Coquina Oil Corp. v. Harry Kourlis Ranch

• Decision Date: 05 April 1982
• Docket Number: No. 81SA268,81SA268
• Parties: COQUINA OIL CORPORATION, a Nevada corporation; N.F.C. Petroleum Corporation, a Delaware corporation; and Hanson Oil Corporation, a New Mexico corporation, Plaintiffs- Appellants and Cross-Appellees, v. HARRY KOURLIS RANCH, a Colorado general partnership, Defendant-Appellee and Cross-Appellant.
• Court: Colorado Supreme Court

Page 519

643 P.2d 519

COQUINA OIL CORPORATION, a Nevada corporation; N.F.C Petroleum Corporation, a Delaware corporation; and Hanson Oil Corporation, a New Mexico corporation Plaintiffs- Appellants and Cross-Appellees, v. HARRY KOURLIS RANCH, a Colorado general partnership Defendant-Appellee and Cross-Appellant.

No. 81SA268.

Supreme Court of Colorado, En Banc.

April 5, 1982.

Friedman, Hill & Robbins, David W. Robbins, Alan H. Friedman, Denver, for plaintiffs-appellants and cross-appellees.

Kourlis, Thornberry & Young, Rebecca L. Kourlis, Craig, Davis, Graham & Stubbs, Clyde O. Martz, Denver, for defendant-appellee and cross-appellant.

LOHR, Justice.

Coquina Oil Corporation, N.F.C. Petroleum Corporation, and Hanson Oil Corporation (collectively, Coquina) appeal from the judgment of the Rio Blanco County District Court dismissing their petition in condemnation, which sought a private way of necessity across the land of the appellee, Harry Kourlis Ranch (Kourlis). The district court held that Coquina, a federal oil and gas lessee, could not assert the right to condemn private property for private use provided by Colo.Const. Art. II, § 14 and section 38-1-102(3), C.R.S.1973, and consequently dismissed Coquina's petition for lack of standing. We affirm.

I.

Coquina holds a number of federal oil and gas leases in Rio Blanco County. The leaseholds of Coquina form a continuous block that lacks access to a public road. In order to secure access to the leaseholds for purposes of initial exploration and later potential production, Coquina entered into negotiations with a number of surrounding landowners, including Harry Kourlis Ranch. These negotiations ultimately proved unsuccessful.

Coquina then filed a petition in condemnation in Rio Blanco County District Court. The petition requested that Coquina be granted a right-of-way, 40 feet in width, across the Kourlis property. The proposed right-of-way is approximately .9 miles in length and is presently used as an unimproved road. The Coquina petition requested authorization to use the right-of-way for surface transportation and for installation of an underground oil and gas pipeline.

Pursuant to section 38-1-105(6)(a), C.R.S.1973, Coquina filed a motion in limine for immediate possession and use of the right-of-way pending resolution of the condemnation proceedings. After a hearing the district court entered an order on September 12, 1980, denying the motion. The basis for its decision was stated as follows:

It is the conclusion of this Court that Petitioners have failed to establish proper standing to proceed in condemnation as lessees under Article II, Section 14 of the Colorado Constitution and C.R.S.1973, 38-1-102(3). These provisions are only available to owners of fee interests and not available to federal oil and gas lessees holding interests under leases such as those held by Petitioners.

Coquina sought review of that order in this court pursuant to C.A.R. 21. We issued a rule to show cause why the requested relief should not be granted, but, after the matter was at issue, concluded that review by appeal provided an adequate remedy and so discharged the rule. Coquina Oil Corp. v. District Court, Colo., 623 P.2d 40 (1981).

On remand, the district court adopted the findings and conclusions of its September 1980 order denying Coquina's motion in limine, and entered a final judgment dismissing Coquina's petition in condemnation. Coquina appealed. ¹ The case was transferred to this court from the Colorado Court of Appeals for a resolution of Coquina's claims. See sections 13-4-109 and 110, C.R.S.1973.

II.

The sources of Coquina's asserted right to condemn a right-of-way across the Kourlis ranch are Colo.Const. Art. II, § 14 and section 38-1-102(3), C.R.S.1973. The premise of Coquina's argument is that this constitutional provision and section 38-1-102(3), by their terms, do not specify the class of persons who may assert the right to condemn private property for a private use. Coquina then contends that this ambiguity should be resolved to allow a federal oil and gas lessee as well as the fee owner of the landlocked property to assert the condemnation right provided by Art. II, § 14 and section 38-1-102(3). It argues that such a reading is consistent with public policy, since a contrary construction would render the leaseholds valueless to Coquina and deprive the public of the benefits that might result from exploration and development of the leaseholds. While we agree with Coquina's premise that neither the constitution nor the statute establishes the class of persons who may condemn, we find its conclusion from that premise unpersuasive.

