UC-NRLF B 3 12T b^T No. 2958. IN THE United States Circuit Court of Appeals For the Ninth Circuit — \ SouTHERX Pacific Company, et al., Appellants, vs. UxiTED States of America, Appellee. y V In Equity. BRIEF OF UNITED STATED APPELLEE. F. P. IIOBGOOD, JR. special Assistant to the Attorney General, Aitorney for Appellee. aHAHNON-eONMY, CM tANtOMf tT. GIFT or //'c^/~/C^^^^n^^y/ ^^,-•?t-^ ^ i/ V «•. » » « « . • • • INDEX SUBJECT — PAGE Introductory 1 History' of Selection List No. 89 4 The contentions 10 Identity of appellant S. P. R. R. Co. with the S. P. R. R. named in the grant of 1866 12 Identity of interest of S. P. R. R. Co. and S. P. Co 12 Relation of Kern Trading & Oil Co. to the S. P. Co. and the S. P. R. R. Co 16 Description of lands in suit 16 Rule of review in appellate courts 17 The errors assigned 22 Four main divisions of argument 23 I. Non-investigation of character of lands in suit by the government 24 II. Government had not equal knowledge of the char- acter of the lands in suit prior to patent 64 III. The lands in suit were known mineral lands 70 IV. Fraud 302 (I) Non-investigation hy government : (a) Withdrawal of 1900 '. 26 (b) Filing and rejection of list 89 28 (c) Appeal therefrom 29 (d) Request for relief from suspension order 29 (e) Special agent's instructions 34 (f) His qualifications and reports 40 (g) Order lifting suspension 48 (h) Effect of foregoing proceedings 49 (II) Government had not equal knowledge: (1) Knowledge 64 (2) Question of reliance chereon 68 (III) TJte lands were known mineral Iknds: Diamond Coal & Coke Co., ease 71 Similarity in depositioi^ of coal and oil 81 /f ri f ^ .-, INDEX — Continued SUBJECT — PAGE Congressional classification of character of lands 93 Reports of appellants' geologists concerning per- sistence of oil-sands 103 The known conditions : (A) Conditions and knowledge thereof 108 (B) Belief, general and specific 199 A. Conditions and knowledge thereof: 1. Structure of the lands in suit 108 a. Anticlinal 108 b. Significance of anticlinal structure 115 c. Relation of accumulation of oil to structure.— 117 2. Favorable situation of lands with reference to the source of oil 117 3. Evidences of oil in the Elk Hills 120 a. Introductorj^ 120 b. Seepages, etc 122 c. Significance thereof 141 d. Significance of oil sands 144 e. Knowledge of Treadwell & Owen 145 4. Seepages and oil sands in the neighborhood gen- erally 148 5. Oil development in the vicinity of the lands in suit 158 6. Geological connection between the neighboring lands and those in suit 162 7. Non-agricultural character of the lands in suit.... 191 '»' B. Belief, general and specific: General belief in the oil character of the lands in suit 201 Specific belief of appellants by its agents and servants 220 Scupham 220 Treadwell 222 Dumble 226 Owen 239 Eberlein 253 Stone 258 Burkhalter 260 INDEX — Continued SUBJECT — PAGE Kruttschnitt 261 Anderson 263 By its acts in Reserving lands from sale as agricultural lands 266 Constructing a railroad branch-line from Bakers- field to McKittrick 270 Mineral locations --. 274 Causes contributing to non-development of the Elk Hills 279 1. Suspension of the lands from entry, 2. The low price of oil, 3. The lack of transportation facilities, 4. The lack of funds for development, Summary outline of the known conditions 288 Legal effect of the known conditions 289 Authorities on false representation 291 Materiality of the non-mineral affidavits 297 (IV) Fraud: Introductory 302 Direct and positive evidence thereof 303 Stone's threats of exposure 307 Eberlein takes charge of S. P. R. R. Co.'s land office 314 Connection between exhibit 157 and exhibits 4-Sa and 4-Sb 322 Withholding production of letter of Dec. 10, 1903, from Eberlein to Chambers by appellants 329 That letter produced and set out 332 Affidavit of C. W. Eberlein dated 6/20/1904 344 Affidavit of C. W. Eberlein dated 8/31/1904 345 Lease, S. P. R. R. Co. to K. T. & 0. Co., dated 8/2/04 346 Personal letter, Eberlein to Cornish, dated 9/3/04.... 350 Details of Eberlein-Cornish conference 359 The secret file of correspondence 373 Discussion of the subject of fraud 381 Concluding summary ■. 388 Ten propositions proved by the government 397 INDEX— Continued SUBJECT — PAGE Part 2 of Brief. Development subsequent to patent of lands interspersed with those in suit 400 Successful welLs of the Associated Oil Co. in the Elk Hills 407 Diagrammatic logs showing production of oil by the Asso- ciated Oil Co. in Elk Hills 412 Daily drilling reports showing production of oil by Asso- ciated Oil Co. in Elk Hills 417 Unsuccessful wells drilled in the Elk Hills 434 The true character of the wells mentioned in "Appellants' Brief Upon the Facts" 437 Conclusion of Subsequent Development 440 Addendum. No hearing was had before the Land Officers 446 Fraudulent acts of S. P. R. R. Co., in prevention of contest over its selection of neighboring lands 447 o Table of Cases. Ainslie vs. Medlycott, 6 Yes. 13 292 Bahcock vs. DeMott, 160 Fed. 882 20 Bennett vs. Judsan, 21 X. Y. 238 292 Book vs. Justice Mining Co., 58 Fed. 106 443 Cosmos Exp. Co. vs. Graij Eagle Oil Co., 104 Fed. 20 _ _ 298, 299. 395 Colo. Coal & Fuel Co. vs. V. S. 123 U. S. 307 388 Cowell vs. Lammers, 21 Fed. 206 394 Castle vs. Wimhle, 19 L. D. 455 443 Cascaden vs. Bartolis, 146 Fed. 739 443 Diamond Coal & Coke Co. vs. U. S., 233 U. S. 236 ; 58 Law. Ed. 936, 18, 57, 70, 391 DeLaval vs. Iowa Co. 194 Fed. 423 20 Davis, vs. Weibbold, 139 U. S. 507 388 Deffehach vs. Hawke, 115 U. S. 392 388 East Tintic Cons. Min. Co. 43 L. D. 79 443 Foley vs. Kilhourne, 222 Fed. 761 19 Francouer vs. Newhouse, 40 Fed. 621 394 Harrison vs. Fete, 148 Fed. 781 20 Harper vs. Taijlor, 193 Fed. 944 20 INDEX— Continued SUBJECT — PAGE Harding vs. Randall, 15 Me. 332, 335 292 Iowa, State of, vs. Carr, 191 Fed. 257 20 Lehigh Zinc Co. vs. Bamford, 150 U. S. 665. 673 294 Lange vs. Robinson, 148 Fed. 799 443 Mastin vs. Noble, 157 Fed. 506 20 Miller vs. Chrisman, 140 Cal. 440; 197 U. S. 313 393, 442 Nevada Sierra Oil Co. vs. Home Oil Co. 98 Fed. 673 443 Santa Rita, The 176 Fed. 890 20 Smoot vs. llberxj, 10 M&W 10 292 Smith vs. Richards, 13 Pet. 25. 36,; 10 Law. Ed. 42 294 Tulare Oil & Mining Co. vs. S. P. R. R. Co. 20 L. D. 269 ___ 59. 447 U.S. vs. Marshall, 210 Fed. 595 19, 21 V. S. vs. Booth-Kelly Lbr. Co. 203 Fed. 423 20, 22, 54 V. S. vs. Minor, 114 U. S. 377; 29 Law. Ed. 110....56, 58, 64, 447 V. 8. vs. So. Pfic. Co. (D. C.) 225 Fed. 197 393 V. S. vs. Culver, 52 Fed. 81 395 Washington Securities Co. vs. U. S., 234 U. S. 76: 58 Law. Ed. 1220 - 55, 447 Other Citations. Act of Congress. July 27, 1866, 14 St. at L. 292 1 Joint Resolution, June 28, 1870, 16 St. at L. 382 2 Act of Congress, Feb. 29, 1895. 28 St. at L. 683 94 Act of Congress. June 25, 1910, 36 St. at L. 847 411 Dept. of Interior Regulation of July 9, 1894, 19 L. D. 21 3, 64, 297, 298, 446 Bigelow on Fraud, Sees. 599. 615 291 Excerpts from Judge Bean's opinion 24, 302 Kerr on Fraud and Mistake, Sees. 53-56 291, 292 Pickett Act (Act of Congress June 25, '10), 36 St. at L. 847 411 Pomeroy's Equity Jurisprudence, 3rd Ed 292, 293 U. S. Rev. Statutes, Sections 2320, 2329 '....393, 394 0&,X::::v3vsGgeC..H3 ().... 123456 123456 23456 5 456 4566 46 J 9- ' » J » , ' ' No. 2958. IN THE United States Circuit Court of Appeals For the Ninth Circuit •>v Southern Pacific Company, et al., Appellants, vs. United States of America, Appellee. > In Equity. BRIEF OF UNITED STATES, APPELLEE. Statement of the Case. This suit in equity was brought by the United States on the tenth day of December, 1910, to the end that a decree might be obtained annulling and cancelling patent No. 135 to public lands issued to the Southern Pacific Railroad Company on the twelfth day of December, 1904, and procured, as the bill charges, in the execution of a fraudulent scheme to acquire mineral lands upon the represen- tation that they were non-mineral and of the char- acter contemplated by the grant of July 27, 1866, 14 Stat, at Large 292, and the joint resolution of June s. 28, 1870, 16 Stat, at Large 382, No. 87. The immedi- ately pertinent provision is the grant to the Southern Pacific Eaih'oad, a company incorporated under the laws of the State of California of which the appellant Southern Pacific Eailroad Company is admitted hy paragraph four of the answer to be the successor in interest, of every alternate section of public land not mineral, designated by odd numbers, to the amount of ten alternate sections of land per mile on each side of said railroad passing through any state, together with suitable provisions for indemnity or lieu lands, to be selected under the direction of the Secretary of the Interior, in alternate sections and designated by odd numbers not more than ten miles beyond the limits of the primary grant in cases in which, by reason of pre-emption, reservation or prior grant or sale, there occurred a failure in the primary grant; as also the following provision : Provided further, That all mineral lands be and the same are hereby excluded from the op- eration of this act and, in lieu thereof, a like "> quantity of unoccupied agricultural lands in odd numbered sections nearest to the line of said road and within twenty miles thereof may be selected as above provided. The lands in suit, comprising about six thousand acres and including parts of sections 17 and 19 and all of sections 15, 21, 23, 25, 27, 29, 33 and 35 of Township 30 South, Range 23 East, Mount Diablo Base and Meridian, are within the so-called indem- nity limits of the grant and were, therefore, subject to selection by the railroad under the direction of 3 the Secretary of the Interior in lieu of lands within the so-called primary limits lost to the railroad by reason of any of the exceptions mentioned in the grant, provided they were not mineral lands and therefore within the exclusion of the proviso above set out. They are situated in a range of hills locally known as the Elk Hills and customarily so desig- nated and referred to in the record; and the town- ship itself is, for brevity, herein designated as ''30-23." July 9, 1894, pursuant to authority vested in him by the granting act, the Secretary of the Interior pro- mulgated the following regulation with reference to railroad selections: "Where the lands selected by the company are within a mineral belt or proximate to any min- ing claim, the railroad company will be required to file with the local land officers an affidavit by the land agent of the company, which affidavit shall be attached to said list when returned, set- ting forth in substance that he has caused the lands mentioned to be carefully examined by the agents and emplo3^es of the company as to their mineral or agricultural character and that, to the best of his knowledge and belief, none of the lands returned in said list are mineral lands." 19 L. D. 21. HISTORY OF LIST NO. 89. The Southern Pacific Railroad Company first filed in the United States Land Office at Visalia, Cali- fornia, its list of selection of the lands in suit No- vember 14, 1903 (Ex. 12 M; E. 3752). This list re- ceived the number 89 and throughout was designated as List No. 89. In accordance with the regulation of the Secretary of the Interior of July 9, 1894, supra, it was accompanied by the affidavits of the railroad's acting land agent, Charles W. Eberlein, following : State of California, City and County of San Francisco — ss. I, Charles W. Eberlein, being duly sworn, de- pose and say that I am the Acting Land Agent of the Southern Pacific Railroad Company, suc- cessor by consolidation to the Southern Pacific Railroad Company (of California) ; that the foregoing list of lands which I hereby select is a correct list of a portion of the public lands claimed by the said Southern Pacific Railroad Company, successor as aforesaid, as inuring to it to aid in the construction of the railroad of said company from Lerdo to Sumner for which a grant of lands was made by the acts of Congress approved July 27, 1866, July 25, 1868, and June 28, 1870, as aforesaid; that the said lands are vacant, unappropriated, and are not interdicted mineral or reserved lands, mid ewe of the char- acter contemplated hy the grant, being within the limits of the exterior ten (10) miles in- demnity belt, on each side of the line or route for a continuous distance of twenty (20) miles, being for the sixth (6th) section of said road, starting from a point in the N. E. 14 of Section 9, T. 28 S., R, 26 E., M. D. B. and M., and end- ing at a point in the N. E. i/4 of Section 5, T. 30 S., R. 29 E, M. D. B. and M., and that the specific losses for which indemnity is claimed are tnih^ set forth and described in said list, and that said losses have not heretofore been in- demnified in any manner. (Ink hand-writing) Charles W. Eberlein (Seal) Sworn and sii])seribed to before me this 7th day of November, 1903. Witness my hand and notarial seal. (Ink hand-writing) E. B. Ryan, Not aril Public in and for the City and County of San Francisco, State of California. (Notarial seal) (R. 3829-30). State of California, City and County of San Francisco — ss. Charles W. Eberlein, being duly sworn, de- poses and says that he is the acting land agent of the Southern Pacific Railroad Company, that he has caused the lands selected in said company's List No. 89 to be carefully examined by the agents and employees of said company as to their mineral or agricultural character, and that to the best of his knowledge and belief, none of the lands returned in said list are mineral lands. (Ink hand-writing) Charles W. Eberlein. Subscribed and sworn to before me this 7tb day of November, 1903. (Ink hand-writing) E. B. Ryan, Notary Public in and for the City and County of San Francisco, State of California. (Notarial seal) (R. 3831-3). 6 This list was rejected November 17, 1903 (E. 3756), by the Eegister and Eeeeiver for the reason that the lands mentioned in the attempted selection were embraced in the telegraphic order of the Com- missioner of the General Land Office of February 28, 1900, by which the Eegister and Eeeeiver at Visalia had been instructed to "suspend from dis- position until further orders" a large body of lands including the entire township of which the lands in suit are a part (Ex. QQQ — E. 1524-5). (Counsel for appellants referred below to this order as a "with- drawal from all forms of agricultural entry" — with- out reason, as is manifest from the words "suspend from disposition" without accompanying words of limitation or explanation.) This order was in full force and effect at the time of the filing of said list and its rejection (E. 3757). From the order of re- jection the railroad appealed December 11, 1903 (Ex. 12-N— E. 3757, 3834), to the Commissioner of the General Land Office. The township in cpiestion was, by order of the Assistant Commissioner of the Gen- eral Land Office, "relieved from suspension" Feb- ruary 11, 1904 (Ex. ZZZ— E. 1555-6, 3757,8), and February 20, 1904 (Ex. 4-A--E. 1557-8, 3757-8); also April 5, 1904 (Ex. 4-C— E. 1568-9-70), follow- ing a request of D. A. Chambers, attorney for the Southern Pacific Eailroad Company, of November 30, 1903, addressed to the Commissioner of the Gen- eral Land Office, that "a special agent be instructed to at once examine said lands" — the identical lands in suit — "and report thereon to your office." The specific directions by the Commissioner to the spe- cial agent were to "examine the lands in question and thereafter submit report to this office stating whether or not in your opinion the same should he relieved from suspension/' (Italics supplied.) February 20, 1904, the Coromissioner wrote the Eegister and Receiver at Visalia advising them that their action in rejecting the application to se- lect "was correct under conditions then existing", (November 17, 1903), but that the lands sought to be selected had been subsequently "relieved from suspension" and that "it would therefore appear that said application to select may now be granted if no other objection thereto exists. Quasi-Gontest No. 2555 is accordingly hereby closed and selection list No. 89 herewith returned for appropriate ac- tion." (Ex. 12-0; E. 3834-5, 3868-9.) The list, thus returned, was accepted by the Register at Visalia February 26, 1904, and Eberlein, the railroad's act- ing land agent, was so notified by letter dated March 5, 1904. (Ex. 12-P ; R. 3836-7, 3767, 3769-70.) Later in the General Land Office it was discovered that there were errors or informalities in the assignment of the base-lands upon whose loss the selection of the lands in list 89 was predicated and thereupon, on September 6, 1904, a new application to select ' was filed in the land office at Visalia for the iden- tical lands in the former application and now in suit, but containing a new or re-arranged assigmnent of base lands and accompanied by the following affi- davits by Eberlein, the railroad's acting land agent (Ex. 12-Q— R. 3771-2) : 8 State of California, City and County of San Francisco — ss. I, Charles W." Eberlein, being duly sworn, de- pose and say : that I am the acting land agent of the Southern Pacific Eailroad Company, suc- cessor by consolidation to the Southern Pacific Eailroaci Company (of California) ; that the foregoing list of lands which I hereby select is a correct list of a portion of the public lands claimed by the said Southern Pacific Eailroad Company, successor as aforesaid, as inuring to it to aid in the construction of the railroad of said company from Lerdo to Sumner for which a grant of lands was made by the Acts of Con- gress approved July 27, 1866, July 25, 1868, and June 28, 1870, as aforesaid; that the said lands are vacant, unappropriated, and are not inter- dicted mineral or reserved lands, and are of the character contemplated by the grant, being with- in the limits of the exterior ten (10) miles in- demnity belt, on each side of the line of route for a continuous distance of twenty (20) miles, being for the sixth (6th) section of said road, starting from a point in N. E. i/4 of Section 9, T. 28 S., E. 26 E., M. D. B. and M., and ending at a point in the N. E. 14 of Section 5, T. 30 S., E. 29 E., M. D. B. and M., and that the specific losses for wdiich indemnity is claimed are truly set forth and described in said list, and that said losses have not heretofore been indemnified in any manner. (Seal) (Ink hand-writing) Charles W. Eberlein Sworn to and subscribed before me this 31st day of August, 1904. (Ink hand-writing) E. B. Eyan, Notary Puhlic in and for the City and County of San Francisco, State of California. (Notarial seal) (E. 3847-8). state of California, City and County of San Francisco— ss. Charles W. Eberlein being duly sworn de- poses and says that he is the acting land agent of the Southern Pacific Eailroad Company ; that he has caused the lands selected in said com- pany's list No. 89 to be carefully examined by the 'agents and employees of said company as to their mineral or agricultural character, and that to the best of his knowledge and belief, none of the lands returned in said list are min- eral lands. (Ink hand-writing) Charles ^Y. Eberlein. Subscribed and sworn to before me this 31st dav of August, 1904. (Ink hand-writing) E. B. Ryan Notary Piihlic in and for the City and County of San Francisco, State of California. (Notarial seal) (E. 3850-1). Patent thereafter, December 12, 1901, numbered 135 issued to the Southern Pacific Railroad Com- pany and is the instrument annulled and cancelled by the decree from which this appeal is prosecuted. That it is based upon the selection list accepted by the Register and Receiver at Visalia September 12, 1904, and not upon the list filed while the lands were under suspension from disposition, appears from the testimony of E. C. Finney, an assistant attorney in the office of the Assistant Attorney General of the Interior Department (R. 1589). This further ap- pears from the fact that the description in the pa- tent of the lands agrees with that in the list of Sep- tember 6, 1904, but not with the description in the list filed November 14, 1903 (R. 3775-6). A photo- graphic copy of the patent was filed as Exhibit 4-G. 10 CONTENTIONS. The bill charges in substance that this patent was obtained by the fraud of appellants in falsely rep- resenting through the affidavits of the acting land agent of the Southern Pacific Eailroad Company that the lands described in it and now in suit were not interdicted mineral lands and were of the char- acter contemplated by the grant and that he, the act- ing land agent, had caused them to be carefully ex- amined by the agents and employees of the railroad company as to their mineral or agricultural char- acter and that, to the best of his knowledge and be- lief, none of them was mineral land; that the pur- pose and effect of these affidavits were to deceive the land officers of the government ; that they relied upon them and, in such reliance, issued the patent ; that all of the lands were and are mineral lands and were known to be such at the time of the proceedings which resulted in the patent; and that their true character was known to appellants. While upon this record it conclusively appears not only that the lands in suit were mineral lands and known to be such at the time of the proceedings which resulted in patent, but that the appellants, Southern Pacific Railroad Company, their officers and agents, knew their mineral character and cov- eted and sought to and did acquire them on account thereof and in defiance of the exception in the grant under which they claimed, it was only necessary that the government show by proper and relevant evi- 11 denee that the lands were known mineral lands and that appellants either knew their true character or could, by the exercise of the diligence imposed upon them by the terms of the grant and the regulation of the Secretary of the Interior and in the discharge of the duty which their relationship to the goyern- ment dictated, haye ascertained it. If the lands were known mineral lands, the affidayits in question were false; and, if they were false, the legal result is the same, whether they were knowingly false or were made in ignorance of ascertainable facts which it was the duty of appellants to know. Accordingly, the only burden resting upon the goyernment at the trial was to show by ''that class of eyidence which commands respect and that amount of it which produces conyiction" that the lands in suit were at the time of the proceedings which resulted in the patent known mineral lands and, therefore, within the exception in the grant of mineral lands other than coal and iron. It will be the purpose of this brief to demonstrate that not only was this burden borne by the goyermnent, but that the record is entirely conyincing that appellants knew the interdicted mineral character of the lands and, knowing it, falsely represented that they were non-mineral agricultural lands of the character con- templated by the grant. 