Opinion
June 11, 1954. On Rehearing October 11, 1954.
Appeal from the Circuit Court, Duval County, Claude Ogilvie, J.
Jennings, Watts, Clarke Hamilton, Jacksonville, for appellant.
Harvey Mabry, Jacksonville, for Duval County and Florida State Improvement Commission.
Dillon Hartridge, Jacksonville, for Robert L. Edwards et ux.
Giles P. Lewis, Jacksonville, for Roosevelt C. Jones et ux.
Robert E. Tanner, Jr., Jacksonville, for Willie B. Young et ux.
Damon G. Yerkes, Jacksonville, for Jack Mitchell et ux.
Edwin C. Coffee, Jacksonville, for William C. Armsted et ux.
Emmet Safay, Jacksonville, for Roy Alfred Mallard et ux.
J.D. Raye, Jacksonville, for Arthur Rasberry et ux.
This case was consolidated with Shavers v. Duval County, Fla., 73 So.2d 684 for the purpose of consideration, conference and disposition. The conclusions reached in that case govern the issues herein.
The judgment appealed from should accordingly be affirmed in part and reversed in part for further proceedings in accordance with the opinion in Shavers v. Duval County.
It is so ordered.
ROBERTS, C.J., and TERRELL, SEBRING, MATHEWS and DREW, JJ., concur.
THOMAS and BARNS, JJ., dissent.
On Rehearing
The essential provision of the mortgage in this case is the same as the provision of the mortgage in the Shavers case. There is some difference in the relief prayed for. In this case the mortgagee prays that the fund shall stand and remain as security until the note is paid and discharged in full according to the express terms and provisions of the note. In his answer, pursuant to notice as provided for by the statute, the mortgagee among other things stated:
"Wherefore, defendant Olin E. Watts, as Trustee under the Last Will and Testament and Codicil thereto of A.F. Baines, deceased, prays that if the land described in the petition herein shall be taken in this condemnation proceeding, this Court will make and enter its order providing and adjudging that the lien of said defendant's respective mortgages herein involved will immediately attach to any funds or award which may, by law be substituted for the mortgaged property, that said liens follow the funds or awards into the registry of the Court and stand in the place and stead of said mortgaged real property, subject to the proper enforcement of said liens by appropriate proceedings, and said defendant further prays that he be adjudged entitled to receive and be paid his costs incurred in and about these proceedings, including a reasonable attorney's fee."
After verdict the mortgagee filed its petition with the Circuit Court for determination of rights of the mortgagee in respect to the awards and stated:
"Defendant, Olin E. Watts, as Trustee under the Last Will and Testament by his undersigned attorneys, makes and presents this petition for determination of his rights as mortgagee under the mortgages hereinafter described in respect to the compensation awarded to each defendant owner by the verdicts heretofore rendered in this cause, and respectfully shows unto the Court that:"
He then set forth the amount of the award as to each piece of property covered by separate mortgages.
It therefore appears that the mortgagee appeared and answered pursuant to notice and due process of law as required by the statutes. There was no objection of improper notice, service or jurisdiction. The answer fully set forth the provisions of the mortgage and made the mortgage a part of the answer. The mortgagee claimed that he was entitled to the balance together with interest thereon until the maturity of each note according to the strict terms thereof or according to his own interpretation of the Constitution, statutes, mortgage and note.
Every provision of the Constitution, statutes, mortgage and note involved in this case were involved in Shavers v. Duval County, supra. The mortgagee in this case is not contending for full compensation determined upon equitable principles but is contending for a strict, full and complete compliance with each and every term of the note irrespective of equitable principles.
It is not necessary to consider due process of law in this case because even if properly raised the record shows that due process was had and answer was filed as the result of such due process.
