K. C. Schuyler and O. H. Shoup, who organized and created the present corporate claimants, were themselves the purchasers for $25,000 of the illegal claim of William G. Henshaw for a three-fourths interest in the use of the names of William M. Fitzhugh and Mary E. Fitzhugh as locators. But eight names were used on each location of 160 acres. If William G. Henshaw had any interest at all in that portion, over 20 acres, acquired by the use of any other name as a locator, the entire location was void and fraudulent under the foregoing cases. The name of William G. Henshaw was used on each location. By that he acquired the maximum, 20 acres, allowed by law. But in addition he held three-fourths of the 20 acres taken in the name of William M. Fitzhugh and another three-fourths (claimed by him and enforced by O. H. Shoup and K. C. Schuyler) in the 20 acres taken in the name of Mary E. Fitzhugh. That alone renders each location null and void. Besides this he was probably the sole party in interest in the use of the other four names of his relatives.

At the time of the sale of the Henshaw interests to the Reed Investment Co., William G. Henshaw, for himself, and O. H. Shoup and K. C. Schulyer for the Verner Z. Reed interests, afterwards incorporated as the Reed Companies, who under their several names took quit-claim deeds and will no doubt be the applicants for leases, made the agreements. By that agreement William G. Henshaw was to receive $325,000 (sic) for his interests in the Salt Creek field and $25,000 for his claim of a three-fourths interest in the profits made by William M. Fitzhugh by his contracts with the Midwest Oil Co. William G. Henshaw had some other claims against Fitzhugh, but those other claims he retained. The only claims sold to Schuyler and Shoup were with reference to locations on Government land which they took in the name of F. P. Evans. That claim they enforced under the name of California Oil Land Co. and C. & W. Oil Co. Suits were instituted but were settled by the concealed contract of July 29, 1913. That contract is set forth herein. They made another contract dated the same day which they placed of record that merely straightened out some conflicting claims. This agreement enforcing the unlawful contracts between William G. Henshaw and William M. Fitzhugh was not recorded.

Each of the 120 deeds for these tracts from William G. Henshaw et al. to the several Reed companies recite a consideration of $100. Emil Nusbaumer informed me that he received $12.50 for the use of his name on one location and that each locator was paid $12.50 for each time his name appeared as a locator. Emil Nusbaumer was an attorney employed by William G. Henshaw. The deeds, therefore, show that but $12,000 was paid for the locators' rights. Out of that William G. Henshaw kept not only his $12.50 but also the $25 that might have been paid to William M. Fitzhugh and Mary E. Fitzhugh. The total consideration paid William G. Henshaw was $385,000. The total expense paid out by him in the Salt Creek development, locating, etc., was about $200,000. Thus beyond his share and expenses he made and kept a clear profit of $113,000 and received besides $25,000 for his claim to three-fourths of the profits in the contracts made by William M. Fitzhugh with the Midwest Oil Co.

There is available a vast amount of evidence but the greater part of that need not be considered in this connection. Only the evidence relating to the bona fides of this transaction will be referred to with such comment as is necessary to properly understand its relation to the locations made in the Salt Creek oil field. In the desire to shorten this report much that is relevant will be omitted, believing that sufficient data will be discussed to explain the circumstances.

December 10, 1908, William M. Fitzhugh and William G. Henshaw entered into a contract under which William G. Henshaw agreed to help finance a contract William M. Fitzhugh had made with the Montana and Wyoming Oil Co. This related to lands in the vicinity of Byron, Wyo. By that contract William M. Fitzhugh agreed to give William G. Henshaw a one-third interest in any and all profits which might be made in the venture.

Subsequent negotiations resulted in a desire to change the contract. The changes are better understood by reference to the letter of William G. Henshaw dated August 2, 1909.

Judge E. NUSBAUMER, Byron, Wyo.

SAN FRANCISCO, CALIF., August 2, 1909.

MY DEAR EMIL: I received the memorandum of agreement that you and Fitzhugh had drawn setting forth the arrangement between Fitzhugh and

myself. I didn't see the one that Black gave you, so I have no idea what was contained in that, but I have had prepared here an agreement setting forth the relationship, and setting forth our respective interests, which I think is not only fair, but certainly liberal so far as the interests of Fitzhugh are concerned. The essential difference between this and the memorandum you forwarded was, that in the one you forwarded it set forth that Fitzhugh was to have a half interest. This new one sets forth that Fitzhugh is to have a 25 per cent interest. In the last talk that I had with Fitzhugh I explained to him in effect this: That I would only go ahead in case that we should each take a 25 per cent interest, and the 50 per cent should be set aside for the money, and that if he wanted to he could take any portion of that, if he would put up the proportionate amount of money. I supposed that he clearly understood this, and infinitely regret that from present appearances he does not, or did not understand it. He runs no risk of loss, except his time and gets carried for a 25 per cent interest in the property. In the talk that he had with me he always claimed that $15,000 would probably be all that would be necessary in the enterprise, and that $25,000 would be an outside figure, but as it is, it is evidently going to run away beyond the larger figure. I am sure I never had anyone offer to give me a quarter interest and run all the risk and put up all the money.

