State Bank v. Plummer

54 Colo. 144

• Court: Supreme Court of Colorado
• Decided: September 15, 1912
• Docket: No. 6416
• Status: Published

Opinions

Mr. Justice Hill

delivered the opinion of the court:

The defendants in error, John T. Plummer, The Morrell Hardware Company and J. M. Parfet, instituted separate ■suits in.the district court of the city and county of Denver to foreclose mechanics’ liens against certain property of The .Cripple Creek and Pueblo Railway Company and The Gold Exploration and Tunnel Company. This property is in Teller county. To these actions the above named owners, The State Bank of Chicago1 as trustee and W. H. Spurgeon were made parties defendants, Personal judgments by default were pro-1 cured against the owners of the property before answer by the bank, and before the time for it to answer had expired (it being a non-resident). After its appearance and upon its application the cases were transferred to the district court of Teller county, where they were consolidated for trial, pertaining to the issues raised by the bank, which-included the amount and’ validity of the liens, and if valid, the question of priority between them, and the bank’s lien evidenced by a mortgage upon the same property, executed by the railway company in favor -of the bank, as trustee for certain bond holders. The judgments were in favor of the several, lien claimants decreeing the liens of Plummer and The Morrell. Hardware Company superior to that of Parfet, and all three superior to the lien of the bank, to the property; foreclosure was ordered accordingly. The bank as trustee brings the case here for review upon error.

One hundred thirty-two assignments of error are presented. Those necessary to consider can be grouped into a few general contentions and will be disposed of accordingly.

It is claimed that the court erred in allowing the plaintiff Parfet to make certain amendments to his complaint during the trial. We cannot agree with counsel that the amendments added new causes of action. The action as against the bank was to foreclose a mechanic’s lien for a certain amount, upon certain property in which it claimed an interest. The amounts covered by the amendments were included in this plaintiff’s lien statement. The amount for which the lien was sought was greater in the original complaint than it was after the amendments were added. The amendments are now a part of the complaint, and as the case must be reversed for reasons hereafter stated, .prior to a new trial the bank will have had ample time to make any preparation for any defense it may have thereto. This will eliminate any question concerning surprise or necessity for delay.

Prior to the trial the bank made a written demand upon the plaintiff Parfet for a bill of particulars covering each and every cause of action set forth in his complaint. This demand' 'was not- complied with; upon account of which the bank objected to the introduction of any testimony on Parfet’s behalf; it also moved to strike all of his testimony. The objection and motion were overruled. The bank alleges, that his failure to-furnish a bill of particulars was prejudicial error, upon account of which it was greatly handicapped in presenting its defense; that the provisions of general section 69, Revised' Code, 1908, are applicable as well as mandatory. Upon behalf of Parfet it is claimed, that while the demand was made upon the entire cause of action, the objection was limited to the first three causes concerning which, by order of the court, íhe had previously been required to sub-divide upon the bank’s motion; that the motion to strike was too broad, because it jointly attacked both first and sixth causes; that the complaint as amended as to the first three causes contained as particular an itemized statement as could be required; also-, that section 69, supra, does not apply; that the bank’s relief, if any, should have been by motion under general section 66, Revised Code, 1908.

It appears to be the general rule in actions to foreclose mechanics’ liens where the work was to be for a certain contract price that no bill of particulars is necessary. — Montpelier Light, etc., Co. v. Stephenson, 22 Ind. App. 175; Stephenson v. Ballard, 50 Ind. 176; White v. West, 58 N. Y. Sup. 841; Menzel v. Tubbs, 51 Minn. 364.

This general rule applies to part of Parfet’s causes of •action, but as to a part of the first and sixth we are of opinion 'that the bank was entitled to more definite information. The first is based upon an agreement that he was to be paid a certain amount per month and his expenses. The sixth is for •services rendered and material furnished. These expenses and material items fall within the rule calling for detailed information. We see no necessity for determining whether it 'should be secured under section 66 or 69, Revised Code, 1908, for in either event, in view of a new trial, opportunity •should be granted to plaintiff Parfet to furnish this information and to introduce evidence to- support it.

