was as follows: 80 per cent. on or before the 10th of the month following shipment; 20 per cent. on completion of plant, but in any event not later than four months from date of shipment." The exciters and transformers arrived at Atlantic about the 18th day of July, 1911. The generator and switchboard reached Atlantic about the 26th day of July, 1911. No part of the consideration has ever been paid, and the appellant is in possession of said property in controversy, having refused to deliver the same to appellee upon demand made prior to the commencement of this action.

For answer the defendant claimed that the plaintiff sold, furnished, and delivered said transformers, exciters, generator, and switchboard, and each and all of them, to said Joseph A. Bortenlanger with the intention and for the purpose of having the said Bortenlanger use the same in the construction of a power plant and lighting system for the defendant city under a contract which the said Joseph A. Bortenlanger Company had with the defendant city, and the said Joseph A. Bortenlanger did so use the same with the knowledge and consent of the plaintiff. It therefore alleges: That plaintiff is barred and estopped from maintaining this action, because it first clothed Joseph A. Bortenlanger with the indicia of ownership by delivering the property in question to him, and then without objection stood by and permitted appellant, without any notice, actual or constructive, of the claim made. thereto by appellee, to pay Joseph A. Bortenlanger, its contractor, $3,352.40, or 90 per cent. of the estimated value of the transformers and exciters, and by reason of such payment the appellant claims to have the right of possession of all the property in controversy, and that the appellee is barred and estopped from asserting title thereto. That Joseph A. Bortenlanger, who had agreed with the appellant to furnish the material and build for it an electric light and power plant and install in said appellant's power house on appellant's land, used said property in controversy, and the same had become a fixture thereto, and thereby had become and was the abso

lute property of the appellant. It is also pleaded and was proven that Bortenlanger failed to complete his contract, became insolvent, and that the defendant city was compelled to take charge of and finish the work at large expense to itself above the original contract price. It denies that it had notice, actual or constructive, of plaintiff's claim, alleges that payments were made by it to Bortenlanger under their contract from time to time as he became entitled to such, and that included in the estimates for which payments were made were the items for which recovery is now sought by the plaintiff.

There was a trial to a jury, resulting in a verdict in favor of plaintiff for $8,284.06, with interest, and the defendant appeals.

II. The appellant is a city of the second class; the appellee was at the time of the transaction under consideration a foreign corporation, with its principal place of business outside of Iowa; and Joseph A. Bortenlanger and the Joseph A. Bortenlanger Company were also nonresidents of the state. Desiring to erect and establish an electric light plant for municipal purposes, the city of Atlantic, on the 21st day of March, 1911, entered into a contract with the Joseph A. Bortenlanger Company under which the latter, for a consideration of $43,000 and certain old machinery, agreed to furnish and install the necessary machinery and fixtures, and to furnish all material and labor for the completion of the plant according to the plans and specifications which were made the basis of the contract. On March 15, 1911, Allis-Chalmers Company made proposal to furnish certain machinery for said work, such proposal having been directed to Mr. Joseph Bortenlanger for the city of Atlantic, Iowa, which was on the 15th day of March, 1911, accepted by Bortenlanger at Omaha, Neb., and on the 5th day of April, 1911, such was approved by the Allis-Chalmers Company at Milwaukee, Wis., thus completing the execution of the contract.

So far as is pertinent to the principal question raised in

the case, the provisions of the contract between Bortenlanger and the Allis-Chalmers Company were as follows:

The title and right of possession to the machinery herein specified remains in the company until all payments hereunder (including deferred payments and any notes or renewals thereof, if any) shall have been fully paid in cash, and it is agreed that the said machinery shall remain the personal property of the company, whatever may be the mode of attachment to realty or otherwise, until fully paid in cash. Upon failure to make payments, or any of them, as herein specified, the company may retain any and all partial payments which have been made, as liquidated damages, and shall be entitled to take immediate possession of said property, and be free to enter the premises where said machinery may be located, and to remove the same as its property, without prejudice to any further claims on account of damages which the company may suffer from any cause.

