Knoll v. N. Y. etc. Ry. Co. , 121 Pa. 467 ( 1888 )

Opinion,

Me. Justice Williams :

This case is somewhat anomalous. The plaintiff is the holder of a mortgage upon a house and lot in the city of Erie. The defendant company, acting under the authority of the railroad laws of the commonwealth and an ordinance of the city of Erie, has built a single track railroad along the centre of Nineteenth street, on which the mortgaged property fronts. The complaint of the plaintiff is, that the value of the property has been depreciated by the building of the railroad along the street, and that his security as a mortgage creditor has been impaired to the same extent. No effort has been made to collect the debt or to bring the mortgaged premises to sale, so as to determine what amount could be realized out of it, but this suit is brought to recover in damages the amount of the alleged depreciation in the value of the property.

From an examination of the testimony we learn that the plaintiff is the administrator of W. Hermle, deceased, who died in 1872. At the time of his death, Hermle was the owner of the equitable title to the lot in question, and had erected the dwelling-house now standing on it. He left a widow to survive him, but so far as the evidence informs us, no issue. Soon after his appointment as administrator Knoll made his application to the Orphans’ Court for leave to sell the house and lot at public sale for the payment of debts. Leave was granted, the sale made and Mrs. Hermle, the widow, became the purchaser at the price of $2,000. She paid no part of the purchase-money, but gave her bond and mortgage for the amount of her bid, and this is the bond and mortgage which Knoll alleges is impaired in value by the act of the defendant in building its road along Nineteenth street. The mortgage was made in 1873, the railroad was located in 1881, and this suit was brought in 1887.

Our first question is, whether the amount due upon the mortgage is greater than the present value of the property bound by it, after providing for a prior incumbrance. If it is not, the plaintiff has nothing of which to complain. The question is, not whether the property is worth less than it was when the mortgage was taken, but whether it is worth less than the plaintiff’s debt. It is the injury to him, not that sustained by the lot owner, on which his right to recover must rest.

It must be borne in mind that the plaintiff is a mere trustee. As administrator of W. Hermle he holds this mortgage for those who may be entitled to the fund on final settlement of the estate, and these after the lapse of fifteen years are presumably not creditors but the heirs-at-law of the decedent. In 1877, the plaintiff filed a partial account of his administration of the estate, from which it appears that the personal estate was appraised at $69.80, and was retained by the widow as part of the amount allowed her as exempt from the claims of creditors. The decedent had no real estate except the house and lot now owned by his widow and represented by plaintiff’s mortgage. The account also shows that Mrs. Hermle had paid to apply on the mortgage, “in money and debts assigned to'her,” the sum of $1,350, with which the accountant charged himself. This left $650 of the principal still due, with some interest. Whose was, this balance ? Out of it Mrs. Hermle was entitléd ■ to take the balance of her $300, as of the date of the mortgage. This would take $230 from the $650, leaving only $420 for distribution, and, in the absence of issue, one half of this balance would belong to her under the intestate laws. The amount to which the plaintiff would be entitled as administrator, would be in this manner reduced to about $200, a sum which under the evidence would be abundantly secure-upon the property. As to Mrs. Hermle’s interest in the mortgage she is very clearly estopped from making any claim against the defendant, because she agreed with the defendant that the damages sustained by the property were $200, and upon the payment of this sum to her she executed and delivered a release of all claims for damage by reason of the location of the railroad on Nineteenth street. As she could not now claim a larger sum than that agreed upon, Knoll cannot claim it for her, but must be regarded as the representative of the other parties entitled to share in the fund. He fails to show, therefore, that his security has been impaired for the sum he is entitled to collect from Mrs. Hermle upon the mortgage, and for this reason alone, the court below was justified in withdrawing the case from the jury.

But, while indicating a sufficient reason for affirming the judgment in this-case, we have no inclination to avoid the consideration of the precise point on which the case turned in the court below, and which has been presented here with so much earnestness and zeal by the learned counsel for the plaintiff in error. Is the plaintiff, on the assumption that his security has been impaired, in a position to maintain this action against the company defendant?

The title to the property injured is in Mrs. Hermle, the owner. The plaintiff is a mortgagee, out of possession; a holder of an incumbrance upon the title merely. As a lien-creditor he has the right to prevent the depreciation of the property, bound by his judgment or mortgage, by the commission of waste thereon. If the owner, or a stranger to the title, attempts the removal or destruction of timber trees, of the minerals, or the buildings, he may interfere by writ of estrepement or injunction to prevent it; but, subject to this right of the lien-creditor to stay waste, the owner has by virtue of his ownership the jus disponendi' of the property, including everything upon the surface or underlying it. He may lawfully sell his timber or his buildings, and if the vendee is allowed to remove them, a good title will vest in him, provided always that the sale be fairly and honestly made. The creditor has the right to interpose, if he will, but if he does not do so, the severed articles pass out from under his lien when they pass beyond the lines of the property on which his lien rests. While on, or affixed to, the freehold, he may insist that they shall so remain; but if severed and removed, his right to them by virtue of his lien on the freehold is gone. Vigilance is the duty of a creditor: Vigilantibus et non dormientibus jura subveniunt.

