Douglas daily dispatch., 1927-03-01
LOSES
LEASE GIVEN
By A. B. FALL
Elk Hills Reverts to Naval
Reserve by Sweeping
Decision.
RULE ON FRAUD
Oil Man Must Rely On Con-
gress for Money Expend-
ed On Tanks.

WASHINGTON, Feb. 2S lP)-Edward
L. Doheny lost today his fighf to have
the courts confirm the leases to the
Elks Hills, Calf, naval oil reserve.
awarded to him by Albert B. FAN. az
secretary of the interior.
UNFOLDING the findings OF the cir
cult court, the supreme court in an
unanimous decision held that these
leases not only were illegal, but were
obtained by fraud and corruption
The victory was sweeping for the
government, confirming in every de-
tail the position taken by special coun
sci appointed after senate commit
tee had completed an Investigation of
the naval oil reserves.
The opinion, delivered by Justice
Butler, held that it was the establish
ed policy of congress and of the gov
ernment, to maintain the reserve fuel
supply of the navy under ground and
that the general leasing act of 1920
carried no authority for leasing the
naval oil reserves.
The court sustained the circuit court
in California in cancelling the leases
and contracts and referred Doheny to
congress for any relief he may con-
slider himself entitled to for the ex-
penditure of more than $10,O0O,0 900 in
the erection of storage tanks at Pearl
Harbor, Hawaii, under his contracts,
and for fuel oil placed in them as well
as for Improvement work upon the
reserve. Throughout the decision the
court referred by way of emphasis to
the fraud and corruption marking tho
transactions, although a jury in the
District of Columbia supreme court last
December held that there was nothing
criminal in the relations between Fall
and Doheny.
The ruling today of the court that
the leasing act did not warrant the
leasing of naval oil reserves was taken
by court attendants as forecasting a
decision in the Harry f. Sinclair Tea
pot Dome naval oil reserve case, sus-
tanning the circuit court in cancelling
the lease and contracts. The Sinclair
case, of which a. review recently was
granted, was today advanced for hear
ing April IL, and it was freely pre-
dicted that when that case reached the
court for decision, it will be disposed
Of upon the authority of the Doheny
case, holding the lease and contract
invalid.
The federal district court in Cali
fornia held the Doheny leases and con-
tracts invalid and ordered them can
celled, but it awarded Doheny COM
pensation for his outlay upon thems
The circuit court, to which both Do
honey and the government appealed,
sustained the trial court in the can
collation. of the leases and contracts
on the ground of fraud and corruption,
hut held that the trial court was in err
ror in awarding compensation. The.
supreme court today asserted that the
question of compensation was not one
to be decided by the courts.
The court found that both Fall and
Edwin B. DENLY, then secretary of the
navy, had signed the leases and con-
tracts, but it declared that secrecy
yelled all steps, and that there had
been no competition. The motives
which had actuated Fall in taking con-
troll and enforcing secrecy were de-
clared to have been, different from
those which had inspired Rear Ad-
miral Robson in enjoining secrecy. In
the former instance, the motive waste
be based upon fraud and collusion ana
in the latter upon apprehension OF
Japanese encroachments.
The 100000 "loan" made to Fall BY
Doheny was related in detail, not as an
influencing factor in the courts de-
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