Opinion · Court of Appeals for the Eighth Circuit
Marrs v. City of Oxford
32 F.2d 134
- Type
- Opinion
- Court
- Court of Appeals for the Eighth Circuit
- Jurisdiction
- Federal
- Date
- 1929-03-25
- Topic
- general
LEWIS, Circuit Judge (after stating the facts as above). The police power is an attribute of sovereignty to be exercised for the public welfare, and it has been authoritatively said: “The possession and enjoyment of all rights are subject to such reasonable conditions as may be deemed by the governing authority of the country essential to the safety, health, peace, good order and morals of the community.” Crowley v. Christensen, 137 U. S. 86, 89, 11 S. Ct. 13, 15 (34 L.
Citator
UpLaw has not yet analyzed Marrs v. City of Oxford. The absence of a flag is not a finding that it is good law.
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MARRS v. CITY OF OXFORD,32 F.2d 134(8th Cir. 1929)
MARRS et al. v. CITY OF OXFORD et al. RAMSEY et al. v. SAME.
Nos. 8268, 8271.
Circuit Court of Appeals, Eighth Circuit.
March 25, 1929.
Rehearing Denied June 10, 1929.
Bills for injunction by C.A. Marrs and others and by G.L. Ramsey and others against the City of Oxford and others. From judgments of dismissal [24 F.2d 541], plaintiffs appeal. Affirmed.
The bills in these cases are attacks on an ordinance of Oxford, Kansas, a city of the third class, in which plaintiffs ask that its enforcement be enjoined on the ground that it interferes with and denies to them rights, privileges, and immunities which they say are protected by the Constitution of the United States; and they aver that the ordinance is therefore void.
By the ordinance, passed June 20, 1927, and set forth below, the city undertakes to restrain and regulate the drilling and operation of gas and oil wells within a large part of its corporate limits, described by metes and bounds. An oil pool had been discovered which extended under the city on its westerly side, and it was reasonably anticipated that leases on city lots would be sought on which to drill wells for oil and gas and operate them if the minerals should be found, — hence the passage of the ordinance, its predominant purpose being to prevent more than one well in each city block. A great many leases have been given and many wells are being drilled within the city.
In Cause No. 8268 it appears from the bill that plaintiffs, except Pickard, are owners of lots 10 and 11 in block 35 within the restricted area, and on June 29, 1927, they gave an oil and gas lease on the two lots to their co-plaintiff Pickard for a term of five years and as long thereafter as the lessee produced oil and gas or either from the premises, in consideration that the lessee would pay the lessors 1/8th of the net proceeds from the oil and gas produced. Without applying for and obtaining a permit from the city, as required by the ordinance, to drill and operate a well, the lessee began the drilling of a well on said lots within 75 feet from a well then being drilled in said block under a permit issued by the city to the Roxana Petroleum Corporation. He was arrested and fined several times for disobeying the requirements of the ordinance in not having a permit. He ceased operations for a while on account of these prosecutions, but later persisted andPage 135drilled the well to a depth of about 2000 feet into the producing sand and was obtaining oil therefrom at the time of the hearing below.
In Cause No. 8271 it appears from the bill that the two plaintiffs are the owners of a lot in block 87 within the restricted area, and on the 12th day of August, 1927, they obtained an oil and gas lease on block 24, also within the restricted area, for a term of five years and as much longer thereafter as oil or gas should be produced, in consideration of delivering to the lessors 1/8th of the production. They drilled a well on their lot in block 87, which was producing oil at the time suit was brought, and they had also drilled to a depth of 800 feet on block 24, but they did not apply to or obtain from the city a permit for either well, as required by the ordinance. There were arrests for drilling without permits in this case also, and fines imposed and threats of further arrests in both cases when the suits were brought. Both bills were dismissed on demurrer; then this appeal.
The ordinance is in these words:
"Ordinance No. 512.
"An Ordinance regulating the drilling of oil and gas wells within the limits of the City of Oxford, and establishing restrictions thereon, and amending Ordinance No. 509 of said city.
