This section is from the book "Popular Law Library Vol7 Equity Jurisprudence, Trusts, Equity Pleading", by Albert H. Putney. Also available from Amazon: Popular Law-Dictionary.
Courts of equity have always had jurisdiction to remove clouds from title. A cloud on a title has been thus defined:
"Whenever a deed or other instrument exists which may be vexatiously or injuriously used against a party after the evidence to impeach or invalidate it is lost, or which may throw a cloud or suspicion over his title or interest, and he cannot immediately protect or maintain his right by any course of proceedings at law, a court of equity will afford relief by directing the instrument to be delivered up and canceled, or by making any other decree which justice and the rights of the party may require." 3
The subject as to what constitutes a cloud on title was discussed by the Court of Appeals in the case of King vs. Townsend,4 the decision in which case was as follows:
"The release sought in this action is the cancellation of a lease executed and delivered by the comptroller of the City of New Orleans upon a sale of 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 cancelled, but some ulterior purpose appears to he 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. It is undoubtedly true, that, until that certificate is given, the right of the lessee is imperfect and no title passes by the conveyance. 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. 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 vs. Davenport. There the State comptroller had not given a deed and was not bound to give it. He might instead cancel the sale, and could not 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 for many years the lessee has omitted to give the notice. That only intensifies the injury and the danger. In Hodges vs. Griggs, 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, and sufficient to prevent any sale of the property and cloud the owner's right, cannot be said to be a mere speculative danger.
3 Eaton on Equity, Sec. 313.
4 141 N. Y., 358.
"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."