The mortgagee was entitled to follow the fund paid into the registry of the Court and to receive full compensation determined by the Circuit Judge on equitable principles. The Circuit Judge has done what he was requested to do by the mortgagee when the mortgagee requested the Circuit Court to determine his rights in the premises. He may not have determined such rights in accordance with the views and wishes of the mortgagee but he determined such rights upon what he considered to be equitable principles, and reversible error has not been made to appear. Based upon the petition for determination of rights of the mortgagee the Circuit Judge, after a full hearing, made an order which, among other things, contained the following:
"* * * that while the liens of the several mortgages held by the defendant mortgagee follow the award moneys into the Registry of the Court, the defendant mortgagee upon payment of the award moneys into the Registry of the Court, must make an election to follow one of two alternative courses, namely, (1) the defendant mortgagee must elect to receive out of the award moneys in the hands of the Court the full principal balances due under the respective promissory notes and mortgages together with unpaid interest thereon computed only to the date this Court orders distribution of the award moneys, or (2) the defendant mortgagee must release its liens against the award moneys and permit the entire money awards to be paid to the respective mortgagors, in which event the defendant mortgagee must then and thereafter look solely to the respective mortgagors personally, unsecured by the condemned property or by the award moneys, for the payment of the future monthly fixed installments of principal and interest thereafter falling due under said promissory notes and mortgages. * * *"
Affirmed.
ROBERTS, C.J., TERRELL and DREW, JJ., concur.
BARNS, J., concurs specially.
THOMAS and SEBRING, JJ., dissent.
Petitioners filed their petition to condemn seven parcels of real estate. The defendants were the owners of the fee and the mortgagee who held a mortgage on each of the seven parcels.
Facts
Each of the mortgage notes and mortgage deeds were payable in monthly installments, each installment including both principal and interest, and each contained express conditions and limitations on the right of the owner to anticipate and prepay the indebtedness, as follows:
"Additional principal amounts may be paid in advance and without penalty on any installment due date. But not more than twenty-five per cent (25%) of the original principal debt, including the installments required hereunder, may be paid in any one loan year. The anticipation of any such additional principal amounts shall not decrease the installments maturing thereafter."
The appellant by his answer and by petition after the award of the jury, sought to have the court adjudicate on the claim of the creditor-mortgagee as against the debtor-mortgagor, as follows:
"(a) That the liens of this defendant's respective mortgages, upon payment into the Registry of this Court of the funds awarded to the defendant owners for the property condemned, immediately attach to said funds so awarded and that said funds are substituted for and stand in the place and stead of the real property condemned, as security for the payment and discharge of the real property condemned, as security for the payment and discharge by the respective defendant owners of their contractual obligations with this defendant mortgagee.
* * * * * *
"(c) That this defendant mortgagee is entitled to have the respective mortgages and notes of the defendant owners satisfied and paid in due course according to, and only according to, the express terms and provisions of said respective mortgages and notes.
"This defendant further prays that this court by its order make appropriate provisions to protect and secure the liens of this defendant's respective mortgages and notes upon said funds to be paid into the Registry of this court and upon the respective houses which the several defendant owners are entitled to receive, remove and retain, in order that said funds and houses shall stand and remain as security until said respective notes and mortgages shall have been paid and discharged by the several defendant owners, in due course according to, and only according to, the express terms and provisions of said notes and mortgages."
After the award of the jury and upon a hearing of the petition for adjudication of the rights of the appellant the Court held that:
"The liens of the several mortgages held by the defendant mortgagee upon payment of the award moneys into the Registry of the Court, the defendant mortgagee upon payment of the award moneys, into the registry of the court, must make an election to follow one of two alternative courses, namely, (1) the defendant mortgagee must elect to receive out of the award moneys in the hands of the Court the full principal balances due under the respective promissory notes and mortgages together with unpaid interest thereon computed only to the date this court orders distribution of the award moneys, or (2) the defendant mortgagee must release its lien against the award moneys and permit the entire money awards to be paid to the respective mortgagors, in which event the defendant mortgagees must then and thereafter look solely to the respective mortgagors personally, unsecured by the condemned property or by the award moneys, for the payment of the future monthly fixed installments of principal and interest thereafter falling due under said promissory notes and mortgages. * * *"
Thereupon, the creditor-mortgagee-appellant appealed and complains that the ruling of the court as above stated
"(a) Is an unconstitutional alteration, abrogation and violation of the contractual obligations existing between the several defendant owners and this defendant mortgagee as evidenced by the several notes and mortgages herein involved and violates the rights guaranteed and protected by Section 17 of the Declaration of Rights of the Constitution of Florida and by Article I, Section 10 of the Constitution of the United States;
"(b) Is violative of the Fifth and Fourteenth Amendments to the Constitution of the United States; and
"(c) Operates to deprive this defendant of his property held as Trustee without due process of law and denies this defendant equal protection of the law."