"Be It Ordained by the Governing Body of the City of Oxford, Kansas:
"Section 1. That it shall be unlawful for any person, partnershp, association of persons, or any corporation to drill or commence to drill a well for oil or gas within that portion of the City limits bounded on the West by Pacific Avenue North of Cedar Street and by Kansas Avenue South of Cedar Street to the Sante Fe tracks, on the North by Elm Street, on the East by a line running North and South Three Hundred (300) Feet East of and parallel with the East Line of Water Street, until said line reaches the Arkansas River, and thence south by Arkansas River, and on the South by Cedar Street West of Kansas Avenue, and by the Santa Fe tracks East of Kansas Avenue, or to work upon or assist in any way in the prosecution of any such well, without a permit for such well and for the prosecution of the development having first been issued by the authority of the governing body of the City in accordance with the terms of this ordinance.
"Section 2. That within the boundaries set forth in Section 1 of this ordinance, there shall be only one permit issued for one well in each block, except that where more than one producing oil or gas sand shall be found in such block, a permit may be granted for one well to each of such sands in such block, and that with such exception, it shall be unlawful to drill more than one oil or gas well in a block; and for the purposes of this ordinance, the spaces of ground immediately adjoining on the East, Blocks Nos. 81, 82, 83, 84, 85, 87 and 88 of said City, respectively, and lying within a distance of Three Hundred Feet (300) of the West line of said numbered blocks, shall, with the adjacent numbered blocks respectively aforesaid, be deemed a city block, and block No. 77, with the adjacent land marked `A' on the East to the extent of Three Hundred (300) feet from the East line of Water Street between the numbered block and the river, shall together be deemed one block; block No. 78 and outlot No. 17, to the extent of Three Hundred (300) Feet from the East line of Water Street, shall be deemed together one block; and block No. 79 and outlot No. 18, to the extent of Three Hundred (300) Feet from the East line of Water Street, shall together be deemed one block; and block No. 80 and outlot No. 19 to the extent of Three Hundred (300) Feet from the East line of Water Street, shall together be deemed one block, and the area covered by the High School tract shall be deemed four blocks of equal size divided by lines drawn North and South and East and West through the center.
"Section 3. That in case a permit for the drilling of a well be issued to a person, persons or corporation not holding oil and gas leases or drilling contracts with the owners of all the lots in the block, it shall be a condition of the permit that the permittee, its successors and assigns, shall deliver to the credit of each of such owners whose land shall not be under lease, free of cost, in the pipe line to which the well may be connected, a share of all oil produced and saved from such well, equal to one-eighth of the proportion of the whole production that the square feet of ground so owned bears to the square feet contained in such block, exclusive of the streets and alleys, and a like proportion of the proceeds of gas and casing head gas produced from the well and used off the premises.
"Section 4. That it shall be unlawful for any person, persons, association of persons, or corporation to drill an oil or gas well, or to extend or deepen one already drilled, in the City of Oxford outside of the limits defined by Section 1 of this ordinance,Page 136at a point nearer than One Hundred Fifty (150) Feet to the streets or the railway track or other boundary named in Section 1 of this ordinance as the outside boundaries of the restricted district therein defined, except that this provision shall not apply to the East boundary of the restricted district as defined in Section 1.
"Section 5. That in case there be application filed with the City Clerk and pending at the same time, for permits to drill in any one block in the City, by more than one applicant, that application shall be granted, if otherwise sufficient, which shall be made by the person, association or corporation holding the greater area of the ground in the block, by lease or other contract with the owner, permitting the drilling thereon for oil or gas; but, in case a permit be issued to persons or corporations who do not hold lease or other valid drilling contract in writing from the owners of all of the land within the block, other than alleys, any owner of unleased land in the block, and any person or corporation other than the permittee, holding oil and gas leases on land in the block, shall have the right to share in the ownership and benefits of such oil or gas well in the proportion that the area of his or its land or lease bears to the area of the block, exclusive of streets and alleys, provided that within ten days from the date of the issuance of such permit, he or it shall file with the City Clerk his or its election in writing to pay to the holder of the permit, or his or its assigns, a like proportion of the total cost and expense of completing and operating the well, and shall within that time make and file with the City Clerk a bond with an authorized surety company as surety, and in an amount representing that portion of the estimated maximum cost of the well that the area of ground owned or held under lease by the principal bears to the whole area of the block, conditioned that the principal in the bond will pay to the permittee and his assigns such proportion of the cost and operations of the well, from time to time, as required in the operations, such bond to be approved by the Mayor and held by the City Clerk for the benefit of all persons interested.
