Opinion
Rehearing Granted March 20, 1930
Appeal from Superior Court, Kern County; Erwin W. Owen, Judge.
Action by Harry Sheehan, sometimes known as Harry F. Sheehan, and another against Dwight G. Vedder, sometimes known as D.G. Vedder, and others. Judgment for plaintiffs, and defendants appeal.
Reversed.
COUNSEL
Robert M. Pease and Roy P. Dolley, both of Los Angeles, for appellants.
Emmons & Aldrich, of Bakersfield, for respondents.
OPINION
SLOANE, P.J.
This appeal was taken to the Supreme Court and afterwards transferred to the Fourth District Court of Appeal for decision.
This action was brought by the plaintiffs, Harry Sheehan and Elbe Oil Land Development Company, a corporation, to quiet title to a tract of land in the county of Kern, described as the S.W. ¼ of section 18, township 28 S., R. 29 E., M.D.B. & M.
It is alleged in the complaint as the basis of plaintiffs’ right of action: That plaintiffs have, and are entitled to have, the exclusive right to prospect for oil or gas, and to drill for oil or gas in and upon said premises.
Dwight G. Vedder, sometimes known as D.G. Vedder, R.D. Vedder, and Vedder Brothers, Inc., a corporation, hereinafter referred to as defendant Vedder, answered to the complaint by setting up and alleging an adverse interest in this property under a drilling contract entered into by and between the plaintiff Harry Sheehan, as party of the first part and the defendant Vedder as party of the second part, on the 3d day of June, 1926, about a year prior to the beginning of this action, the terms of which contract will be later considered.
The exclusive right to prospect for, drill, and develop oil on this land claimed by plaintiffs was acquired by the plaintiff Sheehan under United States prospecting permit serial No. 010684 in the United States Land Office at Visalia, California, under and pursuant to the Act of Congress approved February 25, 1920 (41 Stat. 437), and it is undisputed that this permit was in full force and effect on June 3d, 1926, and that Sheehan was empowered thereunder to enter into the agreement of that date, with defendant Vedder. The substance of such agreement is as follows:
"Said party of the first part does hereby grant and give unto said party of the second part the right to drill and prospect for oil and gas upon some portion of the land embraced in said permit, as above described, and said party of the second part does hereby covenant and agree that he will commence the actual drilling of a well thereon, on or before six months after oil has been discovered in paying quantities in a well which is to be drilled by said party of the second part on either section in the above township and range they may elect. Said party of the second part is to commence operations for the drilling of said well on or before three years and the drilling thereof is to be conducted with diligence until oil or gas is encountered in commercial quantities on said land or until such time as said party of the second part is satisfied that no oil or gas exists under said land.
"Within sixty days after the completion of each well upon the above described property, as described in said Permit, said party of the second part shall commence the drilling of another well on said land and continuously prosecute the work of drilling the same until completed, until he has completed at least one well for each ten acres of land.
"Said party of the second part, in addition to the foregoing, agrees to comply with all the drilling requirements of said Permit and the drilling requirements of any and all leases which may hereafter be granted for said land by the United States, at least sixty days prior to the time when such drilling is required by the terms of said Permit and leases.
"Said party of the first part agrees, in the event the Secretary of the Interior so requires, to assign to the party of the second part, the area covered by this contract; said assignment, if made, shall not change or alter the royalties to be paid said party of the first part as hereinafter set forth.
"After the discovery of oil on said land in paying quantities the parties of the first part agree to make application for a lease thereof to the United States, and thereafter, and subject to the approval of the Secretary of the Interior, to sublet to the party of the second part or his successors in interest, the portion of the Permit area covered by this contract. Said party of the second part shall pay all taxes on all improvements and all taxes on his proportion of oil and gas taken from or stored on said land, and also all costs incurred by said party of the first part in securing a lease from the United States.
"After the discovery of oil in paying quantities, the party of the second part, in addition to satisfying the requirements as to royalties due the United States, agrees to pay to the parties of the first part the equivalent of five per cent (5%) of all oil and gas marketed from that portion of the said land upon which the royalty due the Government is five per cent (5%), in cash at the prevailing market price.
