Elberta Oil Co. v. Superior Court

MARKS, J.

The petitioner Elberta Oil Company is a corporation duly organized and existing under the laws of the state of California, and petitioner M. P. McCormick is an attorney at law duly and regularly licensed to practice in all the courts of the state of California. On March 4, 1929, there was filed in the Superior Court of the State of California, in and for the County of Kings, an action entitled E. A. Russell et al., Plaintiffs,

v.

T. PI. Rougeot et al., Defendants, in which the Elberta Oil Company, a corporation, was named as one of the defendants. It appears in the allegations of this complaint that the plaintiffs were minority stockholders of the Elberta Oil Company. Joined with the corporation as defendants were its officers and members of its board of directors, besides others.

The complaint alleges that the Elberta Oil Company was organized for the purpose of drilling for oil in unproven or “wildcat” territory. It secured a lease on twenty acres of land in San Luis Obispo County, California, and started its operations thereon. After considerable work was done upon the well, it is alleged that an oil sand was discovered, and that the officers and directors of the corporation thereupon suspended the drilling operations and immediately proceeded to buy or lease the adjacent lands for oil drilling purposes. It is further alleged that the fact of an oil sand having been discovered was concealed from the plaintiffs and their associates, and that the directors and officers of the corporation used the knowledge gained from these drilling operations for their own benefit and the benefit of their friends in buying and leasing the adjacent lands, to the exclusion of the plaintiffs and their associates, and the Elberta Oil Company, a corporation. By their action the plaintiffs sought (1) to have the defendants so acquiring or leasing these lands declared trustees for the corporation, (2) that each of these defendants be required to transfer and convey to the Elberta Oil Company all of such property, lands and leases, and (3) that the title to

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such property, lands and leases be quieted in the Siberia Oil Company.

A most casual reading of the complaint raises a most serious question as to whether or not it states a cause of action against any of the defendants. However, this question does not seem to have been raised in the court below.