Opinion · Supreme Court of the United States
Ohio Oil Company v. Indiana
177 U.S. 190
- Type
- Opinion
- Court
- Supreme Court of the United States
- Jurisdiction
- Federal
- Date
- 1900-04-09
- Topic
- general
How later courts describe this case
- determining that oil and gas are "minerals ferae naturace"
- determining that oil and gas are "minerals ferae naturae"
- “But whilst there is an analogy between animals ferae naturae and the moving deposits of oil and natural gas, there is not identity between them.”
- “[W]e cannot say that the statute [regulating natural deposits of oil and gas] amounts to a taking of private property, when it is but a regulation by the state of Indiana of a subject which especially comes within its lawful authority.”
Citator
UpLaw has not yet analyzed Ohio Oil Company v. Indiana. The absence of a flag is not a finding that it is good law.
- Authority status
- pending
- Cited by
- 254 opinions
Headnotes
- Constitutional Law — Due Process A state statute prohibiting persons having possession or control of a natural gas or oil well from permitting the gas or oil to escape into the open air for more than two days after being struck, and requiring that the gas or oil thereafter be confined in the well or in proper pipes or receptacles, is not a violation of the Fourteenth Amendment; its enforcement does not constitute a taking of private property without adequate compensation or a denial of due process, but is a lawful regulation by the state of a subject especially within its authority. 177 U.S. at 190, 205 (syllabus and opinion of the Court)
- Real Property Law — Oil and Gas — Nature of Ownership Before Reduction to Possession Although the owner of the surface has the exclusive right on his own land to bore wells for the purpose of extracting natural gas and oil, he acquires no title to those substances as owner until they are actually reduced to possession; the oil and gas, before being brought to the surface, do not become his property, though he has the exclusive right on his land to seek to acquire them. 177 U.S. at 208–209
- Real Property Law — Oil and Gas — Common Reservoir and Rights of Surface Owners Where oil and gas are commingled in a common subterranean reservoir that shifts and flows beneath the lands of multiple surface owners, no one surface owner can exercise his right to extract from the common supply without diminishing the source available to all others; absent regulation, each surface owner may reduce to possession all or any part of the deposits without violating the rights of the other surface owners. 177 U.S. at 202–203
- Constitutional Law — Due Process Because the surface owners within an oil and gas field hold a common right to reduce to possession the substances in a common reservoir, and the exercise of that right by one owner may result in waste that destroys the interests of the others, the legislature has the power to regulate the manner in which the common supply is appropriated and to prevent waste, in order to protect the collective owners in the enjoyment of their privilege to reduce the substances to possession. 177 U.S. at 210–213
- Real Property Law — Oil and Gas — Analogy to Animals Ferae Naturae Oil and gas, while in their natural reservoir, are analogous to animals ferae naturae in that the right to reduce them to possession exists, but ownership does not arise until the substances are actually reduced to possession; unlike animals ferae naturae, however, the right to take oil and gas belongs only to the owners of the surface within the area of the field, and not to the public generally. 177 U.S. at 208–211
- Constitutional Law — Due Process A statute that prevents one surface owner from wasting the common supply of oil and gas, thereby protecting the property rights of the other surface owners, is not a taking of private property without compensation; if the surface owners hold a property interest in the common reservoir, the state has power to protect that interest from destruction, and if they hold no such interest, the statute cannot be said to take property from them. 177 U.S. at 211–213
OHIO OIL COMPANYv. INDIANA (NO. 1),177 U.S. 190(1900)
20 S.Ct. 576
OHIO OIL COMPANYv. INDIANA (NO. 1).
ERROR TO THE SUPREME COURT OF THE STATE OF INDIANA.
No. 84.
Argued December 18, 19, 1899.
Decided April 9, 1900.
THE title, preamble and first section of a law enacted March
4, 1893, by the State of Indiana, (Acts of 1893, c. 36, p. 300,)
are as follows:
"An act concerning the sinking, safety, maintenance, use and
operation of natural gas and oil wells, prescribing penalties
and declaring an emergency.
"Whereas, great danger to life, and injury to persons and
property is liable to result from the improper, unsafe and
negligent sinking, maintenance, use and operation of natural gas
and oil wells; therefore,
"SECTION 1. Be it enacted by the General Assembly of the State
of Indiana, That it shall be unlawful for any person, firm or
corporation having possession or control of any natural gas or
oil well, whether as a contractor, owner, lessee, agent or
manager, to allow or permit the flow of gas or oil from any such
well to escape into the open air, without being confined within
Page 191
such well or proper pipes or other safe receptacle, for a longer
period than two (2) days next after gas or oil shall have been
struck in such well. And thereafter all such gas or oil shall be
safely and securely confined in such well, pipes or other safe
and proper receptacles."
The remaining sections of the law in question are printed in
the margin.1
Page 192
The issue which this record presents, on the subject of the
law just referred to, is this: Did the enforcement of the first
section of the statute produce as to the persons whose obedience
to its commands were coerced by injunction, a taking of private
property without adequate compensation; that is, did the
execution of the statute amount to a denial of due process of law
contrary to the provisions of the Fourteenth Amendment to the
Constitution of the United Statutes?
