Lowy v. McKeon Drilling Co.

KNIGHT, J.

This is an action for declaratory relief. It was alleged in the complaint that for several years past plaintiff had been the owner of eight and one-quarter per cent “of the oil, gas and other hydrocarbon substances produced, saved and sold from the East half of Lot Five (5) in Block one (1) of Webber Tract No. Two (2) ”, in Los Angeles County; that by mesne assignments the defendant Three-In-One Petroleum Corporation acquired the lease to said premises and sublet the same to the defendant G. C. Fair-child, who in December, 1927, entered into a contract with the McKeon Drilling Company to complete the drilling of an oil-well thereon and bring the same on production; that as a result of said contract plaintiff’s ownership in a portion of the oil production from said premises was repudiated; and he asked, therefore, that his rights thereto be determined, and that he be granted such other relief as would be just and equitable. The defendants filed separate answers, consisting merely of denials of plaintiff’s ownership in any of

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the substances produced on the east half of said lot. The judgment was that plaintiff take nothing by his action, and therefrom plaintiff has taken this appeal.

It appears from the evidence that on February 17, 1922, W. H. Biel, as lessee, entered into a drilling contract with R. C. Steel, whereby the latter was granted the right to drill for oil on two separate parcels of land and to receive for his services a portion of the oil produced by such drilling operations. Parcel one included property not here involved. Parcel two embraced all of lot five of the Webber Tract; and by mesne assignments plaintiff acquired an eight and one-quarter per cent interest in the oil, gas and other hydrocarbon substances produced, saved or sold as a result of the drilling operations prosecuted under the Steel contract. Pursuant to the Steel contract a producing well was completed on parcel one, and afterward a producing well was completed on the west half of parcel two (lot five). Thereafter drilling operations were started on the east half of lot five; but before the well was brought on production the hole was capped, the equipment was dismantled, removed and sold, and nothing further was done toward developing the well until about five years later, when the defendant McKeon Drilling Company, operating under the drilling contract let by Fairchild, the sublessee of the Three-In-One Petroleum Corporation, which had acquired the Biel lease, entered upon the premises, reopened the well, continued the drilling and brought the well on production. The trial court found that plaintiff was not entitled to any portion of the hydrocarbon substances produced under the McKeon contract; and the evidence supports such finding', because, as shown, plaintiff’s ownership in any of the production from said lot five or elsewhere was restricted to substances produced under the Steel drilling contract. He acquired no interest whatever in the production under the McKeon contract.