Mallon v. City of Long Beach

• Decision Date: 05 April 1955
• Citation: 44 Cal.2d 199,282 P.2d 481
• Court: California Supreme Court
• Parties: Felix MALLON, Plaintiff and Appellant, v. CITY OF LONG BEACH, a Municipal Corporation; A. L. Parmley, Lyman B. Sutter, Raymond C. Kealer, James R. Seaton, Clarence E. Wagner, Max Livoni, Carl Fletcher, Bazil U. Carlson and John Doe, as Councilmen of the City of Long Beach; Frank W. Brejcha, as Treasurer of the City of Long Beach; and John R. Mansell, as Auditor of the City of Long Beach, Defendants and Respondents. Alma SWART, Plaintiff in Intervention in Certain Pleadings, and Appellant, v. CITY OF LONG BEACH, a Municipal Corporation; A. L. Parmley, Lyman B. Sutter, Raymond C. Kealer, James R. Seaton, Clarence E. Wagner, Max Livoni, Carl Fletcher, Bazil U. Carison and John Doe, as Councilmen of the City of Long Beach; Frank W. Brejcha, as Treasurer of the City of Long Beach; and John R. Mansell, as Auditor of the City of Long Beach, Defendants, Defendants in Intervention In Certain Pleadings, and Respondents. L. A. 23176.

Page 481

282 P.2d 481

44 Cal.2d 199

Felix MALLON, Plaintiff and Appellant, v. CITY OF LONG BEACH, a Municipal Corporation; A. L. Parmley, Lyman B. Sutter, Raymond C. Kealer, James R. Seaton, Clarence E. Wagner, Max Livoni, Carl Fletcher, Bazil U. Carlson and John Doe, as Councilmen of the City of Long Beach; Frank W. Brejcha, as Treasurer of the City of Long Beach; and John R. Mansell, as Auditor of the City of Long Beach, Defendants and Respondents.

Alma SWART, Plaintiff in Intervention in Certain Pleadings, and Appellant, v. CITY OF LONG BEACH, a Municipal Corporation; A. L. Parmley, Lyman B. Sutter, Raymond C. Kealer, James R. Seaton, Clarence E. Wagner, Max Livoni, Carl Fletcher, Bazil U. Carison and John Doe, as Councilmen of the City of Long Beach; Frank W. Brejcha, as Treasurer of the City of Long Beach; and John R. Mansell, as Auditor of the City of Long Beach, Defendants, Defendants in Intervention In Certain Pleadings, and Respondents.

L. A. 23176.

Supreme Court of California.

April 5, 1955.

Rehearing Denied May 4, 1955.

Stratton & Taylor, Chas. C. Stratton and Mark L. Taylor, Long Beach, for appellant.

Theodore R. Gabrielson and Kenneth E. Matot, Los Angeles, for intervener and appellant.

Preston, Braucht & George, Merced, Crowe, Mitchell & Hurlbutt, Visalia, Neil Cunningham, San Francisco, and J. Thomas Crowe, Visalia, as amici curiae on behalf of intervener and appellant.

Walhfred Jacobson, City Atty., Joseph B. Lamb, Asst. City Atty., and Atlee S. Arnold, Deputy City Atty., Long Beach, for respondents.

TRAYNOR, Justice.

Plaintiff and plaintiff in intervention appeal from a judgment for defendants entered after defendants' demurrers to their complaints were sustained without leave to amend. Plaintiffs sought to enjoin defendants from appropriating and expending for general municipal purposes the income derived from the sale of oil and gas produced from the tide and submerged lands granted in trust to the City of Long Beach by the State of California. Stats.1911, p. 1304, as amended by Stats.1925, p. 235, Stats.1935, p. 793, and Stats.1951, p. 2443. The expenditures to which plaintiffs object are purportedly authorized by a duly enacted amendment to the Charter of the City of Long Beach, the material parts of which provide:

'The 'Public Improvement Fund' is hereby created and established. * * * Money placed therein shall be used exclusively for the payment of costs and expenses for the acquisition, construction, reconstruction, development, operation, repair and maintenance of public improvements and the acquisition of such lands, rights and property as may be necessary or convenient therefor. * * *

'Within thirty days after the effective date of this section, the City Treasurer shall transfer to the 'Public Improvement Fund' fifty per cent of all revenue derived by the City from oil, gas and other hydrocarbons, and fifty per cent of the interest, earnings, income and/or profits from investment of said revenue which is in the 'Harbor Revenue Fund' on the date of such transfer. Within said thirty days, he shall also transfer to the 'Public Improvement Fund' fifty per cent of all revenue in the 'Harbor Reserve Fund' and the 'Tideland Oil Fund' on the date of such transfer.

'At least once each calendar month thereafter, the City Treasurer shall transfer to the 'Public Improvement Fund' fifty per cent of all revenue derived by the City from oil, gas and other hydrocarbons and placed in the 'Harbor Revenue Fund', which is not required by this Charter to be transferred from said 'Harbor Revenue Fund' to the 'Harbor Reserve Fund'. He shall also transfer to the 'Public Improvement Fund', at least once each calendar month thereafter, fifty per cent of all revenue, so derived, which is required by this Charter to be transferred to the 'Harbor Reserve Fund' and fifty per cent of all revenue, so derived, which is required by this Charter to be placed in the 'Tideland Oil Fund'.' (Charter of the City of Long Beach § 260.8, approved by concurrent resolution of the Legislature, Const., Art. XI, § 8, Stats.1953, p. 3826.

