Court Opinion

ID: 7915885
Source: CourtListenerOpinion
Date Created: 2022-09-08 22:10:52.982866+00
Date Added: 2024-06-11T16:32:48.367717
License: Public Domain

Parker, J.
(dissenting): I agree with the majority opinion so far as it holds the state in the exercise of its police power has fhe right to protect the correlative rights of the producers from a common pool and that the State Corporation Commission has power under the proration statute to equalize production as against overages. I cannot, however, approve the contention advanced by the commission and the rule laid down in the majority opinion approv*598ing it to the effect that oil produced from a lease, irrespective of how or in what manner it is produced, in excess of the allowables fixed for wells located thereon is, in all cases, properly chargeable as an overage against the lease from which it was so produced. My views will be stated as briefly as possible.
Because a statute is constitutional — and I concede the oil proration statute is — it does not follow that all orders made under it are valid. A statute may be absolutely unassailable on constitutional questions ánd yet a board or commission charged with the duty of enforcing its provisions may so interpret its force and effect and apply it to a particular situation as to deprive an individual of rights guaranteed to him by the constitution. The commission’s authority is limited by the language of the statute under which it derives its power and if it attempts to proceed beyond the scope of that grant the court should refuse to sustain its action. My interpretation of the statute in question (G. S. 1941 Supp. 55-603) is, insofar as it pertains to the correlative rights of producers, that if a person having the lawful right under a lease to drill into and produce oil from a lease tdkes or produces more than his allowable proportion of crude oil, then, and in such event the commission is required and permitted to take steps which will regulate the taking of such crude oil by such person in such manner as to prevent the inequitable or unfair taking of crude oil by him and equalize the amount so wrongfully taken by^him from the common pool in violation of the correlative rights of others having equal interest therein. It seems to me that any interpretation which results in prohibiting an individual from producing oil from his lease simply because more than the allowable has been produced therefrom regardless of the condition under which it was produced — and, to be specific under conditions which were totally unknown to him, and beyond his control, and by reason of which he received no profit and in fact sustained a total loss — results in an unconstitutional.application of the statute in that it deprives him of his property without that due process of law guaranteed to him by section 18 of the bill of rights of the constitution of Kansas and the 14th amendment to the constitution of the United States.
We are primarily concerned with the situation in the instant case. What does the record disclose? That from the lease owned by defendant, Bennett, there was taken and produced from a well located thereon 26,005 barrels of oil in excess of the allowables fixed by the *599commission. Up to that point in the proceeding the burden of proof was on the commission. I am perfectly willing to concede that if it had stopped there the burden would have shifted and the owner of. the lease compelled to assume the obligation of establishing by proper evidence that such overage was not produced and taken from the lease with his knowledge and consent and at his direction. But the commission was not satisfied to follow this procedure. It entered into the stipulation, copied verbatim on page one of the majority opinion, whereby it agreed not only the amounts of overage exceeded 26,000 barrels of oil but also that the oil taken from said lease was stolen, it was produced' and it was taken without the knowledge of the owner thereof, and he received no part of the returns from the sale of such oil. At this point let me say in fairness that the stipulation may be open to the construction that it applies only to the overage in barrels and not to the matters hereinabove specifically referred to. However, I do not construe it as limited to the amount of overage and the district court did not do so. Certain also, it is from an examination of the transcript of evidence furnished to the court, that the commission itself considered it as admitting all such matters and things. In fact, this language is found in the commission’s brief, “The commission still takes the position that under the admitted facts of this case the statute makes it mandatory upon the commission to charge this overproduction against the Steckel Lease and its order should be affirmed.” (Italics supplied.) It should also be noted a fair analysis of the stipulation discloses that the overage was produced, taken, and stolen from the lease, not that it was reduced to possession, placed in tanks belonging to the owner and then stolen from him. An examination of the record fails to disclose any testimony the overage was reduced to the actual possession of Bennett. So far as the record goes such overage could have been produced and run into vehicles used by the thieves in conveying it to market. If so, the thieves were not only producing and taking it, but stealing oil from the pool in which the owners of oil leases in the pool had a common interest.
