Senator WALSH. That is to say that either Henshaw or Fitzhugh was the real owner of all of them and the names of the other locators had just simply been used without any interest whatever. Mr. FINNEY. I think he conceded that both Fitzhugh and Henshaw had substantial interests, but the other six were

Senator WALSH (interposing). Were dummies?

Mr. FINNEY. Yes.

Senator WALSH. And apparently he made a further contention that the applicants were

Mr. FINNEY (interposing). Were going to receive a larger acreage than the law permitted them to have.

Senator WALSH. And just exactly what was the nature of the contention in that report?

Mr. FINNEY. Roughly, I think it was on the theory that the companies applying were so related through stock ownership and holding companies, and things of that kind, that the approval of their applications was going to result in a larger acreage than that fixed by the section vesting in a single control.

Senator WALSH. And apparently, although their applications were made in the names of different corporations, apparently it was contended that they were all in substance and fact applications of the Midwest Refining Co.?

Mr. FINNEY. That was, I presume, the contention; yes, sir.

Senator WALSH. Well, you are more familiar with the report. We are speaking now about the Bouton report. What was his contention with respect to it?

Mr. FINNEY. That was his contention substantially. Those were the two points.

Senator WALSH. What is that?

Mr. FINNEY. Those were the two points, and that is corroborated by the fact that Mr. Bell made those two points at a hearing held in December of 1920.

Senator WALSH. Well, we will get to that directly. We will incorporate in the record, then, the list of leases given us by Mr. Finney and then the Bouton report with the letter of transmittal. The CHAIRMAN. It will be so ordered.

Senator WALSH. There were some further reports from Mr. Bouton?

Mr. FINNEY. Yes, I found two others. There may be others in the file. I have had people looking ever since I heard you were going to look into this matter.

Senator WALSH. And what is the general character of those?

Mr. FINNEY. I have one in the form of a letter from Mr. Bouton to Commissioner Tallman, of the General Land Office, and that deals apparently with these alleged interlocking interests which would result in a larger acreage being acquired than the law permitted.

Then the second paper I have here is a report signed by Messrs. Bell and Bouton and dated January 15, 1921.

As I recall it, that is a restatement of what is in the protest you have already filed there.

Senator WALSH. Will you let us have those?

Mr. FINNEY. If our people find any more, I will be glad to bring them to the committee.

Senator WALSH. These should also go in the record. I think perhaps it would be wise, in order that we may understand the contention with reference to these interlocking companies, to read this letter of Mr. Bouton of date November 15, 1920.

(The said letter dated November 15, 1920, from A. B. Bouton to Clay Tallman, is as follows:)

Mr. CLAY TALLMAN,

DENVER, COLO., November 15, 1920.

Commissioner General Land Office, Washington, D. C.

DEAR SIR: In connection with your consideration of the pending applications for leases in the Salt Creek oil field I am pleased to notice that both you and the special agents of your office are giving very careful attention to the acreage limitations. The Government will have to be diligent in order to prevent the Midwest interests from securing the entire fields notwithstanding the limitations prescribed by the act of February 25, 1920.

The table submitted herewith is prepared for your information, in addition to my previous memorandum. I believe a showing along this line especially in a small condensed table containing correct information is better and more easily understood than a long report setting out the details. In preparing this table I have used the figures as to the area in the several applications as given in the "addenda" which I sent you in connection with a memorandum on this matter. You will notice I have a list of the applications followed by the area applied for by each. I have made no distinction between the section 18 and section 19 applications. I believe none should be made because section 19 is to apply only where the conditions are not provided for in section 18. The Salt Creek field having all been withdrawn September 27, 1909, I believe it comes under section 18 and not under section 19. For convenience I have used the letters "a" to "1" to indicate the applicants and will therefore use those letters in explaining the table. You will notice that I have added the total area applied for by the several Midwest applicants, being a total of 14,920 acres and called that 100 per cent and on that basis determined the percentage accredited to each applicant and corporation named in the table.

(a) Wyoming Associated Oil Corporation has applied for 5,963 acres or 39.95 per cent of the field. My information, which is obtained from numerous articles in the papers and statements by certain stockholders, is that the Mountain Producers owns 52 per cent of the Wyoming Associated Oil Corporation. While Mr. Tallman and McFarren state that as 51 per cent. Fifty-two per cent of the area applied for is accredited to the Mountain Producers Association, which is 3,101 acres. The Midwest Refining Co. owns 32 per cent of the Mountain Producers Association. This gives the Midwest Refining Co. 992 acres of that area or 6.65 per cent of the field.