The controversy was thus initiated. The State of Indiana,
through its attorney general, filed a complaint in the Circuit
Court of the county of Madison in the State of Indiana, against
the Ohio Oil Company, a corporation organized under the laws of
the State of Ohio, but authorized to carry on its business in the
State of Indiana, as it had complied with the regulations enacted
by that State as to foreign corporations doing business therein.
The cause of complaint was thus stated:
"Plaintiff says that for many years heretofore there has
Page 193
existed, underlying the counties of Madison, Grant, Howard,
Delaware, Blackford, Tipton, Hamilton, Wells and other counties
of the State of Indiana, a large subterranean deposit of natural
gas, occupying a reservoir of large extent, with well-defined
boundaries, and utilized for fuel and light by the people of
those counties and many other counties and cities of Indiana,
including Indianapolis, Fort Wayne, Richmond, Logansport,
Anderson, Muncie, Marion, Kokomo, and others of the most populous
cities of said State, to which cities said gas is conducted,
after being brought to the surface of the earth, through pipes
and conduits, by means of which many hundreds of thousands of the
people of the State of Indiana are now, and have been for more
than ten years last past, continuously supplied with gas for
light and fuel; that said natural gas, underlying the counties
aforesaid and other portions of the State, is contained in and
percolates freely through a stratum of rock known as Trenton
rock, comprising a vast reservoir in which the gas is confined
under great pressure and from which it escapes, when it is
permitted to do so, with great force.
"The fuel supplied by the natural gas thus obtained is the
cheapest and best known to civilization, and the value of the
natural gas deposit to the State and to its citizens is many
millions of dollars; that since the discovery of said gas deposit
in 1886 immense sums of money have come into the State and have
been invested in large manufacturing interests, and other vasts
sums of money belonging to the people of the State of Indiana
have been invested in similar enterprises, causing a great
increase in the population, principally in the territory
underlying which said gas is found. Many cities in and adjacent
to the gas territory, including those named, are wholly dependent
for fuel upon natural gas, and for that reason the people of the
State of Indiana have become and are interested in the protection
and continued preservation of the natural gas supply; that many
millions of dollars invested in manufacturing and other
properties in and near said gas territory are wholly dependent
for their continued preservation and for the permanent value of
their property upon said natural gas supply; that their location
and establishment in said gas territory was due
Page 194
to the presence of natural gas underlying the same, without which
such enterprises could not operate at a profit, and that in the
event the supply of gas should be exhausted in said territory
many of such manufacturing enterprises, in which thousands of the
citizens of Indiana find employment at remunerative wages, will
be compelled to stop operation.
"That their employes will be thereby thrown out of employment,
and many of them, being dependent upon their labor for support,
may and will become charges upon the State and its several
municipal subdivisions; that the property of said manufacturing
enterprises and the vast investments depending upon them and
related to them will become worthless and the owners will be
driven to remove to other parts of the country, taking away from
Indiana great wealth now interested in said enterprises as
aforesaid.
"That in the cities named and in all the territory known as
the `gas belt' the inhabitants have for years used practically no
other fuel than natural gas; that their houses have, in many
instances, been constructed with a view to the use of such fuel,
and will have to be differently equipped before other kinds of
fuel can be used; that the cost of natural gas as fuel to the
people of the `gas belt,' who number several hundreds of
thousands, is very much less than that of any other fuel that has
ever been or can be procured by them, and that to the other
inhabitants of the State using said natural gas it has become and
is a source of great convenience, comfort and increased
happiness, because of its cheapness, convenience and cleanliness
as fuel.
"That many small villages in and near the gas territory have
within a few years become flourishing and opulent cities.
"That the State's wealth and its revenues derived from
taxation on account of such increased population and the various
interests that have been fostered and supported by natural gas
have been greatly increased, and will, in the event natural gas
gives out, be correspondingly curtailed.
"That the State of Indiana, relying upon the permanent supply
of natural gas, has at great expense equipped many of its public
institutions, including the state-house, the Central and
Page 195
other hospitals for the insane, the asylums for the blind and
deaf and dumb, the institution for the care of orphans of
American soldiers, and other public institutions owned and
maintained by the State of Indiana and its various municipal
subdivisions, together with the court houses in many counties,
and a vast number of public schools, for the use of natural gas
as a fuel, by which the cost of maintaining the public buildings
and institutions above named has been materially lessened and the
comfort and happiness of their inmates and occupants immensely
increased.
"That the supply of natural gas underlying the territory
aforesaid is so placed in such Trenton rock that the diminution
or consumption of said gas taken from said reservoir affects and
reduces correspondingly the common supply.
"That if the gas supply is husbanded and protected it will
last for many years and continue to furnish the various cities
named with abundant fuel, and the population, wealth and other
material interests of the State will continue to be benefited and
enhanced and the comfort, happiness and enjoyment of the people
of the State greatly increased.
"That underlying a portion of said natural gas territory and
at the same levels, occupying the interstices — said Trenton rock
in common with said gas, are large quantities of petroleum oil;
and that, because of the volatile character of said gas and the
pressure under which it is confined in said Trenton rock when
said reservoir is tapped by wells drilled into the same from the
surface of the earth, said gas and oil will and do escape into
the open air in great volumes, unless securely confined in tanks
or other proper receptacles.
