MACNICOL v. EAST COALINGA OIL FIELDS CORPORATION ET AL.
This is an appeal from a judgment against appellants and in favor of respondents in an action brought to quiet title to certain lots and parcels of land and for declaratory relief under certain written instruments. The property involved is situated in Fresno County and the action was brought in the superior court of that county, and, by stipulation, was transferred to Merced County for trial. The action was tried before the court without a jury and certain of the facts were stipulated to by the parties. Oral and documentary evidence also was introduced in support of the respective issues raised by the pleadings.
Appellant's opening brief contains a statement of the facts and respondent, in its brief, states that the statement of facts set forth in appellant's opening brief is sufficient for a determination of the questions involved on this appeal. Therefore, for the purposes of this opinion, that statement of facts is adopted and it is as follows: About 1919 one George Schwinn and Mattie Kearns were the owners of a tract of land in Fresno County; the tract was subdivided into blocks and lots and a map of said subdivision showing certain portions to be designated as County Roads was filed for record on July 15, 1919; the subdivision contained 20 blocks, each block containing 120 lots, making a total of 2400 lots. 2160 of the lots of the subdivision were designated as single lots and 240 of the lots were designated as double lots.
On July 29, 1919, the respondent, East Coalinga Oil Fields Corporation was incorporated under the laws of the State of California, the incorporators thereof being said George Schwinn, one Gordon Griffith, and P. B. Miller.
By deed dated September 1, 1919, the owners of said tract of land conveyed blocks 1 to 20 inclusive of said subdivision to the Alameda County Title Insurance Co., as trustee, with instructions to said title company to execute and deliver deeds to purchasers of lots upon receiving certain moneys therefor.
At about the time of the conveyance of said blocks and lots to said title company, the owners of said tract authorized the respondent, East Coalinga Oil Fields Corporation, to act as sole sales agent of said lots.
Pursuant to said authorization to act as sales agent of said lots, respondent made application to and obtained from the Commissioner of Corporations of the State of California, a permit, authorizing it to sell said lots for the amount and for the purposes and upon the conditions set forth in said permit.
According to the provisions of said permit, issued by the Commissioner of Corporations, respondent was authorized to sell lots in said subdivision and to issue to each purchaser of such lots an instrument representing the deed of the lot sold together with a contract or agreement to drill for and produce oil from said tract of land, said contract or agreement to be in the form and containing the terms and conditions as evidenced by a copy thereof attached to the amended complaint filed herein marked Exhibit “C.”
Upon the issuance of said permit the respondent commenced the sale of lots in said subdivision by reference to the map thereof, appellant's predecessor purchasing the two lots described in the amended complaint.
At the time of the sale of each lot each purchaser, including appellant's predecessor, executed a drilling contract, according to the terms of which it was agreed, among other things, that each lot contained 2500 square feet; that lots in the northerly tier of blocks 1 and 2 and in the southerly tier of blocks 19 and 20, should be computed as double lots as to price and as to participation in profits; that each purchaser should receive a proportionate share of 80 per cent of all net profits arising from the sale of oil derived from any oil well or wells drilled on any part of said quarter section and respondent should retain 20 per cent of said profits which were reserved; that the tract was believed to be oil bearing and not otherwise productive and that the subdivision was made for mining purposes only; that the grantee was an independent purchaser of a parcel of land in fee simple, having as an incident thereto a right to receive a portion of the net proceeds from the sale of oil produced from any well or wells drilled upon said tract by respondent or its successors or assigns.
Prior to the date of the execution and delivery of any deeds covering any lots in said subdivision but subsequent to the execution of drilling contracts by purchasers of lots, the Alameda County Title Insurance Company, as trustee, by deed dated April 28, 1921, conveyed blocks 1 to 20, inclusive, of said subdivision to respondent, and about the same time the owners of said tract, George Schwinn and Mattie Kearns executed and delivered to respondent their deed to said quarter section subdivision.
