tained against him. Nor can it be successfully maintained that the cause of action to recover any part of this fund first arose after the receiver was appointed, and when it was first discovered that the other assets of the bank were insufficient to pay its debts. When the fund was misappropriated, the wrong was done, and the right of recovery was complete. The assets of the bank were then insufficient to pay its creditors, if the allegations of the bill that the bank was then insolvent are true, and unpaid creditors might then have maintained a suit to recover back this fund.

"Our conclusion is that, in the State of Nebraska, a suit to recover from an innocent shareholder of a bank an unearned dividend which he has received in good faith, without notice of any fact that would lead a reasonably prudent man to learn that the dividend was not earned, is barred in four years from its receipt."

We have quoted thus at large from the opinion of Judge Sanborn for the reason that it is not only supported by adequate authority, but because we think the argument conclusive of the question.

In Mills v. Hendershot, 70 N. J. Eq. 258 (62 Atl. 542), which was an equitable proceeding by the receiver to recover inter alia dividends paid in impairment of capital, it is said by Vice Chancellor Emery:

"Against defendant Downs there can be no recovery for dividends received more than six years prior to the filing of the bill. He was not an officer of the company, and there is no proof that at the time of the receipt of the dividends before that time he had notice that the dividends were paid out of the capital of the company, instead of the profits. The dividends, when received, were received as his own money, and the receiver can be entitled to their return only on the equitable doctrine that, being in fact paid from the capital, a fund held by the company in trust for the payment of debts, the money received for dividends, being in fact capital, was impressed with this trust. But this trust so raised by the doctrines of the court of equity belongs to the class of implied or construc

tive trusts, and as to such trusts the general rule is that in the absence of fraud the statutes of limitation are applicable."

We are convinced that, upon principle, as well as authority, the innocent stockholder to whom dividends are paid in impairment of capital should receive the protection of the statute. If his liability to return such dividends does not cease at the end of the statutory period (six years), when does it cease? Clearly not in 10 or even 20 years. He may have received his dividends upwards of 20 years before final insolvency of the corporation, and may even have sold the stock itself, and yet, under the theory of the complainant upon insolvency and the discovery of the fraud or mistake of the officers of the corporation in declaring dividends without having earned them, he could be called upon to refund the money for the benefit of the creditors who became such prior to insolvency. Such a condition would be intolerable and would tend to destroy confidence in corporate investments and to disorganize business. The stockholders, who in good faith receive such dividends, must still hold them as a trust fund for the benefit of creditors, but can only be called upon to refund them if the action is brought within six years from the date of payment.

The cause of action arises at the moment of payment, and the right to enforce repayment exists in some one at all times thereafter until the statute shall have run. The fact that some creditor may not have become such within six years of the unlawful diversion has no bearing upon the question.

The order overruling the demurrer is reversed, and the demurrer is sustained.

STEERE, C. J., and MOORE, MCALVAY, STONE, and OSTRANDER, JJ., concurred.

MERRILL v. BRANT.

HILL v. BRANT.

1. MECHANICS' LIENS-LANDLORD AND TENANT-LEASEHOLD INTEREST-CONTRACTS.

If the owner of real property is to be held liable for liens under the mechanics' lien law, it must be by virtue of some contract express or implied; his property cannot be taken to satisfy an indebtedness incurred by his tenants under an arrangement to which the lessor was not a party. 3 Comp. Laws, § 10710 (5 How. Stat. [2d Ed.] § 13766).1

2. SAME.

Evidence that defendant, the owner of a hotel, leased it to tenants for a five-year term, one of them operating the bar, kitchen and cafe, the other having possession of the remainder, that although defendant consented to various alterations proposed by the tenants, he did not order them made, took no part in the supervision of the labor, nor directed its progress, that he at no time discussed the cost of the work with the claimants, that he allowed to the tenants the sum of $300 on rentals for the improvements, and that the tenants made what payments the contractors received, held, insufficient to establish a contract of the lessor expressly or by implication.

Appeal from Berrien; Coolidge, J. Submitted June 18, 1912. (Docket Nos. 142 and 143.) Decided May 28, 1913.

Bills by Levitt L. Merrill and others and by Richard Hill and others against Edward Brant and others for the enforcement of mechanics' liens, the suits being consolidated by consent. From a decree for complainants, defendants appeal. Reversed as to Brant; affirmed as to remaining defendants.

'On the question of the power of a lessee or vendee to subject owner's interests to mechanics' liens, see note in 23 L. R. A. (N. S.) 601.

Cady & Andrews, for complainants.

George W. Bridgman, for defendant Edward Brant.

BIRD, J. The bill of complaint in this cause was filed to enforce several mechanics' liens against the Hotel Benton in the city of Benton Harbor. Certain changes and repairs were made in the interior of the hotel in February and March, 1910, involving an expenditure of about $1,000, in which the carpenter, the mason, the plumber, and the decorator participated. Failing to receive all their pay, they filed liens under the statute and are now seeking to enforce them in this suit. By stipulation of the parties, the cases were tried and disposed of as one, and it is stipulated that the same course may be followed in this court.

There was but one question raised in the trial court, and that was as to whether the defendant Brant, who owns the hotel, was liable for the claims. At the time the claims accrued, he was the owner of the hotel, but it was under a five-year lease to defendant Collins, his son-in-law. In February, 1910, the lease to Collins was modified to the extent of giving to defendant Ronegar a five-year lease, commencing March 1st, of three rooms on the ground floor, to be occupied as a saloon, cafe, and kitchen. Collins and Ronegar had arranged to change the hotel from the American to the European plan. Collins was to run the hotel and Ronegar the saloon and cafe, and the expenditures were made in furtherance of this plan.

It is the contention of the defendant Brant that he is in no way responsible for the labor and materials which went into the hotel; that he did not order the work done; that he never agreed to pay for it; and that no one of the complainants ever asked him to pay for it. He testified that when he made the lease to Ronegar, he agreed with him to allow him $100 toward the improvements in the dining room, and that later, when Ronegar complained that it was costing so much

more than he had expected, he allowed him $200 more on the rent. The complainants claim that defendant Collins acted as the agent of Brant in ordering the work done, and nearly the entire testimony is devoted to an attempt to establish the agency of Collins. At the conclusion of the hearing, the trial court made a decree fixing the amount due to each claimant and decreeing the same to be a lien against the hotel and providing for foreclosure in the event of failure to satisfy the decree.

If defendant Brant is to be held liable to pay the liens, it must be by force of some contract express or implied. 3 Comp. Laws, § 10710 (5 How. Stat. [2d Ed.] § 13766). No one of the claimants testified that he made any contract with Brant, and no one of them testified that Brant agreed to pay him, and no one of them testified that he ever requested Brant to pay him. But it is said his son-in-law, Collins, acted for him. This appears to be based largely upon the fact of his being a son-in-law, and that Collins acted for or with him when the lease was made to Ronegar. This has but little force with us from the fact that Collins was interested in the lease, and, if Brant was to execute a lease of the three rooms to Ronegar, Collins would have to release them. It is further said that Collins and Brant conferred about the work while it was in progress, but, when the witnesses were asked what Brant said, none of them could detail it; they saw them looking at the work and motioning, and they concluded they were talking about the work. It is further said that Brant was around the hotel nearly every day during the progress of the work, and that on one or two occasions he made comments concerning it as to how well it would look when finished, and that it would cost considerable, but no one testified that he directed or attempted to direct the work in any

way.

A study of the record convinces us that Collins and