"That on or about the 25th day of May, 1897, said defendant,
the Ohio Oil Company, drilled, near the city of Alexandria, in
said Madison County, a number of wells into said gas and oil
bearing rock, producing natural gas and petroleum as aforesaid in
large quantities, which wells are known by the name of the land
owner upon whose land they are situated, which name and the
description of said wells are as follows, to wit."
The complaint then enumerated five gas and oil wells which
Page 196
had been opened and were being operated by the defendant for
extracting oil, and averred as follows:
"That instead of securely anchoring said wells and each of
them when so drilled so as to confine within the same or within
tanks or pipes or other safe receptacles the natural gas produced
therefrom within two days after said wells were respectively
completed and gas and oil was struck therein, the said
defendants, ever since the completion of said wells, all of which
have been completed for periods varying from four to nine months,
have unlawfully permitted the gas produced therein to flow and
escape into the open air, whereby many millions of cubic feet of
natural gas have been greatly diminished, and the property of its
citizens in and near said gas territory dependent upon the
continued supply of said natural gas for fuel, as aforesaid, has
been greatly damaged and decreased in value.
"That the defendants and each of them avow their purpose to
permit said gas to escape continuously and indefinitely hereafter
from such wells, and refuse to make any effort to confine the
same, but declare their purpose to drill other wells in said gas
territory and permit the gas therefrom to flow and escape into
the open air, and that if said gas continues to flow from said
wells the supply of natural gas upon which the citizens of said
State depend, as aforesaid, will be greatly diminished; that the
pressure of said gas, as found in said Trenton rock, will be
greatly diminished, and that by the diminution of said pressure
water will accumulate in said rock stratum and ultimately
entirely displace and overcome said gas supply.
"Plaintiff, therefore, says that, because of the wrongful acts
of defendants above described, heretofore committed and now
continuing, its property and that of its citizens has been and
will continue to be essentially interfered with, and the
comfortable enjoyment of the lives of its citizens greatly
interrupted."
Averring the irreparable injury to result from allowing the
wells to continue to flow, as stated, the inadequacy of the
enforcement of the penalties provided in the statute to meet the
evil complained of, and the fact that a multiplicity of suits
would be engendered if the writ of injunction prayed for was not
issued, the bill charged —
Page 197
"That the value of the gas wasted by permitting said several
wells to remain open each day is of great value, and that, in
addition to the value of the same, the whole gas territory or
field is greatly damaged by permitting said wells to remain open,
in that what is known as `back pressure,' resulting from the
confinement of said gas, is in a great measure relieved and
destroyed when said gas is liberated in the manner aforesaid, and
that said back pressure is necessary throughout said field in
order to prevent the flow of water into said rock stratum and the
consequent displacement of the gas therein contained; that, for
the protection of said gas supply from the invasion of salt
water, it is necessary that in the use of gas from wells drilled
into said reservoir only a fraction of the entire volume of said
wells should be used, to the end that the back pressure shall be
maintained at as high a pressure as possible, and that any other
or freer method of using said gas has a tendency to expose the
same to danger of salt water, as aforesaid."
The prayer was as follows:
"And plaintiff therefore prays that a temporary order issue
forthwith from this court prohibiting, restraining and enjoining
said defendant, its agents, servants and employes, from further
suffering or permitting the natural gas produced in said wells or
any of them, or any part thereof, to longer escape therefrom, and
that said defendant be ordered, directed and commanded forthwith
to securely confine the same either by anchoring each of said
wells or by confining the gas produced therefrom in tanks, pipes
or other proper receptacles, and that failing or refusing so to
do the sheriff of Madison County be ordered and directed
forthwith to procure necessary materials and labor and thereby
anchor, secure and confine the natural gas produced from said
wells and each of them, and that the expense of so doing be taxed
as part of the costs of this suit.
"And the plaintiff further prays that upon the final hearing
of this cause said defendant company, its officers, servants,
agents and employes, be perpetually enjoined and prohibited from
further suffering said gas to escape, and that they be forever
thereafter commanded to confine said gas safely and securely in
pipes, tanks or other proper receptacles, and for all proper
relief."
Page 198
The temporary injunction issued as prayed for. The defendant
appeared and demurred to the complaint as not stating a cause of
action. This was overruled. The defendant then answered as
follows:
"The defendant, further answering, says that before and at the
commencement of this action it had in good faith been and then
was engaged in the business of producing oil by drilling therefor
in the earth and rock below in said county of Madison, and that
in the carrying on of said business it has expended many
thousands of dollars in the leasing of territory, the purchase of
machinery and equipment thereof, and for the drilling of a number
of wells and for pipes and pipe lines, all of which it then owned
and still owns.
"The defendant admits that it drilled the well complained of
herein, but says that said well was so drilled in good faith
solely for the purpose of raising and producing oil, the
defendant not being engaged in the business of producing or
transporting natural gas in said county, and having there no
plant for that purpose, and such gas in such case being of no
value to defendant, and there being reasonable grounds to believe
that oil existed in said territory in sufficiently paying
quantities to be utilized.
