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The CHAIRMAN. Apparently on this map the southeast quarter is patented?
Commissioner TALLMAN. The southeast quarter is patented.1
Commissioner TALLMAN. The southwest quarter is patented.
Commissioner TALLMAN. That is all involved in McLeod application for patent, the same identical position; proceedings directed January 5, 1916.
The CHAIRMAN. Dummy entry?
Commissioner TALLMAN. Yes. I may say that all those McLeod cases, practically, are a portion of what is known as the McMurtry locations. Mr. McMurtry was a promoter who procured the names of 32 persons in New York City and Brooklyn for the purpose of locating and located a large area of ground, and he had powers of attorney from these locators to locate and convey. After he had made the locations he transferred it all to a corporation which he organized to take the title. In the meantime he made a contract with McLeod whereby the McLeod Co. should drill oil wells on this ground and in consideration for which they were to get certain specified areas. The McLeod people drilled a good many wells on these areas and got the conveyance from the McMurtry interests in that way. So that we have two lines of title originating in McMurtry-that going down through McLeod, who in turn sold the land he had acquired to various persons, and then McMurtry disposed of what was left on these tracts to the Associated Oil Co.
Senator CLARK. How did they transfer these entries-by quitclaim?
Commissioner TALLMAN. Pretty generally.
Senator PHELAN. What was the attitude of your department with respect to the McMurtry and McLeod claims?
Commissioner TALLMAN. It was such as led us to direct proceedings against the entries. I wanted to know more about it, and I thought we would get the facts more fully and satisfactorily as a result of hearing than we would in any other way.
Senator CLARK. Were those proceedings conducted from the local
Commissioner TALLMAN. They are mostly taken in the way of depositions. These parties are all represented by attorneys, and they usually agree with our hearings' officers to taking the testimony wherever convenient.
Senator PHELAN. You are resisting them, are you?
Commissioner TALLMAN. There have been suits started against some of these.
Senator PHELAN. I was reading the testimony in the San Francisco papers.
Commissioner TALLMAN. Yes. Suit has been started against some of these same properties. Our proceedings are rather in abeyance until we see what the result of that suit is.
Senator PHELAN. I did not hear the final remarks that you made on the Honolulu claims. Where do they stand to-day?
Commissioner TALLMAN. I got led off on this other question.
1 The southeast quarter of section 26. township 31 south, range 23 east, is not patented, but is included in mineral application No. 03360, Visalia.
As I stated, it was on December 5, 1915, that this clear-list memorandum was signed. Copies of that went to the Department of Justice and the Navy Department, and we received some communications from the Attorney General urging that we had decided the cases erroneously. That led to some correspondence between our department and the Department of Justice and the Navy Department, as the result of which the cases in question are right where they were a year ago.
The CHAIRMAN. The object of the inquiry of the conference with regard to the title of these various sections, is simply for the purpose of forming an opinion as to the probable value of this naval reserve to the Government. I had in mind this, that there was a tentative proposition made by certain oil men in California, that these oil men obtain title for the Government or the Navy Department to the patented lands in Naval Reserve No. 1 so that the Navy would at least have that area clear.
Senator CLARK. In a solid block?
The CHAIRMAN. In a solid block. I therefore asked the question of Mr. Williams of the Bureau of Mines with regard to the center of dome of No. 1, and he testified that the center dome of No. 1 is section 31, which is joined on the west by section 36 of township 30 south, range 23 east, which section is a school section and patented, consisting of 640 acres. Having developed the fact that section 36 is right near the center of that oil dome in No. 1, and that it may be acquired for the Navy absolutely, and then considering the condition in Naval Reserve No. 2 as to the probable land that can be acquired there under litigation, we may determine the wisdom of a compromise.
