CALIFORNIA CO. v. STATE OIL & GAS BOARD et al.
In Banc
Oct. 14, 1946
Nov. 25, 1946
200 Miss. 824 | 27 So. (2d) 542
No. 36163
Butler & Snow, of Jackson, for appellees, on suggestion of error.
McGehee J., delivered the opinion of the court.
This appeal is from a final judgment of the Circuit Court of Adams County which dismissed an appeal taken by the appellant, the California Company, from an order of the State Oil and Gas Board, made on October 17, 1945, granting unto the appellee T. F. Hodge an exception to a general rule and regulation of the said Board for the spacing of oil wells, adopted pursuant to the authority conferred upon it by
The general rule in question had provided, among other things, that “all oil wells must be located on a drilling unit consisting of at least forty (40) surface contiguous
The Oil and Gas Board had also provided in one of its general rules and regulations that it would grant exceptions to the foregoing rule, in order to prevent waste or the confiscation of property, so as to permit the drilling of wells within shorter distances than those therein mentioned “whenever the Board shall determine, after hearing, that such exceptions are necessary“; and also that “when an exception to such rule is desired an application therefor shall be made to the Board,” and whereupon “such exception shall be granted only after at least ten (10) days notice to all adjoining lessees affected thereby has been given,” and then only “after a public hearing at which all interested parties may appear and be heard.”
After ten days notice of the application of T. F. Hodge had been given to the California Company as the sole adjacent lessee, and it had filed its written objections thereto, the order of October 17, 1945, was made, granting unto the said applicant (or petitioner) a special exception so as to permit him to drill a well at a location other than that provided for by the said general spacing rule and regulation, and it recited that the same was done “after a full hearing of all the testimony and evidence adduced by the parties and the arguments of both the parties and their attorneys.” Hence the appeal to the Circuit Court was taken therefrom, without further hearing before the Oil and Gas Board. And the only difference between this cause and the appeal in Cause No. 36,162, 200 Miss. 849, 27 So. (2d) 548, which is this day being decided, both of which challenge the validity of the said granted exception, is that in the latter cause the appellant filed a petition asking that the order granting the exception be
It is first contended by the appellees that the order of October 17, 1945, was not appealable to the Circuit Court because (a) no appeal was authorized by the statute from said order, since the order was not a decision upon a petition filed by either party under the provisions of the statute, and (b) that the appellant failed to exhaust its administrative remedy before the Oil and Gas Board and that, therefore, the appeal was premature.
We are going of the opinion, however, that the foregoing contention is not well taken for the reason that the appellant, the California Company, was made a party to the application (or petition) of T. F. Hodge upon which the hearing was had, and since the statute provides that any one “being a party to such petition may appeal,” it
In other words, we think that the provisions of the statute for the appeal to the Circuit Court were intended to authorize such an appeal as was taken in the instant case from the granting of an exception as well as an appeal by any other person, firm, association or corporation shown to be affected by or interested in any rule or regulation of the State Oil and Gas Board and who may not have had an opportunity to be heard by the Board thereon before the same was adopted, and that only in the latter case is it necessary that a petition for a hearing shall be filed after the Board has acted. Most assuredly, the statute does not contemplate that two hearings shall be had upon the same issue between the same parties and on the same evidence.
It is next contended by the appellee that if the said order of October 17, 1945, is an appealable order, and the appeal is not premature, then the requirement that “the matter shall be tried de novo by the circuit court and the circuit court shall have full authority to approve or disapprove the action of the board” is unconstitutional and void because it undertakes to confer nonjudicial functions upon the Circuit Court.
It will be noted that the language last above quoted to the effect that “the matter shall be tried de novo by the circuit court” and also that the said court shall likewise have authority “to approve or disapprove the action of the board” is wholly inconsistent. A trial de novo, within the common acceptation of that term, and as defined in the case of Knox, Attorney General v. L. N. Dantzler Lumber Co., 148 Miss. 834, 114 So. 873, and other decisions of this Court, means that the case shall be tried the same as if it had not been tried before, and the court conducting such a trial may substitute its own findings
Therefore, this Court is confronted with the necessity of determining (1) whether or not this provision for an appeal to the Circuit Court is unconstitutional in its entirety, or (2) whether or not the right of appeal in itself may be upheld as being within constitutional limitations by permiting the Circuit Court to merely approve or disapprove the decision appealed from on grounds hereinafter stated.