"That said well complained of was not drilled in or near any
village, town or city, but, on the contrary, was drilled in the
country and remote from any dwelling, and the same as so
constructed and operated is not dangerous to life or property.
"That said well was so drilled and completed, oil was found
therein in paying quantities, and the defendant proceeded to and
did save and utilize the same, paying to the land owner the
stipulated royalties therefor, and so operated the same with
knowledge, approbation and consent of such land owner, and was so
operating the same solely as an oil well and in entire good faith
at the time of the commencement of this action; all of which was
so done under and by virtue of a lease to defendant by the owner
of said land granted before the commencement of this suit, under
which lease defendant owns all the gas and oil in said well and
under said land, and said well is of great value as an oil well.
"That in said well and in the same strata of rock whence such
Page 199
oil was produced there were also found at said time quantities of
natural gas, which by its own pressure escaped through said pipes
and into the open air, said pipes being the same as the ones
through which said oil was produced and saved, and in so saving
such oil defendant utilized such gas as power, force and agency
to raise said oil from the rock-bearing strata below the surface
of the ground, such being the usual, natural and ordinary method
of raising and saving oil in such cases.
"And the defendant further says that no machinery or process
of any kind has ever by the highest skill been devised or known
to the world whereby in such a case the oil in such well can be
produced and saved, unless at the same time such natural gas as
may be in such well is suffered to escape, and the defendant
charges the fact to be, therefore, that if such gas shall be shut
into such well in such case that it will be impossible to raise
or produce oil in any such well, and thereby defendant's said
business, together with its said plant, property and profits,
will be entirely destroyed and the people of said county and
State will be deprived of the use and profits of such oil, which
is of vastly more value than natural gas in said well; and the
defendant says it so operated said well with the highest skill,
with the most improved machinery and appliances known to the
world, and with employes of the highest skill, and that no more
gas was suffered to escape from such well than was consistent
with the due operation of said well with the highest skill.
"The defendant further alleges that for many months before the
completion of said well it was openly and publicly engaged in
acquiring territory, in equipping said plant, in constructing
such oil lines, and in incurring the liabilities and paying the
money therefor, as hereinbefore alleged, all with the knowledge
and acquiescence of the plaintiff and with no notice or knowledge
whatever to or on the part of defendant that it would not be
allowed to operate such well or wells until after the said money
had been so expended and after said well had been so completed.
"That in the territory where said well complained of is
situated there are a number of paying oil wells, owned and
operated by various persons and corporations, and said field,
when
Page 200
properly developed, may reasonably be expected to be a large one
for the production of oil, which will be and is of great value to
the people of said county."
Referring to the law of Indiana, the context of which has
already been stated, the answer contained this averment:
"This defendant further alleges that said act of the general
assembly of the State of Indiana, as above set out, violates the
Fourteenth Amendment of the Constitution of the United States in
this, that it deprives the defendant and others of liberty and
property without due process of law, and denies to defendant and
others the equal protection of the laws."
The State demurred to the answer as not alleging facts
sufficient to constitute a defence. This demurrer was sustained.
The defendant refusing to answer further, a decree granting a
permanent injunction was entered. An appeal having been
prosecuted to the Supreme Court of the State of Indiana, in that
court the decree of the trial court was in all respects affirmed.
50 N.E. 1125. This writ of error was thereupon allowed.
When this proposition is analyzed by the light of the facts which are admitted on the record, it becomes apparent that the foundation upon which it must rest involves two contentions which are in conflict one with the other; in other words, the argument by which alone it is possible to sustain the claim becomes,Page 201when truly comprehended, self-destructive. Thus, it is apparent, from the admitted facts, that the oil and gas are commingled and contained in a natural reservoir which lies beneath an extensive area of country, and that as thus situated the gas and oil are capable of flowing from place to place, and are hence susceptible of being drawn off by wells from any point, provided they penetrate into the reservoir. It is also undoubted that such wells, when bored from many points in the superincumbent surface of the earth, are apt to reach the reservoir beneath. From this it must necessarily come to pass that the entire volume of gas and oil is in some measure liable to be decreased by the act of any one who, within the superficial area, bores wells from the surface and strikes the reservoir containing the oil and gas. And hence, of course, it is certain, if there can be no authority exerted by law to prevent the waste of the entire supply of gas and oil, or either, that the power which exists in every one who has the right to bore from the surface and tap the reservoir involves, in its ultimate conception, the unrestrained license to waste the entire contents of the reservoir by allowing the gas to be drawn off and to be dispersed in the atmospheric air, and by permitting the oil to flow without use or benefit to any one. These things being lawful, as they must be if the acts stated cannot be controlled by law, it follows that no particular individual having a right to make borings can complain, and thus the entire product of oil and gas can be destroyed by any one of the surface owners. The proposition, then, which denies the power in the State to regulate by law the manner in which the gas and oil may be appropriated, and thus prevent their destruction, of necessity involves the assertion that there can be no right of ownership in and to the oil and gas before the same have been actually appropriated by being brought into the possession of some particular person. But it cannot be that property as to a specified thing vests in one who has no right to prevent any other person from taking or destroying the object which is asserted to be the subject of the right of property. The whole contention, therefore, comes to this: that property has been taken without due process of law, in violation of the Fourteenth Amendment, because of the fact that the thing takenPage 202was not property, and could not, therefore, be brought within the guarantees ordained for the protection of property.
