Drinkhouse v. Birch Ranch & Oil Co.

BARNARD, P. J.

This is an action to quiet title to certain land as against any claims of the defendants arising from an oil and gas lease.

In 1924, the Calivada Oil Company and the Nevada Hills Mining Company executed a joint venture agreement involving several properties,' including the land here in question. On May 15, 1928, these corporations executed an agreement providing for a division between them of the assets belonging to the joint venture which then stood in the name of Calivada Oil Company, including this land. This agreement, after reciting that it was for the purpose of settling differences which had arisen between them, and that the Calivada Oil Company was in the process of liquidation and did not propose to engage in any business other than such as was incidental thereto, provided that the assets of the joint venture should be disposed of and the proceeds divided, 61.54 per cent to be paid to the Calivada and 38.46 per cent to the Nevada Hills Company, and that when all of the assets of the joint venture had been thus divided the agreement should terminate.

This agreement also provided that Calivada might continue with dissolution proceedings, and that if it was dissolved before the assets of the joint venture were fully divided it should transfer any remaining assets to John Lawton Butler, thereby appointed by Calivada, and Warren B. Richardson thereby appointed by Nevada Hills, as trustees, setting forth the interest of the parties and providing for the disposition of such remaining assets in accordance with the provisions of that agreement. It further provided that in the event of the death, resignation or inability to act of either of the trustees thus appointed, the corporation by whom said trustee was appointed should appoint another person to act in his place with like duties and powers, and in the event that either corporation had at that time been dissolved the appointment of such a successor-trustee must be made by a majority vote

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of the persons who were directors of the corporation at the date of its dissolution.

On November 13, 1928, the Calivada Company conveyed the property to Butler and Richardson, in trust, for the purposes set forth in the prior agreement. This conveyance, which was recorded on November 26, 1928, referred to the agreements above mentioned and recited that the May 15, 1928, agreement had provided that such a conveyance in trust might be made to John Lawton Butler, appointed by Calivada and Warren B. Richardson appointed by Nevada, as trustees, upon the trusts and for the purposes and uses therein specified. It also stated that this conveyance was made pursuant to and in accordance with the provisions of the agreement of May 15, 1928. It further provided that (a) “as speedily as possible the trustees shall convert into cash all property of the joint venture . . . which, is hereby transferred ...” and as often as they have $1,000 on hand shall divide the proceeds between the two corporations, or to their stockholders, in the proportion of 61.54 per cent to the Calivada Company and 38.46 per cent to the Nevada Hills Company or its successor; (b) that during the life of the trust the trustees shall collect the income of the trust property, if any, and shall pay all taxes and charges; (c) that when all the property of such joint venture shall have been thus divided the trust shall terminate; and (d) that the trustees shall not be liable for any depreciation in the value of the property during the continuance of the trust.