
    Lewis C. King, Resp’t, v. John Townshend, Impleaded, etc., App’lt. 
    
    
      (Court of Appeals,
    
    
      Filed February 27, 1894.)
    
    1. Equity—Cloud on title.
    Equity may interfere to prevent a threatened cloud, as well as to remove an existing one.
    2. Same.
    But the danger must be more than merely speculative or potential.
    3. Same.
    The existence of a lease in tax proceedings is a threat.
    4. Same.
    The fact that the lessee has, for many years, omitted to give the notice required is no answer, but only intensifies the injury and the danger.
    
      5. Same—Adverse possession.
    The defendant’s possession under the comptroller’s lease, at the date of plaintiff’s deed, does not affect the validity of such deed.
    6. Same—Former adjudication.
    A judgment in favor of defendant, in an action between the parties, Which does not establish a title in any one, does not destroy or affect a title subsequently made perfect in plaintiff by possession.
    7. Trust—When not created.
    Sections 49-58 of 1 R. S., 728, do not apply to a case where the grantee has himself a beneficial interest in the grant and is something more than the holder of a mere nominal title.
    Appeal from judgment of the general term of the supreme court in the first judicial department, entered upon an order made the first Monday of June, 1892, which affirmed a judgment in favor of plaintiff entered upon a decision of the court on trial at special term.
    The nature of the action and the facts, so far as material, are stated in the opinion.
    
      John Townshend, for app’lt; G. A. Gould, for resp’t.
    
      
       Affirming 48 St. Rep., 592.
    
   Finch, J.

The relief sought in this action is the cancellation of a lease executed and delivered by the comptroller of the city of New York upon a sale for unpaid taxes. It is admitted by the defendant, who is the assignee of the lease, that it is void because the sale included an illegal charge for interest. It would seem that such an admission should at once end the controversy and the lease be promptly canceled, but some ulterior purpose appears to lie behind the apparent litigation, and serves to prolong it. For, notwithstanding the defendant’s concession, he resists the relief sought upon the double ground that there is no cloud on the one hand and no title to be clouded on the other.

The claim that the lease constitutes no cloud is founded upon the provisions of the statute which make the lease inchoate; ineffective to produce a right of possession or establish a title; until a specified notice to redeem has been given to occupant or owner, and a certificate of which, signed by the comptroller, must accompany the record of the lease. (Laws of 1871, ch. 381, §§ 13, 14, 15 and 16.) It is undoubtedly true that, until that certificate is given, the right of the lessee is imperfect and no title passes by the conveyance. Lockwood v. Gehlert, 127 N. Y. 241; 38 St. Rep. 261., But if we concede that the imperfect and inoperative lease does not constitute an actual cloud it is nevertheless a decisive step towards the creation of a cloud and a threat and menace to create one in the future. Equity may interfere to prevent a threatened cloud as well as to remove an existing one Sanders v. Yonkers, 63 N. Y. 492. It is true that, in such a case, there must appear to be a determination to create a cloud, and the danger must be more than merely speculative or potential. That was said of tax proceedings in which no lease had been given and there was no proof that the purchaser claimed it or the city threatened it. Here it has been given. Its very existence is a threat. It was not given for amusement or as an idle ceremony. It meant and could only mean a purpose to subvert the title and possession of the owner. The further steps necessary to make the result effective lay wholly in the option of the lessee. If he actually served the necessary notice and filed the prescribed affidavit and satisfied the comptroller of these facts the certificate followed as a matter of course if not barred by a redemption. The lessee, therefore, in the present case stands with an effective weapon in his hands and may strike his blow when he pleases. It is in that respect that the situation differs from that in Clark v. Davenport, 95 N. Y. 478. There the state comptroller had not given a deed and was not bound to give it. He might instead cancel the sale and could be compelled to do so. Here the city comptroller has given the lease and has no discretion left. If the grantee gives the notice and proves it, the comptroller must make the certificate. Nor is it an answer to say that for many years the lessee has omitted to give the notice. That only intensifies the injury and the danger. In Hodges v. Griggs, 21 Verm. 280, a creditor’s execution against land following an attachment had been allowed to sleep for seven or eight years, and equity required him to enforce his right or remove the threatened cloud. And so the defendant here has no right to maintain a threat of title as lessee, when he confesses that it is founded on no legal right. The lease is something more than a certificate of sale. It is in form and terms a conveyance, effective at the option of the lessee if there be no redemption. The statute provides that “ all such leases executed by the said comptroller and witnessed by the clerk of arrears, shall be presumptive evidence that the sale and all proceedings prior thereto, from and including the assessments on said lands and tenements for taxes or assessments, or Croton water rents, and all notices required by law to be given previous to the expiration of the two years allowed to redeem, were regular and according to the provisions of the statute.” Such a lease, armed with such presumptions, effective at the option of the lessee, unless there is a redemption for his benefit drawing forty-two per cent, of interest, and sufficient to prevent any sale of the property and cloud the owner’s right, cannot be said to be a mere speculative danger.