"Said party of the second part shall have the free use of so much of the oil, water or gas produced on said property as may be required in the operation of the property;
"It is further agreed that the party of the second part shall keep books of record, logs of wells, and all other data relating to the well or the drilling thereof, and relating to oil, gas and gasoline produced on said land, and that the same shall be at all times available to the party of the first part in order that the required reports may be furnished to the United States and the State of California.
"Time is hereby declared to be the essence of this contract, and in the event the party of the second part for any reason fails to comply with the terms hereof, or with any extension hereof in writing, signed by the parties hereto, this contract may be at the option of the party of the first part, terminated and forfeited by giving the party of the second part thirty days’ (30) written notice thereof by registered mail at his address at 551 Chamber of Commerce Building, Los Angeles, California, and said party of the second part covenants, promises and agrees that should such notice of forfeiture be given, he will, if the Permit issued to said Harry F. Sheehan has been assigned to him, re-assign the same to the said party of the first part within ten days after receiving such notice.
"If the party of the second part has completed one or more wells which are producing oil or gas, he shall be entitled to the lease of the legal subdivision of ten (10) acres upon which such well or wells is located, provided a lease shall have been granted to the party of the first part by the United States for such ten (10) acres, and forfeiture shall only extend to the remainder of said land upon which party of the second part has failed to drill, in accordance with the terms of this contract, but in event of any such forfeiture, no well shall be sunk for oil and gas within 500 feet of any well retained by the party of the second part.
"The party of the second part at any time before or after the discovery of oil on said premises may quitclaim said property or any part thereof to the parties of the first part, their successors or assigns, and thereupon all rights and obligations of the parties hereto, one to the other, shall thereupon cease and determine as to the premises quitclaimed.
"This contract shall inure to the benefit of, and be binding upon the heirs, assigns and successors in interest of the respective parties hereto.
"In witness whereof, the parties hereto have set their hands the day and year hereinabove first written.
"Harry F. Sheehan,
"Justine Sheehan,
"Parties of the First Part.
"D.G. Vedder,
"Party of the Second Part."
Defendant Vedder, by amended answer, after setting up this contract, alleges that on or about June 5, 1927, he, in writing, notified the plaintiffs that he then was ready, able, and willing to perform said contract and to commence and prosecute the work of prospecting and drilling for oil and gas, as provided in the contract, but that plaintiffs failed and refused, and have ever since failed and refused, to give defendant possession for said purposes, and then and ever since, have denied the validity and effect of said contract, although defendant at all times was and still is ready, able, and willing to perform on his part.
The amended answer further alleges that the only claim of right or interest in said premises of the plaintiff Elbe Oil Land Development Company, is by virtue of a contract practically identical in its terms with the Vedder contract entered into between the plaintiff Sheehan and one L.S. Barnes, of date April 7, 1927. That Barnes was, at the date of said contract, and ever since has been, the secretary and a member of the board of directors of the plaintiff Elbe Oil Land Development Company, and that the said Barnes took and received said contract as the agent of, and for the benefit of said corporation, and has transferred and assigned said contract to said corporation.
That although said contract is dated April 7, 1927, it was not executed until long after that date, namely on or about June 1, 1927. And that said Barnes and said Elbe Corporation, at the time of execution of the latter contract, were informed and knew of the contract of defendant Vedder.
On this alleged state of facts plaintiffs demanded judgment on the pleadings, which was granted, and it is from such judgment that this appeal is taken.
