Court Opinion

ID: 3606071
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:51:29.536184+00
Date Added: 2024-06-11T14:00:14.448687
License: Public Domain

The act of the legislature in 1858 authorized and required the canal board to settle upon the damages to the mill property. It is an acknowledgment of damages committed by the State to real property, by an unexpected alteration of the route of the Erie canal at that particular place. The construction of the canal had drawn to it the investment of money in manufactures and buildings, based upon its permanency and advantages. The owners are named in the act, and the award is directed to be made tothem. These owners had previously mortgaged the mill property to the plaintiffs, to secure a large portion of the consideration money for its conveyance to them, and the change of the location of the canal has very considerably impaired the value of the security. The damage to the mill property, referred to in the said act, has affected the interests of the mortgagees, by impairing their security, and to that extent, whatever it may be, their rights are injured. The equitable interests of the plaintiff are prior to, and greater than the legal or equitable rights of the owners of the land, to the extent that their security has been impaired. The State, admitting a liability for damages done to the mill property, directs an award to compensate such damages. The sum awarded arises from, or grows out of the land, by reason of the injury which has diminished its value. In equity it is the land itself. It takes the place of the reduced value of the land. A mortgage of land carries with it, in equity, a right to the accruing rents, when there has been a default, and the security is inadequate and the debtor insolvent. (8 Paige, 565, and 10 Paige, 45.) The court will appoint a receiver in such a case to hold the rents till the event is ascertained. The mortgage is thus made to operate as an equitable assignment of the rents. The application of this principle does not divert the money from the owners of the land. It pays their debt, and benefits them to the same extent. In my opinion, the mortgage carries with it the prior right to the damages awarded for an injury done to the freehold, whereby the security has been impaired, and the debtors, as in this case, are insolvent. The mortgage *Page 204 
should be regarded as an equitable assignment of so much of the damages awarded as will be required to satisfy a deficiency which may arise on a foreclosure sale. The sum awarded should be considered as the land. The appellants, having parted with nothing except the sum paid to discharge the liens of Wood and Woolson, are entitled to protection against the rights of the plaintiffs as mortgagees, only to that extent.
The judgment should be affirmed with costs.
Judgment affirmed with costs.