Phila. & Reading R. R. v. Penna. Schuylkill Valley R. R.

Opinion by Mr. Justice McCollum, This is an appeal from the refusal of an application by the Pennsylvania Schuylkill Valley Railroad Company for leave to pay into court a sum awarded against it as damages or compensation for land taken for corporate uses by proceedings under the act of February 19, 1849. The application is resisted by the Philadelphia & Reading Railroad Company which is the owner of the land so taken. It is admitted that there are mortgages and judgments to á large amount against the owner, which were liens upon the land at the time of its appropriation, and that the lien creditors have a claim upon the sum awarded which a court of equity on their motion will recognize and enforce. But it is contended bjr the owner that the appellant has no standing to invoke the aid of the court in behalf of the creditors, and that the order applied for is not necessary for its own protection. The case therefore involves a consideration of the respective rights of the owner, the appellant and the lien creditors. 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. These damages are the price of the easement and on payment of them the appellant has a right to an unencumbered title. If the appellant receives that for which it pays and the price of the easement is passed directly to the owner, the real estate security of the lien creditors is impaired to that amount and their sole reliance for it is the personal responsibility of the owner. If on the other hand the security of the lien creditor is not affected by the condemnation proceedings, and the appellant has paid the owner without notice to them, it has not acquired an indefeasible title to the easement, but a title which may be divested by a sale on the mortgage or judgment liens. In Knoll v. Railway Co., 121 Pa. 467, it was held that a mortgagee out of possession could not maintain an action on the case against the company for an injury to the mortgaged premises arising from the construction of its road on a street in front of them, especially when the [576] mortgagee had made no attempt to collect his debt, failed to show that his mortgage interest had been impaired, and the owner of the freehold had already in good faith settled with the company for the injury occasioned. But in the case cited a distinction was taken between an action for consequential injuries, and proceedings for damages occasioned by an entry upon and appropriation of the land. In delivering the opinion of the court our Brother Williams said: “ 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 bad 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 lien creditors, and one as mortgagee to be made effective by proceedings upon his mortgage.” The statute under which the proceedings in the present case were instituted, contains no provision for notice to or for the protection of lien creditors, or declaratory of the effect upon the liens of the appropriation of the land bound by them. It has been said in some of our cases that inasmuch as the land is taken for public use, public policy requires that the liens should be divested by the condemnation proceedings. Reese v. Addams, 16 S. & R. 43; Deckert’s Appeal, 5 W. & S. 342. In these cases the lien creditors chose to consider the owner, in the proceeding for the assessment of the damages, as their trustee, and demanded that the sum awarded to him should be applied on their claims, but the question whether the party appropriating the land, with notice of the liens, would be protected by a voluntary payment to the owner was not considered or raised. It [577] is clear that the owner would have the full benefit of the damages, if they were paid directly to him, or to his lien creditors in satisfaction or reduction of his indebtedness to them. In this case as in Eeese v. Addams, supra, the liens exceed the damages, and it is not alleged that the property bound by them is sufficient for their payment. A proper ease is therefore presented for the exercise of the equity powers of the court for the protection of all the parties interested. The appellant should have leave to pay into court the sum awarded as compensation for the easement, and the lien creditors should have an opportunity to enforce their claims upon it, after which the court can make such order in the premises as justice requires. The order refusing the appellant’s application and dismissing its petition is reversed at the cost of the appellee, and the record is remitted for further proceedings in accordance with this opinion.