Phillips v. Bruce

MARES, J.

Plaintiff brought two actions to quiet his title to five per cent of the oil and gas produced and saved from two parcels of land in the Huntington Beach oil field in Orange county. The cases were consolidated for trial. Defendants had judgment and this appeal followed. Three oil leases are involved.

Defendant Earoline Schaaf owned ten acres and the defendant Sara B. Bruce owned five acres of land, parts of which are here, involved. The Bruce property adjoined the north half of the Schaaf property on the east. William Schaaf, as trustee, holds an interest in the oil produced from the Schaaf property.

The first lease we must notice, although the property is not directly involved, covers the north one hundred fifty feet of the east fifty feet of the Schaaf property and the north one hundred fifty feet of the west fifty feet of the Bruce property. It is called the “Community Lease”. It is admitted that a well was drilled on this property, was placed on production, and is still producing; that plaintiff has received his five per cent overriding royalty from that well. It is admitted that he is entitled to continue to receive that royalty as long as oil, gas or other hydrocarbons are produced in paying quantities from the well drilled on this particular property. The property described in the community lease was expressly excepted from each of the two leases we will next mention.

Under date of October 12, 1935, Sara B. Bruce, as owner, executed an oil lease with the Pacific Southwest Oil Company, as lessee, whereby she leased her property (except the portion in the Community Lease) to the lessee for the term of twenty years and as long thereafter as oil, gas or other hydrocarbons may be produced therefrom in paying quantities.

The lease referred to the Community Lease and stated that the Community Lease provided for actual drilling on the property there described within forty-five days. The lease involved here then provided:

v “In the event drilling is commenced upon said Community Lease within the said time therein provided, then this lease shall terminate as to all rights and obligations unless the

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Lessee herein shall on or before ninety (90) days after the discovery of oil in paying quantities from said Community Lease, or on or before ninety (90) days after the abandonment of drilling upon said Community Lease, the earlier date to control, commence the actual physical operation of drilling in the ground for oil on the land hereby leased. It is agreed that cessation of drilling in good faith on said Community Lease for any period of twenty (20) days, shall constitute an abandonment of drilling.