Beverly Oil Co. v. City of Los Angeles

• Decision Date: 27 March 1953
• Citation: 254 P.2d 865,40 Cal.2d 552
• Court: California Supreme Court
• Parties: BEVERLY OIL CO. v. CITY OF LOS ANGELES et al. L. A. 21977.

Page 865

254 P.2d 865

40 Cal.2d 552

BEVERLY OIL CO. v. CITY OF LOS ANGELES et al.

L. A. 21977.

Supreme Court of California, in Bank.

March 27, 1953.

George E. Cryer and R. Alston Jones, Los Angeles, for appellant.

Ray L. Chesebro, City Atty., Bourke Jones, Asst. City Atty., and Alan G. Campbell, Deputy City Atty., Los Angeles, for respondents.

SHENK, Justice.

This is an appeal from a judgment for the defendants in an action seeking declaratory relief and to enjoin the defendants from enforcing a zoning ordinance alleged to restrict and eventually terminate the plaintiff's nonconforming use of land for oil production.

The plaintiff owns 11 1/6 acres of land bounded by San Vicente, Beverly and La Cienega Boulevards and West Third Street in Los Angeles. The first producing oil well on this property was drilled in 1908 and thereafter a total of ten or eleven oil wells were placed in production. In 1924 the property was annexed to the City as a part of the Fairfax Addition. In 1925 the City Council passed its first zoning ordinance; it zoned a part of the area in question for limited industrial use (M-2) and the remainder for commercial use (C-2). The use for drilling and production of oil was set apart for area 'M-3' and was prohibited in 'M-2' and 'C-2' areas. However, the operation of existing wells in these areas was expressly permitted as a nonconforming use by the ordinance. In addition to the plaintiff's wells there were other wells in production in the area but as production declined these other wells were abandoned. By 1947 the only wells remaining in production were seven operated by the plaintiff on the property in question, and there are now no other wells for many miles. The wells yield approximately 6,000 barrels per month.

The area immediately surrounding the property is largely commercial with some light industrial development. All the surrounding streets are heavily traveled. On the westerly side the Pacific Electric Railway operates freight lines over its right of way. Beyond the immediately surrounding streets there is a dense residential development in every direction, although some of the area is zoned for light industrial and commercial development.

The present Comprehensive Zoning Ordinance, effective June 1, 1946, is largely a reenactment of previous ordinances. It permits the continued nonconforming use of the land and the maintenance thereon of all nonconforming structures. However, it expressly provides that no new well for the production of hydrocarbon substances, which is a nonconforming use, shall be drilled nor shall existing wells be deepened. In 1945, prior to the reenactment of the present ordinance, the plaintiff instituted a suit against the city and obtained an adjudication that it could drill one new well in the center of its property, which it did. In addition the city in July, 1949, granted a variance which permits the plaintiff to drill on a triangular two-acre plot within the 11 1/6 acre tract, as many as four new wells, provided that for each one of the wells so drilled it abandon an existing well in the overall tract.

By a 1949 amendment to the present ordinance it is provided that 'The nonconforming use of land shall be discontinued within (5) years from June 1, 1946 (the date of the enactment of the present ordinance), or within five (5) years from the date the use became nonconforming, in each of the following cases: (1) Where no buildings are employed in connection with such use; (2) Where the only buildings employed are accessory or incidental to such use * * *.' The plaintiff asserts that this amendment was intended to terminate the nonconforming use of land for oil production, and that the situation precipiated by the amendment made it necessary to bring this action to protect its mineral rights. The case was argued in the trial court only on the question of the propriety of the enforcement of those provisions of the ordinance which prohibit drilling or redrilling wells on the plaintiff's property. Although no specific reference was made to the 1949 amendment in the pleadings, still the validity of the ordinance as affected by the amendment seems to have been properly put in issue when it was alleged and denied that the defendants 'seek to prevent any additional drilling and to stifle and terminate the operation of the wells now on plaintiff's property * * *.' Nevertheless it was incumbent upon the plaintiff to show that as between the parties a controversy existed with respect to the 1949 amendment before it could rely upon a threatened termination of its operations under the amendment as an invasion of its constitutional rights. The plaintiff failed to make such a showing. Furthermore, the provisions of the ordinance continue to permit the nonconforming use of buildings or structures (including derricks, pumping units, well casings, pipes, storage tanks) in Section 12.23-B of the Los Angeles Municipal Code and the maintenance of such buildings or structures in Section 12.23-A1.