But the injury complained of in this case is not waste. The defendant company has not entered upon the lot covered by the mortgage or removed anything from it. It has entered upon a public highway in a lawful manner and in the exercise of the right of eminent domain. Its entry could not have been prevented by the plaintiff, nor its work arrested by a writ of estrepement or injunction. The plaintiff alleges that the value of the property bound by his lien has been diminished by the construction of the railroad. So it might have been by the erection of a factory or a tavern on a neighboring lot, or by a change in the use or occupancy' of the buildings near it; but, so long as there is no entry upon the lot bound by the lien, and no unlawful act done by tbe defendant, tbe plaintiff has no ground upon which to stand. The right of action for such eonsequental injuries is in the owner, and if the party exercising the right of eminent domain desires to make an amicable settlement for any damages done thereby, the owner residing on the land is the proper person to whom to apply. The injury is one done to the freehold, as the result of the lawful act of another done beyond the lines of the injured property, and the owner of the freehold is the only person in whom a right of action for such an injury can reside. If the owner should refuse to move, or should act fraudulently, the courts upon a proper application by lien creditors would no doubt treat him as a trustee and require him to do, or permit his creditors to do in his name, what might be necessary to an'-adjustment of the damages, and impound the money for those equitably entitled to receive it.

In this case, the owner has settled with the defendant and given a release of damages. There is no allegation that the settlement was secured by fraud on the part of the defendant, or made by the owner with a purpose to defraud the plaintiff. The plaintiff brings his suit upon a right of action which he alleges rests in him as a lien-creditor. Notwithstanding the settlement and release by the owner, he claims to be entitled to recover his damages, as distinguished from the damages of the owner. The right of action asserted is not that of the owner of the property, but one independent of, and additional to, that which resides in the owner. If this position is tenable for the plaintiff it would be equally so for any number of lien-creditors of Mrs. Hermle. ■ A settlement with or a recovery by one, would not estop another from taking the chances of a more .favorable verdict. To state the position is a sufficient argument against its soundness.

Perhaps the case that comes nearest to our question is In re Road in Upper Dublin and Whitemarsh Township, 94 Pa. 126. A public road had been laid out over a farm in Montgomery county, of which Bissinger was owner but upon which Nash held a purchase-money mortgage for $10,000. Nash claimed to be entitled to the damages sustained by the opening of the road, as the holder of the mortgage. On the other hand, Bissinger, as owner, released them. The Court of Quarter Sessions held the release of the owner effectual as an extinguishment of all claim for damages. The judgment was affirmed by this court with a per curiam opinion in which the following paragraph occurs: “ Nash might perhaps have brought his case on the record by a petition with the necessary averments, but as it stands we cannot take cognizance of the question he has attempted to raise.” If by “ necessary averments” Nash had shown to the court that Bissinger was acting in bad faith towards him, and was releasing the damages, not because the advantages resulting from the opening of the road were, in his opinion, equal to or greater than the disadvantages, but to prevent Nash from securing them to apply upon his mortgage, then it is probable that the Court of Quarter Sessions would have entertained his petition and made such order as to secure a fair ascertainment of the damages and a proper appropriation of them. The claim asserted, however, would have been that of the owner, and the damages when settled would have been paid out under an order of the court. Action analogous to that now suggested has been taken in right of way cases, whenever the courts have obtained control over the damages assessed, and distribution has been made on equitable principles: Powell v. Whitaker, 88 Pa. 445; Workman v. Mifflin, 30 Pa. 362. In these cases, the courts seem to have regarded the owner as a trustee for his lien-creditors, and a recovery in his name as one to be controlled for their benefit.

In the case at bar, if appraisers had been appointed in lieu of the settlement made between the parties, they would have made report, not only fixing the amount of the damages, but stating the fact that the plaintiff was the holder of an unsatisfied mortgage, and recommending the money to be paid into court for the benefit of the parties entitled. If this had been done, the plaintiff might have asked that the money be paid to him upon his mortgage, but if the appraisers had- made no mention of the mortgage and their report had been approved and the money paid to Mrs. Hermle without the intervention or objection of the plaintiff, such payment would have been as to the defendant a final disposition of the claim for damages. An agreement upon the amount of damages made with the owner in good faith, followed by payment to, and a release by him, is equally conclusive upon the claim.

There was, it will be remembered, no entry upon the lot in controversy, no appropriation of any, part of it or of anything upon or affixed to it; and as a settlement fairly made with the owner was, as we have seen, a final disposition of the claim for damages it follows that the plaintiff has no further remedy.' Had the road been located over any portion of this lot, and had the damages been settled by the parties or adjusted without notice to the plaintiff, it is probable that the lien of the mortgage would not be divested, and the mortgagee might in that case proceed upon his mortgage in the same manner as if a sale of part of the mortgaged premises had been made to a private person, selling first that which still belonged to the debtor, and if his money was not made thereby, then selling that which the railroad company had taken. If such had been the situation the plaintiff would have had two remedies at his command; one through the owner as a trustee of the title for his hen-creditors, and one as mortgagee to be made effective by process upon his mortgage. In the case in hand, the plaintiff had the first of these remedies only, and that was extinguished by the settlement with and release by the owner. We conclude that the plaintiff’s counsel entertained substantially this view of the case, for upon the trial he offered, and asked that his offer be entered upon the stenographer’s notes of the trial, that the $200 paid by the defendant to Mrs. Hermle'might be credited upon whatever sum the jury might assess the damages to his client. This was a concession that the payment to the owner was satisfaction pro tanto of the damages sustained by the property. But, if the payment to the owner was a satisfaction to any extent whatever, it was a satisfaction in toto. It was as broad as her right as owner; and as it concluded her it must necessarily conclude all persons claiming through her. The court below was therefore right in the legal rule applied, and upon which the compulsory nonsuit was entered.

Judgment affirmed.

Mr. Justice Sterrett and Mr. Justice Clark dissented.