In re Sea Beach Ry. Co.

CRANE, J. The comptroller has refused to pay the award made to the Sea Beach Railway Company by the street opening commissioners, on the ground that a mortgage covering the property taken has not been released. The land taken for street purposes consists of two railroad strips about 10 feet wide and 40 feet long, one on each side of Third avenue. The mortgage is for $650,000, on all the property of the railway company, made to the trustees to secure the bonds of the company. [1] It is true, as a general proposition or statement of law, that where mortgaged land is condemned the award stands for the land and the mortgagee’s lien is transferred to it, and he is entitled to have his interest ascertained and paid to him. Youngs v. Stoddard, 27 App. Div. 162, 50 N. Y. Supp. 475; Hill v. Wine, 35 App. Div. 520, 54 N. Y. Supp. 892. But even this general rule is apt to be misapplied unless the facts of the case in which it is expressed are also considered. [2] The Greater New York Charter, section 970 to section 1011, provides a complete system for the condemnation of land for public purposes and for the disposition of awards to interested parties. Application is to be made to the court for the appointment of commissioners to determine the compensation which should justly be made to the respective “owners, lessees, parties or persons respectively entitled unto or interested in the land,” etc. Public notice in newspapers and in posters is required to be given at almost every step in the proceedings. Section 973 requires notice to be given of the application for commissioners, as well as notice of their appointment, indicating the land to be taken. Section 978 says the- commissioners shall publish a notice requiring all persons interested and having any claim in the land to present the same to them duly verified, and that proof of title, and likewise proof of liens or incumbrances, shall be referred to the clerk of the commission or to the assistant corporation counsel, a title company’s certificate of title and liens being permitted, if necessary. By section 980 the commissioners must ascertain the compensation which ought justly to be made to the respective “owners, lessees, parties and persons respectively interested entitled unto or interested in the lands,” etc. Section 981 states that 15 days’ notice of presentation of the report must be published in certain papers, while section 985 requires in the report a separate statement of the compensation allowed every party in interest. From this very brief outline of the pertinent parts of the charter, it is, of course, apparent that a mortgagee is an interested party and has a right to his proportionate share of an award. It is the duty of the commissioners to ascertain his interest and to adjust and allow the same. The proof of title and of liens and incumbrances will, in nearly every case, disclose such interest, but by such frequently pqsted and published notices the law also presumes that the mortgagee has received notice of the proceedings and is aware of his right to be heard and to enforce any claim. Patterson v. Binghamton, 88 Hun, 272, 34 N. Y. Supp. 416. [1082] [3] It is also to be presumed that the commissioners have performed their duties so that another general rule must be read, together with the one above stated. It is that where the commissioners have made an award, have fulfilled all the charter provisions and their report has been confirmed by the court, then the city is justified in paying the award to the person named by the commission as entitled thereto, without being liable to a subsequent claimant, unless it has received actual notice before payment of that claimant’s demand. In Spears v. Mayor, 87 N. Y. 359, 373, we find these words: “It is undoubtedly true that the city would be justified to pay the person named in the award, unless it had received notice of an adverse claim. After such notice, * * * the city would pay * * * at its peril.” [4] Even in the Youngs Case, above cited (27 App. Div. 166, 50 N. Y. Supp. 477), it is stated that “the order confirming the commissioners’ report * * * binds the city to pay the awards to the persons to whom they are specifically given,” but that this application “is limited to payments made without notice of adverse claims.” “Even if,” says the opinion in Cassidy v. Mayer, 62 Hun, 364 [17 N. Y. Supp. 358], “a deed has been recorded, * * * the payment by the city in good faith to the party named in the rejport as the owner will protect the city against the true owner. It is only when actual notice is given to the city that it has any reason to refuse to pay the party named in the report.” On argument, and in briefs, it is conceded that the mortgagees here never made any claim to any part of this award, and that the city officials have never received any notice of any adverse claim to the amount allowed the Sea Beach Railway Company. The fact, that the mortgagees made no such adverse claim is the exception to the general rule that the city should not pay one of two claimants. If the commissioners were silent as to the mortgagee’s rights and they for the first' time gave notice of their claim to the comptroller, I do not mean to decide that the confirmation of the commissioners’ report would be a bar to their recovery. Such a question is not presented, and I do not decide it. What the commissioners may have done regarding these mortgagees, or what consideration they gave their interest, I do not know; nothing is said about the matter in the papers on this motion, but it may be that the amount of property taken was so very small that they did not think the security of the mortgage lessened, or that there was any compensation “which ought justly” to be paid to them (section 980 of the charter). For the above reasons, I shall grant the motion of petitioner, and direct payment to it of the award- made, with interest from the date of the report.