Subsequent to the time that said blocks 1 to 20, inclusive, of said subdivision were deeded to respondent and commencing about May 10, 1921, respondent made, executed, and delivered numerous deeds covering lots in said subdivision to purchasers thereof. Respondent conveyed lots 58 and 59 in block 4 of said subdivision to one J. P. Cackler, appellant's predecessor in interest. Each purchaser of lots in said subdivision, including appellant's predecessor, executed and delivered to respondent a drilling contract, a copy of which is attached to the amended complaint and marked Exhibit “C.”
Pursuant to the drilling contracts executed by purchasers of lots in said subdivision, and out of the funds received by respondent from the sale of lots therein, and pursuant to the permit issued by the Commissioner of Corporations and the rights reserved by respondent under its deeds of conveyance of said lots, respondent drilled an oil well on said tract to a depth of about 4780 feet. About May, 1923, respondent discontinued its drilling operations and abandoned said well, its funds being completely exhausted and the drilling fund being expended.
After May, 1923, no further drilling operations were attempted by respondent by reason of its inability to finance such operations.
About 1938 oil was discovered in paying quantities in the general locality of the subdivision and efforts were made toward causing the tract to be prospected for oil.
As a result of these efforts, a community oil and gas lease was executed by the respondent, dated July 19, 1938, wherein one Zeb A. Terry was named as lessee, said lease covering property situated in said N. W. 1/4 of said section 30 and numerous owners of lots in said subdivision, including appellant's predecessor, executed counterparts of said community oil and gas lease. According to the terms of said oil and gas lease the lessee is entitled to drill and to produce oil, gas, and other hydro–carbon substances from the quarter section and is required to pay to the lessors thereunder a royalty on oil equal to a 1/8th of the market price of oil produced and saved from the premises and a 1/8th of the proceeds from the sale of gas produced therefrom. Respondent consented in writing to the execution of counterparts of said lease by owners of lots.
Subsequent to the 19th day of July, 1938, and prior to the filing of this action the lessee under said community oil and gas lease assigned all of his right, title, interest, and estate in and to said lease and each of the counterparts thereof covering the N. 3/8ths of said subdivision, including the counterpart thereof executed by appellant's predecessor, to the Pure Oil Company, a corporation, and said lessee assigned to the Pacific Western Oil Corporation and George F. Getty, Inc., the S. 5/8ths thereof. Drilling operations were commenced in said subdivision by the owners of said lease and oil and gas are now being produced therefrom.
No county roads or streets or roads or streets whatsoever were ever laid out, maintained, or used on said quarter section as designated on the map thereof.
The land lies in the foothill area on the west side of the San Joaquin Valley. It is a general rolling foothill area used for sheep pasture, with no manifestation of ownership or development or subdivision.
In addition to the foregoing statements of fact, it was stipulated by the parties herein as follows: “That it was not the intention of the grantors or of the grantees of said property that any county roads or streets or avenues ever be laid out, maintained or used on, over or across said premises as designated and delineated upon said map of said subdivision, a copy of which said map is attached to plaintiff's amended complaint and marked ‘Exhibit A’, and that said subdivision was made for the sole purpose of selling pieces or parcels of land therein in order to finance the drilling of an oil well or oil wells thereon and for no other purpose whatsoever.”
Under the first cause of action seeking to quiet title there is involved the question as to whether the conveyance of the two lots described in the complaint carried title to the center of the proposed road upon which these lots were located. Section 831 of the Civil Code of this state provides that an owner of land bounded by a road or street is presumed to own to the center of the way, but the contrary may be shown; and section 1112 of the Civil Code provides that a transfer of land bounded by the highway passes the title of the person whose estate is transferred to the soil of the highway in front of the center thereof, unless a different intent appears from the grant.
The filing of the map with the streets and avenue delineated thereon constituted an offer to dedicate the roads, streets, and avenue to a public use. In supplement to the agreed statement of facts it was stipulated beween the parties that there was endorsed upon the map filed for record the following: “State of California, County of Fresno, ss. The Board of Supervisors, in and for said County and State, hereby approve the accompanying map and accept on behalf of the public and for public use, all the streets, avenues, Court, Highways, Alleys and Lanes, offered for dedication thereby. In Witness Whereof, said Board of Supervisors by resolution duly adopted has caused these presents to be signed by its Chairman, and attested by its clerk, this 14th. day of July, 1919. J. B. Johnson, Chairman, Attest: B. M. Barnwell, Clerk, By J. R. Schaeffer, Deputy.”