The defendants assert that the administrative interpretation of the 1949 amendment in its application to the nonconforming use of land for the production of oil in a commercial or limited industrial zone, is that such use may be continued indefinitely since it necessarily involves the nonconforming use of nonconforming structures and therefore not within the purview of the amendment. At the trial no claim was made nor was any evidence presented to the effect that the defendants have taken any action or made any threat inconsistent with the asserted administrative interpretation. The trial judge specifically found that 'no evidence was introduced in this case that the defendants construe the provisions (of the 1949 amendment) as applicable to the subject property and that there is no evidence that defendants threatened to or will apply said provisions to the subject property; therefore, no findings of fact are made with respect to said matter.' Any issue in regard to the 1949 amendment therefore becomes academic in this proceeding and the decision must rest upon the validity of actions taken or threatened by the defendants whereby a controversy is created.

Since this action was begun an amendment to Section 12.33 of the Municipal Code provides that nonconforming oil wells must be abandoned after a 20-year period of liquidation. The effect of this latter provision was not in issue before the trial court and is not in issue here.

Comprehensive zoning has long been established as being a legitimate exercise of the police power. Miller v. Board of Public Works, 1925, 195 Cal. 477, 234 P. 381, 38 A.L.R. 1479; Euclid v. Ambler Realty Co., 1926, 272 U.S. 365, 47 S.Ct. 114, 71 L.Ed. 303. The plaintiff has argued in the present case that the ordinance is invalid because it operates to take away or impairs his vested right to reach any and all oil underlying his property. However, the very essence of the police power as differentiated from the power of eminent domain is that the deprivation of individual rights and property cannot prevent its operation, once it is shown that its exercise is proper and that the method of its exercise is reasonably within the meaning of due process of law. This was illustrated by the case of Hadacheck v. Sebastian, 239 U.S. 394, 36 S.Ct. 143, 60 L.Ed. 348, affirming Ex parte Hadacheck, 165 Cal. 416, 132 P. 584, L.R.A.1916B, 1248, upholding a zoning ordinance of this same defendant, the City of Los Angeles, in a case similar in many respects to the present one. Hadacheck had erected his brick yard and kiln in an almost uninhabited locality several miles outside the city upon an eight-acre tract of land with soil peculiarly valuable for brickmaking. Subsequently the city boundaries were extended to include the locality and later a zoning ordinance was enacted which operated retroactively to require the removal of the industry. In its opinion the Supreme Court of the United States stated: 'It is to be remembered that we are dealing with one of the most essential powers of government, one that is the least limitable. It may, indeed, seem harsh in its exercise, usually is one some individual, but the imperative necessity for its existence precludes any limitation upon it when not exerted arbitrarily. A vested interest cannot be asserted against it because of conditions once obtaining. Chicago & Alton R. R. v. Tranbarger, 238 U.S. 67, 78, 35 S.Ct. 678, 59 L.Ed. 1204, 1211. To so hold would preclude development and fix a city forever in its primitive conditions. There must be progress, and if in its march private interests are in the way, they must yield to the good of the community.' (239 U.S. 394, 36 S.Ct. 145.)

The policy in this state favors the conservation of oil deposits through statutory regulation, Oil and Gas Conservation, ch. 1, Div. 3, Public Resources Code. The people have a 'primary and supreme interest' in oil deposits. Public Resources Code, § 3400. And it is recognized that oil production is a business which must operate, if at all, where the resources are found. Nevertheless city zoning ordinances prohibiting the production of oil in designated areas have been held valid.

In Pacific Palisades Association v. City of Huntington Beach, 196 Cal. 211, 237 P. 538, 539, 40 A.L.R. 782, the court stated that the city had 'the unquestioned right to regulate the business of operating oil wells within its city limits, and to prohibit their operation within delineated areas and districts, if reason appears for so doing.'

In Marblehead Land Company v. City of Los Angeles, 9 Cir., 47 F.2d 528, certiorari denied, 284 U.S. 634, 52 S.Ct. 18, 76 L.Ed. 540, the Circuit Court of Appeals affirmed a judgment of the District Court denying an injunction against the enforcement of the Los Angeles zoning ordinance in its prohibition of oil well drilling operations in an area zoned for other uses. The argument raised the question of the right of the...