By section 4422, all persons so furnishing things, or doing work, except under contracts directly with the owner, are to be considered subcontractors. The statute further provides: "Sec. 4403. Every subcontractor wishing to avail himself of the benefits of this act shall give notice to the owner or proprietor, or his agent or trustee, before or at the time he furnishes any of the things aforesaid, or performs any of the labor, of his intention to furnish or perform the same, and the probable value thereof; and, if afterward the things are furnished or labor done, the subcontractor shall settle with the contractor therefor, and having made the settlement in writing, the same, signed by the contractor and certified by him to be just, shall be presented to the owner or proprietor, or his agent or trustee, and left with him, and within sixty days from the time the things shall have been furnished, or the labor performed, the subcontractor shall file with the clerk of the circuit court of the county in which the building, erection or other improvement is situated a copy of the settlement between him and the contractor, which shall be a lien on the building, erection or other improvement for which the things were furnished, or the labor performed, and shall at the time file a correct description of the property to be charged with the lien, the correctness of all which shall be verified by affidavit. "Sec. 4404. In case the contractor shall for any reason fail or refuse to make and sign such settlement in writing with the subcontractor when the same is demanded, then the subcontractor shall make a just and true statement of work and labor done or things furnished by him, giving all credits. which he shall present to the owner or proprietor, his agent or trustee, and shall also file a copy of the same, verified by affidavit, with the circuit clerk, as provided in section 4403." "Sec. 4421. In case any subcontractor shall not have notified the owner, proprietor, his agent or trustee, before furnishing the things aforesaid, or doing work and labor, as provided for in section 4403, but shall furnish to him the account as provided in said section, or the statement provided for in section 4404, and in all other respects shall comply with the provisions of this act, he shall have the benefit hereof the same as if he had given notice as required herein, to the extent, and only to the extent, that such owner or proprietor can safely, with his engagements and liabilities on account of such building, erection or other improvement, withhold any amount by him owing to his contractor for such subcontractor." The act provided that any such lien should be transferable and assignable. But Pope never complied with the essential provisions of said statute, and therefore never acquired any lien. He did not, in compliance with section 4403, give any notice to the owner before furnishing the material of his intention to furnish the same, and made no settlement in writing with the contractor therefor, nor have any such settlement signed by the contractor and presented to the owner. He never demanded or asked for such settlement of the contractor, who therefore never refused to make, sign, or certify such settlement, and hence said Pope was not entitled to make or furnish to the owner or file with the clerk of the court the statement provided for by section 4404. It is apparent that the written statement made by Pope about December 1, 1902, of the material furnished by him, which was mailed to the owners, and a verified copy of which was on December 29, 1902, filed with the clerk of the court, did not comply fully with any of the provisions of the statute, and was of itself ineffective to secure or preserve his lien. Even had the proceeding taken by Pope amounted to a substantial compliance with that contemplated by section 4421, it would preserve the lien only to the extent which the owner of the building could safely, with his engagements and liabilities on account of the building, withhold from what was owing to the contractor. The object of these provisions for the service upon the owner of the notices and statements by the subcontractor is to enable the owner to reserve for the subcontractor moneys which, without such notice, he would ordinarily pay over to the contractor. The courts of Arkansas have held this same statute to be highly remedial, demanding liberal construction for the advancement of the remedy, and that an exact and technical compliance is not indispensable where no injustice can result from overlooking the omission. Anderson v. Seamans, 49 Ark. 475, 5 S. W. 799; Buckley v. Taylor, 51 Ark. 302, 11 S. W. 281. In this case the defendants admit by their answer that they still have in their hands $147.47, owing by them to the contractor on the contract, and aver that they have tendered that sum to the plaintiff, and again tender and offer to pay the same into court. The record does not show that it was in fact paid into court, so as to affect the right to costs. "A tender, when made, is an admission of an amount due equal to the sum tendered, and while a verdict may be rendered for more than the amount tendered, it cannot be rendered for less. And this, too, although the tender be defective, or even be offered in a case where it cannot be legally made or pleaded, and for such reasons be held unavailable to save costs." Denver, etc., R. R. Co. v. Harp, 6 Colo. 420, 424, citing many cases. See, also, Eaton v. Wells, 82 N. Y. 576; Noble v. Fagnant, 162 Mass. 275, 38 N. E. 507; 28 Am. & Eng. Encyc. of Law (2d Ed.) 15. As the plaintiff claimed no personal indebtedness as owing to it by the defendants Campbell & Williams, but only such liability as arose from plaintiff's lien upon these defendants' building and lot, for material furnished to defendants' contractor Ellis, this tender by defendants of $147.47 as moneys owing by defendants to that contractor, on the contract price for constructing that building, is necessarily an admission by defendants that plaintiff has a valid lien on that building and lot to the extent of the amount so tendered, as their right to pay to the plaintiff such balance of money stated to be