Caffroy v. Fremlin

• Decision Date: 19 December 1961
• Citation: 17 Cal.Rptr. 668,198 Cal.App.2d 176
• Court: California Court of Appeals Court of Appeals
• Parties: Pauline CAFFROY & L. D. Caffroy, Plaintiffs and Appellants, v. Stella FREMLIN, Doe One, Doe Two, Doe Three, Doe Four, & Doe Five, Defendants and respondents. Civ. 25213.

Page 668

17 Cal.Rptr. 668

198 Cal.App.2d 176

Pauline CAFFROY & L. D. Caffroy, Plaintiffs and Appellants, v. Stella FREMLIN, Doe One, Doe Two, Doe Three, Doe Four, & Doe Five, Defendants and respondents.

Civ. 25213.

District Court of Appeal, Second District, Division 2, California.

Dec. 19, 1961.

Rehearing Denied Jan. 16, 1962.

Hearing Denied Feb. 14, 1962.

Stephen A. Pace, Jr., Samuel & Lucas, and Charles E. Samuel, Long Beach, for appellants.

Arthur W. Taylor and James C. Hollingsworth, Ventura, for respondents.

HERNDON, Justice.

Plaintiffs seek to have their oil rights declared with respect to certain real property conveyed by them to defendant and her now deceased husband. The action was initiated in the court below by filing a complaint for rescission, to establish a constructive trust, for an accounting and for declaratory relief.

Defendant, Stella Fremlin, filed her demurrer challenging each of plaintiffs' three alleged causes of action on several grounds as hereinafter noted. The trial court sustained the general demurrer and allowed plaintiffs fifteen days within which to amend. Plaintiffs having elected not to amend, a judgment of dismissal was filed and entered and plaintiffs have appealed from this judgment.

In the first cause of action of their complaint, plaintiffs allege that on March 16, 1936, they were the owners of certain described real property in Ventura County, California, and that 'on or about March 16, 1936, the exact date of which is unknown to plaintiffs, R. A. Fremlin, deceased husband of defendant Stella Fremlin, by an agreement in writing signed by the said R. A. Fremlin, agreed to purchase from the plaintiffs herein the [said] real property * * * for the sum of $500.00 in cash and promised therein to give to plaintiffs herein fifty per cent (50%) of any oil discovered on said real property.' (Emphasis added.)

It is further alleged that on or about the same date plaintiffs executed a deed conveying the real property to R. A. Fremlin and defendant Stella Fremlin, husband and wife, as joint tenants 'and received from the said R. A. Fremlin the sum of $500.00 in chsh'; that the deed was prepared by R. A. Fremlin; that plaintiffs signed the deed 'relying upon the written and oral promises of the said R. A. Fremlin that he would give them fifty per cent (50%) of any oil discovered on said property'; that R. A. Fremlin died 'within several years last past', the exact date of his death being unknown to them, 'and the said real property * * * passed to defendant * * * as the surviving joint tenant'.

In the concluding paragraph of the first cause of action, it is alleged that plaintiffs recently learned that defendant had entered into an oil and gas lease with Texaco, Inc., under which the lessee had undertaken to drill for oil on the subject property; that plaintiffs thereupon requested defendant to comply with the alleged agreement of R. A. Fremlin to give them 50% of any oil discovered on the property; that defendant refused to comply with the agreement whereupon plaintiffs dumanded rescission of the transfer of real property and offered to return to defendant the $500 consideration, but that defendant refused to return the real property to plaintiffs.

The second cause of action incorporates by reference all the allegations of the first except those of the concluding paragraph as last recited. It states that defendant refuses to recognize that plaintiffs conveyed the property in reliance upon the promises of R. A. Fremlin 'that he would give them fifty per cent (50%) of any oil discovered on said property, and denies that plaintiffs have any interest in the oil on said property'; that there have come into to defendant's possession, and in the future there will be coming into the defendant's possession certain rents, issues and profits, 50% of which in equity belong to plaintiffs.

The third cause of action, which is for declaratory relief, incorporates by reference practically all the allegations of the first and alleges that a dispute has arisen, and that an actual controversy exists between plaintiffs and defendant, in that plaintiffs claim that they are entitled to 50% of any oil or revenues from drilling for oil or gas on said real property, whereas, defendant claims that plaintiffs have no interest in the oil on said real property or in the revenues therefrom.