The controversy here relates to a conflict of claims by the mortgagor and mortgagee against the compensatory awards to the mortgagor-owners. The points made by the assignment of errors that have been argued do not relate to the amount of the jury awards to the appellant since these amounts were agreed upon and included attorneys fees for services to the defendant-appellant-mortgagee. The amounts of the jury awards were agreed to by all parties.
Conclusions
By the condemnation proceedings the plaintiff takes the land free of the appellant's mortgages. The owners interest has been converted into money and as between the mortgagee and the owner the court will, on equitable principles, treat the money as reconverted into land for the purposes of determining their relative rights.
By the exercise of the sovereign power of eminent domain the owner's property has been taken from him and he is no longer the owner. The appellant had a lien on the property expropriated but, by the same judicial proceedings of eminent domain, the appellant has lost the lien on the real property as the owner lost the fee to the realty. The mortgage was given subject to the rights and hazards of the property being taken for a public use. This was a hazard to the mortgagee as well as the fee owner. The exercise of the power of eminent domain does not interfere with the inviolability of contracts. Richmond, F. P.R. Co. v. Louisa R. Co., 13 How. 71, 14 L.Ed. 55. Even the obligation of a contract is not impaired when it is appropriated for a public use and compensation made therefor: every contract is entered into subject to the right of the State. City of Cincinnati v. Louisville N.R. Co., 223 U.S. 390, 32 S.Ct. 267, 56 L.Ed. 481. The taker must pay compensation for what is taken and it remains for the court to determine the rights of the former owner and the former mortgagee of the land as between themselves. The status quo has been destroyed, and an equitable adjustment by the court between those affected becomes appropriate.
As to the question "due process" in fixing the compensation by the court, or the form of procedure, all that is essential is that in some appropriate way, before some constituted tribunal, inquiry shall be made as to the amount of compensation; and when this has been provided for there is that due process of law which is required by the Federal Constitution. Backus v. Fort Street Union Depot Co., 169 U.S. 557, 18 S.Ct. 445, 42 L.Ed. 853.
In the determination of the relative rights as between the mortgagee and the owner it must not be overlooked that the previous situation was not altered by the action of the owner. If the mortgagee considered that he would suffer any compensable special damages by reason of the proceedings he could have set up his claim against the plaintiff condemnor. He did not do so. By his answer and his petition after verdict he sought to have such special damages visited upon the innocent co-defendant-owner.
It is our conclusion that as between the appellant-mortgagee and the appellee-owner compensation was fixed by the verdicts of the jury, of which verdict appellant does not complain; that due process has been satisfied and the errors assigned are not well founded.
Affirmed.
The appellees instituted a condemnation proceeding naming as defendants the title holders of the seven tracts of land involved, and appellant, holder of a mortgage on each tract.
In order to simplify the points in controversy I shall confine my observations to the effect of the action upon one of these mortgages which is typical of all. It secured a note providing for the payment monthly of a stated amount to be applied first, to accrued interest, and secondly, to principal. The note contained a stipulation that additional amounts could be paid in advance without penalty on any instalment date, but not more than 25 per cent (25%) of the original debt could be discharged in any loan year and anticipation of "any * * * additional principal amounts [should] not decrease the instalments maturing thereafter."
A part of the answer of appellant, stricken upon motion of the appellees, set out fully the appellant's duties and mode of operation in loaning the trust funds and contained the challenge that the court had no power to abrogate or impair the terms of the contract between the mortgagee, appellant, and the property owner, and that any effort to that end would constitute a violation of the rights vouchsafed to appellant by both constitutions. I think too much of the answer was eliminated because appellant was privileged to present the nature of the transaction with the borrower; and I conclude that that part constituting the challenge could have been eliminated as a strict question of law. But my difficulty arises from the conviction that although the court had the power, as I hope presently to make clear, this power had not when the trial ended, been exercised to the full.