Let me explain to the conference the object of this question I would like to ask Mr. Williams so that the answer will be followed: There is in the mind of some of the committee-I am not speaking of this committee particularly, but the Public Lands Committee of the House and Senate that locators should be considered differently; that is, dummy entrymen should be eliminated entirely from any consideration, while bona fide locators prior to the withdrawal should have a different treatment. If the opinions that finally prevail in the preparing of a bill eliminate dummy entrymen from the right to obtain a lease, then the bill would not only not effect patented railroad lands but it would also not effect those who are being attacked as dummy entrymen; and it would limit the amount of land affected by this bill in naval reserve a great deal. As I understand, some suits are brought on the ground that the claim is based upon dummy entries. That character of claimants would not obtain any lease under this bill, if we eliminated dummy entrymen from the right of leasing, and that relates to sections 22 and 28 on that dome. Assistant Secretary ROOSEVELT. Portions.
The CHAIRMAN. All of 22 is involved.
Assistant Secretary ROOSEVELT. In dummy entries?
The CHAIRMAN. In dummy entries, according to Mr. Tallman.
The CHAIRMAN. So, if we should eliminate from the right to ́obtain a lease dummy entrymen and not permit dummy entrymen to surrender title to obtain a lease, it would limit the number of those that would be involved in this leasing matter greatly in this reserve
No. 2. That is one reason why I was questioning as to the grounds of contest in these various important sections.
Mr. S. W. WILLIAMS. Mr. Chairman, you asked me for information as to how many of our suits involving withdrawn lands in Navy Reserve No. 2 which were charged dummy locations. I have ascertained that we have three suits which contain that charge involving lands, I think, in section 28; and in that connection I have a report from Mr. E. J. Justice submitting a statement prepared by the special agent of the Land Office who is assisting him showing what was brought out in one of the cases that were tried. If the conference desires it, I can give that memorandum to the reporter.
The CHAIRMAN. I think it would be a very good idea to get it in right now.
Mr. S. W. WILLIAMS. Do you want it read or handed in?
Memorandum by Mr. E. J. Justice relating to certain matters discussed by him before the Senate Committee on Public Lands on April 24, 1916, as appears on pages 425-500:
When the provisions of the Senate amendment to H. R. 406 were under discussion before the Senate Committee on Public Lands when I was before that committee on April 24, 1916, I called attention to the danger of accepting ex parte statements relative to the facts in pending cases. I pointed out that the amendment known as the Phelan amendment to H. R. 406 proposed to forgive the fraudulent use of dummy entrymen in cases where the so-called locators had transferred to others, and I ventured the opinion, in response to question, that they are not now and ought not by legislation be made bona fide purchasers for value without notice.
I did not elaborate the facts with respect to the fraudulent use of dummy entrymen in many of the cases under investigation by the Department of Justice because I realized that probably but little good could result from assertions on one side and denials on the other. I did state to the committee, in substance, that I thought the hard cases against which operators complain were, in the main, hypothetical cases, and that when the facts are known the plausible ground for maintaining that serious hardships exist disappeared.
Since the time I was before the committee testimony has been taken in a number of cases in the district courts of California. The facts developed in those cases illustrate the lack of merit in many of the cases where relief is sought by legislation. This is true with respect to fraudulent, dummy entrymen whose names were used to acquire lands in violation of existing law, as well as with respect to the time and manner or entry upon the lands in violation of orders of withdrawal.
I am handing herewith a memorandum pointing out to what extent these fraudulent entries have been made and how they have been used to acquire lands in the oil fields in the San Joaquin Valley of California. While it seems to me the facts developed in certain cases, as shown in the accompanying memorandum, furnish sufficient answer to the proposal to reward purchasers from such entrymen and confirm their title by legislation, these are by no means the only cases in point, but are typical of common practices which prevail throughout the oil fields.
Senator PHELAN. What is the attitude of the Secretary of the Interior with reference to McLeod and McMurtry claims?
Commissioner TALLMAN. We have directed charges on the ground of dummy locators in the same cases.
Senator PHELAN. None of those claims have been clear listed? Commissioner TALLMAN. No.
Senator PHELAN. And they are considered among the lands claimed and disputed by the Government?
