Swanson v. United States

• Decision Date: 25 June 1946
• Docket Number: No. 11131.,11131.
• Citation: 156 F.2d 442
• Parties: SWANSON et al. v. UNITED STATES et al.
• Court: U.S. Court of Appeals — Ninth Circuit

156 F.2d 442 (1946)

SWANSON et al. v. UNITED STATES et al.

No. 11131.

Circuit Court of Appeals, Ninth Circuit.

June 25, 1946.

George W. Young, of Spokane, Wash., for appellant Price.

Lawrence H. Brown and Lloyd E. Gandy, both of Spokane, Wash., for all other appellants.

John T. Raftis, of Colville, Wash., and Harry T. Davenport, of Spokane, Wash., for appellees Spokane Portland Cement Co., and John T. Raftis and Charles E. Bennett.

Before DENMAN, STEPHENS, and BONE, Circuit Judges.

STEPHENS, Circuit Judge.

On November 16, 1942, the United States by eminent domain proceedings acquired title to 340 acres of land out of a 3000-acre tract in the State of Washington. 40 U.S. C.A. § 257 et seq. The sum of $10,000 was deposited with the Clerk of the District Court of Washington, Eastern Division, as the estimated just compensation therefor. Later, a jury assessed the value at $30,000 and the deposit was increased to that sum.

The case is here on appeal from the judgment under the claim that it does not provide for the legal distribution of the compensation paid. The only party appellants named as interested in the issues of this appeal are as follows: The "Swansons," heirs of M. G. Swanson (the mortgagor) and wife, both deceased, assignees of Ella Price, surviving spouse and executrix of the estate of H. G. Price, deceased, who was a partial assignee of J. D. Crary, who was a partial assignee of M. G. Swanson; the Spokane Portland Cement Co., assignee of the Parnell interest; the estate of W. N. Bennett, deceased, assignee of the Parnell interest; and John T. Raftis and Charles E. Bennett as executors of said estate.

Section 258 is applicable and provides that: "The practice, pleadings, forms and modes of proceedings in causes arising under the provisions of section 257 of this title shall conform, as near as may be, to the practice, pleadings, forms and proceedings existing at the time in like causes in the courts of record of the State within which such district court is held, any rule of the court to the contrary notwithstanding." The Washington law, Rem.Rev.Stat. §§ 891-900, provides that eminent domain cases are begun by filing the condemnor's petition, in which the property to be taken is sufficiently described for identification, and the known or reputed owners are named and unknown interests, if any, are made parties defendant.

Contemporaneously with filing the petition the government also filed a declaration of taking on which the usual ex parte judgment was entered vesting title in the United States and requiring prompt delivery of possession unless cause to the contrary should be shown.¹ No such showing has been attempted. Answers have been filed by the owners or reputed owners consenting to the condemnation of the property, but the appellants both as holder of the fee and as heirs of the mortgagor of the condemned land challenged the right of the respondents both as the holder of a sheriff's certificate of sale and as the assignees of the mortgagees, to share in the jury award as compensation for the taking of the 340 acres of the larger tract.

The mesne conveyances and assignments, necessary to a proper distribution of the fund may be summarized as follows:

W. G. Wrenn, the fee holder, on September 3, 1938, conveyed by warranty deed to M. G. Swanson, who gave a mortgage back to W. G. Wrenn. The mortgage was filed September 10, 1938, in records of Stevens County, Washington.

On December 11, 1941, W. G. Wrenn assigned said mortgage to Richard C. Parnell and Thelma S. Parnell, his wife, and the assignment was duly filed for record.

Parnell and wife, on December 9, 1941, brought an action to foreclose the mortgage. A money judgment and decree of foreclosure was rendered in said cause on March 13, 1942, in their favor.

On April 22, 1942, a sheriff's sale on foreclosure was held at which sale the Parnells were the purchasers upon their bid of a sum equal to the obligation, and this sale was confirmed on September 18, 1942.

On April 30, 1942, subsequent to the sheriff's sale to them, but prior to confirmation thereof, the Parnells, assignees of the mortgage from Swanson to Wrenn, in writing and for a consideration assigned all their right, title and interest in the sheriff's certificate to W. N. Bennett, on November 11, 1942, in consideration of various sums paid or to be paid, by partial assignment, assigned the portion of the sheriff's certificate covering Tract No. 3 herein (a part of the condemned land) to Spokane Portland Cement Company.