The filing of the map and the foregoing acceptance by the board of supervisors constituted a complete paper dedication and when the owner, after recording such a map, sells lots designated thereon by reference to said recorded map, he thereby irrevocably dedicates the streets and alleys shown thereon to the use of the public. Larkey v. Los Angeles, 70 Cal.App. 635, 233 P. 991, and cases therein cited. In the case of Elliott v. McIntosh, 41 Cal.App. 763, 183 P. 692, 693, it is said: “Proceeding from this proposition it must follow that if lots are sold by number and not by metes and bounds, reference being made to such a map, the original dedicator is estopped to deny that the portions designated as streets on the map were not in fact dedicated or accepted. Furthermore, conveyances of such a character carry title to the center of the street. Colegrove Water Co. v. Hollywood, 151 Cal.  426, 431, 90 P. 1053, 13 L.R.A.,N.S., 904; section 1112, Civ.Code. But this, of course, is not the case if the portion claimed as a street is not such in fact. Sanchez v. Grace Methodist [Episcopal] Church, 114 Cal. 295, 299, 46 P. 2.”
As to whether there is a valid and complete dedication, an intention to dedicate to a public use is a material element to be considered in determining if there has been in fact such a dedication. In People v. Rio Nido Co., Inc., 29 Cal.App.2d 486, at page 491, 85 P.2d 461, at page 465, it is said: “To constitute a valid and complete dedication, there must be an intention by the owner, clearly indicated by his words or acts, to dedicate the lands to public use (City of Venice v. Short Line Beach L. Co., 180 Cal. 447, 450, 181 P. 658), and an acceptance either by public user or formal resolution. (Brown v. Bachelder, 214 Cal. 753, 7 P.2d 1027).”
A dedication, being a voluntary transfer, as pointed out in County of Inyo v. Given, 183 Cal. 415, 191 P. 688, partakes both of the nature of a grant and also a gift, and is governed by the fundamental principles which control such transactions. It consists of an offer and acceptance and both of those elements must be clearly and definitely established. There must be the intention of the owner to dedicate to public use clearly indicated by his words or acts, and unequivocal proof of the acceptance.
In Manhattan Beach v. Cortelyou, 1938, 10 Cal.2d 653, at page 668, 76 P.2d 483, at page 490, the court said: “In order to constitute a valid dedication, there must be an intention on the part of the owner to devote his property to the public use. California Nav., etc., Co. v. Union Transp. Co., 126 Cal. 433, 58 P. 936, 46 L.R.A. 825; Niles v. Los Angeles, 125 Cal. 572, 58 P. 190.”
In the instant case the public is not seeking the use of any of the roads or of the avenue specified on the map and it is not necessary to consider the rights of the public to their use. In the case of the City of Santa Clara v. Ivancovich, 47 Cal.App.2d 502, 118 P.2d 303, 307, it is said: “There is a distinction between the rights accruing to the public generally and the purchasers of lots according to a map upon an offer of dedication. Eltinge v. Santos, 171 Cal. 278, 152 P. 915, (Ann.Cas.1917A, 1143); People v. Reed, 81 Cal. 70, 79, 22 P. 474, 15 Am.St.Rep. 22.” The deed conveying the lots in question to the predecessors of applicant, the drilling contract entered into in connection with the conveyance and the permit of the corporation commissioner are all a part of the same transaction and must be considered together to ascertain the intent of the parties. The subject matter of the transaction was the sale and conveyance of the lots for the purpose of securing the necessary finances to drill for and produce oil from the quarter section of land of which the described lots were a part, and if oil was found and produced, to provide for its sale and the distribution of the proceeds thereof. The transaction was one for mining purposes only. Considering the stipulated fact that there was no intention on the part of respondent as grantor and the grantees that on the described subdivision no county roads, or streets, or avenues should ever be laid out, maintained, or used on, over, or across said premises as designated and delineated on said map of said subdivision, and that said subdivision was made for the sole purpose of selling pieces or parcels of land thereof in order to finance the drilling of an oil well or oil wells thereon, and for no other purpose whatsoever; the fact that the single lots were of the area specified and contained 2500 square feet and that the larger lots contained double the area of the single lots, and that a period of approximately twenty years elapsed after the acceptance by the Board of Supervisors of Fresno County and no streets, roads, or avenues were located on the ground or constructed, it seems apparent that as between the grantor, respondent herein, and its grantees, to whose rights appellant herein has succeeded, there was the clear intention that there should not be such a dedication as would vest in the grantee of the lots and their successors any title to the portion of the tract embraced within the boundaries of the streets, roads, and avenues delineated and designated upon the map.
