B., C. B. &;
N. B. CO.
B., C. R. & N. R.
(Circuit Court, D. Iowa.
MECHANIC'S LmN-WHEN NO'!' WAIVED BY TAKING SECURITY.
The holder of a claim for labor or materials for a building, erection, or improvements upon land does not waive his right to a mechanic's lien by tak. ing security upon the same contract and upon the same property unless it appear affirmatively that it was his intention to look to such security and not to his mechanic's lien.
2. SAME-SECURITY TO BE UPON THE IDENTICAL PROPERTY.
The taking of bonds secured by a mortgage on II all the franchises, fuel, rolling stock, cars, engines, machinery, and appurtenances appertaining or belonging to " a single division of a railroad line which embraces four different divisions, as collateral security for a mechanic's lien claimed upon II building, erec· tion, or other improvement, including any work of internal improvement" on the entire line of road including the four divisious, is not equivalent to taking security upon the identical property upon which the mechanic's lien is sought to be enforced.
FORECLOSURE-PURCHASER AT SALE PROTECTED BY THE RECORD.
Where, in a suit to foreclose a mortgage, brought against a railroad company, third parties intervene and seek to enforce a claim for materials furnished or used in the construction of the roadway, against the earnings of the road in the hands of the receiver, and without claiming a mechanic's lien, the purchaser at the foreClosure sale is not bound to look beyond what appears upon the face of the record, and anticipate a future claim for a mechanic's lien in case the earnings of the road should not satisfy the claim of intervenors.
Hubbard tl Olark, for complainants. James Grant and J. Trady, for respondents.
MOCRARY, C. J. The complainants bring this8uit for the purpose of establishing and enforcing a. mechanic's lien against the lines of railway now run and operated by the defendant, the Burlington, Cedar Rapids & Northern Railway Company, the main line extending from Burlington, Iowa, to Postville, Iowa; the Pacific division extending from Vinton to Traer; the Muscatine division extending from Muscatine to Riverside; and the Milwaukee extension from Linn to Postville. A lien is also claimed upon the rolling stock of said road, upon the right of way, road-bed, station-houses, car and enginehouses, machine-shops, and all property or things whatsoever belonging or in any way appertaining to said lines of railway. It appears in proof that the plaintiffs, who are iron merchants' at Chicago, Illi. nois, during the year 1873, and between the first of March and the last of Deeem.ber of said year, sold and delivered to the Burlington, Cedar Rapids & Minnesota. Railway Company, then owning and
operating said lines, material for use in the construction and repair of its lines, or some of them, as shown by the bill set out as a part of the petition in this case; that in May, 1875, proceedings were commenced to foreclose certain mortgages upon the said Burlington, Cedar Rapids & Minnesota. Railway, and for the appointment of a receiver thereof. In that case the complainants, Hale, Ayer & Co., filed their petition of intervention, wherein they prayed that the court would order the receiver li)f said railway to pay their said claim outof the earnings of said railway, but not claiming a mechanic's lien. Such proceedings were had in the foreclosure cases that at the October term, 1875, of this court a decree was rendered and the sale of the railway was ordered, subject, however,to the claims of parties who had intervened in the case, including the said Hale, Ayer &Co. From the said decree an appeal was prosecuted to the supreme court of the United States, where it was held that the intervenors (plaintiffs herein) were entitled to payment out of the earnings of the road of so much of their claim as was shown to be in the nature of supplies, but that for all that part which was for construction, they were not entitled to pa.yment from such earnings. After tho decree in the court below, and pending said appeal, these proceedings were instituted under the statute of Iowa for the purpose of enforcing a mechanic's lien for so much of the claim as was for materials furnished for construction purposes. At tho time of furnishing the supplies in question,· Hale, Ayar & Co. took the notes of the railway company for the amount due them, and also received ae collateral security 20 of the bonds of the said railway company, secured by mortgage upon what was known as the Pacific division of said railroad. At the sale '\lnder the decree of foreclosure the entire line of railroad was purchased by the defendant herein, the Budington, Cedar Rapids & Northern B:ailway Company. Upon these facts several questions have been 4iscussed by counsel, two of which only will be considered. These whether a mechanic's lien was wl.tived by taking collateral security; second, whether the defendant, the Burlington, Cedar Rapids & Northern Railway Company,purchased the road with notice of the complainant's claim of a mechanic's lien. A decision of the first question requires a construction of section 2129 (If, the Code of Iowa of 1878, which declares that "no person is entitleq to a mechanic's lien who takes collateralsocurity on the same
HALE V. B., O. B. & N. B. CO.