This leads to a study of the statutes governing proceedings in eminent domain. I find that the petition, after describing the property involved and estate sought, must set forth the "interests in the said property of all owners, mortgagees, judgment creditors and lien holders * * *." (Italics supplied.) So at this point it appears that mortgagees are in the precise category of owners so far as their status as defendants is concerned. Sec. 73.01, Florida Statutes 1951, and F.S.A.
Parenthetically, the trustee of any interest or lien shall be made a party without joining the cestui que trust. Sec. 73.02, Florida Statutes 1951, and F.S.A.
The trial culminates in a verdict which must contain (1) "an accurate description of the property taken;" (2) "the compensation to be made therefor * * *;" (3) "the amount of such compensation to which each owner is entitled, if sufficient facts are before the court to adjudicate the distribution of the proceeds." (Italics supplied.) Sec. 73.11, Florida Statutes 1951, and F.S.A.
Until now I discover no distinction between the dignity or importance of the interest of the title holder and the mortgage holder. True the word "owner" is used but it is doubtful that, as appellant insists, the designation carries the narrow connotation of ownership of title as distinguished from ownership of some other property interest because if such were the case these necessary parties defendant would become ignored while the trial progressed and would have been made parties for the sole purpose of putting them in the position of participating in the distribution of funds after all issues had been adjudicated.
The judgment, founded on the verdict, must, according to the mandate in the act, Sec. 73.12, Florida Statutes 1951, and F.S.A., incorporate the verdict. Then the property is appropriated to the petitioner upon paying or securing the compensation set by the jury.
When judgment is entered and the award is paid or secured the property sought is the petitioner's, the fund is the court's for distribution. At this late date, "upon appropriate petition * * * the rights of any mortgages [sic], judgment creditors and lien holders in respect to the compensation awarded to each owner by the verdict" are determined. Claimants, in the capacities stated, to proceeds on hand have the opportunity then to present their demands and receive the amounts due them. Such procedure in a vast majority of cases would probably be a practical and sufficient means of distributing an award. Especially is this so where a claim is due and the amount is a matter of simple mathematical computation, and even where a mortgage is not due but the instrument contains a provision that the debt may be discharged before maturity by payment of a specified premium.
But the problem now confronting us is much more serious for a trustee is protesting against interference with an existing contract that not only contains no provision for discharge of the total unpaid balance of principal before maturity but, on the contrary, specifically precludes it. So it is not a matter of mere mechanics, but of constitutional inhibitions.
It seems to me from the whole argument that we should compare and first consider the relevant guaranties of the Federal Constitution, namely, the portions of the Fifth Amendment that "No person shall * * * be deprived of * * * property, without due process of law;" no "private property [shall] be taken for public use, without just compensation," the part of the Fourteenth Amendment that "No State * * * shall * * * deprive any person of * * * property, without due process of law;" and the provision of Article I, Section 10, that "No State shall * * * pass any * * * Law impairing the Obligation of Contracts * * *."
Second, we should place these provisions in juxtaposition with the corresponding ones in the Constitution of Florida, F.S.A., "No person shall be * * * deprived of * * * property without due process of law;" no "private property [shall] be taken without just compensation," Declaration of Rights, Section 12, and no law "impairing the obligation of contracts, shall ever be passed." Declaration of Rights, Section 17.
Obviously, it was the purpose of the Legislature in implementing the organic law with reference to the expropriation of private property for public use, where the petitioner sought the fee simple title, to secure to the petitioner all interest whatever in the land in exchange for which just compensation was assured to all holders of interests in the land regardless of their character or extent.
It seems to me that to say less would amount to running a-foul of the safeguards in both Constitutions in respect of "just" payment for what the one relinquished and the other received.
