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STATEMENT OF MR. JOHN V. CLINNIN, CHICAGO, ILL.
The CHAIRMAN. Have you anything to add to what Mr. Barkley has said?
Mr. CLINNIN. I represent the creditors of the General Oil Co., and was here in case Mr. Barkley did not arrive in time. In fact, I was here before he came the other day.
The CHAIRMAN. You do not care to make any statement in addition to that of Mr. Barkley?
Mr. CLINNIN. The only statement I would make, if any, is to call attention of the committee to the California case. I have not the report of the committee now, but will be very glad to furnish the record with it where a similar situation arose with reference to claims where certain lands were withdrawn by the United States Government where the oil prospectors had started work and had not made a real discovery prior to the withdrawals. That case went up to the circuit court of appeals in California, which held that the prospectors had equitable title but not a legal position, and they reimbursed the equitable title holders for the moneys that they had put in there in prospecting and developing that field which was afterwards withdrawn by the Government. The CHAIRMAN. Was that the 1909 withdrawal?
Mr. CLINNIN. That was the case last year, 1922.
The CHAIRMAN. Was that under the Taft withdrawal?
Mr. CLINNIN. In California; yes, sir.
The CHAIRMAN. 1909?
Mr. CLINNIN. Yes.
The CHAIRMAN. Of course, that withdrawal specifically gave those in the diligent prosecution of the work the right to go ahead.
Mr. CLINNIN. They went to the circuit court of appeals to get it.
The CHAIRMAN. There was some dispute as to the meaning of the order. Mr. CLINNIN. Yes, sir.
STATEMENT OF MR. O. E. HARRISON, 504 SOUTHERN BUILDING, WASHINGTON, D. C.
The CHAIRMAN. Is there anyone else representing the Texas claimants? Mr. HARRISON. My name is O. E. Harrison. I represent the Seright claims, and I also represent the Courts Drilling Co., a compaany in which I was personally interested, I am sorry to say, because that company lost about $100,000. The CHAIRMAN. What is your address?
Mr. HARRISON. My address at present is 504 Southern Building, Washington, D. C.
Mr. Chairman, I realize the responsibility that one takes in appearing before the committee. I take it that I am, in effect, testifying, and, therefore, I want to be careful with what I say. I did not come prepared to discuss a great many of the features concerning which inquiry has been made here to-day, for the reason that I thought that the subject matter that was before your committee was not the question of the equities that may be claimed either by the placer people, by the riparian owners, or by the Texas claimants, but rather, you were having under consideration the question as to whether or not you were going to confer upon the Secretary of the Interior the power to make leases and make adjustments to those equitably entitled thereto. I therefore did not assume that this committee would undertake the burden of inquiring closely into individual cases, and I may say that if you do, I think
you will be here some while, but I hardly think that you can decide in a somewhat ex parte way the merits of these different people. There is, indeed, too much involved, and so, therefore, I shall not discuss in the little time that I shall occupy the merits of these different claims. None of us had any right to be there.
We have found that out since the Supreme Court said so, but there are two principles in the law of Nations and the law of States that you ought to consider in passing this legislation. One of them is that when one country even conquers another or takes it, the rights of its citizens, as conveyed by the sovereign, are respected, and even when one State is granted rights in a territory which it does not own, that the courts have been very careful to observe the vested rights of those who receive property under a color of authority. Bear that in mind and bear in mind also that even after the Greer case was decided, the Congress passed an act preserving and protecting and giving to the people who had secured territory from the State of Texas a preference to the extent, I think, of 420 acres. Now, all that was done according to just a principle that has existed in the law of nations.
Do not ask me whether I am ready, whether the placer mining people are ready, whether the riparian people are ready, but ask me, if you will, whether I think you ought to pass some law that will give us an opportunity, all of us, to go before the Secretary of the Interior and set forth in sworn testimony our equities in this matter and the basis of our good faith in making those investments. I went down to Texas some years ago, a short while ago, in this Texas matter. We invested in oil there. We did not know about the Greer case, and I am not a lawyer. I have been admitted to the bar. I do not rise to the dignity, perhaps, of some others. I have had some little experience in public law. But we began to develop territory, and it goes without saying that as we went north, toward the river there, that everybody foresaw that there might be oil out in that territory and in the river bed, and thus it was that people began to cast about from whom they could secure leases, and the word came that Texas owned that territory and the word came that the Interior Department had decided that Texas could give permits in that territory.
