The following opinion was filed at the June term, 1867:
Cole, J.
This is an appeal from an order overruling a demurrer to a portion of the answer. The action is to foreclose a mortgage given by the defendants Gould and wife, on the 9th day of March, 1854, to the La Crosse & Milwaukee Railway Company, to secure the payment of $2,500 ; which mortgage.has been assigned to the plaintiff. In the answer, among other matters, it is alleged that the La Crosse & Milwaukee Railway Company (to whose rights the respondent has succeeded as therein stated), in 1856, located its road across the mortgaged premises, and exercised the power conferred upon it by its charter, of taking land for the use of its road; and. after taking a strip, agreed with the persons then owning the title in fee, for a valuable consideration then paid, to convey to said company said strip of land, upon which its road has been built and constructed, and which now constitues a part of the railroad from Milwaukee to La Crosse. It alleges that the value of the strip of land thus taken for the use of the road is very small as compared with the costs and expenses of building the railroad across the same, and the improvements made thereon by the company; and that a sale of the premises, and. dispossession of the respondent therefrom, under the foreclosure action, would result in a great and irreparable injury to it. The relief asked is, that, if the mortgage is a lien upon the premises, such premises may be sold in the inverse order of alienation, and that it may be referred to a commission of court to ascertain and report the value of the premises conveyed to the La Crosse & Milwaukee Company for right of way, exclusive of the improvements made thereon by it or its successor, and that said premises may be discharged from the lien of the mortgage upon the respondents paying the value thereof, or so much as may be necessary to satisfy the mortgage debt after the application of the moneys arising from the sale of the othér portions of the mortgaged property.
[585] From these allegations it will be seen that the railroad company located its road over lands previously mortgaged, having agreed with the owners of the equity of redemption as to the amount of compensation to he paid; and has paid the consideration agreed upon, and taken a conveyance of the right of way; and now the interesting question arises, What other or further compensation must the company make for this right of way ? On the one hand, it is claimed that the company took the strip of land for the use of its road under the right of eminent domain conferred upon it by its charter, and that the only compensation it is now required to make is the value of the property taken, as of the date of its taking, and interest upon that amount. On the other hand, it is insisted that the railroad track and superstructure are for the benefit of the holder of the mortgage; that they, like industrial accretions, have become permanently annexed to the freehold, and, if necessary, should be sold to satisfy the mortgage debt. Must, therefore, the same rules of law govern which are applied to á case between individuals where fixtures are placed upon mortgaged premises ? It is a familiar rule that all buildings erected and fixtures placed upon mortgaged premises by the mortgagor become a part of the realty, and, so far as they enhance the value of the estate, enure to the benefit of the mortgagee by increasing the security for his debt. Bo the railroad track and superstructure, under the cir-' cumstanees stated in the answer, come under the same rule of law ? Must they be regarded as “ industrial accretions,” annexed to the freehold for the benefit of the mortgagee, and liable to be sold to satisfy the mortgage ? It seems to us not.
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The following opinion was filed at the June term, 1867:
Cole, J.
This is an appeal from an order overruling a demurrer to a portion of the answer. The action is to foreclose a mortgage given by the defendants Gould and wife, on the 9th day of March, 1854, to the La Crosse & Milwaukee Railway Company, to secure the payment of $2,500 ; which mortgage.has been assigned to the plaintiff. In the answer, among other matters, it is alleged that the La Crosse & Milwaukee Railway Company (to whose rights the respondent has succeeded as therein stated), in 1856, located its road across the mortgaged premises, and exercised the power conferred upon it by its charter, of taking land for the use of its road; and. after taking a strip, agreed with the persons then owning the title in fee, for a valuable consideration then paid, to convey to said company said strip of land, upon which its road has been built and constructed, and which now constitues a part of the railroad from Milwaukee to La Crosse. It alleges that the value of the strip of land thus taken for the use of the road is very small as compared with the costs and expenses of building the railroad across the same, and the improvements made thereon by the company; and that a sale of the premises, and. dispossession of the respondent therefrom, under the foreclosure action, would result in a great and irreparable injury to it. The relief asked is, that, if the mortgage is a lien upon the premises, such premises may be sold in the inverse order of alienation, and that it may be referred to a commission of court to ascertain and report the value of the premises conveyed to the La Crosse & Milwaukee Company for right of way, exclusive of the improvements made thereon by it or its successor, and that said premises may be discharged from the lien of the mortgage upon the respondents paying the value thereof, or so much as may be necessary to satisfy the mortgage debt after the application of the moneys arising from the sale of the othér portions of the mortgaged property.
[585] From these allegations it will be seen that the railroad company located its road over lands previously mortgaged, having agreed with the owners of the equity of redemption as to the amount of compensation to he paid; and has paid the consideration agreed upon, and taken a conveyance of the right of way; and now the interesting question arises, What other or further compensation must the company make for this right of way ? On the one hand, it is claimed that the company took the strip of land for the use of its road under the right of eminent domain conferred upon it by its charter, and that the only compensation it is now required to make is the value of the property taken, as of the date of its taking, and interest upon that amount. On the other hand, it is insisted that the railroad track and superstructure are for the benefit of the holder of the mortgage; that they, like industrial accretions, have become permanently annexed to the freehold, and, if necessary, should be sold to satisfy the mortgage debt. Must, therefore, the same rules of law govern which are applied to á case between individuals where fixtures are placed upon mortgaged premises ? It is a familiar rule that all buildings erected and fixtures placed upon mortgaged premises by the mortgagor become a part of the realty, and, so far as they enhance the value of the estate, enure to the benefit of the mortgagee by increasing the security for his debt. Bo the railroad track and superstructure, under the cir-' cumstanees stated in the answer, come under the same rule of law ? Must they be regarded as “ industrial accretions,” annexed to the freehold for the benefit of the mortgagee, and liable to be sold to satisfy the mortgage ? It seems to us not.
