State Ex Rel. Woods v. Cole ( 1936 )

The discussion in this case in its later phases, and on the relator's first and second petitions for rehearing, has turned extensively on propositions not presented in the earlier phases of the case, making necessary this supplemental expression of the court's opinion. The majority of the court, in adhering to its original decision, is convinced that neither the restrictions on public expenditures provided by section 26 of article 10 of the Constitution of Oklahoma, nor the requirement for expenditure of public funds upon appropriation previously and regularly made, nor the so-called special fund doctrine, are involved in this case. In reaching its conclusion, the court is not persuaded by any idea that a municipality may deal with revenues other than those produced by taxation as a special fund not within constitutional and statutory restrictions, nor by any idea that a municipality can be liable on quantum meruit for benefit received where these restrictions prevent liability on contract.

The oil and gas royalties discovered and collected for the city by the defendant in error, however, were neither money nor funds nor revenues until so discovered and collected, and never went into the public treasury until that part of them not assigned to Cole went into the treasury after Cole had discovered and collected them: then, and not until then, they became revenue, subject to all constitutional and statutory restrictions as to appropriation and expenditure.

It is undisputed that Oklahoma City has the right to lease its municipally owned lands for development for oil and gas, and to contract by such leases for the payment to it of royalties from oil and gas produced. The city is empowered by its charter to hold, lease, mortgage, convey, or otherwise dispose of any of its property, real or personal, and it is empowered by general law to make contracts, to take and acquire property, and to engage in any business or enterprise which might be engaged in by others under franchise from the city. Section 6, article 18, Oklahoma Constitution; section 6350, O. S. 1931. These powers were recognized in Ruth v. Oklahoma City,143 Okla. 62, 287 P. 406. The power to lease must carry with it the implied power to collect the stipulated royalties, and to do whatever was reasonably necessary to collect and enjoy this contractual incident of the city's property right. So long as the auditor or investigator employed could be and was compensated in a manner other than by the expenditure of public funds or the incurring of an indebtedness against them, his employment for that purpose was valid. The petition discloses that he was compensated by assignment of a part interest in the concealed royalties which he undertook to discover and collect, and the city did not thereby incur any indebtedness to him.

The second petition for rehearing is, accordingly, denied.

BUSBY, WELCH, and CORN, JJ., and C.W. CAMERON, Special J., concur. McNEILL, C. J., and GIBSON, J., dissent.