The decision of the foregoing questions is found to involve the question (1) of whether or not a trial de novo in the Circuit Court in the instant case would permit the Circuit Court to substitute its own findings and judgment for that of the State Oil and Gas Board on a purely legislative or administrative matter, and, (2) if so, whether or not the right of appeal should nevertheless be preserved by striking down the provision for a trial de novo and retaining the power of the Circuit Court to merely approve or disapprove the action of the State Oil and Gas Board, upon the theory that to permit said Court on a trial de novo to substitute its own ideas as to the proper spacing of oil wells for those of this administrative or legislative body is unconstitutional, while the mere right to approve or disapprove its action is a valid exercise of judicial power on a hearing as to whether or not the decision of said Board in that regard is supported by substantial evidence, is arbitrary or capricious, beyond the power of the Board to make, or violates some constitutional right of the complaining party.
The Legislature itself had the right in the first instance to prescribe the general rule and regulation as to the spacing of oil and gas wells and to provide for exceptions thereto under given circumstances, and it had the right to delegate this legislative power to a special administrative agency, composed of the State Oil and Gas Supervisor, who is to be a competent petroleum engineer or geologist with at least five years experience in the development and production of oil and gas, and therefore presumed to have expert knowledge as to the proper rules and regulations for the spacing of oil and gas wells, and also the Governor, Attorney General, and State Land Commissioner, as it has done by Section 5 of Chapter 117, Laws of 1932, now
If the Legislature had undertaken to adopt this general spacing rule and regulation, and had also heard testimony before its proper committee as to whether exceptions thereto should be provided for in the statute in this state of case, the fact that it may have conducted such a hearing would not have rendered its action judicial. And since the Legislature had the power to delegate this function to a Board composed of the officials hereinbefore mentioned, we are of the opinion that the action of said Board in adopting both the general rules and regulations, as provided for by the statute, and the exceptions thereto after a hearing, was as heretofore stated likewise legislative; that, therefore, the Circuit Court would be without constitutional power on appeal to substitute its own opinion as to what are proper oil conservation measures for that of the State Oil and Gas Board, on a legislative or administrative question, since the separation of executive, legislative and judicial powers, provided for by
However, under the well-settled principle that all presumptions should be indulged in favor of the validity of a statute, and that its unconstitutionality must appear beyond a reasonable doubt before it will be held to be invalid, and that the courts should give such a construction to a statute, if possible, as will uphold it, we are of the opinion that an appeal to the Circuit Court with authority
In determining the questions above stated the Circuit Court would be acting judicially. To that end it may hear evidence to the extent of determining what state of facts the administrative body acted on at the time of the rendition of the decision appealed from.
But to allow an appellant to present to the Circuit Court a different state of case or one based on additional facts would merely tend to becloud the issue as to whether or not the administrative body had based its decision on substantial evidence, had acted arbitrarily or capriciously, beyond its power, or violated some constitutional right of the party affected thereby. In other words, to permit a trial de novo in the Circuit Court on a legislative or administrative decision of the State Oil and Gas Board, within the common acceptation of the term “tried de novo” would permit a party to withhold entirely any showing of his facts, as he contends them to be, from the original board composed of experts and of those charged with the responsibility of a great public policy of the State, and wait until on appeal when he will make his full disclosure for the first time before nonexperts in that field to determine as to the proper spacing of oil and gas wells. In such case the Court would be departing from its proper judicial function into the realm of things about which it has no such knowledge as would form the basis for intelligent action.
We are not unmindful of those decisions of the Texas Court, such as Magnolia Petroleum Co. v. Railroad Comm. of Tex., 128 Tex. 189, 96 S. W. (2d) 273; Carr v. Stringer, Tex. Civ. App., 171 S. W. (2d) 920, and the cases therein cited, to the effect that the Railroad Commission of Texas in granting exceptions to its general spacing rules and regulations for the production of oil and gas is acting in a quasi judicial capacity. And while those cases are persuasive on the point, and are the only cases cited by counsel which decide this specific question, we are unable to follow them to the extent of holding that therefore a trial de novo may be had in the Circuit Courts of our State on an appeal from a decision of the State Oil and Gas Board granting such an exception, where these general rules and regulations and the exceptions thereto are adopted upon the expert advice of the Oil and Gas Supervisor, with the consent of the Governor, Attorney General and Land Commissioner of the State, and where such Board is empowered by statute to promulgate such rules and regulations, and inferentially to make the necessary exceptions thereto, in carrying out the public policy of the State for the conservation of oil and gas. Moreover, the statute with which the Texas court was concerned in those cases does not provide for an appeal to the Circuit Court with the right of trial de novo, but provides for testing the legality of the action of the Railroad Commission by an independent suit.
