Beam v. Dugan

California Court of Appeal Jun 13, 1933 No. Docket No. 8999.Published

Before: Nourse

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Holding. The court held that the plaintiffs acquired a vested interest in the royalties from the land, which could not be unilaterally extinguished by the grantors' subsequent cancellation of the original lease and execution of a new one. The trial court erred in finding that the plaintiffs acquired no interest, necessitating a remand for a determination of the specific scope and nature of that interest.

Issues

Whether the conveyances granted the plaintiffs a perpetual interest in royalties from oil produced on the premises regardless of the lease under which it was produced.
Whether the plaintiffs acquired a vested interest in royalties that could not be defeated by the grantors' subsequent actions without the plaintiffs' consent.

Disposition. Affirmed in part and reversed in part.

Quotations verified verbatim against the opinion

“the appellants purchased some vested interest which they were entitled to have quieted in this proceeding.”

“a reservation or sale by the land owner of an interest in the royalty or the rentals to be obtained from the land creates in the purchaser a right incident to the land itself which cannot be defeated by the act of the land owner”

NOURSE, P. J.

The plaintiff sued to quiet title and for an accounting claiming under a sale and two assignments of portions of a land owner’s royalty in oil aggregating one per cent of the total royalty payable to their grantors. Defendants had judgment and the plaintiffs appeal upon typewritten transcripts.

[548]

The conveyances to the plaintiffs and to their assignors were executed in March, 1923. In form and substance they are identical. The one to the plaintiffs after describing the real property by metes and bounds recites: “And whereas, said above described property, together with other property, has been leased for oil development under a lease, of date, July 18, 1922, between John Dugan and wife and others, as lessors, and Vern Dumas and wife, as lessees, . . . and it being provided among other things in said lease that the owners of said property, covered by said lease, shall receive a royalty of one fifth (1/5) of all oil or kindred substances developed on said lease. . . .

“And whereas, S. K. Beam and Nora B. Beam, husband and wife, desires to purchase, and does hereby purchase a 3/5 of 1 per cent (1%)

land owner’s royalty in said above described property.

“Now, therefore, we ... do hereby sell, transfer, convey, assign and set over to the said S. K. Beam and Nora B. Beam . . .

out of our land owner’s royalty,

an undivided 3/5 of 1 per cent (1%)

in and to any and all oil, gas

or other hydro-carbon substances

produced or saved from any wells to be drilled upon any of the land described

in the lease heretofore mentioned ... it being particularly understood and agreed that the royalty interest, herein assigned, affects all the land mentioned in said lease and is not limited to the land of said Dugans.” The final stipulation in the conveyance is thus explained: In July, 1922, prior to the date of the execution of these conveyances, the Dugans and six other land owners had executed an oil and gas lease to Vern Dumas and his wife; after the execution of that lease the Dugans conveyed a small portion of the land covered by the Dumas lease to others, and, therefore, in the conveyances to the plaintiffs and to their assignors the Dugans made this stipulation that the interest in the royalty which they thus conveyed included oil or gas that might be obtained from wells covered by the Dumas lease though outside of the lands then held by the Dugans in fee.

Beam v. Dugan

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NOURSE, P. J.

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