2. SAME-CONTRACT WITH PLAINTIFF'S EM

PLOYER.

In an action to enforce a mechanic's lien for work performed in the drilling of an oil well for one alleged to have a leasehold interest in the land, no recovery can be had in the absence of any evidence that the party who employed plaintiff was ever directed or authorized by the lessee to dig a well.

[Ed. Note.-For cases in point, see vol. 35, Cent. Dig. Mines and Minerals, § 239.]

Appeal from Circuit Court, Wells County; E. C. Vaughn, Judge.

Action by William D. Friend against Joseph W. Littler and others. From a judgment for plaintiff, defendants appealed to the Appellate Court, from whence the cause was transferred to this court under Burns' Ann. St. 1901, § 1337u. Reversed.

Simmons & Dailey, for appellants. A. R. Long and Eichhom & Matlock, for appellee.

JORDAN, C. J. Appellee, as plaintiff below, commenced this action in the Grant circuit court against the Matthews Drilling Company, George N. Catterson, Joseph W. Littler, and William H. Huffman to enforce a mechanics' lien under section 7255, Burns' Ann. St. 1901, for work and labor performed by him in and about the construction of a certain gas and oil well situated upon the lands described in the complaint. The complaint alleges that on January 14, 1904, the defendant Joseph W. Littler was and still is the owner in fee simple of the S. E. 4 of section 28, township 23 N., range 9 E., in Grant county, Ind. It is further averred therein that on said day the defendant William H. Huffman, operating under an oil and gas lease from the said landowner, Joseph W. Littler, contracted with the defendants the Matthews Drilling Company and George N. Catterson to drill a gas and oil well on said described land. On the aforesaid day the plaintiff and the defendant Catterson entered into a contract by which the plaintiff was employed to work on said well for $4.50 per day, which was the reasonable value of his services. pleading then alleges that the plaintiff continued to work in the construction of the well in question until February 15, 1904, on which date he was discharged by Catterson before the completion of the work which he was performing. The whole amount due and unpaid for his labor or services is $96.75. The complaint discloses that within 60 days after performing the labor in controversy the plaintiff filed a notice in writing in the office of the recorder of Grant county, Ind., declaring therein his intention to hold a lien on the aforesaid described premises and also on the drilling machine situated upon said land and on the gas and oil well and all pipes, tubing, etc., connected therewith, for the amount due him for said work. The employment of an attorney is averred, and judgment is demanded for the amount due, principal, interest, and attorney's fees, and for the foreclosure of a mechanic's lien. The defendants, other than

The

Littler and Huffman, were defaulted and judgment was rendered against them on default. The venue of the action was changed to the Wells circuit court, wherein the cause was tried by the court upon the issues joined by the separate answers of general denial filed by appellants Littler and Huffman. On the evidence introduced the court found in favor of appellee $121.25 and that he was entitled to a foreclosure of the lien involved. Over the separate motions of appellants for a new trial, the court rendered a personal judg'ment against all of the defendants to the action, and decreed that the lands described in the complaint, together with drilling machine, gas and oil wells thereon and all pipes, tubing, and casting connected therewith be sold by the sheriff in like manner as lands and property are sold on an execution at law. The proceeds arising out of said sale were ordered to be applied by the sheriff in payment and satisfaction of the amount due appellee, principal, interest, and costs. From this judgment appellants Littler and Huffman prosecuted a term-time appeal to the Appellate Court.

The record does not disclose that either of appellants moved for a modification of the above judgment and decree. Each has assigned several alleged errors, but the only question discussed by their counsel and urged for a reversal of the judgment is that the decision of the trial court is not sustained by sufficient evidence and is contrary to law. The record shows that appellee on the trial testified as a witness in his own behalf, and the following is substantially the material facts proven by the evidence. Appellee was employed by the defendant, the Matthews Drilling Company, on January 14th to work at drilling a gas and oil well in what he, in testifying at the trial, denominated the "Littler Farm," which he stated was in section 28, township 23 N., range 9 E., in Grant county, Ind. He testified that he worked 221⁄2 days at $4.50 per day; that he commenced his work on the well in question on January 14th and continued his work thereon until February 15th, on which day he was discharged. The well upon which he worked was known as No. 2. He has received nothing on the amount due him for his work. On the 15th day of February, the day on which he quit work, he stated that he had 2 conversation with appellant Huffman, in which he told Huffman that he "looked to him for his money," and that Huffman in reply told him to file a lien. A copy of the lien which was filed in the office of the recorder of Grant county was introduced in evidence. It was agreed between the parties, in the event appellee was entitled to recover, that $25 would be a reasonable sum to be allowed for attorney's fees. A certified copy by the county auditor of certain transfers of real estate was introduced in evidence for the purpose of proving that appellant, Joseph W. Littler, was the owner of the real estate upon which the gas and oil