The judgment decrees: "It is hereby ordered, adjudged and decreed that the plaintiffs herein are the owners of and entitled to, and have the exclusive right and privilege to prospect the premises hereinafter described, for oil and gas, and to drill wells therein and therefor, and that said plaintiffs are entitled to the possession of said premises for such purpose and that the said defendants Dwight G. Vedder, sometimes known as D.G. Vedder, R.D. Vedder and Vedder Bros., Inc., a corporation, have not nor have any of them any estate or interest whatsoever in or to the right or privilege of prospecting said lands for oil or gas or in or to the oil or gas content of said premises or to the possession thereof for such purpose or for any purpose incident thereto; that the title of the said plaintiffs in and to the said right and privilege of prospecting said premises for oil and gas and in and to the exclusive possession of said premises for such purpose and in and to the oil and gas content thereof as against the said defendants herein specifically named, be and the same is hereby quieted as against the said specifically named defendants and the said defendants so specifically named are and each of them is hereby forever enjoined, debarred and restrained from asserting any right and from bringing any action against plaintiffs in regard to plaintiffs’ right, title or possession of said premises, for the purpose of prospecting the same for oil or gas and the rights and privileges of plaintiff incident thereto, adverse to plaintiffs; and that the agreement, set forth in the answer of defendants, alleged to have been entered into under date of June 3, 1926, between plaintiff Harry F. Sheehan and defendant D.G. Vedder, is declared null and void."
In order to sustain a judgment on the pleadings, all the allegations of the answer must be taken as true.
The questions to be considered on this appeal are (1) the sufficiency of a showing of title in the plaintiffs to maintain the action; (2) the sufficiency of the answer to support defendants’ adverse claim.
Assuming as we must, the truth of all the allegations of the answer, we are unable to find any evidence of title in the plaintiff Elbe Oil Land Development Company.
In the first place the plaintiff in a quiet title action must recover, if at all, on the strength of his own title, not on the weakness of that of defendant. (22 Cal.Jur., p. 167 and citations.) Rockey v. Vieux, 179 Cal. 681, 178 P. 712.
The complaint alleges by way of title that "the plaintiffs have and are entitled to have the exclusive right to prospect for oil or gas, and to drill for oil and gas in and upon the described premises."
The answer expressly denies that the plaintiffs or either of them are or is entitled to have the exclusive or any right to prospect for oil or gas, or to drill for oil or gas on said premises. This allegation of the answer raises a direct issue of fact material to the disposition of the action, excepting to the extent that the denial is modified by a subsequent admission of the answer that the plaintiff Sheehan is, and at all times mentioned was, the owner of the prospecting permit with prospecting and drilling rights thereunder, subject only to the subleasing agreement with the defendant Vedder.
The denial of any actionable interest of the plaintiff Elbe Corporation is only qualified by the statement in the answer that its only claim of right arises on the subleasing contract from plaintiff Sheehan to Barnes and assigned to the Elbe Corporation, which is declared to have been acquired subsequent to and with full knowledge of the Vedder contract, and to correspond in its terms with the previous Vedder contract.
In any event, the contract under which the Elbe Company claims is limited by the same clause as the Vedder contract, permitting the termination, at any time, of the rights of all parties by a quitclaim and release from the party of the second part. It is this clause upon which plaintiffs rely as destroying mutuality of the Vedder contract, and rendering it invalid and ineffective to vest any property interest in the defendant.
If such is the effect upon the Vedder contract, it must likewise result that the same provision in the Barnes-Elbe contract defeats the claim of title or interest in the plaintiff Elbe Corporation.
If, on the other hand, this surrender clause does not invalidate the contracts in question, the right of action of the Elbe Corporation must fail, because of its contract being subsequent and subordinate to the Vedder contract.
Assuming the truth of the allegations of the answer in this regard, it must follow, in the absence of a trial of the issue, that the Elbe Corporation call have no claim in this action to a quiet title decree against the defendant on the pleadings.
As to the plaintiff Sheehan, however, the answer admits an actionable title, subject only to the rights, if any, vested in defendant under the contract of June 3, 1926.
As we understand the argument of respondent’s counsel, they base their claim that the Vedder contract is invalid and vests no adverse rights in defendant, on the ground that there is a lack of mutuality in the agreement, in that the provision therein that the "party of the second part at any time before or after the discovery of oil on said premises, may quitclaim the property or any part thereof, to the parties of the first part, their successors or assigns, and thereupon all rights and obligations of the parties hereto, one to the other, shall thereupon cease and determine as to the premises quitclaimed."