owing to Ellis could rest alone on the validity of plaintiff's lien to at least that amount. It follows that the part of the decree of the trial court adjudging and establishing the lien of plaintiff upon the building and lot of these defendants was right, but only to the extent of $147.47 and the costs. Furthermore, it appears by the record that the decree of the trial court was not questioned to that extent in the appeal taken to the United States Court of Appeals in the Indian Territory. The assignments of error on which that appeal was taken are recited in the opinion of the court. The only one bearing on this matter is the following: "Second, that the court erred in entering any decree against them in excess of $147.47 admitted by defendants in their answer to be due and unpaid.” The only part of that decree which was against the defendants was that which established the plaintiff's lien, and directed its foreclosure. That by the defendants' assignment of error was admitted to be proper and valid to the extent of $147.47, and the United States Court of Appeals in the Indian Territory should have modified the decree so as to establish the lien for the amount only of $147.47, instead of reversing the decree and remanding the case, with directions to dismiss the complaint as to the defendants then appealing. The decree of the United States Court of Appeals in the Indian Territory, except as to costs in that court, is reversed, with costs, and the cause remanded to the United States Court for the Southern District of the Indian Territory at Chickasha, with directions that the decree be modified so that the amount recovered by the plaintiffs shall be a lien upon the building and lot of the defendants described in the decree to the extent only of $147.47, and for further proceedings not inconsistent with this opinion. As the outcome of these defendants' appeal to the United States Court of Appeals in the Indian Territory has been a large reduction of the amount for which a lien upon their property had been adjudged, it is considered that they should, in the final adjustment, be allowed the costs of that court. DAVIDSON-WESSON IMPLEMENT CO., Ltd., v. PARLIN & ORENDORFF CO. (Circuit Court of Appeals, Fifth Circuit, December 5, 1905.) No. 1,447. CREDITORS' SUIT-JURISDICTION OF FEDERAL COURTS-STATE STATUTE ENLARGING REMEDY. A simple contract creditor, who has not reduced his demand to judg ment and exhausted his remedy at law, has no standing in a court of equity to have his claim adjudicated and to subject equities; nor can a state statute authorizing such suits in the courts of the state confer jurisdiction thereof upon a federal court, in which the defendant has the constitutional right to a trial by jury to determine the fact and amount of his indebtedness. [Ed. Note. For cases in point, see vol. 13, Cent. Dig. Courts, § 905; vol. 14, Cent. Dig. Creditors' Suit, § 46. Right to trial by jury in federal courts, see note to O'Connell v. Reed, 5 C. C. A. 603; Vany v. Peirce, 26 C. C. A. 528.] Appeal from the Circuit Court of the United States for the Western District of Louisiana. Counsel agree on appellants' statement of the case as follows: This case is an appeal from a decree of the United States Circuit Court for the Western District of Louisiana refusing to vacate an order appointing a receiver for the Davidson-Wesson Implement Company, Limited, and dissolve the writ of injunction restraining the officers of said corporation from managing or controlling its affairs, which decree continued the receiver appointed by said court in control of the property and assets of the appellant. The bill filed by complainant is quite extensive, also the motion to vacate and dissolve, which, for simplicity, we will endeavor to condense in this statement by eliminating the portions which we consider immaterial. Bill. Appellee alleges that it is a corporation organized under the laws of the state of Illinois, and a citizen of said state, and that the Davidson-Wesson Implement Company, Limited, H. Albert Davidson, H. Edward Wesson, and Louis T. Mathews are residents and citizens of the parish of Calcasieu and state of Louisiana. The bill also made the Welsh National Bank a party defendant, which did not join in the motion to vacate and dissolve. Therefore the allegations as to it are not before this court for consideration. Appellee alleges that appellants Davidson, Wesson, and Mathews, during the month of December, 1901, entered into a fraudulent conspiracy to establish a store in the town of Welsh, La., by means of which they could purchase goods, sell same, and appropriate the proceeds of such sales to their individual uses, without incurring personal liability therefor; that with that purpose in view they organized a corporation on December 9, 1901, adopting the name of "Davidson-Wesson Implement Company, Limited"; the charter for same being signed, acknowledged, and.recorded in the recorder's office of Calcasieu parish. La. After stating a number of the provisions of said charter, the bill charges upon information and belief: That said corporation was not formed in good faith for the purpose of carrying on a legitimate mercantile enterprise, but for the purpose of buying goods without any intention of ever paying for them. That nothing further was done towards forming a corporation. No stock was subscribed or certificates therefor issued, no election of officers or meeting of the directors ever held. That the appellant Davidson deeded, on December 9, 1901, lot No. 2, block 25, of the town of Welsh, with a building thereon, which appellee alleges, upon information and belief, was worth about $1,500, for the consideration of $4,100, which deed was not filed for record until January 1, 1903. That, if any contributions were made on stock subscriptions, they were made to pay freight on goods purchased by the said corporation. That the appellants had since the organization of said corporation purchased from various parties goods amounting to $40,000, paying only such debts as they found prudent and politic to pay in order to enable them to continue in business and delay the action of creditors, while the organization appropriated