It is needless to say that in my own mind, I think that this is a damn liberal proposition for Fitzhugh, but as a check upon my opinion I submitted the matter to Fred, and he also said that he thought it was a very liberal proposi tion. If Fitzhugh isn't satisfied with this, wire me at once, for I don't care to get dragged in further in the matter. One fear that I have always had is the chance of disagreement with Fitzhugh, because at times he is very unreasonable in the view he takes of a business matter, and I think that I can easily justify this opinion. Consequently, I want this matter straightened up and straightened up at once. The arrangement is to run to, and apply to all property within the State of Wyoming, instead of limited within 5 miles of Byron. I think this is just, because Fitzhugh is there at my expense, and my mind ought to be at rest; but whether he is there or knocking around the country, that his time is devoted to our joint interests.

I trust by receipt of this, that I have at least been protected to the extent of having the transfers of these leases, etc., made to me, for reasons that I gave in my previous letter.

If this contract is satisfactory to Fitzhugh and he accepts it, you can go ahead and pay the $400 on the Graham land with the option of 15 months at $5,000. I should think that this, and the Byron 40 acres, ought to be signed up without any further delay, and all such matters should be closed before there is any result shown from our boring.

I am surprised to hear that Spence did not give a transfer of all of the property there, and will write him and ask for the transfer of the leases of Brown and wife.

I have no objections to your showing this letter to Fitzhugh and saying to him, that I an (sic) a little discouraged to find that he is holding out for 50 per cent interest in the property. Kindly wire me upon receipt of this.

Very sincerely yours,

WM. G. HENSHAW.

The contract dated August 15, 1909, was filed for record May 26, 1911, and recorded in Book 2 A. C. & L., pages 456-459, Natrona County, Wyo., and is as follows:

EXHIBIT B

This agreement, made and entered into this 15th day of August, 1909, by and between W. M. Fitzhugh, the party of the first part, and Wm. G. Henshaw, the party of the second part. Witnesseth:

Whereas, the party of the first part heretofore entered into an agreement with one J. D. Losekamp in reference to certain oil lands situate near Bryon, Wyo., which said contract the party of the first part claims was violated and repudiated by said Losekamp and by the Montana and Wyoming Oil Co., whom the said Losekamp claimed to represent; and

Whereas, the said party of the first part has brought action for damages for said breach against said Losekamp at Helena, Mont.; and

Whereas, heretofore the parties hereto have severally acquired in the vicinity of said Bryon, certain leases and options upon lands for the purpose of mining the same for oil, gas, and coal, the party of the first part expects to and will

in the future acquire other lands within the State of Wyoming for said purposes; and

Whereas, the party of the second part has heretofore rendered services, and does hereby agree to render additional and further services in financing the acquisition and development of said oil fields and lands, leases and property already acquired by them and to be acquired by the party of the first part in said State of Wyoming, and has already advanced large sums in the prosecution of said objects, and has agreed and does hereby agree personally to finance the same; provided, however, that said party of the second part is not bound to advance any fixed sum for said purposes, but shall be the exclusive judge of the amount necessary or proper, or which shall be expended by him for said purposes;

Now, therefore, in consideration of the premises, it is hereby mutually agreed by and between the parties hereto that any damages that may be recovered by said party of the first part in said action against said Losekamp, or any profits, property or thing of value derived by either or both of said parties from the sale, disposition or development of any such properties, shall be divided between the parties hereto in the following proportion; party of the first part, one-quarter thereof; party of the second part, three-quarters thereof. It is further agreed between the parties hereto that within 90 days from the date hereof a corporation shall be organized under the laws of such State, with such powers and of such capitalization as the party of the second part may determine; and upon such organization of such corporation each of the parties hereto shall immediately convey to the same all lands, leases and properties heretofore acquired and now held by him as aforesaid, and that in consideration of such conveyances said corporation shall issue to the parties hereto its entire capital stock in the following proportion: To the party of the first part one-quarter thereof, and to the party of the second part three-quarters thereof.

