Evening star. [volume] (Washington, D.C.) 1854-1972, 1927-02-28

Drainage Danger Eliminated.
The opinion also said that danger
of drainage at Elk Hills had been
eliminated by agreement between the
United States and oil companies OPP
Grating in the vicinity that no drill
ing should be done by either except
on six months notice to the other.
"The District Court concluded that
the contracts and leases were obtain
ed by corruption and fraud" continu-
ed the opinion I'VE have considered
the evidence, and we are satisfied that
the findings as to the matters OF fact
here controverted are fully sustained,
except the statement that Denny sign
ed the contracts and leases under mis-
apprehension and without full knoWl'
edge of the contents of the docu-
ments. AS to that the record requires
an opposite finding. Under the act of
June 4, 1920, 1t was his official duty
to administer the oil reserves; he was
not called as a witness, and 1t is not
to be assumed that he was without
knowledge of the disposition to be
made of them or OF the means en-
ployed to get storage facilities and
fuel oil for the Navy.
He is presumed to have had knoWl
edge Of what he signed; there are
direct evidence and proven circum
stances to show that he had. But
the evidence sustains the finding
that he took no active part in the
negotiations. and that Fall, acting col
lusiveiy with Doheny, dominated the
making of the contracts and leases. y
Were Corruptly Secured.
The court further declared that the
record showed clearly that the IN
terest and influence of Fall as we'll as
his official action were corruptly Sc.
cured by Doheny for the making OF
the contracts and leases: and
that the contamination of the trans.
action was brought about by means OF
collision and corrupt conspiracy be-
tween him and Doheny
"The whole transaction was tainted
with corruption. 1t was not necessary
to show that the money transaction
between Doheny and Fall constituted
bribery as defined in the criminal
code or that Fall was financially in
terested in the transaction or that the
United States suffered or was liable
to suffer any financial loss or disad-
vantage as a result of the contracts
and leases. 1t is enough that these
companies sought and corruptly OBJ
tanned Falls dominating influence in
fllrtherance of the venture.
at is clear that at the instance
of Doheny, Fall so favored the making
of these contracts and leases that it
was impossible for him Loyalty or
faithfully to serve the interests of
the United States.
Transaction Not Authorized.
1.-THE transaction evidenced by the
contracts and leases was not author
lied by the act of June 4, 1920. The
grant Of authority to the Secretary
of the Navy did not indicate change
of policy as to conservation of the
reserves ." 1t has been and is
the policy Of the United States to
maintain a great naval petroleum
reserve in the ground >.
1.-THE contracts and leases and all
that was done under them are so
interviewer that they constitute a
single transaction not authorized by
law. and consummated by conspiracy,
corruption and fraud. The petition.
ers stand as wrongdoers and no
equity arises in their favor to prevent
granting the relief sought by the
United States. They may not insist
on payment as all was done
without authority, and as means to
circumvent the law"
The civil suits growing out of the
naval Oil leases reached the Supreme
Court through an appeal allowed the
Pan.American Petroleum & Transport
Co. and the Pan-American Petroleum
Co. involving the lease obtained by
Edward l.. Doheny on the Elk Hills
(Calif.) naval reserve and the con-
tracts signed by Dohenys companies
for constructing storage tanks at the
naval base at Pearl Harbor, Hawaii.
The construction work was to be
done at cost and be paid for by the
Government out of royalty oil which
It received from leases on the reserves.
The contracts also involved the plac-
ing by Doheny Of a quantity OF fuel
oil in the storage tanks in exchange
for crude oil to be furnished by the
Navy.
Contracts and leases made with
Doheny and with Harry F. Sinclair
precipitated the Senate's Teapot Dome
investigation, which resulted in the
adoption Of a resolution under which
special counsel was appointed by the
Government to test the legality of the
whole transaction. Suits to cancel
the leases and contracts were entered,
that against Doheny being filed in the
Federal District Court at Los Angeles,
and that against Sinclair in the
Federal Court at Cheyenne, Wyo.
Courts Cancelled Leases.
The trial court in the Doheny case
Cancelled the leases and contracts, but