We are satisfied that the finding of the trial court that no title is vested in appellants to the portion of the subdivided tract to the center of the street upon which the lots bounded as designated upon the map is sustained by the evidence, and that it should not be the province of this court to disturb such finding.
The consideration of the second count of the amended complaint wherein a determination of the rights of the parties as to the declaratory relief sought also requires a construction of the several instruments upon which such rights are predicated and, specifically, as to the rights of the parties to the gas and other hydrocarbon substances produced in connection with the drilling operations for oil, which are to be ascertained. The question as to these rights will first be considered as they existed prior to the execution of the Zeb A. Terry leases.
We have said that the deed, drilling contract, and corporation commissioner's permit must be construed together to ascertain the contractual relations between the parties to this action. Also, the facts as shown from the dates of these instruments to the date of the filing of the complaint, together with the construction which the parties have placed upon the transactions must be considered. This latter construction enters very materially into the determination to be reached as to the respective rights of the parties. In the statement of facts into which the parties entered, it is stipulated as follows:
“That at the time of the execution and delivery of the deeds by the East Coalinga Oil Fields Corporation covering said lots in said subdivision and at the time of the execution of said drilling contracts by the purchasers of said lots by the East Coalinga Oil Fields Corporation, ‘gas' was of no particular or special value and the right of the grantees of said lots to participate in any profits derived from the sale thereof was not within the contemplation of the parties and it was not intended that any rights to any gas was to be transferred or conveyed by the grantor to said grantees of said lots.”
The deed to J. P. Cackler, appellant's predecessor in interest, is in form a grant deed and conveys the lots involved, together with other lots of the subdivision, free and clear of all incumbrances other than therein contained, reserving unto said East Coalinga Oil Fields Corporation, for a period of fifty (50) years from the date hereof, the exclusive right to drill for oil upon said described quarter section. The drilling contract referred to provided that upon payment in full of the purchase price, the East Coalinga Oil Fields Corporation by good and sufficient deed, will convey, or cause to be conveyed, to each purchaser, the lot or lots so paid for, which conveyance shall provide that the grantee in said deed, his heirs or assigns, shall receive a proportionate share of the eighty per cent (80%) of all of the net profits arising from the sale of oil derived from any oil well or wells which the East Coalinga Oil Fields may drill on any part of the above quarter section, and in the proportion that the number of lots conveyed by said deed bears to the total number of lots in said quarter section subdivision, and the East Coalinga Oil Fields Corporation shall retain twenty per cent (20%) of the said net profits, as its share and proportion of the net production of said well or wells, which is hereby reserved, together with the exclusive right to drill for oil on said quarter section.
The corporation commissioner's permit provides that with the purchase of each lot, the purchaser received in addition to the conveyance of the tract purchased, a drilling contract, or agreement, of this corporation to drill for oil within certain reserved lots in said tract, together with the right of participation proportionately in 80 per cent of the net profits arising from the sale of oil derived therefrom.
Pursuant to its application, said company is permitted to sell 1000 lots at the price of $110 per lot for each single lot, or $220 per lot for each double lot, as indicated in the application herein, and to issue to each purchaser of such lots, an instrument representing the deed of the respective lot sold, together with a contract or agreement to drill for and produce oil from the drill sites in said tract.