A.

Colo.Const. Art. II, § 14 provides:

Private property shall not be taken for private use unless by consent of the owner, except for private ways of necessity, and except for reservoirs, drains, flumes or ditches on or across the lands of others, for agricultural, mining, milling, domestic or sanitary purposes.

Coquina also relies on the statutory counterpart to this constitutional provision, contained in section 38-1-102(3), C.R.S.1973. That statute provides:

Under the provisions of this section, private property may be taken for private use, for private ways of necessity, and for reservoirs, drains, flumes, or ditches on or across the lands of others for agricultural, mining, milling, domestic, or sanitary purposes. ²

The provisions of Colo. Const. Art. II, § 14 constitute "a general inhibition against taking private property for private use without the consent of the owner, but with certain (specified) exceptions." Crystal Park Co. v. Morton, 27 Colo.App. 74 at 80, 146 P. 566 at 569 (1915).

We have often held that narrow construction is the rule in determining the scope of the condemnation power delegated pursuant to legislative enactment. E.g., Town of Eaton v. Bouslog, 133 Colo. 130, 292 P.2d 343 (1956); Beth Medrosh Hagodol v. City of Aurora, 126 Colo. 267, 248 P.2d 732 (1952); Potashnik v. Public Service Co., 126 Colo. 98, 247 P.2d 137 (1952); see 1 Nichols, The Law of Eminent Domain §§ 3.213 and 3.213(1) (3d ed. 1973 and 1981 Supp.). As we stated in Town of Eaton v. Bouslog, supra :

The authority to exercise (the power of condemnation), being against the common right to own and keep property, must be given expressly or by clear implication; it can never be implied from doubtful language.

Town of Eaton v. Bouslog, supra 133 Colo. at 131-132, 292 P.2d at 344. Therefore, we must interpret the exceptions in Colo. Const. Art. II, § 14 narrowly, and resolve uncertainty in the ambit of the condemnation power against the person asserting the right to condemn.

Coquina correctly notes that Colo.Const. Art. II, § 14 and section 38-1-102(3), C.R.S.1973 do not explicitly state whether the power of condemnation prescribed by those provisions may be asserted by a federal oil and gas lessee. However, in light of the principles of construction discussed above, we must resolve that ambiguity against Coquina, the party asserting the right to condemn. ³

B.

Coquina contends that such a result is contrary to sound considerations of public policy. We disagree.

Coquina argued in the trial court that condemnation of the right-of-way across the Kourlis ranch would be for the benefit of the lessee alone and would terminate upon expiration of the lease. The undesirable consequences of such an approach are evident. It creates the possibility that the owners of the Kourlis property will be subjected repeatedly to the disruptive effect and expense of litigation as successive lessees attempt to secure a temporary right-of-way. Imposing upon Kourlis the burden of potential repeated litigation involving essentially the same subject matter does not reflect a wise reconciliation of the need to protect an individual against the deprivation of his property without consent and the need to ensure full development of the state's resources.

In contrast, condemnation of a right-of-way by the fee owner of the landlocked estate does not create the same potential for a multiplicity of lawsuits. If the fee owner condemns the right-of-way, the taking is permanent and the appropriate compensation for the interests condemned is established in one proceeding. The parties do not contest that the federal government can initiate a condemnation action to secure a right-of-way to the Coquina leasehold. See Leo Sheep Co. v. United States, 440 U.S. 668, 99 S.Ct. 1403, 59 L.Ed.2d 677 (1979). Indeed, the federal government on occasion has condemned private property for the benefit of a government lessee or permittee. See United States v. 23.9129 Acres of Land, More or Less, In Shasta County, 192 F.Supp. 101 (N.D.Cal.1961). The federal government is the appropriate body to determine whether to condemn an access route to Coquina's leaseholds, and there is no incremental public benefit justifying the additional burden on Kourlis which would result from extension of that condemnation right to the government's lessee.

In addition, the fee owner of the landlocked property makes the decision to pursue a condemnation action from a different perspective than that of an oil and gas lessee. While the lessee's concern for both the leased property and the surrounding lands is limited in both subject matter and duration, the fee owner of the property will consider the broader implications of his actions over a more extensive period of time. As a policy matter, it is preferable that the latter rather than the former perspective inform the condemnation decision.

We believe that the appropriate reconciliation of the competing policy considerations at issue in this case restricts the condemnation power to the federal government and precludes its extension to a federal oil and gas lessee.

C.

Nor is the result we reach today an inequitable frustration of Coquina's legitimate expectations. The trial court found that the federal oil and gas leases clearly notified...