It is claimed that no lien can attach for the so-called Parfet expense account'of $1,500, which it is alleged was allowed under his first cause of action. The total amount allowed Parfet was much smaller than claimed. Much evidence was admitted, under the statement that as the trial was to the court it would admit the evidence and consider only that which it deemed competent. For these reasons it is impossible to ascertain the items which went to make up the $27,-909.17, for which Parfet was decreed a lien. We might assume that this amount was awarded for other items than this ■expense account; there is evidence to sustain this assumption; but in view of a new trial, for other reasons, we think it competent to pass upon the contention concerning this claim. The ■complaint alleges and the evidence discloses that plaintiff Parfet was employed as superintendent, engineer and draftsman In the construction of the property at an agreed price of $250 per month and his. expenses. Under these circumstances the ■expenses were part of the compensation to be paid him for his work while acting as superintendent, engineer and draftsman;, therefore, it is just as much a part of his compensation as the $250 per month was. — Lybrandt v. Eberly, 36 Penn. St. 347.

In considering the items that are proper to be included In this expense account as lienable (in view of the different views of counsel) it is proper to state that they should be limited to his expenses as superintendent, draftsman or engineer in the construction of the property. — R. A. G. & S. M. Co. v. Bouscher, 9 Colo. 385.

It is claimed that none of the plaintiffs are entitled to- a lien against the property involved, or if they are, they are inferior to the rights of the bank. The facts presenting these propositions are substantially as follows: Upon December the 3rd, 1902, the railway company gave a mortgage to the bank upon all of its property to secure its bonds in the sum of $250,000. This mortgage was filed for record in the office ■of the county clerk and recorder of Teller county December 13th, 1912; the bonds were sold; the money realized was principally in paying the expenses of extending a tunnel and laterals and placing railroad tracks therein, which one or both of the defendants (the tunnel and railway companies) were •engaged in doing. This was to be a part of a railroad to be constructed by the railway company. The prospective terminal points of the railroad were Cripple Creek and Pueblo; the tunnel was to be utilized for railroad purposes.

Prior to the execution and recording of the mortgage Parfet was employed as superintendent of the work by the railway company. In this capacity he performed services in superintending the work of extending the tunnel, in connection with the construction of the railroad, commencing in November, 1902, continuing to March 10th, 1904. This was at an agreed price of $250 per month and his expenses. During this period he incurred considerable expenses which were unpaid, as well as the greater amount of the $250 per month agreed upon. On March 10th, 1904, he entered into a written agreement with the railway company tO' construct three hundred feet of tunnel at a specified sum per foot. Between that date and July the 1st, 1905, he entered into- similar contracts to- construct other portions of the tunnel, including several laterals connecting with the main tunnel, during which period at the request of the railway company he furnished materials and supplies which were used. In addition he also performed labor and services in constructing the railroad and tunnel, in the way of superintending such work. To secure and enforce a lien for the amount still due him for services-rendered and material furnished during this entire period, the plaintiff Parfet, on, July 3rd, 1905, filed a lien statement in the office of the county clerk and recorder of Teller county. There is abundant testimony to- the effect that there was- no cessation of labor on the tunnel and railroad for a period'of thirty days from prior to December the 1st, 1902, to July the 1st, 1905.

The Morrell Hardware Company’s account is for material and supplies furnished at different stages in the progress of the work of constructing the tunnel, laterals, and railroad, some furnished to the railway and tunnel companies direct, and "some furnished Parfet under some of his contracts. The last of these materials appears to have been furnished about July 6th, 1905, at which date the company filed its lien statement therefor in the office of the county clerk and recorder of Teller county.

The Plummer claim is for ore cars sold and delivered to the defendant, the railway company, during the period the ■companies were doing work under the direction of Parfet as superintendent, between January 7th, 1903, and March nth, 1903. The last item was delivered March 10th, 1903. This plaintiff’s lien statement was filed July 6th, 1905, for the amount claimed to be due him. Both these materialmen introduced testimony to the effect that there was no1 cessation of labor for the period of thirty days between the commencement of the work on or before December the ist, 1902, down to July the ist, 1905. Neither the railroad nor tunnel had been completed up to this last named date, nor at the time of the trial.