The confusion of thought which permeates the entire argument is twofold: First, an entire misconception of the nature of the right of the surface owner to the gas and oil as they are contained in their natural reservoir, and this gives rise to a misconception as to the scope of the legislative authority to regulate the appropriation and use thereof. Second, a confounding, by treating as identical, things which are essentially separate, that is, the right of the owner of land to bore into the bosom of the earth, and thereby seek to reduce the gas and oil to possession, and his ownership after the result of the borings has reached fruition to the extent of oil and gas by himself actually extracted and appropriated. In other words, the fallacy arises from considering that the means which the owner of land has a right to use to obtain a result is in legal effect the same as the result which may be reached. We will develop the misunderstanding which is involved in the matters just stated.
No time need be spent in restating the general common law rule that the ownership in fee of the surface of the earth carries with it the right to the minerals beneath, and the consequent privilege of mining to extract them. And we need not, therefore, pause to consider the scope of the legislative authority to regulate the exercise of mining rights and to direct the methods of their enjoyment so as to prevent the infringement by one miner of the rights of others.Del Monte Mining Co. v.Last ChanceMining Co.,171 U.S. 55,60. The question here arising does not require a consideration of the matters just referred to, but it is this: Does the peculiar character of the substances, oil and gas, which are here involved, the manner in which they are held in their natural reservoirs, the method by which and the time when they may be reduced to actual possession or become the property of a particular person, cause them to be exceptions to the general principles applicable to other mineral deposits, and hence subject them to different rules? True it is that oil and gas, like other minerals, are situated beneath the surface of the earth, but except for this one point of similarity, in many other respects they greatly differ. They have no fixedsitusPage 203under a particular portion of the earth's surface within the area where they obtain. They have the power, as it were, of self transmission. No one owner of the surface of the earth, within the area beneath which the gas and oil move, can exercise his right to extract from the common reservoir, in which the supply is held, without, to an extent, diminishing the source of supply as to which all other owners of the surface must exercise their rights. The waste by one owner, caused by a reckless enjoyment of his right of striking the reservoir, at once, therefore, operates upon the other surface owners. Besides, whilst oil and gas are different in character, they are yet one, because they are unitedly held in the place of deposit. InBrownv.Spilman,155 U.S. 665,669,670, these distinctive features of deposits of gas and oil were remarked upon. The court said:
"Petroleum gas and oil are substances of a peculiar character, and decisions in ordinary cases of mining, for coal and other minerals which have a fixedsitus, cannot be applied to contracts concerning them without some qualifications. They belong to the owner of the land, and are a part of it, so long as they are on it or in it, or subject to his control, but when they escape and go into other land, or come under another's control, the title of the former owner is gone. If an adjoining owner drills his own land and taps a deposit of oil or gas, extending under his neighbor's field, so that it comes into his well, it becomes his property.Brownv.Vandergrift, 80 Penn. St. 142, 147;Westmoreland Nat. Gas Co.'s Appeal, 25 Weekly Notes of Cases, (Penn.) 103."
InWestmoreland Cambria Natural Gas Co. v.De Witt, 130 Penn. St. 235, the Supreme Court of Pennsylvania considered the character of ownership in natural gas and oil as these substances existed beneath the surface of the earth. The court said:
"The learned master says gas is a mineral, and whilein situis part of the land, and therefore possession of the land is possession of the gas. But this deduction must be made with some qualifications. Gas, it is true, is a mineral; but it is a mineral with peculiar attributes, which require the application of precedents arising out of ordinary mineral rights, with much morePage 204careful consideration of the principles involved than of the mere decisions. Water, also, is a mineral, but the decisions in ordinary cases of mining rights, etc., have never been held as unqualified precedents in regard to flowing or even to percolating waters. Water and oil, and still more strongly gas, may be classed by themselves, if the analogy be not too fanciful, as mineralsferae naturae. In common with animals, and unlike other minerals, they have the power and the tendency to escape without the volition of the owner. Their `fugitive and wandering existence within the limits of a particular tract was uncertain,' as said by Chief Justice Agnew inBrownv.Vandergrift, 80 Penn. St. 147, 148. . . . They belong to the owner of the land, and are a part of it, so long as they are on or in it, and are subject to his control; but when they escape and go into other land, or come under another's control, the title of the former owner is gone. Possession of the land, therefore, is not necessarily possession of the gas."
InHaguev.Wheeler, 157 Penn. St. 324, the question involved in the cause was the right of a land owner who had a gas well on his own land to complain of the escape of gas from a well situated on the land of another. After adverting to the rule embodied in the maxim,sic utere tuo ut alienum non loedas, and after referring to the exceptional nature of the right to acquire ownership in natural gas and oil, it was decided that the complainant was not entitled to relief. The court said, 340, 341:
"Now, it is doubtless true that the public has a sufficient interest in the preservation of oil and gas from waste to justify legislation upon this subject. Something has been done in this direction already by the acts regulating the plugging of abandoned wells. . . . In the disposition he may make of it (private property) he is subject to two limitations. He must not disregard his obligations to the public. He must not disregard his neighbor's rights. If he uses his product in such a manner as to violate any rule of public policy, or any positive provisions of the written law, he brings himself within the reach of the courts. If the use he makes of his own, or its waste, is injurious to the property or the health of others, such use or waste may be restrained, or damages recovered therefor; but,Page 205subject to these limitations, his power as an owner is absolute until the legislature shall, in the interest of the public, as consumers, restrict and regulate it by statute."
