Opinion
44638 Record No. 811405.
April 27, 1984.
Present: Carrico, C.J., Cochran, Poff, Compton, Stephenson, and Russell, JJ., and Gordon, Retired Justice.
Under Code 25-46.34, the Court has the authority to dismiss a condemnation proceeding where the condemnor and the owner jointly move for dismissal after reaching a compromise settlement and where the condemnor neither paid the award nor took possession of the land; numerous provisions of General Condemnation Act (Code 25-46.1, et seq.), construed.
(1) Eminent Domain Statutory Construction — General Condemnation Act Commission to Fix Value of Property and Damages (Code Sec. 25-42.20); View by Commissioners (Code Sec. 25-46.21) Parties in Interest — In the First (Valuation) Stage of Proceedings under the General Condemnation Act the Only Parties in Interest are the Condemning Authority and the Owner of the Land.
(2) Eminent Domain — Statutory Construction General Condemnation Act — Owner Effort to Purchase Required (Code Sec. 25-46.5); Commencement of Proceedings, Etc. (Code Sec. 25-46.9); No Notice Required When Owner is Infant, Etc. (Code Sec. 25-46.21); Distribution of Money Paid Into Court (Code Sec. 25-46.28) — Lienholder Not Owner Within Meaning of General Condemnation Act.
(3) Eminent Domain — Statutory Construction — General Condemnation Act — General Principles — Reenactment of Statute After Judicial Interpretation — Reenactment of General Condemnation Statute After Supreme Court Construction that Lienholder Not Owner Indicates Legislative Acquiescence in Construction.
(4) Eminent Domain — Statutory Construction — General Condemnation Act Right of Entry Upon Property (Code Sec. 25-46.8); Distribution of Money Paid Into Court (Code Sec. 25-46.28) — Title — When Vests in Condemnor Title Vests in Condemnor Only When It Takes Possession Under Code Sec. 25-46.8 or Pays Award Under Code Sec. 25-46.28.
(5) Eminent Domain — Statutory Construction — General Condemnation Act — Distribution of Money Paid Into Court (Code Sec. 25-46.28) — Award — Rights of Lienholders — Rights of Lienholders do not Accrue Until Award Paid Into Court.
(6) Eminent Domain — Statutory Construction — Dismissal of Proceedings; Dropping Defendant [Code Sec. 25-46.34(c) and (d)] — Vesting of Title — Rights of Lienholder — Lienholder Not Prejudiced by Condemnation Proceeding Until Title Vests in Condemnor, Code Sec. 25-46.34(c) or (d) Providing for Dismissal of Proceeding, etc.
(7) Eminent Domain — Dismissal of Proceedings — Rights of Lienholders — Lienholders not Prejudiced, Condemnor Neither Having Taken Possession of Property Nor Paid Award Before Dismissal.
(8) Eminent Domain — Statutory Construction — Dismissal of Proceedings [Code Sec. 25-46.34(c)] — Court Had Authority to Dismiss Proceeding Under Code Sec. 25-46.34(c) Because Condemnor Failed to Pay Award, Etc.
(9) Eminent Domain — Statutory Construction — Dismissal of Proceedings [Code Sec. 25-46.34(d)] — Parties Had Revealed Compromise Settlement and Court Could Dismiss on Basis of Stipulation of Dismissal Under Code Sec. 25-46.34(d).
A condemnation proceeding was initiated by a petition filed by the Fairfax County Redevelopment and Housing Authority (the Authority) seeking to condemn 45 acres of land in Fairfax County. The defendants were the fee simple owners of the land and the trustees named in the recorded deeds of trust. The trustees asserted the right to have their lien indebtedness paid before owner was compensated. After a trial to determine the fair market value of the land, the commissioners filed a report fixing the value at $5,250,000. The Authority excepted to the report, and on 30 January 1981, the Court overruled the exceptions and ordered payment of the award into court. Between 18 February and 27 March 1981, upon the joint motion of the Authority and owner, the Trial Court modified the 30 January order three times, each time within 21 days of the previous order, ultimately changing the effective date of the order to 30 March 1981. The trustees received no notice of any orders following the 30 January order.