The plaintiff in error contends, that each of the several items which go to make up the amounts included in the lien statements can only be regarded as having been rendered or furnished under separate and distinct contracts; that for lien purposes each of such contracts must be considered separate and distinct, and that the work provided to' be done under •each must be considered as a separate and entire structure within itself for the purposes of our lien act; that when thus considered the time within which to file a1 lien statement for the amount due under each contract began to run from the •date each contract was completed; for which reasons none of the items can be made a basis for a lien against the property of the railway and tunnel companies, except those contracted for in 1905, and that when they are thus considered as standing alone, they cannot be made liens superior to that of the mortgage executed December 3rd, 1902, and recorded December 13th, same year. ■

As previously stated the evidence discloses that the work of constructing the tunnel and railroad was practically continuous from the time the work commenced on or before December ist, 1902, down to July ist, 1905, .although under sundry different contracts and arrangements. But the agreed statements of fact and the evidence are conclusive of the fact, that it was all in furtherance of one general design and intention on the part of the railway and tunnel companies, viz* to complete as one structure a railroad and tunnel, which tunnel was to be a part of the railroad system; that the entire structure when completed was to be a railroad between Cripple Creek and Pueblo. This was what the railway company was incorporated for. It was agreed that this was the object of its incorporation; but even if we ignore this general design and intention of the parties and limit our consideration to the tunnel itself (in which practically all this work was done) we are driven to the same conclusion. It was not planned as mining tunnels are, to. be run for a certain distance at one time, with the possibility that it might be run a further distance at some future time if desired by its owners, depending upon many conditions and circumstances; but to the contrary, the completion of this tunnel in its entirety• was planned for at the time this work was commenced by Parfet. It was to be constructed for railroad purposes, in order that a railroad could run between certain points, passing through it. Without its completion the objects for which it was being constructed could not be accomplished; the laterals in cennection therewith were also thus planned as a part thereof, as Parfet states in his testimony when asked “Q. Mr. Parfet, what was this drift and laterals run for, if anything, aside from the construction of the railroad? A. Run as feeders for the main line, to get business for the main line of the railroad.” This line of testimony stands uncontradicted; when the facts are summed up in their entirety, if we apply the rule to the entire proposed railroad, or limit it to that portion included in the tunnel and its laterals., the result is the same. They were all planned and being constructed as an entirety, as one structure, the lesser included in the greater. The facts are quite similar to those in Brooks v. Burlington & Southwestern R. Co., 101 U. S. 443, where a similar conclusion was reached. When the property is thus ascertained to1 be one structure or identity, we find nothing in our mechanics’ lien act which requires that the work done under each contract be considered as a separate structure for the purposes of the act; but to the contrary, the act throughout contemplates that different portions or parts of the work will be done by different contractors, and that each may haye a lien upon the entire property for the amount of his claim, for the work done upon or material furnished for a portion of the whole. — Section 4027, R. S., 1908.

This court has heretofore held, under section 4027, supra, that where the contract is for the construction of a part of a railroad or for materials furnished, used in constructing a part only, that the claimant is entitled to- a lien upon the entire road. — Barnes et al. v. The C. S. & C. C. D. Ry. Co., 42 Colo. 461.

We also held under the former act which was quite similar to section 4027, supra, where the contract was for the construction of a flume along the line of a canal, that this gave a lien upon the entire canal as between the lien claimant and the owner. — Jarvis et al. v. State Bank of Fort Morgan et al., 22 Colo. 309.

These principles are applicable here. As between- the lien claimants and the owners the liens, if valid, attach to- the entire property. — Brooks v. Burlington & S. W. R. Co., 101 U. S. 443; Steger v. Arctic Refrigerating Co., 89 Tenn. 453; Creer v. Cache Valley Canal Co., 4 Idaho 280; 2 Jones on Liens, section 1619; Boisot on Mechanics’ Liens, section 190; Phillips on Mechanics’ Liens (3rd Ed.), section 202; Neilson et at. v. Iowa Bastern Railroad Co., 51 Iowa 184.