12 IDENTITY OF APPELLANT SOUTHERN PACIFIC RAILROAD COMPANY WITH THE SOUTHERN PACIFIC RAILROAD NAMED IN THE GRANT OF 1866. Paragraph four of tlie ''joint and several answer of all defendants other than the Equitable Trust Company of New York," read in connection with paragraph four of the bill, would seem to establish by admission the legal identity of the appellant Southern Pacific Railroad Company and the cor- poration of like name mentioned in the granting act. If doubt remains, it is set at rest by Exhibits 11-E and 11-F, being respectively a certified copy of the articles of Incorporation and Consolidation of the Southern Pacific Railroad Company (of California), the Southern Pacific Railroad Company (of Ari- zona), and the Southern Pacific Railroad Company (of New Mexico) filed in the office of the Secretary of State March 8, 1902, and a certified copy of Amended Articles of Incorporation and Consolidation of the Southern Pacific Railroad Company filed in the office of the Secretary of State August 28, 1905. IDENTITY OF INTEREST OF SOUTHERN PACIFIC RAILROAD COIVrPANY AND SOUTHERN PACIFIC COMPANY. The Southern Pacific Company was incorporated in 1884 "for the purpose of unifying in manage- ment lines of railroad extending from New Orleans, Louisiana, to San Francisco, California, to Poi^- land, Oregon, and to Ogden, Utah." This appears from Manual No. 1 for the year 1902 of the South- ern Pacific and Auxiliary Companies issued to its officers, Ex. Ill (R. 1344). This manual was issued 13 July 1, 1902, and is from the files of the Secretary of the Southern Pacific Company. In it, on page 1344, under the caption "Controlled Properties," appears the following: "The Southern Pacific Company is the prin- cipal owner of the capital stock of the follow- ing companies and operates them under lease to it: Central Pacific Eailway Oregon and California Eailroad Southern Pacific Railroad of California Southern Pacific Railroad of Arizona Southern Pacific Railroad of New Mexico Southern Pacific Coast Railway. The Southern Pacific is also the principal owner of the capital stock of the following com- panies which are operated by their own organi- zations, yiz: Galveston, Harrisburg & San Antonio Rail- way Texas and New Orleans Railroad New York, Texas and Mexican Railway." The same manual (R. 1345), shows the following: u In March, 1902, the Southern Pacific Rail- road of California, the Southern Pacific Rail- road of Arizona, and the Southern Pacific Rail- road of New Mexico were consolidated into a new California company, the Southern Pacific Railroad Company ?? Subsequent manuals, for the years 1903 to 1909, inclusiye, constitute exhibits "JJJ" to "PPP," in- clusive (R. 1355-1462), and show the continuation throughout the period covered by them of the con- ditions of operation and control by the Southern 14 Pacific Company of the Southern Pacific Eailroad Company set out in manual number one above quoted. From the foregoing the absolute control and opera- tion by the Southern Pacific Company of all of the properties of the Southern Pacific Railroad Com- pany is beyond question. Indeed, the govermnent understands that it is not denied by appellants that since about 1885 the Southern Pacific Company has controlled and operated the Southern Pacific Rail- road Company and all of its properties, including the lands granted by the granting act in question; and that in large measure officers of the one have been throughout that period officers of the other. Fur- thermore, Mr. Julius Kruttschnitt, who testified as a witness for appellants April 7, 1913, being at that time Chairman of the Executive Committee of the Board of Directors of the Southern Pacific Com- pany, stated that from the autunm of 1901 to April 1, 1904, he was vice-president and assistant to the president of the Southern Pacific Company, being ^ located at San Francisco, and had charge of the ex- ploitation of oil lands and the production of oil for fuel purposes of the railroad company (R. 3080) and that both the president of the Southern Pacific Company and the president of the Southern Pacific Railroad Company had instructed him and those under him to go on the Southern Pacific Railroad Company's grant lands and develop oil (R. 3102). It was C. H. Markham, general manager of the Southern Pacific Company, who in 1904 insisted 15 that Eberlein execute the lease to the Kern Trading & Oil Company of Southern Pacific Railroad Com- pany lands, (Exhibits II— R. 1050-1; KK— R. 1053- 4-5-6; LL— R. 1059-60; MM— R. 1061; NX— R. 1063- 4; QQ— R. 1069; RR— R. 1070-1). W. D. Cornish was in 1903 and 1904 vice-presi- dent of the Southern Pacific Company and the su- perior officer of Eberlein, the Southern Pacific Rail- road Company's acting land agent (R. 1091, 1132; also R. 1095-6). E. E. Calvin was vice-president and general man- ager of the Southern Pacific Company and called upon Eberlein for lists of lands of the Southern Pacific Railroad Company (R. 1098). Eberlein, the railroad company's acting land agent, had a room and desk at 120 Broadway, New York City, the New York office of the Southern Pacific Company (R. 1271). There was only one law department, that of the Southern Pacific Company '^ presided over" by William F. Herrin^ and it was as well the law de- partment of the Southern Pacific Railroad Company (R. 1310). It is needless to further multiply references to the record to prove the palpable fact that the South- ern Pacific Railroad Company was dominated and controlled b}^ the Southern Pacific Company and that the officers of the latter did as thev listed with 16 the properties of the former. Indeed, Mr. Kriitt- sclinitt admitted that every share of the stock of the Southern Pacific Railroad Company was owned by the Southern Pacific Company (R. 3087-8). RELATION OF THE KIERN TRADING & Dili COMPANY TO THE SOUTHERN PACIFIC COMPANY AND SOUTHERN PACIFIC RAILROAD COMPANY. The Kern Trading & Oil Company was organized May 22, 1903, and was then and since then has at all times been owned by the Southern Pacific Company. It first appears in the manuals of the "Southern Pacific Company and Auxiliaries" for the year 1903 (R. 1357-8) and is carried in all subsequent manuals. Mr. Kruttschnitt testified that it and the Rio Bravo Oil Compam^ "were really departments of the com- pany (Southern Pacific Company) for exploiting oil lands and producing oil for fuel purposes — for fuel for the railroad." The government understands that it is conceded by counsel for appellants that the company was no more than the "fuel department" of the Southern Pacific Company and that its officers and servants were chosen and its acts and opera- tions directed and controlled solely by the latter company. DESCRIPTION OF LANDS IN SUIT. The Elk Hills, in which lies the township of which the lands in suit are odd numbered sections of the southern half, is a range of hills in Kern County, California, approximately sixteen miles long and of six or seven miles maximum width. Rising rather 17 abruptly from the San Joaquin valley on the east side to an elevation of a thousand or twelve hundred feet and separated from the neighboring Buena Vista Hills to the south bv a relativelv level vallev fc' «,' •/ lying somewhat to the southwest, their trend is northwest and southeast and they are plainly seen from McKittrick, Taft and Maricopa, towns often referred to in the record and situated in the midst of developed oil fields. The region is one of low rainfall, the average yearly precipitation being only two inches, and is a broken, semi-arid desert. Erosion there is very slight, insomuch that it appeared at the trial in 1912 that these hills were then in es- sentially the same condition as during the period of the proceedings that resulted in patent (R. 688-9. Veatch; 1004), with the exception of such changes as had been wrought by the hand of man. The Temblor range is the principal uplift in the sur- rounding country and the Elk Hills at their west- erly end are within a short distance of it. More de- tailed description of the geographical and other con- ditions may be found in the record in the testimony of B. K. Lee at pages 225-6, S. P. Wible at pages 320-1, and F. O. Martin at page 612. THE RULE OF REVIEW IN APPELLATE COURTS. The govermnent is mindful of ''the dignity and character of a patent from the United States" and that it is not to be lightly set aside. It is fully ad- vertent to the decisions which require that, to can- cel and annul such an instrument, the government shall bear the burden of proof and shall sustain it 18 by that class of evidence which commands respect and that amount of it which produces conviction. It is confidently submitted that, in determining that this burden was supported and that the material allegations of the bill were proven at the trial by evidence of the class and amount prescribed and in rendering in favor of the United States the chal- lenged decree, the trial judge committed no error. In the case of Diamond Coal & Coke Co. vs. United States, 233 U. S. 236; 58 L. Ed. 936, as in every other case in which the government has sued to set aside a patent, the solemnity of the government's own assurances of title has been stressed by those resisting the decree of annulment and rescission ; and it is not novel that insistence in the instant case is directed to this ]3oint. It is to be presumed that the trial judge gave due consideration to this rule so elaborately invoked below and now here and came to the conclusion that the govermnent had proved its case by evidence quantitatively and qualitatively responsive to the requirement of the pertinent for- mula. At the time of preparing this brief the govern- ment has not the benefit of an examination of the brief of appellants which, under the rules, is not required to be filed more than fifteen days before argument. The record is so voluminous that it is impossible for the government to postpone the preparation and printing of its argument to the narrow interval between the times fixed by the rules 19 for filing the respective briefs of the parties. Ac- cordingly, what the reliance of appellants will be can only be determined at this time by a considera- tion of their assignment of errors. It may be fairly assumed, however, that this court will not be asked to disturb the lower court's findings of facts in the absence of a showing that there is in the record no substantial basis upon which to predicate such findings. The pertinent rule has been often enunci- ated, but never more clearly nor succinctly than by this court in Foley vs. KiJhoiinie, 222 Fed., 761, where it is said: "It is the established rule that the findings of the trial court in a suit in equity must be taken as presnmptivelij correct and that, unless an obvious error has intervened in the applica- tion of the law or some serious or important mistake has been made in the consideration of the cA'idence, the findings will not be disturbed by the appellate court. ij The foregoing was a suit to set aside a patent ob- tained by fraud. In United States vs. Marshall, 210 Fed., 595, 597, in the eighth circuit, also a suit to set aside a patent fraudulently obtained, the emphasis is placed upon the necessity that error, to be reversible, must be "manifest", "obvious", "palpable", "serious"; but, in the last analysis, the decisions in all of the courts and in all of the circuits amount to the same, viz., that the findings of the trial court are "presumptive- ly correct" and will not be disturbed except upon a plain showing that they are not only against the 20 weight of the evidence, but that no substantial basis for their support is afforded by the evidence. Harrison vs. Fete, 148 Fed., 781 Mastin vs. Noble, 157 Fed., 506 State of Iowa vs. Carr, 191 Fed., 257 Harper vs. Taylor, 193 Fed., 944 DeLaval vs. Iowa Co., 194 Fed., 423 Babcock vs. DeMott, 160 Fed., 882. But it may be contended that, in view of the fact that the testimony was taken in the instant case be- fore an examiner, no presumptions attend the find- ings of the trial court and that this court is in as favorable position to pass upon the credibility of the witnesses and glean the truth in the midst of conflict as the lower court; and The Santa Rita, 176 Fed., 890, and United States vs. Booth-Kelly Lumber Co., 203 Fed., 423, 429, will doubtless be cited in support. It is sufficient to say that in the former, an admiralty case, the holding is that, when the evidence of the principal witnesses was by written depositions, the rule that "the trial court is better able to reach a satisfactory conclusion than the appellate court * * * does not apply with the same force.'' In the Booth-Kelly Lumber Company case the court indicates that, when the evidence is taken before an examiner and not before the trial judge, the latter 's findings "are not attended with presumptions" which attach when the judge "has the opportunity to observe the demeanor of the witnesses". By the language quoted it is submitted that Judge Gilbert did not intend to say that under such circumstances 21 no presumption of correctness attends the findings of the trial court; for in such case the lower court would, as suggested by the eighth circuit in United States vs. Marshall, 210 Fed., 595, 597, be no more than ''a mere conduit". As there stated, "the ques- tion is not so much one of situation to decide as of where the law places the primary determination of questions of fact. While no doubt the circumstance that the district judge personally heard the wit- nesses tends to strengthen the presumption in favor of his conclusion, the fact that he did not hear such witnesses, but that the proofs before him were en- tirely by deposition or upon examiner's report, does not destroy the presumption. Such still exists in favor of his conclusions. To hold otherwise would be in effect to make this a court of first instance. The district court is not in such matters a mere conduit. It, not this court, is the trial court. Our func- tions are simply to guard against manifest error on its part and this is true whether such arises upon hearing witnesses or upon reading a record." Measured solely by relative situation, the appel- late court, in cases in which the evidence is taken by an examiner, is not nearly so favorably situated as the lower court for the reason that under the new rules of practice in equity the testimony by questions and answ^ers is not seen by the appellate court, but only a condensed statement of it in nar- rative form. The advantage that arises out of read- ing the questions and answers, especially of the cross examination, is obvious; and the wisdom of a 22 rule, the effect of which is to take away this advan- tage, would be gravely questionable unless the find- ings of the trial court are to be held presumptively correct and are not to be disturbed in the absence of *' manifest", "obvious", "palpable" error. If the trial court is "a mere conduit" through which to transmit to the appellate court the evidence upon which a determination shall be reached, that evi- dence ought surely to be sent up unimpaired and un- diminished so that the court may have all the bene- fits open to the forwarding agency. But the gov- ernment does not understand that such was the de- cision in The Santa Rita or in United States vs. Booth-Kelly, supra, the effect of these decisions being merelv to indicate that in the one case the pre- sumption of correctness, while still obtaining, is merely not as strong as in the other. THE ERRORS ASSIGNED. Assignment number one presents this question: Did the United States prior to patent investigate and ascertain the true character of the lands in suit — did the government adjudicate their non-mineral character? Assignments numbers two and five present, in effect, the same question, viz. : Had the United States equal knowledge with appellants of the true char- acter of the lands'? Assignments numbers three, four, six, seven, eight and nine present, in somewhat varying form, two questions, viz.: 23 1. Were the lands in suit at the time of the pro- ceedings which resulted in patent knoivn mineral lands? ' 2. Did the railroad company's acting land agent falsely and fraudulently represent to the land de- partment of the government that he had caused the lands in suit to be carefully examined as to their mineral or agricultural character and that they were not interdicted mineral lands, but non-mineral agri- cultural land of the character contemplated by the grant ? It will be readily seen that the answer to the sec- ond question is largely dependent upon the solution of the first; for, if the lands were known mineral lands, it would follow that the affidavits filed by ap- pellants were false. Assignment number ten presents the general ques- tion of the validity of the assailed patent and its solution depends upon the answers to the x>articular assignments. In the ensuing argument the questions so pre- sented will be discussed under the following main divisions, each of which will be divided into such sub-topics as the nature and details of the evidence may require: I. The government did not prior to patent investigate and ascer- tain the true character of the lands in suit and did not determine nor adjudicate them non-mineral in character. II. The government had not prior to or at the time of patent equal knowledge with appellants of the true character of the lands in 24 suit and therefore had the right to and did rely on their verified proofs. III. The lands in suit were, at the time of the proceedings re- sulting in patent, known mineral lands. IV. The proofs by appellant Southern Pacific Railroad Company of the character of the lands in suit offered in connection with its selec- tion thereof were false and were fraudulently made and were cal- culated and intended to and did deceive the land officers of the gov- ernment. I. THE GOVERNMENT DID NOT PRIOR TO PATENT INVESTIGATE AND ASCERTAIN THE TRUE CHARACTER OF THE LANDS IN SUIT AND DID NOT DETERMINE NOR ADJUDICATE THEM NON-MINERAL IN CHARACTER. Upon this question Judge Bean's opinion lias the following : "At the time the selection list was first filed the lands in controversy, together with a large area of other lands, were within a previous with- drawal order of the department because of their probable oil content. At the request of the de- fendant company the department ordered an examination of the lands applied for by a special agent to ascertain whether they should be relieved from suspension and upon his re- port the suspension order was revoked as to these lands and they were subsequently patented to the defendant. The claim is made that the department, in issuing the patent, relied upon the report of its own employees as to the char- acter of the land and not upon the affidavit accompanying' the selection list. The evidence shows that the agent making the examination and report was not an oil or mineral expert and was instructed by his superior in the Land 25 Office that 'it would be unnecessary to go over all the lands, but to drive over part of them "as the crow flies" and to interview ranchmen, stockmen, etc, as to the location of oil wells pro- ducing oil in paying quantities' and to 'recom- mend that those lands be relieved from sus- pension on which he found no oil wells pro- ducing oil in paying quantities'; and that he acted accordinsrlv and made no examination whereby he determined or could determine whether in fact the lands were mineral in char- acter. In his report he said that he 'found no oil seepages, oil springs or other indications of oil or mineral of any kind that would tend in his opinion to warrant' the lands being classi- fied as mineral in character and, therefore, recommended that they he relieved from sus- pension. ''These proceedings were in no sense an adjudication, hut a method adopted hy the department for determining whether its pre- vious order of withdraival shoidd he revoked and the lands opened to entry. They did not es- tablish the non-mineral character of the lands nor relieve the company from the consequences of suhmitting false and misleading affidavits and proof upon tvhich the land officers ivere ex- pected to and no doubt did rely in issuing patents. >y The foregoing excerpt shows that the trial court considered the very question now raised by appel- lants and found against them. Unless, then, it plainly appears that in this finding there was mani- fest, palpable error and that there is no substantial support of it in the record, under the rule already discussed it Avill not be disturbed by this court. However, the government is far from being com- 26 pelled to fall back upon the doctrine of "presump- tive correctness", since the record abundantly shows that the finding is not onl}^ amply supported, but that it was inevitable and is inescapable. A proper review of the pertinent facts involves consideration of the following: (a) The withdrawal order of February 28, 1900. (b) Filing and rejection of selection list 89. (c) The appeal of the railroad company from the order of rejection. (d) The railroad's request that the lands in suit be relieved from suspension. (e) The instructions to special agent Ryan. (f) S|)ecial agent Eyan's qualifications, in- vestigation and reports. (g) The order of the Commissioner of the General Land Office relieving the lands in suit from suspension. (h) The effect of the foregoing proceedings. a. The withdrawal or suspension order of February 28, 1900. The so-called withdrawal of Februarv 28, 1900, was a telegraphic order from Binger Hermann, then Commissioner of the General Land Office, to the Register and Receiver at Visalia to "suspend from disposition until further order" forty-five entire townships including the one in which are situated the lands in suit (Ex. QQQ— R. 1524). This order was, in terms, a suspension from all forms of acqui- sition. 27 E. C. Fiimej^ a witness for the government, testi- fied as to the circumstances and history of this order of suspension. At the time of testifying this wit- ness was an assistant attorney general in the In- terior Department; he had served eleven 3''ears as a clerk and examiner in the mineral division of the General Land Office, that division being known as division "N" and its correspondence exclusive!}^ bearing the letter "N"; for the three next succeed- ing years he had served as a member of the board of law review, reviewing letters and decisions pre- pared for the signature of the Commissioner ; served during the year 1909 as assistant to the Secretary of the Interior; thence and until May, 1911, he was .chief law^ officer of the reclamation service; Novem- ber 1, 1911, he became an assistant attorney general in the Interior Department; during his long service he had become very familiar with the practice of the land department (R. 1581-2). With reference to Exhibit QQQ, the suspension order now under con- sideration, Mr. Finney stated that the effect given it in the General Land Office was that it ivas a suspen- sion from all forms of acquisition, both mineral and non-mineral (R. 1582). It was issued in response to representations made to the General Land Office dur- ing 1899 and 1900 that, unless large areas in Cali- fornia were suspended from entry, agricultural pat- ents would be obtained thereto before opportunity was afforded for ascertaining whether or not they contained oil (R. 1581-2). That this order was in force when selection list 89 w^as first filed is not dis- puted. 28 b. Filing and rejection of selection List 89. C. W. Eberlein at the instance of E. H. Harriman, then president of the Southern Pacific Company and the Southern Pacific Eailroad Company, came to San Francisco in June, 1903, to take up the matter of consolidating and reorganizing certain land grants in which appellants were interested (R. 1037). After his arrival Mr. Julius Kruttschnitt, vice-president and general manager of the Southern Pacific Com- pany, asked and insisted that he accept the position of acting land agent of the Southern Pacific Railroad Company. He did so and entered upon the dis- charge of the duties of that office August 3, 1903 (R. 1037), which involved "full charge and control of all the granted lands of the compan}^" (R. 1039-40). November 14, 1903, Eberlein filed in the land office at Visalia the original selection list number 89, desig- nated here as "original" for the reason that two lists were filed before patent and bore the same num- ber, 89 (Ex. 12-M). This so-called list is labeled "Lands selected by the Southern Pacific Railroad Company, Indemnity Limits, Main Line," and is dated November 7, 1903. It was accompanied by the non-mineral affidavits set out in full on page 3 of this brief. November 18, 1903, this selection list was rejected by the Register and Receiver on the ground that the lands applied for were embraced in the Commission- er's order of suspension of February 28, 1900 (R. 3756-7). That this action was in conformity with 29 the rules of the department in like cases apx)ears and is stated and admitted by the Washington attorney of appellants, D. A, Chambers, in a letter from him December 16, 1903, to W. F. Herrin, general counsel of the Southern Pacific Company and Southern Pa- cific Bailroad Company (R. 1483-4.) That a patent would not issue in the face of the outstanding sus- pension was known to the railroad, as is shown by the letter- of December 9, 1903, from W. F. Herrin, general counsel, to Eberlein, the acting land agent, which is quoted by Eberlein in his letter of December 10, 1903, to Chambers (R. 1577). In it Herrin is quoted as saying: "The best course, it seems to me, was to accompany the selection list with affidavits setting forth that the lands are vacant and unappro- priated non-mineral lands and asking that the order of suspension he released" (R. 1578). c. Appeal of the railroad from the order of rejection. From the rejection of list 89 the railroad appealed December 11, 1903, to the Commissioner of the Gen- eral Land Office and the appeal, together with the papers in the case, was forwarded the same day to Washington by Geo. W. Stewart, the Register (Ex. 12-N-R. 3767). d. The railroad's request that the lands be relieved from suspension. As already noted, an appeal was taken from the order of rejection and was forwarded to Washington December 11, 1903. This appeal was taken by the Q law dej)artment of the railroad b}^ W, F. Herrin, general counsel of the Southern Pacific Company and Southern Pacific Railroad Company, and not by the land department or Eberlein, the acting land agent (R. 1577-8). It would seem that the papers were prepared by Wm. Singer, an eminent attoruej^ connected with the railroad company. The specific purpose of this appeal does not appear nor does it appear that it ever came on for hearing before the Commissioner. Such action as was taken with refer- ence to it Avill be discussed later. A copy of the appeal was sent by Herrin to Cham- bers, the Washington attorney, December 9, 1903, two days before the appeal w^as filed in the local land office at Visalia (R. 1577). Replying December 16, 1903, to the letter enclosing such copy. Chambers called the attention of Herrin to the fact that an effort had been previously made to have the late Commissioner of the General Land Office, Dinger Hermann, revoke the outstanding suspension order of February 28, 1900, but that "the best he would do was to direct his special agents to examine and report on all lands within railroad limits in southern Cali- fornia" (R. 1483). Prior to the filing and forwarding of the appeal, viz., November 30, 1903, Chambers had addressed a letter to the Commissioner in which, referring to list 89 and the lands described in it, he called attention to the fact that the lands had been suspended February 28, 1900, but that "an examination of the tract books 31 in your office fails to sliow the entry of a single acre of these lands under the act allowing entry of lands valuable for oil"; and further writing as follows: ^'Upon my request of October 7, 1903, your office wrote me October 23d (Quasi contest 1997 and 1998) 'that an investigation' of other lands described (among them the SW14 Sec. 1 of said T. 30 S., K. 23 E.) 