Rubens v. Texam Oil Corp.

FILES, P. J. Plaintiff paid $15,000 for a 1 percent interest in an oil lease, and agreed, in addition, to pay his pro rata share of drilling costs. He actually paid $1,228.16 towards expenses, and owed an additional $426.49 when the venture was abandoned because of failure to find oil in paying quantities. Plaintiff then brought an action to recover his money from Texam Oil Corporation, which was both the transferor of the 1 percent interest and (during a portion of the time) the operator of the drilling venture. Texam counterclaimed to recover the $426.49 due under the contract. The trial court gave judgment that plaintiff take nothing on his complaint and that defendant recover the amount of its counterclaim. Plaintiff is appealing from the judgment.

[80]Although plaintiff asserts in his brief that “There are many independent grounds for requiring the return” of his investment, all of his arguments center around the theory that there were violations of the Corporate Securities Act which made the transaction “void” and thereby entitled him to rescind. (Corp. Code, § 26100.) Some background facts which are not in dispute may be stated first to place the issues in context.

Plaintiff is a patent attorney who has practiced in New York City since 1930. Mr. A. L. Koolish is plaintiff’s second cousin. In 1957 plaintiff told Koolish he had money to invest and asked Koolish to let him know if he had a deal.

On August 4, 1958, Guiberson & Burke applied to the California Commissioner of Corporations for a permit to issue to certain named persons undivided working interests in the oil lease which is involved in this action. Koolish was one of the proposed transferees. Another of the transferees named in the application was Angelus Oil Co., Inc., as to a 5 percent interest. Exhibits attached to the application indicate that defendant Texam Oil Corporation was intended to have an 814 percent interest, but through oversight Texam was not included.in the list of proposed transferees. On August 18, 1958, the commissioner issued a permit consenting to the issuance of the “securities,” i.e., the working interests, to the persons named in the application. The permit was subject to the customary conditions to restrict transferability: The permit provided that the securities, when issued, must be delivered to an escrow holder to be held in escrow pending further order of the commissioner; and that the owner “shall not consummate a sale, assignment, or transfer of said securities or any interest therein, or receive any consideration therefor, until the written consent or permit of said Commissioner shall have been obtained so to do. ’ ’