Again, inJonesv.Forest Oil Company, (January, 1900,) 44 A. 1074, the same subject was once more considered. The complaint was filed by one land owner having a gas well on his land to enjoin the owner of adjoining property from using in a gas well thereon a pump which was asserted to have such power that its operation would draw away the oil and gas from the well of the complainant to that of the defendant. Reviewing the cases to which we have just referred, and after quoting the language of Chief Justice Agnew, inBrownv.Vandegrift, supra, wherein as we have seen oil and gas were by analogy classed as "mineralsferae naturae," the court decided:
"From these cases we conclude that the property of the owner of lands in oil and gas is not absolute until it is actually in his grasp, and brought to the surface."
Again, applying the consequences of the doctrine just stated, the court declared:
"If possession of the land is not necessarily possession of the oil and gas, is there any reason why an oil and gas operator should not be permitted to adopt any and all appliances known to the trade to make the production of his wells as large as possible?"
A brief examination of the Indiana decisions, on the subject of oil and natural gas, and the right to acquire ownership thereto, will make it apparent that from the peculiar nature of these substances courts of that State have announced the same rule as that recognized by this court inBrownv.Spilman,supra, and which has been applied by the Supreme Court of the State of Pennsylvania. InState ex rel. Corwinv.IndianaOhio Oil, Gas Mining Co.,120 Ind. 575, a law of the State of Indiana which made it unlawful for any person to conduct natural gas beyond the State, and imposing penalties for so doing, was assailed as unconstitutional because repugnant to the commerce clause of the Constitution of the United States. The court held the statute to be void for the asserted cause. ThePage 206property in natural gas when reduced to actual possession was decided to be like any other property, and therefore the subject of commerce, and within the protection of the Constitution of the United States. InJamiesonv.Indiana Natural Gas OilCompany,128 Ind. 555, a law of that State which prohibited the transportation of natural gas through pipes at a greater pressure than three hundred pounds per square inch, or otherwise than by its natural flow, was attacked not only on the ground of its interference with the right of property which sprang into existence with the possession of the gas, but because also the act in question was a regulation of interstate commerce. Both contentions were decided to be without merit, substantially on the ground that the dangerous nature of the product, its susceptibility to explosion and the consequent hazard to life and property which might arise from its movement through pipes, made the act of transmitting a fit subject for police regulation. In the course of its opinion the court said:
"The local character of such a substance as natural gas is, we repeat, marked and peculiar. It is a natural product, and its source is in the soil or rocks of the earth. It is as strikingly local as coal or petroleum; and yet no one has ever questioned the power of a State to enact laws governing mining. . . . It is so essentially local that only local regulation can be effective or appropriate. It is found in very few localities, and the character of locality is impressed upon it more clearly and strongly than upon almost any other natural product in the world."
Again, said the court:
"The local and peculiar character of natural gas makes it almost impossible that it should be the subject of general national regulation. . . . Upon this point we affirm that natural gas is characteristic and peculiarly a local product; that its production is confined to a limited territory; that because of its local characteristics and peculiarities it is a proper subject for state legislation, and cannot, so far as regards local production, be made the subject of general legislation by Congress."
InPeople's Gas Companyv.Tyner,131 Ind. 277andPage 207280, the controversy was this: A lot owner in a town filed a bill for an injunction to prevent a neighboring lot owner from using nitro-glycerine "to shoot" a gas well on his property. The court refused the injunction. In the course of the opinion it was said:
"It has been settled in this State that natural gas when brought to the surface of the earth and placed in pipes for transportation, is property, and may be the subject of interstate commerce.Statev.Indiana Ohio Oil Gas Min. Co.,120 Ind. 575. Water, petroleum, oil and gas are generally classed by themselves as minerals possessing in some degree a kindred nature."
After quoting authorities relating to subterranean currents of water, and treating gas and oil before being reduced to possession as of a kindred nature, the court said:
"Like water it is not the subject of property, except while in actual occupancy, and a grant of either water or oil is not a grant of the soil or of anything for which ejectment will lie."
