Taylor

This is an appeal by the defendant, United States Fidelity & Guaranty Company, a corporation, from a judgment entered against it in favor of plaintiffs, based upon a bond and undertaking executed by said defendant as surety for the United States Royalties Company, a corporation.

The ease was tried by the court sitting without a jury.

The facts not in dispute are these: The plaintiffs were the owners of two lots in the Signal Hill Oil District at Long Beach, Los Angeles County, California, and on February 3, 1923, plaintiffs, as lessors, made and executed an oil and gas lease covering this property to said United States. Royalties Company as lessee. This lease was never recorded but at all times held in escrow by the Long Beach National Bank, to whom it was delivered by the parties thereto with certain written instructions. By the terms of said lease it was provided, among other things, that said lessee would within ninety days following the furnishing of a certificate of title showing the premises vested in the lessors, commence the actual drilling of a well on some portion of the leased property; or, at its option, to be entitled to a further extension of time for a limited…