Stockburger v. Dolan

EDMONDS, J.

In two actions which were consolidated for trial in the superior court and are presented together upon appeal, the court is called upon to determine the rights of lessors of land to rental under an oil and gas lease.

The litigation between the parties commenced when Francis H. Dolan and his wife sued to recover delay rental in

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the sum of $12,000 alleged to be due under a lease entered into by them with R. R. Stockburger as lessee. Thereafter, Mr. Stockburger filed an action against the Dolans to recover $5,000 paid by him upon the execution of the lease. His suit was brought upon the theory that as the land leased to him was zoned against oil drilling operations by the city of Los Angeles and the city had refused him a permit therefor, there was a failure of consideration which entitled him to recover the rental paid by him. He also relied upon the same facts as a defense to the action brought by the lessors. Upon findings that the lease was made for an unlawful purpose, the court entered judgment for Mr. Stockburger in both cases.

The lease, executed in 1936, is for a term of twenty years, and so long thereafter as oil is produced from the property. The rental prescribed is $5,000, paid by the lessee at the time it was executed, a one-sixth royalty, and, commencing with the fourth month of the term, the sum of $1,000 per month if the lessee has not commenced drilling operations on the land or terminated the lease. The lessors ’ action is to recover rent for the year commencing September 1, 1937.

It is conceded that at the time the lease, prepared by the lessee, was executed by the parties, the land upon which the lessee was to drill for oil was zoned by ordinance for residential purposes, yet it does not mention any restriction upon the use of the property. However, the record shows that the lessee, after entering into the lease, endeavored to secure a permit allowing him to drill for oil. This variance from the zoning requirements was sought by a petition filed by the lessee with the board of city planning commissioners pursuant to the terms of the ordinance which provides that the board may recommend to the city council a reclassification of the property.

This petition was denied without prejudice and sent to the city council with the request that it be returned for reconsideration after further study. Later the board disapproved the request, but Mr. Stockburger did not prosecute an appeal to the city council as allowed by the ordinance, nor did he take any further steps in the matter.