The case ofBrownv.Vandegrift, 80 Penn St. 142, from which we have previously quoted, was then referred to, and the analogies between oil and gas and animalsferae naturaewere approved and adopted. InTownsendv.State,147 Ind. 624, the constitutionality of a statute forbidding the burning of natural gas in flambeau lights was attacked because it was asserted to violate the Fourteenth Amendment to the Constitution of the United States and various provisions of the constitution of the State of Indiana. The court held that the statute was not amenable to the assaults made upon it. In a full opinion reviewing the nature of the ownership in oil and natural gas, the power of the State to regulate and control their use and waste in the interest of all those within the gas field and of the public at large was elaborately considered. Reviewing its own previous adjudications, which we have cited, and those of the Supreme Court of the State of Pennsylvania, to which we have also referred, it was decided that the owners of the surface of the land within the gas field, whilst they had the exclusive right on their land to sink wells for the purpose of extracting the oil and gas, had no right of property thereinPage 208until by the actual drawing of the oil and gas to the surface of the earth they had reduced these substances to physical possession. It was further held that in consequence of the nature of the deposits, of their transmissibility, of their interdependence, of the rights of all and of the public at large, the State could lawfully exercise the power to regulate the right of the surface owners among themselves to seek to obtain possession, and to prevent the waste of the products in which all the surface owners within the area wherein the gas and oil were deposited, as well as the public, had an interest, because in the preservation of these substances the well-being and prosperity of the entire community was largely involved. And it was upon the opinion announced in that case that the court rested its decree in the case now under review.
Without pausing to weigh the reasoning of the opinions of the Indiana court in order to ascertain whether they, in every respect, harmonize, it is apparent that the cases in question, in accord with the rule of general law, settle the rule of property in the State of Indiana, to be as follows. Although in virtue of his proprietorship the owner of the surface may bore wells for the purpose of extracting natural gas and oil, until these substances are actually reduced by him to possession, he has no title whatever to them as owner. That is, he has the exclusive right on his own land to seek to acquire them, but they do not become his property until the effort has resulted in dominion and control by actual possession. It is also clear from the Indiana cases cited that, in the absence of regulation by law, every owner of the surface within a gas field may prosecute his efforts and may reduce to possession all or every part, if possible, of the deposits without violating the rights of the other surface owners.
If the analogy between animalsferae naturaeand mineral deposits of oil and gas, stated by the Pennsylvania court and adopted by the Indiana court, instead of simply establishing a similarity of relation, proved the identity of the two things, there would be an end of the case. This follows because things which areferae naturaebelong to the "negative community;" in other words, are public things subject to the absolute controlPage 209of the State, which, although it allows them to be reduced to possession, may at its will not only regulate but wholly forbid their future taking.Geerv.Connecticut,161 U.S. 519,525. But whilst there is an analogy between animalsferae naturaeand the moving deposits of oil and natural gas, there is not identity between them. Thus, the owner of land has the exclusive right on his property to reduce the game there found to possession, just as the owner of the soil has the exclusive right to reduce to possession the deposits of natural gas and oil found beneath the surface of his land. The owner of the soil cannot follow game when it passes from his property; so, also, the owner may not follow the natural gas when it shifts from beneath his own to the property of some one else within the gas field. It being true as to both animalsferae naturaeand gas and oil, therefore, that whilst the right to appropriate and become the owner exists, proprietorship does not take being until the particular subjects of the right become property by being reduced to actual possession. The identity, however, is for many reasons wanting. In thingsferae naturaeall are endowed with the power of seeking to reduce a portion of the public property to the domain of private ownership by reducing them to possession. In the case of natural gas and oil no such right exists in the public. It is vested only in the owners in fee of the surface of the earth within the area of the gas field. This difference points at once to the distinction between the power which the lawmaker may exercise as to the two. In the one, as the public are the owners, every one may be absolutely prevented from seeking to reduce to possession. No divesting of private property, under such a condition, can be conceived because the public are the owners, and the enacting by the State of a law as to the public ownership is but the discharge of the governmental trust resting in the State as to property of that character.Geerv.Connecticut, supra. On the other hand, as to gas and oil, the surface proprietors within the gas field all have the right to reduce to possession the gas and oil beneath. They could not be absolutely deprived of this right which belongs to them without a taking of private property. But there is a co-equal right in them all to take from a common source of supply, the twoPage 210substances 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. This necessarily implied legislative authority is borne out by the analogy suggested by thingsferae naturae, which it is unquestioned the legislature has the authority to forbid all from taking, in order to protect them from undue destruction, so that the right of the common owners, the public, to reduce to possession may be ultimately efficaciously enjoyed. Viewed, then, as a statute to protect or to prevent the waste of the common property of the surface owners, the law of the State of Indiana which is here attacked because it is asserted that it devested private property without due compensation, in substance, is a statute protecting private property and preventing it from being taken by one of the common owners without regard to the enjoyment of the others. Indeed, the entire argument, upon which the attack on the statute must depend, involves a dilemma, which is this: If the right of the collective owners of the surface to take from the common fund, and thus reduce a portion of it to possession, does not create a property interest in the common fund, then the statute does not provide for the taking of private property without compensation. If, on the other hand, there be, as a consequence of the right of the surface owners to reduce to possession, a right of property in them, in and to the substances contained in the common reservoir of supply, then as a necessary result of the right of property, its indivisible quality and the peculiar position of the things to which it relates, there must arise the legislativePage 211power to protect the right of property from destruction. To illustrate by another form of statement, the argument is this: There is property in the surface owners in the gas and oil held in the natural reservoir. Their right to take cannot be regulated without devesting them of their property without adequate compensation, in violation of the Fourteenth Amendment, and this, although it be that if regulation cannot be exerted one property owner may deprive all the others of their rights, since his act in so doing will bedamnum absque injuria. This is but to say that one common owner may devest all the others of their rights without wrongdoing, but the lawmaking power cannot protect all the owners in their enjoyment without violating the Constitution of the United States.