its moneys to their individual uses, charging that each of them had received the sum of $5,000 from said corporation. That the Davidson-Wesson Implement Company, Limited, owned a stock of goods of the probable value of $5,000, which it was selling for less than cost, as appellee is informed. That it owns notes and accounts of the probable value of $5,000, and mules, etc., of the probable value of $500. That it had contracted debts which are unsatisfied and owing to various creditors, "to the extent, as your orator charges and believes, of $25,000." That defendants were indebted to complainant in the sum of $19,323.70. But the bill does not assert any interest in defendant's property or any privilege upon same; nor does said bill allege that such indebtedness is past due. It alleges that the defendants refuse to pay complainant any sum, but continued to collect the notes and accounts owing to the corporation and appropriate the same to their own use. It states, upon information and belief, that Davidson, Mathews, and Wesson are each insolvent, that the Davidson-Wesson Implement Company, Limited, is insolvent, that all its property does not exceed the value of $10,000, and its indebtedness is at least $25,000. The bill closes with an appropriate prayer for the appointment of a receiver to take charge of the property of the Davidson-Wesson Implement Company, Limited, and for a writ of injunction restraining the defendants from selling or disposing of any goods, chattels, property, or effects belonging to the Davidson-Wesson Implement Company, Limited, etc.; that defendants be ordered and directed to pay orator the sums to be due to it by the notes and accounts described in the bill and that orator have judgment for said sums; and that defendants be required to answer said bill, but not under oath, which was specially waived. Motion to Vacate and Dissolve. Appellants, after denying all of that portion of complainant's bill charging them with entering into a fraudulent conspiracy for the purpose of acquiring goods without intention of paying for same, or to appropriate same to their individual uses, allege that complainant knew same to be false and untrue at the time they were made. They allege that the Davidson-Wesson Implement Company, Limited, was organized in good faith, and they were advised, encouraged, and counseled to do so by the agents and representatives of complainant, who were fully cognizant of all facts connected therewith, and of the value of the property conveyed to it by Davidson, also their manner and method of doing business. They allege that 51 shares of stock of $100 each were subscribed and paid for in a valuable consideration, and that complainant had full knowledge thereof long prior to the filing of its bill; that the certificates representing said 51 shares of stock were issued; that all the formalities required by the laws of Louisiana were complied with; and that the corporate existence was complete in every respect; that the lot in Welsh and building thereon was purchased by the corporation from Davidson for $4,100, which was considered by each of the appellants and also by the agents and representatives of complainant, who were fully conversant with said transaction at the time it occurred, to be a reasonable valuation for same-pleading an estoppel as to the complainant urging any defect in the corporate organization or to the value of the property purchased from Davidson. Appellants further deny that they have ever appropriated to their several or individual uses the money received from the sale of goods, or that they have applied the cash to the payment of debts in order to delay the action of creditors, that they have appropriated to the uses of each the sum of $5,000, or any other sum, stating that the complainant knew said allegations to be false and untrue when made. Appellants allege that they applied all money received from the sale of goods to the payment of actual running expenses and to the payment of debts and obligations contracted in due course of business; that Davidson and Mathews have never received one cent from the corporation; and Wesson, who gave his time to its management, had received a salary of only $100 per month, and no further sum for his own benefit. Appellants deny that they had sold any goods for less than cost; aver that complainant knew this charge to be false and untrue at the time it was made; deny that it had on hand only $5,000 worth of goods, but allege that same was worth $8,886.67, which fact was well known by both complainant and its solicitor at time of filing the bill; allege that its notes and accounts receivable exceed $12,000, and the allegation in the complainant's bill that same was only $5,000 is false and untrue and was known to be so by both the complainant and its solicitor when made; deny that the Davidson-Wesson Implement Company, Limited, owes $25,000; and state that its total indebtedness does not exceed $11,500. They also deny an indebtedness of $19,323.70 to complainant. They also deny an indebtedness to the Welsh National Bank in the sum of $800, or any other sum. Appellants deny having refused to pay complainant any sum of money, and allege to have paid it large sums at various and different times; deny selling the goods of the implement company and appropriating same to their separate use, or of collecting the debts due it and applying same to their individual accounts; deny Davidson, Wesson, or Mathews, or either of them, are insolvent, or that the Davidson-Wesson Implement Company, Limited, is hopelessly insolvent, or that its property is worth only $10,000 and its debts amount to $25.000, but allege that its assets far exceed its indebtedness; allege that the officers of the Davidson-Wesson Implement Company, Limited, are entitled to remain in control of its corporate affairs and conduct its business; pray that the order appointing a receiver be vacated and the writ of injunction dissolved, and that its officers be reinstated in the custody and control of its assets. The answer is verified by the oath of H. A. Davidson, H. E. Wesson, and Louis T. Mathews. Charlez A. McCoy and Leland H. Moss, for appellants. |