
    “I. I find that the contract between the parties for the specific performance of which this action is brought, is an undertaking on the part of the plaintiffs to transfer something more than mere municipal corporation tax lease, defeasible under certain circumstanced by redemption or otherwise.
    “I find that by the terms of the contract the plaintiffs were bound to grant, convey and assign to the defendant not only such indentures of lease, but with them an estate in land, viz.: ‘ in all and singular the premises therein mentioned and described, and the buildings thereon, together with the appurtenances,’ to be held by the defendant and his assigns, from May 1, 1871, for and during the residue of the term of years mentioned in said indentures.
    “II. I find that the contract being an executory agreement, for the sale of an estate in land, is not within the prohibitions of the Revised Statutes with respect to the implication of covenants in conveyances of real estate (1 B. S. 738, § 140).
    “ III. I find therefore that a covenant, that the vendors had a good title not only to the instruments purporting to be the leases, but to the premises therein described, for and during the residue of the term purporting to be granted thereby, is accordingly to be implied.
    “IV. I also find that in the case of municipal corporation leases where the contract provides for an assignment not merely of the instruments as such, but of the estate and term thereby purporting to be granted, there is also to be implied a covenant that the corporation had the right and power to grant the estate and term, in manner and form as therein expressed.
    “V. I find that under the construction of the said contract as above found, the burden of proof was upon the plaintiffs, to show the regularity and validity of the instruments by the tender of which they claim to have sufficiently established performance of or readiness to perform the contract on their part.
    
      “ VI. I find that the said leases being defective and irregular, as found in the second finding of fact above stated, were void, and conferred upon the lessees and their assigns no estate, title or interest whatsoever in the premises thereby purporting to be demised, and that there was a failure of the consideration of the said contract of April 1, 1871.
    ‘1VII. I find that the defendant is entitled to recover back the $500 paid by him on account of said contract with interest from the date of payment, and that he should have judgment therefor, and for dismissal of the complaint upon the merits with costs.”
    Judgment was entered for defendant accordingly, and plaintiffs appealed.
    