"Section 6. That it shall be unlawful to drill any oil or gas well within any of the streets or alleys of the City, or to block or incumber or close up any street or alley in any drilling or production operations, except by special permit by order of the governing body, and then only temporarily.
"Section 7. That every application for a permit to drill a well shall be in writing signed by the applicant or some person in his or its behalf; it shall be filed with the City Clerk and be accompanied with a deposit of $100.00 in cash. The application shall state the block and the particular lot and location in the block where the proposed well is to be located, and have attached to it certified copies of all oil and gas leases, or other drilling contracts with the owners of land in the block which applicant may have, together with abstracts of title or certificates of title satisfactory to the governing body, to the end that the application will show what proportion and what parts of the block the applicant holds under lease or contract from the owner. The application shall also be accompanied with a plat or map of the block showing the exact location of the proposed well, which shall be as nearly as practicable at the center of the block. The application shall also be accompanied with a duly executed bond given by the applicant as principal and a surety company authorized to do business in the State of Kansas, as surety running to the City of Oxford, for the benefit of the city and all persons, firms and corporations concerned, conditioned that if the permit be granted, the applicant and his or its assigns will comply with the terms and conditions of this ordinance in the drilling and operation of the well, will pay to any owners of land in the block, on which the applicant shall not hold oil and gas lease or contract, the oil and gas royalties as herein provided, that the applicant will restore the streets and sidewalks and other public places of the City which may be disturbed in the operations to their former condition, will clear the block and lots of all litter, machinery, derricks, buildings, oil and other substance erected, used or allowed in the drilling or producing operations, whenever the well shall be abandoned, or the operation thereof discontinued, and that he or it will pay to the owners of any buildings, improvements, goods or chattels located in the block, any extra cost of insurance on such property; imposed by reason of the granting of the permit or the operations carried on thereunder, and any and all damages suffered by any person or corporation as to property in the city from fire, over and above insurance collected thereon, or from oil, gas or water caused by or originating from the operations connected with such well, and will hold the City harmless from any or all liability growing out of the granting of such permit. Such bond shall be in the sum of $50,000.00 in the case of applications for permits to drill upon any of Blocks Nos. 24, 25, 30, 32, 33, 34, 39, 40 andPage 13741 in the city, except where the applicant holds oil and gas leases on the entire block, when the bond shall be for only $25,000.00, and in the sum of $25,000.00 in the case of applications for permits elsewhere within the boundaries defined in Section 1 of this ordinance. Provided, that in cases other than in the above numbered blocks, where the applicant for the permit holds oil and gas leases on the entire block and there are no buildings or other improvements thereon, the bond need not be in excess of $5,000.00; and shall be approved by the Mayor and filed with the City Clerk.
"The governing body shall have the power, and reserves the authority to refuse any application for a permit where, by reason of the location of the proposed well and the character and value of the permanent improvements already erected on the block in question, or adjacent thereto, and the use to which the land and surroundings are adapted for civic purposes, or for sanitary reasons, the drilling of an oil or gas well will be a serious disadvantage to the City and its inhabitants as a whole; but that when a permit shall be refused for any of these reasons, but not otherwise, the deposit of cash made with the application shall be returned to the applicant. Except as hereinbefore provided, if an application be found by the governing body to comply in all respects with the terms of this ordinance, the City Clerk shall be authorized to issue a permit for the drilling of the well applied for, but no single application shall be made for a permit covering more than one city block, as herein defined. The permit shall specify the particular location of the well to be drilled, and it shall be unlawful for the permittee to drill elsewhere in the block.
"Section 8. That it shall be unlawful to erect or use within the boundaries defined in Section 1 hereof, or elsewhere in the City within Three Hundred (300) Feet of a residence, or business or public building, in the drilling or operation of any oil or gas well, any drilling rig without enclosing it on all sides, and every such drilling plant shall be equipped with fire extinguishers maintained in good order. No storage of oil or facilities therefor shall be kept, erected or maintained within the boundaries defined in Section 1 of this ordinance, except to the extent of not to exceed five hundred barrels for each well.
