Smith v. George F. Getty, Inc.

YORK, J.

On November 1, 1926, Oliver G. Mason and his wife were the owners of lots 11, 12, 13 and 14, block 36, of the Manila Avenue Tract, in the city of Long Beach, and as lessors, they entered into an oil and gas lease with the defendant corporation covering the four lots named. Prior to the development of any oil, the Masons sold lots 11, 12 and 14, conveying the fee and all their right and interest in the oil lease in the proportion to which the said lots so sold w'ould be entitled, or a total of twelve and one-half per cent of the total production from the four lots. The Masons retained for their own use lot 13 and four and one-sixth per cent of the oil rights. Subsequently, the grantees of the Masons conveyed the lots to other parties, and executed and delivered assignments of their twelve and one-half per cent land owners’ royalty to various persons and corporations, who in turn entered into an oil distribution trust in which the California National Bank of Long Beach was named trustee and distributing agent. Said bank gave notice to the defendant corporation of the trust agreement, and the latter by letter agreed to distribute the twelve and one-half per cent royalty to the said bank. The defendant at this time, May 23, 1927, asked the Masons to verify the sale of the three lots and the royalty interest of twelve and one-half per cent, which request was complied with by the Masons. During the months of May, June, July and August, 1927, twelve and one-half per cent of the royalty was actually distributed to the California National Bank upon a basis of 60 cents per barrel for the crude oil produced.

In November, 1928, plaintiff as assignee of all persons owning a share in the twelve and one-half per cent royalty,

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brought suit against defendant to recover from it the difference between 60 cents per barrel received by them and the Standard Oil Company’s posted market price of 90 cents to 98 cents per barrel (depending on the gravity) from the date the well was placed upon production up to and including August 31, 1927, claiming that they were entitled to the posted market price under their agreement with the defendant company.

The trial court gave judgment to plaintiff for the sum of $2,286.99, this being the difference between 60 cents per barrel paid by defendant, and the posted market price as found by it, from June 16, 1927, to and including August 31, 1927, evidently on the theory that the assignments of royalty were valid, and that the Standard Oil price become effective on June 16, 1927.