Opinion
November 11, 1948.
January 3, 1949.
Eminent domain — Damages — Practice — Notice to mortgagee — Discontinuance of claim by owner — Necessity of timely intervention.
In a proceeding upon a rule to show cause why a mortgagee should not be permitted to intervene as a party plaintiff in a land damage case, in which it appeared that it was instituted more than twenty years ago and had ended more than nine years ago by the owner of the mortgaged property discontinuing the case, it was Held that (1) the mortgagee had not been entitled to notice of the proceeding; (2) the city, in failing to object to the discontinuance of the claim did not become a party to the alleged fraud practiced upon the mortgagee by the owner in abandoning the claim; and (3) the mortgagee's intervention was not timely.
Before MAXEY, C. J., DREW, LINN, STERN, PATTERSON, STEARNE and JONES, JJ.
Appeal, No. 214, Jan. T., 1948, from order of Common Pleas No. 2, Philadelphia Co., Dec. T., 1928, No. 12495, in the matter of Construction of Drainage Channels and other improvements appurtenant to the Drainage and Sewage System of the City of Philadelphia, 40th Ward. Order affirmed.
Proceeding upon petition and rule to show cause why the holder of a mortgage should not be permitted to intervene in appeal from award of Board of View.
The facts are stated in the opinion by GORDON, JR., P. J., of the court below, as follows:
This case was before us on a rule to show cause why a mortgagee should not be permitted to intervene as a party plaintiff in a land damage proceeding which was begun upwards of twenty years ago and terminated in 1939 by the owner of the mortgaged property entering an order discontinuing and ending the case.
Under an ordinance of Council dated February 21, 1927, the City of Philadelphia constructed drainage channels and dikes along the County line separating Philadelphia and Delaware County, in the 40th Ward of said City. In doing so it took and condemned private property including 6.384 acres out of a tract of approximately 66 acres belonging to one Morris Rosenbaum. A Board of View was appointed February 11, 1929, which in due course, after hearing testimony on behalf of claimants and the City, filed its report October 16, 1931, awarding the said Morris Rosenbaum the sum of $5,280, from which both the owner and the City appealed. On November 14, 1931, upon the death of Morris Rosenbaum, the record was amended so that said award of damages should be in favor of Samuel R. Rosenbaum and Hannah Rosenbaum, Executors of Morris Rosenbaum, deceased, to the use of Samuel R. Rosenbaum. On March 10, 1939, by order of David F. Maxwell, attorney for the executors of Morris Rosenbaum, deceased, this suit was marked "discontinued and ended."
It appears that at the time of the condemnation there was a mortgage of $40,000 against the Rosenbaum property, which, by various assignments came on November 1, 1945, into the possession of Leonard A. Gottlieb, the petitioner herein, who on May 16, 1948, took a rule upon the City of Philadelphia and Samuel R. Rosenbaum to show cause why he should not be permitted to intervene in the above proceeding as to the Rosenbaum claim. After the hearing and filing of briefs the rule was discharged by the Court June 12, 1948.
The Rosenbaum claim was definitely disposed of by order of competent and reputable counsel discontinuing and ending the same. There is no ground either in law or equity to warrant the Court in allowing petitioner to intervene at this late date. The claim was properly and fully presented before the Board of View. The chief and only expert witness for claimant was Samuel R. Rosenbaum, son of the original owner, Morris Rosenbaum. Just why claimant and his counsel decided to discontinue and end the case we do not know; it would however be reasonable to presume that they reached the conclusion that 60 acres of land protected by drainage channels and dikes were more valuable than 66 acres of land exposed and subjected to periodic floods and inundation.
The petitioner, questioning the wisdom and judgment of the Rosenbaum owners, complains that neither he, nor any other assignee of the original mortgage, nor the original mortgagee "ever received notice of the taking aforementioned." It suffices to say that they were not entitled to such notice. A mortgagee is supposed to keep himself informed concerning the conditions surrounding his investment, but the City of Philadelphia also protects him by settling no claim for land taken in condemnation proceedings until the owner furnishes the City with a clear title policy which means that outstanding liens have either been paid in full or satisfactorily compromised.
"It is well settled that it is not necessary for mortgagees or other lien holders to be made parties to condemnation proceedings in order to divest their claims upon the property taken. Moreover, under all but the most recent statutes, the mortgagee is not such a party as may institute proceedings for the assessment of damages for a taking by eminent domain." 14 Standard Pennsylvania Practice, p. 229, par. 21.
In Philadelphia v. Peters, 62 Pa. Super. 90 (pp. 93-94), (1916), opinion by TREXLER, J., It is said: "When land is taken for public use, it is not the record title that is acquired, nor is it any person's title, but the land itself, irrespective of record or ownership. In Pennsylvania a mortgage is both in law and in equity only a security for the payment of money and passes no title to the land. The mortgagor is the owner of the land: Jackson v. Pittsburgh, 36 Pa. Super. 274. "
In Jackson v. Pittsburg, 36 Pa. Super. 274 (1908), the Court ruled as follows (pp. 279-280): "The law so far as we can see only requires notice to be given to the owners of the land condemned. . . . The theory of the appellant seems to be that the mortgagee ought to have received actual notice and should have been made a party to the proceedings. But we do not so understand the law: Knoll, Adm'r. v. Railway Co., 121 Pa. 467; Farnsworth v. Boston, 126 Mass. 1; see also Phila. Reading R. R. Co. v. Penna. Schuylkill Valley R. R. Co., 151 Pa. 569."
See also Shields v. City of Pittsburgh, 252 Pa. 74 (1916).
It is obvious that petitioner's request for leave to intervene is hopelessly belated inasmuch as the taking of the land in question occurred nearly twenty years ago and the owner finally withdrew his claim more than nine years ago. If there is to be any intervention at all, it must be timely. In Harris's Appeal, 323 Pa. 124 (1936), the Supreme Court said (p. 127): "In Phila. Reading R. R. v. Penna. Schuylkill Valley R. R., 151 Pa. 569, 575, 25 A. 177, it was said: 'It is the undoubted right of the owner to institute and maintain proceedings for the recovery of the damages resulting from the appropriation of its land and to have the full benefit of the same.' To the same effect is Knoll, Admr., v. N.Y., etc., Ry. Co., 121 Pa. 467, 15 A. 571. Our decisions establish that in carrying on this type of litigation and securing a proper award the property owner sustains a trust relation as to creditors possessing liens on the property, sufficient to entitle the latter to equitable aid in enforcing such liens upon timely intervention in the proceedings" (Italics supplied.)
The custom of the City of Philadelphia to settle no claim in condemnation proceedings without a clear title policy is merely a matter of self-protection with respect to the proper distribution of the fund paid by the City to the owner. It does not enlarge a lienholder's right, or impose any duty upon the City where an owner either makes no claim for damages or abandons one already made.
The petitioner's suggestion that, in failing to object to the discontinuance, the City became party to a fraud practiced upon the then holder of the mortgage by the owner in abandoning his claim for damages, is manifestly without merit. The City is in no sense a trustee for the holders of liens on land it condemns. It was not required to insist upon a claim it denies being pressed; and any fraud that was committed, if indeed there were any, was that of the owner alone, to whom the petitioner must look for redress.
It was for the foregoing reasons that we discharged the petitioner's rule for leave to intervene in this case.
Appeal by holder of mortgage to Supreme Court allowed.
Sidney B. Gottlieb, for appellant.
Edwin S. Ward, with him O. Charles Brodersen, Assistant City Solicitors, and Frank F. Truscott, City Solicitor, for appellee.
The order of the court below is affirmed on the opinion of President Judge GORDON.