Beveridge v. Westgate Oil Co. , 171 Okla. 360 ( 1935 )

On August 8, 1933, the Westgate Oil Company and Grison Oil Corporation filed a joint application with the building superintendent of Oklahoma City for a permit to drill a well on block 12, Phillips and Meade East Side addition to Oklahoma City, which was by him denied and appeal was perfected to the board of adjustment. On August 28, 1933, the board denied the permit. The cause was appealed to the district court of Oklahoma county, and on October 4, 1933, the district court ordered that a permit to drill be granted, not as an exception under the ordinance, but under the terms of the ordinance. From said judgment the building superintendent appealed to this court. On November 2, 1933, the date of the filing of the appeal, there was also filed an application in this court by the building superintendent for supersedeas and stay of the judgment of the district court granting said permit, which application was by this court denied on November 4, 1933. Thereupon, pursuant to the judgment of the district court, permit was issued to said companies to drill said well, the appeal still pending in this court undetermined. On May 8, 1934, the judgment of the trial court ordering said permit to be issued was reversed for the reason, as set forth in the opinion filed therein, that the permit ordered to be issued by the district court was issued, not as an exception to the ordinance relating thereto, but, as stated by the district court in its judgment, "under the terms of the ordinance."

The opinion pointed out that a certain provision of the ordinance, hereinafter referred to, was overlooked and violated by the judgment of the district court, and for said reason the judgment was erroneous. The cause was remanded "to proceed in conformity with the views herein expressed." Van Meter v. Westgage Oil Co., 168 Okla. 200, 32 P.2d 719.

At this point we direct attention to the city ordinances and to the exact location of the well in question. Long prior to the present application, blocks 12 and 13 of Phillips and Meade East Side addition were, by authority of the board of adjustment, consolidated as a drilling area. A well was authorized to be drilled on block 13, which is immediately south of block 12. There is no question herein concerning the right of the companies to drill on said lands except for the restrictions and regulations of the ordinance relating to drilling. The north boundary line of block 12 is likewise the north boundary line of what is known as the "U-7 Use Zone," which zone was established by the ordinances of the city as territory in which drilling for oil is permitted under certain conditions and restrictions. By the provisions of ordinance No. 3944 of the city of Oklahoma City, drilling within 300 feet of the outer line of the zone is prohibited. This 300-foot strip is commonly known as the "buffer zone." Block 12 is 320 feet in depth from north to south and the north 300 feet of said block is within said buffer zone. A strip of land 20 feet wide running east and west along the south edge of the block is within drilling territory and outside of the buffer zone, and except for certain regulations and restrictions contained in the ordinance, hereinafter noticed, drilling is not prohibited in said strip. This strip is contiguous to the north boundary line of Second street, which runs east and west along the south side of block 12.

The ordinance prohibits drilling, as stated above, in said buffer zone and likewise prohibits drilling within 300 feet of any property "used for public school purposes." The block immediately west of block 12 is so used. The district court, by its judgment, provided that the well should be drilled not less than 300 feet from the east boundary line of the property used for school purposes. This located the well at a point in block 12, 19 feet north of the south boundary line of said block, and in the eastern part of said block.

After this court had refused to stay the force and effect of the judgment of the district court ordering the issuance of said permit, and after said permit had been granted pursuant to said judgment, said companies went upon said location in said block and drilled to a depth of 5,078 feet, or within a few hundred feet of the known location of an oil producing stratum, said drilling having been pursued at a cost of $60,000. When this court determined that the issuance of said permit was erroneous, said companies ceased all operations, thus leaving said well uncompleted at a total depth of 5,078 feet and prior to the production of oil.

Supplemental pleadings were filed in the trial court in which it was alleged that said well had been drilled almost to completion at great expense and in good faith; that the gas pressure in said field was practically exhausted and that the fire hazard incident to completion of said well was practically nonexistent; that the territory in which the well was located had now been given practically over to oil production and that the use for oil drilling purposes was much more valuable than for any other use, and that if said well were not completed a large amount of recoverable oil would be permanently lost, due in the main to a decreased and decreasing gas pressure, and that a large amount of natural resources would be forever lost and the public interest would thereby be impaired and that the public peace, health, and safety of the citizens generally would not be prejudicially affected or impaired by the continuance of said operations. After sundry motions in the district court had been overruled, the cause proceeded to a further hearing on the issue of the granting of a permit under an exception to said ordinance. The trial court made findings of fact and conclusions of law, to which we shall advert.

The board of education of Oklahoma City was a party protestant when the matter was orginally tried in district court. Pending the appeal to this court, the board of education leased the school property adjacent to the premises in question, and when the matter was tried in district court the second time, the attorney for the school board announced that the board of education had changed its position and would withdraw from the case.

Only J.L. Beveridge, building superintendent, and the city of Oklahoma City have filed petitions in error in the instant appeal.

