Paddock v. Vasquez

• Decision Date: 31 December 1953
• Citation: 122 Cal.App.2d 396,265 P.2d 121
• Court: California Court of Appeals Court of Appeals
• Parties: PADDOCK v. VASQUEZ et al. Civ. 19747.

Page 121

265 P.2d 121

122 Cal.App.2d 396

PADDOCK v. VASQUEZ et al.

Civ. 19747.

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

Dec. 31, 1953.

Rehearing Denied Jan. 21, 1954.

Hearing Denied Feb. 24, 1954.

Burke, Williams & Sorensen, Los Angeles, for appellants Leandro Vasquez and Ruby Alari, as trustees of Vasquez Trust.

Reynolds, Painter & Cherniss, Los Angeles, for appellant Southern California Petroleum Corp.

John C. Gillham, Los Angeles, for respondent.

VALLEE, Justice.

Plaintiff brought this action for a declaration of his rights under a mineral deed, and dependent on the determination of his rights to recover money due.

On January 15, 1937, Anselmo M. Vasquez and Bertha R. Vasquez, being the owners of a parcel of realty, entered into an oil and gas lease of the realty with Ohio Oil Company, as lessee, by which Ohio agreed to pay the Vasquezes, as landower's royalty, the equal 1/8th part (12 1/2%) of the value of all oil, gas, and other hydrocarbon substances removed from the demised premises. On April 24, 1940, while the lease with Ohio was in force, the Vasquezes, pursuant to a permit issued to them by the commissioner of corporations, executed to H. C. Bailie the instrument in question, which reads:

'Grant Deed

'Anselmo Vasquez, also known as Anselmo M. Vasquez, and Bertha R. Vasquez, husband and wife, herein called Grantors, for and in consideration of the sum of Ten Dollars ($10.00) in hand paid, and other good and valuable consideration, receipt whereof is hereby acknowledged, do hereby grant to H. C. Bailie, herein called Grantee, an undivided Three (3%) per cent of 100% of all petroleum, oil, gas and other hydrocarbons within or underlying, or which may be produced, saved and sold from that certain real property located in the County of Los Angeles, State of California, more particularly discribed as follows, to-wit: * * *

[Description] Said real property is presently subject to an oil and gas lease dated the 15th day of January, 1937, executed by Anselmo Vasquez, also known as Anselmo M. Vasquez, and Bertha R. Vasquez, as lessors, and The Ohio Oil Company, an Ohio corporation, as lessee. Said lease was filed for record on February 19, 1937, in the office of the County Recorder of Los Angeles County, California, and provides for a royalty payment to the Lessors of one-eight ( 1/8th) part of all petroleum, oil, gas and other hydrocarbons extracted and saved from said real property. This Grant Deed includes, but is not limited to 6/25ths of all bonuses, rents, royalties and other benefits which may accrue to the lessors under the terms of said Oil and Gas Lease or any extension or assignment thereof, or any other oil and gas lease that may be entered into with respect to said real property from and after the date hereof.

'To have and to hold unto the said grantee, H. C. Bailie, his heirs, executors, administrators, successors and assigns forever.'

On May 6, 1940, Bailie and wife, pursuant to a permit from the commissioner of corporations, executed to plaintiff an instrument identical in wording with the foregoing instrument from the Vasquezes to Bailie. This instrument also contained a clause that it was its intent and purpose to grant to plaintiff the total interest in the realty conveyed by the deed from the Vasquezes to Bailie.

In June of 1949, Ohio quitclaimed to the Vasquezes all of its interest in the lease. On April 6, 1950, the Vasquezes conveyed the realty to defendants Leandro Vasquez and Ruby Alari, as trustees. On June 1, 1950, defendants Vasquez and Alari, as lessors, entered into an oil and gas lease of the realty with defendant Southern California Petroleum Corporation, referred to as the corporation, as lessee. At the time this lease was executed the corporation paid $5,000 to defendants Vasquez and Alari as a bonus for executing the lease. By the lease the corporation agreed to pay defendants Vasquez and Alari a landowner's royalty of 18% of all of the oil, gas, and other hydrocarbon substances produced and saved from the leased lands. About November 13, 1950, the corporation completed a well on the property and placed it on production.

The facts as we have stated them were agreed to by written stipulation.

The court concluded: 1. Under the grant deed of April 24, 1940, from the Vasquezes to Bailie, plaintiff's predecessor in interest, the Vasquezes granted into Bailie 6/25ths of all bonuses, rents, royalties, and other benefits which accrued and which may accrue to the lessors under the lease from Vasquez and Alari to the corporation. 2. By reason thereof plaintiff is entitled to judgment declaring he is the owner of and entitled to 6/25ths of the 18% landowner's royalty payable under that lease. 3. Plaintiff is entitled to judgment against Vasquez and Alari, as trustees, declaring he was and is entitled to 6/25ths of the $5,000 bonus, that is, $1,200, but since he had received $833.33 of the $1,200 he was entitled to a money judgment of $366.67. Judgment was entered accordingly. Defendants appeal.

