Brooks v. O'Hara

• Decision Date: 01 January 1881
• Citation: 8 F. 529
• Parties: BROOKS & HARDY v. O'HARA BROS.
• Court: United States Circuit Court, District of Iowa

8 F. 529

BROOKS & HARDY v. O'HARA BROS.

United States Circuit Court, D. Iowa.

1881

P Henry Smyth, for complainants.

Hubbard & Clark, for respondents.

Bill in equity brought to set aside a decree in favor of respondents establishing a mechanic's lien upon the Burlington &amp Southwestern Railway for $39,763.26, heretofore rendered in this court. The material allegations of the bill are the following:

'Your orators represent and show to the court that heretofore to-wit, about 1870, the Burlington & Southwestern Railway Company, a corporation in Iowa, constructing, owning, and operating a railroad in Iowa and Missouri, by a certain deed of trust, duly and legally executed, conveyed its railroad property and franchises to your orators and one James F. Joy, who subsequently assigned his interest in said trust to your orators; said railway company being then and now a citizen of the state of Iowa, and your orators citizens of the state of Massachusetts, and said James F. Joy a citizen of the state of Michigan.

'That said deed of trust was made to secure certain bonds, to be issued by said railway company to aid in constructing said railway, to the amount of $20,000 per mile of road, which bonds were actually issued and sold; and said railway having made default in payment of interest on said bonds, your orators filed their bill to foreclose said mortgage in this court, and such proceedings were had that on the eighth day of June, 1871, a decree of foreclosure was entered, whereby it was found and decreed by the court that said company was indebted to your orators in the sum of-- million dollars, and said property ordered to be sold.

'Your orators further state and charge that said respondents, prior to 1874, were engaged in constructing a certain portion of said road, having a contract to do the grading under J. W. Barnes, who was the original contractor, and which grading was to be done at certain prices set out and stipulated between him and said Burlington & Southwestern Railway Company.

'That said respondents, prior to January 1, 1874, made out and rendered to said railway company statements of the amount of work done by them and claimed to be paid therefor, and certain estimates were made by the engineer of said railway company for the sums so claimed, under the belief and supposition that said statements made by them were true and correct.

'That prior to the first of January, as aforesaid, said railway company had paid to said respondents large sums of money on account of said work, and they held a large amount of said estimates, so called, for work done, as claimed by them, which were not paid.

'That in December, 1873, said respondents brought suit in the circuit court of Appanoose county, Iowa, upon these estimates, claiming that there was yet the amount thereof due to them for grading done on said railroad, and such proceedings were had in the premises that a judgment and decree was rendered in their favor against said railway company on the ninth day of January, 1874, for the sum of $39,763.24, besides costs; but your orators were not parties thereto; but your orators charge that said estimates were issued and said judgments obtained upon the belief that said respondents had done the work claimed by them, and that, in rendering their accounts, they had acted in good faith, and that their representations of the amount of work done were true and correct.

'That it was subsequent to the obtaining of this judgment that your orators commenced proceedings in this court to foreclose said mortgages, and in that proceeding said respondents were made parties to the bill, and appeared and filed their cross-bill, setting up said judgment and decree rendered in the circuit court of Appanoose county. Your orators beg to refer to said proceeding in said cause in this court as part of this bill, and, without setting the same out in haec verba, to show what was done therein.

'That during the pendency of said suit, and before decree therein, the parties, by counsel, entered into an agreed statement of the facts, whereby it was admitted that said respondents' claim was correct, as shown by the judgment in Appanoose county, but such agreement was made under the belief and upon the representations that said judgment in Appanoose county was properly obtained upon a true state of the facts, and without any knowledge that said claim was not correct, or that the work upon which it was based had not been done.

'Such other proceedings were had in said cause in this court that on the eighth day of June, 1877, a decree was entered awarding to said respondents the amount of said judgment in Appanoose county, Iowa, and ordering that the same be a lien on the property of said railway company paramount and superior to that of the mortgage to your orators hereinbefore mentioned.

'That your orators and their counsel were wholly ignorant of what state of facts was proved in Appanoose county, or upon what representations or claim said decree was rendered, or whether the claim upon which it was based was correct or not; and your orators had no reason to know, and had no real knowledge, of the incorrectness of the same until within a few weeks last past. But so it is; and your orators now charge upon information and belief that the claim made by the respondents in said Appanoose county, and upon which said judgment and decree was rendered, was wholly fraudulent and fictitious; that the Burlington & Southwestern Railway Company, prior to the commencement of said suit in Appanoose county by respondents, had paid to them for grading and work done in the construction of its road, the sum of two hundred and thirty-two thousand (232,000) dollars, and the amount sued for by them was for a claimed balance unpaid, which your orators charge was fraudulent, and that no such balance was due, and that the money paid by said railway company, as aforesaid, more than paid said respondents for all the work they had ever done upon said railway; that said supposed balance was made to appear either by mistake of all the parties, or by false statements for the amount, and deception practiced upon the Burlington & Southwestern Railway Company, or its engineer, or by collusion with the officers of that company to defeat and injure the claims represented by your orators, and to defraud the holders of the bonds secured by the mortgage to your orators; that said claim was either a mistake, or was false or fraudulent, and based upon no consideration, and upon a claim for work which was never done and ought never to have been allowed, all of which was unknown to your orators, and with reasonable diligence could not be learned during the pendency of the suit in this court; the only one to which your orators were parties.'

The prayer is for an injunction to restrain the execution of the decree, and that...