SUTPHIN v. SPEIK

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District Court of Appeal, Second District, Division 1, California.

SUTPHIN v. SPEIK.*

Civ. 11654

Decided: February 07, 1939

John W. Preston and Crump & Rogers, all of Los Angeles, for appellant. Leland J. Allen, of Los Angeles, for respondent.

Respondent Sutphin recovered judgment against appellant Speik on April 5, 1934, in an action brought by him to recover certain oil royalties under an assignment of a five per cent participating royalty interest in the gross total production of all oil, gas and other hydrocarbons produced, saved and sold from a well located upon two certain lots in the Huntington Beach oil district, said assignment covering a well being drilled thereon or any substitute well. The judgment also gave title to respondent of a five per cent interest in the total production of oil, gas and other hydrocarbons produced, saved or sold from said property “whether the same is produced from one or more wells upon said premises”.

Said judgment was affirmed by this court upon appeal (Sutphin v. Speik, 15 Cal.App.2d 516, 59 P.2d 611), and a petition for hearing therein was denied by the Supreme Court.

The instant action, based upon the aforesaid judgment, is for royalties accruing subsequent to said judgment and the matter is again before this court on an appeal from a judgment rendered by the trial court on July 6, 1937, in favor of respondent Sutphin for the sum of $31,932.54 and interest.

At the time the assignment was made to respondent a well known as well No. 3 was being drilled upon the property in question, which well was later completed and placed on production. Thereafter, the derrick and machinery surrounding this well were destroyed by fire and in June, 1933, appellant redrilled said well, using part of the same hole and casing, and renamed it well No. 3–A. This latter well was placed on production in August, 1933, and in October, 1933 well No. 4 was drilled. Both wells have been producing continuously since that time, except when temporarily shut down.

In the instant action appellant denies respondent's claim to royalties on the ground that the oil produced from well No. 4 does not emanate from the lots referred to in the former judgment, but comes from without the lateral limits of said lots, to-wit: from the tidelands of the state of California which underlie the Pacific ocean; that said well No. 4 is what is commonly known as a “whipstock well”, drilled diagonally to and into an oil-producing sand under the ocean, more than two thousand feet from the said leasehold property.

Respondent answers that the total production of oil and gas in the instant case was reduced to possession at the mouths of wells Nos. 3–A and 4, located upon the two lots, and that title thereto vested in respondent and appellant according to their respective interests at that time and not before.

The trial court found as to this issue: “That it is immaterial whether or not wells 3–A and 4 are, or are commonly known as, ‘whipstock wells', or whether or not they are drilled diagonally; because of the doctrine of res judicata said issues do not constitute a defense in this action which is based upon the former judgment. * Plaintiff has an estate, right title and interest amounting to five per cent in said well No. 4 and in and to the oil, gas, asphaltum and other hydrocarbons produced, saved or sold therefrom and the moneys derived from such sale.”

Appellant maintains that such findings are erroneous because the rights in the production of oil and gas in areas beyond the limits of the lots in question were in nowise determined by the judgment in the prior action. Appellant also contends that it was prejudicial error for the trial court to reject his offer to prove that since the rendition of the prior judgment he had acquired from the state of California a new and independent right to produce oil and gas from beneath the tidelands, and that the trial court employed the doctrine of res judicata to actually destroy such unlitigated property right in appellant which he acquired in October, 1934, under an agreement with the state of California.

During the trial of the first action, to-wit, on or about February 1, 1934, it was brought out in evidence by counsel for appellant upon his voir dire examination of the witness Amlin that the wells on lots 12 and 14 drew oil from the supply or pool underlying the tidelands along the ocean, therefore the defense which appellant here urges was available to him during the trial of the original action. At any rate, if he did not definitely know that wells Nos. 3–A and 4 were producing oil from the pool underlying the ocean he did know that such a possibility then existed and he could very readily have alleged that fact as a defense to the supplemental complaint which was filed in the original action on March 19, 1934. Not having taken advantage of that opportunity, he is estopped to urge such defense in the instant action. So far as appellant's agreement with the state of California is concerned, respondent was not a party thereto and cannot be bound thereby, especially in the face of the judgment in the original action, which was rendered on April 5, 1934, when both wells Nos. 3–A and 4 were actually producing, said judgment reciting as follows: “2. That the plaintiff, I.O. Sutphin, is the owner of five per cent of the total production of oil, gas and other hydrocarbons produced, saved or sold from lots 12 and 14 block 118, in the Huntington Beach Seventeenth Street Section, as per map thereof in book 4, page 10 of miscellaneous maps, records of the county of Orange, state of California, whether same is produced from one or more wells upon said premises, and as such owner plaintiff is entitled to receive all moneys derived from the sale of said five per cent of the total production of oil, gas and other hydrocarbons from said lots 12 and 14.”

So long as the oil and gas are reduced to possession at the mouths of wells Nos. 3–A and 4 which are located upon the lots covered by the original assignment to respondent, title to his proportionate share thereof is vested in respondent by virtue of the prior judgment upon which the present action is based.