(b) The Midwest Oil Co. has applied for 1,970 acres, which is 13.2 per cent of the field. Mr. Tallman has stated in his reports that the Salt Creek Producers Association owns 66 per cent of the stock of the Midwest Oil Co. That gives 1,300 acres of that area to the Salt Creek Producers Association. I wish to call attention to that part of Exhibit A attached to my previous memorandum which shows that the Salt Creek Producers Association resolved to purchase $3,074,125 of the par of the common stock of the Midwest Oil Co., which has $4,000,000 in common stock. If that resolution was carried out, then the Salt Creek Producers Association would own over 76 per cent of the Midwest Oil Co. Therefore, I would like to know if they actually own but 66 per cent or (?). The Midwest Refining Co. owns 32 per cent of the Salt Creek Producers Association, therefore would have 416 acres of the area applied for by the Midwest Oil Co. accredited to the Midwest Refining Co.

(c) The Central Wyoming Oil & Development Co. applied for 920 acres. The Wyoming Oil Field Co. has all the stock of the Central Wyoming Oil & Development Co., therefore that 920 acres can be accredited to the Wyoming Oil Fields Co. The Salt Creek Producers Association purchased 77 per cent of the stock of the Wyoming Oil Fields Co. from the Franco Wyoming Oil Co., and according to McFarren's latest information they had purchased the 23 per cent of the Wyoming Oil Fields Co. formerly owned by the Petroleum Maatschappij Salt Creek, hence I have accredited 920 acres of the area to the Salt Creek Producers Association. The Midwest Refining Co., owning 32 per cent of the stock of the Salt Creek Producers Association, is therefore accredited 294 acres of the area.

(d) The Petroleum Maatschappij Salt Creek applied for 160 acres, the southeast one-quarter section 23, simply because their name had been used in the patent application. They had long ago transferred that interest to the Wyoming Oil Fields Co., and, as stated in paragraph (c), all the stock in the Wyoming Oil Fields Co. is now owned by the Salt Creek Producers Association, hence this 160 is accredited to the latter corporation. The Midwest Refining Co., owning 32 per cent, is accredited with 51 acres.

(e) The Salt Creek Consolidated Oil Co. has applied for 2,347 acres; 50 per cent of its stock is owned by the three corporations, Wyoming Oil Fields Co., Wyoming Associated Oil Co., and Midwest Oil Co., each of which is therefore accredited with one-third of 50 per cent of this area, each receiving 391 acres. The Salt Creek Producers Association, owning the Wyoming Oil Fields Co., has that 391 acres, and owning 66 per cent of the Midwest Oil Co., has in addition 66 per cent of 391 acres, receives credit for 649 acres. The Mountain Producers Association, having 52 per cent (or 51 per cent) of the Wyoming Associated Oil Corporation, has 203 acres. Midwest Refining Co., owning 32 per cent of each Salt Creek Producers Association and Mountain Producers Association, receives 32 per cent of 649 acres and 203 acres, which gives it 273 acres.

(f) There is an agreement entered into by the E. T. Williams Oil Co., Salt Creek Consolidated Oil Co., and E. J. Sullivan, trustee, under which E. J. Sullivan is acting in applying for this 560 acres. He applied for 720 acres, but in their settlement the Salt Creek Consolidated Oil Co. was given the southwest one-quarter section 10, so E. J. Sullivan withdrew that application. E. J. Sullivan, trustee, is applicant for 560 acres. I believe your office would be justified in calling on E. J. Sullivan to show for whom he is acting as trustee and to furnish a copy of the agreement above referred to. Under the terms of that agreement the Salt Creek Consolidated Oil Co. is to have 50 per cent in the land applied for by E. J. Sullivan, trustee. I have therefore accredited the Salt Creek Consolidated with 280 acres. As stated in paragraph (e), 50 per cent of the Salt Creek Consolidated being owned by the Wyoming Oil Fields Co., Wyoming Associated Oil Corporation, and Midwest Oil Co., I have accredited each of those with one-third of 50 per cent of the area thus secured by the Salt Creek Consolidated, being 46.6 acres to each. The Salt Creek Producers Association, by owning the Wyoming Oil Fields Co. and 66 per cent of the Midwest Oil Co., is accredited with 77 acres. The Mountain Producers Association, owning 52 per cent of the Wyoming Associated Oil Corporation, is accredited with 24 acres. The Midwest Refining Co., owning 32 per cent of both the Salt Creek Producers Association and Mountain Producers Association, has 32 per cent of 77 and 24 acres, which is 32 acres.

