O'Connell

A petition for rehearing herein was granted because we entertained some doubt concerning the correctness of the opinion heretofore filed, but upon further consideration we have concluded that the original opinion was correct, and it is now adopted as the opinion herein, as follows:

Certain real property in Los Angeles County held under lease by the appellant corporation, of which the individual appellants were directors, was acquired by them for the drilling of an oil-well. The respondents purchased certificates representing interests known as overriding royalties therein. The well was not completed, demand for a return of the moneys paid for said certificates was refused, and in an action therefor judgment was rendered in favor of the plaintiffs, from which the defendants appealed.

Following negotiations between appellant MeCaslin and respondent O’Connell, in the presence of one Charles A. Draper, during which the former offered to sell certificates, each representing a “gross over-riding royalty interest equal to one per cent (1%) of the gross proceeds received from the sale of any and all oil, gas or other hydrocarbon substances produced, saved or sold”, to quote from the…