Western Mesa Oil Corp. v. Edlou Co.

Appellants are Western Mesa Oil Corporation, a corporation, an unsecured creditor claiming in this proceeding brought by Sovereign Oil Corporation, hereinafter called the debtor, under Chapter XI of the Bankruptcy Act of 1898, as amended by Chandler Act of 1938, 11 U.S.C.A. § 701 et seq., and El Segundo Oil Company, a corporation, successor to the debtor under a plan of arrangement made in the bankruptcy proceeding. They appeal from an •order of the district court sustaining an order of the referee that under a provision of the plan of' arrangement appellees, landowner lessors of oil lands to the debtor, are entitled to a priority payment of their unsecured claims for unpaid royalties due prior to the filing of the petition. It is agreed that the terms of the leases are to be construed under the law of California.

The debtor filed its petition on June 19, 1942. It is admitted that there were due royalties on three leases of oil lands to the debtor. The facts differ regarding the non-payment of royalties on one lease on Sovereign Well No. 1, and on two other leases on Sovereign Wells Nos. 2 and 4. Each class is here separately considered. Claims were filed by the lessors for the…