When we consider the nature of the rights vested in the railroad company by its charter, the purposes for which these rights are conferred by the legislature, and the great [586] interest the public has in the successful operation of the road, it seems to us that all the rules and analogies of law which control as between individuals cannot be strictly applied to such a corporation. Of course, the most peculiar and distinctive power conferred upon the corporation is the right of taking private property for the use of the road upon making just compensation therefor. In this case, the charter required the company to agree with the owner, if possible, as to the amount of compensation to be paid for the lands taken, and in the event it could not agree with such owner, then the amount of compensation was to be ascertained as therein provided. Chap. 198, Laws of 1852; chap. 280, Pr. Laws of 1856. It seems that the company was able to agree with the persons in possession and owning the land, as to the amount of compensation, and took a conveyance from them of the right of way. But this mortgage lien was then outstanding. Had the company, instead of agreeing with the persons in actual possession and control of the land as to the amount of compensation, submitted that question to arbitration in the manner provided by the charter, the mortgagee would have been bound by the appraisal. And had the company, through mistake, paid this compensation to the parties in possession, when it should have paid it t.o the mortgagee, the only consequence would be that it would have to pay it over again to the right party. When the company obtained the. right of way, it could not assume that the mortgage would not be paid by those under obligation to pay it. Of course, it incurred the risk that it might ultimately be enforced against the mortgaged premises. But in the event it should be enforced, it seems to us that all equity requires the company to do is to make compensation by paying the value of the land at the time it was taken, and interest on that amount. This appears to us more just and equitable than to say that [587] there shall be no apportionment of the lien, but that the bolder of the mortgage may enforce it to the full amount of bis debt by selling the road track, superstructure and fixtures placed upon the land at great expense by the company. See the case of Daws v. Congdon, 16 How. Pr. R., 571. It was further insisted that the company should be required to pay the value of the land when appraised, and not its value when taken by the company, so as to give the mortgagee the benefit of any increase in the value. But suppose it should turn out that the land was worth much less now than when taken by the company, upon what rule should compensation then be made ? Upon the facts of this case we think the true rule should, be, the value of the land when taken, and interest upon that amount. And we place it upon the ground that the company purchased the right of way from the owners in possession and owning the land. Whether another rule should not be applied in a case where the company neglects to acquire the right of way, we do not decide. Possibly in the latter ease, if there was any increase in the value of the land after it was appropriated for the use of the road, the company' would be required to pay its value when appraised. But when the company has purchased the right of way, and neglected to have a- mortgage lien discharged, so that it has to make further compensation, then we think it ought only to pay the value when taken, and interest upon that sum. And this is obviously the principle upon which the charter contemplates that the assessment shall be made, since it provides that the “ commissioners, or a majority of them, shall make an appraisement and award of the value of the land so entered upon, taken, possessed, occupied or used by said company for any of the purposes aforesaid, at the time when the same was so entered upon and taken, whether such time was before or subsequent to the passage of this act * * .” Section 2, chap. 280, supra.
[588] The relief asked is, that it he referred to a commissioner to ascertain and report the value of the premises conveyed to the company for right of way, exclusive of the improvements, and that upon the payment of this amount, thus ascertained; the strip taken he released from the lien of the mortgage. We do not think a reference in this way is the proper mode to ascertain the compensation to he made. The company should proceed under the provisions of its charter, and have the land appraised by commissioners. The general rule upon the subject is, that the statutory method of ascertaining the amount of compensation must he followed; and we have so ruled in a number of cases where the question has arisen. We can see no sufficient reason for departing from this practice in the present case, even if it be -true, as contended by the counsel for the respondent, that a court of equity has authority to make the reference — a- position by no means clear. The provisions of the charter are ample and adequate for the purpose of appraising the value of the land; and why not resort to them to fix the amount of compensation ? We think they furnish a much better mode than a reference out of chancery. At all events, it is the mode prescribed by law. . And it is evidently the practice conteihplated by chapter 175, Laws of 1861, which provides that.where the title to any land taken by a railroad company for the phrpose of its road, becomes invalid by reason of any mortgage or other lien affecting it, the company shall .have power to cause compensation to be made therefor in the manner provided by law or the charter of the company. The court might, if deemed necessary, protect the company in its possession of its road pending the proceeding to ascertain the amount to be paid. This could readily be accomplished by a stay in the foreclosure suit, so far as the strip of land taken by the road was concerned.
The company, in asking for a reference to ascertain the [589] amount of compensation, has demanded a different relief from that which the facts of. the answer — admitted by the demurrer to he true — would warrant. But this relief, as it is not a matter which goes to the ground of defense, and respects the event merely, is not a ground of demurrer. State v. Smith, 14 Wis., 565. In Leonard v. Rogan, 20 Wis., 540, where a plaintiff demanded equitable relief, when, upon the facts stated in the complaint, he should have asked judgment at law for damages, yet the court held that he should have judgment appropriate to the case made in the complaint, and that the.action should not he dismissed.
By the Court. — The order is affirmed.'
Mr. Justice Downer took no part in the decision of this case.