Board of Levee Commissioners v. Wiborn

Cooper, C. J., delivered the opinion of the court. There is great conflict of decision upon the question whether a mortgagee out of possession, but whose mortgage is duly recorded, is an “owner” of the land, within the meaning of that word, when used in statutes authorizing the exercise of the power of eminent domain on notice to, and proceedings against, the “owner” of lands. In some states it is held that, while the mortgagee has only an incumbrance on the land as security for his debt, that security is valuable as property, often far exceeding the real interest of the mortgagor, and, therefore, such mortgagee should be regarded in law, as he is in substance, the owner of the property, under statutes authorizing third persons or the public to take the land. In others it is decided that the mortgagee, especially before forfeiture, has no estate in the land, but only a security for his debt, and therefore is not owner of the land. In these states it is reasoned that neither the character of the tribunal by which the award of compensation is made, nor its machinery, qualify it to discharge the duty of settling conflicting claims to the fund awarded; that one who accepts a mortgage upon land, does so with notice of the fact that the property may be subjected to public uses, and upon payment to the mortgagor. It is, however, held in all the states, that the fund, when awarded, stands so far in the place of the land taken,, that the mortgagee may, by seasonably proceeding, arrest its payment to the mortgagor, and secure its application to the mortgage debt. We are not called upon by the facts of this case to determine whether, upon proceedings to condemn lands under statutes providing only that payment shall be made to the “owner ” of the land, a mortgagee is or is not a necessary party. The act under which the condemnation now under investigation was [399] made (Acts of 1884, p. 166), provided that: “In event that the owner or owners of said land, material or other property-are unknown, or the said commissioners of damages are uncertain who they are, or there are conflicting claims to the amount of said award, or part thereof, then said levee treasurer may pay the same to the chancery court clerk of the proper county for such person as it may properly belong to, ’ ’ etc. The report of the commissioners showing what sums were awarded to the mortgagor, and to his tenants who had crops growing on the land, states that: “To the mortgagee, G. Wiborn, we award nothing, as his security is ample.” This statement that the security held by the mortgagee was ample, seems to have been not true, for upon sale of the mortgaged property there remained a balance due of something like $20,000 over and above the sum realized at such sale. The levee commissioner, by the very return of the award, had knowledge of the fact that there was a mortgage upon the land appropriated, due to the appellee; the statute under which the proceedings were had empowered the treasurer, as the officer of the board, to deposit the sum awarded in the hands of the chancery clerk, and thus to discharge the debt due by the board. In the face of this knowledge, and with full power to protect all parties in interest, he elected to pay the sum awarded to the mortgagor; and the single question is whether, under these circumstances, such payment can be interposed as a bar to the demand of the mortgagee. We think such payment does not preclude a recovery by the mortgagee, and, that whether he was or was not a necessary party to the proceedings, the statute manifestly contemplated just and equitable action on the part of the officers of the board in the payment of awards, and the provision that in cases of doubt the money might be paid over to the clerk of the chancery court was intended not only to protect the board from the danger of being required to pay twice for the same land, but to preserve to parties having claims upon the fund the opportunity of asserting their rights by proper [400] judicial proceedings. The fund in the hands of the treasurer was, by necessary implication, made to stand for the land, in feference, at least, to conflicting claims known by him to exist. As to such funds he stood in the relation of a mere stakeholder, and, if he was guilty of the folly of assuming to determine to whom it should be paid, the consequence of a mistake must fall upon the board whose officer he was, rather than upon an innocent third person entitled to the fund, and of whose rights the board, through its agent, had full notice. The decree is affirmed.