well in controversy was located. A certain contract or lease was introduced in evidence. This instrument bears date of October 15, 1896, and was entered into by and between Joseph W. and Sarah E. Littler and one William A. Walley, whereby the said Littlers sold and assigned to said Walley all of the gas and oil in and under a certain tract of land in Grant county, Ind., described as the east half of the S. E. 4 of section 28, township 23 N., range 9 E. The right is therein granted to said Walley to enter upon said land at all times for the purpose of drilling and operating for gas, oil or water, with the right and privilege of doing all and singular that which is necessary for said purpose, etc. This lease appears to have been duly recorded in the recorder's office of Grant county, Ind. On October 31, 1896, said Walley made the following assignment of said contract, or lease: "For value received I hereby sell, assign, and transfer to the Consumers' Gas Trust Company all of my right, title, and interest in and to the within lease. [Signed] William A. Walley. [Seal.]" This assignment was duly acknowledged before a notary public on October 31, 1896, and was recorded in the recorder's office of Grant county, Ind., and was introduced in evidence on the trial. The above was all of the evidence given in the cause.

It is certainly manifest that it is for several reasons insufficient to sustain the decision of the trial court. As previously shown, the complaint, after averring that Joseph W. Littler on January 14. 1904, was, and still is the owner in fee simple of the real estate described, then proceeds to allege that on said date the defendant, William H. Huffman, "operating under an oil and gas lease from said owner Joseph W. Littler, contracted with George N. Catterson and the Matthews Drilling Company to drill a gas and oil well on the above-described lands"; that on said 14th day of January George N. Catterson employed the plaintiff (appellee herein) to work in constructing the aforesaid well at and for the price of $4.50 per day. The principal theory of the complaint appears to be to enforce or foreclose a mechanic's lien against the leasehold interests of Huffman, which the latter acquired in the lands under the lease from the Littlers, but the evidence in the case wholly fails to prove that Huffman owned or had any interest whatever, by lease or otherwise, in the lands or other property upon which it was sought to enforce the lien in controversy. The evidence shows that Joseph W. and Sarah E. Littler executed the gas and oil lease upon these lands to one William A. Walley and that he subsequently assigned and transferred all of his interest, right, and title in and to the lands to the Consumers' Gas Trust Company, which company, so far as the evidence discloses, is still the owner and holder of said lease under this assignment. There is absolutely no evidence tending to show that IIuffman in any manner

succeeded to any of the interests or rights under the lease to said premises from the Consumers' Gas Trust Company, or any other person; or, in other words, there is an entire absence of any evidence to show that he, at the time he let the contract to Catterson and the Matthews Drilling Company to drill the well in question, or at any time. thereafter, had or held any interest or title to the leased premises or was in any manner operating under the lease executed by the Littlers to Walley. Again, the evidence does not establish that Huffman either expressly or impliedly employed or in any manner authorized or directed Catterson or the Matthews Drilling Company to construct the well about which appellee was employed by said company, or that Huffman had any knowledge or notice that it was being constructed during the time appellee was employed there

If the evidence were sufficient to show that Huffman was the lessee of Littler, the owner of the land, and that he had contracted or directed the drilling or construction of the well, as alleged in the complaint, upon which appellee was employed to work, the lien that might have been created in the latter's favor so far as the lands in question could thereby be charged, would only extend to and affect the leasehold interest which Huffman owned or had therein under the lease from the owner. Sections 7255 and 7256, Burns' Ann. St. 1901; McCarty v. Burnet et al., 84 Ind. 23, and cases there cited; Coburn v. Stephens et al., 137 Ind. 683, 36 N. E. 132, 45 Am. St. Rep. 218; Adams v. Buhler et al., 116 Ind. 100, 18 N. E. 269. See Phillips on Mechanics' Liens, §§ 65, 83, 84, 191, 112, 305, 306. In Adams v. Buhler, supra, this court, in considering the mechanic's lien therein involved, said: "Mechanics' liens rest upon contract, express or implied, with the owner or other person whose interest in the real estate it is proposed to bind or affect by the lien, and while persons who perform labor or furnish material for a contractor may secure a lien upon the real estate or building, by notifying the owner and taking the other necessary steps, it is, nevertheless, essential to the sufficiency of a complaint to foreclose such a lien that it should appear therein who owned the real estate, or the interest to be affected, at the time the building was erected, and that it was erected in pursuance of a contract, express or implied, with such owner. Lawton v. Case, 73 Ind. 60; Neeley v. Searight, 113 Ind. 316, 15 N. E. 598; City of Crawfordsville v. Brundage, 57 Ind. 262." It cannot be asserted that the complaint under the facts therein alleged seeks to secure, in addition to a foreclosure of the lien, a personal judgment against either of appellants herein. The evidence is so clearly insufficient to establish the right of appellee to either a personal judgment or a decree foreclosing the lien in controversy as against appellants that nothing in reason can be said to the contrary.

