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Colonel ROOTE. It is not exactly so. In one sense it is entirely immaterial. We do not care anything about that, but I might explain why it was changed to October 1, 1919. After this Newton bill was introduced, I had a conference with Senator Gore and Mr. Testerman over this whole matter. We frequently met. I was informed by Mr. Testerman that he had visited the Land Department the day before, and had discussed this matter, I believe, with Mr. Finney, the Assistant Secretary of the Interior. He told me that the Land Department, meaning Mr. Finney, preferred the date of October 1, 1919, for the reason that it is in the leasing law. That is in section 19 of the leasing law, which affords relief, and which reads in part as follows:
" That any person who on October 1, 1919, was a bona fide occupant or claimant of oil or gas lands under a claim initiated while such lands were not withdrawn from oil or gas location and entry, and who had previously performed," etc.
That is the date fixed in the leasing law, and, therefore, when the next bill was drafted, having been informed by Mr. Testerman that it was the desire of Mr. Finney to have it changed, that date was used ; and Senator Harreld put that date in the bill that he introduced, which corresponds to the bill that the chairman introduced at the request of the department. In the department's bill introduced in the Senate the date of October 1, 1919, appears.
I personally had no conversation with Mr. Finney or any other official of the Interior Department with respect to that date. We found that they preferred that date, and that is the only reason that date is used in the final draft of the bill that was introduced.
Mr. DYAR. Why is it that the maximum amount that any company can get is fixed at 480 acres, which is the am int of your claim, rather than 640 acres, which, I believe, would be the amount of the Testerman claim?
Colonel RootE. It was because the Secretary of the Interior, in his letter addressed to the chairman of the Senate Committee on Public Lands, designated 480 acres, and I believe that is in the letter to the chairman of this committee. That is the only reason.
Mr. GORE. A conference was held with the Secretary at which Colonel Roote and others appeared, and Colonel Roote and others made an eloquent appeal to have the acreage changed to 480. Neither Senator Testerman nor myself made any argument at that time to have the amount raised to 640 acres. We have been down there since, and Mr. Finney has signified a willingness to have it increased to 640 acres, which would accommodate the Testerman claim.
Colonel RootE. I was just going to state that to the committee. I wanted to show that in the first bill that was introduced by Mr. Newton at my request, the acreage was placed at 2,560, because that was the amount named in the leasing law, and we were trying to follow the leasing law. If you will examine line 19, page 2, of the Newton bill, you will find that we have 2,560 acres there, and the Secretary of the Interior in his first letter recommended that no one person be permitted to obtain more than 160 acres. We appeared before him and argued the matter, and showed that while the Burk Divide Co. was interested in the three claims, the original 24 locators still owned the property. It is only leased to us, and they retained a royalty of 25 per cent. We showed that if the acreage were cut down, it would be cut down for them. The three Burk Divide claims aggregate only 480 acres for the 24 locators. They are all still interested in the property, and have a one-fourth interest in it, or more than one-fourth. They have one-fourth of the oil free from all expense. It is only about 18.3 acres per man. In the case in the Supreme Court they were joined as parties with the Burk Divide Co. Their interest
was alleged in that case, and was proven. I speak of this now because of the question propounded to me by Mr. Vaile the other day, which indicated that someone had told him and I know it has been told, or I have heard that it has been told within the last few days—that these locators of the Burk Divide claims had sold their property. They have not sold anything of the kind. They have a contract with the Burk Divide Oil Co., and they get a royalty of 25 per cent of all the oil free of expense.
Mr. BURTNESS. As a matter of fact, would it make any difference whether they had sold, or not, so far as this committee or Congress is concerned?
Colonel Roote. It ought not to make any difference. Justice is justice, and the greatest corporation in the world is entitled to justice and to no more than justice, just as the humblest citizen is entitled to justice. While on this point, I want to say that while, as you have well said, it makes no difference, the Burk Divide Company is not affiliated in any way, shape, nor form, with any other corporation in the world. It is not a subsidiary of any other corporation. Several hundred of the 1,114 stockholders live in Vigo County, Ind. Its president was born in that county, and lived most of his life on a farm near the City of Terre Haute. He is present here to-day. The secretary and treasurer of the company is the manager of a taxicab company at Terre Haute; and another director is the proprietor of a restaurant in Terre Hautė. Another is a retired farmer, and another is a lawyer in Terre Haute. Another one is a railroad employee. Another is a lumber dealer. They are honest American citizens, and they and the other stockholders have invested the huge sum of $790,000 for the stock that they hold.
