Clark v. Richfield Oil Co.

16 P.2d 162, 127 Cal. App. 495, 1932 Cal. App. LEXIS 364

• Court: California Court of Appeal
• Decided: November 15, 1932
• Docket: Docket No. 7419.
• Status: Published

Opinions

TAPPAAN, J., pro tem.

From a judgment in the sum of $2,811.01 entered as against appellants Nordenholt and Stevely this appeal is taken. As to the other defendants named in the complaint a nonsuit was granted.

The facts which form the basis of the action here involved are few in number. Respondents were the owners of certain real property and, as lessors, leased to one of the defendants named in the complaint the right to remove gas and oil therefrom, it being agreed under the terms of the said lease that respondents were to receive as royalty or rent 1/12 of all gas, oil and other hydrocarbon substances produced from said leased property. Thereafter on September 29, 1927, and subsequent to the making of said oil lease respondents made and entered into an agreement with appellant Stevely by the terms of which they agreed to sell the property upon which they had granted the oil lease, to appellant Stevely for the sum of $6,000, payable $2,000 at the time of the signing of the agreement, and the balance in two equal payments at one and two years respectively. This agreement provided that upon payment of the full purchase price respondents would deliver to the buyer a good and sufficient grant deed to the premises “free and clear of encumbrance excepting an oil lease between the seller and Pacific National Gasoline Company”. There is no provision in this agreement that the buyer, William H. Stevely, should have possession of the premises agreed to be sold. It appears from the evidence that during the year following the execution of this agreement and at a time when the “buyer”, Stevely, was not in default under the terms of the agreement, the property in question was drilled under the terms of the oil lease previously referred to, gas developed thereon 'and that the sum of $2,381.22 was paid to appellant Stevely as the 1/12 royalty saved to the lessor under the terms of the oil lease. This payment was made to appellant Stevely by the National Gas Syndicate, a partnership. It also appears that after the first year period as fixed in the agreement of sale, Stevely having defaulted in his payments, respondents instituted an action to quiet their title to the premises in question and in that action all the rights of appellant Stevely were foreclosed.

Prom the record it appears that the oil lease upon the premises in question was assigned by the Pacific National Gasoline Company, the lessee named in the lease, to the National Gas Syndicate, a copartnership composed of appellant Nordenholt and three other persons who do not appear to have been joined in this action nor to have appeared herein. Respondent I. S. Clark during- the months of October and November, 1926, wrote to both the Pacific National Gasoline Company and the National Gas Syndicate, asserting their, respondents’, rights to the royalties under the oil ■ lease, and setting up. the claim that these royalties did not pass under the terms of the agreement of sale of the property in question to the buyer therein named. Appellant Nordenholt was president of the Pacific National Gasoline Company and signed the oil lease with respondent in his capacity as president of the corporation. It also appears that appellant Stevely, the buyer in the agreement of sale, never took actual possession of the property in question.. Some testimony was introduced by appellants at the trial as to conversations had before or at the time the agreement of sale was signed by respondents. As to what was said at these conversations the testimony produced by appellants is as to its material parts directly contradicted by the testimony of respondent I. S. Clark. The questions thus presented were ones of fact, and as the trial court’s implied finding is against appellants’ contention, and is based upon conflicting evidence, the matter is not subject to question before this court upon this appeal.

The sole point urged by appellants upon this appeal is that the evidence does not support the finding of the trial court that respondents retained the benefits of the said oil lease after they entered into the agreement for the sale of the real estate or that appellant William H. Stevely agreed to purchase said property subject to said oil lease and the rights thereunder. The question thus presented, under the circumstances of the case as disclosed by the record here, involves the construction to be placed upon the so-called agreement of sale made between respondent and appellant Stevely. The sole question here presented is: Is the proposed “buyer” under the terms of an agreement to purchase real property calling for installment payments of the purchase price over a period of years and providing that when the purchase price is paid in full that the seller therein named will deliver a deed free and clear of all encumbrances except an existing oil lease and which agreement does not provide that the buyer shall have possession of the property described in the agreement, entitled to collect and hold the royalties paid under the terms of the excepted oil lease? There is evidence to the effect that the buyer never entered into possession of the property in question, which must have the effect that his rights, if any, are those granted him under the sales agreement referred to. The testimony as to the facts and circumstances surrounding the making of this agreement is in conflict, as has already been stated, and the court’s findings as to these facts and circumstances, it appears; must have been adverse to appellants, therefore appellants must rest their contention upon the terms of the sales agreement solely.