"Section 9. That no permit shall be granted or issued for the drilling of a well except upon ground held by the applicant under oil and gas lease or drilling contract from the owner, giving the owner's permission to drill the well; and when a permit shall have been issued, the same shall terminate and become inoperative without any action on the part of the governing body of the City, unless within thirty days from the date of issue, actual drilling of the well shall have commenced, and after the drilling of a well shall have commenced, the cessation for a like period of the drilling operations, or the cessation of production of oil or gas from the well after production shall have commenced, shall operate to terminate and cancel the permit and the well shall be considered as abandoned for all purposes of this ordinance, and it shall be unlawful thereafter to continue the operation or drilling of such well without the issuance of another permit.
"Section 10. That neither this ordinance, nor any permit issued hereunder, shall be interpreted to grant any right or license to the permittee to enter upon or occupy in any respect in the drilling or production operations, any land except by the written consent of the owner, nor shall it limit or prevent the free right of any lot owner to contract for the amount of royalty to be paid with respect to his own land, or for damages, rights or privileges with respect thereto.
"Section 11. That in operating under any permit issued under this ordinance or any amendment thereto, all oil, gas and water produced or arising from the operations, shall be piped or otherwise conveyed or removed from the territory of the City within the boundaries defined in Section 1 hereof, except the ordinary use of a slush pond, and all excavations in or use of the streets and alleys in such operations shall be under the reasonable direction of the street commissioner of the City, and done without unreasonable obstruction of the streets and without expense or cost to the City.
"Section 12. That no permit which shall be issued under this ordinance or under any amendments hereto, or any rights, privileges or franchise granted hereby or hereunder shall exist longer than for a period of twenty years from the date of issuance of the permit.
"Section 13. That any violation of any of the terms of this ordinance, whether herein denominated as unlawful or not, shall be deemed a misdemeanor, and any person or corporation convicted of any such violation shall be fined in a sum not exceeding one hundred dollars, and any person so convicted shall be committed to jail until such fine and the costs are paid. Each day of the continuance of such violation shall be considered aPage 138separate offense and be punishable separately, and any person, agent or employee engaged in any such violation shall on conviction be so punished therefor.
"Section 14. That the ordinance No. 509, and all ordinances or parts of ordinances of the City which are in conflict with any of the terms of this ordinance be, and the same are hereby repealed.
"Section 15. That this ordinance shall take effect and be in force from and after its publication in the Oxford Register, a weekly newspaper published in the City of Oxford.
"Passed and approved this 20th day of June, 1927.
"D.D. Eshelman, Acting Mayor."
The bills further disclose that there are improvements in blocks 24 and 35. One side of block 24 abuts on the business street of the city, and there is one block lying between that street and block 35. These city blocks are approximately 300 feet square with streets on their four sides and alleys through them, and a well will draw the oil and gas in the producing sand from all directions for an approximate distance of 400 feet. Block 87 lies about six blocks from the business section, and the bill in Cause 8271 alleges that this block has no improvements of any kind upon it, that it lies on the farther side of a railroad right of way from the business section, it is surrounded by unimproved property and there are no improvements in close proximity. It is further alleged that the drilling and operation of the three wells will not cause annoyance or discomfort to the inhabitants of the city nor endanger them or their property. It appears that a derrick 75 to 80 feet in height, of wood or steel, was erected for the drilling of each well. The drilling of wells and pumping of oil is done with gasoline combustion engines. The bills allege that the plaintiffs have not and will not store the oil produced on the premises, but that they have carried it through pipes and will continue to do so to tanks outside of the city limits. The city contains a population of about 850.