I am convinced that the reference in the statute to "owner" does not connote ownership of the fee simple title to the exclusion of the mortgagee's interest. As is demonstrated in this very case the holder of such an interest, and a trustee at that, presented at the outset of the litigation potent reasons why his outstanding contract with his lendee should not be disturbed. The issues were processed in the formal trial, resulting in a verdict of twelve men disposing of the interest of the title holder. After the adverse ruling on the motion to strike the case was submitted on a stipulation that petitioners could condemn and should take "full title"; that compensation should be the amount stated; and that certain fees and costs should be paid. But the stipulation did not counteract the allegations in appellant's pleading because the right of appeal was reserved notwithstanding the stipulation and in this appeal appellant assigned as error the ruling on the motion. So the interest of the appellant was not adjudicated in the trial before the jury, though, of course, he did avail himself of the privilege of petitioning the judge for an allotment of the proceeds. It was there that the serious constitutional questions were eventually decided.
I hasten to say here that I find no fault with the manner in which the trial judge attempted to track the statute even though I may disagree with his ultimate decision. There is met in this court, head-on, the question whether compliance with the apparent design of the statute in the circumstances recorded, results in a collision with Constitutional proscriptions.
I am not reluctant to agree that the mortgagee's interest may be condemned and taken the same as the title owner's interest may be condemned and taken for certainly the former's cannot be of more dignity than the latter's. But I am concerned with expropriating one in the very formal manner contemplated both in the constitutions and implemental legislation while relegating the other to the simple post-trial procedure delineated in Chapter 73, supra.
This concern is intensified because of a solemn obligation to be wary of all the provisions of state and Federal constitutions to which I have alluded and which have been brought into play by the salient facts. Clearly the appellant has an outstanding contract which will be impaired because his mortgage is not due and will not mature for a considerable period. The question, then, is whether the mortgage is not now worth more than the unpaid principal and the interest on it to the date of distribution.
If the guaranties insuring due process and prohibiting impairment are read and applied together, as they must be, and if equal consideration be indulged the provisions for eminent domain, it seems to me that the safeguard against impairment can only be neutralized by a jury verdict assaying the present value of the mortgage indebtedness, or in other words taking the appellant's property by due process, in the same manner the property of the holder of the legal title is taken. Solely in that way can just compensation of the mortgage holder's property interest be determined.
I have explored the suggestions of preserving the contract while delivering the physical property to the condemner, and of requiring the court to reinvest the amount due the mortgagee to insure the earning of the interest called for in the note. All these have lead me into cul-de-sacs of impracticality.
I quite agree with the appellant that his lien is transferred to the ultimate award but I cannot accept his view that thereafter the mortgage continues in effect instead of being liquidated at its then value. The arrangement he suggests would be unfeasible because the fund then out of use would either be slowly depleted by interest payments or, at best, if invested by the court in securities and there was no loss, the earned interest would be reduced by the amount of the cost of handling the fund. There is no reason to believe that the court would be more able than the appellant to make a wise investment of the money. On the other hand if the discount value is properly determined, which should be comparatively simple as testimony should be readily obtainable from experts in the investment field establishing the true value, the appellant would be fully compensated for his property rights.
We have held that a mortgage lien is "a species of intangible property, of which the holder cannot be deprived without due process * * *." Seaboard All-Florida Railway v. Leavitt, 105 Fla. 600, 141 So. 886, 889.
I cannot conclude that the formal proceedings in eminent domain must be followed to obtain the property of a title holder but need not be followed to dispose of the property rights in an executory contract such as we are studying.
When the judge entertained the petition for determination of the appellant's rights subsequent to the judgment, under Sec. 73.12, supra, an order was entered making available to appellant "two alternative courses." He could accept the principal and interest to date of distribution, or he could release his liens against the award permitting the owner of the legal title to take all of it leaving the mortgagee to "look solely to the respective mortgagors personally, unsecured by the condemned property or by the award moneys" for future instalments as they fell due.
In my opinion both of these propositions amounted to impairment of the contract and being imposed as they were, without the sanction of the jury, constituted deprivation without due process.
To repeat, I think the quandary results from the narrow definition of "owner" which has been adopted and used through the years as meaning the one holding the legal title to the exclusion of the holders of other interests, although all of them are required to be named in the petition. It would not be difficult for the jury while finding "the amount * * * to which each owner is entitled," to fix the value of a mortgagee's interest, as well as the worth of the legal title.
For the reasons set out in my original dissenting opinion I do not agree with the opinions filed after rehearing granted.