The party of the first part agrees that he will, immediately upon the acquisition of other lands or leases in the State of Wyoming, convey the same to the corporation to be formed as above referred to in consideration of said stock so to be issued to him as aforesaid, provided, however, that any additional lands or leases acquired by him in the State of Wyoming before the organization of said corporation, shall be by him immediately conveyed to party of the second part, who shall convey the same to said corporation immediately upon its formation upon the consideration above mentioned.

It is further agreed by and between the parties hereto that upon the organization of such corporation and issuance of the stock thereof, the stock to which said party of the first part is entitled shall be issued and delivered to said party of the second part as trustee, who shall hold the same in trust for said party of the first part for the term of five years, with the power, and said party of the second part is hereby given and granted for said period of five years, the full and complete power to manage, control, sell, hypothecate and dispose (sic) of all of said stock so issued as aforesaid, and all the assets and property of said corporation, or any part of either of said stock, assets, or property for the joint benefit of the parties hereto, as the interests are herein set forth, upon such terms and in such manner as the best judgment of said party of the second part may dictate and determine.

Said party of the second part hereby covenants and agrees to advance from time to time during such period as he shall elect to finance said project as aforesaid, any and all sums of money required to carry the interest of said party of the first part in said lands, leases, property, and corporation, and it is expressly understood and agreed by and between the parties hereto that two-quarters of said three-quarters interest of said party of the second part is the consideration for the promise and covenant on the part of said party of the second part in this paragraph contained.

This contract shall not constitute an agreement of copartnership, but shall be taken and deemed as a declaration of the several interests held by the parties hereto in and to the lands, leases, and properties heretofore herein described and referred to.

Witness the hands of the parties hereto the day and year first above written. August 15, 1909.

Witness to the signature of Wm. M. Fitzhugh:

E. NUSBAUMER.

105775-28-PT 1- -3

Wм. M. FITZHUGH.
WM. G. HENSHAW.

The contract was acknowledged May 16, 1911, by William G. Henshaw, for himself, and by E. Nusbaumer, as to the signature of William M. Fitzhugh, before Margaret Walker, a notary public, San Francisco, Calif.

There might have been some doubt as to this contract applying to locations to be made in the Salt Creek oil field. William G. Henshaw came to Casper, Wyo., on or about November 12, 1909, visited the Salt Creek oil field, and then, and not before, decided to have those lands located. But before any locations were made by the Fitzhugh-Henshaw group the following contract was executed November 16, 1909, and filed for record May 26, 1911, and recorded in book 2 A. C. & L., page 460, Natrona County, Wyo.

EXHIBIT B

THE OIL WELLS DRILLING SYNDICATE (LTD.),
Casper, Wyo., November 16, 1909.

This is to certify that the attached contract, dated August 15, 1909, between us, the undersigned, is hereby modified to the following effect and extent, to wit: The said Fitzhugh shall have 25 per cent and the said Henshaw shall have 75 per cent of all profits made by the said Henshaw, either directly or indirectly, from all oil lands or oil or gas discovered or produced from any lands or oil or gas interests either may acquire in the State of Wyoming, or either have acquired in the said State. This is intended to cover contracts, leases, conveyances, and other and all manner of methods of acquisition.

Witness:

TYLER HENSHAW.

WM. G. HENSHAW.
Wм. M. FITZHUGH.

This was also acknowledged May 16, 1911, by William G. Henshaw for himself and by Tyler Henshaw, who states he was present and saw William M. Fitzhugh sign said paper and that he, Tyler Henshaw, signed as a witness, Margaret Walker, notary public, Alameda County, Calif.

The foregoing completes the illegal agreements that made the locations null and void under the law as construed by the courts.

The present corporate holders of the title from the Henshaw grantees can say in the language of section 18 that they had knowledge and reasonable grounds to know of this fraud because the very person who purchased that title and acted for them was on the very day of that purchase a party to the following:

EXHIBIT H

This agreement, made and entered into this 24th day of July, 1911, by and between William H. Henshaw, of California, party of the first part, and O. H. Shoup, trustee for the Reed Investment Co., a Colorado corporation, party of the second part, witnesseth that

Whereas heretofore party of the first part made and entered into a certain agreement with William M. Fitzhugh, and a certain modification thereof, which agreement and modification are of record in the records of Natrona County, State of Wyoming, and thereafter and on, to wit, the 3d day of June, 1911, a certain agreement was made between William M. Fitzhugh, the Midwest Oil Co., and O. H. Shoup, and on July 14, 1911, a certain other agreement was made between the said William M. Fitzhugh, the Midwest Oil Co. and the Reed Investment Co.