The word came, and we saw and knew that Texas had exercised sovereignty over that river for years; had policed it; had patrolled it; that in public celebrations it had been recognized and recognized by Congress. Now, then, the people, as practical men, thinking that Texas was a sovereign State and had the right to give a permit, and that that permit could be assigned and others could take it, and that the decision had been secured about the time that we entered into the war, when the whole country was urged, as people in the oil business were urged, to produce, and people were plunging ahead
The CHAIRMAN (interposing). What decision do you refer to?
Mr. HARRISON. The law of Texas under which it gave permission to lease water-covered areas-I mean that Texas passed-which covered this river. Mr. RAKER. That is a new one. I did not hear that.
vide for water-covered areas?
Mr. HARRISON. Yes; it was passed in 1917.
Does that lease pro
Mr. RAKER. And after the law was passed by Texas leasing water-covered areas is when this leasing operation commenced?
Mr. HARRISON. Surely; after that. We had no right to be there, as the law is subsequently found out. The Supreme Court has decided that question. It is true it is by a dissenting opinion. It is true that it was argued by able lawyers that the Greer case did not apply. It would be a great thing if we lawyers
could look back and decide the good faith of people upon the situation as we understand it now. But the placer people went in, as I understand, without any color of title, and the riparian people went in without any more color of title than we did.
I am not going to make any argument, and I want to shorten this as much as I can, but with the permission of the committee I want to introduce in the record at this time an argument that was made in a memorandum submitted on behalf of the Texas permittees in the Senate hearing, which is only three pages. It deals with the history and nature of our rights and the claim of the placer people and the riparian and it gives numerous decisions. Mr. SMITH of Idaho. What page is it?
Mr. HARRISON. Pages 118 to 121.
Mr. SMITH. The committee already have copies of that.
Mr. HARRISON. I do not want to make the argument here. I do not think it is material to this inquiry. I did not think so at the time they made it to the committee there. The committee could throw it all out on the ground that they were not going to determine the equities, that they had before them the question as to whether or not some tribunal ought to consider whether or not the people that had gone in should be given preference in the granting of these leases.
Mr. LARSEN. Do you not think it is material for us to determine the equities in order that we may determine the scope of the bill we will pass and the nature of the bill?
Mr. HARRISON. I do not see how you can determine the equities in individual
Mr. LARSEN. I mean to have them before us and to have them in mind in framing the bill.
Mr. HARRISON. A general view of them?
Mr. LARSEN. Yes.
Mr. HARRISON. Then I ask the committee if they will please to read that statement. It was prepared by Smoot & Smoot, attorneys, of Texas, in connection with myself, and if you will pardon my saying so, I think it is a wonderful memorandum because I had little participation in making it. It is a very short, concise statement of the thing that I think the committee wants.
Mr. LARSEN. In view of the fact that we are trying to get this printed in larger type, and that it is only three pages, I suggest that we include that in this record and then we will not be bothered by both records.
The CHAIRMAN. Without objection, it may go in.
Mr. LARSEN. I am referring to the Smoot memorandum.
(The statement referred to is as follows :)
MEMORANDUM ON BEHALF OF TEXAS PERMITTEES.
RIGHTS AND EQUITIES OF CITIZENS AND CORPORATIONS OF THE UNITED STATES TO LAND AND OIL AND GAS DEPOSITS SITUATED SOUTH OF MEDIAL LINE OF RED RIVER.
I. History and nature of rights of Texas permittees.-A brief summary of the oil and gas developments will be necessary to a clear understanding of the conditions which lead to the acquiring of these claims.
As the result of an active drilling campaign following the bringing in of the famous "Burk" oil pool in Wichita County, Tex., the development of the field was continued north until it reached the "Big Bend" area in Red River. Up to this time no particular attention had been paid the bed of that stream. The
adjoining Texas landholders used it where it was fit for such use, and it was generally looked on as Texas territory to the center of the stream. As the oil development approached the stream by the bringing in of the "Texas Chief" and other wells, the Texas operators began to see a possible oil value to the bed of Red River and began to look for authority for its test and development. In March, 1917, Texas had amended her oil leasing laws so as to make them apply to water-covered areas, and permits and leases were sought under this law with a view of extending the oil development into the river. Up to this time Texas was apparently the only sovereignty asserting any control or interest in the south half of the stream, and this, coupled with the fact that she had always been in possession within the memory of man, had always exercised authority over it and her courts had decided in numerous cases that she owned to the center of the stream, Texas was considered, of course, as being the proper authority from whom leases could be secured.
