Kenney v. Los Feliz Investment Co.

SHENK, J. In this action for declaratory and other relief the plaintiff sought an adjudication of the rights and obligations of the parties under a note and trust deed given by the plaintiff’s predecessor, C. G. Willis, to the defendant and appellant, Los Feliz Investment Company, evidencing and securing deferred payments of the purchase price of an oil producing property at Santa Fe Springs, especially with reference to the application of payments thereon representing proceeds realized from oil and gas produced on the property. Recovery was also sought of various sums alleged to have been paid under duress and protest.

In June, 1931, the case was first tried resulting in a judgment declaratory of the rights and obligations of the parties as contended for by the plaintiff, together with a money judgment in his favor for $26,702.86, with interest. The judgment was reversed. (Kenney v. Los Feliz Investment Co., Ltd., 121 Cal. App. 378 [9 Pac. (2d) 225].) Prior to the retrial the plaintiff filed an amended and supplemental complaint in which he presented the same issues with respect to the construction of the contract and sought the recovery of all alleged duress payments including those paid pending the appeal and before the second trial. The new trial resulted in a judgment following in substance the declaratory relief as adjudicated upon the first trial, and included a money judgment in the plaintiff’s favor for all of the payments made under protest, with interest to December 29, 1932, aggregating $68,917.29. The present appeal from that judgment is prosecuted solely by the Los Feliz Investment Company.

The property was sold by the company to Willis for a stated consideration of $1,000,000, $125,000 of which was paid at the time. Concurrently therewith Willis, under date of March 1, 1929, executed and delivered to the company a promissory note for $875,000, payable “in installments of Five Thousand Dollars ($5,000) or more on the 1st day of each and every calendar month beginning on the 1st day of May, 1929”, with interest on the unpaid principal at the rate of seven per cent per annum payable monthly. The [649]note also provided that the maker of the note should not be held personally liable, and that “such principal and interest shall be payable solely and only out of the proceeds that may be derived for 50% of 13-2/3% of the oil and gas that may be produced, saved and sold from the property covered by the trust deed executed to secure the note. . . . Nevertheless, it is understood and agreed that if said minimum payment of Five Thousand Dollars ($5000) per month and interest is not made as and when each installment becomes due, even though 50% of the 13-2/3% of the proceeds of oil do not equal that amount, then this note shall be deemed in default, and the holder thereof shall have all the rights of foreclosure set forth in the trust deed executed as security for this note.”