Howard Townsite Owners, Inc. v. Mills

• Decision Date: 16 December 1968
• Citation: Howard Townsite Owners, Inc. v. Mills, 73 Cal.Rptr. 715, 268 Cal.App.2d 223 (Cal. App. 1968)
• Parties: HOWARD TOWNSITE OWNERS, INC., et al., Plaintiffs and Respondents, v. Alice F. MILLS, as Executrix of the Estate of Wayne Mills, Deceased, Defendant and Appellant. Civ. 32334.
• Court: California Court of Appeals

Page 715

73 Cal.Rptr. 715

268 Cal.App.2d 223

HOWARD TOWNSITE OWNERS, INC., et al., Plaintiffs and Respondents, v.Alice F. MILLS, as Executrix of the Estate of Wayne Mills, Deceased, Defendant and Appellant.

Civ. 32334.

Court of Appeal, Second District, Division 1, California.

Dec. 16, 1968.

Webb & Webb, and James, C. Webb, Long Beach, for defendant and appellant.

Webb & Webb, and James C. Webb, Long and Hampton Hutton, Los Angeles, for plaintiffs and respondents.

FOURT, Associate Justice.

The executrix of the estate of Wayne Mills herein appeals from an interlocutory judgment in which the trial court determined that a certain oil and gas lease was a valid and subsisting community oil lease and that plaintiffs continued to be entitled to the payment of oil royalties thereunder from the estate.

The following findings of the court are not disputed: On or about July 24, 1940, a group of property owners herein designated collectively as the Howard Townsite Owners, Inc.(sometimes hereinafter referred to as the Owners) entered into a community oil and gas lease covering approximately 20 acres situated in the Townsite of Howard, County of Los Angeles.The lease provides, among other things, that the lessors shall receive a 1/6 royalty on all oil and gas and casinghead gas produced, after certain specified deductions, and that payment is to be made collectively and settlement shall be made on the 25th of each month.The term of the lease is twenty years or so long as oil and gas shall be produced.

Southern California Petroleum Co., the original lessee, drilled a well but later the well was abandoned because it produced no oil, and the lease was assigned to Meeker & Garner who, in turn, assigned it to Feldman.At the time of the assignment by the original lessee 96 lot parcels by signature of their owners remained subject to the community oil and gas lease, and the owners of these lots and their successors in interest were the only persons who remained entitled to participate in potential royalty benefits thereunder.During the period he held the lease, Feldman quitclaimed to the respective owners of all except 11 of these lots, whatever interest he had under the lease.On one of the retained lots he drilled in 1949 the well which is presently producing oil.Feldman, however, obtained no oil production therefrom and in 1950, about a year after drilling the well, he assigned the lease to Kenneth Mills and Wayne Mills, doing business as Progressive Oil Company.They did some work on the well, discovered oil, and brought the well into oil production.Sometime thereafter Wayne Mills succeeded to the interest of Kenneth Mills and he thereafter, during his lifetime, quitclaimed to their respective owners his interest in 9 of the 11 lots still subject to the lease.He retained, and on or about August 10, 1953, purchased from the Owners by grant deed, the property upon which the wellsite was located.Wayne Mills continued to produce oil from the well during his lifetime, and following his death and her appointment, his executrix continued the oil well operation.The well was producing oil up to and including the time of trial in the present case.

Royalties from the producing well, known as Howard Townsite CommunityNo. 1, were paid to Howard Townsite Owners, Inc., as the collecting agent for the lessors, up to and including July 1953.Although the well continued oil production, Mills at that time ceased making royalty payments.On account of his refusal to make such payments, Howard Townsite Owners, Inc., in behalf of all holders of royalty interests, brought an action in the superior court to obtain an accounting in order to recover unpaid royalties.On December 31, 1958, a judgment was rendered in favor of the collecting agent and royalties were paid pursuant thereto up to and through that date.Although the well continued producing and presently continues in oil production, no further royalties have been paid.Following the death of Wayne Mills the Owners filed creditors' claims in the probate proceedings and these claims were denied by his estate.The Owners thereafter brought the present action for an accounting to claim the royalties which have accrued and remained unpaid since January 1, 1959.

Appellant admitted by answer that the oil and gas lease was executed by the Owners on or about July 24, 1940; that the producing well was developed on Lot 16 in Block L; that royalties had been paid as alleged in the complaint, and that no further royalties had been paid after the date of the prior judgment.She further alleged, however, that the nature and terms of the community oil lease were unknown to her; that Wayne Mills purchased from the Owners the property upon which the wellsite is located; and that as part of the consideration the Owners waived all further and future royalty benefits under the lease.Although she acknowledged possession of the books and records, and agreed to produce these as required, she refused on the basis above stated to pay royalties.She further sought to restrain the Owners from proceeding to claim royalties; requested that the lease be declared cancelled; and requested the refund of and sought to imposed requested the refund of and sought to impose payments made to the Owners pursuant to the prior judgment.The Owners denied any waiver of royalty rights as to the producing wellsite, claiming that the prior judgment was determinative of their rights to royalties and the absence of a waiver.Ultimately, the matter was submitted to the court on the record and file in this action and the entire record and file, including all exhibits, presented to the court in the prior action.

Although it is difficult to ascertain from her brief the precise nature of her contentions, we conclude that appellant claims that the judgment of the trial court is inconsistent with its findings; that the findings of fact and conclusions of law are deficient because they do not define or determine the respective rights and duties of appellant and respondent, and they do not declare the status of the lease.These contentions, which merely argue the court's determinations and improperly attempt to attack collaterally the prior judgment which was affirmed by this court on appeal, have no sound basis or legal merit.

The interlocutory judgment of the trial court decrees that the lease, which is attached to and incorporated in the judgment, is a valid and subsisting community oil lease; that the lessors thereunder are all of the original signers or their successors; and that so long as there is a producing well on the property covered by the lease these parties are entitled to a one-sixth royalty under the lease.It decrees further that appellant owes to the Owners royalties for oil produced from the leasehold property from December 31, 1958, to the date of the judgment with interest; it appoints Hampton Hutton as collecting agent to receive payment of the judgment 'and future royalties subject to the continuing jurisdiction of ...