On May 12, 1934, by leave of court, a petition in intervention was filed by John J. Coates and W.H. Slaughter, as trustees for 600 royalty holders under communitized oil and gas leases covering block 12, and other adjacent property. The principal allegations of the petition in intervention related to the interest of the royalty holders in the subject-matter of the lawsuit and included a plea that the drilling of the well in question would be in harmony with the public interests and not contrary thereto. The petition prayed for the granting of said permit according to the request of the original application. The trial court overruled a motion to strike the above plea in intervention, which action of the court is assigned as error herein. We do not deem it necessary to pass upon the question, since it does not appear that any prejudice resulted to the plaintiff in error in allowing the filing of said petition in intervention.

The defendant city urges that the former opinion of this court (Van Meter v. Westgate Oil Co., 168 Okla. 200,32 P.2d 719), is res adjudicata of all the issues involved herein, and consequently plaintiff was not entitled to a new trial in the district court. There is no merit in the contention. The cause was remanded with directions "to proceed in conformity with the views herein expressed." It was pointed out in the opinion that the trial court had neglected to take into consideration one of the restrictions of the ordinance, and had granted a permit under the ordinance and not under an exception thereto. It is therefore clear that the trial court was directed to hear the case with a view of determining whether or not there was justification in making an exception to the ordinance.

Upon appeal there is but one question presented, and that is whether or not the judgment of the trial court is contrary to the weight of the evidence.

The material findings of the trial court are as follows:

"3. The court further finds that under the evidence in this case that the well commenced to be drilled on block 12, Phillips Meade East Side addition to Oklahoma City, Okla., has been located and partially drilled in compliance with ordinance No. 3944 of Oklahoma City except as to section 7 which relates to the property line provision thereof; that said well is located within 50 feet of the property line of said block and that under a decree of this court heretofore granting a permit to drill said well in said location, the same has now been drilled to an approximate depth of 5,000 feet at a considerable expense to the owners thereof.

"4. The court further finds that the area in said block is in excess of the minimum requirements under the terms of the ordinance for drilling locations.

"5. The court further finds that the drilling of said well in said block would not increase fire hazards or general danger to the welfare of citizens in that community and would not be such an operation as would violate the public safety spirit of the zoning ordinance herein referred to: that there would be no serious increase in fire hazard or danger to life and property of citizens in that block or locality; that the gas pressure of such well is now so reduced as not to cause any danger from unusual flows of gas.

"6. The court further finds that inasmuch as plaintiffs have been permitted to drill said well to a depth of 5,000 feet at a large expenditure of money, that it would be an inequitable hardship on said applicants to refuse them the right to complete said well, under all of the evidence adduced the trial herein; that said well is in and around a strictly producing oil area in the city oil field with producing wells adjacent to said property, and that to deny same would amount to a loss of several thousands of dollars to the applicants, and that the drilling of said well would not amount to a breaking down of the zoning ordinance in any sense so far as extensions thereof are concerned, and that the only objection offered thereto would be the fact that the same may be within the 50-foot limit of the property line, said property line being the south property line of said block and not on the side of said block which would have a tendency toward the extension of said ordinance."

It is contended by plaintiff in error, building superintendent, that the location of the well in block 12 at the particular point violates the spirit and intent of the general zoning ordinance (ordinance No. 3944), and that said permit should not have been granted, more especially by reason of its violation of section 7 thereof, as follows:

"Section 7. No well for the production of or mining for petroleum or natural gas shall be drilled or put down nearer than 50 feet from the property line of the tract on which such well is situated."

Briefly stated, the general spirit and intent of said ordinance is as set forth in section 1 thereof, as amended, "that for the purpose of the protection of lives and persons of the citizens of the city of Oklahoma City, and of the public generally, and for the protection of property from the danger of fire, explosion, gas, public nuisances, and other hazards dangerous to the public peace, health, and safety as a result of the drilling for and production of petroleum and natural gas," no person should drill any well, or perform labor in connection therewith, or build or erect any structures or equipment for such purposes within the U-7 zone without first having obtained a permit for such well to be drilled. No more than one well to a block is permitted; in unplatted tracts the term "block" is defined to mean "one contiguous tract of not less than 5 acres in area," and in platted tracts the area is fixed at 2 1/2 acres; and by section 7, supra, it is provided that no well shall be put down nearer than 50 feet from the property line on the tract on which such well is situated. It is conceded that block 12 is of greater area than 2 1/2 acres.

This court determined in the case of I. T. I. O. Co. v. Larkins, 168 Okla. 69, 31 P.2d 608, that, upon proper showing, the board of adjustment, and the district court upon appeal and trial de novo, were vested with authority to grant an exception to this provision of the ordinance. By section 6177, O. S. 1931, as supplemented by the provisions of the ordinances of Oklahoma City, the board of adjustment is empowered:

"To authorize upon appeal in specific cases such variance from the terms of the ordinance as will mot be contrary to the public interest, where owing to special conditions a literal enforcement of the provisions of the ordinance will result in unnecessary hardship, and so that the spirit of the ordinance shall be observed and substantial justice done."