There was no redemption from the foreclosure sale and, at the expiration of a year therefrom and on April 28, 1943, the assignees of the sheriff's certificate, viz., appellees Spokane Portland Cement Company and the W. N. Bennett Estate (Bennett having died), surrendered their respective assigned sheriff's certificates and took sheriff's deeds, to-wit, said Spokane Portland Cement Company to Tract No. 3, and said Bennett's estate to Tract No. 4 and the remainder of the 3000 acres.

On September 5, 1945, Parnell and wife sold and assigned all their interest, if any, in the judgment of foreclosure to Spokane Portland Cement Company, and the matters in controversy between the company and the Bennett estate on the one hand and the Parnells on the other were settled and adjusted at the same time.

It is important to know who were the "owners" of the property at the time of its taking by the government. It is stated in Danforth v. United States, 1939, 308 U.S. 271, 283, 60 S.Ct. 231, 236, 84 L.Ed. 240, that "just compensation is value at the time of taking. * * * For the reason that compensation is due at the time of taking, the owner at that time, not the owner at an earlier or later date, receives the payment. Unless a taking has occurred previously in actuality or by a statutory provision, which fixes the time of taking by an event such as the filing of an action, we are of the view that the taking in a condemnation suit under this statute takes place upon the payment of the money award by the condemnor".

It is settled that when a parcel of land is taken by eminent domain, every person having an estate or interest at law or in equity in the land taken is entitled to share in the award. The term "owner" in statutes relating to the exercise of eminent domain includes any person having a legal or equitable interest in the property condemned. A mortgagee of real property sought to be condemned or a mortgagee's assignee or grantee is "owner" or "person interested in property," and as such and to the extent of the interest is entitled to share in the distribution of the compensation judgment. John Hancock Mutual Life Ins. Co. v. Casey, 1 Cir., 1945, 147 F.2d 762; United States v. Bransen, 9 Cir., 1944, 142 F.2d 232; Morse v. Board of Com'rs of Marshall County, 1934, 169 Okl. 600, 38 P.2d 945; Morgan v. Willman, 1927, 318 Mo. 151, 1 S.W.2d 193, 58 A.L.R. 1518.

At the time of the taking the "owners" were legal owner M. G. Swanson, and mortgagees Richard C. Parnell and wife, "equitable owners." The subsequent mesne conveyances by assignment to W. N. Bennett and to Spokane Cement Company would act to subrogate these assignees to the rights of the mortgagee-assignor.

The District Court questioned the validity of the assignments against the Parnells, but they were not set aside and were not challenged by the assignors, nor by the United States.

The questions raised by this appeal grow out of the divergent claims made by the appellants and the mortgage creditors. The appellants claim the entire fund by virtue of their being the legal owners at the time of the taking, while the mortgagees, appellees, claim enough of the fund to liquidate the entire debt secured by the mortgage.

The District Court found both the facts and law in favor of the assignees of the mortgage creditors and awarded them an amount sufficient to satisfy their mortgage lien with the balance, if any, to the appellants as legal owners.

The holders of the sheriff's certificates, the Bennett estate and the Cement Company, turned in their certificates when the redemption period expired and received the sheriff's deed, and thereby took absolute title to the balance of the tract.

At the trial the appellants attempted to prove a collusive understanding between the assignors and the assignees of the mortgage, but the court found against such claim and also that the assignment was valid until and unless set aside and that the appellees had acted within their legal rights. The District Court in passing upon the questions involved properly treated the appellees as equitable owners. If, therefore, appellees cannot recover the amount due on the mortgage, neither can any one else, other than appellants, the legal owners.

When the appellees became purchasers of the mortgage for value, they acquired whatever security the mortgage gave. If the real estate bound did not pay the mortgage debt, the appellees could proceed for the balance in a personal action on their bond, or, if damages accrued to the owners by reason of the taking of the mortgaged property, the security of the mortgage being thus depreciated, they could follow the fund awarded for the taking to the extent of making good their loss. This is what was done in the present case, but as we shall see the court went too far by awarding the assignees of the mortgagee-purchasers all of the award.

The appellants seek to take advantage of a questionable assignment as heretofore referred to between the assignees. We do not see how this controversy, if indeed there is one, can avail to defeat a recovery on the mortgage. The United States does not set up the defense and is not benefited by it. That assignment stands as it did before the present proceedings were instituted. The only question presented on this appeal is whether the claim of the appellees as mortgagees is the claim as an "owner" having the right to participate in the fund for distribution....