Fidelity-Philadelphia Trust Co. v. Kraus

• Decision Date: 22 March 1937
• Docket Number: 85
• Citation: 190 A. 874,325 Pa. 581
• Parties: Fidelity-Philadelphia Trust Company, Trustee, Appellant, v. Kraus, Executor, et al
• Court: Pennsylvania Supreme Court

190 A. 874

325 Pa. 581

Fidelity-Philadelphia Trust Company, Trustee, Appellant, v. Kraus, Executor, et al

No. 85

Supreme Court of Pennsylvania

March 22, 1937

Argued January 20, 1937

Appeal, No. 85, Jan. T., 1937, from decree of C.P. No. 3 Phila. Co., March T., 1936, No. 3480, in case of Fidelity-Philadelphia Trust Company, successor to Fidelity Trust Company, trustee, v. Gilbert J. Kraus, surviving executor and trustee under will of Solomon C. Kraus deceased, City of Philadelphia and Will B. Hadley, Treasurer. Decree affirmed.

Bill in equity. Before MacNEILLE, J.

The opinion of the Supreme Court states the facts.

Adjudication entered dismissing bill. Exceptions to adjudication dismissed. Plaintiff appealed.

Error assigned was final decree.

Decree affirmed; costs to be paid by appellant.

Howard H. Rapp, with him Morgan, Lewis & Bockius, for appellant.

Gilbert J. Kraus, of Kraus & Weyl, propria persona.

Joseph H. Lieberman, with him O. Charles Brodersen, Assistant City Solictors, and Joseph Sharfsin, City Solicitor, for City of Philadelphia, appellee.

Before KEPHART, C.J., SCHAFFER, MAXEY, DREW, LINN, STERN and BARNES, JJ.

OPINION

MR. JUSTICE LINN:

This is a bill to construct a trust for plaintiff's benefit of a writ of mandamus execution in possession of the defendant, Kraus.

Premises abutting on Market Street, Philadelphia, were injuriously affected by a change of grade of the street between 30th and 31st streets begun May 4, 1931. Title to the property was in Sarah Mayer who assigned the claim for damages to the executor and trustee of Kraus (one of the appellees) for whom, it was suggested in the record, she held title. On July 25, 1933, Kraus, executor and trustee, filed his petition in Common Pleas Number 1 for the assessment of damages. Viewers were appointed and in 1935 awarded $6,350 to petitioner. The city appealed. Petitioner and the city on January 20, 1936, agreed that $6,000 should be paid in satisfaction of the award whereupon the city withdrew its appeal. The award, so reduced to $6,000, was confirmed and constituted a judgment against the city. On this judgment a rule for a writ of mandamus execution issued and on March 23, 1936, was made absolute: see Schlosberg v. New Castle, 100 Pa.Super. 139, and cases there cited. The writ was taken out returnable first Monday of April, 1936, and required the city to pay the judgment; it was presented to the city treasurer for payment but had not been paid when the bill was filed. At the time the grade was changed the premises were subject to the lien of a mortgage held by plaintiff as trustee to secure certain bonds. No part of the mortgaged property was taken by the city. The owner was in possession. Plaintiff did not intervene in the proceedings for the assessment of damages. On July 21, 1934, before the assessment of damages was completed, plaintiff began foreclosure proceedings on its mortgage and at the sale purchased the premises on a nominal bid, receiving the sheriff's deed on or about September 24, 1934. The sale discharged the lien of the mortgage. The right to the damages resulting from the change of grade did not pass to plaintiff by the sale; the right is personal and does not run with the land: Kaufmann v. Pittsburgh, 248 Pa. 41, 46, 93 A. 779; Shields v. Pittsburgh, 252 Pa. 74, 97 A. 124.

On April 6, 1936, plaintiff filed this bill in Common Pleas Number 3. The bill asked that Kraus, the city's judgment creditor, be enjoined from pursuing his execution and that the city be restrained from complying with the writ and "That the defendant, Gilbert J. Kraus, Surviving Executor and Trustee, be commanded to deliver and assign to plaintiff the said writ of mandamus issued out of the Court of Common Pleas No. 1 of Philadelphia County on March 23, 1936 directed to the Treasurer of The City of Philadelphia commanding him, the said Treasurer, to pay a certain judgment secured by said Gilbert J. Kraus, Surviving Executor and Trustee under the Will of Solomon C. Kraus, Deceased, in the principal sum of $6,000 with interest thereon from January 20, 1936 and costs, secured in said proceedings entitled In re Change of Grade of South side of Market Street from 30th Street to 31st Street as of June Term, 1933, No. 7673."

The learned chancellor correctly stated the general rule as follows: "It is a well recognized rule that the owner of land at the time property is taken for public use is the person entitled to the damages awarded for such taking, and that where the land is subject to the lien of a mortgage, the court having jurisdiction of the subject, will guard the rights of the lien creditor. This is on the theory that the land is converted into money to the extent to which damages are allowed. The damages become a substitute for the thing taken, and the mortgage is a charge against the fund. While the award is in the name of the owner, he becomes a trustee for the mortgage creditor, and until there has been an actual payment of the damages assessed to the owner by the municipality, the mortgage creditor has standing to intervene and claim the fund to the extent necessary to satisfy his lien: [citing cases]."

The bill gave no intimation that plaintiff had foreclosed its mortgage; there is an averment ^[1] of depreciation of the security in the amount of the judgment subsequently rendered in the change of grade proceeding.

At the trial plaintiff's proof consisted of reading in evidence admissions in the pleadings; no proof that the mortgaged property was damaged as averred was offered. Plaintiff's theory was, as we understand it, that by showing it held a mortgage when the grade was changed, it became entitled to receive the amount payable by the city. As the answer had alleged plaintiff's foreclosure in 1934 (an averment admitted in plaintiff's replication) defendants made the point, when plaintiff closed its case, that plaintiff was no longer a lien holder and had offered no evidence of loss or damage to justify a decree in its favor. ^[2] Defendants accordingly moved that the bill be dismissed: equity rule 66. The motion was granted. Exceptions were then filed which, after hearing by the court in banc, were also dismissed and the decree complained of was made. In the course of the opinions filed by the learned court below and in the argument of the appellant and in its statement of the first question involved, plaintiff's foreclosure in 1934 is treated as a fact in the case; we have therefore so considered it.

Plaintiff now contends that its purchase at a nominal bid requires a finding of loss in the present suit in the amount of the judgment rendered in the change of grade proceeding. In support of this, various cases decided in this state are relied on; in none was the point so decided.

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