The above tract of land is believed to be oil bearing and not otherwise productive, and the subdivision is made for mining purposes only. It is further understood that the grantee is an independent purchaser of a parcel of land, in fee simple, having as an incident thereto a right to receive a portion of the net proceeds from the sale of any oil produced from any wells drilled upon said tract, by the East Coalinga Oil Fields Corporation, its successors and assigns. The deed, on its face, conveys title in fee and the drilling contract states the title to be one in fee. It is the intent of the parties at the time of the execution of the several instruments which is controlling, and this intent must be ascertained from all of the instruments considered together. This rule of construction we deem to be so well settled as not to require a citation of authorities. In view of the provisions of the stipulation of the parties herein, a detailed analysis of the terms of the several instruments involved is considered unnecessary. It is sufficient to say that the whole transaction evidenced a scheme or method by which the oil from the whole subdivision might be developed and produced, and the resulting profits therefrom distributed.
The kind or character of title vested in the respective parties hereto under the conveyances and drilling contract involved herein has been before the courts of this state a number of times in cases wherein there were involved written instruments similar or analogous to those involved herein. In the drilling contract involved herein it is provided that “the East Coalinga Oil Fields Corporation shall retain twenty per cent (20%) of the said net profits, as its share and proportion of the net production of said well or wells, which is hereby reserved, together with the exclusive right to drill for oil on said quarter section.” Under this drilling contract the exclusive right to drill for oil upon the premises was, by the deeds, limited to a period of fifty years but the rights of the grantor to participate in the profits resulting therefrom was not limited but was to continue perpetually. It appears to be well settled in this state that where the interest sold and conveyed or reserved is unlimited in duration, it is a freehold interest, an estate in fee in real property. Callahan v. Martin, 3 Cal.2d 110, 43 P.2d 788, 101 A.L.R. 871; Dabney–Johnston Oil Corporation v. Walden, 4 Cal.2d 637, 52 P.2d 237; Schiffman v. Richfield Oil Co., 8 Cal.2d 211, 223, 64 P.2d 1081; Dabney v. Edwards, 5 Cal.2d 1, 12, 53 P.2d 962, 103 A.L.R. 822; Pimentel v. The Hallbaker Co., 32 Cal.App.2d 697, 703, 90 P.2d 588; Lever v. Smith, 30 Cal.App.2d 667, 87 P.2d 66. We are of the opinion that grantees of the lots were vested with title not only to the surface of the lots but also with a fee simple title thereto but excepting therefrom the rights expressly, inferentially, and incidentally reserved by the grantor as contained in the deed and the drilling contract when considered together but that any title to the portion of the subdivision embraced within the proposed roads or avenue delineated upon the map did not vest either as to surface or soil but remained in the grantor.
From the stipulated fact that there was no intention at the time of the conveyance to vest title in the grantees in and to any gas or carbohydrates taken in connection with the purposes of the transactions, as we construe the conveyances and drilling contract, it is clear that, irrespective of whether title in fee was attempted or intended to be conveyed, the rights to the gas and carbohydrates produced were reserved by the grantor. Those rights remained in the grantor unless relinquished by the Zeb A. Terry leases.
The record herein does not disclose whether casing–head gas has been found upon the quarter section subdivision involved and no mention of casing–head gas appears in the proceedings before the trial court but in the Terry lease the subject of casing–head gas is mentioned, the provision being as follows: “If casing–head gas is manufactured or extracted on the premises, or elsewhere, by lessee, or others under contract, or lease on a royalty basis, from gas produced from wells on said premises, the lessee reserves the right and option to add such gasoline to the oil produced on the premises, in which case it shall be classed as crude oil. No separate accounting or settlement shall be required of lessee; if sold as gasoline, then the lessee shall pay to lessor one–eighth of such royalty or proceeds received by lessee from the sale thereof * * *.”