They claim, that by reason of this release clause, the contract is not subject to enforcement of specific performance, and that a contract that is not capable of specific performance is not a defense to an action to quiet title. Citing Archer v. Miller, 73 Cal.App. 678, 239 P. 92; Crane v. Roach, 29 Cal.App. 584, 156 P. 375; Jolliffe v. Steele, 9 Cal.App. 212, 98 P. 544; Valentine v. Streeton, 9 Cal.App. 640, 643, 99 P. 1107; Dabney v. Key, 57 Cal.App. 762, 207 P. 921.
These authorities seem to support respondents’ position, but it seems to us they go further than the facts in this case would warrant.
All the cases cited are distinguishable in several particulars from the instant case.
Archer v. Miller, 73 Cal.App. 678, 239 P. 92, 94, is an action by plaintiff to quiet title against a contract of lease of real property. The pleadings admit that plaintiff is owner and in possession of land in question.
The answer sets up as adverse claim a contract executed by plaintiff Archer leasing to defendant Miller this property for a term of 10 years, at a total rent of $40,000, payable in periodical installments, with an option to defendant "during the faithful performance of all covenants of this lease, to purchase the premises for the sum of $40,000, any amounts paid on the rents to apply on purchase price."
The contract contained covenants for performance of various conditions at specified times by lessee, and a condition that should the lessee fail to make any of the payments agreed to be made, or to fulfill any of the obligations of this lease, then the party of the second part agrees and does hereby relinquish all rights and interest created under this agreement.
The lessee is by the contract also in consideration of $50 paid to the lessor given the right to terminate the contract at any time before a specified date, by notice in writing to that effect.
The defendant pleaded this lease agreement, and asked, by way of cross-complaint, decree for specific performance of the option to purchase. Judgment was for defendant in trial court, and was reversed by the Second District Court of Appeal on the following grounds:
(1) That the answer was silent as to fairness of the contract, and adequacy of consideration.
(2) That the contract was lacking in mutuality of remedy, and containing covenants for personal services which could not be specifically enforced against the defendant and cross-complainant.
(3) That it appears from the pleadings that defendant was in default in the performance of some of the conditions prescribed.
On the question of sufficiency of the answer as a defense in a quiet title action, the opinion says: "It is sufficient on this proposition to refer to the rule, established by decision, that a contract of purchase and sale which is not specifically enforceable cannot be the basis of defense against an action to quiet title." Citing Jolliffe v. Steele, 9 Cal.App. 212, 98 P. 544; Valentine v. Streeton, 9 Cal.App. 640, 99 P. 1107, 1108; Crane v. Roach, 29 Cal.App. 584, 587, 156 P. 375.
The following distinguishing points exist in the instant case. Here the lessee by his answer alleges the fairness of the contract and adequacy of consideration; that he was not in default but that this attempt and offer to perform was defeated by the lessor; and he is not applying for specific performance, but merely interposing his contract by way of defense to the action to quiet title.
Moreover we question if the rule as stated in the Archer Case that a contract "which is not specifically enforceable cannot be the basis of defense against an action to quiet title" is, at least in its application to the instant case, supported by the authorities cited. In the case of Jolliffe v. Steele, supra, the rule is stated by way of dictum, as the contract there relied upon by defendant was held to have been without consideration.
In Valentine v. Streeton, supra, the contract pleaded in the answer was not merely by way of defense to the quiet title action, but by cross-complaint seeking specific performance of an agreement to convey, and the appellate court held that the contract relied upon was unfair and inadequate as to consideration. It was admitted in the pleading that "the premises so contracted for were at the date of the contract worth nearly threefold the contract price." The court says: "This admission as to the inadequacy of the price is sufficient to defeat appellant’s claim for specific performance."
In Crane v. Roach, supra, the defense was also by way of cross-complaint to enforce an agreement to convey property, under which the court found that the defendant had not performed, and was in default in the conditions of the agreement.
