Lierly v. McEwen

262 P. 457, 87 Cal. App. 711, 1927 Cal. App. LEXIS 55
California Court of Appeal·Decided December 21, 1927·No. Docket No. 5217.·Published·Cited by 2 cases

Opinion

TYLER, P. J.

This action was originally brought by plaintiffs against Security Trust Company of Bakersfield as defendant for the purpose of having determined the proportionate amount of royalties that certain locators of oil lands were entitled to under a leasing agreement with the Associated Oil Company, which royalties were held by the defendant banking company under a certain trust agreement. The company later came into court under motion, according to the provisions of the Code of Civil Procedure, and deposited the sum of $1,704.32, the amount held by it, and procured an order bringing into the action certain defendants who thereafter filed pleadings alleging the proportion of the amount they were entitled to. The facts are somewhat involved. It appears from the record that on January 1, 1910, W. S. Lierly, plaintiff herein, made a number of oil locations on government lands under the then existing system and named B. F. Wilson as one of the locators. Shortly thereafter the Associated Oil Company leased certain of these locations, including those in which Wilson’s name was used as a locator. As soon as Wilson ascertained the fact that his name had been used as one of the locators he communicated the fact to his partner D. H. McEwen, defendant and appellant herein, advising him that the locations made in his name were for the joint benefit of both, by reason of their partnership. Later the *713 government sought to disturb the locations so made because of the withdrawal of the particular lands from location by President Taft in the fall of 1909. Nothing was determined under these controversies at this time. On February 25, 1920, Congress passed what is known as the “Leasing Act.” On August 10, 1920, the Associated Oil Company entered into an agreement with certain locators, including McEwen, from whom leases were taken covering the locations in which B. F. Wilson was interested. This agreement had for its object the development of the lands under the Leasing Act, in the event that it should be determined that the locators were entitled to a lease. The Associated Oil Company succeeded in procuring a lease from the government upon the properties on condition that it effected a settlement among the various claimants of their conflicting interests. This the company succeeded in doing and on April 2d all of the parties to this action, or their predecessors in interest, signed an agreement with the Associated Oil Company, whereby they agreed upon the proportion that each claimant should have under their various claims. The substance of this contract is: that the government of the United States leased to the Associated Oil Company the southeast quarter of section 26, township 30 south, range 24 east, on condition that such company would clear up any adverse claims against the government upon this quarter-section and upon the further consideration that three other quarter-sections which were put into the naval reserve should be surrendered to the government by all the locators or their successors in interest, and that in consideration of the surrender of these three quarter-sections, the government leased the quarter-section above described to the oil company. This section is outside the naval reserve. It then became incumbent upon those who had claimed some interest, either as locators or subsequent transferees of the three quarter-sections, to adjust their respective rights with the Associated Oil Company, which was done under the contract of April 2, 1921. By the terms of this contract the government was to receive twenty per cent royalty and other interests were to receive five per cent, leaving seventy-five per cent of the net production to be divided between the oil company and the various locators on the three quarter-sections. It is claimed by appellant McEwen that as there were twenty-four locators *714 on these disputed three quarter-sections and each surrendered to the government the same quantity that each other person surrendered, they therefore surrendered one-eighth of each location considered as a separate surrender of each quarter-section, or, considering the three-quarter sections as a unit, each surrendered l/24th of the three. That this is the respective relation that each locator stood to the other; one-eighth of one, or l/24th of the three considered as a unit, and the royalty which the Associated Oil Company agreed to pay them was one-eighth of seventy-five per cent of the net production. One-eighth of the royalty divided by l/24th gives each person l/192d part of the royalty of seventy-five per cent, and the agreement specifically provided that this was the interest that each of the locators was entitled to thereunder. This agreement was signed by both Wilson and Mc-Ewen. Prior to the entering into thereof, Wilson attempted to repudiate and deny that McEwen had any interest in the locations or the contract originally entered into with the Associated Oil Company. McEwen thereupon instituted suit against Wilson, joining the oil company, the Security Trust Company, and one William C. Davis, the latter having acquired from Wilson some interest in the property. The issues were joined and prior to the case going to trial a certain stipulation was entered into by all the parties to said action to the effect that upon its final determination there would be paid to the person or persons to whom said royalty should be awarded, such proportions as the court should determine. On January 10, 1923, judgment was duly made and entered giving and granting to McEwen one-half of all the interests acquired by Wilson under the locations made on and after January 10, 1910. It was also decreed that under the contracts of August 10, 1920, and April 2, 1921, above referred to, McEwen was entitled to one-half of the interests acquired by reason of Wilson’s locations and also one-half of the compromise agreement made between the government of the United States with the Associated Oil Company under the contract of April 2, 1921. In other words, Wilson’s and McEwen’s interest collectively in the southeast quarter of section 26, township 30 south, range 24 east, was l/24th of the royalty or l/192d part of the seventy-five per cent; which would make their separate interest l/384th part of seventy-five per cent of all production of *715 oil, gas and other substances obtained from the quarter-section mentioned. Prior to the settlement of the controversy between McEwen and Wilson, the Security Trust Company on September 21, 1921, entered into an agreement with certain of the locators who were entitled to a part of the royalty on the above-described quarter-section, whereby the Associated Oil Company was to pay to the Security Trust Company the royalties, and the owners of such royalties were to receive from such trust company the distributive share to which each was entitled. Thereafter, W. S. Lierly brought the present action against the Security Trust Company to recover the royalties in its hands. This action set forth the trust agreement and then alleged the reception by the trust company of a certain sum of money from the oil company. The action was filed on March 20, 1923, subsequent to the rendition of the decree in McEwen v. Wilson. On application of the trust company an order was made permitting it to pay the amount into court and certain of the royalty owners were then substituted as defendants in the action. As above recited, certain of these defendants filed pleadings.

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Lierly v. McEwen, 262 P. 457, 87 Cal. App. 711, 1927 Cal. App. LEXIS 55 (Cal. Ct. App. 1927).

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