Hale v. Harbor Petroleum Corp.

THE COURT. In 1925 the Flower Street Investment Company, a corporation, leased to plaintiff and another certain lots in Los Angeles County. The lease provided that the lessees should pay as rental twenty per cent of all oil, gas and other hydrocarbon substances produced therefrom. Later plaintiff acquired the interest of his eolessee. Thereafter and prior to February 9, 1926, plaintiff assigned fractional undivided interests in all the oil and gas to be produced aggregating fifteen per cent thereof. These interests were sold without the permission of the state corporation commissioner. Wells were drilled and oil produced, and in January, 1926, plaintiff caused defendant Harbor Petroleum Corporation to be organized under the laws of Nevada. He then offered to the directors of the corporation, in consideration of the issuance to himself of certain preferred and common stock of the company, a conveyance of certain oil properties, including the lease of the lots first mentioned. The offer so far as material read as follows: “The undersigned proposes to convey or cause to be conveyed to the Harbor Petroleum Corporation of Reno, Nevada, . . . the oil well known as Nathan W. Hale No. 3, situated on Ludy street on lots 15, 16 and the north half of Lot 17 Hunt Villa Tract, East Signal Hill, Los Angeles county, California, subject to landowners’ and like royalties of thirty-five per cent, with an outstanding indebtedness of $100,000 (I think not over $75,000) on all three of the wells, with the following understanding, that $30,000 to $40,000, being the amount of cash put in by various people for certain profits made from each well, which additional amount must be taken care of with preferred and common stock in addition to the indebtedness, for the following consideration, to wit: $200,000 of the preferred stock and $100,000 of the common stock, such stock to be issued upon call and delivery of assignments of proportional interests as above proposed.” The directors by resolution accepted the offer, and plaintiff on February [45811], 1926, executed to the corporation an assignment, the material parts of which are as follows:

“Know all men by these presents: That we, Nathan W. Hale and Laura A. Hale, husband and wife, in consideration of the sum of ten dollars to us in hand paid, receipt whereof is hereby acknowledged, do hereby sell, assign, convey and set over unto the Harbor Petroleum Corporation, Keno, Nevada, all our right, title and interest in and to that certain oil and gas lease (description of lease and full description of property omitted).