The State statute grants to the city of Oxford full power to enact ordinances for the preservation of the health of its inhabitants, the maintenance of peace, good order, good government, and the general welfare of the city, its trade, commerce, and manufacture, and to enforce all such ordinances by fines, forfeitures, and penalties upon its inhabitants and others for the violation thereof, not exceeding a fine of $100 for any one offense. Section 1 of the ordinance makes it unlawful for anyone to drill an oil or gas well within that part of the city described by boundaries or to assist in the work, or to assist in any way in the prosecution of any such well without a permit for such well first having been issued by the city. Section 2 prohibits more than one well in a city block, and section 13 defines any violation to be a misdemeanor and fixes the penalty at a fine of $100 and declares that each day's continuance of the violation shall be a separate offense. These are the sections under which some of the appellants were prosecuted, and they say further prosecutions against them and their employees are threatened.
The plaintiffs in Cause No. 8271 first brought their suit in the state court, and failing there to obtain injunctive relief they appealed. On that appeal the Supreme Court of Kansas held that the ordinance here under consideration was passed by the city pursuant to power conferred by the State statute. Ramsey v. City of Oxford,124 Kan. 713,261 P. 572. They then brought this suit in the court below.
K.M. Geddes, of El Dorado, Kan. (John J. Jones, of Chanute, Kan., and B.R. Leydig, of El Dorado, Kan., on the brief), for appellants Ramsey and others.
James A. Veasey, of Tulsa, Okla., and Austin M. Cowan and Chester I. Long, both of Wichita, Kan. (W.A. Ayres, C.A. McCorkle and J.D. Fair, all of Wichita, Kan., on the brief), for appellees.
Before LEWIS and KENYON, Circuit Judges, and WOODROUGH, District Judge.
"The observations of Mr. Chief Justice Waite in that connection [Munn v. Illinois,94 U.S. 113,24 L. Ed. 77] had reference to the facts of the particular case and were certainly not intended to declare the right of either the legislature or a city council to arbitrarily deprive the citizen of rights protected by the Constitution under the guise of exercising the police powers reserved to the States. It may be admitted that every intendment is to be made in favor of the lawfulness of the exercise of municipal power, making regulations to promote the public health and safety, and that it is not the province of courts, except in clear cases, to interfere with the exercise of the power reposed by law in municipal corporations for the protection of local rights and the health and welfare of the people in the community. But notwithstanding this general rule of the law, it is now thoroughly well settled by decisions of this court that municipal by-laws and ordinances, and even legislative enactments undertaking to regulate useful business enterprises, are subject to investigation in the courts with a view to determining whether the law or ordinance is a lawful exercise of the police power, or whether under the guise of enforcing police regulations there has been an unwarranted and arbitrary interference with the constitutional rights to carry on a lawful business, to make contracts, or to use and enjoy property."
And it was there further said, quoting from Holden v. Hardy,169 U.S. 366,398,18 S. Ct. 383,390(42 L. Ed. 780):
"The question in each case is whether the legislature has adopted the statute in exercise of a reasonable discretion, or whether its action be a mere excuse for an unjust discrimination or the oppression, or spoliation of a particular class."
In Winkler v. Anderson,104 Kan. 1,177 P. 521, 3 A.L.R. 268, the Supreme Court of Kansas had for consideration the validity of a State statute which made it unlawful to drill or operate oil or gas wells within one hundred feet of the right of way of any steam or electric line of railway. Winkler had an oil and gas lease on a strip of ground within one hundred feet of the right of way of a steam railway and he filed his bill for the purpose of enjoining enforcement of the penal provisions of the statute. His lease was valueless if the statute was valid. He claimed that the statute deprived him of property without compensation, without due process; that it denied him equal protection of the laws and that it abridged his privileges and immunities contrary to the provisions of the Constitution of Kansas and the Constitution of the United States. The Court said:
"The police power extends, not only to the protection of the public safety, health, and morals, but to the promotion of the common convenience, prosperity, and welfare. State v. Wilson,101 Kan. 789,794,168 P. 679, L.R.A. 1918B, 374. While oil and gas wells are not nuisances per se, and the business of drilling and operating them is ordinarily legitimate and harmless, it is conceivable that they may become detrimental in a high degree. The greed for mineral in a rich field becomes insatiate. Steam and electric railway rights of way may be exploited, and unless the works, structures, establishments, activities, and products of mining operations be kept at a safe distance from railway tracks, life and property might be endangered, commerce impeded, and the general welfare seriously affected. If the legislature acted from some such considerations as these, it possessed power to fix a limit within which drilling and operating should not intrude, and the court is unable to say that a free space of one hundred feet is unreasonable."