'will be made by an agent of the office and upon receipt of his report appro- priate action will be taken upon the application of the company to select same '. I, therefore, re- spectfully ask that a special agent be instructed to at once examine said lands and report thereon to your office" (Ex. VYA^— R. 1545). On the 7th day of October, 1903, Chambers had made similar representations concerning other lands which the railroad company was attempting to select and which were in the suspended area and had asked that a special agent be instructed to report on them ; so that the suggestion of a report by a special agent originated witli Chambers and not ivith the Commis- sioner (Ex. SSS: R. 1539-40). When these letters were received in the General Land Office they were referred to the witness Finney who testified that^ upon receipt of them, particularly that of November 30, 1903, having prepared for the signature of the Commissioner a reply to that of October 7th, he w^ent to the Chief of Division P, in charge of the field force, and "asked for the name and address of a special agent to make a field investi- gation of the lands included in the order of suspen- sion in California with a view to obtaining inf orma- 32 tion upon wliicli the General Land Office might determine the advisability of either coyit inning or revoking the siispensioyi order" ; the only intention at that time deing to determine whether the suspen- sion shoidd he lifted or not; "it was my purpose, if the special report so warranted, to prepare for the approval of the Commissioner a letter restoring the lands to general and appropriate disposition and entry, selection and filing under the law applicable to them; if the report showed good reason for con- tinuing the suspension orcler^ it was my purpose to prepare letters denying the request of the attorney for the railroad company and advising the Register and Receiver that the suspension would be con- tinued" (R. 1582-3). December 16, 1903, in a letter to W. F. Herrin, general counsel of the Southern Pacific Company and Southern Pacific Railroad Compan}^, D. A. Chambers, the Washington attorney, referring to the suspension of February 28, 1900, wrote that the rejection by the Register and Receiver of list 89 was in conformity with the rulings of the Department in like cases. He further wrote that he had endeavored to secure from Commissioner Dinger Hemiann the revocation of the order of suspension, but that "the best he would do was to direct his special agents to examine and report on all lands within railroad limits in southern California." He further stated that he had never been able to learn that any report was ever made by special agents. With specific reference to list 89 he wrote: "As to the lands in 33 this list 89, on the 30th ult. I requested the Com- missioner to have an investigation of them made immediately by a special agent and on the 10th inst. he advised me that a special agent had been in- structed to examine and report on them. ' ' It did not seen advisahle to him '^to take steps to get a hearing" (E. 1483). December 10, 1903, Chambers wrote Eberlein that he had requested the Commissioner to "have an investigation made by a special agent of his office without delay of the lands named in the application list"; and further: "I am now advised by this letter of the tenth instant that he has directed such ex- amination to be made. I presume that the special agent is Mr. Ryan, but I am not advised positively about this." (R. 1482.) January 13, 1904, Chambers wrote Eberlein a let- ter in which he states with reference to his action in ordering that a report be made on the lands in list 89: "But inasmuch as patent cannot issue until the Commissioner relieves them of suspension, it seems to me that what has been done here will hasten the adjudication of the lands as non- mineral and their patenting to the company. That was my object." (R. 1486, 1488.) In the same letter Chambers writes that he has been confidentially allowed to read the Commis- sioner's letter of December 10, 1903, to Special Agent Ryan and that it "suggests that he now report 34 whether there is aiw necessity for the continuance of the suspension of any of the lands in three dis- tricts." (R. 1488.) e. Instructions to Special Agent Ryan. Exhibit WWW (R. 1547-8) is the Acting Com- missioner's letter of instructions to special agent Eyan. Because of its importance it is here set out in full and follows : DEPART^^IEXT OF THE INTERIOR General Land Office N. Washington, D. C. H. G. P. E. C. F. December 10, 1903. Address only the Commissioner of the General Land Office. Mr. E. C. Ryan, Special Agent, General Land Office, Los Angeles, California. Sir: By letter of this office dated October 23, 1903, in case of ex parte Southern Pacific Railroad Company, Quasi-Contest 1997 and 1998, you were directed to proceed to and examine the SE14 Sec. 23; SWi/4 Sec. 27; T. 32 S., R. 25 E.; and the SW14 Sec. 1, T. 30 S., R. 23 E., said tracts having been applied for by the railroad company and to submit report to this office stating whether or not in your opinion same should be relieved from the suspension placed thereon bv telegrams "P" of February 21st and 28th, 1900. The Southern Pacific Railroad Company has now recpiested that the following lands be also examined in order that same may he relieved from suspension and made subject to selection by the company, being within the indemnity 35 limits of its grant, if such examination dis- closes that same are agricultural in character. It is stated that nearly four years have elapsed since the order of suspension and that no mineral entries have been made for any of said lands. The lands referred to are described as follows: All of section 15; NE14 and BWV^ Sec. 17; NE14 and SWy, Sec. 19; all of sections 21; 23; 25; 27.- 29; 33, and 35, T. 30 S., E. 23., M. D. M. You are accordingly directed, when you make examination of the lands first described, to also examine the tracts just enumerated and to promptly thereafter submit report as to whether or not in your opinion scone should he relieved from suspension. This office has no available force from which to assign you assistance at the present time. With this condition of affairs in view, you will make report based upon the examinations here- tofore made, your knowledge of the lands re- maining to be examined, and familiarity with the country generally, as to whether in your opinion there is any necessity for the continu- ance of the suspension of the lands in the Visalia, San Francisco and Los Angeles land districts suspended by this office in 1900, and not reported upon, a list of which you have. Very respectfully, J. H. FlMPLE^ WPW 7 Acting Commissioner. (R. 1547-8.) The ''letter of this office dated October 23, 1903," referred to in the foregoing reads as follows (Ex. UUU; R. 1542-3): 36 N. Departmext of the Ixteeioe, hoc ECF General Land Office HOP Address only tlie Commissioner of the General Land Office. Washington, D. C. October 23, 1903. Southern Pacific P. P. Co., Ex parte. Quasi contests 1997 & 1998. Mr. E. C. Pyan, Special Agent, General Land Office, Los Angeles, California. Dear Sir: The Southern Pacific Pailroad Company has filed application in the Visalia land office to se- lect the SE14 See. 23, the SW14 Sec. 25 and the SW14 Sec. 27, T. 32 S., P. 25 E., M. D. M., and the SW14 Sec. 1, T, 30 S., P. 23 E., M. D. M. The lands in the above named townships were suspended from disx30sition under the agricul- tural land laws on account of their alleged min- eral (oil) character bv telegrams "P" of Feb- ruary 21st and 28, 1900. It is alleged by the railroad company that the tracts above described are in fact non-mineral in character. You are therefore directed, in the regular order of busi- ness, to proceed to and examine the lands in question and thereafter suhmit report to this office stating whether or not in your opinion the same should he relieved from suspension. When making report please refer to Quasi contests 1997 and 1998. Very respectfully, J. H. FnrpLE, WPW 7 Assistant Commissioner. It will be observed that these letters were written December 10, 1903, and October 23, 1903, respect- 37 ively, aucl therefore before tlie receipt in Washington of the appeal which, as heretofore noted, was filed at Visalia December 9th and forwarded the same day to the General Land Office. That the railroad's effort and request were to have the lands ''relieved from the suspension placed tJiereon by telegram 'P' of February 21 and 28, 1900", and that By an tvas directed to " sutmit report as to tvlietlier or not in your opinion same should he relieved from suspension" are the pertinent pro- visions of his instructions. This ivas the end and purpose in view — what u-as sought hy the railroad and ordered hy the Commissioner. The manner and method to be employed and fol- lowed are set out plainly in the last paragraj)h of this letter and demonstrate the singleness of purpose and object already shown. The foregoing letters constitute the written in- structions to Eyan. He also had verbal instructions which were given by one Pollock, who was then chief of the field service. Ryan testified as a witness for the government (R. 1598) and stated in detail these verbal instructions which he said w^ere given him about the last of September, 1903, prior to his written instructions. Pollock told him that the lands in suit and other lands upon which he was directed to report had been suspended about four years and, in answer to the protest of the witness that it would be impossible for him to go over all of the lands without a camp outfit, stated that he could not fur- 38 nish him with the outfit, htd that it was not necessary for the witness to go over all the lands; that he could drive over part of them ''just as the croiv flies" and interview ranchmen and stockmen as to the location of oil ivells producing oil in paying quantities. Pol- lock til en instructed Ryan to recommend that lands on which he did not find wells producing oil in pay- ing quantities he relieved from suspension (R. 1597-8). His instructions tvere to examine all of the lands under suspension which included about tiventy- five townships (E. 1598). Ryan had no instructions, either oral or written, to determine speeificalh' the mineral or non-mineral character of the lands upon which he was directed to report (R. 1601). He understood definitely from Pollock that the only thing on tvhich he was to report was 'Whether or not he found oil in paying quantities and stated that that was all he was looking for (R. 1606). E. C. Finney, an assistant attorney general in the Interior Department, who in one capacity or another had been (connected with that department more than fifteen years, testified that prior to the request by the railroad for a report on those lands there was a feeling in the department that many of these lands which had been under suspension for some time should be relieved unless there was real showing in the way of exploration; that he himself had noted several instances of the rejection by the Register and Receiver of railroad selections and applications for H9 homestead entries and tbought that, if the agents' reports showed no good reason to the contrary, the lands should be restored to general disposition (R, 1591). He also stated that the order of suspension of February 28, 1900, covered all forms of disposi- tion and that, during its pendency, no entry or selec- tion could he allowed (E. 1591). Accordingly, it was the purpose of the witness, in preparing the letter of instructions to Eyan, and of the Commissioner, in approving and signing it, to obtain general infor- mation derived from a general examination of the lands and from whatever knowledge Eyan might be able to acquire or had already acquired (E. 1586). The Commissioner's purpose was to acquire general information to guide him in restoring the lands to general disposition so that desert lands claimants, forest lieu selectors, mineral claimants or any other qualified citizens might apply to select or enter the lands under the applicable laws upon submitting the proofs of the character required by the law and regulations ; that there was no attempt to adjudicate the character of any particular tract of land in any of the letters which he prepared or with which he had to deal; that consequently there was no effort to send a person with special scientific qualifications to determine the character of the lands; and, in fine, that the revocation of a suspension teas regarded and treated as a mere restoration of the lands to their former status. (E. 1587). Finney was the official to whom was referred for appropriate action the letter of November 30, 1903, 40 of Chambers, the Washington attorney of the Southern Pacific Eailroad Company (Ex. VVV — R. 1544-5), to tlie Commissioner asking that "a spe- cial agent be instructed to at once examine said lands and report thereon to your of&ce." He testified that, when, as already set out, he sought the name and address of a special agent to make a full inyesti- gation of the lands included in the order of sus- pension, he did so with a yiew of obtaining infor- mation upon which the General Land Office might determine the adyisability of either continuing or re- yoking the orders in question. The letter of instructions of December 10, 1903, from the Acting Commissioner to Ryan (Ex. WWW — R. 1547) was prepared by Finney and bears his initials— "E. C. F." (R. 1586.) It is for this reason that so much of the testimony of this witness has been set out, bearing, as it does, directly upon the question of the written instructions by which Ryan was goyerned. f. Special agent Ryan's ctualifications, investigations and report. 1. His qualifications : Ryan was a special agent of the General Land Office stationed at Los Angeles. He was neither a geologist nor mineralogist (R. 1597) and himself testified that he woidd not have known a gas hloiv- out if he had seen it (R. 1605). He had gone to Los Angeles in October, 1899. He first went into the oil fields at Bakersfield probably in 1900 or 1901. Afterwards he was at McKittrick for a while, "pass- 41 ing in and out." He was there probably twice or oftener in 1903 "to look over the suspended lands." (R. 1601.) The foregoing is the "short and simple annals" of the special agent's qualifications as disclosed by the record and as brought out both on direct and cross-examinations. It is manifest that there can be predicated upon them no special fitness to pass upon the difficult problem of determining the mineral character of land and that the land department of the government, in sending him into the oil fields, did not expect to be informed by him as to whether the lands upon which he was to report were actually oil lands or chiefly valuable for agriculture. Indeed, there is direct testimony that "there was no attempt to send a person with special qualifications to determine the character of the lands." (Finney — R. 1587.) 2. His investigation: Only two witnesses testified as to w^hat Ej^an actu- ally did — he himself and D. W. Maddux, a witness for appellants, who drove the team in which Ryan made his trips of invcvstigation of the presence of "oil wells producing oil in paying quantities." From Ryan's testimony the following appears: The examination was begun in January, 1904. Ryan and Maddux made McKittrick headquarters and Ryan was engaged about three days in the ex- amination of the EUi Hills (R. 1602). He first went 42 to a point where he could look over the lands and looked around for oil . wells, but did not see any. (It will not be disputed that, while an oil well itself cannot be seen afar, the derrick with which every producing oil well in California is crowned is of commanding height and size and, when there is no obstruction, can be seen for miles.) He did not go over everv section of land — only four or five of them (E. 1598), The land was very rough and it was physicallv impossible for him to get over all of it. He did not examine the land with reference to oil seepages or oil sands. He looked for them along the road which he followed, but found none. There might have been some on the lands at places which he did not see; but he was not instructed to go over every legal subdivision (R. 1599). He probably got over half of the townships in the twenty-five upon which he reported and interviewed people relative to the oil wells that might be there (R. 1599). According to instructions he interviewed stockmen, cattlemen and anyone whom he chanced to meet along the line as to both the lands which he^ traversed and those upon which he did not go (R. 1600-1). His exammation was made for tlie purpose of ascertaining if there were oil wells and, finding none, he reported according to instructions (R. 1603). He did not go upon much of the land in the Elk Hills; but, finally coming to the command- ing eminence already mentioned, he could see no development. He made no inquiries concerning the Elk Hills, though Maddux may have told him some- thing about them (R. 1604). (It will not be dis- 43 puted that at the time in question there was no development in the Elk Hills.) He made no ex- tensive examination of the lands and did not go on much of it — just looked along the road, ''his cri- terion being oil in paying quantities" (R. 1605). From Maddux' testimony the following apepars: The witness accompanied Eyan as a sort of pilot and his recollection was that thev were in the Elk Hills three or four days (R. 1972). Ryan did not tell him that he was looking for oil derricks and the onlv information that he gave was that his business was to inspect the odd-numbered or railroad sections. Witness observed no mining work in progress in the Elk Hills (R. 1973). but saw many location notices. If there is anv real conflict in the testimonv of these witnesses as to the number of days spent in the Elk Hills, it is clearly resolved in favor of the statement of Rvan in his letter of Januarv 22, 1904, in which, reporting to the Commissioner, he states that his examination covered five days, Januarv 10, 11, 12, 13 and 14. Maddux himself on cross-ex- amination admitted that, if the entire exami- nation covered but five davs, onlv two of them were spent in the Elk Hills (R. 1972-3), two days being consumed in joux^ne^dng to and from Mari- copa. Manifestly, Ryan's memory of the period of the examination during the very month in which it was made was more reliable than Maddux' could possibly have been eight years afterwards ; and there is no suggestion that Ryan at the time of making 44 his report had reason to understate the duration of his work. 3. His report: January 22, 1904, special agent Ryan transmitted a written report to the Commissioner of the General Land Office concerning the lands described in the letters of the Acting Commissioner already set out. That report is Exhibit XXX (R. 1550) and follows: 88085 Department of the Ixterior General Land Office Los Angeles, Cal., January 22, 1904. Hon. Commissioner, General Land Office, Washington, D. C. Sir: By your letter ("N" E. C. F.) of October 23, 1903, in case of ex parte Southern Pacific Rail- road Company, Quasi contests 1997 and 1998, I was directed to proceed to and examine the SE14 Sec. 23; SWi/i Sec. 25; SWy4 Sec. 27, Township 32 South, Rani^e 25 E., M. D. M., and the SWi/i. Section 1, Township 30 S., Range 23 E., M. D. M., said tracts having been applied for by the railroad company, and to submit re- port stating whether or not in my opinion same should be relieved from the suspension placed thereon by telegrams "P" of February 21st and 28, 1900. By your letter ("N" E. C. F.) of December 10, 1903, I was directed to also examine Section 15; NEi/, and Sl/> Section 17; NE1/l and Si/> Section 19; Sections 21, 23, 25, 27, 29, 33 and 35, Township 30 S., Range 23 E., M. D. M., and to submit report as to whether or not in my 45 opinion said lands should be relieved from sus- pension. I have the honor to report that on January 10th, 11th, 12th, 13th and 14th, 1904, I made a careful examination of the lands in question and found no oil seepages, oil springs, surface or other indications of oil or minerals of any kind that would tend, in my opinion, to warrant said lands being classed as mineral in character, and I respectfully recommend that they he relieved from suspension. Very respectfully, E. C. Eyan, Special Agent, General Land Office. (R.1549-50-51.) It is to be noted that this report concludes with a recommendation in exact accord wdth the request of the railroad and the instructions of the Acting Commissioner. The request of Chambers had been that the lands be ''relieved of suspension/' The in- structions of the Acting Commissioner had been that Rvan recommend w^hether or not thev should be "relieved from suspension/' Now comes the report recommending that they be relieved from suspension. The report already set out covers the lands in suit and a quarter section in each of Sections 23, 25 and 27 of T. 32 S., R. 25 E., distant therefrom ten or twelve miles. In a general report made March 22, 1904, Ryan included these lands in suit along with twenty-four other townships covered by the outstanding order of suspension. This report is Exhibit 4-B and is found 46 at pages 1559-1567 of the record. In this report he says with reference to the township in which the lands in suit lie: "No wells have been bored for oil and in my opinion all the lands in this township should be relieved from further suspension." (R. 1564.) Thus it is seen that he was following the "cri- terion" wdiich he says was prescribed by his chief, Pollock. As corroborative of his testimony concerning this matter of "criterion" — that is, that he should rec- ommend relief from suspension where he found no "oil wells producing oil in paying quantities" — and of his faithfulness in observing it, this gen- eral report shows that m several instances in which he found wells ivhich had yielded oil he recom- mended that the lands he relieved from further sus- pension. The report demonstrates that he was literally governed in his recommendations by the instructions that his ''criterion'' shotdd he the pres- ence or absence of oil wells actually producing oil in commercial quantities. With reference to town- ships 31-22, 31-23, 31-24, 31-25, 32-20, 