These considerations are sufficient to dispose of the case. But as there are several contentions which seem to have been considered, in argument, as resting on different premises, though such in reason is not the case, we briefly notice them separately: First. It is argued that as the gas, before being allowed to disperse in the air, serves the purpose of forcing up the oil, therefore it is not wasted, hence is not subject to regulation. Second. That the answer averred that the defendant was so situated as not to be able to use or dispose of the gas which comes to the surface with the oil; from which it follows that the gas must either be stored or dispersed in the air. Now, the answer further asserted that when the gas is stored and not used the back pressure, on the best known pump, would, if not arresting its movement, at least greatly diminish its capacity. Hence it is said the law by making it unlawful to allow the gas to escape made it practically impossible to profitably extract the oil. That is, as the oil could not be taken at a profit by one who made no use of the gas, therefore he must be allowed to waste the gas into the atmosphere, and thus destroy the interest of the other common owners in the reservoir of gas. These contentions but state in a different form the matters already disposed of. They really go not to the power to make the regulations, but to their wisdom. But with the lawful discretion of the legislature of the State we may not interfere.
In view of the fact that regulations of natural deposits of oilPage 212and gas and the right of the owner to take them as an incident of title in fee to the surface of the earth, as said by the Supreme Court of Indiana, is ultimately but a regulation of real property, and they must hence be treated as relating to the preservation and protection of rights of an essentially local character. Considering this fact and the peculiar situation of the substances, as well as the character of the rights of the surface owners, we cannot say that the statute amounts to a taking of private property, when it is but a regulation by the State of Indiana of a subject which especially comes within its lawful authority.Affirmed.
- Page 191 SEC. 2. Whenever any well shall have been sunk for the purpose of obtaining natural gas or oil or exploring for the same, and shall be abandoned or cease to be operated for utilizing the flow of gas or oil therefrom, it shall be the duty of any person, firm or corporation having the custody or control of such well at the time of such abandonment or cessation of use, and also of the owner or owners of the land wherein such well is situated, to properly and securely stop and plug the same as follows: If such well has not been "shot" there shall be placed in the bottom of the hole thereof a plug of well-seasoned pine wood, the diameter of which shall be within one half inch as great as the hole of such well, to extend at least three feet above the salt water level, where salt water has been struck; where no salt water has been struck, such plug shall extend at least three feet from the bottom of the well. In both cases such wooden plugs shall be thoroughly rammed down and made tight by the use of drilling tools. After such ramming and tightening the hole of such well shall be filled on top of such plug with finely broken stone or sand, which shall be well rammed to a point at least four feet above the Trenton limestone, or any other gas or oil bearing rock; on top of this stone or sand there shall be placed another wooden plug at least five feet long with the diameter as aforesaid, which shall be thoroughly rammed and tightened. In case such well shall have been "shot," the bottom of the hole thereof shall be filled with a proper and sufficient mixture of sand, stone and dry cement, so as to form a concrete up to a point at least eight feet above the top of the gas or oil-bearing rock or rocks, and on top of this filling shall be placed a wooden plug at least six feet long, with diameter as aforesaid, which shall be properly rammed as aforesaid. The casing from the well shall then be pulled or withdrawn therefrom, and immediately thereafter a cast-iron ball eight inches in diameter shall be dropped in the well and securely rammed into the shale by the driller or owner of the well, after which not less than one cubic yard of sand pumping or drilling taken from the well shall be put on top of said iron ball.
SEC. 3. Any person or corporation violating any of the provisions of this act shall be liable to a penalty of two hundred dollars for each and every such violation, and to the further penalty of two hundred dollars for each ten days during which such violation shall continue; and all such penalties shall be recoverable in a civil action or actions, in the name of the State of Indiana, for the use of the county in which such well shall be located, together with reasonable attorneys' fees and costs of suit. Page 192 SEC. 4. Whenever any person or corporation in possession or control of any well in which natural gas or oil has been found shall fail to comply with the provisions of this act, any person or corporation lawfully in possession of lands situate adjacent to or in the vicinity or neighborhood of such well may enter upon the lands upon which such well is situate and take possession of such well from which gas or oil is allowed to escape in violation of the provisions of section one of this act, and pack and tube such well and shut in and secure the flow of gas or oil, and maintain a civil action in any court of competent jurisdiction in this State against the owner, lessee, agent or manager of said well, and each of them jointly and severally, to recover the cost and expense of such tubing and packing, together with attorneys' fees and costs of suit. This shall be in addition to the penalties provided by section three of this act.
SEC. 5. Whenever any person or corporation shall abandon or cease to operate any natural gas or oil well, and shall fail to comply with the provisions of section two of this act, any person or corporation lawfully in possession of lands adjacent to or in the vicinity or neighborhood of such well may enter upon the lands upon which such well is situate and take possession of such well, and plug and fill the same in the manner provided by section two of this act, and may maintain a civil action in any court of competent jurisdiction of this State against the person, persons or corporation so failing, jointly and severally, to recover the costs and expenses of such plugging and filling, together with attorneys' fees and costs of suit. This shall be in addition to the penalties provided by section three of this act. ↩