The Telegraph-courier. [volume] (Kenosha, Wis.) 1888-1946, 1925-12-10
.DOHENEY OIL SUIT
FIRST ONE TRIED
Court Opinion Holding In
dictment Valid Revives
Dill Suit Case.
OIL LEASES CANCELLED

Washington, D. C. Il 7)-The gov
ernment's suit against the E. l.
Doheny oil interests, which was held
valid yesterday by the District OF
Columbia court of appeals, was the
first case investigated by the United
States Senate committee to come to
trial. During the senate investigation
Doheny testified that he expected to
realize $100,O0O,o0O on the leases and
contracts involving the Elk Hills naval
oil reserve, Kern county, California,
and construction of The navy oil base
at Pearl Harbor, Hawaii.
Federal Judge Paul J. Mccormick at
Los Angeles, after hearing the case,
which opened in Oct. 1924, ordered the
leases and contracts Cancelled on two
grounds. First, that they were against
public policy because the action OF
the then Secretary of the Interior,
Albert B. Fall, in making them was
fraudulent, and second, because the
executive order under which the In
struments were executed was invalid.
In it's complaint the government
charged that fraudulent conspiracy
between Fall and Doheny entered into
negotiations surrounding the leases.
Government counsel charged specific
cally that the 100000 "loan" Doheny
made to Fall in November, 1921 was
a bride and constituted fraud on the
United States.
Called It Personal Loan.
Counsel for Doheny defended the
100000 transaction as personal
loan between friends of lifelong
standing and held that it played no
part in securing the leases since the
tender took place more than year
previous to the letting of the major
lease in suit.
During the trial at Los Angeles the
government introduced mass of evil
dence designed to show that through
out the negotiations Fall and Doheny
were the chief factors in all important
matters leading up to the letting OF
the leases. Other evidence tended to
show that secrecy surrounded the
negotiations and that the leases were
made without competitive bidding.
Countering this contention the oil
magnate's counsel through evidence
and argument, held that Edwin DENLY,
at that time Secretary of the Navy
and in charge of naval oil matters,
was always informed of the various
steps in making the leases and that
secrecy was ordered by the navy de-
partment because the Pearl Harbor
project was included in the navy's war
plans.
Defense Assails DENLY.
In arguing before the circuit court
of appeals the defense contended that
Judge McCormick's finding that Secre-
tary DENLY was passive" throughout
the negotiations, that he "took no
active part in them and was without
knowledge of the contents of the
documents he signed, was directly con-
trary to evidence in the lower court.
Defense counsel pointed specifi-
cally to testimony of Admiral j. K.
Robson, in charge of oil matters UNI
der Secretary, DENLY, who testified
that 81 never did one thing in this oil
business without its being approved
by Secretary DENLY first"
Through this and other evidence the
defense sought to show that the stamp
of legality was placed on all leases
and contracts in suit.
During the arguments on the APP
peals attorneys for Doheny called the
attention of the court to the decision
of Federal Judge Kennedy at Chey-
enne, who declined to cancel leases
held by the Mammoth Oil company,
executed at about at the same as
the Doheny leases, and quoted taat
part of the decision which said that
ITO hold that it was not Denbys of
fetal act is, it seems 20 us, little short
of branding him as an imbecile."
Lease Signed By Harding.
The leases to Doheny were executed
under the executive order of May 81,
1921, signed by President Harding,
delegating poTer to lease naval oil
lands to the secretary of the navy.
Preceding this order was the con-
gressional act of June A, 1920, known
as the naval oil reserve act, which
Authorized the secretary of the navy
to lease and operate these lands "in
his discretion" and "for the benefit
of the United States"