32-22, 32-25, South, Ranges East, M. D. B. & M., and townships 11-28 and 12-28 North, Ranges East, S. B. B. & M., finding or learning of no w^ells on them, he recom- mended, as in the case of township 30 South, Range 23 East, that they be relieved from suspension. In other instances, in townships in which upon certain sections he found or learned of commercial wells, he 47 recommended that all sections upon which there were no wells be freed of the embargo. It is mani- fest that he was guided, as he stated in his testimony, by the sole and simple test of the absence or pres- ence of commercially producing wells. With refer- ence to townships 29-30 and 29-21 South, Ranges East, M. D. B. & M., he recommended, although he actually found oil wells thereupon, that they be re- lieved for the reason that the wells w^ere not pro- ducing in paying quantities. Explaining his recommendations and justifying his action, Eyan stated that he was merely following Instructions (R. 1600). As to half of the townships his recommendations were based upon hearsay evi- dence — why not, he asked, since they had been origi- nally suspended upon such evidence? On cross-examination Ryan, with reference to township 30-23, said: "My examination was made for the purpose of ascertaining if there Avere any oil wells on there; and I found no oil wells and hence I made that report. I made that report in accord- ance with instructions. I did not say that there were no oil seepages. When I said that I found no oil seepages, I meant that as a fact. And I found no surface or other indications of oil or minerals of any kind. That is what I said in my report, I believe." (R. 1602-3.) On re-direct he said: **I just looked along the road, as my instruc- tions did not require me to make a thorough 48 and minute investigation of the land. * * * The language used by me in these reports, viz., 'oil seepages,' 'oil wells,' 'oil springs,' and 'sur- face indications which would tend in my opinion to warrant lands being classified or not classified as mineral lands' were a kind of stereotyped form that I used. I find it running through all my reports." (R. 1605-6.) g. The order of the Commissioner of the General Land Office re- lieving the lands in suit from suspension. Exhibit ZZZ is the letter of the Acting Commis- sioner relieving the lands in suit and others from suspension. It is found at pages 1555 and 1556 of the record and follows: N. W. O. C. E. C. F. H. G. P. Department of the Interior General Land Office Address only the Commissioner of the General Land Office. Washington, D. C, February 11, 1904. Register and Receiver, Yisalia, California. Sirs: Bv telegrams "P" of February 21 and 28, 1900, townships 30 S., Range 23 E., and 32 S., R. 25 E., M. D. M., were suspended from dis- position under the agricultural land laws upon allegations that same contained deposits of min- eral (oil). I am now in receipt of a report from a special agent of this office who has examined the SW14 Section 1; Section 15; NE14 and ^Vo Sec. 17; NE 1/4 and SV> Sec. 19 ; Sections 21, 23, 25, 27, 33, 35, Township 30 S., R. 23 E. ; the SE14 Sec. 23, SW14 Sec. 25, and the SWI/4 Sec. 27, Town- 49 ship 32 S., E. 25 E., M. D. M., and who states that a careful examination thereof failed to dis- close any oil seepages, oil springs, surface or other indications of oil or minerals of any kind that would tend to warrant the lands being classed as mineral. He reconnnends that same be relieved from suspension. The statements made in the special agent's report are not con- troverted by the records of this office and it would appear that during the period of nearly four years which has elapsed since said sus- pension, any persons interested in the mineral development of the lands have had ample oppor- tunity to explore and develop the same. In view of these facts, it appearing that no oil or mineral of any kind has been discovered upon the lands in question it is believed that no good reason exists for the further suspension thereof. Accordingly, the lands hereinabove described are hereby relieved from suspension. Make the proper notations upon your records. Very respectfully, J. H. Fimple, IL Assistant Commissioner. It is noteworthy that this letter was prepared by the witness E. C. Finney, whose initials appear at the head and who testified to its purpose and effect. h. The effect of the foregoing proceedings. A brief review at this point may not be illtimed. The railroad compan}^ sought patent to the lands in suit. It filed its selection list. This was sum- marily rejected by the local land office for the reason that the lands were under suspension and upon that ground alone. The railroad had pre- 50 vioiislv souQ'ht from Coiiuiiissioner Hermann a revocation of the suspension, but had failed to secure it. The railroad appealed, but, before it did so, its Washington attorney had asked that a special agent make a report in order that a basis for the action which it sought might be had. The Com- missioner ordered a special agent to make an ex- amination and report and instructed him to make a recommendation as to whether the lands should be relieved from suspension. The special agent made his recommendation that the lands be relieved and the Commissioner so ordered. At no point in the proceedings under review does it appear that an effort was made to ascertain the true character of the lands. The railroad did not ask it — the special agent was not instructed to ascer- tain it — he could not have ascertained it because of his known and self-admitted lack of qualifications — he made no report upon their true character — the Commissioner made no finding as to it. The outstanding order of suspension was the lion in the railroad's path. To obtain riddance of it was the direct and only purpose. As long as this order remained in force the lands were segregated from the public domain and were not liable to entry or location. While the contention of counsel for appellants that the suspension order related only to non-mineral entries is challenged by the govern- ment, which urges that it barred as well mineral locations, it is admitted by all that, as long as it 51 continued unrevoked, it ahsolutely withdrew the lands from homestead entries, desert land entries, etc., and railroad selection. The action of the railroad in seeking a revocation of the suspension was not in the nature of a pro- ceeding in aid of its appeal from the action of the local land officers in rejecting selection list 89, that action having, as already shown, antedated the ap- peal. What it sought was such an order as would give its selection a standing before the local land officers. It was not in terms seeking a classifi- cation of the lands as non-mineral, though the letter of Chambers of January 13, 1904, to Eberlein hints that there might have been such a hidden object (R. 1486, 1487). The sole question before the General Land Office was: Shall the lands be relieved from suspension and restored to their original status as part of the public domain and, as such, open to all forms of entry, mineral and non-mineral, according as their true character might turn out to be? Nothing but the order of suspension of February 28, 1900, took the lands in suit out of the category of public lands open to such forms of acquisition as might be found appropriate. The removal of the suspension merely restored the status quo. This reasoning is so sound and the conclusion so in- evitable as not to require elaboration or argument. It was certainly the opinion entertained by the General Land Office (E. 1587). 52 And 3^et it is now urged that b}^ the proceedings under review the government investigated and ascer- tained the true character of the lands in suit and, having done so, may not now be heard to say that it was deceived bv the representations of appellants, however false and fraudulent they may have been. The railroad did not ask for a classification of the lands or an ascertainment of their character; the Commissioner did not order a classification or an ascertainment; the special agent did not attempt either; and all of the proceedings resulted only in relief from the effect of the suspension. Sus- pension from what *? From entry, location, selection ! The status quo was restored. Had there been no antecedent suspension, appellants would not con- tend that the railroad's non-mineral affidavits were merely pro forma and not entitled to be relied upon and not relied upon. And yet, although it is manifest that the proceedings in question had only the effect of doing away with the suspension — mak- ing it non-existent — appellants gravely contend that the removal of the only obstacle to the status quo was more than it purported to be, more than they asked for, more than the Commissioner ordered — in fine, that it was a finding or adjudication that the lands which they coveted were non-mineral and of the character contemplated by their grant. If any weight were to be given to the circum- stance that in this report Ryan stated that he had made a careful examination and had found no sur- face indications that would warrant the classifi- 53 cation of the lands as mineral lands, it is met by two considerations: first, that he was not chosen because of his qualifications — ^lie was neither a mineralogist nor geologist nor what is known as a practical oil man and, by his own admission, would not have known a gas blow-out if he had seen one — to pass upon the character of the lands; second, that his instructions defined his duty, which was limited to recommending whether the suspension should be continued or removed, so that, even if he had undertaken to ascertain the true character of and classif V the lands, he would have been beyond the scope of his authority, without the course of his employment, and his action in so attempting or doing would have been without force or effect. Authorities need not be cited to support this prop- osition. The contention of appellants lacks even the merit of novelty. In many, if not most, of the suits brought by the United States to set aside fraudu- lent patents it has been urged that the government ought not to prevail because of knowledge possessed by it based upon some alleged investigation made through its agents or obtained at a hearing or other- wise. It would be difficult to determine which has been the more popular with defendants in such cases, the contention just mentioned or declamation with respect to the dignity of a patent, the solemnity of its import and the convincing, overwhelming character of the testimony necessary to effect its cancellation. It A^dll suffice to examine a few of 54 the cases setting up the defense of direct or im- puted knowledge. United States vs. Booth-KelUj Lumher Co. et al, 203 Fed. 243, decided in this court February 24, 1913, was a suit to set aside patents under the Timber and Stone Act on the ground that the initial application of the individual patentees had been fraudulently made by them for the use and benefit of the corporate defendant. In the answer of the Lumber Company there was this allegation: "That this defendant is informed and be- lieves and therefore alleges that, after the said entries mentioned in said bill were made by said several entrymen, charges were made and filed with the complainant's officials in the Interior Department, whose duty it was to in- vestigate and determine the same, that said entries were fraudulent in character and were made for the benefit of this defendant and that said charges were fully investigated by the Interior Department for the purpose of as- certaining the truth or falsity of said charges and to determine whether patents should be issued upon said entries or whether the same should be canceled and that such proceedings were had in said matters that said several en- tries were fully investigated by complainant's officials charged with that duty and testimony and affidavits were taken upon said investi- gation and the complainant and said entry- men were duh^ represented at said hearing and investigation and that, upon a full in- vestigation and hearing upon said charges, and with full knowledge of all the facts, it was found and determined by the said officials that said entries w^ere not fraudulent and that 55 the irregularities in said entries, if any, were not of sufficient gravity to require or justify the cancellation of said entries and ordered that patents issue upon said entries for said land and that patents were thereupon issued therefor, as alleged in said bill of complaint." The defense thus raised was not, as will appear from a careful reading of the opinion by Judge Gilbert, considered of sufficient importance to be even noticed by the Court which reversed the decree of the lower court and ordered the fraudulent patents annulled and cancelled. In the case under review it will be observed that the allegations of the defense were more far-reach- ing than those of appellants in the instant case. Here it is merely that the government made an investigation — there, that there was a hearing at which all parties were represented and, indeed, what amounted to a trial and was urged as an adjudi- cation of the very question presented in the appeal. Washington Securities Co. vs. United States, 234 U. S. 76; 58 L. Ed., 1220, was a suit in equity to cancel four patents issued under the commutation provision of the homestead law. The bill charged that the patents were fraudulently procured by falsely representing to the land officers that the lands were agricultural in character and therefore subject to homestead entry, when in truth they were at the time known to be valuable coal lands. Among other things, it was contended that the pro- ceedings resulting in the patents were not ex parte, 56 but adversary; that the land officers found the land to be agricultural in character and that this finding was conclusive upon the government. (This is the very contention made in the instant case and it cannot be distinguished from the case under review on the ground that in the one there was a so-called field investigation, whereas in the other the investi- gation was confined to the quasi-judicial tribunal, the local land office. If an investigation by the deciding tribunal is not binding, a fortiori an in- vestigation by one which has nothing to do with the decision is even less so.) Upon the contention so raised in the Washington Securities case the Supreme Court, speaking through Mr. Justice Van Devanter, says: "No doubt those officers found from the proof submitted to them that the lands were agri- cultural and not coal lands, but the proceedings were not adversar}^ in any true sense of the term. The applications and proofs of the entry- men were entirely ex parte. The government was not called upon to make any adverse show- ing, no issue was framed, no hearing was had and no one represented the government save in the sense that the land officers did so. As this court has often held, the finding of the land of- ficers in such a proceeding, although not open to collateral attack, is not conclusive against the government when it seeks to cancel the result- ing patent upon the ground that it was ob- tained bv means of false and fraudulent proofs. United States vs. Minor, 114 U. S., 233 ; 29 L. Ed., ilO; J. J. MeCaskill Co. vs. U. S., 216 U. S. 504, 509; 54 L. Ed., 590, 594, and cases cited. In such a suit the action of the land officers is given appropriate effect by treating it as pre- 57 siimptively right and as requiring tlie govern- ment to carry the burden of proving the fraud by that class of evidence which commands re- spect and that amount of it which produces con- viction. Diamond Coal & Coke Co. vs. United States 2'i'd\]. S. 236, 239." The quoted language fits the instant case as per- fectly as if written exiDressly for it. Here ''the ap- plication and proofs were strictly ex parte". Here ''the government was not called upon to make any adverse showing, no issue was framed, no hearing was had and no one represented the government save in the sense that the land officers did so." Appellants would, upon the fact that the Com- missioner in his letter. Exhibit 12-0 (R. 3834-5), refers to this matter as a quasi-contest, imi)ort into it the character of a real contest. This would have the effect of changing the meaning of the words and would destroy the very distinction entering into the words employed by the Commissioner. Further- more, if the Commissioner had used the very word "contest" itself without the attached word of quali- fication, it would matter nothing, since the question is not what he called it, but what it reallv was. Again, it is to be remembered that the original request that the lands be "relieved of suspension" and the immediate request upon which Eyan was instructed antedated the appeal from the rejection by the Register and Receiver at Visalia; from which it follows that tliere luas no proceeding of any char- acter before the Commissioner, to say nothing of a 58 contest. It all reverts to this: that there had been a suspension from disposition of lands including those which the railroad then desired to select — so long as this suspension was in force there could be no selection — and the railroad sought to get the sus- pension out of the way and, accordingh^, before there had been any sort of action in its attempted selec- tion, appealed to the Commissioner for an order of revocation. The instructions to the special agent, his recommendation that the suspension be revoked and the favorable action thereupon by the Com- missioner, all at the request of the railroad, are now sought by appellants to be tortured and dignified into a contest. The mere statement of the facts is a complete refutation of their contention that there was a contest, that there was a determination by the government of the true character of the lands in suit and that the government is now estopped to deny the truth of false and fraudulent proofs. In United States vs. Minor, 114 U. S. 377 ; 29 L. Ed., 110, it is plainly held that the doctrine of the conclusiveness of judgments and decrees of court as between those who are parties to the litigation is not applicable to the United States in regard to pro- ceedings before its land officers in granting patents to the public lands ; that, when it is said that in some cases the land department exercises functions in their nature judicial, it has reference to cases in which individuals have, as between themselves, con- tested the right to a patent before that department, the decision of which as to the facts before it is held 59 to be conclusive between such parties ; but that fraud upon that department has been always held to be subject to remedy in equity and that, when there has been no contest and the claimant proceeds without opposition in his ex parte proof, it is especially iiec- essary that equity afford the government a remedy if those proofs are founded in fraud. The contest that furnishes the basis of conclusiveness is clearly the contest between individual claimants. Such was the situation in Tulare Oil & Mining Co. vs. South- ern Pacific Railroad Co., 29 L. D. 269, a case strongly relied on by counsel for appellants upon the argu- ment below. It was on its face an actual contest between the parties to the litigation. In the Minor case, supra, the reasons why the gov- ernment in this class of cases should not be held to, the same diligence in guarding against fraud as a private owner of real estate, founded upon the vast extent of the public domain and the paucity of land officers, are convincingly set out. This is also shown in the fact that in more than nine cases out of ten the applicant "has it all his own way"; he makes his own statement and produces his own affidavits. "If these affidavits meet the requirements of the law, the claimant succeeds and what is required is so well known that it is reduced to a formula. It is not possible for the officers of the government, ex- cept in a few rare instances, to know anything of the truth or falsehood of these statements. In the cases where there is no contesting claimant there is no adversary proceeding whatever. The United 60 States is passive; it opiDOses no resistance to the establishment of the claim and makes no issue on the statement of the claimant." These quoted words from the Minor case are aptly descriptive of the facts of the instant case and the principles under- lying them are destructive of the contentions of ap- pellants. Many other cases might be cited and reviewed; but those above referred to support fully the posi- tion of the government that nothing was done, no proceedings were had, in the land department in connection with the patent here under attack that stands in the way of the equitable remedy of can- cellation now invoked. The only person connected in any capacity with the government who appears upon this record even to have seen the lands in suit is special agent Eyan. It is manifest that he w^as neither instructed to make nor made any examination or investigation of them for the purpose of ascertaining whether they were mineral or non-mineral in character. The sub- stance and extent of his report was that lie saw no superficial evidence of their mineral character. It is also affirmatively shown that his lack of fitness to pass upon the character of land was well known both to the land department and to himself. To seriously (contend that upon such a record there is any evidence to sustain the proposition that the gov- ernment actually for itself and by its own processes ascertained as a fact that the lands in suit were non- 61 mineral would seem to be put forward, it is respect- fully submitted, only for the purpose of multiplying tlie errors assigned and to distract attention from the plenary evidence of the false and fraudulent character of the proofs offered by the railroad in support of its application for patent to the lands in suit. Since there w-as no investigation nor ascertain- ment by the government of the true character of the lands in suit, a fortiori there was no determination nor adjudication of their non-mineral character. As shown by the cited cases, there is no such ad- judication save in cases, like the Tulare Oil & Min- ing Co. case, supra, where there is a contest between parties to the litigation. Finally, the position of the government upon this question is : By the order of suspension of February 28, 1900, the lands in suit were segregated from the public domain open to entry, selection and location. They could thereafter be acquired for no purpose. The local land officers, the Register and Receiver, had, as it were, no jurisdiction whatever over them. They could not entertain any sort of an application to acquire them for the reason that they were not open or subject to acquisition. Accordingly, when selection list 89 was filed, they summarily rejected it. Their action was analogous to that of a court which dismisses a case for want of jurisdiction. They no more considered the evidence upon the merits, that is, as to the character of the land, than 6'J a court would have considered evidence upon the merits of a cause as to which it had decided in limme that it was without jurisdiction. From the order simimarily rejecting its applica- tion the railroad appealed to the Commissioner of the General Land Office. While the appeal was pend- ing the Commissioner relieved the lands sought to be selected from the suspension. If he had re- garded the investigation and report of Ryan and his own order of relief as an ascertainment and de- termination of the non-mineral character of the lands, why did he not, instead of returning the list to the local land officers, clear-list the lands and issue patent? The answer is obvious: for the rea- son that the function of passing upon proofs be- longs to the local land officers; the lands had been restored to the public domain and were open to ap- propriate acquisition upon compliance with depart- mental regulations and requirements; a situation different from that which obtained when the list was rejected was presented; the lands were restored to the condition in which they were before suspension and no want of jurisdiction was now in the way of the consideration of the proofs submitted; and it was necessary that the local land officers pass upon the question of the true character of the lands be- fore patent could issue. Accordingly, the Com- missioner, while advising the Register and Receiver that their action in rejecting the list "was correct under conditions then existing", returns the list ''for appropriate action" with the statement: "It 63 would therefore appear that said application to select may now be granted if no other objection tJiereto exists" (Exhibit 12-0; E. 3835). The proofs consisted wholly of the Eberlein af- fidavits. They had accompanied the list when filed, but had in the very nature of the case received no consideration. Thev could now be considered upon the question of the character of the land, the deter- mination of which in favor of the truth of the af- fidavits was a condition precedent to clear-listing and patent. If the revocation of the suspension amounted to a determination that the lands were non-mineral, then there was nothing .for the local land officers to do. Surely, it will not be suggested that the Commissioner directed his inferior officers to affirm his action. If his action had the effect at- tributed to it by appellants, he is placed in the ab- surd position of opening that action to review and possible reversal by his subordinates. AVhat he actually did was to send the list back to the Register and Eeceiver with directions which amounted to an instruction that they were, under the changed con- dition, at liberty to hear the railroad's proofs and themselves determine thereupon whether the lands should go to patent. That the only proofs offered or produced during the pendency of the application to select and forwarded to the Commissioner with the appeal were the affidavits of Eberlein appears from the testimony of the Register himself, George W. Stewart. R. 3784-5.) This was all that was re- quired by the regulation heretofore mentioned. The 64 fact that this was known to the railroad was notice to it of the reliance placed in such proofs and im- posed upon it the high duty of strict truth. II. THE GOVERNMENT HAD NOT PRIOR TO OR AT THE TIME OF PATENT EQUAL KNOWLEDGE WITH APPELLANTS OF THE TRUE CHARACTER OF THE LANDS IN SUIT AND THEREFORE HAD THE RIGHT TO AND DID RELY SOLELY UPON THEIR PROOFS. 