This provision had consideration by the court in the case of Anderson-Kerr, Inc., v. Van Meter, 162 Okla. 176,19 P.2d 1068.

Whether or not the record discloses an unnecessary hardship owing to special conditions existent in this case, we turn to the record and to the findings of fact of the trial court. The trial court ordered the issuance of a permit on a prior hearing, from which an appeal was taken to this court. This court refused to stay the issuance of said permit, and after said permit had been granted, petitioners went upon said location and with an expenditure of $60,000 drilled a well to a depth of 5,078 feet. To deny a permit to petitioners would result in the utter loss of this large expenditure. That such expenditure was made is undenied, and that it would be wholly wasted and destroyed is irrefutable. But the building superintendent asserts that said expenditure was imprudently made by petitioners by reason of the fact that a contest was pending in the court as to the right to said permit. Petitioners introduced evidence showing that they acted in good faith after this court had refused to stay the former judgment and that no drilling was done until after February 22, 1934, when this court announced the opinion in the Larkins Case, supra. While financial loss to a citizen alone may not be used as a means of thwarting the general good, yet a large financial outlay, which would be utterly destroyed or washed, is a factor to be considered in determining the hardship which may be alleviated under the terms of the statute by the granting of an exception, and we cannot close our eyes to the tremendous loss in this case.

Moreover, it is shown by the testimony of scientific experts that said well will drain an area containing 560,000 barrels of drain that the gas pressure has greatly decreased and is rapidly decreasing, and that such gas pressure is highly necessary to production of said oil, which, if a permit be not granted at this time, can never be produced by any methods known at present for the production of oil, and that in addition to the $60,000 above mentioned, petitioners will lose the value of said unproduced oil, amounting to a large sum of money: This is another factor which must be given due weight in determining the propriety of an exception to said ordinance.

The trial court found that the vicinity around said well is a strictly oil producing area, with producing wells adjacent to said property, and that the drilling of said well in said block would not increase fire hazard or general danger to the welfare of citizens in that community, and that the public safety spirit of the zoning ordinance would not be violated; that there would be no serious increase in fire hazard or danger to life and property of citizens in that locality, and that by reason of the location of said well in the south part of said block said location does not tend to break down or extend the limits of said U-7 zone. There was much controversy concerning these issues before the trial court, but after carefully reviewing the entire record we cannot say that the findings of the trial court on these material issues are against the weight of the evidence.

Not only have exceptions to this feature of the ordinance been recognized by this court, as in the Larkins Case, but it is shown in the record that exceptions have been granted thereto without appeal by the city of Oklahoma City. Each case must rest upon its own state of facts. It is for the legislative authorities of the city to fix the boundary where drilling operations may be carried on. But it is inconceivable that conditions surrounding every potential drilling location within the drilling territory could be so identical that an ordinance could be enacted which would apply to every such situation so that no injustice would result therefrom. It is not only for the courts to exercise extreme care and caution, in the light of the facts of each case, to see that the legislative will is not broken down, but also to zealously guard with the same care and caution the right of the individual property owner to take into his possession that which is rightfully his own, when such possession can be had without endangering the peace, health, and safety of his neighbors. While, under some conditions, not disclosed by the record in this case, the location of a well nearer than 50 feet of the boundary line of the street might be hazardous, resulting in the denial of a permit, the trial found in this case, under the surrounding circumstances, the hazard to life and property was not increased by reason thereof. All of the property owners in said block are supporting the issuance of said permit.

It is argued that to grant a permit in this case is to authorize the granting of a permit in other cases along the buffer zone similarly situated, and that thereby the spirit of the ordinance will be broken down. We call attention, however, to the fact that each application for a permit must stand or fall upon its own particular facts and that the legislative authority of the city can be used, if it sees fit, to end such result.

It is said that, instead of an unnecessary hardship being shown in this case, the permit will enable petitioners to obtain an advantage by taking possession of more oil than it is entitled to take from the source of supply. We again call attention to the fact that the city has never been authorized to require ratable or equitable taking of oil from a common source of supply. The power conferred upon the city relates only to the public peace, health, and safety of the citizens, and its acts must be referable, if valid, to this grant of power alone.

In view of the finding of the trial court and in view of the extraordinary hardships which would be cast upon petitioners by a denial of said permit, we elect to follow the finding of the trial court, which is not against the clear weight of the evidence. The judgment of the trial court is affirmed.

RILEY, WELCH, PHELPS, and CORN, JJ., concur. McNEILL, C. J., and BUSBY, BAYLESS, and GIBSON, JJ., dissent.