On 1 April 1981, the Authority and the owner entered into a compromise agreement, and upon their joint motion the order was vacated and the cause dismissed. The award was never paid, but the Authority acquired title to the land by a deed from the owner, and assumed the debts secured by the deeds of trust.
After learning what occurred after the 30 January order, counsel for the trustees filed motions challenging the settlement and dismissal of the suit. The Trial Court denied the motions, and trustees appeal.
1. In the first stage (valuation stage) of the proceeding under the General Condemnation Act (Code Sec. 25-46.1, et seq.) the only parties in interest are the condemning authority and the owner of the land.
2. A lienholder is not an "owner" within the contemplation of the General Condemnation Act (Code Sec. 25-46.1, et seq.). This conclusion is supported by constructions of Code Sections 25-46.5; 25-46.9; 25-46.13; 25-46.21 and 25-46.28.
3. The Supreme Court held in Fonticello Co. v. Richmond, 147 Va. 355, 137 S.E. 458 (1927) that the holder of a deed of trust was not an owner of property for the purposes of the General Condemnation Act. The General Assembly, not having changed the definition in subsequent revisions of the statute, is presumed to adopt the judicial construction.
4. The award determined by the Court at the valuation stage of condemnation proceedings merely establishes the price the condemnor must pay if it elects to take the property, title only vesting when the condemnor takes possession of the land under Code Sec. 25-46.8 or pays the award under Code Sec. 25-46.28.
5. The rights of lienholders in any award do not accrue until the award is paid into Court, the second stage of the condemnation proceeding then commencing and the Court, under Code Sec. 25-46.28 determining the rights and claims of all persons entitled to the fund or to any interest or share therein.
6. Until title vests in the condemnor, a lienholder is not prejudiced by the condemnation proceeding, Code Sec. 25-46.34(c) and (d) providing for the dismissal of the proceeding at the instance of either the condemnor, the owner, or both.
7. The Authority (condemnor) neither having taken possession of the property nor having paid the award, title remained in the owner and the trustees' liens were unimpaired, no rights in the award having accrued to the trustees.
8. Assuming, without deciding, that the order entered on 30 January 1981 was a final order and that the Trial Court failed to comply with Rule 1:1, the Trial Court had authority to dismiss the action upon the owner's motion under Code Sec. 25-46.34(c) because the Authority had failed to pay the award before the time for noting the appeal from the final order.
9. Assuming, without deciding, that the order entered on 30 January 1981 was a final order and that the Trial Court failed to comply with Rule 1:1, the Court was authorized to dismiss the proceeding under Code Sec. 25-46.34(d), the only parties affected (the owner and the Authority) having reached a compromise settlement and this compromise with their motion to dismiss, constituting a stipulation of dismissal within the meaning of Code Sec. 25-46.34(d), the trustees not being parties affected.
Appeal from a judgment of the Circuit Court of Fairfax County. Hon. Lewis Hall Griffith, judge presiding.
Affirmed.
Terrence Ney (Thomas F. Farrell, II; Boothe, Prichard Dudley, on briefs), for appellants.
J. Howard Middleton, Jr.; Francis A. McDermott (Daniel R. Burk; James E. Farnham; Cheryl G. Ragsdale; Grayson P. Hanes; Richard W. Hausler; Thomas Fiske; Hunton Williams; Hazel, Beckhorn and Hanes, on briefs), for appellees.
In this appeal, we focus upon when, and under what circumstances, either a condemnor, a condemnee, or both, may obtain a dismissal of an eminent domain proceeding instituted pursuant to the provisions of the Virginia General Condemnation Act, Code Sec. 25-46.1, et. seq.