I cannot agree with the majority opinion on rehearing granted. As I understand the record, Duval County instituted an eminent domain proceeding to condemn seven separate parcels of real estate for highway purposes. The appellant was made a party defendant because he was the owner and holder of a separate mortgage on each of the seven parcels to be condemned.
In due course the mortgagee filed his answer to which he attached copies of the mortgages involved, which were payable in monthly installments of principal and interest, and which contained express conditions and limitations on the right of the mortgagor to anticipate and prepay the indebtedness, as follows:
"Additional principal amounts may be paid in advance and without penalty on any installment due date. But not more than twenty-five per cent (25%) of the original principal debt, including the installments required hereunder, may be paid in any one loan year. The anticipation of any such additional principal amounts shall not decrease the installments maturing thereafter."
In his answer the appellant prayed "that if the land described in the petition * * * shall be taken in this condemnation proceeding, this Court will make and enter its order providing and adjudging that the lien of said defendant's respective mortgages * * * will immediately attach to any funds or award which may, by law, be substituted for the mortgaged property, that said liens follow the funds or awards into the registry of the Court and stand in the place and stead of said mortgaged real property, subject to the proper enforcement of said liens by appropriate proceedings * * *."
Subsequently, the cause was tried on the merits, on the petition of the condemnor, the answers of the property owners and the mortgagee, and certain stipulations filed by the parties consenting to the entry of a verdict and judgment as to each parcel of land involved. After the rendition of the verdict and judgment, the mortgagee petitioned the trial court, pursuant to the provisions of section 73.12, Florida Statutes 1951, F.S.A. for a determination of his rights in respect to the awards made by the jury to the property owners. In this petition the mortgagee set up the provisions of the mortgages, relating to the manner in which the principal and interest was stipulated to be paid, and averred that he was "entitled to have the several notes and mortgages * * * satisfied in due course according to, and only according to, the express terms and provisions of said notes and mortgages," that the court was without power "to alter, abrogate or violate any term or provision thereof [and] that any effort by [the] Court or the parties to [the] suit to alter, abrogate, violate or extinguish any rights of said defendant under said mortgages would be unconstitutional as violating the rights guaranteed and protected by Section 17 of the Declaration of Rights of the [F.S.A.] Constitution of the State of Florida and by Article I, Section 10, of the Constitution of the United States of America which prohibit the application or construction of a State law in such manner as to impair the obligation of a contract, and would be unconstitutional as violative of the Fifth and Fourteenth Amendments to the Constitution of the United States of America, and would deprive this defendant of his property held as trustee without due process of law and would deny said defendant equal protection of the law."
In the prayer of the petition the mortgagee prayed for the entry of an order decreeing that the lien of defendant's respective mortgages, upon payment into the registry of the court of the funds awarded to the defendant owners for the property condemned, immediately attach to said funds so awarded and that said funds are substituted for and stand in the place and stead of the real property condemned, as security for the payment and discharge by the respective defendant owners of their contractual obligations with this defendant mortgagee; that defendant mortgagee is entitled to have the respective mortgages and notes of the defendant owners satisfied and paid in due course according to, and only according to, the express terms and provisions of said respective mortgages and notes; and that the court by its order make appropriate provisions to protect and secure the liens of this defendant's respective mortgages and notes upon said funds to be paid into the registry of the court and upon the respective houses which the several defendant owners are entitled to receive, remove and retain, in order that said funds and houses shall stand and remain as security until said respective notes and mortgages shall have been paid and discharged by the several defendant owners, in due course according to, and only according to, the express terms and provisions of said notes and mortgages.
Motions to dismiss and to strike the petition were filed by certain of the property owners. On the hearing, the trial court entered its order granting said motions, reciting in its order as the basis for the same "* * * that while the liens of the several mortgages held by the defendant mortgagee follow the award moneys into the Registry of the Court, the defendant mortgagee upon payment of the award moneys into the Registry of the Court, must make an election to follow one of two alternative courses, namely, (1) * * * must elect to receive out of the award moneys in the hands of the Court the full principal balance due under the respective promissory notes and mortgages together with unpaid interest thereon computed only to the date this Court orders distribution of the award moneys, or (2) * * * must release its liens against the award moneys and permit the entire money awards to be paid to the respective mortgagors, in which event the defendant mortgagee must then and thereafter look solely to the respective mortgagors personally, unsecured by the condemned property or by the award moneys, for the payment of the future monthly fixed installments of principal and interest thereafter falling due under said promissory notes and mortgages."
