Issenhuth v. Robert Marsh Co., Inc.

California Court of Appeal Dec 27, 1928 No. Docket No. 3635.Published

Before: Tuttle

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Holding. The court held that a contract for the purchase of an oil royalty interest containing a guaranty of development was an entire, non-severable agreement, and the failure to perform the guaranteed development work entitled the purchaser to rescind the contract and recover the purchase price.

Issues

Whether a contract containing a guaranty of development is entire or severable.
Whether a subsequent assignment of interest without a guaranty clause supersedes the original contract.
Whether the trial court erred in using extrinsic evidence to interpret the scope of the development guaranty.
Whether the purchaser is entitled to rescission for breach of the development guaranty.

Disposition. affirmed

Quotations verified verbatim against the opinion

“The contract was in its nature entire, and not severable.”

“The latter had the right to full performance under his contract. It would, indeed, be a lax rule of law which would permit a promisor to exercise his own discretion as to the extent he should perform his part of an obligation.”

TUTTLE, J.,

pro tem.

This is an action brought to rescind a contract for the purchase of a share in an “oil lease” and to recover the sum of $5,000 paid upon the same. Judgment went for plaintiff according to the prayer of the complaint, and from said judgment this appeal is taken.

The following facts are undisputed. On April 14, 1923, Gilbert & Hawley assigned to Reed & Campbell an interest in an oil lease covering two and one-half acres of land in the Santa Pe Springs district. By the terms of said instrument the assignees agreed to do certain development work in search of oil. Included in this work, the assignees were to continuously and diligently prosecute the drilling of a well to a depth of 5,000 feet or until production was obtained at a lesser depth in what is known as the “Meyer sand.” Gilbert & Hawley then assigned two per cent of the royalty under said agreement to appellant Robert Marsh & Co., and the latter assigned one per cent of said royalty to plaintiff.

On May 15, 1923, respondent paid appellant the sum of $2,000 in cash, and received from it a writing as follows:

[795]

“May 15, 1923.

“Received from 0. C. Issenhuth buying order covering

Gilbert Lease, Carter Tract, operating company Reed & Campbell, drilling contractor Roy Evans, Price $5,000.00. Robert Marsh & Co. Inc, Guaranteeing development of said properties and title pertaining to same. Terms $2000.00 cash, receipt of which is hereby acknowledged—balance on or before the 31st day of May.

“Robert Marsh & Co., Inc.

“By C. A. Briggs, Mgr.”

The balance of the purchase price, $3,000, was paid June 4, 1923, and on June 18, 1923, appellant executed to respondent an assignment of the one per cent royalty which he had agreed to purchase on May 15th.

The court found, upon sufficient evidence, certain facts to be true, and they are given in substance, as follows:

Issenhuth v. Robert Marsh Co., Inc.

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TUTTLE, J.,

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