This condemnation proceeding was initiated by a petition filed by the Fairfax County Redevelopment and Housing Authority (the Authority) seeking to condemn approximately 45 acres of land located in Fairfax County. The defendants were Robert L. Kirby, the fee simple owner of the land, and trustees named in recorded deeds of trust securing various debts. Among the trustees were the appellants, Carrington Williams and William C. Bauknight (the Trustees). In their answer, the Trustees asserted the right to have their lien indebtedness paid before Kirby was compensated.
Thereafter, commissioners were summoned, and a trial was conducted to determine the fair market value of the land. Following the trial, the commissioners filed a report fixing the value of the land at $5,250,000. The Authority excepted to the report, and on January 30, 1981, the court entered an order overruling the exceptions, confirming the report, and directing the Authority to pay the amount of the award into court. Although the Trustees did not participate in any of these proceedings, their counsel did endorse the January 30 order.
Subsequently, on February 18, 1981, within 21 days of the January 30 order, the court entered an order, submitted upon the joint motion of Kirby and the Authority, purporting to have the effective date of the January 30 order changed to February 18, 1981. On March 10, 1981, within 21 days of the February 18 order, the trial court entered a second order purporting to modify the February 18 order to have its effective date read March 10, 1981. On March 27, 1981, a third order was entered within 21 days of the March 10 order, purporting to modify it to have its effective date to read March 30, 1981.
The trial court entered each order "anticipating that [the Authority] would withdraw" from the condemnation proceeding. On April 1, 1981, Kirby and the Authority advised the court that they had "compromised and settled" the litigation and upon their joint motion the final order was vacated and the cause dismissed. The Trustees received no notice of any orders following the one entered January 30.
The award was never paid. However, according to the compromise, the Authority acquired title to the land by a deed from Kirby, and assumed the debts secured by the deeds of trust. The Trustees do not claim that the security for the notes has been impaired.
Kirby and the Authority asserted, both at trial and on appeal, that these debts were assumable. The Trustees do not take issue with this assertion.
When counsel for the Trustees learned what had transpired since the January 30 order, they filed motions challenging the settlement and dismissal of the suit. The trial court denied the motions, and this appeal ensued.
The Trustees, relying upon Rule 1:1 as interpreted in In Re: Dept. of Corrections, 222 Va. 454, 281 S.E.2d 857 (1981), and Godfrey v. Williams, 217 Va. 845, 234 S.E.2d 301 (1977), contend that the trial court had no authority to extend the effective date of the final order entered January 30, 1981. They claim, therefore, that the orders purporting to extend its effective date and the dismissal order are void. They also challenge all orders entered after the January 30 order because they were not endorsed by counsel for the Trustees and neither the Trustees nor their counsel had notice of their entry.
Rule 1:1 states in pertinent part:
All final judgments, orders, and decrees, . . . shall remain under the control of the trial court and subject to be modified, vacated, or suspended for twenty-one days after the date of entry, and no longer.
Kirby and the Authority counter with these contentions: First, they assert that Rule 1:1 does not apply because Code Sec. 25-46.34 gives either the Authority, Kirby, or both, the right to have the condemnation proceeding dismissed because the award had not been paid. Secondly, they claim that even under Rule 1:1, the trial court effectively modified or suspended the January 30 order. Finally, they argue that any error by the trial court is harmless because the Trustees' position remains the same and their interests are protected.
The Condemnation Act provides for a two-stage proceeding. In the first stage, the court determines the fair market value of the land taken and the damage, if any, to the remaining land. The only parties having an interest in the valuation stage are the condemning authority and the owner of the land. Manuf'rs Trust Co. v. Roanoke Co., 172 Va. 242, 256, 1 S.E.2d 318, 323 (1939).
An exception applies to certain tenants who have an interest in the award. See Code Sec. 25-46.21:1.