Appellants in support of their contention that the “buyer” named in a contract of sale of real property is entitled to the rents and profits arising from the property agreed to be sold, cite a number of cases which state a 'generally accepted equitable rule. The case of Miller v. Waddingham, 91 Cal. 277 [27 Pac. 750, 13 L. R. A. 680], cited by appellants, is illustrative of this, and at page 380 of the opinion it is said: “Upon the execution of this contract of sale the vendee of the plaintiff became vested with the equitable title to said land, and the plaintiff retained in himself the legal title as a security for the performance of the contract by the vendee. ’ ’ In this case and all the other cases cited by appellants the possession of the land covered by the contract of sale was in the “buyer” either under the terms of the contract or by the consent of the “seller”. In the instant ease the contract did not give possession to the “buyer” nor was there any evidence that would support a finding that the “seller” gave consent, either express or implied, to the “buyer” taking possession. The evidence showed, in fact, that the “buyer” never took possession of the premises in question and that the “seller” placed the lessee named in the oil lease in possession of the premises. “There was no stipulation in the contract exhibit A surrendering the possession of the property to the vendee; and unless there is such a stipulation in a contract like the one mentioned, it may be considered as settled in this state that the vendor retains the possession until the legal title passes to his vendee.” (Stratton v. California Land etc. Co., 86 Cal. 353, 364 [24 Pac. 1065, 1069].) “There is no presumption of law that the vendee in an executory agreement for the purchase of land has been put into possession. In the absence of anything in the contract from which it can be inferred or implied that he is to have possession, he has no right'thereto. ” (Crane v. Ferrier etc. Co., 164 Cal. 676, 678 [130 Pac. 429, 430].)

We have not found nor has any authority been cited here which would uphold appellants’ contention that the “buyer” named in an executory contract to purchase real property, where such “buyer” was not entitled to the possession of the property agreed to be sold, was entitled to the rents and profits of the land agreed to be sold, during the period between the signing of the contract and the time when the “buyer” became entitled to a deed to the property. In other jurisdictions, under circumstances such as are presented by the instant case, it has been held that the “buyer” would not be entitled to such rents and profits. (Iowa Railroad Land Co. v. Estate of Boyle, 154 Iowa, 249 [134 N. W. 590, 38 L. R. A. (N. S.) 420] ; Bostwick v. Frankfield, 74 N. Y. 207.)

In view of the fact that the agreement of sale expressly excepted the oil lease then upon the premises agreed to be sold, and that the property was at the time of the signing of the agreement of sale in the possession of the lessee under this lease, and that the “buyer” never had possession after the signing of the agreement nor right to possession under the agreement, it seems conclusive that the “buyer” is not entitled to the oil royalties under the agreement of sale and other evidence before it at the trial. The finding made by the court that the copartnership “wrongfully paid” the royalties to appellant Stevely was an inferential finding on this point. (Warden v. Stoll, 210 Cal. 374, 376 [291 Pac. 835].) This is doubly true if we accept appellants’ theory as advanced in their brief that respondents occupied a position similar to that of a mortgagee. The effect of the removal of the gas under the terms of the oil lease would deplete the security by removing a part of the thing agreed to be sold. If the “seller” was to waive the right to this part of the security the agreement should have so provided. The agreement made no such provision.

The cause of action as stated in plaintiffs’ complaint is one for the recovery of unpaid rents and profits under the express terms of the oil lease. It does not appear from an examination of this pleading that plaintiffs had in mind or attempted to state a cause of action for the recovery of a designated fund or the recovery of money in an action in the nature of a common count. From the pleadings and evidence it appears that the duty to pay the rents and profits provided to be paid under the oil lease and therein designated as “royalties” had been assumed by the National Gas Syndicate, a partnership, of which appellant George D. Nordenholt was a member. Section 388 of the Code of Civil Procedure provides: “When two or more persons, associated in any business, transact such business under a common name, whether it comprises the names of such persons or not, the associates may be sued by such common name, the summons in such cases being served on one or more of the associates; and the judgment in the action shall bind the joint property of all the associates, and the individual property of the party or parties served with process, in the same manner as if all had been nanned defendants and had been sued upon their joint liability(Italics ours.) Under the provisions of the above-quoted section the trial court was justified in finding appellant, Nordenholt, liable for the unpaid royalties. The fact that the National Gas Syndicate attorned to appellant Stevely, and paid the royalties due respondents to him is not a defense to this action to recover them from the person legally bound to pay them. (Galderwood v. Pyser, 31 Cal. 333.) Under the circumstances as disclosed by the record and in view of the fact that the cause of action as stated is one for the recovery of rent or royalties and not for money as such, the evidence fails to support the judgment as rendered against appellant Stevely.

The judgment as to appellant George D. Nordenholt is affirmed, and as to appellant William H. Stevely it is reversed.

Conrey, P. J., concurred.