Majority
This is an action for declaratory relief. It was alleged in the complaint that for several years past plaintiff had been the owner of eight and one-quarter per cent “of the oil, gas and other hydrocarbon substances produced, saved and sold from the East half of Lot Five (5) in Block one (1) of Webber Tract No. Two (2) ”, in Los Angeles County; that by mesne assignments the defendant Three-In-One Petroleum Corporation acquired the lease to said premises and sublet the same to the defendant G. C. Fair-child, who in December, 1927, entered into a contract with the McKeon Drilling Company to complete the drilling of an oil-well thereon and bring the same on production; that as a result of said contract plaintiff’s ownership in a portion of the oil production from said premises was repudiated; and he asked, therefore, that his rights thereto be determined, and that he be granted such other relief as would be just and equitable. The defendants filed separate answers, consisting merely of denials of plaintiff’s ownership in any of
It appears from the evidence that on February 17, 1922, W. H. Biel, as lessee, entered into a drilling contract with R. C. Steel, whereby the latter was granted the right to drill for oil on two separate parcels of land and to receive for his services a portion of the oil produced by such drilling operations. Parcel one included property not here involved. Parcel two embraced all of lot five of the Webber Tract; and by mesne assignments plaintiff acquired an eight and one-quarter per cent interest in the oil, gas and other hydrocarbon substances produced, saved or sold as a result of the drilling operations prosecuted under the Steel contract. Pursuant to the Steel contract a producing well was completed on parcel one, and afterward a producing well was completed on the west half of parcel two (lot five). Thereafter drilling operations were started on the east half of lot five; but before the well was brought on production the hole was capped, the equipment was dismantled, removed and sold, and nothing further was done toward developing the well until about five years later, when the defendant McKeon Drilling Company, operating under the drilling contract let by Fairchild, the sublessee of the Three-In-One Petroleum Corporation, which had acquired the Biel lease, entered upon the premises, reopened the well, continued the drilling and brought the well on production. The trial court found that plaintiff was not entitled to any portion of the hydrocarbon substances produced under the McKeon contract; and the evidence supports such finding', because, as shown, plaintiff’s ownership in any of the production from said lot five or elsewhere was restricted to substances produced under the Steel drilling contract. He acquired no interest whatever in the production under the McKeon contract.
The main argument advanced by plaintiff with reference to the above finding is that inasmuch as an oil-producing well was completed on the west half of said lot five under the Steel contract the parties claiming thereunder were vested with an interest in whatever hydrocarbon substances were afterward produced, saved or sold from any part of said lot, regardless of when, how or by whom they
The trial court went much further however, and found that “the predecessors in interest of the plaintiff abandoned said premises [the east half of lot five], and all rights theretofore by them, or any of them, acquired in said premises under and by virtue of said [Steel] drilling agreement aforesaid’’, and concluded as matter of law therefrom that “plaintiff has no right, title or interest in or to any of the oil, gas or other hydrocarbon substances produced, saved or sold from the Bast Half of Lot Five. . . . ” As will be observed, the effect of such finding and conclusion was to declare a forfeiture of all future drilling rights under the Steel contract as to the east half of lot five as of the date of the rendition of said findings, to wit, July, 1929. In the state of the pleadings above set forth and in the absence of any affirmative defenses pleaded in that behalf, it may be seriously doubted, as plaintiff contends, whether the trial court had the authority to declare a forfeiture of the rights acquired under the Steel drilling contract; but, assuming that it did, the evidence, in our opinion, is legally insufficient to support a finding and conclusion to that effect. As will be noted they were based entirely upon the fact that after starting the second well on lot five the hole was capped and the equipment dismantled and sold. But the evidence shows without dispute that the lease held by Biel at the time he entered into the Steel drilling contract fixed a ten-year term. The lease was dated September 30, 1921, which gave Biel until September, 1931, to develop oil on any part of lot five, and the right to enter into drilling contracts covering the entire period of the lease. The Steel contract was drawn to that effect, no limitation of time being placed on the termination of the drilling operations to be prosecuted thereunder. In this
For -the reasons stated the judgment is reversed, with directions to the trial court to modify its findings on the issue of abandonment and thereupon to re-enter judgment defining plaintiff’s rights under the Steel contract in conformity with the views herein expressed.
Tyler, P. J., and Cashin, J., concurred.