In respondent's brief the question of the classification of casing–head gas is discussed. Our attention is not directed to any California cases bearing upon this subject but we are referred to a discussion thereof appearing in 34 A.L.R. at page 291, and in 82 A.L.R. at page 1304. In 82 A.L.R., beginning at page 1304, it is said: “It will be observed that, while the question has frequently arisen as to whether casing–head gas is gas or oil, the solution of this question does not depend primarily on any abstract inquiry as to the nature of such gas, i. e., the question is not fundamentally an academic or scientific one, to be solved by an analysis of the component parts of the gas, but is a question of construction of the terms of the lease or other contract, in the effort to determine the intent of the parties thereto; and the popular rather than the scientific understanding of the term is the more important usually in determining the rights of the parties. * * So, casing–head gas was held in Livingston Oil Corp. v. Waggoner, Tex.Civ.App., 1925, 273 S.W. 903, to be a constituent of oil, as the term ‘oil’ was used in the contract of lease * * *.” After referring to the testimony of an expert witness concerning the method of extracting casing–head gas, the court says:
“ ‘From this statement of the witness's testimony, it will be observed that casing–head gas is a constituent element of oil; that, in place, it is realty, not personal property. Whether gas or oil, it is, as announced by Chief Justice Hall, speaking for this court in the case of American Ref. Co. v. Tidal Western Oil Corp., Tex.Civ.App., 1924, 264 S.W. 335, writ of error denied in 1924, 114 Tex. 583, 278 S.W. 1114, the settled law in Texas that they are, in place, realty. It is conclusively shown by the testimony of appellant's own witness that casing–head gas is in liquid form in the earth, that it is a constituent of oil, and in order to remove it from the earth it must be vaporized and then carried to the surface, where it is again condensed in liquid form. We think the trial court, upon the evidence before him, rightly concluded that casing–head gas was included within the term “oil,” and that the appellant (lessee) was required under his contract to account to appellee Waggoner for one–eighth thereof on the basis of oil.’ The construction of the contract of lease placed by the parties upon it was one of the factors taken into consideration by the court in reaching the above conclusion. * * *
“And the view was taken in George v. Curtain, 1925, 108 Okl. 281, 236 P. 876, that, where the lease was made prior to the time when casing–head gasoline was known to have a special value, and no mention was made of casing–head gas to be taken from oil wells, it must be held that that subject was not within the contemplation of the parties when the contract was entered into, and was therefore not covered or controlled thereby.
“So, in Hammett Oil Co. v. Gypsy Oil Co., 1923, 95 Okl. 235, 218 P. 501, 34 A.L.R. 275, the position was taken that gasoline manufactured from casing–head gas is neither oil nor gas within the contemplation of an oil and gas lease which makes no reference to such gas, if nothing appears to indicate that the parties have contracted concerning the same.
“And in Ludey v. Pure Oil Co., 1932, 157 Okl. 1, 11 P.2d 102, the court in the syllabus says that ‘casinghead gas is neither oil nor gas within the contemplation of an oil and gas lease which makes no reference to casinghead gas and nothing appears to indicate that the parties have contracted concerning the same.’ The lease in this instance was the common one providing for a royalty of one–eighth of the oil and a fixed sum per year per well where gas was marketed and used off the premises. None of the wells produced gas only, but all were oil wells. And it was held that casing–head gas therefrom belonged to the landowners, because in the lease no mention was made of casing–head gas. * *
“* * * In Reynolds v. McMan Oil & Gas Co., Tex. [Com.App.], 1928, 11 S.W.2d 778, rehearing denied in 1929, Tex. [Com.App.], 14 S.W.2d 819, in which the lease did not expressly refer to casing–head gas, and, at the time it was made, gas, whether wet or dry, was considered practically as waste, except for the purpose of fuel. The court held that the lessee must pay for casing–head gas as oil, where it used the same for the manufacture of gasoline.
“And in Gilbreath v. States Oil Corp., [5 Cir.], 1925, 4 F.2d 232, writ of certiorari denied in 1925, 268 U.S. 705, 69 L.Ed. 1167, 45 S.Ct. 639, it was held that casing–head gas or gasoline must be considered as part of the oil, since it partook of the nature of that substance, rather than what is ordinarily known as natural gas, so as to entitle the lessor to the stipulated royalty of one–eighth of the oil. * * *
“In Twin Hills Gasoline Co. v. Bradford Oil Corp. [D.C., 264] F. , supra, the court said that the evidence showed that casing–head gas is a component part of oil; that it is not made from dry gas, but is a product of wet gas, which exists only with oil.”
It appears from the foregoing authorities defining the term “casing–head gas” that casing–head gas is a component part of oil, and we are of the opinion that as the stipulation herein as to the fact of the intention of the parties as to the gas having been entered into subsequently to the determination reached in the foregoing cited cases, that as between the parties herein casing–head gas was not intended to be covered by the stipulation and that casing–head gas, if any was produced, should be classified and considered as oil.