After the entry of the order the mortgagee took this appeal assigning as grounds for the reversal of the order that the ruling constitutes an unconstitutional alteration, abrogation and violation of the contractual obligations existing between the several owners of the properties and the mortgagee; that it violates the rights guaranteed the mortgagee by the Constitution of Florida and the United States; and that it deprives the mortgagee of his property without due process of law.
It is apparent to me from a study of the record that the basic issue presented by the pleadings in the case at bar, with respect to the rights of the mortgagee under his mortgage contract with the property owners, is quite different from the issue that was involved under the pleadings in Shavers v. Duval County, opinion filed June 11, 1954. While in the Shavers case the stipulation for payment of principal and interest was similar, in many respects, to the stipulation contained in the mortgages held and owned by the appellant in the instant case, the mortgagee in the Shavers case, in its answer filed in the condemnation proceedings, set forth the unpaid principal balance which by the terms of the mortgage would eventually become due and then affirmatively claimed and asserted that it was presently [73 So.2d 692] "`entitled to be paid said principal balance, together with interest thereon until the maturity [date] of said mortgage.'" As is plain from the language in which the answer was couched, the mortgagee in the Shavers case claimed that as of the date of distribution of the award it was entitled not only to the payment of future principal but also was entitled to interest thereon to maturity. Under these circumstances it was thought by this Court that it would be highly inequitable to give the mortgagee all of its present unpaid, yet not due, principal and still require the mortgagor to pay interest on sums already in the hands of the mortgagee, when under the terms of its note and mortgage the mortgagee was not entitled to interest except on principal "`remaining from time to time due and unpaid.'"
In the instant case the situation is entirely different. Here the mortgagee makes no claim in his pleadings that he is presently entitled to receive the face amount of principal that will become due in the future. He does not, in any particular, assert the claim that he is presently entitled to receive the whole of the unpaid principal balance plus an additional sum equal to interest to the maturity of the obligation. All he asks is that his rights in the award be enforced and that his solemn contract with the mortgagors not be impaired.
It is clear that the mortgagee's right to stated amounts of the principal and interest until the maturity date of the mortgages arises from his contract with the mortgagors, and that Chapter 73, Florida Statutes 1951, does not purport to define the method by which the amounts due under such mortgages on condemned property shall be computed. Therefore, even though a statutory method is provided by which the mortgagee may become a party to the eminent domain proceedings and enforce his lien against the compensation before it comes into the hands of the owners of the condemned property, it is upon the provisions of his contract with the property owners that the mortgagee must depend for a delineation of his rights and the determination of the nature and extent of the liens to be enforced. Compare Union Savings Institution v. Boston, 129 Mass. 82, 37 Am.Rep. 305.
In the case at bar, the appellant is the owner and holder of seven mortgages which contain stipulations according limited prepayment privileges. These were given to secure debts that are to be repaid by the several mortgagors on a monthly basis by the payment of specific sums each month to be first applied on interest and the remainder on principal. As I understand the order brought here for review, the court below has held, in effect, that where the holder of such a mortgage attempts by answer in a condemnation proceeding to exercise his right to enforce his lien against an award made to the owner of the property, he is entitled to recover the full amount of the unpaid principal of the mortgage, but cannot recover the interest on the mortgage debt beyond the date the trial court enters an order decreeing distribution of the award to the owner, mortgagees, judgment creditors and other lienholders.
I cannot agree with this general conclusion. While section 73.01 requires the petitioner in condemnation to make a mortgagee a party defendant, and section 73.06 requires that such defendant shall file an answer or else "be bound by the proceedings," I find nothing in the controlling statutes which evidences an intent to change, enlarge, or subordinate the respective rights of mortgagees and mortgagors to any greater extent than is implicit in the exercise of the right by the sovereign to acquire title by eminent domain. Indeed, any attempt to affect or alter contractual obligations to any greater degree might well be considered violative of the constitutional prohibitions against impairment of the obligation of contract. Section 17, Declaration of Rights, Florida Constitution, F.S.A., and Article I, section 10, United States Constitution. Ogden v. Saunders, 12 Wheat. 213, 257, 6 L.Ed. 606.