Notwithstanding the allegations of the bill, it seems undeniable to us that when work of the kind under consideration is carried on in residential or business sections of a town or city without some limit to the number of wells in a given area, they will necessarily become nuisances of a most aggravated sort to its inhabitants and its business interests. There will be annoyance from unsightlyPage 140structures, disquieting noises of machinery, the immediate and constant presence of numbers of workmen and the persistent thought of impending danger from explosion and conflagration because of the highly inflammable nature of the product. Such a situation calls for some governmental restriction and control. The greater the number of wells in a city block the greater will be the annoyance and hazards to the public. Indeed, it would be hard to say that an ordinance prohibiting the drilling and operation of any well within the business or residential districts of a city would be an unreasonable and invalid exercise of the police power. We do not doubt the validity of the ordinance here challenged. Its requirements and regulations are in protection of the public welfare, effective if enforced to accomplish that purpose; and the passage and adoption of it cannot in our judgment be justly said to be an arbitrary and unreasonable exercise of the city's power. This is enough to dispose of the appeal.
But looking to the substance of things, as equity does, what are the rights of plaintiffs that will be encroached upon or denied to them by the enforcement of this ordinance? It is not the mere right to drill a well on one or two lots at great cost and stop with that, or to take the proportionate part of the oil and gas in the pool that might be said to lie under or be fairly attributed to those lots. The obvious purpose was to reach the pool as quickly as possible and take all of the oil and gas obtainable before others could get it, thus seriously encroaching upon and probably destroying the same rights of adjoining lot owners. If one or more lot owners have given a lease for which no permit is obtainable their lessee may join a lessee who has a permit in the same block on terms that are fair to both lessor and lessee. If a lot owner has not given a lease he is protected by the asking in a fair proportion of the mineral produced by a permittee. The regulations make every effort to protect, rather than to destroy rights. They extend equal opportunity to all who have an interest and eliminate the race between those having equal rights in a common source of wealth, so that some may not take all and leave others with nothing. Under the law in Kansas there is no property in oil and gas, because of their migratory nature, until they have been captured, though each surface owner may take without limit, unless lawfully restrained. Phillips v. Springfield Crude Oil Co.,76 Kan. 783,92 P. 1119; National Supply Co. v. McLeod,116 Kan. 477,227 P. 350. This is the rule also in Pennsylvania and Indiana. The nature of this right was fully discussed and defined in Ohio Oil Co. v. Indiana,177 U.S. 190,20 S. Ct. 576,44 L. Ed. 729. The court in that case, after accepting the general practice as a settled principle, that every owner of the surface within a gas or oil field might prosecute his efforts and reduce to his possession if possible all of the deposits without violating the rights of other surface owners, in the absence of regulations to the contrary, said:
"But there is a co-equal right in them all to take from a common source of supply, the two substances which in the nature of things are united, though separate. It follows from the essence of their right and from the situation of the things, as to which it can be exerted, that the use by one of his power to seek to convert a part of the common fund to actual possession may result in an undue proportion being attributed to one of the possessors of the right, to the detriment of the others, or by waste by one or more, to the annihilation of the rights of the remainder. Hence it is that the legislative power, from the peculiar nature of the right and the objects upon which it is to be exerted, can be manifested for the purpose of protecting all the collective owners, by securing a just distribution, to arise from the enjoyment by them, of their privilege to reduce to possession, and to reach the like end by preventing waste."
If this right in each and all of the surface owners can be thus restrained and its exercise regulated by a law of the state enacted for the purpose, how can it be held that a valid police regulation, which incidentally and in caution embodies the same restraint and regulation, can be made the basis of a claim that plaintiffs have a right to take all of it, and any restraint of that right violates constitutional guaranties? The basis of a statute, suggested in the Indiana case, is the governmental power to equally protect each surface owner in his right to a common fund. Complaint is made that the city was not vested with that power. Let it be conceded; still it does not follow that a court of equity will lend its aid to one in his effort to take all of a fund in which there is a community interest. The bill seems to us to be wholly without merit and the judgments of dismissal are
Affirmed.Page 141Page 142