It is the contention of appellant that respondent waived any interest it may have had in and to the proceeds derived from the sale of oil and gas produced, saved and sold from the premises by consenting to the execution and delivery of the Terry oil and gas lease. On the other hand, respondents contend that by this consent it did not waive any of its rights, except its right to drill and prospect the premises for oil and gas as provided in the Terry lease. In determining this question the situation existing at the time of the execution of that lease to Terry by respondent and its consent to the execution of identical Terry leases by the lot owners, must be considered.
In connection with this situation, C. Ray Robinson, president of the East Coalinga Oil Fields Corporation, testified substantially that “under the deeds and in accordance with the stipulated facts, the East Coalinga Oil Fields Corporation had a reserved right to drill for oil on this property for a period of fifty years, and had a right to take twenty per cent received from the sale of oil under the terms and conditions reflected by the contract and deed; the lots had been sold for taxes, a substantial portion of them, and, in addition to that, the thing was in a hopeless state of confusion by virtue of diversified ownership. I might say at the present time there are approximately eight hundred owners in this subdivision. Various interests and groups were seeking, through one theory or another, to get control of this property or some part of it, the thought being to get an acre drilling site or something in a position where you could put down a well. I acquired an interest and represented others who owned the balance of the interest in the corporate stock. * * * Various large lot owners and those of us interested in the corporation, and I might say that the corporation owns interests in some of the lots there, finally worked out a plan to where this property could be developed or drilled if we could get our title cleared under this community lease. The community lease was then signed by a large number of people. The question of whether the lease was of any effect or not by virtue of our reserving drilling rights was of vital importance. The land owners took the attitude they put their money in and were entitled to a play on the situation. In other words, entitled to have the property developed. We had no desire to hinder the matter so we simply worked together with them, consenting that they could lease the property under the drilling contract, reserving to us whatever rights that we had in the particular subdivision at that time. In other words, the main thought being to get the property developed and see whether or not there was any oil there and whatever the rights of the parties were would be retained in status quo by virtue of these agreements.”
The consent of respondent to the Terry lease is as follows:
“Whereas, East Coalinga Oil Fields Corporation is the owner of the exclusive right to drill on the Southwest Quarter (SW1/4) of Section Thirty (30), Township Nineteen (19) South, Range Sixteen (16) east, M. D. B. & M., Fresno County, California, said right to drill being reserved in deeds issued by East Coalinga Oil Fields Corporation covering the lots sold in the East Coalinga Oil Fields Subdivision in said quarter section to various grantees; and
“Whereas, under date of July 19, 1938, the owners of various lots or parcels of land in the aforesaid quarter section, have executed lease agreements to Zeb A. Terry, reference to which lease agreements is hereby made; and
“Whereas, at a regular meeting of the board of directors of the East Coalinga Oil Fields Corporation, duly convened and held on Saturday, December 17, 1938, at eleven o'clock A. M., at the office of said corporation, it was agreed that the said East Coalinga Oil Fields Corporation would consent, upon certain conditions, to each and every lease in similar terms and import to said lease agreement dated July 19, 1938, heretofore or hereafter given to Zeb A. Terry or the Pure Oil Company on any lot or lots in the above described quarter section, and that the President and Secretary of this corporation be authorized to execute such consent for and on behalf of this corporation; and
“Whereas, all of the stockholders of the East Coalinga Oil Fields Corporation agreed to said action by the Board of Directors of said Corporation;
“Now, therefore, the East Coalinga Oil Corporation hereby consents to each and every lease agreement bearing date July 19, 1938, heretofore given to Zeb A. Terry by the owners of any lot or lots in the above described quarter section, and to each such lease agreement in similar form hereafter given to Zeb A. Terry or the Pure Oil Company, bearing the same date, by the owners of any lot or lots in the aforesaid quarter section, provided, however, that all such leases shall be executed prior to July 1, 1940.