Commissioner TALLMAN. Yes.
Senator PHELAN. They are about one-quarter of the whole which is in dispute?
Commissioner TALLMAN. No. 2.
Senator PHELAN. I should think, Mr. Chairman, that it would be sufficient to file that document rather than to consume our time by reading it.
(The remainder of the document above referred to, submitted by Mr. Williams, is as follows:)
MEMORANDUM FOR MR. JUSTICE.
The records of the General Land Office show that a large number of applications for patent, made by J. M. McLeod, either in his own name or an attorney in fact for some oil company, set out and rely upon certain locations made on January 1, 1909, which are commonly known as New York locations.
The locations referred to were made under power of attorney, dated December 18, 1907, and signed by thirty-two persons, most of whom reside at, or in the vicinity of New York. These locations cover the following described lands:
All of section 20, township 31 south, range 23 east; all of section 22, township 31 south, range 2 east; all of section 24, township 31 south, range 23 east; all of section 26, township 31 south, range 23 east; all of section 28, township 31 south, range 23 east; the north half of section 32, township 31 south, range 23; all of section 34, township 31 south, range 23 east; the north half of section 4, township 32 south, range 23 east; the northeast quarter of section 9, township 32 south, range 23 east; twenty-nine quarter sections in all. The recent trial of United States v. 32 Oil Company et al., A38 equity, in the United States district court, southern district, northern division, has thrown considerable new light on the history of these locations and of the lands covered by them. Mr. L. B. McMurty, to whom powers of attorney, signed by the 32 persons above mentioned, ran, was on the stand as a witness on behalf of the Government. However, in addition to the facts as brought out in the trial, there are in our possession affidavits and statements made by interested parties which throw some light on the transactions. From the facts, as shown in that trial, and as taken from the affidavits and statements referred to, I shall endeavor to show briefly the history of the lands in question.
It appears from a statement made by Mr. McMurtry himself, in a letter addressed to the Commissioner of the General Land Office, dated July 28, 1914, that he first became interested in the Midway field in the year 1900. His first two or three efforts were failures. During the years from 1901 to 1905 the Oregon Midway Oil Co. held a lease on certain lands in the Midway field, most of which were in township 32 south, range 23 east. After Mr. McMurtry's early failures he undertook to take over this lease, and later secured an option from the Oregon Midway Oil Co. for all of its holdings. He immediately went to New York. That was in 1905. He at that time met Mr. Frank H. Searls, Mr. E. A. Hoeppner, and others. As a result, in December, 1905, they incorporated under the laws of Arizona the Empire Oil & Development Co., and started to sell stock. These efforts continued until the panic of 1907 stopped all efforts in that direction, and the Empire Oil & Development Co., and Mr. McMurtry, and those associated with him, gave up all further efforts. Mr. Frank H. Searls, Mr. J. C. Thickins, Mr. E. L. Powell, and Mr. C. W. Thorn had been associated with Mr. McMurtry, either as investors in stock in the Empire Oil & Development Co., or as salesmen. Prior to his leaving New York for California in the latter part of 1907, he discussed with Messrs. Searls, Thickins, Powell, and Thorn the formation of associations for the purpose of locating lands in the Midway field. These men were sent out to get signers to powers of attorney, and did get enough names to make the number 32.
Under these powers of attorney the 32 persons were located on the lands above described on January 1, 1909, and also on one hundred and sixty-four 160-acre tracts in San Benito County on January 1, 1908.
It appears from the records of San Benito County, that on December 21, 1903, a power of attorney was secured from 32 persons, who were at that time em ployed at the stockyards in Chicago. The purpose of securing those powers of attorney at that time is not apparent, although the records of San Benito County show that on January 1, 1904, one hundred and fifty-six 160-acre tracts
were located, using the names of the 30 persons in Chicago, who will be hereafter referred to as the Chicago group of locators. It is very probable that at the time those powers of attorney were secured, Mr. Murtry had no idea of then using them in the Midway field. However, the records of Kern County show that on January 1, 1907, he located in the Midway field, using the names of the so-called Chicago group, 32 in number, approximately the same lands described above, and which were subsequently, on January 1, 1909, located with the use of the names of the 32 persons in New York. None of the applications referred to above set out and rely upon the so-called Chicago locations.
