The defendants, in their answer, allege that the note upon which the action was brought, was given for the rent of a tract of land, which the plaintiffs had no power to demise. They further allege, that an action has been com menced against one of them by the owners of the land, to recover damages, for the unlawful possession held under the lease of the plaintiffs.

These allegations in the answer, if true, constitute a good counter-claim, as it is a cause of action arising out of the transaction which induced the contract set forth in the complaint as the foundation of the plaintiff’s claim: C. C. P., sec. 101. As these allegations of new matter in the answer, constituting a counter-claim, are not controverted by a reply, they are to be taken as true for the purposes of the action; C. C. P., sec. 127, and his Honor, upon motion, might have given judgment for the defendants.

His Honor heard the counter-claim set up in the answer, as upon demurrer, although a demurrer was not filed. The new rules of pleading ought not to be strictly enforced in *288 this case, as the action was commenced so soon after the adoption of the Code of Civil Procedure; and we take it for granted that his Honor, in the exercise of his ample discretion, will allow the pleadings to he supplied and amended. We will consider the case as if the pleadings were regular, and presented the true issues between the parties..

The lease, for which the bond was given, implied an obligation on the part of the plaintiffs to secure the defendants the possession and enjoyment of the demised premises, and to indemnify them against the demands which a paramount owner might claim as damages for unlawful occupation. The rent is dependent upon this implied obligation, and ought not to be collected until full indemnity is secured to the defendants. If our old system of jurisprudence were now in existence, the defendants could obtain adequate relief in a Court of equity. Their remedy now, is to set up their equity as a counter-claim to the action of the plaintiffs. The Superior Court's have ample jurisdiction to adjust and determine the legal and equitable rights and liabilities of the parties to the action, and all other persons interested in the subject matter of the controversy.

The defendants held possession of the land in question, and are liable for rent to the plaintiffs, according to the terms of the bond, — or to the owners for damages; but not for both. ' It is evident that a complete and equitable determination of the controversy cannot be had without the presence of the owners of the land, and the Court below should cause them to be brought in before another trial: C. C. P., sec. 65. It may hereafter appear that the owners authorized the plaintiffs to lease the land; and then there would be another contract to construe and determine. His Honor can direct the proper issues, to ascertain all the facts in the case, and then determine the rights and liabilities of the parties. If the plaintiffs had no authority to demise the. land, they ought not to recover rent, and the bond sued on, ought to be cancelled. The owners cannot recover on *289 the bond, as they are not privies to the contract, but they are entitled to recover such damages as a jury may assess, for the trespass of the defendants.

If his Honor had ruled correctly upon the questions presented by the defendants, the question as to the kind of currency in which the bond sued on was solvable, might not have arisen. The appeal of the plaintiffs must therefore, be dismissed, as the question presented is not properly before us for adjudication.

His Honor erred in refusing to allow the defendants to sustain their counter-claim by proper evidence, and there must be a venire de novo.

Let this be certified.

Per Curiam. Venire de novo.