For the insufficiency of the evidence the judgment of the lower court, so far as it affects appellants, or either of them, is in all things reversed, and the cause is remanded, with instructions to grant each of the appellants a new trial, and for further proceedings not inconsistent with this opinion.

(167 Ind. 42)

CITY OF COVINGTON et al. v. FERGUSON. (No. 20,878.)

(Supreme Court of Indiana. June 21, 1906.) 1. MORTGAGES-FORECLOSURE-PARTIES-DE

FENSES.

Under the Code a defendant joined in a foreclosure proceeding by allegations that it claims some interest in the property is entitled under its general denial to prove any title it may have.

2. APPEAL AND ERROR-HARMLESS ERROR RULING ON DEMURRER.

Error, if any, in sustaining a demurrer to a portion of an answer is harmless where evidence of all the facts alleged in the answer is admissible under the general denial, also pleaded, pleaded.

[Ed. Note.-For cases in point, see vol. 3, Cent. Dig. Appeal and Error, § 4094.]

Appeal from Circuit Court, Fountain County; Joseph M. Rabb, Judge.

Action by David S. Ferguson against the city of Covington and others. From judgment for plaintiff, defendants appealed to the Appellate Court, from whence the cause was transferred to this court under Burns' Ann. St. 1901, § 1337u. Affirmed.

O. S. Jones, A. T. Livengood, and O. R. Lewis, for appellant. Lucas Nebeker and V. E. Livengood, for appellees.

GILLETT, J. This suit was instituted by appellee against appellant and others to foreclose a real estate mortgage, executed by the Fountain, Warren & Vermillion Agricultural Association. The allegations of the complaint as to appellant are as follows: "Plaintiff further avers that the city of Covington, defendant herein, a municipal corporation in and under the laws of Indiana, claims and pretends to have and own a contingent estate in fee simple, dependent upon the condition that should said corporation for any cause whatever cease to exist, or should fail to take all proper care of said grounds, pay all taxes thereon, and keep the same properly and securely fenced, and strictly applied for the purposes for which said corporation was organized, for the period of five years, then said real estate to revert to said town, now city, of Covington, for a public park, commons, or fair ground, but plaintiff denies that said defendant has any contingent or other right, title, or interest whatever in any of such land. Plaintiff avers that if said defendant has, or shall be found or held to have any title, right, or estate, the same is subject to the lien of said mortgage, and that said mortgage is paramount thereto, and that the same was duly

78 N.E.-16

conveyed and mortgaged to plaintiff. by virtue of the powers conferred therefor on said association by the deeds aforesaid, and by the law in force at the time of the execution of said mortgage." The relief sought by said complaint is the foreclosure of the mortgage and a sale of the mortgaged premises, "free from all claims of the defendants or any of them," for the purpose of raising and paying the plaintiff's debt. Appellant unsuccessfully demurred to the complaint, and it afterwards filed answer in three paragraphs, the first of which was a general denial. It then filed a cross-complaint in two paragraphs, and with this pleading there was filed what was denominated a fourth paragraph of answer by way of cross-complaint, which, for the sake of convenience, we shall hereafter denominate as a fourth paragraph of answer. The third paragraph of answer was directed to so much of the complaint as sought a foreclosure upon a particular 15-acre tract, and, in substance, the defense therein asserted was that said association deraigned its title from a deed, which was specially pleaded, and under which said city claimed that it was entitled to said real estate by virtue of a provision therein which it is claimed amounted to a limitation. The first and second paragraphs of cross-complaint were ordinary paragraphs to quiet title as to the whole real estate against which a foreclosure was sought, and what we have denominated the fourth paragraph of answer set up substantially the same facts as are contained in the third paragraph of answer. Appellee filed a general denial to the cross-complaint, and demurred, for want of facts, to the second and third paragraphs of answer. The demurrer was sustained, to which ruling said city reserved a several exception. It then appears that the city withdrew its fourth paragraph of answer, and refused and declined to amend the first and second paragraphs of answer, or to plead further to the plaintiff's complaint, but elected to stand by and upon its said answers. The cause was submitted, and, after hearing the evidence, the court entered a finding that all of the allegations of the complaint were true, and it further found against the city on its cross-complaint. Upon the findings there was a decree of foreclosure, under which it was ordered that all the right, title, interest, and claim of the defendants and each of them be sold for the purpose of raising and paying the amount due, and it was further adjudged that the city take nothing by its cross-complaint. From this decree, the city appeals. The first and second assignments of error, which draw in question the sufficiency of appellee's complaint, stand as waived. The remaining assignment is based on the alleged error of the court in sustaining appellee's demurrer to the third paragraph of appellants' answer.