[2-3] A lienholder is not an "owner" within the contemplation of the Act. A reading of Code Sec. 25-46.5 supports this conclusion. This section, which is jurisdictional, provides that "[n]o proceedings shall be taken to condemn property until a bona fide but ineffectual effort has been made to acquire from the owner by purchase the property sought to be condemned." (Emphasis added.) Clearly, the General Assembly did not intend that a condemnor must negotiate with lienholders or that they would have standing to contest value.
Other Code sections reinforce the above definition of "owner," including Sec. 25-46.9 (providing that a copy of the petition and notice be served on the owner), Sec. 25-46.13 (appointment of guardian ad litem for an owner under a disability), Sec. 25-46.21 (commissioners viewing the land "with the owner and the petitioner"), and Sec. 25-46.28 (distinguishing the interests of "the owner . . . in the property taken or damaged" from those of "liens by a deed of trust, judgment or otherwise"). Moreover, in Fonticello Co. v. Richmond, 147 Va. 355, 368-69, 137 S.E. 458, 462 (1927), we specifically held that the holder of a deed of trust was not an "owner" of the property for purposes of the statute, and, despite the subsequent revision of the statute, there has been no indication that the General Assembly has seen fit to change this definition. Therefore, the General Assembly is presumed to use the language as judicially defined.
The award merely establishes the price which the condemnor must pay if it elects to take the property. Norfolk O. V. Ry. Co. v. Turnpike Co., 111 Va. 131, 144, 68 S.E. 346, 350-51 (1910). Before title can vest, the condemnor must either take possession of the land pursuant to Code Sec. 25-46.8 or pay the award.
Upon the award being paid into court . . . the interest or estate of the owner or owners in the property taken or damaged shall terminate and they shall have such interest or estate in the fund . . . and all liens by a deed of trust, judgment or otherwise upon such property . . . shall be transferred to the fund so paid into court.
Code Sec. 25-46.28.
The rights of lienholders in any award do not accrue until the award is paid into court. If payment occurs, the second stage of the proceeding is commenced, and the court determines "the rights and claims of all persons entitled to the fund or to any interest or share therein." Code Sec. 25-46.28. See Exxon v. M Q Corp., 221 Va. 274, 279, 269 S.E.2d 371, 375 (1980); Realty Corporation v. City of Norfolk, 199 Va. 716, 725, 101 S.E.2d 527, 534 (1958).
Until title vests in the condemnor, a lienholder has not been prejudiced by the condemnation proceeding, and Code Sec. 25-46.34 provides for the dismissal of the proceeding at the instance of either the condemnor, the owner, or both. Paragraph (c) of this section provides that "[i]n the event the petitioner fails to pay . . . the award . . . before the time for noting an appeal from any final order upon the report of just compensation, the owner or owners of the property to be taken or affected may, upon motion, obtain as a matter of right an order dismissing the proceeding . . . ." Code Sec. 25-46.34(d) states that "[b]efore the vesting of title . . . in the manner prescribed in this chapter, the proceedings may be dismissed . . . upon the filing of a stipulation of dismissal by the parties affected thereby; and, if such parties so stipulate, the court may vacate any order that has been entered."
As previously noted, the Authority neither took possession of the property nor paid the award. Title remained in Kirby, and the Trustees' liens were unimpaired. Thus, no rights in the award had accrued to the Trustees.
[8-9] We will assume, without deciding, that the order entered January 30, 1981, was a final order and that the trial court failed to comply with the provisions of Rule 1:1. The court had authority to dismiss the action upon Kirby's motion because the Authority had failed to pay the award "before the time for noting an appeal from [the] final order." Code Sec. 25-46.34(c).
Additionally, the court was authorized to dismiss the proceeding "[b]efore the vesting of title," because the "parties affected" (Kirby and the Authority) stipulated thereto. We find that the compromise settlement, coupled with their joint motion, constitutes a stipulation of dismissal within the meaning of Code Sec. 2546.34(d), and that, since the award was not paid into court, the Trustees were not "parties affected."
Accordingly, we will affirm the judgment of the trial court.
Affirmed.