This was seemingly confirmed by the Federal Government when, in response to an inquiry addressed to it by Texas land commissioner, the Interior Department indicated in a letter dated October 2, 1914, that it considered that Texas extended to the center of the river.
Therefore, permits were secured from the State and the development pushed out into the stream, the General Oil Co., one of the permittees under Texas, bringing in the first well. Following this, extensive activities began and vast sums were spent and considerable oil was being developed in the river area by Texas permittees when suit was instituted and the properties placed in the hands of a Federal receiver. The resulting loss to Texas operators can not be calculated, but some idea of its extent can be appreciated when it is considered that practically all the companies operating therein are now in the hands of receivers and many of the individual operators are in bankruptcy courts.
The right of the Texas claimants to a preference in the property they had discovered, developed, and thought they owned was recognized by the Supreme Court in its ordering all wells above the cut bank turned back to the owners under certain restrictions which would secure to the Federal Government its rights.
Chapter 83. Acts Texas Legislature, March, 1917, in substance provides that any citizen of the United States may apply in writing for a permit to prospect for oil and gas on a described portion of river bed, have it surveyed out and field notes returned by the official surveyor, and the application and field notes filed in the general land office of the State. When this is done the applicant acquires a vested right to prospect therein, which right may be freely conveyed. The applicant is also entitled to a written permit from the State to prospect for oil and on discovery of oil thereon a lease is issued by the State, retaining one-eighth royalty.
Such applications, permits, and leases are the titles under which preferential rights are claimed.
The claims in behalf of which this memorandum is filed, of which the Seright lease is an example, grow out of the leases and filings made under the Texas oil and gas leasing laws. These claimants submit that such rights were acquired from the apparent sovereignty actually in possession of the area, that they have expended money and labor in attempted improvements, and that this would entitle them to preferential treatment in leasing or other disposition made of the area.
II. Possible adverse claim.—As the prospects for an extensive oil field in the bed of Red River became apparent it is, perhaps, but in keeping with the common experience that a vast number of persons not possessing rights under Texas leasing laws should cast about for means of securing a share in it. These
present two classes of claims adverse to the Texas claimants, and will be noticed briefly.
(1) Placer claims.-These are claims attempted to be filed under mineral placer laws. As legal claims they have been specifically disposed of by the recent decision in the case of Oklahoma v. Texas, and they could have no force as basis for an equitable preference.
Analysis of these claims show no equities as a possible basis for preferential rights because:
(a) No possible color of title is shown. They are not based on any grant from a sovereignty, either direct by grant or indirect by compliance with statutory invitation to acquire title, and were actually in defiance of the Federal Government which, through the Interior Department, refused to recognize them at an early date (see letter of commissioner to register and receiver at Guthrie, dated June 12, 1919), and the State of Texas then in control of the area, the only two possible sources of title.
(b) Good faith is not shown, because they are not taken under the sanction of any recognized Government agency, but rather in defiance of all agencies ordained by organized society, and are plainly only attempts to gamble on an unsettled legal situation.
(c) Money and labor expended under these circumstances could not be made the basis of an equity, but no expenditures of this nature were made by them on property covered by much of the leased land.
The placer-mining claims being without color of title or any showing of good faith in their initiation are mere colorless attempts to force title and form no basis for an equitable preference.
(2) Oklahoma riparian claims.-This class of claims is based on a contention of patentees on the north bank of Red River that their land would extend entirely across the stream regardless of the amount they had patented to them as shown by their field notes. This claim also, so far as it applied to the south half of Red River, was also specifically disposed of in the recent decision, and it only remains to consider its force as an equitable basis for preferential rights.
Analysis of such claims shows no equities as a basis for a preferential claim, because
(a) No color of title is shown to any land south of the medial line. The patents from the Government only give title by express grant to the area comprised in the field note of the patent, and by implication to the medial line. A claim to any land south of that line is, therefore, wholly without color of grant or conveyance.
(b) Good faith is not shown, since it is an attempted confiscation of valuable property based on no color of title and in fraud of the royalty rights of the Government under which the claim is made.
(c) Under these circumstances no equities will arise from the expenditure of money or labor which would be a deliberate gamble on a title known not to exist and in defiance of the Texas de facto sovereignty. However, even a consideration of this question is made unnecessary by the fact that all sums spent by riparian claimants in attempted development have been refunded to them under court order by the receiver in charge of the property, and that they have been given extensive adjoining property lying north of the medial line. It is further suggested that they could not claim recognition in equity, as they had induced the Government to patent to them valuable oil lands on representation that it was mere grazing land.