1. The question of knowledge. Little need be said beyond again calling attention to the case of United States vs. Minor, supra; to the fact that no official or agent of the government other than special agent Ryan is shown ever to have seen the lands in suit; and to the conspicuous diligence of officials and agents of appellants in the examination and investigation of lands within the granted limits in California prior to and at the time of patent. Furthermore, it was the duty of the Southern Pacific Railroad Company to ascertain the true character of all lands to which it sought patents. This duty arose as well out of the rela- tionship of the railroad to the government by reason of the exception of mineral lands from the opera- tion of the granting act as of the duty imposed by the regulation of the Secretary of the Interior of July 9, 1894, 19 L. D. 21, promulgated pursuant to authority conferred on him by the granting act, re- quiring proof b}^ affidavit of its land agent of the careful examination of land sought to be patented 65 and of its non-mineral character. Counsel for ap- pellants contend that such requirement was ''merely formal", the implied argument being that it was therefore immaterial whether the affidavit was false or true. It is sufficient upon this point to suggest that the Supreme Court in the Minor case, supra, while recognizing that, in the matter of proofs, "what is required is so well known that it is re- duced to a formula", none the less held that, since in that case that requirement, while observed, was falsely met, it vitiated the patent there assailed. If whatever knowledge Eyan had were imputable to the government, it would amount only to this : that during three days' examination of thirty-six square miles of land he had found no oil springs, oil seep- ages nor croppings of oil sand upon the lands in suit and that in his opinion they should be relieved from suspension. From this to knowledge or notice on the part of the government of the true character of the lands is a far cry. It is equally as far removed from the condition which the record discloses of the knowledge of appellants. Since the extent and ac- curacy of that knowledge must and will be reviewed at length in connection with the main features of the case, namely, the question of the fraud of appellants, it is deemed unnecessary to here anticipate a review of the evidence. Suffice it to say that the record proves conclusively the presence upon these lands or in the immediate vicinity prior to patent of of- ficials of appellants, high and low, ranging from presidents and vice-presidents down to land-graders ; 66 tlie maintenance by appellants prior to patent of a corps of skilled geologists who examined, investi- gated and gathered information and facts concern- ing these and other oil lands; and even the location for minerals of some of the lands in suit and of the even numbered sections with which they are inter- spersed by geologists, oil experts, engineers and di- vision superintendents of appellants. It is true that the lands granted to the railroad were of such extent as to constitute an empire ; but it is equally true that they were but a small fraction of the public domain. The following from the opinion in the Minor case, supra, aptly describes the situation: "The government owns millions and millions of acres of land * * * There is established in each land district an office in which are two officers, and no more, called Eegister and Re- ceiver. These districts often include twenty thousand square miles or more * * * When therefore he (an applicant for patent) succeeds by misrepresentation, by fraudulent practices, aided by perjury, there would seem to be more reason why the United States, as the owner of land of which it has been defrauded by these means, should have remedv aarainst the fraud — all the remedy which the courts can give — than in the case of a private owner of a few acres of land on whom a like fraud has been practiced ? ? The legal effect sought to be given to the thesis that the government had equal knowledge with ap- pellants is that it had no right to rely on the proofs offered by the railroad, the affidavits in question being, according to the argument of counsel below, "mere red tape". This position illy comports with 67 the character which men are in the habit of ascribing to evidence under oath. It is true, as in the Minor case, that "what is required is so well understood as to be reduced to a formula"; but the formula is in-, dicative of the well known character of the proof required — not of a lack of importance or an invita- tion to falsehood. The "formula", falsely sworn to, was all the fraud there was in the Minor case and yet the court held that the government "should have remedv aarainst that fraud — all the remedv which the courts can give". The "formula", if the appel- lants had been in need of information, conveyed most accurate knowledge of what had to be proven ; and the acting land agent made his oath according to that "formula", swearing falsely to what was neces- sary in order to secure the coveted patent. The falseness in every particular of his affidavit accord- ing to "formula" was shown by the evidence and in at least one particular was admitted by him on the stand (R. 1088). Since the whole includes all the parts and counsel for appellants say that the whole affidavit was immaterial and not intended to be re- lied on and was not relied on, it will doubtless be urged that it mattered not that the affidavit was admittedly false in one particular. Even in the ordinary affairs of life men do not so lightly ap- praise an oath and it is surprising that in a court of equity it should be put forward that, because an oath is according to "formula", its falsity is not matter of concern. 68 2. The question of reliance. There is little direct testimony upon this question. The outstanding fact is that the non-mineral affi- davits were made by the regulation of July 9, 1894, set out in full on page 3 of this brief, the sme qua non of the issuance of patent. The contention of ap- pellants amounts to this: that, although they could not have secured the patent without it, nevertheless the affidavit was of no moment and the government had no right to rely upon it. The indispensable is not customarily regarded as immaterial and unessential. The fact remains that the railroad could not have gotten the patent if its acting land agent had not made the required affidavits which appellants now say constitute no part of the inducement or showing upon which favorable action was based by the land officers. The only direct testimony in the record bearing upon this question is that of the government wit- nesses Finney and Stewart, the former of whom stated that, throughout the entire period of his serv- ice in the General Land Office, that is, from 1894 to 1909, that office adjudicated ex parte cases, whether selections or entries, upon affidavits or other proofs submitted by the selector or entryman in accordance with pertinent regulations; but that, in cases contested by third parties, it was the prac- tice to have hearings or trials at which the testi- mony of witnesses might be taken, reduced to writ- ing and thereafter passed upon. He further ex- 69 pressly stated that, in a selection or entr}^ in which there was no contest by a third person, the depart- ment would not base its action upon an agent's re- port, if one there happened to be, but upon the proofs submitted by the selector or entryman in sup- port of his application (E. 1584). If, however, there was in any case a special agent's report that was unfavorable to the contention of the selector or entr}Tiian that the land sought to be acquired was non-mineral, it might result in a rule or order by the Commissioner for a hearing at which both the se- lector or entr^Tnan and the government might in- troduce evidence concerning the character of the land; but, whether there was no agent's report or there was a favorable one, the ex parte proofs of- fered by the selector or entrjonan being uncontro- verted, it was the practice of the General Land Office to accept such proofs at their face value (R. 1592). The fact that the railroad recognized and acted upon the necessity of offering proof is conclusive of the materialty of the proof and of its recognition of the effect of the order of relief from suspension, viz., the restoration of the suspended lands to the status quo of ante-suspension days. Stewart, the Register at Yisalia, testified that during the pendency and consideration of the appli- cation to select the lands in suit — that is, what is so often referred to as list 89 — the only evidence of the character of the lands which was offered bv the rail- 70 road and taken into account by the Register and Eeceiver was the affidavits of Eberlein; and that these affidavits constituted the sole and entire evi- dence upon the question forwarded to the General Land Office b}^ the local land officers at Visalia (E. 3783-4). Thus, it affirmatively appears from the testimony of the only witnesses who spoke to the point that the only evidence of the non-mineral character of the lands in suit which was considered by the land de- partment of the government was that offered by the railroad and consisted solely of the affidavits of the railroad's acting land agent which appellants now stigmatize as ''pro forma" and neither intended nor received seriously; albeit they were addressed to and concerned with the only open question in the matter and constituted the sine qua non of the appl- cation. III. THE LANDS IN SUIT WERE AT THE TIME OF THE PROCEEDINGS THAT RESULTED IN PATENT KNOWN MINERAL LANDS. Introductory. The case upon which the govermnent relies as lay- ing down the rule or standard for the determination in advance of development of what are known min- eral lands is Diaynond Coal & Coke Company vs. United States, 233 U. S. 236, 58 L. Ed., 936. A re- view of this case as preparatory to the consideration of the evidence is thought expedient to the end that 71 the relevancy of the facts may be readily appreci- ated. This case is the authority upon which Judge Bean, the trial judge, founded the decree from which this appeal is prosecuted. While the opinion post- dated the conclusion of the testimony, it was handed down before the argument and decree. THE DIAMOND COAL AND COKE COMPAI^TY CASE. The Diamond Coal & Coke Company case was a suit in equity brought by the United States in the circuit court for the district of AYyoming to set aside patents to lands alleged in the bill to contain valuable deposits of coal. The patents had been applied for by and issued to two individuals, Sned- don and Harrison, under the homestead law upon soldiers' additional homestead entries, and they sub- sequently conveyed the lands in suit to the Diamond Coal & Coke Co. Each of the applications for pa- tents had been accompanied by an affidavit by one or the other of these individuals to the effect that he was well acquainted with the land, had passed over it frequently and could testify understandingly about it; that there was not, to his knowledge, any deposit of coal or other valuable mineral within its limits and that it was essentially non-mineral; and that application was made with the object of securing it for agricultural purposes and not of fraudulently obtaining title to mineral land. The bill charged that the affidavits were false and that the entries and patents were procured in the execution of a fraudulent scheme to acquire known coal lands under soldiers' additional homestead entries. The 72 principal issue in the case was whether the lands were known to be valuable for coal when the appli- cations for the entries were made. The trial court found for the defendants and the government appealed to the Circuit Court of Ap- peals for the Eighth Circuit which reversed the action of the lower court, 191 Fed. 186. There- upon the coal company appealed to the Supreme Court, which, in an opinion delivered by Mr. Jus- tice Van Devanter, affirmed the decree of the circuit court of appeals. The essential facts set out in the opinion are as follows: "The proceedings in the land office began in May, 1899. Most of the applications were filed during that year and passed to patent in 1901. The others were presented and acted upon in succeeding years. The patents were all se- cured by means of affidavits and proofs, as be- fore indicated, declaring that the lands were essentially non-mineral, were not known to con- tain any'^deposit of coal, and were sought for agricultural purposes, and not as mineral land. For many years the district in which the lands were situate had been known to contain coal. They were surveyed in 1874, and the surveyor reported one of the sections as coal land, the others being contiguous to lands similarly re- ported. This was shown in the field notes and upon the official plats. The lands were in a val- ley, 3 or 4 miles in width, bounded on the east and west by foothills. A thick bed of coal was disclosed in the eastern face of the western hills, but its quality was not such as to make it of commercial value. Along the western base of the eastern hills was the outcrop of another coal bed. This outcrop had been weathered 73 down and in some places covered by the wash from above, but it could be traced upon the surface for several miles. It had been opened up at different places and the openings disclosed a coal bed, from 6 to 14 feet feet in thickness, dipping to the west at an angle of from 15 to 25 degrees from the horizontal, as did the cretaceous rocks with which it was inter- stratified. This coal was of superior quality and recognized connnercial value and the rocks containing it were the coal-bearing strata of that region. The lands in controversy were west of the outcrop in the direction of the dip. Some were near the outcrop and the east line of the farthest section was about a mile and a half away. There was nothing upon their sur- face showing the presence of coal beneath nor anything indicating that the bed outcropping on the east and dipping to the west did not pass through them. Unless valuable for coal, they were not worth to exceed a dollar and a quarter an acre. They were arid sage-brush lands, about 7,000 feet above sea level, and afforded very limited pasturage. Without irrigation they were not susceptible of cultivation and the cost of se- curing water for that purpose was prohibitive. Attracted by this outcrop, the coal company opened a mine thereon in the vicinity of these lands in 1894. In the beginning the output of the mine was small, but it reached 183,750 tons for 1897, 259,608 tons for 1898 and 441,227 tons for 1899. "An attemj^t was made by the coal company to acquire a part of the lands in controversy in 1898 by inducing some of its employees and others to make ordinary homestead entries of them under an agreement whereby the company was to bear the expense, compensate the entry- men for the exercise of their homestead rights and receive the title when perfected. The ar- 74 rangement was fraudulent and in direct viola- tion of the homestead law, independently of the character of the lands. 26 Stat, at L. 1097, chapter 561 Sec. 5, U. S. Comp. Stat. 1901, p. 1388. Sneddon was in charge of the attempt. He was acquainted with the lands and all their surroundings and was well informed upon the subject of coal mining. With the aid of a sur- veyor he identified the subdivisions to be en- tered and afterwards selected the men who were to make the entries and directed all that was done, indicating in that connection that the lands were coal lands and were to be taken for that reason, and also to prevent another coal concern from getting them. The entries were made in 160-acre tracts and to give them appar- ent support cheap cabins were put upon the lands at the company's expense, but the law was not even colorably complied with in other re- spects. The next year this plan was abandoned and that of using soldiers' additional rights was adopted. These rights were assignable and in their exercise no residence, improvement or cul- tivation was required. See Kev. Stat. Sec. 2306, U. S. Comp. Stat. 1901, p. 1415; Webster vs. Luther, 163 U. S. 331, 41 L. Ed., 179, 16 Sup. Ct. Rep. 963. At the company's request the prior entries were relinquished and the entr\Tnen were severally paid $500.00 for what they had done, the pavment to one being $600.00. When the relinquishments were filed, Sneddon and Harrison immediately applied to enter the lands with soldiqrs' additional rights. A few of the relinquished subdivisions were not re-entered and several tracts not covered b}^ the prior en-, tries were included in the new ones, but all of the latter were made with soldiers' additional rights purchased and supplied by the company and were made for its benefit. The price paid by the company for these additional rights was from $6.00 to $13.00 an acre. After the entries 75 were obtained the lands were conveyed to the company and Sneddon was paid $1,000 for this service/ although otherwise regularly employed by the company at the time. "In 1898, shortly before the dummy entries were made, Sneddon had filed in the land office a sworn declaration of his intention to purchase, under the coal-land law (Eev. Stat. Sees. 2347- 49, U. S. Comp. Stat. 1901, pp. 1440, 1441), one of the tracts in controversy, which he then de- scribed as containing 'a valuable vein of coal'. The tract was about a quarter of a mile from the outcrop. At the time of making the soldiers' additional entries he relinquished the coal filing and included the tract in two of them. "In 1899, about the time of the additional entries, James Lees purchased from the govern- ment, under the coal-land law, and sold to the company for $3,400, a quarter section upon which earlier exploration had disclosed good coal, 8 feet in thickness. This sale was in execu- tion of a prior arrangement and the price paid to Lees was $200.00 in excess of that paid to the government. The tract was within a half mile in each of three directions from lands here in controversy. "As indicative of the weight and importance which men having a practical knowledge of coal mining attached to the outcrop at the time, the government proved by an experienced mine fore- man, who had been in charge of large mines known as the Cumberland adjacent to a portion of the lands in controversy, that those mines were opened in 1900 by reason of what was found on the outcrop ; that there was no prece- dent drilling of the adjacent lands ; and that in advising the opening of the mines he was guided by what an examination of the outcrop in 1889 disclosed. True, he said, that he could not take 76 'a solemn oatli' or 'be positive' that unexplored lands in the vicinity of the outcrop and in the direction of the dip contained valuable coal, but his testunony was plainly to the etfect that the outcrop, the direction and inclination of the dip and other conditions in 1899 and 1900 afforded reasonable ground for believing that a consider- able territory lying west of the outcror> could be mined profitably. "There was much expert testimony by geolo- gists concerning the outcrop and other known geological data bearing upon the character of these lands. In the main the witnesses were agreed respecting the existence of these physical indicia, but differed as to the conclusions to be drawn from them; the expert for the govern- ment maintaining that they afforded convincing reasons for concluding that the lands were coal lands and the experts for the coal company con- troverting that view. But the divergence was not so pronounced as it would seem, for it was partly due to a difference as to what, in legal contemplation, are coal lands. ''The expert for the government proceeded upon the theoi-y that, when the known surround- ings are such tbat practical coal men would in- vest in particular lands for coal mining or ad- vise others to do so, those lands are to be deemed coal lands, even though coal has not as yet actually been disclosed within their limits. And having in mind the outcropping coal bed, the direction and inclination of its dip, the char- acter of the rock with which it was interstrati- fied. the quality and thickness of the coal at the outcrop, the proximity of the lands to the out- crop and the topoQTaphical and structural fea- tures of the vicinity, he crave it as his opinion that the coal bed extended into and through the lands in question and that practical coal men would regard the lands as valuable for coal and 77 invest iu them as such. He accordingly pro- nounced them coal lands within his acceptation of that term. This conclusion had substantial support not only in the facts already recited, but also in the fact that the compam^'s maps, made three years before the suit was begun, showed that it was intended to project its mining opera- tions westward from the outcrop a mile and a half and had designated the intervening lands, which included some of those in controversv, as coal lands, and in the further fact that the com- pany had returned lands extending westward a similar distance, likewise including some now in controversy, as exempt from direct taxation by reason of a local statute substituting an output tax upon coal mines. Laws AVyo. 1903, chap. 81, p. 101. The return for the year in which the maps were made claimed an exemption of sub- stantially six sections in two tiers of three sec- tions each, although the work of developing the mine (No. 4), as shown by the maps, was still within the east half of the middle section in the eastern tier. "The experts for the coal company proceeded largely, but not entirely^ upon the theory that lands cannot be regarded as coal lands unless coal in quantity and of quality to render its ex- traction profitable is actually disclosed within their boundaries. One testified that, even if a slope were driven from the outcrop to within five feet of the vertical boimdary of one of the sections in question and in good coal all the way (a fact proved but not to be considered here be- cause in the nature of a discovery subsequent to the entries), it would not show that the section approached was coal land, there being no actual exposure of coal within its limits. And he added that it would be the same if the distance were 3 inches instead of 5 feet, but that 'the moment you cross the line, then it commences to be coal 78 land'. Special emphasis was laid upon tlie un- certainties incident to coal mining in the cre- taceous areas of the West by reason of the oc- currence of faults, wants, thinning and the like ; and this, it was said, required that actual ex- posure of coal within the land, by an outcrop- ping at the surface or an excavation, be ac- cepted as the true and only test. But even such a test was largely discredited by statements that 'a good outcrop at the surface may represent a want below or a want at the surface may repre- sent a coal below', and that in following a good discovery a fault or thinning, as well as a want, may be encountered at any moment. It was conceded, however, that the coal horizon — mean- ing the coal-bearing strata shown at the out- crop, but not necessarily the coal — passed through the lands m controversy and one ex- pert, while declaring that he could not make an affidavit that they were coal lands in the sense of 'strictly containing deposits of coal', candidly added: 'But I would be prepared to make an affidavit that I believe them to contain coal'. Another, although pronouncing the showing at the outcrop and elsewhere insufficient to render the lands valuable for coal mining, said: 'I am not prepared personally, to either affirm or deny that this land does or does not contain coal. I contend that it is beyond the capacity of any man to sa}^ that something exists or does not exist upon which he has no absolute testimony'. "It is of some significance that Sneddon — who had long been in the company's service, had been the central figure in the acquisition of these lands, was familiar with them and the pur- pose for which they were sought and acquii'ed, was the company's superintendent when tlie evidence was taken before the master and was present during- a part, at least, of the time when it was being taken — was not called by the com- 79 pany as a witness and that statements, declara- tions and acts attributed to him and which made against the company were permitted to go un- denied and unexplained. "We think the evidence, rightly considered, shows w^ith the requisite certainty that at the time of the proceedings in the land office the lands were known to be valuable for coal. Other- wise they had only a nominal value, not to ex- ceed $1.25 an acre!