Appeal from (lie Circuit Court of the United States for the Southern District of California.

The appellant, the Golden Gross Mining & Milling Company, a corporation of the state of California, together with J. M. Elliott, trustee, filed a bill in equity against the Free Gold Mining Company, a corporation of the state of Nevada, which will in this opinion be designated the “Free Gold Company,” and the appellee, the Credits Commutation Company, a corporation of the state of Iowa, to foreclose a vendor’s lien for $1,000,000, which had been expressly reserved in a conveyance made on June 20, 1897, by the appellant to the Free Gold Company of certain mining claims, mills, and other property situate in San Diego county, state of California. The Free Gold Company made no appearance, and as against it the bill was taken pro eonfesso. The appellee demurred to the bill for want of equity and for defect of parties defendant. On the latter ground the demurrer was sustained, and, the complainant declining to amend, the hill was dismissed. The bill alleged in substance that on June 20, 1897, the appellant was the owner of the property described in the bill, subject to a trust deed which it had given to James Spiers and others to secure sundry indebtedness of the appellant, aggregating more than $200,-000, and on that day, for a consideration of $1,000,000, it sold and conveyed all of said property to the Free Gold Company; that no part of the purchase price was paid; that in the deed to the Free Gold Company the appellant expressly reserved to itself a lien upon the property so conveyed, to secure the payment of $1,000,000, the purchase price thereof; that at the same time an agreement was- entered into between the appellant and the Free Gold Company providing for the manner in which said property was to be worked and managed by the latter, and for the application and disposition of the proceeds arising therefrom; that in this agreement reference was made to the conveyance above mentioned, and to the reservation of the lien, and it was recited that the Free Gold Company was advised that the trust deeds given to Spiers and others were invalid, that all or some of the claimed indebtedness was without right, and that litigation might he necessary to adjudicate the same; that the Freo Gold Company covenanted to save the appellant harmless from said claims and indebtedness under said trust deed, and that it was agreed that nothing should be deducted from said sum of $1,000,000 by reason of said claims, and that as soon as the Free Gold Company should acquire possession of the property it would put into operation suitable machinery and appliances for treating tailings and concentrates, and operate said mines during the whole of the time it should be in possession, and that it would perform all necessary assessment work on the claims, procure patents therefor, put said property in suitable condition for sale, and endeavor to sell the same or enough thereof to pay the appellant said sum of $1,000,000, and that it would dispose of the alleged indebtedness of the appellant by payment, compromise, or litigation, and apply 60 per cent, of the net proceeds of the mine to the payment and extin-guishment of such indebtedness, and pay the remaining 40 per cent, of such net proceeds to the appellant until all of its said original indebtedness should be paid, thereafter to pay GO per cent, of the net proceeds to the appellant, the remaining 40 per cent, to be retained by the Free Gold Company.

The bill further presented the following facts: On June 28, 1897, the Free Gold Company commenced an action in the superior court of San Diego county against James Spiers and others to quiet its title to the said property, and to have the trust deeds to Spiers and others declared invalid. On the application of the Free Gold' Company, C. W. Pauley was appointed receiver to work and operate the mines. Prior to April 22, 1899, differences and disputes had arisen between the Free Gold Company and the appellant and some of its stockholders, resulting in suits and actions at law, which were then pending, and on that date, while the above-mentioned suit to quiet title was still pending, and Pauley the receiver was in possession of the property, an agreement was made to compromise the pending litigation and all controversies between the Free Gold Company, the appellant, and certain of its stockholders. In that agreement it was provided that Spiers and other trustees should, as soon as possible, reeonvey the property to the Free Gold Company; that neither such deed nor any patents from the United States to said mines should in any manner affect the lien reserved to the appellant in the deed of June 2G, 1897. Referring to that deed and to the agreement of the same date, the agreement of April 22, 1899, provided as follows: “The said deed of conveyance and the said contract are hereby ratified and confirmed, except in so far as the said contract and deed are herein qualified, modified or changed, and this contract is and shall be considered as supplemental to the said original contract.” It was further provided that a board of managers, consisting of five members, was to have the complete management and control of the mining property and of the mining operations thereon, with powers which are in substance as follows: First, to employ all servants and employSs in the management o^ the-property and the conduct of the business; second, to direct and control the development of the mines and property; third, to receive and dispose of the products of the mines in the manner which is set forth below. Prior to the execution of that agreement, the appellee was asserting a claim for a considerable sum of money against Hedges, one of the stockholders of the appellant. An arrangement had been entered into between Hedges, the appellant, and the appellee, whereby the latter was to accept in satisfaction of its claim $85,000, to be paid out of the net profits of the working of the mine, $30,000 of which was to be paid out of the share of the appellant, and $55,000 out of the share of the Free Gold Company, in consideration of which the appellee was to release its claim against Hedges. The terms of this arrangement were embodied in the agreement of April 22, 1899, on the expressed condition that -the-appellee should release its claim against Hedges. The appellee subsequently-assented to the agreement and released Hedges. The agreement of April 22,. 1899, provided that until the sum of $1,000,000 and interest was paid to the appellant, and $85,000 to the appellee, out of the net profits of the property there-should be paid by the board of managers 25 per cent, of 68 per cent, to the ap-pellee until $30,000 was paid, and thereafter $1,500 per month from the 25 per cent, of the Free Gold Company until the further sum of $55,000 should be paid, to the appellee, and that in the event of the sale of said property 68 per cent, of any moneys coming to the appellant therefrom should be applied to the payment of said $30,000, and that all money coming to the Free Gold Company not payable to the appellant should be applied to the payment of any remaining balance of the $55,000 payable to the appellee. In the agreement it was further stipulated that the time when the appellant’s lien should be enforced by a suit of foreclosure should be six years from June I, 1899.

Tn a supplemental agreement it was provided that no change in the ownership or possession of ¡lie property, whether effected by private sale or judicial decree and public sale or otherwise, should affect the rights of the appellee as set forth in said contract, but that the property should pass burdened with the paramount lien and obligation of working said mines by the agencies provided in said contract, with the obligation to apply the proceeds as therein set forth until the appellee should be paid in full.

The bill further alleged that the lien of the appellee was subsequent and subject to that of the appellant, and that no part of Uie appellant’s vendor’s lien had been paid.