Mr. DYAR. When did they acquire their interest in these claims?
Colonel RootE. I will tell you all about it. Since Major Dyar has asked for that information, and the question casts a doubt upon all these matters, I want to go into it. It was in June, or about June, 1920.
Mr. DYAR. During the law suit?
Colonel ROOTE. Just about the time the receiver was appointed. Those are the facts. The locators of the Burk Divide claims, 24 in number, and all of whom live in Tillman County, Okla., first entered into a contract with three unincorporated joint stock associations known, respectively, as the Burk Divide Oil Company, the Burk Divide Oil Co, No. 2, and the Burk Divide Oil Co. No. 3. These were little unincorporated joint stock associations. The Burk Divide Oil Company took a contract to develop the Judsonia Claim; the Eurk Divide Oil Co. No. 2 took a contract to develop the Belle Isle Claim, and the Burk Divide Oil Co. No. 3 took a contract to develop the Mary Isle Claim.
Mr. BURTNESS. Were the people who formed those associations residents near Grandfield there?
Colonel ROOTE. Yes, sir. I might explain that whole history: As I said yesterday, these original locators found that the burden was too great for them. It was more expensive to drill oil wells in that river bed than elsewhere because of the freshets, and they were afraid that it would be too great a burden to themselves to drill those wells. Therefore, they entered into this contract. It was done, however, after they had spent considerable money.' It is in evidence that they spent over $4,000. These original locators hauled
the first lumber and commenced to build the first derrick and buildings. Now, those three unincorporated companies took possession of the property as lessees of the locators. Later, in February, 1920, immediately after I was called into the case, a Delaware corporation was organized, known as the Burk Divide Oil Co. Consolidated. That corporation was organized by these Indiana gentlemen, and they bought the interests of those three companies, or of those three unincorporated joint stock associations. They paid for the stock of this Delaware corporation—it being understood at the time that these Terre Haute people were going to buy the stock, and they did buy the stockthe sum of $790,000. The Terre Haute people bought that stock, and it cost them $790,000.
Mr. RAKER. Did the Burk Divide people issue any prospectus?
Colonel RooTE. They have not even a letter-head that I know of. Mr. Pierson, the Secretary, was here yesterday, but he is ill to-day. That company has not a letterhead that I know of.
Mr. BURTNESS. Were arrangements made to sell the interests to this corporation before it was organized by those three associations?
Colonel RootE. Yes, sir; and the new company was organized to take them over.
Mr. BURTNÉSS. So that the associates in these three partnerships were really the people who promoted the sale of the property to the Indiana people?
Colonel RootE. Yes, sir. They are out and gone, and they made some profit. They were between the original locators and the present company.
Mr. RAKER. Was this stock put on the stock market? I am talking about the stock of the Burk Divide Oil Co.?
Colonel RooTE. I do not know. It may have been so. None of it has been on the stock market since this new company was formed.
Mr. RAKER. How did it come about that so many people were interested in the stock?
Colonel ROOTE. There was a number of Terre Haute gentlemen who went down and examined this property. Four or five Terre Haute gentlemen went down and examined the property and, when they came back, they told their friends about it. In that way it became known to their friends and acquaintances.
Mr. RAKER. I wonder if they told their friends and neighbors what they found down there or about the conditions as they found them?
Colonel ROOTE. I think so. They told them they thought it was a good oil property, and that they thought they had a good title to it. The Terre Haute stockholders of this company are railroad employees, lawyers, dentists, doctors, merchants, laborers, etc. All of them were acquainted with Mr. Soules, who has lived there for 60 years.
Mr. RAKER. They issued the stock and offered it to these stockholders?
Mr. RAKER. Do you know whether or not they told their friends and neighbors what the physical conditions were down there, or whether they told them that it was in litigation ?
Colonel RootE. Naturally they told them that.
Colonel ROOTE. Yes, sir; it is true that they did tell them that it was in litigation, and they told them that they had been advised by lawyers in whom they had the utmost confidence that they had the right to locate mining claims there. In my 32 active years as an advocate I have never come in contact with a case in which I had a profounder conviction of the justice of my position than I had in this case.
Mr. RAKER. When a man buys a lawsuit, he buys it with his eyes open, does he not?
Colonel RooTE. Yes, sir; that is the presumption when he buys a lawsuit or anything else.
Mr. RAKER. I am talking about the lawsuit. When he buys a lawsuit, he buys with the chance of losing?
Colonel ROOPE. Certainly he does.
