Horan

In December, 1911, plaintiffs and one Murphy contracted to build a flume in Nevada County for the defendant to furnish water to its mine, for which they were to receive twenty-six thousand dollars. The contractors failed in their undertaking, after having drawn nearly half the contract price on account, leaving creditors to the extent of $6,213.72, with less than one-third of the flume completed. On the eighteenth day of November, 1912, a new agreement was entered into between the parties hereto, under which defendant agreed to complete the flume, applying so much of the unpaid balance of the contract price as was necessary for the purpose, the remainder, if any, to be applied, first, to the payment of the debts incurred by the contractors, the balance, if any, to be paid to the contractors, the defendant to use in such completion all tools, machinery, supplies, and lumber on hand provided or used by the contractors in connection with said contract. The flume was completed in September, 1913, at an expense of over twenty thousand dollars, leaving nothing for the creditors or the contractors.

In June, 1914, plaintiffs brought this action, alleging a number of defaults and…