Section 4033, R. S., 1908, in part, reads:

“* * * all such lien statements claimed for labor and work by the day or piece, but without furnishing material therefor, must be filed for record after the last labor for which the lien claimed has been performed and at any time before the expiration of one month next after the completion of the building, structure or-other-improvement; all lien statements of all other sub-contractors and of all material men whose claims are either entirely or principally for materials, machinery or other fixtures, must be filed for record after the last labor is performed or the last material furnished for which the lien is claimed, and at any time before the expiration of two months next after the completion of such building, structure or other improvement, and the lien statements of all other principal contractors must be filed for record as aforesaid after the completion of their respective contracts and at any time within three months next after the completion of the building,, structure or other improvement.”

This section (which is different from the former act) is self-explanatory of the fact that the liens were not filed too early or too late. They were filed áfter the contract was performed, or the material furnished, for which the lien was. claimed, and before the completion of the structure. As previously stated there had been no cessation of labor thereon from the time the first work commenced under Mr. Parfet until the date the liens were filed. This section does not require that they wait until the property is completed; that time might never arrive. — Rice v. Rhone, 49 Colo. 41; The Lookout Lbr. Co. v. The Mansion Hotel and Belt Railway Co., 109 N. C. 658; Levert v. Read, 54 Ala. 529; Young v. The Orpheus, 119 Mass. 179; Davies v. Miller, 130 U. S. 284; Hunter v. Truckee Lodge, 14 Nev. 24; Baldridge v. Morgan et al., 106 (N. M.) 342.

Section 4030, R. S., 1908, reads, in part:

“All liens, established by virtue of this act shall relate back to the time of the commencement of work under the contract between the owner and the first contractor; or, if said contract be not in writing, then such liens shall relate back to and take effect as of the time of the commencement of the work upon the structure or improvement, and shall have priority over any and every lien' or encumbrance subsequently intervening, or which may have been created prior thereto, but which was not then recorded, and of which, the lienor, under this act, did not have actual notice.”

The first contract with Parfet as superintendent is not shown to have been in writing. None of1 the contracts are shown to have ever been recorded and none of the provisions of section 4029, R. S., 1908, were ever complied with. If the first contract with Parfet is to be construed as a contract with a contractor within the meaning of section 4030, supra, then he commenced construction under it in November, 1902, or at least on or before December the 2nd, 1902. If we accept this position as correct, all these liens would relate back to and take effect as of that date. If this construction of his contract is not correct, and it was not a contract with a contractor within the meaning of this section, but while acting as superintendent, he was the agent of the companies,’and they were in this manner engaged in the construction, of the work, then, under this section, the liens would relate back to and take effect as of the date of the commencement of the work by the companies, under him as superintendent. This was on or before December 2nd, 1902, and prior to the date of the execution or recording of' the mortgage; hence, accepting either position as correct, the result is the same, and under section 4030 the liens antedate the date of the execution of the mortgage which, by stipulation, is shown to have been December the 3rd, 1902; the date when it was filed for record was December 13th, 1902, for which reasons the liens became prior in time upon this property. This conclusion which is in harmony with the findings of the trial court makes unnecessary any consideration of the contention pertaining to the after acquired property clause in the mortgage, where the property was. partially brought into existence by the lien claimants.

Over the objections of the defendant, the plaintiffs were allowed to introduce in evidence their judgments secured by default against the railway and tunnel companies. It is claimed that this was prejudicial error. We cannot agree with this contention. In an action by a sub-contractor or material-man to foreclose his lien the original contractor must be made a party to the suit. The claim must be adjudicated and established against the contractor in favor of the sub-contractor or materialman. — Charles v. Hallack Lbr. Co., 22 Colo. 283; Davis v. Mouat Lbr. Co., 2 Colo. App. 381; Estey v. Lumber Co., 4 Colo. App. 165; Marean v. Stanley, 5 Colo. App. 335; Clayton v. Farrar Lbr. Co., 119 Ga. 37; Vreeland v. Ellsworth et al., 71 Iowa 347.

