Bullen v. De Bretteville, 14897.

• Decision Date: 31 December 1956
• Docket Number: No. 14897.,14897.
• Citation: 239 F.2d 824
• Parties: Herschel BULLEN, Mary H. Bullen, J. C. Hayward and Marian S. Hayward, Appellants, v. B. DE BRETTEVILLE, Treasure Company, Walter B. Scoville and The Adamant Company, Appellees. B. DE BRETTEVILLE and Treasure Company, Appellants, v. Walter B. SCOVILLE and The Adamant Company, a corporation, Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

239 F.2d 824 (1956)

Herschel BULLEN, Mary H. Bullen, J. C. Hayward and Marian S. Hayward, Appellants, v. B. DE BRETTEVILLE, Treasure Company, Walter B. Scoville and The Adamant Company, Appellees.

B. DE BRETTEVILLE and Treasure Company, Appellants, v. Walter B. SCOVILLE and The Adamant Company, a corporation, Appellees.

No. 14897.

United States Court of Appeals Ninth Circuit.

December 31, 1956.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Hoge & Perry, Fulton W. Hoge, Los Angeles, Cal., for appellants Bullen, et al.

John H. Rice, Nicholas & Mack, Los Angeles, Cal., for appellants de Bretteville, et al.

Leland J. Allen, Los Angeles, Cal., for appellees Adamant Co., et al.

Before ORR, McALLISTER, and BARNES, Circuit Judges.

BARNES, Circuit Judge.

We will consider the intervenors' appeal first.

Appellants Bullen and Hayward and their respective wives, intervenors, appeal from that part of the judgment which denied enforcement of the "two for one agreement," by reason of which they sought payment, out of funds held by the court as a condemnation award, of the sum of $5,000, which they had advanced in equal shares of $2,500 each, for the completion of an oil well, known as Treasure Well No. 8.

Treasure Company, a corporation of which de Bretteville was President, as lessee of certain property in Los Angeles County, started drilling for oil many years ago. When money for drilling became scarce, Walter B. Scoville and The Adamant Company, a corporation, came to the rescue, and provided funds to continue drilling. For this they were to receive participating royalties. Again money became scarce, and Mr. Bullen and Dr. Hayward each advanced $2,500, under the terms of a letter dated September 27, 1938, written by Bullen to George Halverson, (an attorney representing Scoville and Adamant); (Exhibit B-1 of Plaintiffs in Intervention) and endorsed by Scoville and Adamant only. By the letter, Bullen and Hayward were to receive one per cent (1%), participating royalties, and, (by the terms of a "two for one agreement," combined therein) receive double their investment, or $5,000 each, "out of the 1st 15% of production from the well."

de Bretteville and Treasure Company neither agreed to, nor knew of, nor were they in any way bound, by the terms of Exhibit B-1.

In December, 1938 the well came in. The value of the gross production was over $200,000. In 1941, Scoville and Adamant brought this suit against de Bretteville and Treasure (a) for an accounting, so as to establish the amount of their royalty interest due and payable, if any; and (b) to recover $13,000, which they had advanced. Included therein was the $5,000 put up by appellants Bullen and Hayward.

In 1942 the Government brought suit to condemn the property covered by the lease. All parties herein were parties defendant in the condemnation proceedings. An award was made, which included the presumed value of future production. Jurisdiction was retained in order to adjudicate

"all adverse claims in or to any part of the award or awards of compensation herein made and the apportionment and distribution of said awards to the parties entitled thereto, and the right, if any, to interest on the awards."

Pursuant to this retention of jurisdiction, the parties commenced proceedings in the same court, but before a different judge, to apportion and distribute the award. Appellants Bullen and Hayward asserted in that action "a lien or a security interest in the nature of a trust deed upon the interest of lessee, Treasure Company, and upon the royalty interests of Scoville and Adamant Company, under the letter agreement,". App. Brief, p. 6.

The trial court found the "two for one agreement" was between appellants and Scoville alone and that neither Treasure nor Adamant was a party to nor was bound by it.

All parties appealed in the condemnation suit. United States v. Adamant Company, 9 Cir., 197 F.2d 1. This court concurred with the trial court that any rights under the "two for one agreement" were personal, and held that the determination of the interests of the royalty holders was correct, but refrained from allocating the fund, pending the outcome of various accounting suits between the parties. This is such a suit.

Appellants Bullen and Hayward duly sought leave, and were allowed, to intervene herein. Their complaint in intervention contained three causes of action. The first was for an accounting to determine any amounts due, by reason of their 1% royalty interest, from past production. The trial court found none due, and there is no appeal on that point.

