Chainey v. Shostrom

SPENCE, J.

Plaintiffs brought this action seeking the cancellation of a certain contract and further seeking to obtain an accounting of and judgment for the sums previously received by Darlot Densmore, since deceased, and defendant Margaret Densmore, his wife, under said contract. Prom a judgment in favor of defendant Margaret Densmore, plaintiffs appeal.

Numerous other defendants were named in the complaint-, but there is no controversy except that between the plaintiffs and the defendant Margaret Densmore, who was the

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sole defendant, appearing at the trial and is the sole respondent on this appeal. Upon the death of her husband, said defendant Margaret Densmore had succeeded to all of his rights under the contract.

In March, 1921, said Darlot Densmore and Margaret Densmore were the owners of certain property located on Signal Hill in Los Angeles County. They entered into a contract with plaintiffs by which they agreed to sell said property to plaintiffs for the sum of $15,000, which sum was to be paid by plaintiffs in installments as provided in the contract. In June, 1921, and at a time when approximately $3,000 of the purchase price had been paid, plaintiffs had an opportunity to enter into an oil and gas lease with the Oceanic Oil Company, which company was willing to pay for said lease a royalty of % part of the oil and gas extracted and saved from the premises. The company, however, required that plaintiffs should obtain the written consent of the Densmores, as owners of the property, to the making of said lease. The proposed lease was for the term of twenty years and at the option of the lessee for as long thereafter as the wells thereon were producing oil in paying quantities. On or about June 23, 1921, the Dens-mores gave their written consent indorsed upon said lease and a written contract was entered into between the Dens-mores and plaintiffs wherein it was agreed that the royalty provided for in the lease with the Oceanic Oil Company should be divided equally between them until the Densmores had received the full amount due them from the plaintiffs under the contract to purchase the land and thereafter the royalty should be divided % to plaintiffs and % to the Densmores. It is this contract which is involved in the present action. In January, 1923, and before any royalty had been received by the parties, plaintiffs paid to the Densmores the full balance due upon the agreed purchase price for the property. In closing the transaction a deed was executed by the Densmores and deposited with an escrow holder to be delivered to plaintiffs upon payment of the balance due. A clause included in the signed escrow agreement read as follows: “It is understood by the parties hereto that the royalties on the oil lease on this property is for % of production and that the same is to be distributed %ths to purchaser and % to seller for life of lease.” The deed