Vantress Farms, Inc. v. Sydenstricker

11 Cal. App. 3d 943, 90 Cal. Rptr. 251, 37 Oil & Gas Rep. 1, 1970 Cal. App. LEXIS 1789
CourtCalifornia Court of Appeal
DecidedOctober 1, 1970
DocketCiv. No. 12194
StatusPublished
Cited by3 cases

This text of 11 Cal. App. 3d 943 (Vantress Farms, Inc. v. Sydenstricker) is published on Counsel Stack Legal Research, covering California Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Vantress Farms, Inc. v. Sydenstricker, 11 Cal. App. 3d 943, 90 Cal. Rptr. 251, 37 Oil & Gas Rep. 1, 1970 Cal. App. LEXIS 1789 (Cal. Ct. App. 1970).

Opinion

Opinion

PIERCE, P. J.

Defendants and cross-complainants Ray Sydenstricker, Bernice Sydenstricker, his wife, and Charlene Marqua, their daughter (hereinafter referred to collectively as “Sydenstrickers”) appeal from the judgments entered in favor of plaintiff Vantress Farms, Inc. (“Vantress”) and defendant and cross-complainant (by interpleader) Buttes Gas and Oil Co. (“Buttes”) et al., respectively. Defendant William McGinnis (“McGinnis”) separately appeals from the same judgments.

The complaint of plaintiff Vantress was for declaratory relief in form. Actually it sought to quiet title and recover as against the Sydenstrickers and McGinnis certain gas and oil rights.1 The Sydenstrickers and McGinnis [946]*946joined issue by their answers and the former by a cross-complaint for specific performance and the reformation of a deed. Buttes, the lessee under the community oil and gas lease, was neutral. It interpleaded the parties, deposited into court current amounts due as lessee and ultimately received judgment. The trial was protracted, the facts are lengthy and complicated, but the questions presented are not difficult.

The Facts

The statement of facts will be more readily understandable if we explain what a community oil and gas lease is. This we will do in the margin.2 The one here involved had been acquired in 1931 (see fn. 1) by the predecessors of Vantress. On Buttes’ records this 1931 lease is identified as Parcel 19. The total lease comprises approximately 40,000 acres. The fair market value of Parcel 19’s participating royalty interest as of December 1964 was $145,607. This interest, the Sydenstrickers and McGinnis say they bought for $2,000 under the circumstances to be set forth below.

Vantress was a world-wide business in the sale of pedigree cockerels. Its principal place of business is at Duluth, Georgia. Its president in 1964 was Dr. Fred Smith, a veterinarian. In August 1933 Vantress became the wholly owned subsidiary of Artnell, Inc., a Delaware corporation with its principal place of business in Chicago, Illinois. During 1964 the parent corporation adopted a program to sell real estate owned by Vantress not used directly in its corporate operations. Horace Sharrow, executive vice-president, treasurer and a director of Artnell, directed Smith to obtain values on those properties. One of such properties was Sutter Buttes Farm owned in fee and located in the Sutter Buttes area in Sutter County, containing 855 acres, plus the mineral rights to an adjacent 465-acre parcel— the “Noyes parcel.” (The community gas and oil rights described belonged [947]*947to Vantress under its former name, International Genetics Corporation by an assignment from the original owners.)

During September 1964 Smith contacted real estate salesman Gilbert Anderson, formerly employed by Vantress for 29 years. He discussed the sale of the farm with Anderson. On September 18 he executed an exclusive authorization to sell (to Hub Realty through Anderson). The authorization included the farm but reserved one-half the “mineral, oil and gas rights.” The purchase price was to be $55,000.

The Sydenstrickers had been Vantress’ tenants for the last 10 years. Anderson approached them as prospective purchasers informing them of the listing. On October 13, 1964, he obtained their $5,000 deposit. Anderson forwarded their receipt to Smith in Georgia for signature and acceptance. The deposit receipt signed by the Sydenstrickers mentioned no mineral rights other than the one-half interest on the Sutter Buttes Farm.

When the October 13, 1964 deposit receipt reached Smith he did not sign an acceptance and return it. Although there is a conflict in the testimony regarding the next steps it is susceptible to the inference (drawn by the trial court) that Smith, instead of trying to complete the deal as presented, had a better idea—for himself. He decided to by-pass the corporation for which he acted in a fiduciary capacity, and turn a deal for himself or, perhaps, for himself and his lifelong friend and cousin, William McGinnis, of Lompoc, California. The scheme was this; Smith would sell the Sutter Buttes Farm plus the mineral rights both to that land and to the Noyes parcel, keep one-half of those rights for himself (and McGinnis?) and sell the other half to the Sydenstrickers. The sales price of $55,000 would be increased by $2,000. Sydenstrickers would pay this amount, receiving 100 percent of the mineral rights but immediately resell one-half of those rights, the deed to be taken in the name of McGinnis.

The evidence conflicts as to whether Smith or Ray Sydenstricker had hatched this plan. The latter testified he broached the subject of buying the mineral rights of the Sutter Buttes Farm for $1,000.

Smith telephoned to McGinnis at Lompoc and told him of the plan. McGinnis did not know whether he was buying “a diamond mine or gold dust.” Smith then phoned Anderson, instructing him to state his proposition to the Sydenstrickers. They were “willing.”

The Sydenstrickers expressed no curiosity who McGinnis was or his relationship to Smith, what they were paying a net of $1,000 for. Ray Sydenstricker stated he had no idea of the value of any of the mineral rights. He knew of such things as community leases but he testified that all he [948]*948knew of their value was that they “varied.”3 He said that the Sydenstrickers were interested in buying the land primarily for cattle grazing but they “would have taken anything that came along.”

On October 29, 1964 Anderson prepared, the Sydenstrickers signed, and there was forwarded to Smith, a deposit receipt agreement following the terms of Smith’s proposition. Smith, when he received this, did not forward it to his principals in Chicago. Instead, he reported by telephone from Georgia, to Horace Sharrow in Chicago, that he had received an offer to purchase the Sutter Buttes Farm. Smith reported that they could sell the 855 acres in fee and the mineral interest in an adjoining 465 acres (the Noyes parcel) for $57,000. Asked by Sharrow whether the mineral interest was of any value, Smith assured him that it was of nominal value only. Upon further questioning as to whether any drilling had ever occurred upon the property to be sold, Smith stated that no drilling had occurred, that he thought it unlikely that any drilling would occur and that not too far from the farm a couple of wells had only produced dry holes.

At no time during the discussions regarding the sale of the farm did Fred Smith mention that Vantress owned an interest in a community gas lease, or what such a lease was. Neither did Smith send the receipt or a copy thereof to Sharrow.

Smith executed and returned the deposit receipt. When Anderson got it he opened an escrow at Yuba City Title Company dated November 13, 1964.

On November 23, 1964, Gabriel Gedvila, the secretary and counsel for Artnell Company, received seller’s escrow instructions, a deed and a letter from Smith requesting execution of the documents forwarded and a certified copy of a resolution by the board of Artnell authorizing the sale of the farm and the mineral rights to the Noyes parcel. Gedvila did not receive the deposit receipt covering the agreement for the transfer and sale of the farm nor was there any mention in Smith’s letter of the existence of an ownership interest in the lease.

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Bluebook (online)
11 Cal. App. 3d 943, 90 Cal. Rptr. 251, 37 Oil & Gas Rep. 1, 1970 Cal. App. LEXIS 1789, Counsel Stack Legal Research, https://law.counselstack.com/opinion/vantress-farms-inc-v-sydenstricker-calctapp-1970.