Defendants' point is that the grant deed of April 24, 1940, provides that the grantee shall receive 3/18ths of 18%, and not 6/25ths of 18%, because 3/18ths of 18% is the same as 6/25ths of 12 1/2%. They say the 6/25th language was not meant to convey and more than the 3% of 100% conveyed by the first part of the deed; thus, they add, plaintiff's royalty interest under the lease with the corporation is 3% of 18% rather than 6/25ths. We have concluded that the trial court correctly construed the deed and that defendants' contention cannot be sustained.

A grant is to be construed in like manner with contracts in general. Civ.Code, § 1066. A clear and distinct limitation in a grant is not controlled by other words less clear and distinct. Civ.Code, § 1067. A grant is to be construed in favor of the grantee, with exceptions not relevant here. Civ.Code, § 1069. If several parts of a grant are absolutely irreconcilable, the former part prevails. Civ.Code, § 1070. A contract must receive such an interpretation as will make it operative, definite, reasonable, and capable of being carried into effect if it can be done without violating the intention of the parties. Civ.Code, § 1643. An interpretation which gives effect is preferred to one that makes void. Civ.Code, § 3541. The primary objective of all interpretations of a conveyance is to ascertain and to give effect to the intention of the parties. 9 Cal.Jur. 245, § 119. Arbitrary and technical rules of construction are not to be invoked if the intention of the parties can be plainly discovered from the four corners of the instrument without their aid. 9 Cal.Jur. 243, § 117; 16 Am.Jur. 570, § 237. The intention of the parties is to be gained from a consideration of the entire instrument though the immediate objective of the inquiry is the meaning of an isolated clause, taking into consideration every provision, clause and word, whether of grant, or description, or of qualification, exception, or explanation. 9 Cal.Jur. 255, § 128. Every part of the deed is to be given effect if reasonably practicable. Idem.

Two separate and distinct mineral interests can be conveyed by one instrument. One interest may be an absolute interest in the minerals; the other may be in the royalty to be payable under an existing lease and under any future lease. The fractional interest in the royalty need not corresponed with the interest in the minerals; the royalty may be larger or smaller. Richardson v. Hart, 143 Tex. 392, 185 S.W.2d 563.

We think the deed is clear, definite, certain, and unambiguous. See Richardson v. Hart, supra, 143 Tex. 392, 185 S.W.2d 563. The first paragraph preceding the description grants an undivided 3% of 100% in the minerals. If the deed had stopped there the parties would have been tenants in common, the grantor owning 97% and the grantee 3% of the minerals subject to the Ohio lease. Barnard v. Jamison, 78 Cal.App.2d 136, 137-138, 177 P.2d 341. But the deed did not stop there. It went on to explain that the property was subject to the Ohio lease, and that said lease provided for a 1/8th royalty. The second paragraph then clearly states that the conveyance includes, but is not limited to, 6/25ths of all bonuses, rents, royalties, and other benefits which may accrue to the grantors under the terms of the Ohio lease, 'or any other oil and gas lease that may be entered into with respect to' the property. Six twenty-fifths of 1/8th (12 1/2%) equals 3% of 100%. Six twenty-fifths of 18% equals 4.32% of 100%. As long as the Ohio lease was in effect, if an oil well were brought in with a net production of 100 barrels a day with the royalty of 1/8th or 12 1/2%, the grantor would receive 9 1/2 barrels and the grantee, 3 barrels or the equivalent in money. Under the lease with Southern California Petroleum Corporation, with the same assumption a well producing at net 100 barrels of oil a day with the royalty of 18%, the grantor would receive 13.68 barrels and the grantee, 4.32 barrels or the equivalent in money.

In Barnard v. Jamison, 78 Cal.App.2d 136, 177 P.2d 341, 343, a conveyance was made while an oil and gas lease was in force. It conveyed 2% 'of all oil, gas, other hydrocarbon substances and other minerals in and under and that may be produced, saved and sold or removed from' the land. This provision was followed by a clause to the effect that the interest conveyed was chargeable with its proportionate share of taxes and other costs permitted to be withheld by the lessee under the lease and under any other lease. The conveyance then read: "It is also expressly provided that Grantee herein at all times and under any such Oil and Gas Lease shall be entitled to receive and shall be paid said full Two Percent (2%) of all the oil, gas and other hydrocarbon substances hereby conveyed to Grantee, and Grantee's Proportionate share of all cash and oil bonuses, rentals for delayed drilling, and other...