“It is specifically understood and agreed that nothing herein stated shall affect the rights of the East Coalinga Oil Fields Corporation in, on or to any lot or lots in the said quarter section not leased to Zeb A. Terry or the Pure Oil Company, in accordance with the aforesaid lease agreement.”
The successors in interest under the so–called Terry leases are not parties to this action and we are not called upon to consider the effect of such leases between respondent and the successors in interest under the Terry leases, on the one hand, and as between the lot owners and such successors in interest on the other hand, as we have held that the lot owners had no right or title in or to the land embraced within the proposed roads and avenue delineated upon the map and in or to any gas, as distinguished from casing–head gas, produced in connection with the drilling for any production of oil. Therefore, specifically, we are called upon to determine whether respondent, by its consent intended to and did waive the rights which it had in and to the oil, gas, and other carbohydrates, and by such consent, to vest the title so waived in appellant and the other lot owners, or that such consent was intended to be a waiver only of its drilling rights. Also, there should be taken into consideration the fact that respondent's consent is limited to the oil and gas leases referred to as the Zeb A. Terry oil and gas leases, and that in the event of forfeiture or surrender of the lessee thereunder, respondent's right to drill the premises would be restored; and, further, that respondent's interests extended to the whole subdivision and that only a part of the subdivision was covered by the Terry leases. Under all of the circumstances appearing, we are of the opinion that if there was intent on the part of respondent, by its consent to waive more than its drilling rights, such intent should be made to appear by clear, convincing and unequivocal evidence. Such intent is not so shown but, on the contrary, considering the evidence, the written instruments in connection with all of the transactions and the circumstances appearing from the record, we are satisfied that there was no intent on the part of respondent to waive, by its consent, anything more than its drilling rights.
In its finding of fact and conclusions of law the trial court, in finding X, found that the said quarter section was subdivided only for the purpose of selling the surface rights in and to the lots and parcels of land therein. In finding XV it found that plaintiff is the owner and entitled to the possession of the surface of a total of 2500 square feet represented by lot 58 of block 4 of said subdivision, and the sum of 2500 square feet in lot 59 of block 4 of said subdivision. In finding XVI, referring to the lots, “the surface of which is owned by plaintiff,” and in its conclusions of law in paragraph I, it is found that plaintiff, Lee Alex MacNicol, is the owner of and entitled to the surface rights, in, over, and upon all that certain real property (describing said lots) and that in the decree it is determined that plaintiff, Lee Alex MacNicol, is the owner of, and entitled to the surface rights in, over, and upon all that certain real property (describing said lots).
We are of the opinion that it is not necessary to a decision in this case to limit plaintiff's ownership merely to the surface rights but that plaintiff is the owner of a fee title in the lots subject to the rights, reservations, and exceptions as hereinbefore indicated. Therefore, the findings and conclusions of law and decree should be amended so as to effect this modification.
The whole situation was before the trial court and it reached its determination of the intention of the parties from a construction of the instruments involved, together with the evidence and stipulated facts. This construction appears to be reasonable and in accordance with the intent of the parties. Under these circumstances, the principle set forth in the case of Bodkin v. Silveira, 49 Cal.App.2d 1, 120 P.2d 910, 914, particularly applies: “It is a well established principle of law that when the construction given an instrument by a trial court appears to be reasonable and consistent with the intent of the parties making it, courts of appellate jurisdiction will not substitute another interpretation, even though it seems equally tenable. Estate of Bourn, 25 Cal.App.2d 590, 78 P.2d 193; Adams v. Petroleum Midway Co., Ltd., 205 Cal. 221, 270 P. 668; Kautz v. Zurich Gen. A. & L. Ins. Co., 212 Cal. 576, 300 P. 34; Estate of Boyd, 24 Cal.App.2d 287, 74 P.2d 1049; Estate of Burnett, 42 Cal.App.2d 427, 109 P.2d 26; Coviello v. Moco Fruit Co., Inc., 42 Cal.App.2d 637, 109 P.2d 765.”
Modification of the findings of fact and conclusions of law by the trial court is directed in accordance with the foregoing ruling, and it is ordered that upon such modification the judgment be affirmed.
MONCUR, Justice pro tem.
THOMPSON, Acting P. J., and TUTTLE, J., concurred.