      Man & Parsons, attorneys, and John E. Parsons, of counsel, for appellant.
    I. The contract implied no covenant that the title of the plaintiffs to the lot was good for the demised term. It was error for the special term to hold the reverse of this. 1. That in an agreement to convey tax leases there is no implied covenant of title to the premises, was expressly decided by the court of appeals, in Boyd v. Schlesinger, 59 N. Y. 301; Bensel v. Gray, 62 Id. 632 ; where, in deciding this very case, the court of appeals affirmed Boyd v. Schlesinger as authority, and as requiring the reversal of the decision of the general term.
    II. The contract was not, as found by Judge Sarford in his opinion, a contract by the terms of which the plaintiffs were bound to grant to the defendant an estate in the lot for the residue of the term of years mentioned in the leases. 1. The contract is written into a printed blank for the assignment of a lease. By it the plaintiffs agreed to transfer to Gray the two leases, describing them, and that is all (fol. 44). The contract then goes on to specify the conditions of the assignment; that Gray was to pay $7,000, &c., &c. After that follow the printed words which would be applicable to an actual assignment, but they have no application to the agreement to assign. The words expressing the agreement to assign, &c., relate to the leases alone. The contract cannot be read in any such way as to make them apply to the lot.
    ITT. It was error for Judge Sanford to find that Mrs. Adriance was the owner of the fee of the lot, and that Gray acquired title in fee by her conveyance, and that it was under her that he took possession. 1. The lot in question was alleged to form a part of what was formerly known as Harlem commons, in the twelfth ward, of the city of Hew York (fol. 350). It was one of the lots described in a deed from Dudley Selden and wife, to Isaac Adriance, dated April 23, 1832, and recorded February 8, 1833, in the office of register of the city and county of Hew York, in liber 291 of Conveyances, p. 594. Heither Dudley Selden nor the Adriances were ever in possession. It was a wild lot (fol. 453), and there was no possession of it until under one of the tax leases Mrs. Kip took possession, erected buildings, &c. At that time the lot was only worth $300 to $350 (fol. 450). Title to real estate must originate in actual possession (Smith v. Lorillard, 10 Johns. 338). Heither the Adriances nor Gray as Mrs. Adriance’s grantee would maintain an action of ejectment upon the evidence in the case. It is probably impossible for any body to make out a legal Harlem commons title. However this may be, it was not made out in Mrs. Adriance. It is to be observed that the Dudley Selden deed to Isaac Adriance, which conveys a very large number of lots, expresses only a nominal consideration. Isaac Adriance never paid taxes or assessments, and neither he or his family made any claim to the lot until Gray put himself in communication with them (fols. 392-400), he doubtless using the tax leases for which he was to pay $7,000 as-an argument by which to obtain the claimed title in fee for $5,000. 2. Gray could not, therefore, enter under Mrs. Adriance. She had no title: she was not in. possession, and could not give possession to him.
    IV. Gray did take possession of the lot under the contract in question. Judge Satteord was in error in finding the reverse of this. 1. Upon precisely the same testimony, so far as concerns this point, Judge Freedmatt, on the first trial, found that Gray did enter under this contract, and that, for the purpose of depriving the plaintiffs of their possession and improvements without payment, he held on to 'possession until he procured the Adriance deed.
    Y. Gray having put himself in possession under the contract, was estopped from disputing the plaintiff’s title. By taking possession he put plaintiffs at this disadvantage, that it was necessary for them, if they sued in ejectment, to succeed upon the strength " of their title. This advantage he gained from them under their agreement with him, and it effectually precluded him from disputing the title under which he entered (Jackson v. Stewart, 6 Johns. 34 ; Jackson v. De Walts, 7 Id. 157; Bk. of Utica v. Mesereau, 3 Barb. Ch. 528; Jackson v. Hotchkiss, 6 Cow. 401; Jackson v. Walker, 7 Id. 637, and numerous other cases, laying down the rules in ejectment).
    YI. By his deed from the Adriances, according to • the finding .of Judge Satteord that it conveyed a title In fee, Gray has himself cured all difficulties in the leases. 1. That deed merged the plaintiff’s title, under which Gray entered (4 Kent’s Com. 99-101 ; 3 Greenl. Cr. 467; Roberts v. Jackson, 1 Wend. 478; James v. Morey, 2 Cow. 246, 248, 300 ; Clift v. White, 12 N. Y. 519). 2. A purchaser who has entered cannot defeat specific performance by reason of alleged defects which he has cured (Smedberg v. Moore, 26 Wend. 238). 3. And so Gray’s deed put it out of the power of the plaintiff to obtain a title which would cure the alleged defects, and one cannot defend against the performance of a contract on the ground of impossibility which he himself has created (Chitty on Contracts, 636, and cases cited ; Fleming v. Gilbert, 3 Johns. 528, 534; Betts v. Perine, 14 Wend. 219; Young v. Hunter, 6 N. Y. 203). 4. As Gray took possession without waiting for an actual assignment of the leases, the plaintiffs had until the trial of their action to make their title complete (Brown v. Half, 5 Paige, 235; Reformed Dutch Church v. Mott, 7 Id. 77; Vielle v. Troy & B. R. R. Co., 21 Barb. 381; S. C., 20 N. Y. 184; Cleveland v. Burrill, 25 Barb. 532).
    VII. Gray has himself obviated the inequitable objection which he himself took. He has quieted all questions of the validity of the leases, and though his purpose in doing so was to consummate the wrong he designed for the plaintiffs, it is just that his act should enure to their benefit.
    
      Wakeman & Batting, attorneys, and Abram, Wake-man, of counsel, for respondent.
    
      
       Note.—See Bensel v. Gray, 38 N. Y. Superior Court, 447.
    
   By the Court.—Freedman, J.