contract." This statute has been several times considered and construed by the supreme court of Iowa, whose ruling upon the question of its construction we are bound to follow. In several cases that court has held that the acceptance of promissory notes for work and labor performed or materials furnished in the erection of a building or other improvement will not divest the right of a party to a me- chanic's lien, unless such is the agreement of the parties. Bonsall v. Taylor, 5 Iowa, 546; Scott v. Ward, 4 G. Greene, 112. The taking of notes is not the taking of collatel'al security. It has also been held that where a party has done work Or ful'nished materials in erecting a building tinder a contract with the owner, he does not waive his lien upon such building by accepting the promise of a subsequent purchaser of the building, made in consideration of forbearance to sue, to pay for such work or materials. Mervin v. Sherman, 9 Iowa, 881. The court in that case, per Wright, chief justice, defines the words "collateral security" to mean "either a separate obligation attached to the regular contract named, to guaranty its performance, or it may be the transfer of property or other contracts to insure the performance of the principal agreement; and in any event, the. contract, promise, or property'taken must have been intended and accepted as collatera,l security, before the lien could be said to be waived or defeated." The latest case upon the subject is that of Gilcrest v. Gottschalk, 89 Iowa, 811, where it is held th,at the acceptance of a mortgagefo1 the same debt upon the same property covered by a mechanic's lien is not the taking of collateral security, within the meaning of the statute, and will not divest a mechanic's lien, unless the lienholder evinces the intention to rely upon the new security rather than upon . the lien. The rule to be deduced from these authorities is that the holder pf a claim for labor or materials for a building, erection, or improve. ment upon land, does not waive his right to a mechanic'lillien by taking security upon the Sll-me eontraot and upon the same, property, unless it appear affirmatively that it was his intention to look to such security, and not to his mechanic's lien., If, therefore, in the present case it is made to appear,either that the security afforded by the 20 Pacific-division bonds was not upon the same property sought to be to the mechanic's lien, or that -the intended to and did rely upon the collateral security afforded by said bonds, in either caae the mechanic's lien is waived.
There is testimony tending strongly to show that the complainants did intend to rely upon the security of said bonds; as, for example, the fact that they claimed under the bonds in the foreclosure suit, and received their proceeds in the form of stock in the new company under the decree of foreclosure. But, without dwelling upon this feature of the case, let us inquire whether the security taken was in fact upon the identical property which might have been held by the mechanic's lien. It appears in evidence that the 20 bonds here referred to were secn:red by mortgage upon only a part oithe railway, to-wit: That part known and designated as the Pacific division, being one of four divisions into which the entire railway was divided, and on each of which there was a separate mortgage. Now it does not appear upon what part of the lines the material furnished by complainants herein was, used. It certainly cannot be claimed, under the evidence, that it was all used upon the Pacific division. No such claim is made. On the contrary, the complainants admit that they are unable to show into what part of the linea. their material went, and they therefore claim a lien upon all ·the lines now run and operated by the defendant, the Burlington, Cedar Rapids & Northern Railway Company, including not only the Pacific division, but the main line, the Milwaukee extension, and the Muscatine division. It is manifest, therefore, that the security afforded by the 20 bonds of the Pacific division, secured as they were by mortgage upon that division alone, was not lit security upon the identical property against which a lien is claimed. But again, the statute provides for a mechanio's lien upon "the building, ereotion, or other improvement, including any work of internal improvement." I suppose it would not be contended that under this statute the complainants could enforce a lien against the rolling stock of the railway for materials furnished or used in the construction of the roadway, and no part of which was used in the construction or repair of such rolling stook. It has been held by the supreme court of Iowa, in the oase of Neil80n v.Iowa Eastern R. Co. 51 Iowa, 184, that the rolling stock of a railroad does not constitute a part of its real estate, and that a mechanic'slien upon llo railroad does not embraoe such property. If this be a true construction of the statute, (and it is at all events a rule of decision for us,) it still further illustrates the correctness of the proposition above stated, to-wit: That the mortgage bonds, taken as collateral security, are a lien on different property from that upon