Not one of the cases cited involves a transaction where a defendant, merely standing on his unbreached contract by way of defense, and not seeking affirmative relief by way of specific performance, was denied the right to rely upon his contract.
Dabney v. Key, 57 Cal.App. 762, 207 P. 921. The only other case bearing with any force upon the proposition of specific performance, here involved, was an action brought by the plaintiffs to enforce a specific performance of a contract by defendant to execute a lease for the development of prospective oil lands. The relief sought was denied on the ground that the proposed lease was lacking in mutuality, one of the proposed conditions being that the lessee reserved the right to surrender the lease at such time as he might see fit, whereas the owners of the land were to be bound for twenty years.
The rule is sufficiently established that equity will not grant the relief of specific performance to one who is not himself bound to perform his part of the contract, but it does not follow that one who holds an executed grant or lease to real estate, and who is not in default in the performance of his obligations under the contract, may not defend against an action of the grantor or lessor to quiet title by setting up such executed contract. Neither the Dabney Case nor the case of Sturgis v. Galindo, 59 Cal. 28, 43 Am.Rep. 239, on which the rule relied on in the Dabney Case rests, were quiet title actions. The Galindo Case was one brought by a plaintiff to compel specific performance, in his favor, of an alleged contract for the sale of real estate. The consideration for the contract to sell was an agreement on the part of the plaintiff to render certain services in prospecting the land for coal, but provided that plaintiff might at any time cancel the agreement on his part if he became satisfied that it was useless to carry his prospecting further.
Holding that the contract was not specifically enforceable for want of mutuality, the court applies the general rule "that when, from personal incapacity, the nature of the contract, or any other cause, a contract is incapable of being enforced against one party, that party is equally incapable of enforcing it specifically against the other, though its execution in the latter way might, in itself, be free from difficulty attending its execution in the former."
None of the cited cases involve, as here, an executed grant wherein the right to possession and use of the premises was vested and only subject to revocation on the happening of conditions subsequent.
It may be admitted that the surrender clause destroys the resort to specific enforcement of the terms of the agreement against defendant Vedder. Any attempt to enforce the obligations assumed by Vedder by a decree of court could be defeated by his throwing up the contract under this surrender clause.
But do the authorities relied upon support the doctrine that a contract not mutually enforceable in all its terms, by decree for specific performance, is insufficient to support a defense in an action to quiet title?
The Vedder contract relied on here is something more than an option. In its operative clause, it is an express grant by the plaintiff to the defendant of the prospecting and development right on the premises in question. It provides that "Said party of the first part does hereby grant and give unto the said party of the second part the right to drill and prospect for oil and gas," upon the land covered by plaintiff’s government permit. The party of the second part just as explicitly undertakes on his part to commence drilling on the premises within six months after the happening of future events to be postponed not longer than three years, but the happening of these conditions is not made to postpone the vesting in the defendant of a present right to enter upon, having possession of, and exploit said premises in search of oil. That right was created by the granting clause.
All the subsequent provisions of the contract are conditions subsequent and go to the manner of carrying on the work of prospecting and developing, the interest to be enjoyed by the respective parties in any discoveries made, and reserving the right of the plaintiff to revoke, on notice, the grant to defendant, in case of failure to meet the conditions of the contract, and the right of defendant at any time in the future, to quitclaim his interest under the contract and restore possession to plaintiff.
This is an executed contract, so far as the vesting of the right to the specified use and possession of the premises in defendant is concerned, and is a very different matter from an executory option to purchase, or take a lease on property, dependent for its operative effect upon some future election of the parties.
In the case of an express grant of title to real estate, could the grantee be kept out of its use or possession, or be precluded from defending his title, because the instrument of conveyance provided for a reversion of title to the grantor if certain conditions subsequent provided for in the deed were not yet complied with, or because the grantee was permitted to relieve himself from further obligations to the grantor, by a quitclaim or surrender of the premises?
