Shaw v. Guaranty Liquidating Corp.

California Court of Appeal Jan 24, 1945 No. Civ. 3146Published

Before: Griffin

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Holding. The court held that the provision in the partial assignment requiring approval of the Secretary of the Interior within one year created a condition subsequent, and the failure to obtain such approval within that time caused the estate to terminate automatically.

Issues

Does the language of the partial assignment create a condition subsequent that terminates the estate upon the failure to obtain government approval within the specified time?
Is the defendant entitled to equitable relief from the forfeiture of the leasehold interest?

Disposition. affirmed

Quotations verified verbatim against the opinion

“Language similar to that used in the partial assignment of lease, which is the subject of this action, has been construed by the courts as evidencing the intent of the assignor to create a condition subsequent.”

“The words “null and void” and “no force and effect” have a clear and unmistakable meaning, a meaning which leaves no doubt as to the intention of plaintiff as assignor under the partial assignment.”

“the estate conveyed by the partial assignment automatically terminated and the trial court’s sole duty was to ascertain the happening of that event, and upon proof thereof, to affirm the termination of the estate.”

GRIFFIN, J.

On January 23, 1937, plaintiff and his wife, by “Partial Assignment of Lease” assigned to defendant corporation a certain oil and gas lease dated July 2, 1928, between the United States of America, as lessor, and plaintiff, as lessee. Insofar as said lease pertains to and affects a portion of the lands originally demised under the “Partial Assignment” defendant agreed to make application to the Secretary of the Interior for approval of said assignment within ninety days after delivery thereof to defendant “. . .

and that if said assignee shall not have procured such approval within 1 year after delivery to him of this assignment, then and in that event said assignment shall be null and void and of no effect. . . .

The Assignee agrees that he will comply with all of the terms, conditions and covenants provided in said lease to be kept and performed by the lessee, . .

Defendant made timely application for the approval of the assignment on or about April 15, 1937, and in reply thereto the Secretary of the Interior notified defendant to furnish evidence of its corporate capacity to acquire the leasehold interest conveyed by the partial assignment and to furnish a $5,000 surety bond in favor of the United States of America, as lessor, guaranteeing faithful performance of the original lease obligations, insofar as they pertained to and affected the portion of the demised premises covered by the partial assignment. No action in this regard was taken by defendant. Subsequently, by letter dated November 24, 1937, the Commissioner of the General Land Office again notified defendant that it would be necessary for it to furnish the requisite $5,000 lease bond before the Secretary of the Interior would approve the partial assignment.

Defendant made no effort to comply with the requirements of the Secretary of the Interior until September,' 1942, at which time it filed a “Petition for Supplemental Showing.” The required lease bond was not filed until May 22, 1943, six days prior to the trial of this action, and over six years after the notice from the General Land Office wherein defendant was first apprised of the requirement.

Plaintiff brought this action to quiet his title to the leasehold estate created by the above mentioned oil and gas lease, in

[662]

Shaw v. Guaranty Liquidating Corp.

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GRIFFIN, J.

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