^ and yet easily ten times that amount was voluntarily expended by the com- pany in acquiring them. It was hardly intend- ing "to make an aimless or grossly excessive ex- penditure. It was a practical concern, operated by practical men. It had located a mine upon the outcrop five years before and in the mean- time had proved the wisdom of the undertak- ing by its mining operations. They had dis- closed the existence of an extensive bed of valu- able coal dipping to the west under the valley and in that way had supplemented the evidence afforded by the outcrop and its surroundings. Without any doubt these considerations induced the company to believe, and rightly so, that the lands in controversy possessed a value for coal mining greatly in excess of their value for any other purpose. This explains the expenditure and the persistency of the company's efforts to acquire them ; and the fact that the earlier effort was obviously fraudulent and unlawful, inde- pendently of the character of the lands, serves in no small degree to explain the kindred prac- tices employed in the later effort. In short, the company, without care as to the means, sought and acquired the lands because it regarded them as valuable for coal. Its view and purpose were also reflected by its maps and tax returns. Of course, it was not a bona fide purchaser from Sneddon and Harrison, for they were mere agents representing it as an undisclosed princi- pal. 80 "An exposure to tlie eye of coal upon tlie par- ticular lands was not essential to give them a then present value for coal mining. They were all adjacent to the outcrop and above the plane of the coal-bearing strata dipping under the valley. In alternate even-numbered sections they substantially paralleled the outcrop for seven miles and in two places were separated from it bv onlv a few rods. Those to the north were opposite the company's developed mine (No. 4) and those to the south were opposite the tract acquired through Lees, upon which good coal was disclosed. The outcrop, the disclosures in the vicinity and the geological formation pointed with convincing force to a workable bed of merchantable coal extending under the valley and penetrating these lands. These con- ditions were open to common observation and were such as would appeal to practical men and be relied upon by them in making investments for coal mining. They did so appeal to the Cumberland people, as well as this company, both large concerns represented by men of ex- perience, understanding the uncertainties and hazards of the business as well as its rewards. No doubt it has its uncertainties and hazards, but the evidence shows that the}' are not so pro- nounced as indicated by the company's experts ?7 The court takes full notice of "the respect due to a patent" and the other usual arguments based on the solemn character of such an instrument and thereupon lays down the following rule : "To justify the annulment of a homestead patent as tvrongfiilly eovering mineral land, it must appear that at the time of the proceedings which resulted in the patent the land was known to he valuable for mineral: that is to say, it must appear that the known conditions at the time of 81 these proceedings tvere plainly such as to en^ gender the belief that the land contained mineral deposits of such quality and in such quantity as tvould render their extraction profitahle and justify expenditure to that end." The most casual reading of the quoted language will disclose that the court was laying down a rule or formula for the determination of what is knotvn mineral land and the language employed, as well as the context and the facts, indicates very clearly that, while the coal company insisted that an actual ex- posure of coal on each unit of the lands in suit or the development of the land by the ''work of man" eventuating in the disclosure of the presence of coal in commercial quantity and of commercial quality were necessary to place the lands in the category of known mineral lands, the court repudiated that con- tention and held that, where there is absolutely neither natural exposure nor development, lands are mineral lands when the known conditions are plainly such as to engender the belief that they contain min- erals quantitatively and qualitatively commercial. Appellants assert and contend that the instant case is not within the principle upon which the Diamond Coal & Coke Company case was decided; while the government confidently maintains that it is. In the closing paragraph of the opinion Mr. Justice Van Devanter says: "Neither are we considering other minerals whose mode of deposition and situation in the earth are so irregular or otherwise unlike coal as to require that they be dealt with along other lines." 82 The government asserts that upon this record oil is shown to be in the same class with coal with respect to "mode of deposition and situation in the earth" and that in all respects the two minerals are so simi- lar as to be dealt with along the same lines. As already indicated, if the rule is not applicable to oil, it is restricted solely to coal — and the language of the opinion is plainly such as to indicate that the court intended no such limitation. The standard laid down is not expressly restricted to coal, but im- pliedly extends to other minerals, while only those are excluded whose "mode of deposition and situa- tion in the earth are so irregular or otherwise unlike coal as to require that they be dealt with along other lines". If oil is not within the rule, then, manifestly, the rule, contrary to the implication, is restricted to coal. The immediate purpose of this introduction is to show by the record the striking similarity in the "mode of deposition and situation in the earth" of the two minerals, coal and oil ; and in this connection reference will be had principally to the testunony of two eminent geologists. Dr. John Casper Branner, President Emeritus of Leland Stanford Jr. Uni- versity, and A. C Yeatch, although that of others will be alluded to. In 1897 Mr. Veatch was connected with the Indi- ana University Geological Survey in charge of a section doing field work in Indiana. In 1898 he was a member of Cornell University Geological Survey working on the coastal plains from New Jersey to Mississippi. From 1898 to 1900 he was assistant State geologist of Louisiana and in 1901 was assist- 83 ant in charge of areal and stratigraphic geology in Cornell University summer school of field geology. In 1901 and 1902 he was geologist of the Houston Oil Company working in the Louisiana and Texas oil fields. In 1902 he became professor of geology in the State University of Louisiana and State Geolo- gist, resigning these positions to accept a position with the United States Geological Survey with which he w^as connected from December, 1902, to 1910. In 1910 and 1911 he was engaged in work in the Trinidad and Venezuela oil fields and after his resignation from the Survey was engaged as a consulting geologist. While with the United States Geological Survey he was chairman both of the coal land classification board and the oil land classifica- tion board. In 1907 he had been appointed by the President of the United States a special commis- sioner to investigate the mining laws of Australia and New Zealand (E. 687-8). Mr. Veatch w^as "the expert for the government" referred to by Mr. Justice Van Devanter in the Dia- mond Coal & Coke Company case. While in that case there was much expert testimony concerning a distant outcrop of coal and other geological data con- cerning adjoining and surrounding lands bearing on the character of the lands there in suit and while there was little disagreement respecting the existence of such physical indicia, the experts for the coal com- pany and the expert for the government differed as to the conclusions to be drawn from them. The main attack of the coal company's experts was cen- 84 tered upon Yeateh's defiuition of what constituted coal land. The Supreme Court disregarded the testi- mony of the coal company's experts and adopted and wrote into its decision his definition. Upon the subject in hand Mr. Yeatch testified in substance as follows: Where minerals occur in stratified beds, it is fre- quently possible to determine with exactness their extent and value and other factors important in their appraisement and development. Stratified rocks are laid down in relatively regular layers, for the most part beneath the sea, and are in contrast with other rocks formed by igneous intrusions or volcanic out- pourings or which have been so attended by meta- morphic action as to lose their former characteristics. The individual layers of stratified deposits can be traced for many miles, showing to a great extent the same characteristics; and it is on this regularity or irregularity, as shown by the outcrop, that practical men base their conclusions and have spent great sums of money in developing minerals of the kind which occur in stratified deposits, among the most important of which are coal, oil, water and the phos- phates. These differ widety in their mode of occur- rence from most deposits of ores and entirely from veins or lodes, which are of very irregular character. It is on the exposure of stratified rocks containing coal, oil, water and the phosphates caused by uplifting, folding and erosion that the geologist bases his conclusions. The beds, after deposition, are folded up and eroded and the effect is to enable 85 the geologist to examine the character of the rocks as fully and carefully as he could in an enormous trench dug through the surface of the earth. Extending for many miles it forms a much sounder basis for judgment than a single development. (E. 696-7.) Both coal and oil occur in stratified deposits and are subject to much the same laws. In the case of a coal deposit, where erosion has entirely removed the strata around a given area, that area rises as a hill above the surrounding area. If in such a case you find the coal outcropping on one side of the hill and vou follow the coal bed around the hill, as you can by natural exposures, and find that it goes en- tirely around the hill, you know absolutely that the coal underlies the hill and are justified in buying that land as coal land in the absence of any develop- ment. In a similar way, if you find a coal bed ex- posed on the side of a valley and follow the bed around the valley, you know that the valley is under- laid with coal; and by the rate of slope of the beds you can calculate the depth of that coal bed in that area which is underlaid with it. (E. 698.) In the case of oil or water you can follow the sand bed or other porous bed suitable for containing them in exactly the same way in which you follow a coal bed. You can determine the existence of that porous stratum in the same wav in which vou can determine the existence of the layer of coal and in a similar way you can calculate the thickness of the depth of that porous bed under different portions of the terri- tory. You follow the same method. (E. 698.) 86 The presence of oil or water in the porous bed can be indicated either by springs along the outcrop in the case of water or seepages in the case of oil or, failing these, their presence may be demonstrated by a well or group of wells. Such a well or group of wells or such seepages, taken in connection with the detenninal persistence of these beds and the geo- logical structure, warrants the development of terri- tory in which you have not drilled. It shows the presence under the lands of the substance desired. (R. 698-9.) The oil value of land may be demonstrated in the same way in which coal can be demonstrated by the outcrop. The principle is the same in every way. It has frequently been demonstrated in advance of drilling (R. 700-1). With specific reference to the lands in suit Mr. Veatch, after mentioning the long line of seepages along the east flank of the Temblor Range in the vicinity of the lands in suit and the great series of wells which had been sunk prior to the patent down the dip from these seepages showing that the seep- ages represented oil in commercial quantities (R. 701-2) and after stating that the strata dipped from the direction of these seepages and wells towards the Elk Hills, the locality of the lands in suit, and that the Elk Hills are within the proven area from geo- logical deductions, testified in substance as follows: The determination of the oil value of the lands in the Elk Hills is predicated on the seepages which 87 occur along the flank of the Temblor Range. They prove the extent of the oil impregnated zone and in that way demonstrate the oil value of the Elk Hills (R. 704). Dr. J. C. Branner, whose qualifications are set out somewhat in detail on pages 1000 and 1001 of the record, may, without disparagement of others, be described as the most eminent oil geologist on the Pacific Coast. He has had wide experience in the oil fields of California, has visited and examined many of them, including the lands in suit and others in the neighborhood. His character is so exalted and his attainments so conspicuous that counsel for ap- pellants admitted that he was not "open to impeach- ment" (R. 1992). At the time of testifying he was professor of geology in Stanford University and subsequently became its honored president. Dr. -Branner's testimony in this case is best read as a whole. A mere reference to that part of it bearing upon the question instantly under discussion is here attempted : After detailing somewhat the presence and condi- tions of seepages and wells along the east flank of the Temblor Range, the presence of immense thick- nesses of Monterey shales, the recognized and ad- mitted source of oil in that region, the geologic conditions consisting, among other things, of the dip of the strata from the seepages and wells in the direction of the Elk Hills, Dr. Branner stated that, although at the time to which his testimony related there was absolutely no development in the Elk Hills, 88 ''the geological structure was perfectly clear" (R. 1002), and his opinion was that the "Elk Hills was the most promising area for petroleum in that region in the vicinity of McKittrick" and that they were "oil-bearing" (R. 1003). His conclusion was the result of geologic deduction and he said: "I should say that, if am^ competent geologist, observing the natural waste of oil about Mc- Kittrick and the stage of development in 1900 or a year or two subsequent and visiting the Elk Hills and making some examination of the struc- tural formation, failed to form an opinion that the Elk Hills were oil in character and that there was an oil bearing zone underneath those hills, he did not understand his business" (R. 1004). Dr. Branner stated that, taking into consideration the developments that had been accomplished off the lands in suit in 1904 and the geologic structure of the region, he would in 1904 have advised the pur- chase of these lands for their oil value at a price in excess of their value for agriculture (R. 1005). He also testified that practical men invest money in oil territory in advance of drilling on the advice of geologists and he regarded that practice as fully justified by the results (R. 1006). With reference to the "risk" in petroleum mining as compared with the mining of the precious metals he testified in substance as follows : "I am familiar with the methods of quartz and gold mining and with petroleum mining and consider that, so far as metal mining is con- cerned, the finding of traces of gold or silver on 89 the surface of a ledge or lode does not amount to anything more than the merest suggestion, whereas in the case of the Elk Hills I consider that the evidence makes it worth going ahead without any other evidence than the geology itself and disregarding any drilling or actual development in the hills themselves. That evi- dence existed as early as 1900." (R. 1023.) Dr. Branner also testified that there is no such uncertainty in petroleum mining as in quartz mining and that, next to coal mining, the mining of petro- leum, based solely on geologic evidence, is the surest kind of mining (R. 1024). These views find ample support in the testimony of other witnesses and brief references to that of Frank Barrett, W. E. Youle, John R. Scupham, F. O. Martin and J. A. Taff follow : Captain Frank Barrett when on the stand was sixty-seven years old and had been in the oil business practically his entire life, having operated in Penn- sylvania, West Virginia, Kentucky, Ohio, Texas, Indiana and California. He brought in the first pay- ing well in the Coalinga field, having come to Cali- fornia about 1885 (R. 478). He stated that he had found, to his sorrow, that placer and gold mining were much more uncertain than the oil business and denied on cross-examination that a practical oil driller has just as much chance to tell where oil is as a scientific geologist, stating that a good practical driller may not know exactly where to locate his well, while a man who understands the formation 90 and the topography of the country will locate the well and turn it over to the driller (E. 486). W. E. Youle, whose qualifications as an expert are set out on pages 540, 541, 542, 543 and 544 of the record, had been in the oil business fiftv vears, having begun in Pennsylvania in 1863. He had had wide experience in California, having discovered and exploited many of the now important fields, and had had phenomenal success in determining the presence of oil. Upon this record he stands out par excellence as combining in conspicuous measure knowledge of oil both scientific and practical. He had not, in his experience of fifty years, failed in a single instance to find oil sand in any place in which, before drilling, he had thought that he would find it (R. 567) ; and the context shows that he based his "thought that he would find it" on geologic evidence. Especially pertinent to the question under immediate review is his testimonv that, while the discoverv of oil in one section does not indicate to a practical oil man that oil will be found in ever}- other section in the town- ship, experience has shown that oil is not confined to the well in which it is found, but that it "has a direc- tion somewhere" and that, in consequence of that fact, after a discovery you will find oil men locating and acquiring lands quite distant from the discovery well (E. 579). He further stated that many years before he had seen the uplift and fold in the Elk Hills and because of these surface conditions had advised the location of several sections (E. 579). 