Where there is a mortgage upon the property and the mortgagee is made a party, the same rule would apply in requiring that the owner be made a party to' the suit. In order for these plaintiffs to> recover it was necessary for them to show in order to bind the mortgagee, not only that the owners were indebted to them in the amount alleged in the petition, but that the same was the kind of indebtedness which would sustain a lien against the'property sought to be held, and both facts must be established against the owners. It must be adjudicated in this, or have been in some other case, as between them. Where, as in this case, the contention is between two rival claimants to the property, to-wit, lien claimants and mortgagee, it was necessary for the plaintiffs, to establish their claims against the owners. The judgments were competent evidence to. show that the claims, had been established against the owners. They were estopped from denying their validity. It was conclusive against them that the personal liability had been established. This estops them from thereafter disputing the claim.' — Missoula Mercantile Co. v. O’Donnell, 24 Mont. 65; Batchelder v. Rand, 117 Mass. 176.

There are reasons for' the rule which requires, this. To illustrate, suppose that service had not been made upon the railway company and no adjudication had against it; that the action had proceeded against the mortgagee; that the liens were established as against it, and in order to. prevent foreclosure it paid the indebtedness and upon foreclosure of its mortgage it then sought to- have the amount paid the lien claimants added to its lien and in this manner be subrogated to the rights of the lien cláimants; that in answer to such petition the owner denied the indebtedness or alleged that a part of the indebtedness had been paid prior to the entry of the judgment and that it had never had its day in court concerning it. In such case it could not be estopped from so doing, for the reason that the claim had never been established against it. This reason for the general rule is apparent in most all cases, if a sub-contractor establishes his lien against the property and the owner is compelled to pay it (if not owing the principal contractor the amount) he has recourse upon him, but must be furnished with an adjudicated claim, between the two contractors and not with a mere open account. We think the judgments competent for the purpose of showing that such claims had been established against the owners of the property. It was conclusive against the owners and was likewise conclusive against the mortgagee of that fact, to-wit, that the claim had been adjudicated against the owner.

In presenting its alleged defenses the bank attempted to-prove that a part of the alleged indebtedness covered in the Parfet default judgment had been paid, prior to the time the judgment was secured, and prior to the date that his suit was. instituted. All this line of testimony was excluded upon the theory that the judgment was conclusive of these facts and. could not be impeached by the bank, except upon allegations and proof of fraud and collusion between the parties to the judgment. Many authorities are cited to show that judgments cannot be otherwise attacked.

In considering this question it is necessary to take into consideration the parties, the pleadings and record as they existed at the time this testimony was offered. The plaintiff Parfet instituted his action to foreclose a mechanic’s' lien, making as parties defendants the owners of the property and the mortgagee representing an interest therein. 'His complaint alleges that he performed services and furnished materials' in the' construction of the-property, for which the owners owed him a certain amount, which had not been .paid; that he was entitled to a lien therefor, etc. "These were the allegations in the complaint which the bank was. summoned to answer and which it did within the time allowed. In its answer and which it did within the time allowed. In its an-of a part of this indebtedness. In his replication to this answer Parfet denied the allegation of payment. This was the condition of the pleadings when the evidence was. offered. It will be observed that no judgment against the owners was plead, hence, the mortgagee had no opportunity by answering any pleading to attack for fraud or collusion, the validity of the judgment between Parfet and the owners; but if counsel are correct, regardless of these facts, upon account of the owners allowing a default judgment to be taken against them, the bank is precluded from presenting a defense which is made a direct issue by pleadings between it and Parfet. If this is the correct rule, in this class of cases, a portion of the issues as made up by the pleadings might or might not be, issues upon which evidence could be received at the time of the trial, depending upon whether certain other defendants might or might not allow default judgments to be taken against them. We do not think' this reasoning sound, but are of opinion that the fact that the owners allowed judgments to be taken by default against them did not preclude the mortgagee from showing that a part of this alleged indebtedness had been paid prior to the time the suit was brought. ■ If the bank could show this, then the judgment was in law a fraud as against it. The issues as made up involved the payment of a part of the indebtedness, the ruling was that upon account of the default judgment against the owners, the bank was not entitled to offer evidence to sustain this defense, for the reason that the owners had not seen fit to defend the action, although the bank had sought to do so.

