Howard v. General Petroleum Corp.

• Decision Date: 05 December 1951
• Citation: 108 Cal.App.2d 25,238 P.2d 145
• Parties: HOWARD et al. v. GENERAL PETROLEUM CORP. et al. Civ. 18468.
• Court: California Court of Appeals Court of Appeals

Page 145

238 P.2d 145

108 Cal.App.2d 25

HOWARD et al. v. GENERAL PETROLEUM CORP. et al.

Civ. 18468.

District Court of Appeal, Second District, Division 3, California.

Dec. 5, 1951.

John N. Metcalf and Elon Gilbert Galusha, Los Angeles, for appellants.

D. W. Woods, J. M. Jessen and Martin J. Weil, all of Los Angeles, for respondent, Gen. Petroleum Corp.

Cree & Brooks, Long Beach, for respondents, Jack Herley, et al.

SHINN, Presiding Justice.

This is an appeal from a judgment of nonsuit rendered after the action for the recovery of oil royalties had been fully tried and all the evidence of the defendants, as well as that of the plaintiffs was before the court. We are satisfied that the judgment should be reversed with instructions to the trial court to make findings and conclusions of law and to render judgment thereon. The evidence of plaintiffs, when given full credit and effect, would have entitled them to some relief. It was therefore error to grant a nonsuit. The evidence of the defendants, however, presented the transactions in a different light. The entire case was before the court, the evidence of the defendants should have been considered and the court should have made findings and conclusions in accordance with statutory procedure.

Plaintiffs were the owners of lot 18 in block 19, of Athens in the City of Los Angeles, in December 1932, when they sold it to General Petroleum Corporation, having derived title as surviving wife and children of William J. Howard. On February 11, 1925, the administrator of the estate of Mr. Howard as lessor of lot 18, and Edith Griswold and Nellie B. Radcliffe as lessors of lot 19 adjoining, entered into a community oil and gas lease with Walter H. Fisher, as lessee. The term of the lease of lot 18 was 20 years, with the privilege in the lessor or assigns to extend the term beyond 20 years, and of lot 19, 20 years and so long thereafter as oil and gas should be produced from said lot 19 in paying quantities. The owners of lot 18 did not elect to extend the term of the lease and it expired as to that lot on February 11, 1945. Royalty was to be paid to the lessors at the rate of one-eighth of production, one-half to the owner of lot 18, and one-half to the owners of lot 19, whether production be from one lot or the other.

Fisher Petroleum Corporation, as assignee of Fisher, brought in a well in 1925 on lot 19, and paid royalties to all lessors until the 1st of April, 1926. On March 27, 1926, Fisher Petroleum Corporation assigned the lease to defendant, General Petroleum Corporation, then known as General Petroleum Corporation of California. This defendant operated the well and paid royalties to December 1, 1932. On October 26, 1932, General Petroleum bought lot 19 and conveyed it to R. P. Cooney, December 1, 1932. On January 11, 1933, General Petroleum recorded a deed of plaintiffs to lot 18, dated December 1, 1932, paying therefor $1,000 and other consideration. Plaintiffs have retained the consideration paid to them and have not rescinded or attempted to rescind the sale. General Petroleum conveyed lot 18 to Mr. Cooney January 10, 1933, and on the same day recorded an instrument by which it purported to surrender the lease and all of its rights thereunder. On January 24th, Mr. Cooney entered into an oil and gas lease of lot 19 with defendants Jack Herley and Paul L. Kelley, who reconditioned the well and have operated it since that time, paying royalties to the lessor but none to the plaintiffs herein. This action was brought on September 15, 1948, to recover damages in the amount of royalties on the production from the well on lot 19 since December 1, 1932.

The complaint alleged that General Petroleum represented to plaintiffs that the well was not producing oil or gas in paying quantities, and that it was the intention of General Petroleum to abandon the same; that plaintiffs believed the representations and in reliance thereon sold their lot to General Petroleum; that the representation was false and made with fraudulent intent; that plaintiffs were and ever since have been residents of the State of Michigan, and inexperienced in business; they made no inquiry as to whether the well had been abandoned and refrained from inquiry because they believed the alleged representation of General Petroleum; that on May 1, 1948, they were informed by one Guy N. Stafford that the well had not been abandoned; they appointed Stafford as their attorney in fact and as such he instituted the present action. It was alleged, further, that plaintiffs have not disposed of their right to receive royalty from the well on lot 19. Defendants answered, denying the allegations of fraud on the part of General Petroleum and pleading numerous defenses, among which were those of the statute of limitations and laches. It was alleged that in the purchase of lot 18 General Petroleum acquired all rights of the grantors to receive royalty under the lease; also that when General Petroleum acquired both lots the leasehold interest was merged with the fee. The answers pleaded General Petroleum's surrender and abandonment of the lease by the instrument recorded January 10, 1933.

The action was duly brought to trial; plaintiffs introduced their evidence, consisting of certain documents and the depositions of two of the plaintiffs. When plaintiffs had rested their case, defendants made a motion for a nonsuit. The settled statement on appeal reads in part as follows: 'The Court then suggested that the defendants put on their evidence, for consideration by the Court in event the motion for non-suit was denied, in order that the cause might be decided without further appearance by the parties. The defendants accepted the suggestion and thereupon the defendant General Petroleum Corporation, introduced the following documentary and oral evidence.' (Five written exhibits.) As shown by the settled statement defendants also introduced the testimony of several witnesses, one of whom was at the time of the transaction in question, secretary of General Petroleum, another, a vice president and general manager of production, and a third, manager of the land department. The testimony of these witnesses was to the effect that in 1932 the corporation was operating 18 wells in the Athens field, that all of them were in very bad condition and were operated at a loss in 1931 and 1932; that it was determined to abandon all said wells and to discontinue operations in the Athens field; that it proceeded to abandon all the wells except four, one of them the well on lot 19; that it was determined that it would be less expensive to sell the four weeks with all equipment, than to abandon them by pulling certain of the casing, flooding the wells, dismantling the derricks and removing the machinery. The four wells and equipment were sold to Mr. Cooney for $6,500. Mr. Cooney at the time was engaged in salvaging oil well equipment and selling it. General Petroleum has had no interest in the well or the property since the same were sold to Mr. Cooney. Following a narrative of the testimony, the settled statement reads: 'Defendant General Petroleum Corporation offered no further evidence and rested. The defendants Jack Herley and Associates offered no additional evidence and rested.

'The Court then announced that if the motion for non-suit was denied, the argument should be upon briefs, plaintiffs' brief filed within ten days after Notice of denial of said motion for non-suit, the defendants' briefs within ten days thereafter, and plaintiffs' closing brief within five days thereafter, to which the parties agreed.' Thereafter, the court granted the motions for nonsuit and entered judgment dismissing the action.

It is a most unusual procedure in a nonjury case for the...