California Court of Appeals, Second District, Sixth Division
GARY D. LEIPER, as Trustee, etc., Plaintiff and Respondent,
DENNIS GALLEGOS, Defendant and Appellant JOHN L. POOLE et al., Objectors and Respondents.
Superior Court County of Ventura P073688 Glen Reiser, Judge
Offices of Greg May and Grey May; Jones & Lester; Jones,
Lester, Schuck, Becker & Dehesa, Mark A. Lester and
Theresa Loss; Norman Dowler and Brett L. Price for Defendant
and Appellant Dennis R. Gallegos.
Musick, Peeler & Garrett and Cheryl A. Orr for Respondent
Bank of the West, co-trustee for Austin M. Barnard, deceased.
L. Poole, in propria persona, Respondent.
appearance for Plaintiff, Gary D. Leiper as Trustee.
sale of real property described in the deed as pertaining to
surface rights does not include oil and gas rights which are
“restrictions of record” in a previously recorded
oil and gas lease.
1939, Mr. E.S. Barnard, believed there was oil and gas under
a 2.3 acre lot he owned near the Ventura River, Lot 7. He
entered into a lease with a major oil company to drill for
oil and gas. Mr. Barnard was prescient. For 80 years, it has
been a steady and reliable source of oil with no end in
20 years later, Mr. Barnard conveyed fractional interests in
the oil and gas royalties to family members. Another 20 years
later, one of the fractional owners either did not care, or
was not paying attention to a $12.78 tax bill on the surface
rights to Lot 7. Upon default, the County of Ventura sold it
to the state of California. The state then sold Lot 7 to Mr.
and Mrs. Joseph Gallegos for $3000. The tax deed to the
Gallegoses was silent on oil and gas. Their son, Dennis,
appellant, somehow got the idea that he owned the oil and gas
under Lot 7.
trial court ruled, and we agree that appellant is the surface
owner to Lot 7 but he does not now own an interest in the oil
and gas under Lot. 7.
Gallegos appeals a quiet title judgment that a tax deed for
the sale of Lot 7 did not convey the right to receive
royalties on a 1939 oil and gas lease. The judgment states
that appellant has no interest in the oil and gas royalties
from Lot 7. Appellant claims that the trial court “got
it wrong” and “threw up its hands and deferred
entirely” to the referee's findings and
recommendations. That did not happen. We affirm but modify
the judgment to show that upon termination of the oil and gas
lease, any remaining oil and gas rights described in the 1939
Memorandum of Oil and Gas Lease revert to the surface owner.
(Code Civ. Proc. § 43; American Enterprise,
Inc. v. Van Winkle (1952) 39 Cal.2d 210, 219.)
and Procedural History
also known as assessor's Parcel 045, lies in the Ventura
Avenue Field, the tenth largest producing oil field in
California, < https://en.wikipedia.org/wiki/
Ventura_Oil_Field [as of Oct. 1, 2019], archived at
<https:// perma.cc/5DDX-A5GC>. In 1939, fee simple
owner E. S. Barnard Company entered into an oil and gas lease
with British-American Oil Producing Company that was
recorded. The lease required that British-American and
successor lessees pay oil royalties to the lessor.
1957, E. S. Barnard Company, a family company, dissolved and
conveyed its interests in Lot 7, including the oil and gas
lease, to its shareholders (the Barnards and Pooles;
hereafter, fractional owners). In 1977, the fractional owners
entered into an agency agreement titled “Barnard Oil
Trust - Hartman - Barnard Leases” (Barnard Oil Trust)
for the distribution of oil and gas royalties.
Ventura County Tax Assessor assessed Lot 7 using two assessor
parcel numbers: APN 063-9-190-024 and APN 063-0-190-045. The
1971-1972 tax assessment roll for APN 063-9-190-024 listed a
$14, 775 valuation for “LAND Assessed Value of Real
Estate and Mineral Rights Except Improvements.” The APN
063-9-190-024 tax bill was mailed to Gulf Oil Corporation,
the successor lessee. The tax assessment roll for APN
063-0-190-045 listed a $100 valuation for “LAND
Assessed Value of Real Estate and Mineral Rights Except
Improvements.” The $12.78 tax bill for APN
063-0-190-045 was mailed to “Barnard HA Attn Barnard
Austin M” in Long Beach.
Austin M. Barnard “defaulted” on the $12.78 tax
bill, Ventura County Tax Collector sold Lot 7 to the State of
California for $12.78. The Conveyance of Real Estate
described the property as APN 063-0-190-045 but was silent on
mineral rights. On February 10, 1978, State of California
sold Lot 7 at a public auction to appellant's parents,
Joseph and Ruby Gallegos for $3, 000. The tax deed described
the property as APN 063-0-190-045. After Joe Gallegos died,
Ruby Gallegos deeded Lot 7 to appellant.
to Quiet Title; Oil Lease Royalties Interpleaded
appellant received a letter from the successor lessee, Aera
Energy LLC (Aera), describing the extent, timing, and
location of the oil extraction operation. (Civ. Code, §
848.) Responding to the letter, appellant claimed that Aera
“was potentially trespassing and drilling on his
property....” Appellant further claimed that he was
entitled to 5.714 percent of the royalties, representing H.A.
Barnard's fractional interest. This caused Aera to
suspend distribution of the oil royalties. Appellant
tentatively settled the dispute with Gary Leiper, trustee of
the Barnard Oil Trust. The proposed agreement provided that
appellant would receive $12, 000, plus 5.714 percent of the
impounded royalties and future royalties. But the proposed
settlement agreement required approval by the Ventura County
Superior Court. Trustee filed a petition to confirm the
“trust assets” in accordance with the settlement
agreement. (Prob. Code, § 850.)
filed a cross-petition to interplead the oil royalties ($177,
000) and deposited the money with the trial court. John L.
Poole, a Barnard Oil Trust fractional owner, objected to the