The grounds and the legal theory upon which the general demurrer was sustained by the court below are indicated by memoranda filed by the learned trial judge and made a part of the record herein. The determinative conclusions therein expressed are these: (1) That the alleged promise of the deceased R. A. Fremlin 'to give plaintiffs 50% of any oil discovered on said real property' constituted an attempt to create a contingent future interest which might not vest within the period limited by the rule against perpetuities and was therefore void; and (2) that if the application of the foregoing rule to nullify plaintiffs' contingent future interest gave rise to any cause of action in favor of plaintiffs for rescission, reformation or to establish a constructive trust, such cause of action accrued immediately upon the consummation of the original transaction in 1936, and is necessarily barred by the statute of limitations.

The California rule against perpetuities is now found in Civil Code sections 715.2 and 716. The essence of the rule is in the following part of section 715.2: 'No interest in real or personal property shall be good unless it must vest, if at all, not later than 21 years after some life in being at the creation of the interest and any period of gestation involved in the situation to which the limitation applies. * * *' Although Civil Code section 715.2 was not enacted until 1951, the common law rule was in effect prior thereto. (Victory Oil Co. v. Hancock Oil Co., 125 Cal.App.2d 222, 230, 270 P.2d 604; Dallapi v. Campbell, 45 Cal.App.2d 541, 544, 114 P.2d 646.)

The rule against perpetuities applies to real and personal property and to equitable as well as legal estates therein. But it relates only to vesting and does not apply to vested future estates though possession and enjoyment be postponed indefinitely. (Williams v. Williams, 73 Cal. 99, 101-102, 14 P. 394; Goldtree v. Thompson, 79 Cal. 613, 622, 625, 22 P. 50; Victory Oil Co. v. Hancock Oil Co., supra, 125 Cal.App.2d 222, 230, 270 P.2d 604; 38 Cal.Jur.2d § 10, p. 455; Leach, Perpetuities in a Nutshell, 51 Harv.L.Rev. 638, 647; 70 C.J.S. Perpetuities § 7, p. 583, § 12, p. 589.)

Under the principles declared in Beneficial etc. Ins. Co. v. Kurt Hitke & Co., 46 Cal.2d 517, 524-525, 297 P.2d 428, the language here in question, whereby the purchaser promised to give the sellers 50% of any oil discovered on the described real property, is ambiguous and susceptible of more than one reasonable construction. It reasonable might be construed to mean that the parties intended thereby to reserve to the sellers a vested equitable estate entitling them to one-half the right to take oil from the land or to one-half of the proceeds of oil taken therefrom. The law favors the vesting of interests and will presume every interest to vest unless a contrary intention is clearly manifested. (Estate of Stanford, 49 Cal.2d 120, 124, 315 P.2d 681; Victory Oil Co. v. Hancock Oil Co., supra, 125 Cal.App.2d 222, 230, 270 P.2d 604.)

A reservation may be made through an instrument collateral to the deed (15 Cal.Jur.2d § 183, p. 589; 16 Am.Jur. § 306, p. 612); technical terms are not indispensable (26 C.J.S. Deeds § 138, pp. 999-1000) and, where appropriate to effectuation of the intent of the parties, inappropriate words of reservation may be construed to create an exception. (Boyer v. Murphy, 202 Cal. 23, 32-33, 259 P. 38.)

The owner of land does not have an absolute title to the oil and gas in place as corporeal real property, but rather has the exclusive right to drill for oil and gas upon his premises. (LaLaguna Ranch Co. v. Dodge, 18 Cal.2d 132, 135, 114 P.2d 351, 135 A.L.R. 546.) As stated in Dabney-Johnston Oil Corp. v. Walden, 4 Cal.2d 637 at page 649, 52 P.2d 237 at page 243: 'The owner of land has the exclusive right on his land to drill for and produce oil. This right inhering in the owner by virtue of his title to the land is a valuable right which he may transfer. The right when granted is a profit a prendre, a right to remove a part of the substance of the land. A profit a prendre is an interest in real property in the nature of an incorporeal hereditament.' The owner may convey fractional interests in his right to drill for and produce oil, and such a conveyance may pass a vested property interest. (LaLaguna Ranch Co. v. Dodge, supra, 18 Cal.2d 132, 137-140, 114 P.2d 351, 135 A.L.R. 546.)

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