Evening star., 1927-10-10

tCOnII0u0Q from F1TSL HdSe.)
change for a personal note featuring
the Elk Hills litigation.
The little black bag" transaction
between the then Interior Secretary
and the California oil operator, as
well as one payment of $25 900 in Lib
erty bonds to Fall by the lessee of
Teapot Dome, after FAN left the cabi-
net, were developed by the Senate
committee after months of investiga-
ton.
Lease Attacked by u. s.
1t remained for special Government
oil counsel, appointed by direction of
the Senate, to bring the further star
ting charge that within a few weeks
after the Sinclair-Fall negotiations
had been completed. $230,500 in Lib
erty bonds found their way from the
oil operator to the then Interior Secre-
tary and his son-in-law, M. T. Ever
hart of Pueblo, Colo.
The Government attacked the Sim
clair lease as invalid, not only on the
gre und of fraud and corruption, but
also on the ground that it was not
authorized by law. The Federal Dis
trict Court at Cheyenne. Wyo., dis
agreed on both contentious and
sustained the lease and the supple
mental contract under which Sinclair
was to build pipe line to the Teapot
Dome reserve and construct storage
tankage for the Navy on the Atlantic
coast in exchange for royalty oil ac.
cruing to the Government under the
lease.
In an opinion by Judge William s.
Kenyon, former United States SEN
1fOr -
peals sustained the District Court on
the proposition that there was author
ity in law for making the lease, but
Cancelled it on the ground that fraud
and corruption ran through the whole
transaction between Sinclair and Fall.
The wealthy oil operator and sports
man then appealed to the Supreme
Court. contending that the evidence
had failed to show fraud and corrup-
tion, and insisting that as both of the
lower courts had declared that there
was authority in the law for leasing
the naval oil reserve to protect it
against drainage, the lease and the
contract must be sustained.
On the other hand, the Government
asserted that the facts disclosed by the
evidence in the trial court were ample
to warrant the action of the Circuit
Court in canceling the lease and con-
tract. and in. refusing to compensate
the Sinclair Crude Oil Purchasing Co
and the Sinclair Pipe Line Co. for ex.
penditures upon the reserves because
they had been willful trespassers.
Sinclair insisted that the questions
at. issue before the Supreme Court
were materially different from those
presented in the Doheny case. The
Government contended that under the
sweeping decision in the Doheny case
the Sinclair lease was invalid for want
of authority to make it. 1t also insist
ed that had the lease been authorized
by law, 1t must be cancelled for fraud
and corruption.
Counsel for Sinclair urged that the
lease was justified because Of the
danger of the drainage of Teapot
Dome, but Government attorneys re-
piled that facts did not warrant con-
clusion of danger of drainage and that
the real purpose of the lease was to
enable naval officials to use royalty
oil for the erection of storage tankage
for which Congress had refused to ap-
propriate.
The conclusion of the Circuit Court
that there was fraud and conspiracy
to defraud in the Teapot Dome case
was based largely upon it's finding
that Sinclair had bribed Fall with the
$3.50, 500 worth of Liberty bonds, which
went to Everhart and the Interior
Secretary.
Signed i'm 1929.
The Sinclair lease was signed on
April Z. 1922, and on May 20, 1922, the
Government contended, Everhart ap-
peared in Pueblo with $230,500 in Lib
erty bonds. By means of their cou-
pons the Government sought to trace
these bonds to the Continental Trad
ing Co., Ltd, Canadian concern or
ganized by Fl. s. Osler, a lawyer of
Toronto, to purchase oil from A. T.. |
Humphreys, who controlled the Mexia |
Oil Co. and the Humphreys Texas Co. !
The Government charged that subse- |
quently Harry NJ. Blackmer, chairman |
of the board of the Midwest Co., q sub |
sidiary of the Standard Oil Co. Of In |
diana; James F. O'Neil, president Of |
the Prairie Oil and Gas Co.. Robert w. |
Stewart, chairman of the board of the |
Indiana Standard Oil, and Sinclair |
became parties to an agreement where :
by Humphreys oil was to be pur-