In Price v. Sixth District Agricultural Association, 201 Cal. 502, 258 P. 387, a leading case on the question here being considered, it was stated at page 509, 258 P. at page 390, quoting from 23 Cyc. 1215:

“ ‘A fact or question which was actually and directly in issue in a former suit, and was there judicially passed upon and determined by a domestic court of competent jurisdiction, is conclusively settled by the judgment therein, so far as concerns the parties to that action and persons in privity with them, and cannot be again litigated in any future action between such parties or privies, in the same court or in any other court of concurrent jurisdiction, upon the same or a different cause of action.’ * Appellants, however, apparently have a misconception of this rule. They seem to contend that an issue heard and determined in a former case is binding only as to such grounds supporting or opposing said issue as were actually urged and litigated. But an issue may not be thus split into pieces. If it has been determined in a former action, it is binding notwithstanding the parties litigant may have omitted to urge for or against it matters which, if urged, would have produced an opposite result. In other words, when an issue has been litigated all inquiry respecting the same is foreclosed not only as to matters heard but also as to matters that could have been heard in support of or in opposition thereto. This rule has been aptly stated as follows: ‘It is important to note in this connection, however, that even though the causes of action be different, if the second action involves a right, title or issue as to which the judgment in the first action is a conclusive adjudication, the estoppel so far as that right, title or issue is concerned must likewise extend to every matter which was or might have been urged to sustain or defeat the determination actually made.’ (Freeman on Judgments, 5th ed., sec. 677, p. 1432.) To the same effect see Sullivan v. Triunfo Gold etc. Min. Co., 39 Cal. 459. Numerous California cases may be found where this rule has been applied.

“This principle also operates to demand of a defendant that all his defenses to the cause of action urged by the plaintiff be asserted under the penalty of forever losing the right to thereafter so urge them. The rule has been stated as follows: ‘The defendant in an action is ordinarily required to set up all his defenses which do not constitute separate causes of action and if he neglects to do so is concluded by the judgment rendered in such action. The judgment operates as res judicata, not only in regard to the existence of the plaintiff's cause of action, but as to the nonexistence of the defense which was not pleaded. The reason for this rule lies in the principle that there must be an end to litigation and, where a party has an opportunity to present his defense, and neglects to do so, the demands of the law require that he should take the consequences.’ (15 R.C.L. § 446, pp. 969, 970.)” (Italics added.)

See, also, Nelson v. Lake Hemet Water Co., 212 Cal. 94, 99, 297 P. 914, 916, where it is stated: “It is therefore not germane to review the events transpiring prior to this adjudication, as all questions which could have been raised prior to the judgment are conclusively deemed to have been presented, and all proof that could have been presented is conclusively presumed to have been received. Price v. Sixth District, 201 Cal. 502, 258 P. 387. *” (Italics added.)

Again in Edmonds v. Glenn–Colusa Irr. Dist., 217 Cal. 436, 446, 19 P.2d 502, 506, it is stated: “ ‘A former judgment between the parties to an action is conclusive, in all subsequent actions involving the same question, not only as to matters actually decided in the former controversy, but as to all matters belonging to the subject of the controversy and properly within the scope of the issues which also might have been raised and determined.’ Southern Pacific Co. v. Edmunds, 168 Cal. 415, 143 P. 597, 598; Curtis v. Upton, 175 Cal. 322, 165 P. 935; Philbrook v. Newman, 148 Cal. 172, 82 P. 772; Estate of Harrington, 147 Cal. 124, 81 P. 546, 109 Am.St.Rep. 118. *” (Italics added.)

In support of his contention, appellant cites the case of English v. English, 9 Cal.2d 358, 70 P.2d 625. That was an action to rescind a separation agreement settling property rights between husband and wife on the ground that the agreement was procured by fraud and duress rendering it void. The defendant and appellant in that case contended that a former judgment which directed the payment of certain instalments of the separation agreement necessarily determined the validity thereof and constituted res judicata of the issues presented in the proceeding to rescind said agreement so as to estop the plaintiff from asserting the invalidity of the said agreement. It was held page 363, 70 P.2d page 628, that the contract or agreement was severable and that each instalment represented a different obligation. “The validity of the contract was not raised by the pleadings nor was it a direct issue in the former case. Judgment was rendered in the first case by default. Under such circumstances the parties are not estopped from raising the issue of fraud, coercion, or duress in a subsequent suit upon a different obligation.”

The cited case is not applicable to the case now under consideration. No question arises here as to the validity of the assignment, and furthermore, the question of fraud in the inception of the assignment is not involved.

Therefore, since the defense here urged is one which was within the power of appellant to present during the trial of the original action, he is estopped to raise it in the instant action, and the trial court was bound, as is this court, by the judgment in the original case of Sutphin v. Speik, 15 Cal.App.2d 516, 59 P.2d 611.

The judgment is affirmed.

YORK, Presiding Justice.

We concur: DORAN, J.; WHITE, J.