The evidence in the suit referred to shows that in the fall of 1908, L. B. McMurtry entered into an agreement on October 8, 1908, with Mrs. J. M. McLeod, represented by J. M. McLeod, her attorney in fact. This agreement affected all of section 32. This agreement was made by McMurtry as attorney in fact for the so-called Chicago locators. At or about the same time McMurtry gave an option for the purchase to J. M. McLeod for the north half of section 4, township 32, range 23, for $40,000. Some time in the fall of 1908 he sold to the Chanslor-Canfield Midway Oil Co. the northeast quarter of section 9, township 32, range 23, for either $10,000 or $12,000. Mr. J. M. McLeod has also stated in an affidavit, prepared for the Commissioner of the General Land Office, dated May 23, 1914, that after he had entered into contracts with Mr. McMurtry with reference to sections 4 and 32, he negotiated deals with Mr. McMurtry for other lands, as follows: Sections 20, 22, 24, 26, 28, and 34, all in township 31 south, range 23 east. It has not been made clear whether or not those negotiations were prior to January 1, 1909. However, the records show that those lands had been located by McMurtry on January 1, 1907, acting under his power of attorney from the so-called Chicago group.
So far as section 32 was concerned, the original contract of October 8, 1908, was changed so as to include only the north half. The evidence shows that Mr. McLeod and his associates remained in possession in the fall of 1908, and actually started development work on the north half of that section. The location of January 1, 1909, by a different set of locators, made no difference in the possession or the occupancy of that land. The record in A38, involving the northeast quarter of section 32, township 31, range 23, shows that so far as the north half of section 32 is concerned, all of those up to the time of the appointment of a receiver in possession and occupancy of the north half of section 32, namely, the California-Midway Oil Co., the 32 Oil Co., and certain individuals who organized the Buick Oil Co., secured their rights prior to January 1, 1909, through the original agreement entered into on October 8, 1908, between Mrs. J. M. McLeod, acting through J. M. McLeod, and L. B. McMurtry. This is not true of the Associated Oil Co. However, at the time the Associated Oil Co. entered into its contract of August 4, 1910, with the so-called New York locators, and L. B. McMurtry, acting for himself, and under his power of attorney from the New York locators, the records of Kern County show that the New York locators had parted with whatever interest they might have had.
On May 17, 1909, a new contract was entered into by McMurtry, acting as attorney for the New York locators, affecting the north half of section 32, and J. M. McLeod, the general terms of which were the same as the original contract entered into in the fall of 1908.
On November 26, 1909, the 32 Oil Co.. the assignee of McLeod's interest in section 32, entered into a lease with the California Midway Oil Co. for a portion of the north half of section 32. In that lease reference is made to the agreements of 1908. The general terms of the agreement of November 26, 1909, were the same as the terms of the agreement of November 26, 1908. In other words, all of the contracts, agreements, leases, etc., entered into after January 1, 1909, recognized the rights of McLeod acquired prior to January 1, 1909, and acquired under the admitted fraudulent and dummy character of the so-called Chicago group of locators.
Under the original agreement, and also in the subsequent agreements, L. B. McMurtry retained an interest in section 32. The same is true as to the other lands heretofore referred to, concerning which Mr. McMurtry and Mr. McLeod had agreements. Generally speaking, Mr. McMurtry's interest was one-half of the lands involved. In section 32, however, he retained the north 100 acres in each quarter section.
The evidence in A38 shows that on December 3, 1909, the 32 New York locators assigned to one C. L. Claflin certain agreements, as follows:
Agreement dated February 4, 1909, between L. B. McMurtry as attorney in fact and J. M. McLeod, affecting all of section 20, township 31, range 23.