Lierly v. McEwen

TYLER, P. J.

This action was originally brought by plaintiffs against Security Trust Company of Bakersfield as defendant for the purpose of having determined the proportionate amount of royalties that certain locators of oil lands were entitled to under a leasing agreement with the Associated Oil Company, which royalties were held by the defendant banking company under a certain trust agreement. The company later came into court under motion, according to the provisions of the Code of Civil Procedure, and deposited the sum of $1,704.32, the amount held by it, and procured an order bringing into the action certain defendants who thereafter filed pleadings alleging the proportion of the amount they were entitled to. The facts are somewhat involved. It appears from the record that on January 1, 1910, W. S. Lierly, plaintiff herein, made a number of oil locations on government lands under the then existing system and named B. F. Wilson as one of the locators. Shortly thereafter the Associated Oil Company leased certain of these locations, including those in which Wilson’s name was used as a locator. As soon as Wilson ascertained the fact that his name had been used as one of the locators he communicated the fact to his partner D. H. McEwen, defendant and appellant herein, advising him that the locations made in his name were for the joint benefit of both, by reason of their partnership. Later the

[713]

government sought to disturb the locations so made because of the withdrawal of the particular lands from location by President Taft in the fall of 1909. Nothing was determined under these controversies at this time. On February 25, 1920, Congress passed what is known as the “Leasing Act.” On August 10, 1920, the Associated Oil Company entered into an agreement with certain locators, including McEwen, from whom leases were taken covering the locations in which B. F. Wilson was interested. This agreement had for its object the development of the lands under the Leasing Act, in the event that it should be determined that the locators were entitled to a lease. The Associated Oil Company succeeded in procuring a lease from the government upon the properties on condition that it effected a settlement among the various claimants of their conflicting interests. This the company succeeded in doing and on April 2d all of the parties to this action, or their predecessors in interest, signed an agreement with the Associated Oil Company, whereby they agreed upon the proportion that each claimant should have under their various claims. The substance of this contract is: that the government of the United States leased to the Associated Oil Company the southeast quarter of section 26, township 30 south, range 24 east, on condition that such company would clear up any adverse claims against the government upon this quarter-section and upon the further consideration that three other quarter-sections which were put into the naval reserve should be surrendered to the government by all the locators or their successors in interest, and that in consideration of the surrender of these three quarter-sections, the government leased the quarter-section above described to the oil company. This section is outside the naval reserve. It then became incumbent upon those who had claimed some interest, either as locators or subsequent transferees of the three quarter-sections, to adjust their respective rights with the Associated Oil Company, which was done under the contract of April 2, 1921. By the terms of this contract the government was to receive twenty per cent royalty and other interests were to receive five per cent, leaving seventy-five per cent of the net production to be divided between the oil company and the various locators on the three quarter-sections. It is claimed by appellant McEwen that as there were twenty-four locators