The Harbor Revenue Fund, Stats.1931, p. 2807, the Harbor Reserve Fund, Stats.1949, p. 2857, and the Tideland Oil Fund, Stats. 2d Ex.Sess.1946, p. 367; Stats.1949, p. 2857, are depositories of the income derived from the production of oil and gas from the tide and submerged lands granted to the city by the state, except for the income derived from the production of 'dry gas' from those lands, which is handled separately and is discussed below. Plaintiffs claim that the transfers authorized by this charter amendment and the expenditures pursuant thereto are unlawful. Defendants contend that the type of expenditures enumerated in the amendment are proper ones for a municipality to make, and that the transfers ordered by the amendment are authorized by chapter 915 of the Statutes of 1951. That statute provides:

'Section 1. It is hereby found and determined: That the City of Long Beach since 1939 has produced and is now producing large quantities of oil, gas and other hydrocarbon substances from lands conveyed to said city by (the statutes cited above). That from the revenue derived therefrom, said city has constructed upon said lands, wharves, docks, piers, slips, quays, and other utilities, structures and appliances necessary or convenient for the promotion and accommodation of commerce and navigation, at a cost of approximately thirty-five million dollars ($35,000,00). That said city has available and unexpended approximately seventy-five million dollars ($75,000,000), also derived from said source, for the uses and purposes required by said acts, and is now receiving and will continue to receive for many years approximately twenty-four million dollars ($24,000,000) per annum from said source. That, in addition thereto, said city obtains large quantities of 'dry gas' derived from natural gas produced from said lands, which is sold by said city to domestic and other consumers. That by reason of the already large expenditure on such lands for the uses and purposes required by said acts, the large additional sums available and to become available throughout the years for such purposes, the expenditure of more than a total of fifty per centum (50%) of such revenue, received and unexpended and hereafter to become available for such uses and purposes, would be economically impracticable, unwise and unnecessary. That fifty per centum (50%) of all revenue heretofore derived and unexpended, and to be derived, by the City of Long Beach from oil, gas and other hydrocarbon substances, other than 'dry gas,' produced from lands conveyed by said acts, is no longer required for navigation, commerce and fisheries, nor for such uses, trusts, conditions and restrictions as are imposed by said acts. That none of the revenue heretofore derived, and to be derived, by said city from 'dry gas' obtained from said lands is any longer required for navigation, commerce and fisheries, nor for such uses, trusts, conditions and restrictions as are imposed by said acts.

'For the purposes of this act, 'dry gas' is defined to mean the gas directly produced from wells, which contains one-half of a gallon or less of recoverable gasoline per 1,000 cubic feet, or from which gasoline has been removed by processing.

'Sec. 2. That fifty per centum (50%) of all revenue heretofore derived and unexpended, and to be derived, by the City of Long Beach from oil, gas and other hydrocarbon substances, other than 'dry gas,' produced from lands conveyed by said above-entitled acts is hereby declared to be free from the public trust for navigation, commerce and fisheries, and from such uses, trusts, conditions and restrictions as are imposed by any of said above-entitled acts. That all of the revenue heretofore derived, and to be derived, by said city from 'dry gas,' obtained from said lands is hereby declared to be free from the public trust for navigation, commerce and fisheries, and from such uses, trusts, conditions and restrictions as are imposed by any of said above-entitled acts.' Stats.1951, pp. 2444-2445.

The tide and submerged lands from which the monies in question are derived were originally owned by the state subject to a trust for purposes of commerce navigation, and fisheries for the benefit of all the people of the state. City of Long Beach v. Morse, 31 Cal.2d 254, 262, 188 P.2d 17; City of Long Beach v. Marshall, 11 Cal.2d 609, 614, 82 P.2d 362; Boone v. Kingsbury, 206 Cal. 148, 183, 189, 273 P. 797; City of Long Beach v. Lisenby, 175 Cal. 575, 579, 166 P. 333; People v. California Fish Co., 166 Cal. 576, 584, 138 P. 79, quoting from Illinois Central Railroad Co. v. Illinois, 146 U.S. 387, 452-453, 13 S.Ct. 110, 36 L.Ed. 1018. The Legislature committed the administration of this trust to the City of Long Beach (City of Long Beach v. Lisenby, supra, 175 Cal. 575, 579, 166 P. 333; and see Pub.Res.Code, § 6875) by conveying the lands involved to the city in fee simple, City of Long Beach v. Marshall, supra, 11 Cal.2d 609, 613, 82 P.2d 362, subject to an express trust that they be devoted exclusively to the improvement of commerce, navigation, and fisheries for the benefit of an the people of the state. Ibid.; Atwood v. Hammond, 4 Cal.2d 31, 37-38, 48 P.2d 20, and cases cited. The lands granted included the minerals therein, which are also subject to the trust. City of Long Beach v. Morse, supra, 31 Cal.2d 254, 257-258, 188 P.2d 17; City of Long Beach v. Marshall, supra, 11 Cal.2d 609, 614, 82 P.2d 362; Trickey v. City of Long Beach, 101 Cal.App.2d 871, 879, 226 P.2d 694. Before the enactment of the 1951 statute, quoted above, we held that 'the proceeds from the sale of oil and gas from the lands in question may not be used for any purposes other than those specified in the trust conveyances under which the (City of Long Beach) claims title to the lands. The Legislature specified purposes relating to the harbor that...