(g) The Mountain & Gulf Oil Co. has applied for all of section 6, township 39 north, range 78 west. I know that the New Bradford Oil Co., the predecessor of the Salt Creek Consolidated Oil Co., had an interest in section 6; also, the Northwestern Oil Co. had an interest in section 6. I have not sufficient information to divide up that 640 acres. The Mountain & Gulf Oil Co. has also applied for the north one-half of section 11, township 40 north, range 79 west. This north one-half section 11 was leased by the Parkman Oil Co. to B. D. Townsend October 1, 1915, recorded February 14, 1916, book 3, A. C. & L., page 595. By that lease one-tenth of the oil and gas was reserved to the Parkman Oil Co. October 14, 1915, B. D. Townsend assigned that lease to the National Petroleum Co., and on December 13, 1917, the National Petroleum Co. assigned that lease to the Mountain & Gulf Oil Co. Under this last assignment 40 per cent of the net profits were to go to the National Petroleum Co. after paying royalty, taxes, expenses, and reimbursement for drilling, etc. By a quit-claim deed dated January 7, 1919, the National Petroleum Co. deeded its interest to the Salt Creek Producers' Association and it was taken over by the Salt Creek Producers' Association under the resolution of January 15, 1919. That would give the interests at 10 per cent to the Parkman Oil Co., 36 per cent to the Salt Creek Producers' Association, and 54 per cent to the Mountain & Gulf Oil Co. The Midwest Oil Co. owns 95 per cent of the Parkman Oil Co. That would give it 30 acres of this 320 acres. The Salt Creek Producers' Association under its purchase from the National Petroleum Co. would be entitled to 115 acres, and as the Salt Creek Producers Association owns 66 per cent (or 76 per cent) of the Midwest Oil Co., it would have a total of 135 acres in this application. The Midwest Refining Co. has 32 per cent of the Salt Creek Producers Association, or 43 acres interest in this application.

(h) The New York Oil Co. is an applicant with the Midwest Oil Co. for the southwest one-fourth section 13, township 39 north, range 79 west. I have

accredited the New York Oil Co. with 120 acres, assuming they were taking possession of the Wyoming Associated Oil Corporation's part. I have no information as to just how that acreage should be divided. It is probably shown in the application.

(i) The New York Co. and Northwestern Oil Co. are applicants for 480 acres. On the southwest one-fourth section 34, the New York Oil Co. has a royalty interest of one-eighth, the balance going to the Northwestern Oil Co., which is owned by the Boston Wyoming Oil Co., while the Midwest Oil Co. owns 41 per cent of the Boston Wyoming Oil Co., which would give the Midwest Oil Co. 35% per cent interest in this 160 acres. On the south one-half section 1 the New York Oil Co. has a 121⁄2 per cent royalty interest and an additional working interest, which makes its total interest in that lease 234 per cent. The Midwest Oil Co. has a 104 per cent interest and also owns 41 per cent of the Boston Wyomings' interest, which makes its total interest in the south one-half section 1, 2834 per cent. That would give the Midwest Oil Co. 149.3 acres. The Salt Creek Producers' Association with its 66 per cent of the Midwest Oil Co. has an interest equal to 98 acres. The Midwest Refining Co. with its 32 per cent of the Salt Creek Producers' Association has 31 acres.

(j) The National Petroleum Co. has applied for 960 acres. October 1, 1915, the Parkman Oil Co. leased the land to B. D. Townsend, who assigned it to the National Petroleum Co. October 14, 1915. By the agreement dated December 15, 1917, the National Petroleum Co. transferred this lease to T. A. Dines. T. A. Dines being vice president of the Midwest Refining Co., I have considered his interest went direct to the Midwest Refining Co. As the agree ment with T. A. Dines gave 40 per cent of the net profits after paying the royalty, taxes, and expenses and reimbursement for drilling to the National Petroleum Co., it would give the interests as 10 per cent to the Parkman Oil Co., 54 per cent to T. A. Dines, and 36 per cent to the National Petroleum Co. The Midwest Oil Co. owning 95 per cent of the Parkman Oil Co. has 91 acres of this area. The Salt Creek Producers Association having 66 per cent of the Midwest Oil Co. gets 60 acres. The Midwest Refining Co. having the T. A. Dines interest and 32 per cent of the Salt Creek Producers Association, has an interest equal to 538 acres.

(k) The Federal Oil & Development Co. applied for 320 acres. This 320 acres was leased to B. D. Townsend by the Federal Oil & Development Co. October 1, 1915, a 15 per cent royalty being reserved to the Federal Oil & Development Co. B. D. Townsend assigned that lease to the National Petroleum Co. The National Petroleum Co. assigned the northeast quarter section 13 to T. A. Dines, reserving 40 per cent of the net profits after paying royalty, etc. That assignment was dated December 15, 1919. While the southeast quarter section 13 was on December 13, 1917, assigned by the National Petroleum Co. to the Mountain & Gulf Oil Co., reserving 40 per cent of the net profits after paying royalty, etc., to the National Petroleum Co., January 7, 1919, the National Petroleum Co. by a quit-claim deed conveyed all of its interest to the Salt Creek Producers Association, and under the resolution of the Salt Creek Producers Association all interest of the National Petroleum Co. and T. A. Dines went to the Salt Creek Producers Association in exchange for stock. Thus divided, the whole interest of the 320 would be 15 per cent to the Federal Oil & Development Co., 252 per cent to the Mountain & Gulf Oil Co., and 592 per cent to the Salt Creek Producers Association. The Salt Creek Producers Association's interest in this land would amount to 190 acres; 32 per cent of that going to the Midwest Refining Co., amounts to 61 acres.

