Frost v. Ponca City

• Decision Date: 21 October 1975
• Docket Number: No. 47326,47326
• Citation: 541 P.2d 1321
• Parties: Ronald W. FROST et al., Appellants, v. PONCA CITY, Oklahoma, Appellee.
• Court: Oklahoma Supreme Court

Page 1321

541 P.2d 1321

Ronald W. FROST et al., Appellants, v. PONCA CITY, Oklahoma, Appellee.

No. 47326.

Supreme Court of Oklahoma.

Oct. 21, 1975.

Cohen & Pluess, Eagleton, Nicholson & Pate, Oklahoma City, for Ronald W. Frost and Richard R. Klinger.

Don Manners, Oklahoma City, for Hayden Sullivan.

Marland Johnson, City Atty., Ponca City, Maurice H. Merrill, Norman, for appellee.

BERRY, Justice:

Plaintiffs, owners of property in two additions, Southside and Boggess, located within Ponca City, Oklahoma, filed a class action against the City. They requested an accounting from City for the total sum received by City from the sale of certain hydrocarbons.

The parties stipulated refined hydrocarbons were and are still located in a shallow sand underlying parts of the two additions. Gaseous vapors arose from the hydrocarbons. The residents of area demanded City take action to protect residents in case of explosion. City, acting pursuant to its police power, refused to allow plaintiffs, and others similarly situated, to drill wells on their property. City then drilled 26 wells in the area and took other steps to produce, transport and sell the hydrocarbons. City kept all funds received from such hydrocarbons without accounting to plaintiffs. City has continued operations to prevent recurrence of hazardous condition. Continued safety of persons and properly in the area require future operation of the wells, collection in tank trucks of refined hydrocarbons from collecting tanks, and skimming of sewer line ditches.

There is nothing in record concerning source of the refined hydrocarbons, but plaintiffs' brief implies such substances escaped from nearby refineries.

The record indicates that some of City's wells are located upon property which belongs to some plaintiffs.

The trial court found (1) City's ordinance preventing plaintiffs from drilling within the City limits, and City's refusal to grant variance to this ordinance, was a valid exercise of City's police power, (2) City under its police power had the right and obligation to remove the existing dangerous conditions in order to protect the public health and safety of the residents and property in the area, and (3) because of the valid exercise of City's police power, and the rule of capture as it exists in Oklahoma, plaintiffs and all others similarly situated have no property interests in the hydrocarbons that have been removed.

The Court of Appeals, Div. 2, reversed and remanded with directions to proceed with an accounting. The City petitions for certiorari.

On appeal the parties agree City, in exercise of its police power, had authority to remove the hydrocarbons. The disagreement centers around plaintiffs' rights in the hydrocarbons after they were removed by City.

The parties agree that under the 'law of capture' which obtains in Oklahoma, a landowner does not own migratory substances underlying his land, but has an exclusive right to drill for, produce, or otherwise gain possession of such substances, subject only to restrictions and regulations pursuant to police power. Edwards v. Lachman, Okl., 534 P.2d 670; Carter Oil Co. v. State, 205 Okl. 541, 240 P.2d 787; Gruger v. Phillips Pet. Co., 192 Okl. 259, 135 P.2d 485. A landowner does not acquire title, or absolute ownership of the migratory substances, until the substances are reduced to actual possession by being brought to the surface and then controlled. Wright v. Carter Oil Co., 97 Okl. 46, 223 P. 835; Williams v. Phillips Pet. Co., Okl., 406 P.2d 474.

The parties agree the refined hydrocarbons were subject to capture, West Edmond Salt Water Disposal Ass'n v. Rosencrans, 204 Okl. 9, 226 P.2d 965, and that plaintiffs had the right to capture refined hydrocarbons underlying their lands subject only to existing police power regulations. They also agree that City, in exercise of its police power, adopted a valid Charter provision prohibiting plaintiffs from drilling wells or otherwise capturing hydrocarbons under their land.

City contends this Charter provision destroyed plaintiffs' right to capture hydrocarbons underlying their property, and since plaintiffs have no right to capture the hydrocarbons, they have no claim to proceeds from production by City.

Plaintiffs contend the police power is directed to restriction, regulations to prevent, and removal of hazardous conditions, and City, in exercise of police power, had authority to prohibit plaintiffs from removing the hydrocarbons, and authority to remove hydrocarbons itself.

However, plaintiffs contend City, in removing the hydrocarbons, was exercising the landowners' right to capture, and landowners became owners of the hydrocarbons after they were captured by City. They contend City's continued possession of the captured substances exceeds the bounds of the police power, and City's failure to account to them for proceeds of the hydrocarbons deprives them of property without due process of law and contravenes Art. II, § 24, Okla.Const., and the 14th Amendment of the U.S. Constitution.

We agree with plaintiffs. We have recognized mineral owner's right to reduce minerals to possession is a valuable property right. Wright v. Carter Oil Co., supra. The state, or city, acting pursuant to its police power, may establish regulations which have 'the effect of regulating or abrogating in a measure the law of capture.' Gruger v. Phillips Pet. Co., supra. However, these regulations may only restrict the landowner's right to capture minerals underlying his property, and may not authorize third persons to enter upon his premises and capture minerals underlying same without compensating landowner. To authorize a third person to enter upon a landowner's premises and exercise the right to capture minerals underlying the premises would constitute a taking of landowner's property. In Phillips Petroleum Co. v. Corporation Commission, Okl., 312 P.2d 916, we quoted from 29 C.J.S. Eminent Domain § 6, as follows:

'* * * in the exercise of eminent domain private property is taken for public use and the owner is invariably entitled to compensation, while the police power is usually exerted merely to regulate the use and enjoyment of property by the owner, or, if he is deprived of his property outright, it is not taken for public use, but rather destroyed in order to promote the general welfare * * *'

Therefore, we conclude City's regulation prohibiting plaintiffs from drilling and producing the hydrocarbons did not destroy plaintiffs' right to capture said hydrocarbons, but merely restricted such right. The hydrocarbons underlying the lands created a dangerous situation, and City, in exercise of its police power, was authorized to remove them in order to protect public safety. See Cummings v. Lobsitz, 42 Okl. 704, 142 P. 993. However, in so doing City was merely exercising the landowners' right to capture the hydrocarbons. When City acquired possession of the hydrocarbons, the landowners' ownership of the substances became absolute. Wright v. Carter Oil Co., supra. We find no authority which permits City to acquire ownership of the hydrocarbons it removed from...