Then, too, there are other considerations in connection with the right of appeal to the Circuit Court, as provided for by
Therefore, the only sound, practicable or workable rule that can be announced by the Court is to hold that when the appeal is from either a general rule and regulation or from an exception granted thereto, the Court to which the appeal is taken shall only inquire into whether or not the same is reasonable and proper according to the facts disclosed before the Board, that is to say, whether or not its decision is supported by substantial evidence or is arbitrary or capricious, or beyond the power of the Board to make, or whether it violates any constitutional right of the complaining party.
And it is not within the legitimate province of this opinion to set forth views as to how the complaining party shall appraise the Circuit Court of the facts upon which the State Oil and Gas Board may have acted, except to say that the Circuit Court is not permitted to hear evidence as to a different state of case than that presented to this inferior tribunal, or to substitute its own findings and judgment in the premises for those of the tribunal from which the appeal has been taken; that is to say, the Cir-
It is next contended that the decision of the Circuit Court dismissing the appeal should be affirmed at all events by this Court on the alleged ground that the issue as to whether or not the appellee T. F. Hodge should be permitted to drill and operate an oil well at the location provided for in the granted exception has become moot, since the well has already been drilled and is now in operation. But we are unable to agree with this contention on account of the public interest involved herein, and for the further reason that if the order granting the exception is declared invalid, either the State Oil and Gas Board or the appellant, as an adjoining lessee, would then have the right to enforce a discontinuance of the operation of the well. Humble Oil & Refin. Co. v. Railroad Comm., Tex. Civ. App., 68 S. W. (2d) 622; Brown et al. v. Humble Oil & Refin. Co., 126 Tex. 296, 83 S. W. (2d) 935, 99 A. L. R. 1107; Gulf Production Co. v. Railroad Comm. et al., Tex. Civ. App., 84 S. W. (2d) 359; Arkansas Fuel Oil Co. et al., v. Reprimo Oil Co., Tex. Civ. App., 91 S. W. (2d) 381; Turnbow et al. v. Barnsdall Oil Co., Tex. Civ. App., 99 S. W. (2d) 1096; 1 Summers Oil & Gas, Sec. 86, p. 214.
From the foregoing views, it will follow that the case should be reversed and remanded in order that the Circuit Court may conduct a hearing within the limitations hereinbefore set forth.
Reversed and remanded.
Sydney Smith, C. J., did not participate in this decision.
Griffith, J., delivered a specially concurring opinion.
To go directly to a solution of the inquiry which lies at the threshold of this case, we could propound the question whether the legislature could have conferred upon the
And there could scarcely be any division of opinion on that question as to the general rules and regulations, but there might be the further question, what about the exceptions to the rules and regulations, and could not the legislature authorize one or the other of the two courts mentioned to determine and declare exceptions to the general rules and regulations. This question considered, there must be the answer that the authority to make exceptions to rules and regulations is authority of the same nature as that which was exercised in making the rules themselves.
The result is the conclusion that the legislature could not confer upon either of the said judicial courts the original authority in either respect above mentioned, and since it could not do so directly, it could not do so by the indirect device of a trial de novo on appeal; and thus there is the further result that all the authority which could be conferred on the courts would be of a review to determine whether the Oil and Gas Board in its order acted within the authority conferred on it by statute, and if so, then whether in making its order it did so upon facts substantially sufficient to sustain its action.
The essential nature of such a review is such that it must be of what the Board had before it at the time it made its order. It would be an incongruity as remarkable to permit another and different record to be made up on appeal to the Circuit Court as it would be to allow another and a different record to be presented to this Court on an appeal to it. The question is, and must be, what did the Oil and Gas Board have before it, and all this the majority opinion has well and sufficiently pointed out.
L. A. Smith, Sr., J., delivered the opinion of the court on suggestion of error.
The Suggestion of Error filed herein attacks our interpretation of the statute involved,
Many intriguing suggestions have been made in the briefs as to the production and introduction of evidence, and the procedure at the hearing and on the trial of cases like the one at bar. The statute does not announce complete and adequate directions as to either, and if we should do so we would violate two rules of our judicature. One, that our function is judicial and not legislative, and if we attempted the formulation of guides as suggested, we would be trespassing upon the function of the Legislature. The second is that this Court has no original but only appellate jurisdiction.
In re Opinion of the Justices, 148 Miss. 427, 114 So. 887, 888, dealing with advisory opinions between departments of the state government, this Court remarked: “Moreover, and aside from this prohibition, the giving by judges of opinions on questions that may thereafter be submitted for decision to the courts of which they are members is highly improper unless they are constitutionally authorized so to do.” We are not authorized by the Constitu-
The suggestion of error is overruled.
Sydney Smith, C. J., did not participate in this decision.