It is settled that the condemnation statutes require the owner of land to relinquish his title and to accept in lieu thereof a "just" or "full" compensation in money for the property that has been taken. Section 29, Article XVI, and section 12, Declaration of Rights, Florida Constitution. It is equally clear that the condemnation statutes require the holder of a mortgage to relinquish his lien against the land and to look to the award of the jury for the satisfaction of the lien, because of the superior right of the sovereign power to take the property for the benefit of the whole public. Seaboard All-Florida R. Co. v. Leavitt, 105 Fla. 600, 141 So. 886. But since the exercise by the sovereign of the right to take the property necessarily deprives the mortgagee of a stable form of security or collateral and substitutes in its place a cash fund, section 73.12 quite properly permits present enforcement of his lien against that fund. And in proceedings pursuant to the statute, the mortgagee should be given, so far as possible, the same rights, present and prospective, as he would have had if events in connection with the mortgage had pursued their normal course to the date of the maturity of the debt.
With this in mind, it is plain that to permit an owner-mortgagor to receive and retain from the jury award the full present value of his land, and require of him only that he pay the interest already accrued on a mortgage on the land up to the date of the order decreeing distribution of a portion of the funds to the mortgagee, would allow the owner to receive and retain more than the "just" or "full" compensation to which he is entitled under the provisions of the Constitution, and would deprive the mortgagee of an important incident of his original bargain, namely, an expectation of continued returns on his investment until the maturity date of the mortgage. On the other hand, to require an owner of condemned property to pay to a mortgagee either the whole principal amount of the mortgage or the full sum of unearned interest, each of which items, by the terms of the mortgage, is to be payable in the future, would impose upon the owner an unjust and unconscionable burden arising out of a situation not of his own making.
As I view the matter a fair, equitable, and constitutional solution of the problem arising from such a situation — a solution by which neither party can claim unjust enrichment at the expense of the other, and yet one under which all parties will be made whole — can only be reached by allowing to the mortgagee, conditioned upon his cancellation of the mortgage and the debt for which it was given as security, a sum representing the present value of the mortgage as of the date of the order of distribution. Ordinarily, the determination of present value will be a matter of mere mathematical computation by the trial judge; although I can readily envision certain situations where, on demand of either party, the empaneling of a jury will be necessary to determine claims or defenses which may arise out of conflicting issues of fact. But whether the allowance is made by the trial judge or by the jury, the issue to be determined should be the present value of the right to receive payments in the future according to the terms and conditions of the mortgage. And in determining present value the elements to be taken into consideration should include: (1) the full amount of the accrued principal and interest payments due on the mortgages as of the date of the order of distribution; (2) the commuted value of future payments on the principal mortgage debt; and (3) the commuted value of future interest on said future principal payment.
It should be understood, also, that we are dealing here with a case in which the entire property covered by the mortgage lien is being acquired by the condemning authority and in which the amount awarded the property owner for his land is sufficient to discharge the mortgage debt in accordance with the principles outlined herein. I think it would be improper for us to express an opinion as to the proper decree to be entered in a case wherein the money awarded to the owner of the land is insufficient to satisfy the present value of the debt secured by the mortgage lien; or in a case in which only a small portion of the property covered by the mortgage lien is taken by the condemning authority.
It should be understood that nothing I have said herein is to be construed as precluding the holder of a mortgage on condemned property from electing to waive his mortgage lien against the land and rely solely upon the terms of the note for the recovery of the debt.
The question of the right of the mortgagee to receive an attorney's fee for his services in the suit is also before us, but I think that the question must be resolved against the appellant in view of our holding on the issue in Shavers v. Duval County, supra.
From the conclusions I have reached I am of the opinion that we should recede from our prior opinion that this case is ruled, in all respects, by Shavers v. Duval County, supra, and should hold that the order appealed from should be affirmed in part and reversed in part for further proceedings in accordance with this opinion.