Smith v. Drake

THE COURT.

Plaintiffs brought this action to recover a percentage of the oil produced on lot 8, block C, tract No. 3207, Bixby Heights No. 1 in the county of Los Angeles. Judgment was rendered in favor of defendants and from this judgment plaintiffs have appealed. The facts in substance are as follows:

Defendants Thomas Gr. Drake and Sarah E. Drake are the owners of said lot and on or about May 6, 1922, they leased the same to Ed. R. Berwick and Ariel N. Berwick, husband and wife, by said lease granting to them the exclusive right to drill, operate for, develop and remove petroleum, oil, naphtha, natural gas, asphaltum and other kindred substances therefrom, the said Drakes to receive one-sixth of the oil or other kindred substances, the lease to continue for twenty years unless said wells fail to produce oil in paying quantities in a less period of time. This lease was recorded July 6, 1923. On July 18, 1923, the said Herwicks assigned the said lease to John E. Carson, Walter B. Barham and

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Frank E. Deeper, reserving a royalty of 13⅓ per cent. Pursuant to said last-named instrument, the said assignees entered upon said premises and drilled a well thereon which produced oil from 1924 until some time prior to March, 1927. Deeper acquired the interests of his associates Bar-ham and Carson in said lease. During this time the Her-wicks were paid the royalty reserved by them. During the summer of 1927, Deeper grew discouraged over the conditions of the well and his efforts to make it producing, and offered to quitclaim to the Drakes the lease which had been assigned to him. At that time the Drakes refused to accept said quitclaim and insisted upon Deeper continuing his efforts to make the said well a producing one. Thereafter Deeper had trouble with water coming into said well, and finally, about the last of September, 1927, he again offered to quitclaim the said lease to the Drakes, informing them at that time that he was through with the lease and was going to quit, also informing them that he had sold all of the equipment of said well to Charles W. Camp. In the meantime he had moved the boiler and some of the equipment to another lease. The Drakes thereupon agreed to accept said quitclaim and at his request accompanied him to Camp’s office to accept delivery of the same. After said quitclaim was executed Camp offered to lease the said lot from the Drakes for the purpose of drilling for oil and finally, after some haggling over the percentage of royalty that was to be reserved by the Drakes, a royalty of ten per cent was agreed upon. Thereafter, on October 1, 1927, the Drakes executed a lease to Camp. Camp then proceeded with the work of trying to produce oil from said well, but without success, and on or about the 23d of January, 1928, he assigned the said lease to C. D. Anderson, who, as consideration therefor, paid to Camp $15,000. Anderson thereupon took over the operation of said well and finally brought it into production about July 1, 1928, at an expense of about $200,000. In May, 1927, plaintiffs purchased, in the matter of the bankruptcy of Ed. R Berwick, the portion of oil and gas reserved by the Eerwicks in their lease to Deeper and others, this portion having been reduced to eight per cent in July, 1927. The trial court found that neither Camp nor Anderson had