In Brooks v. Burlington & Southwestern R. Co., 101 U. S. 443, it was. held that judgments in favor of sub-contractors against the owners are not conclusive as to the validity of the lien against a mortgagee not a party to the action. We gather this from the following language in the opinion:

“It is also to be observed that OfHara & Co-. and Wells,. French & Co., had both commenced legal proceedings in the proper courts of the state to establish their liens before the-present foreclosure suit was begun by appellants, and that in those courts, after a contest with the railway company, judgments were rendered establishing their liens, and it was after this that they were made defendants to- the present foreclosure suit.

T'o these proceedings, Barnes, the principal contractor,, and the railway company were parties, and we take it for granted that as against them the judgment of the state court, establishes the validity of the lien. The appellants being no-party to these proceedings are not bound by .that judgment,, and both the validity of the lien as against them, and whether the lien, if valid, is paramount to- that of the mortgage, are the questions for consideration here.”

In Sargent v. Salmond et al., 27 Me. 539, it was held that a judgment is evidence of the amount of indebtedness, between' the parties to- it, but is not binding as. to third persons not parties or privies ’thereto. A creditor of Salmond,. after having obtained a judgment against him, sought to1 recover in satisfaction of his judgment certain real estate which it was alleged belonged to- the defendant Salmond, but was-held in the name of Mary P. Salmond. In the latter action she sought to attack the validity of the indebtedness upon which the judgment was. rendered. It was held she had that right. In commenting upon this phase of the case, at page 547, the court said:

“The judgment is evidence against William Salmond,. the debtor therein, ■ of the amount of indebtedness; but it is-not binding against the other defendant, who- was not a party-to the judgment or the suit in which it was rendered. She is-entitled -to impeach it in this suit, commenced for the purpose-of affecting her. personally, • or the interest in the property, which she claims as belonging to her. If she has received’ property of the other defendant fraudulently as against the creditors of the latter, she cannot be bound to restore it beyond an amount sufficient to cover the just and legal claims of creditors. When the bill, answers and proof are considered, it satisfactorily appears, that the complainant took judgment against William Salmond for a sum larger than that to which he had a just and legal claim, and it does not conclude the defendant, Mary P. Salmond.”

In Montgomery et al. v. Rich et al., 3 Tenn. Ch. Rep. 660, it was held that a bona fide purchaser to, land may successfully contest a claim of the creditor of the vendor by virtue of mechanics’ liens fixed by attachment and judgment, by showing that the lien debt had been paid before the sale and judgment. In commenting upon this subject the court, at pages 663-664, in part, said:

“The case before us is that of a third person who, is seeking to avoid the effect of the judgment of a justice on realty, the title to which was acquired by such third person previous to the rendition of the judgment. It is not exactly a collateral attack on the judgment. It is rather the assertion of a right which, the bill insists, should not be affected by the judgment. And the question is not so, much the invalidity of the judgment, as of the complainant’s right to contest with the defendants, ast between them, facts, which the defendants may claim as settled in their favor, against Long, by the judgment.

As a general principle, a transaction between two parties in a judicial proceeding will not be binding on a third party. * * * “it .would be unjust to' bind any person who could not be admitted to make a defense, or to examine witnesses, or to appeal from a judgment he might think erroneous; and, therefore,' the depositions of witnesses in another cause in proof of a fact, the verdict of a jury finding the fact, and the judgment of the court upon facts found, although evidence against the parties and all claiming under them, are not, in general, to be used to the prejudice of strangers.” * * * Accordingly, it has been held that a mortgagee of land is not estopped by a judgment, in an action between his mortgagor and a prior mortgagee, rendered after the execution of the second mortgage, but may litigate ttíe amount due upon the mortgage, notwithstanding the prior judgment. — Campbell v Hall, 16 N. Y. 575. * * * The complainants have the right, therefore, to contest with the successful litigant those matters which bear upon their rights, just as if no such judg-. ment had been rendered. And they have proved by Long himself that the defendants’ debt, so far as it could claim to be a mechanics’ lien on their land, was paid before the attachment suit was instituted. * * * The burden of proof is thus thrown upon the defendants, as between them and complainants, to show affirmatively the existence-of a mechanics’ lien for any portion of the debt claimed.”