Now therefore, for and in consideration of $1 and other good and valuable considerations, in hand paid to the party of the first part by the party of the second part, and the purchase by the party of the second part from the party of the first part and his associates, of certain properties in Salt Creek oil fields, Natrona County, Wyo., under a certain option dated July 24, 1911, party of the first part hereby confirms the making of said contracts by the said William M. Fitzhugh with the other parties thereto, for himself, and as attorney in fact for his associates, named after the signature hereto of the party of the first part, with the exception that said confirmation shall in no wise be taken as any recognition of any claim in said agreements made by said William M. Fitzhugh as to the extent or nature of his interest in the premises or properties referred to, or affected by said agreements, and nothing herein contained shall be construed as in any wise affecting, releasing, or conveying any claims which the party of the first part, or his associates have or may have against the said

Fitzhugh, for all or a portion of the proceeds or property rights accruing or arising, or to accrue or arise to the said Fitshugh under and by virtue of said agreements, or under or in pursuance of the option of the parties thereunder. This confirmation shall extend to and is made for the benefit of not only the party of the second part, but also of the Reed Investment Co., Midwest Oil Co., and O. H. Shoup.

In witness whereof, the party of the first part, for himself and as attorney in fact for his associates to the extent of whatever interest they may have in said matter, their names being set forth after the signature of the party of the first part thereto, has hereunto set his hand and seal, the day and year first above written.

[SEAL.] WM. G. HENSHAW. (For himself and as attorney in fact for Hetty T. Henshaw, Helen W. Henshaw, Tyler Henshaw, Alla S. Chickering, Henry D. Nichols, Ethel K. Nichols, E. M. Hall, Lillie T. Hall, F. W. Henshaw, H. J. Knowles, W. H. Metcalf, A. H. Chickering, C. T. Rudolph, Emil Nusbaumer, P. C. Black.)

The above was acknowledged July 25, 1911. The acknowledgment is omitted for brevity.

Not satisfied with the full knowledge of the existance of the unlawful contract and having secured for their principal the ratification of the contracts made by William M. Fitzhugh with the Midwest Oil Co. O. H. Shoup and The Reed Investment Co.; K. C. Schuyler and O. H. Shoup, proceeded to make the future Reed companies parties to that illegal contract by securing for them the rights and interests of William G. Henshaw under said contract by purchasing an assignment thereof in the name of F. P. Evans, which reads:

EXHIBIT I

This indenture, made and entered into this day of July, 1911, by and between Wm. G. Henshaw, of California, party of the first part, and F. P. Evans, of Colorado, party of the second part.

Witnesseth: That, for an (sic) in consideration of the sum of $25,000, and other good and valuable considerations, in hand paid the party of the first part by the party of the second part, the receipt whereof is hereby confessed and acknowledged, party of the first part has granted, bargained, sold, assigned, remised, released and quitclaimed, and by these presents does grant, bargain, sell, assign, remise, release and quitclaim unto the party of the second part, his heirs and assigns, all rights, claims, interest, estate, and demands which the party of the first part heretofore has had, now has or which may at any time hereafter arise, in and to any and all benefits, advantages, property, property rights, whether in stock, money oil property or other proceeds of any kind or nature whatsoever, heretofore derived or hereafter to be derived by William M. Fitzhugh under and by virtue of operations under or in pursuance of those two certain contracts dated June 3, 1911, and July 14, 1911, made and entered into by the said William M. Fitzhugh, the first of the said contracts being with the Midwest Oil Co. and O. H. Shoup, and the second of said contracts being with the Midwest Oil Co. and The Reed Investment Co., said claims, demands, right, title, and interest of the party of the first part hereby assigned arising under and by virtue of that certain contract heretofore made and entered into between the party of the first part and William M. Fitzhugh dated August 15, 1909, and a certain modification thereof made and entered between the party of the first part and William M. Fitzhugh, dated November 16, 1909.

Together with all the right, title, interest, and estate of the party of the first part under said contract between the party of the first part and said Fitzhugh last hereinabove referred to, so far as the same constitute claims against the said Fitzhugh for an interest in any and all property rights and proceeds of any kind and every kind arising out of the dealings of said Fitzhugh in the Salt Creek oil fields of Natrona County, Wyo., and also hereby assigning, transferring, and setting over unto the said party of the second part all rights of action heretofore, now, or hereafter existing in favor of the party of the first part as against the said Fitzhugh, with full right and power to enforce said claims and demands as against the said Fitzhugh to the same extent as the party of the first part could enforce the same; provided this conveyance does not include Wyoming Central Association lease transaction.

To have and to hold unto the said party of the second part, together with all rights of the party of the first part at law or in equity unto the said party of the second part, his heirs and assigns, forever.