If we are right that the document here rested some sort of a present interest in defendant to the use and occupation of these premises, when did that vested right terminate?
The pleadings show that he has not defaulted in any of the conditions subsequent that he was to perform; that he, within the time specified, offered to perform, but was denied possession by plaintiff. There has been no claim or notice by plaintiff, of forfeiture, and no election to quitclaim and terminate the contract by defendant.
These various covenants and provisos in this contract are not made conditions to the vesting of defendants’ rights under the grant, but conditions subsequent upon the failure or happening of which the grant may be revoked. These conditions of forfeiture have not happened, and may never happen, and until they do, we can see no good reason why defendant may not maintain his rights under the contract.
He alleges a good and adequate consideration, and that the transaction was fair and equitable. Even if some of the conditions subsequently to be performed may not be specifically and mutually enforced, does it follow that defendant would not be entitled to rely as a defense to plaintiff’s action to quiet title, upon the specific terms of the grant which purport unconditionally to give him the present right to use and possession of the land?
It is conceded that the defendant may recover damages for the breach of this contract by plaintiff, but what becomes of even this remedy under a judgment on the pleadings which declares his contract null and void. One may not even predicate an action for damages on the breaching of a void contract.
If defendant possesses any sort of an interest, legal or equitable, under his contract here, dependent upon the use and occupation of these premises, he should be permitted to set it up in defense of an action to quiet such title against him.
Section 738 of the Code of Civil Procedure does not confine the right to an action to quiet title to an adverse claim of any particular character. It was intended to embrace every description of claim, whereby the plaintiff might be deprived of the property, or whereby the title would be clouded, or its value depreciated, or whereby the plaintiff might be incommoded or damnified by the assertion of an outstanding title already held or to grow out of the adverse pretensions. Accordingly an action may be maintained to quiet title against a claim under a void tax deed, a forged deed, or one undelivered, a deed intended as a mortgage, or a recorded option to purchase, a claim of an easement granted on a condition subsequent and asserted after condition broken, and in short any adverse interest from a claim of title in fee to the smallest leasehold; whatever may be regarded by third persons as a cloud upon title. 22 Cal.Jur., pp. 115, 117; Castro v. Barry, 79 Cal. 443, 21 P. 946; Withers v. Jacks, 79 Cal. 297, 21 P. 824, 12 Am.St.Rep. 143; Akley v. Bassett, 68 Cal.App. 270, 228 P. 1057.
It must then, as a corollary to this proposition, be true, if either of such adverse claims exists and plaintiff’s title cannot be unclouded until such claim is annulled, that the defendant may maintain the validity and potency of such claim as a defense to an attempt to avoid it.
If its existence constitutes a cloud, its removal can only be effected by showing that it is wrongfully maintained, or is invalid, or ineffective to create any right or interest in defendant to the possession or use of such premises.
The amended answer here pleads the equitable rule that he who seeks equity must do equity and must come into court with clean hands.
It has been repeatedly held that the owner of land may not quiet his title as against an unsatisfied mortgage without paying the mortgage debt, even though its collection is barred by the statute of limitations. Faxon v. All Persons, 166 Cal. 708, 137 P. 919, L.R.A.1916B, 1209; Bulson v. Moffatt, 173 Cal. 685, 161 P. 259.
The mortgagee may plead the existence of his unsatisfied mortgage as a bar to the action of mortgagor to quiet title, but he cannot compel the payment of the mortgage debt.
How can the plaintiff in this action equitably deprive the defendant of the benefits of this contract, on the ground that it is not specifically enforceable in his favor, when he has, by his own refusal to perform, denied the offer and prevented the efforts of defendant to perform his part of the agreement?
It is also alleged in the answer that the defendant by reason of fulfillment of conditions agreed upon between the parties as an inducement to entering upon the contract, has been placed in a position which renders it inequitable that the contract should be avoided.
Even where the right to specific performance of a contract is involved, it is not always true that lack of mutuality prevents specific performance. The equity rule, set forth in Civil Code § 3386, as stated in Pomeroy’s Equity Jurisprudence, 2191, is open to so many exceptions, it is of little value as a rule. Wolleson v. Coburn, 63 Cal.App. 315. 324, 218 P. 479.
