Welch
Security-First Nat. Bank of Los Angeles v. Welch
Opinion
Lead Opinion
Neterer, J.
Reversal is sought of a judgment in favor of appellee, denying recovery of a tax claimed to have been erroneously paid on appellant’s net income for the year 1924.
Appellant, as trustee, received distribution of the residuary estate of one Klein-meyer, November 15, 1916, in which was included the lands, the basis of this controversy, and which will be referred to as leased land. The fair market value, on that date, of the leased land was $50,997.69. This land had no known oil value on said date.
The leased land was located in the so-called “Torrance” oil field. Discovery of oil in said field was by a well drilled and “brought in” during the year 1921. On June 30, 1924, appellant leased the said land to a lessee for a term of years to be exploited for gas, oil, etc. The lessee agreed to “commence operations preparatory to the drilling of at least 12 wells” upon said land within 15 days, and to “commence actual drilling of each of the wells within 60 days from the date of the lease, and to drill other wells until a total of 85 wells were completed.” The lessee agreed to pay cash royalties on petroleum produced, and a cash bonus of $150,000.
The bonus was paid on July 1, 1924. The…
Dissenting Opinion
Haney, J.
(dissenting).
I dissent. Appellant (referring to it and its predecessor as such) was named trustee of the residuary estate of one Kleinmeyer in his will, and received distribution of the residuary estate on November 15, 1916, in which was included certain lands, hereinafter referred to as the leased land. The fair market value of t’he leased land was $50,997.69 on that date, but the “property was an unproven tract of land and had no known oil value at said date.”
The leased land was located in the so-called “Torrance” oil field, discovery of oil in which was by a well drilled and brought in during the year 1921. On June 30, 1924 the leased land “was proven oil bearing property as a result of its known geological condition at that time and production from oil wells on property owned by other persons immediately adjoining it.”
On the date last mentioned, appellee leased the “leased land” to a lessee for a term of “twenty years from the date thereof and so long thereafter as petroleum and natural gas shall be produced therefrom in paying quantities.” The lessee agreed to “commence operations preparatory to the drilling of at least twelve wells” upon the land within 15 days, and to…