In Kansas there is no property in oil and gas because of their migratory nature, until they have been captured, though each owner may take without limit, unless lawfully restrained. (Phillips v. Oil Co., 76 Kan. 783, 92 Pac. 1119, Supply Co. v. McLeod, 116 Kan. 477, 227 Pac. 350; Gas Co. v. Neosho County, 75 Kan. 335, 89 Pac. 750; Zinc Co. v. Freeman, 68 Kan. 691, 75 Pac. 995; Burden v. Gypsy *600Oil Co., 141 Kan. 147, 40 P. 2d 463, and Marrs v. Oxford, 32 F. 2d 134, 67 A. L. R. 1336, 1345.)
Until discovered and brought to surface no. severance of title occurs, the minerals not only remain a constituent part of the land but they belong to the owner of the surface soil beneath which they lie. The lessee has no “right or title to them.” (Zinc Co. v. Freeman, supra; Gas Co. v. Neosho County, supra, and Burden v. Gypsy Oil Co., supra.)
The interest conveyed by an oil and gas lease is not a present vested interest in the oil and gas in place but a mere license to explore — an incorporeal hereditament — a profit a prendre (Phillips v. Oil Co., supra, and National Supply Co. v. McLeod, supra).
To a certain extent it can be said the property right of an owner or lessee of land in and to the oil and gas beneath the surface is not an absolute one and such substances because of their peculiarity in the natural state partake more of the nature of “common property” title to w;hich becomes absolute only when they are captured and reduced to possession. Until so produced such rights as are vested by oil leases to oil in a common pool can be said to belong jointly to the owners of such leases (State Corporation Commission of Kansas v. Wall, 113 F. 2d 877).
Summarizing, I am convinced that in holding the proration statute requires the charging of overage, irrespective as to how and in what manner it is produced, to the lease from which it is produced, the commission has proceeded beyond the scope of the grant fairly included by the language to be found in G. S. 1941 Supp. 55-603, 55-604. By its action it penalized an individual who had not produced oil in excess of his allowables and did not prevent the inequitable 'and unfair taking of oil from the pool by that person. Instead of preventing unreasonable discrimination under the facts presented by the stipulation and the evidence its action had the effect of producing it by requiring Bennett to make good for all overage when that overage having been produced and taken from the pool by a third party was properly chargeable, if at all, to the persons having a common interest in the oil in place. In any event, I am convinced a construction of the statute as contended for by the commission under the facts and circumstances of this case would result in such unreasonable, arbitrary and discriminatory action with respect to Bennett, the owner of the lease, as to deprive him of rights guaranteed to him under the constitutional provisions herein referred to *601and prohibit the overage disclosed from being charged to the Steckel lease.
I am not unmindful of the fact the rule contended for in this dissent would impose a more difficult task upon the commission in its administration of the provisions of a proration statute. I cannot feel that is an argument which justifies the commission's position. In these times when government, through the medium of rules and regulations of Boards and Commissions, is becoming all too prevalent, too many governmental agencies are prone to deprive the individual of rights guaranteed to him by the constitution under the guise of necessity for effective administration. If we are to be governed in part by rules and regulations, under direction of boards and commissions, government should provide ways and means of efficient administration and at the same time preserve the rights of the individual as guaranteed by the constitution.
Nor do I believe that the wrongful acts of the pumper who was employed by the lease owner, who was proceeding in absolute violation of the duty he owed him, in fact actuated by a purpose to injure him, and acting without the scope of his employment, should be permitted to fix liability on his employer for the overage produced in excess of the allowable. Under the facts and circumstances of this case, I can find no decisions holding that the relationship of employer and employee, principal and agent or master and servant has that legal effect.
Smith, J., concurs in this dissenting opinion.