Little v. Mountain View Dairies, Inc.

217 P.2d 416, 35 Cal. 2d 232, 1950 Cal. LEXIS 330
CourtCalifornia Supreme Court
DecidedApril 28, 1950
DocketL. A. 20462
StatusPublished
Cited by17 cases

This text of 217 P.2d 416 (Little v. Mountain View Dairies, Inc.) is published on Counsel Stack Legal Research, covering California Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Little v. Mountain View Dairies, Inc., 217 P.2d 416, 35 Cal. 2d 232, 1950 Cal. LEXIS 330 (Cal. 1950).

Opinions

TRAYNOR, J.

In 1935 plaintiffs’ predecessors in interest in certain real property granted to defendant a limited interest in that property described as “Eight and one-third per cent (8-%%) of all oil, gas and other hydrocarbon substances, and minerals, in, under and/or which may be hereafter produced and saved from” the property. In 1945 plaintiffs leased the property to Loren L. Hillman, Inc., for the purpose of producing oil and gas. The lease reserved to plaintiffs as lessors a royalty of one-sixth of all oil produced and saved from the premises. The lease also provided in part as follows:

“10. In ease said Lessor owns a less interest in the above described lands than the entire and undivided fee simple estate therein, then the royalties and rentals herein provided for shall be paid the said Lessor only in the proportion which his interest bears to the whole undivided fee.
“10-a. Lessor agrees that in no event shall Lessee be required to pay greater rents or royalties than provided in this lease and Lessor further agrees that Lessor will fully satisfy and discharge any and all of the obligations and requirements under [the deed to defendant] insofar as the above described land and the production therefrom is concerned. And Lessor further agrees to protect Lessee against any expense, loss or damage arising as a result of claims or rights asserted by others in or under said deed above referred to.”

Defendant did not sign the lease but executed a separate [234]*234document attached thereto, which reads as follows: “The within Oil and Gas Lease is hereby ratified, approved and confirmed. ’ ’

The present controversy is over the proportions in which plaintiffs and defendant shall share the one-sixth (16%%) royalty payable by the lessee under the lease. Plaintiffs by their complaint for declaratory relief claimed that they were entitled to eleven-twelfths of the royalty. Defendant answered and cross-complained, claiming one-twelfth of all the oil produced or 50 per cent of the royalty. Bach party moved for judgment on the pleadings, and the court decided in favor of defendant and entered its judgment accordingly. Plaintiffs have appealed from the minute order granting defendant’s motion and denying theirs, and from the judgment. It is settled that an order granting a motion for judgment on the pleadings is not final or appealable, and that it is only from the subsequently entered judgment that an appeal will lie. (Holton v. Noble, 83 Cal. 7, 9 [23 P. 58]; Montgomery Ward & Co. v. Welch, 17 Cal.App.2d 127, 129 [61 P.2d 790]; Overton v. White, 18 Cal.App.2d 567, 568-569 [64 P.2d 758, 65 P.2d 99]; Code Civ. Proc., § 963.) Accordingly, the appeal from the order must be dismissed.

Before the oil and gas lease was executed, plaintiffs and defendant were tenants in common in the exclusive right to drill for and produce oil from the land. (See Dabney-Johnston Oil Corp. v. Walden, 4 Cal.2d 637, 649 [52 P.2d 237].) Their respective interests were defined by the grant deed from plaintiffs’ predecessors in interest to defendant. If, as plaintiffs contend, the deed conveyed no more than a one-twelfth interest in the grantors’ mineral rights, their interests were in the ratio of eleven to one.

It is settled that if one cotenant produces oil, he is entitled to charge the interests of nonproducing cotenants for their proportionate share of drilling and operating expenses. (Dabney-Johnston Oil Corp. v. Walden, 4 Cal.2d 637, 657 [52 P.2d 237]; see, also, McCord v. Oakland Q. M. Co., 64 Cal. 134, 148-149 [27 P. 863, 49 Am.Rep. 686]; anno., 5 A.L.R.2d 1368, 1380.) In this case the expense incurred by the owners of the mineral rights in producing the oil from the land is represented by the five-sixths of the oil that the lessee retains from the total production. By ratifying the lease defendant agreed that this is a fair charge for the expense of bringing the oil to the surface. (Gill v. Bennett, (Tex.Civ.App.) 59 S.W.2d 473, 475; Texas & Pacific Coal & Oil Co. v. Kirtley, [235]*235(Tex.Civ.App.) 288 S.W. 619, 622.) “If a lease be executed by a cotenant, the nonconsenting cotenants may recognize the lease and receive their fractional interest in the royalty, or they may reject the lease, and receive their fractional part of the oil produced, less their proportionate part of the cost of discovery and production. ’ ’ (Davis v. Atlantic Oil Producing Co., 87 F.2d 75, 77.)

Section 10 of the lease provides for the payment to plaintiffs of that proportion of rentals and royalties that their interest bears to the whole undivided fee in the real property.

Section 10-a of the lease does not increase the share of the royalties to which defendant would otherwise be entitled. That section merely binds plaintiffs to “satisfy and discharge any and all obligations and requirements under” the deed to defendant. It does not purport to state what those obligations are. Accordingly, it is necessary to determine whether the deed conveyed only one-twelfth of the mineral rights, or on the contrary, as defendant contends, it conveyed an expense-free or royalty interest that would entitle defendant to one-twelfth of the oil produced free of any cost of production.

Defendant contends that the addition of the words “and which may hereafter be produced and saved” to a grant of a fraction of all the oil in and under the land clearly evidence an intent that the interest granted should be expense free. It has been generally held, however, that a grant of a fraction of all '“of the oil, gas and other minerals in and under, and that may he produced” from the land creates an expense-bearing mineral fee interest rather than an expense-free royalty interest. (Richardson v. Hart, 143 Tex. 392 [185 S.W.2d 563, 564-565]; Watkins v. Slaughter, 144 Tex. 179 [189 S.W.2d 699, 700]; Jones v. Bedford, (Tex.Civ.App.) 56 S.W.2d 305; Gill v. Bennett, (Tex.Civ.App.) 59 S.W.2d 473, 475; Hinkle v. Gauntt, - Okla. - [206 P.2d 1001, 1005]; Manley v. Boling, 186 Okla. 59 [96 P.2d 30, 31-32]; Shinn v. Buxton, 154 F.2d 629, 631-635; see, also, Brooks v. Mull, 147 Kan. 740 [78 P.2d 879, 883].) When there is an existing oil lease at the time the lessor executes a mineral deed, it is not uncommon for the deed to grant not only a given fraction of all the oil in, under, and that may be produced from the land, but also the same fractional interest in the royalties payable under the lease. (See 3 Summers, Oil and Gas [Perm, ed.], § 606, p. 502.) If the first clause of such a deed were construed as creating an expense-free royalty interest, it would grant the stated fraction of the total production rather than [236]

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Little v. Mountain View Dairies, Inc.
217 P.2d 416 (California Supreme Court, 1950)

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Bluebook (online)
217 P.2d 416, 35 Cal. 2d 232, 1950 Cal. LEXIS 330, Counsel Stack Legal Research, https://law.counselstack.com/opinion/little-v-mountain-view-dairies-inc-cal-1950.