(1) The Parkman Oil Co. has applied for 160 acres, the southeast quarter section 12. By lease dated October 1, 1915, the Parkman Oil Co. gave the land to B. D. Townsend, reserving only a 10 per cent royalty. B. D. Townsend assigned his interest to the National Petroleum Co. December 15, 1917, and its interest in the lease to T. A. Dines, reserving a 40 per cent net interest in the profits after paying royalty, taxes, etc. The Salt Creek Producers Association purchased this interest, which is shown by their resolution of January 15, 1919, and the deed dated January 7, 1919. The Midwest Oil Co. owns 95 per cent of the Parkman Oil Co., therefore an interest of 15 acres. The Salt Creek Producers Association, owning 66 per cent of the Midwest Oil Co. and having secured all the interest of the National Petroleum Co. and T. A. Dines, therefore has an interest of 154 acres, of which 32 per cent belongs to the Midwest Re fining Co., which amounts to 49 acres.

The total shown by this table are important in that they show the Salt Creek Consolidated as attempting to secure 3627 acres, the Wyoming Associated Oil

Corporation over 6,400 acres, the Midwest Oil Co. wants 2,693 acres, the Salt Creek Producers Association has an interest of 3,743 acres, the Mountain Producers Association 3,328 acres, and the Midwest Refining Co. a direct interest of over 2,780 acres. The purpose of such a table is to show how and by what means and to what extent the allied Midwest interests are trying to circumvent the limitations of the act of February 25, 1920. All the applications must necessarily be considered together to determine the total acreage accruing to the several interests.

I trust this may be of some value.
Very respectfully,

A. B. BOUTON,

Special Assistant, United States Attorney. (The following report was ordered by the chairman to be incorporated in the record:)

FRAUD AND THE MIDWEST INTERESTS' CLAIM FOR RELIEF, ACT OF CONGRESS APPROVED FEBRUARY 25, 1920

PREFACE

Having been requested by the Commissioner of the General Land Office to discuss the question of the fraudulent character of the Fitzhugh-Henshaw locations before the Secretary of the Interior, and being informed that the Midwest interests would seek to secure their leases not only on their claim of lack of knowledge of the fraud in connection with those locations but also by presenting asserted claims of right through other chains of title and having been asked with reference to the fraud in connection with those other so-called chains of title, we have endeavored to furnish the Secretary of the Interior an outline of some of the known frauds which have been committed and exist in the Midwest claims now presented through drivers names for leases under the relief sections of the act of Congress, approved February 25, 1920, and to indicate the nature and source of the evidence by which the frauds alleged may be proved. Such is the object and purpose of this letter.

A. B. BOUTON, Special Assistant United States Attorney. R. C. BELL, Special Assistant to the Attorney General.

DENVER, COLO., January 15, 1921.

SECRETARY OF THE INTERIOR,

Washington, D. C.

SIR: The purpose of this memorandum is to set forth the numerous and continuous acts of fraud of the Midwest Refining Co. and its subsidiaries in connection with the Salt Creek field, Wyoming.

No claimant for a lease who has been guilty of any fraud or who had knowledge or reasonable grounds to know of any fraud, or who has not acted honestly and in good faith, shall be entitled to any of the benefits of this section." (Secs. 18 and 19, act of February 25, 1920.)

There are four classes of claimants excluded from the benefits and privileges of the relief sections of the so-called leasing law. Any one of those grounds is sufficient. Those guilty of fraud are excluded. Those who had knowledge of the fraud are excluded. Those who had reasonable grounds to know of any fraud though protesting their innocence and ignorance of the fraud shall not be the beneficiaries under this act. Furthermore unless the applicant shall also have acted honestly and in good faith. Congress enacted that his claim should be rejected. The Department of the Interior is charged with the duty of enforcing this law. Any citizen aware of existing fraud affecting a claim presented seeking a lease for oil or gas lands of the United States is morally bound to disclose that information for the good of the Government.

"Fraud: An endeavor to alter rights, by deception touching motives, or by circumvention not touching motives." (Bigelow, Fraud 5.)

"Actual or positive fraud includes cases of the intentional and successful employment of any cunning, deception, or artifice, used to circumvent, cheat, or deceive another." (1 Story, Eq. Jur. par. 186.)