In the second cause of action, intervenors sought payment of the sums due them as "royalty-holders", in the nature of stockholders. These sums they obtained, and there is no appeal.

In the third cause of action, intervenors sought the $10,000 allegedly due under the "two for one agreement" from both Scoville and Adamant Company and Treasure Company.

The District Court held that the "two for one agreement" created only a personal obligation; that it was not specifically enforceable from or out of the royalty interests of the parties to it; and that it was, therefore, barred by the four year statute of limitations.

It was unnecessary, in view of the position taken by the trial court, to come to the question of whether the "two for one agreement" was binding on both Scoville and Adamant, or only on Scoville, because it was barred as to each. We need to consider here certain questions:

I. Does the doctrine of res judicata bar the claim of the Bullens and Haywards?

We are confronted at the outset by the threshold question of whether the claim asserted by appellants has already been adjudicated adversely to them.

The determination of this issue necessarily entails an examination and comprehension of the decision in the distribution phase of the condemnation proceedings. In that action appellants asserted, as they do now, an interest in the condemnation award arising out of the "two for one agreement". The issue was joined, argued, briefed and decided. Judge Westover expressly found that

"Bullen and his wife and Hayward and wife have no equitable lien upon the moneys due the parties as hereinbefore set forth from the jury award and verdict." Finding of Fact XXVIII.

He therefore concluded that the enforcement of the agreement was a "personal matter" between the appellants and Scoville.¹ On appeal, this court referred to the matter thus:

"We dispose of the claim arising from the `Two-to-One Agreement\' by stating that the trial court was correct in holding it to be a personal undertaking on the part of Scoville which gave the Bullens and Haywards no interest in the well or production from it." United States v. Adamant Co., supra, 197 F.2d at page 8.

This court devoted considerable attention and space to this aspect of the controversy. The analysis was thorough and we believe, as will forthwith be discussed, correct.

The instant suit was heard by the same able judge, Honorable Leon Yankwich, who authored this court's opinion in the prior case. It seems evident that Judge Yankwich shared the view that the question had been conclusively resolved. In a statement made after the case had been submitted, he stated:

"However, I am of the view, and I don\'t want any argument on that point, that so far as Bullen and Hayward are concerned, first that the finding of Judge Westover is determinative of the matter * * *"

However, Judge Yankwich did not rest his ultimate decision on res judicata, preferring to face the question on its merits, and in that posture, affirm the reasoning and result of the prior decision. Of course, that does not preclude this court from ruling on this defense. An appellate court may employ any valid theory to sustain a judgment below. Springfield v. Carter, 8 Cir., 175 F.2d 914. The defense is meritorious and warrants discussion.

It is well established that the principles of res judicata apply to final orders, judgments and decrees in condemnation proceedings as to matters therein litigated. Carmack v. United States, 8 Cir., 177 F.2d 463; In re Ward, 9 Cir., 61 F.2d 896; Pomona College v. Dunn, 7 Cal.App.2d 227, 46 P.2d 270; City of Oakland v. Buteau, 219 Cal. 745, 29 P.2d 177; Jahr, Eminent Domain, 411 (1953). The sound policy that underlies the doctrine has frequently been delineated at length, and no useful purpose would be served by extensive comment herein. Suffice to say, every person is entitled to his day in court, but no more. The administration of justice requires that there be finality to the judicial process. Few cases present a more eloquent and striking illustration of the necessity for an end to litigation than the one at bar. At least some facet of the problems which ensued from bringing in an oil well have been before the courts for eighteen years.

Appellants contend, however, that they are not barred by the former judgment from raising this claim because (1) that judgment was not final as to the share of the award going to the royalty holders, and (2) this court held that the rights of the royalty holders, (and necessarily, therefore, the rights of claimants against their royalty shares,) could not be determined in that action.

The fact that several questions were deferred for later decision does not render the doctrine of res judicata inapplicable. A case remanded for further hearing or over which jurisdiction is retained for some purposes may nonetheless be final as to other issues determined. Restatement of Judgments § 41, Comment C, states,

"A judgment may be final as to some matters in litigation, although the litigation continues as to other matters."

The claim of the Bullens and Haywards to a share of the condemnation fund was argued and decided. It is a binding adjudication, if the court had jurisdiction to decide the question.

Appellants urge that the District Court, sitting in condemnation cases, is a court of limited jurisdiction and that if the...