This contract was filed for record May 17, 1911, in the office of the county recorder of Cass county, Iowa, in which county is the city of Atlantic, which was before any part of the machinery claimed had been furnished; but, as both of the parties were nonresidents, such did not amount to constructive notice, were such sufficient. Code, section 2906. Four estimates were made of the work done by Bortenlanger under his contract with the city, and payments were made upon them in accordance with the provisions of the contract. Included in the estimates upon which payments were made were a considerable portion, but not all, of the machinery and equipment furnished by the Allis-Chalmers Company, but that which was not in the estimate was delivered and awaiting installation. No part of the money received by Bortenlanger was paid to the Allis-Chalmers Company. On the 9th day of September, 1911, by formal written notice to the mayor and city council of Atlantic, Bortenlanger abandoned the contract with the city, and thereafter the city caused the work to be completed.

It is claimed, and the evidence tends to support the fact, that while no actual notice of the reserved title in AllisChalmers Company was served on the mayor, or members of the city council, that notice was acquired by certain members of the council. It also is claimed that the engineer who prepared the original estimates for the city had notice of such claim, and that his relation to the city and to the work was such as to charge the city with notice. It appears, and the evidence tends to show, that the machinery and appliances furnished by the Allis-Chalmers Company were so erected and attached to the real estate owned by the city as to be a permanent and fixed improvement thereto, and a part of the real estate. It further appears by concession of counsel, which, however, was not in the presence of the jury, but to the court, that the appellee knew, before furnishing it, and when contracting with Bortenlanger, that it was intended to be so used.

III. Many errors are assigned. Some relate to instructions given, the failure to instruct upon questions directly raised by the pleadings, and rulings upon the admissibility of evidence. Many of them depend upon the determination of the law as to the ultimate right of recovery under conditions such as are here presented, and we therefore will first consider that which we conclude to be the controlling question in the case.

IV. The theory upon which the cause was tried in the district court was that the nonliability of the city must be made to depend upon want of notice by it of appellee's reserved title, and this element entered into the various counts pleaded by way of defense. The action in the present case is for conversion, based upon the alleged ownership of the property. It clearly appears from the evidence that the property was generally so attached to the real estate as to become a part of it, and that its removal could not be accomplished without substantial damage to the structure of which it forms a part. With these facts before us, together with

the knowledge by appellee of the use to which the machinery was to be put, together with the payments made by the appellant upon the estimates, we turn first to the law which governs the parties.

1. FIXTURES:

machinery.

By the weight of authority it is held to be the rule that when a vendor sells machinery, which it is understood will become a part of the realty by being attached to it, and that it cannot be removed without injury, and thereby places it within the power of the vendee to so attach it, and sell or mortgage it to innocent purchasers, the better and more just rule is that the vendor must suffer. Haven v. Emery, 33 N. H. 69; Voorheis v. McGinnis, 48 N. Y. 278; Hunt v. Iron Company, 97 Mass. 279; Porter v. Steel Co., 122 U. S. 267 (7 Sup. Ct. 1206, 30 L. Ed. 1210); Jenks v. Colwell, 66 Mich. 428 (33 N. W. 528, 11 Am. St. Rep. 502); Wickes Bros. v. Hill, 115 Mich. 333 (73 N. W. 375). In Hopewell Mills Company v. Taunton Savings Bank, 150 Mass. 519 (23 N. E. 327, 6 L. R. A. 249, 15 Am. St. Rep. 235), it was held that when machinery was furnished for the manufacture of collor cloth, and was placed in a mill already subject to mortgage, it became realty as against the mortgagor and his grantees, when it was heavy, not intended to be removed, but fastened in position to be used until worn out. This rule is recognized and adopted in Thomson v. Smith, 111 Iowa, 718, as applied to wagon scales, which were a part of the realty.

But we think it may and should be more broadly stated, as applied to conditions such as are under inquiry here. Where a sale of personal property is made, to be used for a

2. SAME: conditional sales: bona fide purchaser: notice.

particular purpose by a third party, and to become attached to and a part of the real estate, and when such a third party and the purpose is known to the seller as the one who is to receive such property under contract with the buyer to pay for it under certain conditions which will arise only between the buyer and the owner of the property, to protect itself in a reserved title under the contract with the buyer, the third