In Clark et al. v. Moore, 64 Ill. 273, it was held, that where certain lien claimants had not been made parties tO' a foreclosure under mechanics’ liens by others, and where property had been sold thereunder at an inadequate price, that on application by them the court was justified in setting the former sále and decree aside; that by the decree and sale the other lien claimants had acquired no right that barred or precluded those not made parties from asserting their rights; that when the decree and sale were set aside the other lien claimants were then at liberty to contest the amount or validity of any or all of the liens being asserted against the property, precisely as they could have done had they been parties to the first proceeding; that if the allowance was too large in favor of any oiie of the plaintiffs and endangered any portion of the other claims, that they, for their own protection, had the unquestioned right to resist and have it reduced to its just and fair amount, just the same as though the former judgment had not been rendered; that the findings of the court in the first decree was not conclusive against those not then parties to the action. The .same rule is. announced in Boisot on .'Mechanics’ .Liens, section 670.

In Early v. Albertson, Vol. 2 Weekly Notes' of Cases (Penn.) 369, it was held that terre tenants should always have an opportunity to defend against the validity of lien claimants.

In Field v. Oberteuffer, 2 Phila. Rep. 271, it was held that the amount of a judgment confessed on mechanics’ lien claims is not conclusive against- an auditor of the court in making his report for its distribution where the defendant’s real estate had been sold at sheriff’s sale and the funds paid into court. In passing upon this subject at page 273 the court said:

“We agree with the auditor that the judgment confessed upon the claim filed, ought not to1 have been deemed conclusive evidence of the sum due, but no case could better illustrate the propriety of this decision, than that which has given rise to the exception. For it appears plainly on the auditor’s investigation, that the judgment had been advisedly confessed for a much larger sum than was due as mechanics’ claim under the acts of assembly.”

Without approving or disapproving as a whole the rulings in the cases last cited, we think,' as stated in the last case that the facts here are also of that class which gives rise to the exception. This record discloses, that Mr. Parfet was one of the promoters as well as one of the original stockholders of the railway company; that he was its first superintendent of construction; he testified that certain gentlemen would become interested therein only. on condition that he be selected in such capacity; that as the representative of the company he disbursed in construction a large amount of the money received from the' sale of the bonds represented by the plaintiff in error.

Under such circumstances, without making any intimation that there is anything wrong with, the amount .of1 Mr. Parfet’s claim, or that there is .any fraud or collusion, where, as here, it is made an issue by the pleadings, we think that the bank should have the opportunity to defend against any and all portions of the claim, and if payments have been made, as its pleadings alleged, it should have the right to show these facts, regardless of the default judgment entered against the owners. This principle is recognized in Gordon Tiger Co. v. Loomer, 50 Colo. 409. A purchaser had acquired from the decedent’s heirs certain real estate which might be jeopardized by the allowance of certain claims against the estate, for that reason we held that he had the right to intervene and defend against the claims.

That portion of the decree fixing the amount of their claims and declaring them liens upon the property including the order of their rank or class in favor of the plaintiffs, John T. Plummer and The Morrell Hardware Company, as between themselves anj the plaintiff Parfet, and as. against the defendants is affirmed. For the reasons stated the judgment in favor of the plaintiff J. M. Parfet is reversed and the cause as between him and the bank is remanded for a new trial upon the questions only of the amount due him, including the question of payments and what items are lienable under his. expense account, in harmony with the views herein expressed. The ultimate decree rendered to include an order of foreclosure in favor of the plaintiff Plummer and The Morrell Hardware Company similar to the former decree in this respect. The plaintiff in error will recover one-half of its costs for this writ of error against the defendant in error Parfet, the defendants in error Plummer and The Morrell Hardware Company will recover their costs, upon this writ of error against the plaintiff in error. Affirmed in part.

Reversed and Remanded in part.

Decision en banc.

Mr. Justice Gabbert dissents. Chief Justice Campbell not participating.