207 which the complainants might have asserted their mechanic's lien, for the mortgage securing the bonds covers and includes, so far as the' Pacific division is "all the franchises, fuel, rolling stock, cars, engines, machinery, and appurtenances appertaining or belonging to said Pacific division," as well as coal stations, land stations, engine-houses, and other buildings. It is quite apparent that a large proportion, at least, of the property here enumerated would not be subject to a mechanic's lien for iron and other materials used in the construction of the track. We think· it therefore quite clear that the taking of the bonds in question as collateral security was 1;1ot equinlent to taking secu:dty upon the identical property :upon which amechanio's lien is sought to be enforced. The second question is whether it appears from the evidence that the purchaser at the foreclosure sale, the Burlington, Cedar Rapids & Northern ,Railway Company, had notice that the complainants claimed a mechanic's lien upon the road. They certainly had notice that the complainants held a claim against the old company, and that they were seeking to enforce it as against of the road in. the hands of the receiver under theirbill the of intervention in the foreclosure cases; but I see nothing in the record of the foreclosure cases which would charge a purchaser at that sale with notice of a mechanic's lien, claimed or to be claimed . , 'by these complainants. . ' . They certainly did not claim. any such lien in their intervening petition, and in the agreed statemenfof facts filed in the foreclosure cases, it is distinctly stated, not only that t,he Pacifig-division bop.ds above referred to have been taken as collateral security, but also that "no mechanic's lien is claimed.". Counsel insist that this was simply an admission of what was appa,rent without it, that 'no mechanic's lien was claimed in that case. Even if we admit this, how can it be claimed that the filing of a petition claiming payment out of the earnings of the road, together with an admission that no mechanic's lien was claimed, was sufficient to give ,to the purchaser at the fore'closure sale notice that amechanic'g lien would or might be claimed? To give the record this construction would be to require the, purchaser at the sale to anticipate that the claimants would fail in ,the -end to secure their claim out of the earnings of the road, ·and.would their claim, or a· part of: it, under thereupon take measures to the mechanic's lien
I do not think that the purchaser was bound to anticipate all this. He was not bound to look beyond what appears upon the face of the record, and nothing appears there indicating any purpose on the part of the intervenors in that case to claim anything more than that which was claimed by them in their intervening petition. I think it fair to say that the purchaser was authorized to assume that the claim of the intervenors was fully and completely set forth by them. Without considering any of the other questions discussed by counsel, these considerations lead to the conclusion that the complainants are not entitled to a mechanic's lien as prayed. The bill must therefore be dismissed.
SMELTING & REFINING Co. v. GREEN and
(Oircuit Court, D. Oolorado. June 19,1882.)
EJECTMENT-PATENT NOT SUBJECT TO COLLATERAL ATTACK.
In an action of ejectment defendant cannot collaterally attack a patent for land issued by the officers of the land department of the government, even upon the ground of fraud.
SAME-EsTOPPEL, DOCTRINE OF.
If the owner of an estate stands by and sees another erect improvements on the estate, in the belief that he has the right to do so, and does not interpose to prevent the work, he will not be permitted to claim such improvements after they are erected; but he is not thereby estopped to claim the title in an action of ejectment. .
An allegation that after defendants were notified and informed that pJaintift had applied for a patent they had an arrangement with the plaintiff by which plaintiff assured them that he would sell to them for a nominal price, and would not disturb them in their possession, is not a good plea of estoppel.
Ruling on Demurrer. G. G. Symes, for plaintiff. T. A. Green, for defendants. MOCRARY, C. J., (orally.) This in an action of ejectment, and the record shows, and the defendants by their pleadings admit, that the plaintiff claims under a patent of the United States. Some oftha questions in the case have been determined heretofore upon demurrers to former. answers. The questions now to be considered arise upon demurrer to the third amencled answer. By this pleading the defendants seek to attack, in this action of ejectment, the patent