91 In speaking, as indicated, of "the direction" of oil it is clear that Youle referred to the sand which is the reservoir of the oil; and the fact that oil men locate land at a distance from new wells is a recogni- tion by them of the persistence of the sand and of the fact that by determining its dip and direction it is possible to trace the oil sand underground and locate producing wells at a distance upon the basis of these known conditions, the presence of oil at a given place and the direction and dip of the containing stratmn of sand — being the identical principle upon which it is held in the Diamond Coal & Coke Company case that lands may in advance of actual development be determined to be coal lands. John Scupham had entered the service of the Cen- tral Pacific Railroad Compan}^ in 1865 as a civil en- gineer. In 1871 he was recalled from field work and was made consulting engineer reporting to the direc- tors Leland Stanford, Charles Crocker, Mark Hop- kins, C. P. Huntington and their successors. He came into contact frequently with these directors and, among other things, examined mineral lands for them. Upon his advice various coal properties had been acquired. He did pioneer meteorological work and reported on artesian water projects in the San Joaquin valley and sank the first successful artesian well (R. 586). In 1887 A. N. Towne, general mana- ger of the Southern Pacific Railroad Company, sent him to make an examination of the asphalt deposits around McKittrick. AYhat he found and the results of his report are told elsewhere in this brief. Suffice 92 it to say that lie came to the conclusion at that time that the lands in suit were oil lands and so advised the directors of the railroad (K. 588). With particular reference to the striking similar- ity between coal and oil mining Scupham, who had had wide experience in both, testified that there is a relation between the means by wdiich one deter- mines the depth of artesian basins and coal measures and that of oil measures or oil sands based upon the controlling principle of the stratification, that is, the direction and dip of the strata (R. 599). J. A. Taff was a geologist in the employ of appel- lants w^ho testified as a witness for them. He had been on the United States Geological Survey and had had experience in classifying coal lands. He ad- mitted that it is possible and usual to do this in advance of development. He testified that in geo- logical examinations the succession of the beds and the extent to which oil is likely to occur are deter- mined in the same way in which is determined the extent of coal beds (R. 2768). F. O. Martin, an expert mineralogist and geologist (R. 609), testified in effect that oil mining is much less uncertain than lode mining (R. 617-8) and that the conditions of the accumulation of oil and the appearance of valuable metals such as gold are quite dissimilar, the conditions favoring oil (R. 619). It is practically without dispute upon the record and it appears from the foregoing testimony that oil, )3 like coal, occurs in stratified sedimentary rocks ; that oil sands, like coal, are, within reasonable limitations, persistent; and that oil, in its mode of deposition and situation in the earth, is like coal and unlike minerals found in lodes. To be sure, there is testimony on the part, princi- pally, of interested Southern Pacific Company geolo- gists to the effect that oil sands, meeting obstructions, are interrupted; that at tunes and in places they "thin" or are "pinched out"; and it is urged that by reason thereof the principle of the Diamond Coal & Coke Company case is not applicable to the determi- nation of what lands are "known oil lands". It is sufficient at this point to answer that these conten- tions lack novelty — they are the identical contentions advanced by the defendant in the case in question and are noted and conclusivel}^ disposed of by the opinion of the Supreme Court, while in the circuit court of appeals it is said that, as urged, they amount to "a condemnation in general of the practical value of the coal beds of the west". That lands may in advance of development be determined to be known oil lands upon the same basis as that laid down in the Diamond Coal and Coke case is not without legislative recognition and sanction. On July 2, 1864, the government made to the Northern Pacific Railroad Company a grant of land similar in all essential respects to the grant under which appellants claim. By an act approved February 26, 1895, Congress provided for an exam- 94 ination and classification of the lands within the pri- mary indemnity limits of the Northern Pacific grant with reference to their mineral character and therein made a legislative declaration of what evidence is competent and proper to determine the character of such lands. That declaration, made, as is seen, nine years before the selection by the Southern Pacific Eailroad Company of the lands in suit, recognizes clearly the propriety and practicability of determin- ing by geologic evidence what are knoAvn oil lands. The pertinent section of the act in question follows : "Section 3. That all said lands shall be classified as mineral which by reason of valuable mineral deposits are open to exploration, occu- pation and purchase under the provisions of the United States mining laws; and the commis- sioners, in making the classification hereinafter provided for, shall take into consideration the mineral discovered or developed on or adjacent to such land and the geological formation of all lands to be examined and classified or the lands adjacent thereto and the reasonable probabili- ties of such land containing valuable mineral deposits because of its said formation, location or character. The classification herein provided for shall be by each legal subdivision, where the lands have been surveyed. If the lands examined are not surveyed, classification shall be made by tracts of such extent and designated by such natural or artificial boundaries to identify them as the coimnissioners may determine. Where mining locations have been heretofore made or patents issued for mining ground in any section of land, this sliall be taken as prima facie evi- dence that the forty-acre subdivision within which it is located is mineral land. Provided, that the word 'mineral' where it appears in this 95 act, shall not be held to include iron or coal ; and provided, further, that the examination and classification of lands hereby authorized shall be made without reference or regard to any pre- vious examination or report or classification thereof." (28 Stat, at L. 683.) In the Diamond Coal and Coke Company case the contention was that the drill was the onlv test of the coal character of land. Indeed, this is an under- statement of the contention there urged, as appears from the opinion of the Supreme Court and particu- larl}^ that of the circuit court of appeals. In the former is found this passage : a Special emphasis was laid upon the uncer- tainties incident to coal mining in the cretaceous areas of the West by reason of the occurrence of faults, thinning and the like; and this, it was said, required that actual exposure of coal within the land, by an outcropping at the sur- face or an excavation, be accepted as the true and only test." In the circuit court of appeals the opinion of Judge Hook contains the following language: "The defendant gives a number of reasons for its position that the lands in suit are not cojil lands. It says, which is true, there is no evi- dence upon their surface of coal content. The long line of outcrop lies to the eastward. It also says that the only way to determine with the certainty required by law is to explore with a drill ; and that has not been done. One of de- fendant 's principal witnesses testified that, in the absence of an actual outcrop of coal, a tract of land should be laid out in thousand foot squares and a hole drilled with a diamond drill 9() to the requisite depth at each corner. He also said that in the case here the cost would be pro- hibitive. His contention was, and it is substan- tially that of defendant, that land could not be regarded as coal land unless coal is actualh^ ex- posed naturally or artificially; in other words, at the time it is acquired from the United States there must be either a natural outcrop or an actual disclosure by the work of man; visible evidences of coal veins upon adjacent lands and geological probabilities, however strong, as to the lands in question, will not suffice." (191 Fed. 786, 794.) So, in the instant case the contention is that the drill is the only test, this requirement being urged in several forms and clothed in various language. On the argument below "wells in the plural" was the formula ; and at all times it has been vehemently proclaimed that nothing short of absolute "knowl- edge" of the presence upon the identical lands in suit of oil of present commercial quantity and quality will suffice to remove them from the category of agricultural non-mineral lands. In the Diamond Coal & Coke Company case both the Supreme Court and the Circuit Court of Appeals for the Eighth Circuit repudiated this doctrine and held that lands may by proof of known conditions that are such as to engender the belief that they are commercial coal lands be determined to be coal lands. The testimony from the record already recited proves the striking similarity in the occurrence and mode of deposition and situation in the earth of coal 97 and oil. If, then, the standard of the Diamond Coal & Coke Company case it not applicable to oil, it must be rigidly restricted to coal; and, as already pointed out, the language of the opinion excludes only those minerals "whose mode of deposition and situation in the earth are so irregular or otherwise unlike coal as to require that they be dealt with along other lines". Inferentially, it applies to those minerals not within the described exclusion. Judge Bean found that the standard was applicable to oil and so held. Congress nearly twenty years previ- ously had recognized the soundness of geologic evi- dence as the basis of determining whether given lands are oil lands and in the instance cited above by legislation prescribed it as the basis of such de- termination. While now denying the propriet}^ of determining the oil character of lands by geologic evidence and affirming that, on the contrar}', the drill is the only test, the record demonstrates that even before the date of the assailed patent appellants were them- selves by geologic evidence alone segregating from their vast holdings large areas of lands upon wliich there was neither exposure nor development, classi- fying them as oil lands and withdrawing them from sale b}^ their land department as agricultural lands. Three years later upon geologic evidence alone the Southern Pacific Railroad Company, one of the ap- pellants, leased to the Kern Trading & Oil Company, another of appellants already sho^n on pages 11 and 12 of this brief to have been a subsidiarj^ of and 98 owned by the Southern Pacific Company and, in reality, merely its "fuel department", hundreds and thousands of acres of lands upon which there was neither exposure of oil sand nor development — in- deed, nothing beyond favorable structure, formation and relation to proven lands in some instances many miles distant. Upon the very principle upon which the government contends that the lands in suit were shown by the known conditions to be oil lands appel- lants segregated and classified lands as such; and it is both instructive and interesting to note that some of the lands so determined b}^ appellants to be oil lands and as such segregated and leased to an oil pro- duction company adjoin and are interspersed with the very lands which the government contends were kno^Ti oil lands at the time when they were selected by appellants and falsely represented to be non- mineral agricultural lands. Since more extended reference to the evidence proving the indicated action on the part of appellants will be hereafter made in connection with another phase of the main question under consideration, only brief attention is accorded it now. From 1893 to the summer of 1903 J. B. Treadwell was the oil expert of the Southern Pacific Company (R. 424). He got data or information upon which he made recommendations of lands to be withdrawn from sale from "personal investigation" (R. 432-3). Exhibit 115 is a map introduced by appellants show- ing the withdrawal made by him in 1900. An exam- ination of it, as well as the evidence of Treadwell 99 when called as a witness for appellants, shows that it included lands further away from the outcrop or producing wells than the lands in suit. Indeed, he included in his withdrawal sections 3, 5, 7, 9 and 17 and the NWi/4 of section 19 and all of section 21 of the very township in which are the lands in suit and the map, read in connection with its legend, shows that those lands were "shaded tracts reserved from sale because in or near oil territory". (E. 3002.) Explaining the principle upon which he selected lands to be withdrawn from sale Treadwell testified that he "followed the system of taking the trend of the oil and located enough so as to be sure to go far enough on the dip to include all the oil that they in the future might develop and even further". (R. 437.) This was while he was on the stand as a gov- erimient witness and long before appellants intro- duced Exhibit 115, Treadwell testif^dng as a govern- ment witness that all of his maps had been destroyed in the fire of 1906 (R. 433-4) ; and he then, in ignor- ance of the fact that Exhibit 115 would be produced to contradict him, stated that he did not include in his withdrawal any part of the Elk Hills (R. 435). Exhibit 115 shows that he did include considerable portions of the Elk Hills and, indeed, every section of land adjoining in every direction the lands in suit; and he himself in effect admitted that, if he had not been ignorant of the fact that the lands in suit had been surveyed and if they had been then patented to the Southern Pacific Railroad Company, he would have shaded and reserved them from sale (R. 3458-9). 100 Thus it is shown that four years before the patent now assailed appellants through their oil expert followed the "system of taking the trend of the oil" for the purpose of determining what lands were oil lands. Following the "sj^stem of taking the trend" along the dip can mean nothing less than that he started from the exposure or well, ascertained and followed the dip of the strata and determined geo- logically that lands on the dip, though many miles away from the exposure or well, were oil lands. . Can appellants be heard to complain that the govemn- ment invokes the very "system" employed by their own expert ^ In 1903 the Southern Pacific Company, wishing to separate its oil production from other departments, created a "fuel department" and organized it into a corporation, the Kern Trading & Oil Company (R. 3085). Instructions were given to its then head geologist, E. T. Dumble, to select the oil lands of the Southern Pacific Railroad Company to be leased to and operated by this new department (R. 2911). Dumble submitted the questions of the lands to be selected to Josiah Owen, a geologist and field man of appellants (R. 2910). The Kern Trading & Oil Company lease, of which much will be heard later, contains the catalogue and description of the lands so selected (Ex. YY; R. 1101, 1106-7). This lease includes section 31 in township 30-23, the township in whi(^h the lands in suit lie, section 25 of 30-22 and section 5 of 31-23, adjoining or cornering the lands in suit; from which it appears that in 1903 101 ' appellants were then following the "system" in- augurated by Treadwell and to the application of which the}^ now object; for they were then frans- f erring to their "fuel department" as oil lands sections upon which there was neither exposure nor well and which, accordingly, they could determine and did accordingly determine to be oil lands solely upon geologic evidence — that is, by following the dip of the strata from knoAAoi exposures or wells and assuming the continuation and persistence of tlce sands and contained oil. It is surely not doing vio- lence to the proprieties to observe that the estimate placed by appellants in 1900 and 1903 upon geologic evidence is in striking contrast to the execration and contumelv with which thev now view it. Then it was a useful basis for practical operation — now it is condemned as synomonous with "guessing". In the Diamond Coal and Coke Company case the basic facts were the outcrop to the east and the dip of the strata towards the lands there in suit. All that was there conceded was that "the coal horizon — meaning the coal-bearing strata shown at the out- crop, but not necessarily the coal — passed through the lands in controversy". From this it was held that the presence of coal under the lands in question could be assumed or deduced. In the instant case there are the long line of seepages and many wells to the west and the known dip of the oil-containing sands towards the lands in suit and, in addition, the record is not without evidence of the known presence of oil sand and outcrop upon and beyond the lands •''' 102 in suit. Indeed, the parallel is complete. In the case of coal the Supreme Court says that upon such evidence practical men invest large sums of money. The like appears from the testimony already recited in the case of oil; and it will hereinafter be sho-svn that practical men in the case of the Elk Hills upon no more evidence than this record discloses invested more than half a million dollars. September 21, 1903, E. T. Dumble, chief geologist of appellants, wrote a letter to Julius Kruttschnitt, then assistant to the president of the Southern Pa- cific Company (E. 2912), being defendant's Exhibit 119, in which he offered certain suggestions concern- ing the operation of the newly formed "fuel depart- ment", the Kern Trading & Oil Company. After advising that the "Kern Trading & Oil Company should acquire by purchase or lease such lands now belonging to the Southern Pacific Company as we consider valuahle for oil purposes," he proceeds as follows : "The attached maps show these under three heads: first, oil lands proven or practically proven, colored red; very probable oil lands, colored green; probable oil lands, colored blue. Of the oil value of the first two classes there is very little dou])t; tlte tliird depends in part upon the continuance of normal dips and conditions, dut in addition it represents untested anti- clinals u'hich show good indications of oil. I consider that all of these lands should bo under the control of this company." (R. 2912-3.) In this letter the chief expert of appellants is seen in 1903, a year before patent, concluding from geo- 103 logic evidence alone that certain lands are oil lands. That is, starting from the proven he concluded that unproved lands contained oil because of the persist- ence of oil sands known at the proven point to con- tain oil. His course of reasoning manifestly and necessarily was that, since at one point or at several points he found oil either in a seepage or in a well, he would find it at a distance along the continuation of the stratum of sand which was found to contain oil at the point of starting, provided the dip and conditions continued normal — an illuminating appli- cation in 1903 to oil of the principle many years later approved by the Supreme Court for determining that lands are coal lands. His deduction was purely geologic and the counterpart of the reasoning of Dr. Branner, Veatch, Barrett, Youle and Owen, — resting upon the basis of classification approved by Con- gress and applied by the court of last resort. It remains to note reports of the geologist of ap- pellants concerning the persistence of the oil sands so consjDicuous at McKittriek. E. T. Bumble, chief geologist of the Southern Pa- cific Company, said of Josiah Owen that he had a faculty of carrying underground conditions in his mind more perfectly than anyone whom he had ever known (E. 3037). Owen was an expert oil geologist of appellants from 1902 to 1909. In February, 1903, he took up the investigation of the oil field at Mc- Kittriek and on March 25, 1903, made a detailed report to Diunble which was introduced by the gov- 104 erninent as Exhibit 4-J (R. 1615). McKittrick, it will be remembered, is four miles west of the lands ill suit. Of the McKittrick field he says : "There is but one oil horizon in this field. .... In the direction of Midw^ay I find that the McKittrick fold flattens out in the valley, but other hills further on in the same direction would indicate that it may extend to near the Kern lake. The Midway oil sands belong to the same horizon as the McKittrick oil sands." (R. 1617.) It cannot be knovrn positively whether by "other hills" Owen intended to refer to the Elk Hills or the Buena Vista Hills or both; but the inherent proba- bilities are that he had in mind both. Further on in this report he says: "I have traced the outcrop of the oil horizon all the way to Sunset oil field and find that there is hid the one oil sand. I believe it will be possi- ble to trace the same horizon to the Kern River fields. There are several reasons for believing that they all belong to the same zone." (R. 1620.) A line drawn from McKittrick to the Kern River fields would pass through the north end of the lands in suit, the distance from McKittrick to the lands in suit being four miles and from the lands in suit to the Kern River fields about twentj^-five miles. Thus in 1903 we have the evidence of this expert field geologist of appellants themselves that by geo- logic evidence he had arrived at the conclusion that the oil sands persisted from McKittrick under the 105 lands in suit and, indeed, twenty-five miles beyond. His report is eloquent of his faith prior to the assailed patent in the value of geologic evidence in determining the direction and persistence of oil sands from the point where their presence is proven by natural exposure or actual development. Obvi- ously, he employed and followed the same course of reasoning and deduction advocated by "the expert for the government" in the Diamond Coal & Coke Company case and approved by the Supreme Court. He believed that the oil horizon at McKittrick, under the Elk and Buena Vista Hills and in the Kern River fields was one and the same — the exact parallel of the admission in the Diamond Coal & Coke Company case that the coal horizon — not the coal itself, but only the strata which in the outcrop contained coal — passed under the lands there in con- troversy. In 1910 there had been no development whatever in the Elk Hills. Their condition was in all respects as it had been in 1903 and 1904; but, nevertheless, the Associated Oil Company, at that time controlled and dominated by the appellants (R. 3592) which owned fifty-one per cent of its capital stock and hav- ing as the chairman of its board of directors Mr. Wm. F. Herrin (R. 3613), the general counsel of appellants and a vice-president of the Southern Pacific Company (p. 20 of Vol. of "Documents and Evidence Not Printed"), spent more than half a million dollars in the development for oil purposes of even numbered sections interspersed with the 106 lands in suit and completely surrounding parts of them (R. 3123). The evidence in proof of this fact was offered by appellants. This action of the Asso- ciated Oil Company constitutes a striking instance of the application to oil of the identical principle upon which, in the case of coal as pointed out by the court in the Diamond Coal and Coke Company case, practical coal men "regard lands as valuable for coal and invest in them as such". It is true that the evidence in question relates to a period postdating the patent; but that subtracts nothing from its rele- vancy and competency upon this point or from the inescapable implication that practical oil men follow in the footsteps of practical coal men and invest their money upon faith in the reliableness of geo- logic evidence and deduction. Enough has been shown, it is submitted, to demon- strate the soundness of the thesis that the rule laid down in the Diamond Coal & Coke Company case is applicable to the instant case and furnishes the test by which it could have been determined before pa- tent and in advance of development, upon the basis of the known conditions hereinafter to be reviewed, that the lands in suit were known mineral lands. There is in reality but one question in this case : Were the known conditions at the time of the proceedings which re- sulted in the assailed patent plainly such as to engender the belief that the lands in suit contained oU in such quantity and of such quality as would render its extraction profitable and justify expenditures to that end? 107 Next, therefore, will follow an examination of the evidence showing these conditions and leading ir- resistibly to the conclusion that they were not only of the character required by the rule, but that they actually engendered in the Southern Pacific Com- pany and the Southern Pacific Eailroad Company the belief required by the rule. What the known conditions were will betreated under the heading: THE KNOWN CONDITIONS. This topic will be subdivided into the following heads, some of which will themselves be appropri- ately subdivided: A. Conditions and knowledge thereof. 1. Structure of the lands in suit. 2. Situation of the lands in suit with reference to the accepted source of oil. 3. Evidences of oil in the Elk Hills. 4. Seepages and oil sands in the neighborhood generally. 5. Oil development in the vicinity of the lands in suit. 6. Geological connection between foregoing lands and those in suit. 7. Non-agricultural character of lands in suit. B. Belief, general and specific. 108 1. STEUCTUKE OF THE LANDS IN SUIT. (a) Anticlinal. The lands in suit lie on both sides of the summit of the Elk Hills (E. 690) and for convenience are re- ferred to herein as the Elk Hills. The structural character of the Elk Hills is evi- dent to the most casual observer (R. 702). Struc- tural hills are contradistinguished from hills that owe their form or elevation to erosion, that is, that are left ujDstanding above the surrounding sur- face because of the greater resistance of the ma- terials of which they are composed. Structural hills owe their elevation to torsion of the crust of the earth, by which the stratified beds of which they are composed are folded so that they are thrust or pushed above the general level of the country. The Elk Hills constitute an anticlinal fold in which the present topography shows the essential slope of the fold. That fold has a few wrinkles in it and it is these wrinkles in the grand uplift or fold which are referred to as different anticlines — they are anti- clinal axes of minor folds, the hills themselves being a great fold. ( R. 714). The Elk Hills are, like their neighbors, the Buena Vista Hills, an elongated dome of ideal structure for oil accumulation. (R. 702-3). That an anticline runs through the Elk Hills is not in dispute. Indeed, this anticline was observed and carefully traced prior to patent by Josiah Owen, 109 a skilled geologist of appellants, on a map which he enclosed in a letter of March 25, 1903, to E. T. Dimible, chief geologist of the Southern Pacific Company (Ex. 157; R. 2977). Owen had entered the employ of the appellants in the fall of 1902. (R. 2900-1). He was at once assigned to the examina- tion of the Southern Pacific Railroad Company's oil lands in California and in March, 1903, wrote the letter with which was enclosed the map in question. This map, introduced by appellants, delineates clear- ly the anticlinal structure of the lands in suit. More- over, he told F. M. Anderson, another of appellants' geologists and witnesses, that he had been in the Elk Hills and that he recognized their anticlinal struc- ture (R. 2598). He was well acquainted with it, according to his best friend, S. P. Wible (R. 321). F. M. Anderson, just referred to, testified that the Elk Hills is rather a broad fold of dome-like char- acter and that the anticline of the Elk Hills is a broader arch than that of the Buena Vista Hills (R. 2618) ; also, that an anticlinal structure is usu- ally the most favorable for the reason that it facili- tates the accumulation and retention of oil if the right stratigraphic and other conditions are present (R. 2623); further, that the general position and the general character of the Elk Hills had attracted his interest from the first (R. 2625). W. H. Ochsner, another of appellants' geologists and experts, testified: ^' Where the anticline is as clearly defined as in the Elk Hills we have the ele- ments of an ideal spot by an anticlinal structure." 