One ground of exception is where a party to the contract has thereby been led to place himself in a position where it would be inequitable to deny him relief.
In this case it is alleged in the answer that one of the main inducements to this lease contract was the fact that defendant Vedder was a geologist and an experienced prospector of oil lands; that the lands in question were undeveloped and were in what is known as "Wild Cat Territory," and the advisability of sinking prospect shafts on them depended to a large extent upon the exploitation of the surrounding and adjacent country. The contract in question fixed the time at which defendant was to commence operations on the leased premises "on or before six months after oil has been discovered in paying quantities in a well which is to be drilled by said party of the second part" (the defendant) on any section in the township and range in which the leased lands are located. It is alleged that no well had previously been drilled within five miles of the land in question, and that in reliance on the acquiring of this lease defendant was induced and did expend much time and money in causing wells to be drilled in such locality, and that plaintiff knew of such facts, and knew that defendant relied upon and required said contract with plaintiff as one of the items which justified and made worth while said work and expense.
The nature and extent of this outside exploitation work is not very definitely pleaded, but, in the absence of any demand to make the pleading more definite and certain, it furnishes an additional reason why defendant should have been permitted to present his case to the court.
Again the plaintiff’s hands are somewhat besmirched from an equitable standpoint, from the fact as alleged in the answer, that plaintiff Sheehan has joined with the plaintiff Elbe Corporation to sustain the Barnes contract which under the alleged facts is subsequent to and subordinate to the Vedder contract, and which is open to the same defense of want of mutuality, and have combined to permit the exploiting and developing of the land in question under the Barnes contract, to the exclusion of any rights of defendant under his prior contract.
Defendant further alleges in his answer that plaintiff at no time prior to the bringing of this suit, or since, has returned or offered to return any part of the consideration paid by defendant upon the execution of his contract. The money consideration alleged was only the sum of $10. It is, however, the general rule applicable to actions to quiet title, that one may not ask for a decree barring another from asserting a claim under an instrument executed by the former, without restoring the consideration received. 22 Cal.Jur., p. 134; Chandler v. Chandler, 55 Cal. 267; Henry v. Phillips, 163 Cal. 136, 124 P. 837, Ann.Cas.1914A, 39.
We are satisfied that the pleadings in this case do not justify the decree quieting title in favor of the plaintiff Elbe Corporation, and while we are not entirely clear as to where the weight of authority lies as to the rights of defendant under the Sheehan-Vedder contract, we feel that the equities are with him, and decide accordingly.
The judgment is reversed as to both plaintiffs.
I concur: BARNARD, J.
MARKS, J. (concurring).
I concur in the foregoing opinion of the court. In reaching this conclusion I desire to particularly stress and rely upon the rule stated in the opinion, that he who asks equity must do equity. This is an action to quiet title, and not for the specific performance of a contract, and therefore section 3386 of the Civil Code and the cases decided under it are not necessarily involved in a decision of the case, as I view the issues framed by the pleadings.
The answer of respondents raises the direct question of whether or not the respondent Sheehan came into court with clean hands. This presents an issue which the trial court should decide. Sheehan made a lease with appellant Vedder, which the parties to this action admit was good in law. It appears from the answer that before Vedder entered upon the leased premises to perform his contract, and before he was required to do so under its terms, Sheehan made another lease to a third person and put his assignee in possession of the leased property. Whether Sheehan did this as a result of a whim, or to acquire the personal gain of a larger profit from the transaction, or for some other reason, does not appear. A chancellor sitting in a court of equity should not relieve him of his first contract, to further either end, and not at all unless satisfied after a trial that fairness and equity are with him. To do so might put the stamp of approval upon a transaction tainted with fraud. The case should go to trial upon its merits, with the trial judge keeping in mind the mandate of equity that the hands of the respondents must be clean before a court of equity will grant them any relief.