It does not admit of doubt that under the issues which were formed by the answer in

general denial to appellee's complaint the question was presented for adjudication as to whether appellant had any interest in the real estate against which a foreclosure was sought. Appellee sought, by his complaint, as he was entitled to do, to secure a decree of such a character that a sale thereunder would cut off the claim which it was charged that the city was asserting; that pleading amounted to a distinct challenge to the latter to come in and assert its claim of right, so that if appellee should be successful, a sale under the decree would pass a title divested of the claim which the city was alleged to be asserting. In Masters v. Templeton, 92 Ind. 447, the question arose as to the right of Masters to assert a vendor's lien as against one Beckett, it appearing that the latter claimed under a decree of foreclosure, in which it was alleged "that all of the defendants, other than the mortgagors, 'claimed to hold some interest or lien in and upon said real estate, but that they took and held the same subject to Beckett's mortgage lien.'" The court said: "The decree in Beckett's favor concludes the appellant from assertIng any right or lien in the land superior to his, because she was a party to that action, and her rights were foreclosed by the decree therein rendered. Our Code provides that 'any person may be made a defendant who has, or claims, an interest in the controversy adverse to the plaintiff, or who is a necessary party to a complete determination or settlement of the questions involved.' This is a very comprehensive provision, and was meant to confer authority to settle in one suit all conflicting claims to property involved in the litigation. The rule is a wise and salutary one, for it enables the court to fully adjust all equities, to determine and protect all rights, and to put an end to litigation concerning the subject-matter of the suit by one decree. Multiplicity of actions is thus prevented, full force and effect secured to judicial decrees and judicial sales made operative and effective. It has long been the law of this state, that conflicting claims of title may be settled, and questions of priority determined, in foreclosure suits, whenever the proper issues are tendered. * Prior to the adoption of the Code system there was some reason for holding that the question of title could not be adjudicated in a foreclosure proceeding; for questions of title were triable only by courts of law, while the question of a right to a foreclosure was cognizable only by courts of chancery, and there was thus a conflict of jurisdiction whenever a legal title was asserted. This cannot happen under the Code, where both law and equity jurisdiction are vested in one tribunal, where provision is made for bringing into court all parties interested, either in the property or the controversy, and where ample authority is conferred to determine all rights, and adjust all equities in one suit. The provisions of our Code upon the subject of parties are very compre

hensive, and the provisions respecting judgments and decrees are also very full and liberal, and we should do violence to its letter and spirit if we did not hold, to borrow the language of its framers, that the 'ultimate rights of the parties' may be determined in one action." In Ulrich v. Drischell, 88 Ind. 354, 360, this court said: "While it is true that a proceeding to foreclosure a mortgage is not an action to quiet title, it is also true that in very many essential respects it is closely analogous. The parties are brought into court in such a suit for the purpose of adjusting all equities, rights and interests in the land, and the question of their rights to the land is one of the principal and controlling questions of the case. It is, in truth, the dominating and leading purpose of the suit. The subject of the controversy is a thing-the mortgaged real estate and this the decree directly affects, for it settles the rights of the parties to it, measures their equities, and adjusts their interests." See, also, Woodworth v. Zimmerman, 92 Ind. 349; Adair v. Mergentheim, 114 Ind. 303, 16 N. E. 603; Gaylord v. City of Lafayette, 115 Ind. 423, 17

N. E. 899.

The proposition is too well settled to require the citation of authorities that where evidence of the particular matters which are set up in an answer to which a demurrer was sustained is admissible under the general denial, which was on file, the ruling, if erroneous, is harmless. Appellant cannot avall itself of its own action subsequent to the ruling on demurrer. The question is: Did the sustaining of the demurrer constitute error at the time the ruling was made? We may also call attention to the point made by appellee's counsel that appellant was not circumscribed in the introduction of his evidence by the ruling on the third paragraph of answer, since the same affirmative matters were available to it under the issues tendered by the first and second paragraphs of crosscomplaint, citing Luntz v. Greve, 102 Ind. 173, 26 N. E. 128, and State v. Hindman, 159 Ind. 586, 65 N. E. 911. The cause went to trial on the issues as we have indicated that they existed, and we can only hold that the error relied on, in the state of the issues, is not available. Judgment affirmed.