Nor is it true that the invalidity of the lease appears upon its face. It shows no details of the amounts for which the sale was made, and the presumptions attending it make proof of such details unessential to the right of the lessee. It is only by evidence outside of the lease itself that its invalidity can be made to appear.

I think, therefore, that enough was shown to justify the intervention of equity to cancel the lease even if considered only as a threat to create a cloud, and if the action be regarded as one not to remove but to prevent a cloud.

The further controversy appears to me to be quite extraordinary. It is over the purely legal question whether the plaintiff’s title was or was not good and perfect, and the equity action became busy with the exact issue belonging to an action of ejectment. The plaintiff alleged that he was the owner of the land as he was bound to allege, and the defendant denied the allegation. If thereupon the plaintiff, as a condition of equitable relief, is compelled, not only to show possession which raises a presumption of title, but to go beyond that and disclose and defend the actual title under which he holds, with the burden of establishing it. resting on him, and every weakness in it inuring to the adversary,, and the final judgment conclusive on the question, he is stripped of every advantage due to his possession and which would be his-in an action of ejectment. I incline to the opinion that this plaintiff was not bound to show • or defend his paper title; that he might safely have rested upon his possession and the presumption of ownership which the law attaches to it, and was not required to subject his chain of title to the attack of his adversary. But I do not decide that question, or bind my own later judgment, because in this case no such objection appears; the paper title was disclosed and fought over and passed upon, without objection or protest; and so the question is presented whether it is good or not.

The plaintiff’s chain of title was attacked, first, at the conveyance by Rollins to Mooney, Stansbury and Queripel, described as trustees of the New York City Land Association, but, nevertheless, running to them “as joint tenants, to the survivor of them, his-heirs and assigns forever.” It does not appear that the association was a corporate body or capable as such of taking a legal title.. It must be assumed to have been a partnership of individuals-associated for dealing in real estate. Who they were we do not know, but we must presume that the three grantees were members' of the association holding the legal title for the benefit of others-as well as of themselves. They had, therefore, or may have had, a beneficial interest, and were not mere trustees holding the bare- and naked legal title. The sections of the Revised Statutes which take away the nominal title and vest it in the beneficiary .intended do not apply to a case where the grantee has himself a beneficial' interest in the grant and is something more than the holder of the mere nominal title. 1 R. S. p. 728, §§49-58; N. Y. Dry Dock Co. v. Stillman, 30 N. Y. 194. No case was made sufficient to divest the grantees of the legal title and vest it in an association which probably could not take at all; and whether we regard th.e deed as one to the individuals merely, discarding the reference to the-association as matter of description (Towar v. Hale, 40 Barb. 361), or as conveying to some extent also for the benefit of others, the-result is the same; for in the "latter cáse there was undoubted authority to sell, entirely consistent with the possible or supposed trust, and in no respect a contravention of its purposes; so that the purchaser’s title would be good, and not charged with responsibility for the due disposition of the proceeds.

Nor was the deed to plaintiff void because at its date Townshend was in possession and holding adversely. If he held under the comptroller’s lease his possession was not adverse to plaintiff’s title. Moores v. Townshend, 54 Super. 249; 10 St. Rep. 463 , Bedell v. Shaw, 59 N. Y. 46. If he did not hold under that he failed to show any specific title upon which his possession rested. Dawley v. Brown, 79 N. Y. 396. He now asserts that he held under the judgment in ejectment rendered in Moores v. Townshend, but that judgment gave him no title, and adjudged none in him. He pleaded none and defended on his possession alone.

But he further relies upon the decision in that action as conclusive against the title now asserted by the plaintiff. Judgment then went for the defendant and is described as upon its merits. It settled that Moores at that time and upon the then existing facts had no valid title, such as to defeat Townshend’s possession. The judgment established no title in anybody, for the defendant neither pleaded nor proved one in himself, but stood, as he had a right to stand, on his possession. The certificate of the Superior Court shows that the pbintiff proved no possession in himself or in any of his grantors, and he may have been defeated for that reason and that alone. But the present plaintiff has obtained possession and changed the situation. The previous adjudication that a title in the air was bad, does not destroy the title subsequently anchored to the possession. The conditions are different: the questions are not the same. The argument of the General Term shows, I think very fairly, that the judgment in ejectment is conclusive only as to the title established in that action, and that the judgment rendered did not establish any. The defendant pleaded none : the plaintiff proved none. If the court had decided in that case that the paper title disclosed was at any point defective or unsound, the decision would conclude us, but it does not so appear. The court may have held it to be good in and of itself provided only that there was possession somewhere under it. There is such possession now, and a decision on the present facts in favor of tlie the plaintiff does not necessarily contradict the previous judgment against his grantor. At all events, the defendant was bound to show a decision adverse to and destructive of the title now asserted in some of its essential elements, but has not done so. In that respect we agree with the reasoning of the General Term.

It follows that the judgment should be affirmed, with costs.

All concur.

Judgment affirmed.  