Mr. SMITH. Is it not rather unusual that a company would be able to sell that amount of stock to several hundred persons without having some literature to distribute?
Colonel ROOTE. The Burk Divide Co. has its head office in the city of Terre Haute, in the home of the secretary. The books are kept there, and there has been no printed literature issued by it. The Burk Divide Oil Co., Consolidated, is the corporation that holds those contracts.
Mr. SMITH. They must have had great confidence in the officers of the company if they took the stock without knowing anything more about it than was told to them by word of mouth.
Colonel RootE. The Terre Haute people had bought stock in the three unincorporated companies long before this litogation started. Long before this litigation started they had thousands of dollars invested in those companies, They exchanged their stock in those companies, and got Burk Divide Oil Co., Consolidated, stock. They bought out other stockholders in those original companies, and they had thousands of dollars invested in those original companies before there was ever any suit filed in the Supreme Court, and before there were any legal proceedings, and before they were driven away. Mr. Soules, the president of the company, made many trips there, and he was there on the afternoon before the Texas Rangers came. When the Texas Rangers came they were connecting their pipe line, and they would have had it connected within an hour if they had been undisturbed.
Mr. Smith. Was Mr. Soules interested in those three associations?
Colonel RootE. Yes, sir; he had stock in them. He was not an officer in them, but ha had stock. The Terre Haute people had bought a large part of the stock of those three associations, and eventually they bought out the others.
Mr. RAKER. Notwithstanding this interruption of the connection of the pipeline by the Texas Rangers, who took possession of the property, these good people bought this stock and paid their money for it?
Colonel RootE. They paid actual cash for it.
Colonel RooTE. Yes, sir, They had owned some of this stock long before the Texas Rangers came, and long before this case in the Supreme Court was commenced.
Mr. RAKER. What I can not understand is why men will buy stock in a company when its source of supply is cut off.
Colonel ROOTE. It is because of the confidence they had in the officers of the company, and on account of the belief they had that they would eventually recover their property. Mr. Oscar Rohn, representing Butte, Mont., and Pittsburgh, Pa., interests, offered the huge sum of $640,000 for these claims when the case was in court. That offer was made through me. Over here sits a gentleman who came from Denver with me to make the payment. It is not unusual for a person to buy stock in a company that may be in litigation, and I might say right here—and it has some bearing on this matter-that before that offer was made they made some investigation, not only of the property
but of the legal questions involved in the case. They were of the belief that
Mr. RAKER. Let me put this up to you: If they lost anything, can they then come back and say: • We are poor, innocent people, American citizens, and should have relief" ?
Colonel RootE. No, sir; we are not playing the baby act at all. I say none of the 24 original locators was in that situation. But the people in the stock company paid actual cash for it.
Mr. RAKER. Did these second locators locate before or after this well came in?
Mr. RAKER. The placer mining locators; I am not complicating them with the original people.
Colonel ROOTE. The ones I call claim jumpers.
Mr. RAKER. Let me ask you this question, as an attorney familiar with the laws: A claim is not valid until discovery is made?
Colonel ROOTE. Yes; it is. I will show you that. I know a gentleman is here contending that that is the case. But I want to read what the Supreme Court of the United States said. You say valid.” You can not get a patent until there is a discovery, but the claim is valid. I will read you what the court said about that. I know recently, in the last few days, it has come to me a number of times that some one said that before these locators discovered oil they had sold that property. But they had never parted with the title, and there was a ruling made by the Land Departemnt many years ago that where eight persons located a claim if, before diseovery is made, seven of them sell to one, when that one then makes the discovery he can hold only 20 acres. That is all he could have located. But, of course, after the discovery is made and the claim is perfected, they can sell it.
Mr. RAKER. Probably I did not make the distinction clear in my question.
Colonel ROOTE. The claim is good without discovery. Let me read you what the court said ; that is the briefest way to explain it. I will read from my brief on page 43:
The first recognition of Congress of such right is found in the act of June 25th, 1910”
That is the Pickett Act"(36 Stat. 847), which authorized the President to make certain withdrawals of public lands, and contains a provision in these words following: •The rights of any person who, at the date of withdrawal,
is a bona fide occupant or claimant of oil-bearing lands and who, at such date, is in diligent prosecution of work, leading to discovery of oil or gas, shall not be affected or impaired by such order, so long as such occupant or claimant shall continue diligent. ”
Mr. RAKER. Right there, let me ask you this question. The court held if
Colonel ROOTE. Yes.