Though the defendant may not have entered into actual possession under the contract, it seems clear upon the evidence that, for the purpose of putting plaintiffs off their guard, he held on to the'key delivered to him until he could, make some arrangement with the record-owner for acquiring the fee. Such arrangement he finally succeeded in making and then he took visible possession. But in view of the intimations given by the court of appeals, on defendants’ appeal, to the effect, that possession under a tax lease cannot become adverse to the right of the real owner, the conduct of the defendant becomes immaterial, if the contract was as found below. Indeed, if this rule is to govern the case, it is difficult to see. how the plaintiffs can have any relief whatever.

Under the changed issues of the case the learned judge below was correct in holding that the contract called for a conveyance of a leasehold interest in the land, and not merely for a conveyance of the paper title.

This being so and the tax-leases being clearly invalid, if plaintiffs could ground no rights upon adverse possession, the defendant was legally justified in doing as he did, however wrong his conduct towards the plaintiffs may have been from a moral point of view.

• The case is one involving great hardship to the estate of which the plaintiffs are executors, but in view of the intimations given by the court of appeals by way of admonition, we cannot see how this court can help them.

The judgment must be affirmed with costs.

Speie, J., concurred.

Note. This is the decision on the appeal from a judgment entered on a second trial of this action.

On the first trial plaintiffs recovered judgment, the court resting its decision on the proposition (as controlling the decision of the case) that there was no warranty to be implied in an agreement to assign a tax lease by a municipal corporation, and consequently refusing to pass on the evidence adduced as to the invalidity of the lease.

On appeal by defendant, the general term held that a warranty was implied, and that the refusal of the court below was error, it also held that the fact that the defendant went into possession, under the contract, did not deprive him of the right to acquire it in fee, and to contest the tax title. The judgment below was reversed, and a new trial ordered (38 N. Y. Superior Court, 447).

Plaintiffs stipulated and appealed to the court of appeals. That court (62 N. Y. 632) held, in conformity with its previous decision in Boyd v. Schlesinger, 59 N. Y. 301 (then still in MSS.), that in an agreement to assign a corporation tax lease there was not an implied warranty of title to a leasehold interest, and that consequently the general term decision could not be sustained on the basis on which it was placed. It, however, held that in either of two aspects (which were not presented to or passed on by either the special or general term, and need not have been, under the views which controlled the decision there) it was necessary to pass on the evidence given as to the validity of the leases. (1) If the agreement undertook to assign, not only the leases as merely instruments in writing, but also to transfer the right in the premises for the term in the leases named, it was necessary that the force of that testimony should be passed on. (3) It was equally necessary, even if the agreement did not so undertake, but only to assign the -writing, and thereby agreed to transfer nothing valuable, and so left the contract of the defendant without consideration to support it. It, however, declined to construe the contract, because, if it was construed favorably to the defendant, it might involve the necessity of determining the question of fact as to the validity of the leases, and if the determination was against the validity it would lead to a reversal of a judgment of the special term on a question of fact as to which that court had made no finding, which would be contrary to the established rule.

The court also declined to reverse the judgment of the general term and affirm that of the special term, on the ground that the former was wrong and the latter right on the question of implied warranty, and that the positions taken by the defendant in that court were not in the way of its so doing, inasmuch as they were not pleaded by his answer, nor taken in the court below, because fliere were exceptions taken on the trial by the defendant, which were not considered by the general term, and which might have been presented in his favor if that court had thought it necessary to have noticed them, and which the defendant had a right to urge on the plaintiff’s appeal. (Simon v. Canaday, 53 N. Y. 298).

But for various reasons, among them the fact that the objections to evidence taken by the defendant did not enter into a consideration of the case by the general term, the court concluded to exercise a power which it had frequently in analogous cases felt called on to exercise, and permit the appellants to take a dismissal of their appeal and proceed to a new Prial.

The court referred to previous decisions made by it as'to the effect of municipal tax leases as clouds on titles, as to bills guia timet, and as to its not being possible that possession under a tax lease could become adverse to the right of the real owner.  