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Click here for the full text of this decision The rights of each condemnee, in accordance with their priority in the property upon condemnation, vest in the condemnation proceeds upon condemnation. FACTS:This appeal is from the grant of the Birdie Nix Trust’s Motion to Pay Judgment, under which the trial court ordered payment to BNT, as lienholder, from condemnation proceeds deposited in the registry of the court. HOLDING:Affirmed. A party to a condemnation proceeding need not have been the actual holder of the tract’s title to have a justiciable interest in the tract. Wynnewood Bank and Trust v. State, 767 S.W.2d 491 (Tex. App. Dallas 1989, no writ). It is sufficient that the party possessed a lien in the property at the time of the taking. Once an award is made and the amount thereof is placed in the registry of the court to the order of the condemnees, and the land is occupied by the condemning authority, “the interest of each condemnee is established in and attaches to that fund as security for any possible damage suffered by reason of his dispossession.” Fort Worth Concrete Co. v. State, 400 S.W.2d 314 (Tex. 1966). When a lienholder participates in a condemnation proceeding, he suffers no damage due to dispossession but instead due to the destruction of the lien itself. “[W]here the whole of the mortgaged property is taken in eminent domain proceedings, the mortgagee is entitled to all of the award or so much of it as is necessary to satisfy the mortgage indebtedness.” Buell Realty Note Collection Trust v. Central Oak Inv. Co., 483 S.W.2d 24 (Tex. Civ. App. Dallas 1972), writ ref’d n.r.e., 486 S.W.2d 87 (Tex. 1972) (per curiam). An impairment-of-security doctrine is, therefore, applicable in assessing a mortgagee’s entitlement to condemnation proceeds where there was a partial taking of the mortgaged property. This doctrine suggests that the condemnation award is to be regarded as satisfaction of the mortgage indebtedness to the extent that the security interest has been impaired and the debt has become unsecured. Thus, when the condemnation proceeds were deposited, the interest of the condemnee lienholder vested in the condemnation proceeds as compensation for the destruction of the lien. The court recognizes that a more recent case, however, states that when the condemnation proceeds are deposited, the “lien”of a mortgagee is “effectively transferred from the property into the deposit.” Nevertheless, the characterization of the condemnee’s interest as a transferred lien in Wynnewood Bank and Trust is buried in the court’s discussion of the condemnor’s burdens and rights in condemnation. This characterization is dicta, as the Wynnewood Bank and Trust court used the transferred lien characterization as a means of explaining that the condemnor’s rights in the condemned property were not subject to the rights of lienholders who participated in the condemnation proceedings. Furthermore, in support of this statement, the Wynnewood Bank and Trust court cites Fort Worth Concrete Co. However, the Forth Worth Concrete Co.court did not characterize the nature of the condemnee’s interest but instead addressed whether the dismissal of any or all of the condemnees would be improper and prejudicial after the condemnation proceeds had been deposited in the registry. The court set aside the dismissal of a condemnee stating that the condemnee’s interest had been “established in and attaches to [the condemnation] fund” and the “County Court had no authority to award any portion of the deposit . . . to the exclusion of [the condemnee] until there had been a final determination of petitioner’s compensable interest and damage, if any.” Additionally, although the Restatement (Third) of Prop.: Mortgages �4.7 cmt a (1997) notes that the condemnation proceeds are sometimes viewed as “substitute collateral” and that the mortgagee’s claim on them is sometimes described as an “equitable lien,” the only Texas case cited for this proposition is Wynnewood Bank and Trust. The court believes the better approach to the issue is the one supported by Forth Worth Concrete Co.and Buell. The court holds that the rights of each condemnee, in accordance with their priority in the property upon condemnation, vest in the condemnation proceeds upon condemnation. If a lienholder intervenes in a condemnation proceeding and the condemnation award is deposited into the registry of the court, the lienholder’s rights to the condemnation proceeds vest. The failure to take any additional action with regard to the judgment lien or the subsequent dormancy of the judgment supporting the judgment lien does not affect the rights that vested at the time of the condemnation proceedings. OPINION:Lopez, C.J.

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