110 (R. 2211). He stated also that the mere sight of the uplift there would arouse the suspicion of a com- petent geologist as to the oil-bearing character of the Elk Hills and that that suspicion would have been immediately aroused without any investigation. (R. 2212). The record is replete with evidence of the anti- clinal structure of the Elk Hills and, indeed, that such w^as their structure is not disputed by appel- lants. That their structure was known and recog- nized and that the significance of the structure was appreciated appears from the testimony of many witnesses. S. G. Drouillard testified that their formation is exactlv like that of the other oil country and that the anticline was found running parallel with McKit- trick, northwest and southeast (R. 116-117) and in a direction which would take it generally through the center of the hills (R. 124). L. G. Sarnow, who for years worked for appel- lants under their oil expert, J. B. Treadwell, and drilled for them thii*ty wells in the Kern River field and three in the McKittrick field (R. 133-4), testified that the formation of the Elk Hills is shale, gypsum and sand and is substantially the same as the formation of the eastern flank of the Temblor range (R. 134). Ira M. Anderson, who had had many years' ex- perience exploiting and developing oil territory and Ill had drilled in four or more states, examined the Kern Eiver, Sunset, McKittrick and Midway fields and found them all about the same (E. 153-4). He examined the Elk Hills and found shale, g}^sum and oil sand (E. 155) and an anticline running through the hills northwest and southeast (E. 160-1). There is quite a pronounced anticline near the town of McKittrick and to the south and west of it. It dips away from the town of McKittrick. (E. 162-3). F. J. Sarnow drilled ten producing wells in the McKittrick field under Trea dwell for appellants (E. 164-5). He stated that at the time of testifying he was drilling on section 6 of 30-22 on the same anti- cline that runs through the Elk Hills (see exhibit 157) ; that he had drilled three wells there and was working on the fourth ; that he concluded that there is an anticline there because it runs from near Buena Vista Lake to thirty-five miles northwest of McKittrick. He said further that he had drilled six wells on that same anticline and that sometimes you don't see it for a couple of miles and then it crops up again with blow-outs of oil sand; that the anticline is an outcropping of oil sands and blow- outs and the formation surrounds it, the formation being shale, clay and g}^sum ; and that the oil sands show stratification from which you can determine that it is an anticline (E. 173-4). M. S. Wagy was in the Elk Hills about 1900 and located for oil purposes in 30-23, recognizing the general trend of the ledge running through the hills and the formation pitching to the southwest con- 1V2 stituting an anticline running northwest aad south- west (R. 179-80). B. K. Lee, after mentioning many outcrops and seepages in the vicinity of McKittrick, stated that he noticed in 1900 evidences of an anticline in the rail- road cut in section 14 of to^Tiship 30-22 in the Elk Hills (E. 227) and later, starting from section 36 of 30-23, followed the anticline "right through from there to the cut and drove a team across, a distance of seven miles", finding and tracing without diffi- culty the pitch both to the north and south (R. 232). S. P. Wible was familiar with the Elk Hills since 1893. He had drilled many wells and had had long experience in the oil business (R. 318). He stated that there is an anticline in the Elk Hills which could be detected in the canj^on in a number of sections, in a dozen different places, just north of the apex of the hills ; that it is verv well defined in section 14 of 30-22 just at the northeast end of the Elk Hills in the railroad cut and that this is a continuation of the anticline running northwest and southeast through the Elk Hills which can be followed over the hills to the southeast ; and that Josiah Owen, geologist of the Southern Pacific Company whom he knew well, was acquainted with it (R. 320-1). He further testi- fied that before 1904 there were two oil wells on sec- tion 6 of 30-22 and one on section 1 of 30-21, and three on the same anticline which runs through the Elk Hills (R. 321). (The record says section 1 of 30-22 by mistake). He stated that the formation of 30-23 and 30-24 consisted of shale, sandstone, clay, 113 fullers-earth and gypsum, fullers-earth, gypsum and oil usually occurring in conjunction (R. 322). H. P. Dover started in the oil business in 1901 and had been in it constantly. He did not find quite as much shale in the Elk Hills as in the Midway, but the formation is favorable for oil (R. 463). Colon F. Whittier, who had been in the oil busi- ness fourteen years and produced a million barrels a year, first went to McKittrick in 1902. (R. 469). He knew the Elk Hills and stated that the anticline running through them is sufficiently marked to be seen from the train as it goes through the cut in section 14 of 30-22 (R. 469). Frank Barrett had had practical experience in the oil business well-nigh all his life. He first went into the Coalinga field in 1895 and brought in the first paying well in that field. He visited the Elk Hills in 1899 and went through them on a tour of investiga- tion (R. 479). He noticed very pronounced indica- tions of anticlines in the Elk Hills and did Tivt think the characteristics of the formation at all dissimilar to the formation around McKittrick, Taft and Mari- copa (R. 480). Chas. W. Lamont, also an experienced oil man (R. 580), was in the Elk Hills in 1899 and concluded that section 32 of 30-24 was the top of the anticline and at that time took section 14 of 30-22 to be the west end of the anticline (R. 581). 114 F. O. Martin, an expert engineer, geologist and mineralogist (R. 609-10), described the Elk Hills as an anticlinorum, meaning thereby an anticlinal ridge with a major anticline and smaller wrinkles or folds running parallel or nearly so to the main ridge, whose topography bears a close resemblance to the geological structure (E. 612). There is evidence on the surface that the conditions in the hills are prac- tically the same as when first uplifted and the}" were practically the same in 1903 as in 1910. John Lang, a witness for appellants, thought that the anticline in the Elk Hills runs from northwest to southeast and had seen outcrojDpings of it in section 14 of 30-22 and noticed the anticlinal fold there. He had observed the broken and smashed conditions around McKittrick that had resulted from disturb- ances and that there was no evidence of such dis- turbances in the Elk Hills (R. 1969-70). Samuel Shannon, called by appellants, who had made in 1909 locations in the Elk Hills on which he had spent eight or nine thousand dollars (R. 2140-1), described them as having pretty much the same char- acteristics as the Buena Vista Hills, admittedly productive oil territory (R. 2143). Other witnesses to the same effect might be quoted ; but enough has been shown to prove the anticlinal structure of the lands in suit. As already indicated, this is not disputed by appellants. 115 (b) The significance of anticlinal structure. This subject may be dismissed with a few words — not, however, because unimj^ortant, but because not a subject of controversy. The testimony of two government experts and that of an appellants' ex- pert will suffice. F. Oskar Martin stated, in effct, that the most favorable indication of the oil character of lands is anticlinal structure and that it is a well known fact that along the summits of anticlines oil tends to ac- cumulate and that these summits are the most favor- able spots for such accumulation (R. 613). F. M. Anderson, a geologist and expert witness of appellants, gave the following testimony : "A. The outcrop of oil sands, of course, taken in connection with the dip and strike of the same and the general appearance of the sand and the overlying strata, is one of the most favorable ; and the occurrence of asphaltum, oil springs and seepages and so forth, taken in con- nection with other things, is a very favorable indication. ''Q. Structure? "A. And structure. "Q. What sort of structure would you re- gard as favorable? "A. Usually an anticlinal structure is the most favorable. "Q. And why is that so? ''A. It facilitates the accumulation and re- 116 tention of oil if tlie right stratigraphic con- ditions and other conditions are present." (R. 2622-3). There is no controversy here or elsewhere as to the proposition that the geological structure most favorable to the accumulation and retention of oil is the anticlinal. The commerical oil of to-day is oil that has accumulated and been stored in past ages in nature's anticlinal reservoirs. Accordingly, in ex- ploring for a present supply the skilled oil man di- rects his attention to the natural reservoirs of oil found in anticlinal structures. This is what the several witnesses whose testimony has been recited had in mind when speaking of the anticlinal struc- ture of the lands in suit. Nor is there controversy that the Elk Hills, in- cluding the lands in suit, were and are structurally ideal reservoirs for the accumulation and retention of oil. Exhibit 157, appellants' own evidence, shows clearly the anticlinal structure of the lands in suit and Veatch testified that these lands lie on both sides of the summit of the hills (690), Dr. Branner adding that the general structure was perfectly simple and the conditions for the accumulation of oil favorable along certain folds that were easily seen by any geol- ogist (R. 1003). That this was one of the known con- ditions appears not only from the evidence already recited, but follows of necessity from the fact that it was so conspicuous that it could be plainly seen from McKittrick (S. P. Wible, R. 320), as also from 117 the railroad cars as they passed through from Bakersfield to MeKittrick and, of course, returning (C. F. Whittier, R. 469). Finally, according to Dr. Branner, the general structure of the Elk Hills is so favorable to the ac- cumulation of oil in that region that, even if drilling had gone to five thousand feet and not found oil, he would yet advise a company to not give up hope of finding it (R. 1008). (c) Relation of accumulation to structure. Oil does not as a rule remain in the place where it is found. It passes out into an absorbing bed where it accumulates. Hence the necessity of favor- able structure. It is formed by the death of myriads of small marine infusoria called diatoms; but its accumulation depends upon the nature of the beds into which it passes. (Dr. Branner, R. 1011). As will more fully hereinafter appear, even though the oil be formed in abundant quantity and the porous beds be at hand, unless the structure of the beds is such as to retain the oil as it passes into them, there is no retention, bat infinite dissipation. Hence the necessity of the anticlinal structure in which to trap and confine the migrating oil (R. 1011, 1016-17). 2. FAVORABLE SITUATION OF THE LANDS IN SUIT WITH REF- ERENCE TO THE SOURCE OF OIL. The record exhibits unanimous agreement that the accepted source of the oil in the California fields is shales. Dr. Branner lays this down categorically 118 (R. 1010-11). He testified that the oil in the Cali- fornia fields originally developed from a series of beds designated by geologists as "Monterey shales'' — a series of rocks made up of the skeletons of dia- toms that have accumulated in infinite quantities, especially about the southern end of the San Joa- quin Valley, the name "Monterey shales" being local and given because rocks of the same age and gen- eral character occur at Monterey, California (R. 1008-9). He explained that diatoms float near the surface of the water while alive and, upon dying, sink wherever they are, whether in shallow or deep water. In the case of marine deposits, he said, these currents sweep down from the north and have been pouring in for millions of years from the same source and accumulating where the coastal condi- tions were favorable. Further explaining that it would be erroneous to attribute all of the oil to the "Monterey shales", he stated that, in looking over lands that he had been called upon to examine for petroleum, he searched for these diatomaceous shales and, because of the enormous period of time during which they had been accumulating, these dia- toms were not associated exclusively with "Monterey shales" nor their accumulations confined to the period during which these specific shales were being heaped up; so that, wherever he had found marine diatoms accumulated in considerable quantities, whether in the Monterey or other shales, he consid- ered that there was a legitimate place to look for petroleum (R. 1009-10-11). 119 Dr. Branner fui'ther testified that at the southern end of the San Joaquin valley these diatomaeeous shales have a thickness of five thousand feet and that such a great thickness would immediately make a competent geologist prick up his ears and say: "Here is a chance for an enormous accumulation of oil." (R. 1012-13). With reference to the Elk Hills he stated that their general geology would lead him to infer that diatomaeeous shale was under them and in great thickness (R. 1020). They are situated, he said, "right about in front of the thick portions of these Monterey shales. The thickest parts, begin- ning up here some way north of McKittrick, come — oh, perhajDS, twenty miles or more or so northwest of McKittrick and from there down to the vicinitv of Maricopa is the very area in which these shales have those great thicknesses ; and these Buena Vista Hills and Elk Hills lie right off towards the east, northeast, of those hills." (R. 1022). It seemed to him that the best chances for oil in the whole of that region, in which were some of the greatest oil fields in the world, were in the Elk Hills and Buena Vista Hills (R. 1024). It will be borne in mind that Dr. Branner stated that these conditions were such as to "make any competent geologist prick up his ears" and that one who did not recognize the structure, etc., was not competent. This is especially relevant and pointed in view of the presence and work of ap- pellants' geologists and oil experts, Dumble, Owen, F. M. Anderson, Treadwell and others in the region of the lands in suit prior to patent, of which more will be said later. 120 F. M. Anderson, upon whose testimony appellants rely most strongly, admitted that the Elk Hills, lying out some distance from the line of outcrop, are in a favorable place for the thickening of the diatoma- ceous beds which are supposed to be the origin of oil (R. 2627). Thus it appears from the testimony of the gov- ernment's most eminent expert and that of appel- lants' geologist and most prominent expert, who was in their service before patent, that the lands in suit are most favorably situated with reference to the source of the oil which has made the region round about one of the richest and most famous oil fields in the world; and their testimony upon this point stands uncontradicted and unquestioned upon this record. It necessarily follows that this favorable situation was one of the known conditions prior to patent. It is recognized now at a glance and is af- firmatively shown to have been known by at least one of appellants' experts who will be shown later to have been busying themselves prior to patent with minute investigation and examination of these and neighboring lands. 3. EVIDENCES OF OIL IN THE ELK HILLS. (a) Introductory'. The favorable structure of the lands in suit and their favorable situation with reference to the source of oil have been shown. It is now proposed to recite the testimony relating to the actual existence prior to patent of known evidences of oil in the Elk Hills. 121 Dr. Branner indicated very clearly that evidence of the actual presence of oil upon the land is b}^ no means necessary to the determination that it is oil land. He saw the seepage hereinafter referred to on section 32 of township 30-21, but apart from it he felt confident of the unportance of the lands for oil and his experience with oil had been that, if you have an oil-yielding horizon or bed covered over with a thick impervious stratum, it may happen that the evidences of oil itself will never come to the surface ; so that you could, in a region that was otherwise favorable, advise companies to put their wells down absolutely regardless of whether there is a seepage or not. If he found the seepage there he would, as he did in this case, regard it as confirmatory of the other things (E. 1015). It has already been shown that he testified that a geologist, who in 1900, 1901 or 1902 saw the seepages and asphalt around McKittrick and the wells which had then been drilled and who made some examina- tion of the structural formation of the Elk Hills and failed to form an opinion that they were oil in char- acter and that there was an oil bearing zone under them did not understand his business (R. 1004). It is noteworthv that the elements stated do not include evidence of the actual presence of oil in the hills. There is no suggestion that the expert, trained geologists of appellants who during the period in question were exploring these lands before patent did not understand their business. The record will be invoked later to show that they did and that they 122 came to the conclusion reached by Dr. Branner that these lands were oil lands. (b) Seepages, gas Mow-outs, asphaltum, hrea and oil-sands. The record contains evidence of the presence of oil sands, seepages and gas blow-onts in the Elk Hills and in the immediate vicinity of the lands in suit. Dr. Branner himself said that he visited the hills in 1911 and that "near the middle of the noth- vv^est quarter of section 32 of 30-24, about on an anticline, are oil seeps" and that this ''seepage was important as an indication of what was under- neath." (R. 1015). He made no test of it on that occasion ; but it is hardly to be assumed that he could have been mistaken as to what he saw. He was so positive in his estimate of the oil character of the lands, based on favorable structure and situation with reference to the known presence of oil, that he felt no need of confirmation. Jno. R. Scupham, who was consulting engineer to the directors of the Southern Pacific Railroad Com- pany, in 1887 saw the seepage in 32 of 30-24. He testified that it was a fresh seepage and that such indication could not be found in an exhausted oil sand; that it was an active seepage was not visible to the unassisted eye, but it showed freshness of the outflow of oil. The stain was a fresh stain. He could not detect actual oil, but the stain was neces- sarily recent — there had not been a complete evap- oration of it. (R. 597). 123 S. G. Drouillard, whose experience and qualifica- tions as a practical oil man are set out on page 114 of the record, located land in 1899 in the Midway, Temblor, McKittrick, the Buena Vista Hills and the Elk Hills (R. 114-5). He had seen oil outcrop- pings or seepages on section 15 of 30-24, the town- ship next east of the lands in suit. It was quite a belt of sand cropping (R. 114). On the strength of these seeps he and his associates located the land. He had seen an oil seep in section 32 of 20-24 in 1874. Tl^e sand at that time luas wet with oil. It would adhere to the hand when squeezed and there was a prominent smell of gas. He found other seeps north and west that he with his instrument compared with that in 32 of 30-24, finding that it would hit the Elk Hills. He supposed it was an anticline running southeast and northwest and parallel with McKit- trick. When he in 1899 visited the seepage in 32 of 30-24 with his associate, Chas. W. Lamont, the sand was dry. The foimation was exactly like the bal- ance of the country that had oil in it and the land was regarded by him and by people generally as oil land (E. 116-7). After 1874 he visited the seepage in 32 of 30-24 "once in a while" when riding range, the seepage remaining in the same condition; but in 1899 it was dry. He dug about two feet into it and found the same sticky stuff observed in 1874 (R. 121-2). He showed W. E. Youle some of this sand and he pronounced it oil sand (R. 122-3). He lo- cated the land because of this seepage and regarded it as oil territory. He found the anticline on section 124 5 of 30-22 north of McKittrick and an oil sand crop- ping (R. 115, 123). John Jean in 1899 Avent with Chas, W. Lamont to the seepage in 32 of 30-24 and found a black, course sand — dry oil. The depth was about three feet and about one hundred feet long and broad. It looked like dry oil, burnt sand. He reported this to J. B. Treadwell, oil expert of the Southern Pacific Company (R. 128), who accompanied him to see it, examined it and said "it looked good" (R. 127-8). W. E. Youle told him that from the Buena Vista Lake through the hills to the other hills where Mc- Kittrick is and from Sunset north to McKittrick through that flat there was oil; and that, "if you go into the Elk Hills, you will find oil an}^where north of the line between Sunset and McKittrick." L. G. Sarnow had worked for appellants under Treadwell, their oil expert, in the Kern River field and at McKittrick in 1899 and thereafter as a dril- ler and in charge of the field, drilling for them thirty wells in Kern River and three at McKittrick (R. 133-4). He had been in the Elk Hills and lo- cated land there. The formation is substantially the same as that over on the eastern flank of the Temblor Range, shale, gypsum, and sand. (R.134- 5). Having been sho\ATa some sand from 32 of 30-24 by John Jean, he, Jean and Treadwell went to the place from which it was taken which was apparently a blow-out, there being an "anticline that came to the surface in a way — it was just the same as you would 125 find in Temblor". He said that Treadwell was a mineralogist and thought "it was good for oil". On the strength of that showing Treadwell, Jean and he located the land. "With reference to that oil sand", he said, "we did not locate just on the sand. I re- member the sand was on one side of it and we seemed to figure that it came from McKittrick or Temblor and we took the land that we thought would be on the strike" (R. 135-6). He made no test of this sand, but did not need to. It was oil and he did not think he could have been mistaken (R. 141-2). F. D. Lowe in 1900 had heard of the discovery of oil evidences in the Elk Hills — had heard some people speak of the gas blow out in 32 of 30-24. He, with associates, went in in the latter part of 1900 and looked carefullv over the land for anvthino; that indicated an outcropping of oil sand. He found evidences three hundred yards due north of the northeast corner of section 11 of 31-24 — what looked like oil sand in a gulch. He found another similar place at the centre of section 2 of the same township (E. 145-6). He found still another indication half a mile east of the section line of section 2. He said : "These oil sands showed stains and looked as though they were very much dried. ' ' He and his associates made locations of section 10 and others in January, 1901 ; incorporated into a company, levied an assess- ment, erected an eighty foot derrick and let a con- tract for drilling, the derrick being erected at the northeast corner of section 11 of township 31-24, about the place where he made the first discovery. 126 Drilling progressed to five hundred and sixty feet at which point a small showing of oil was discovered. At various times gas was found, which was piped and used for cooking purposes. The formation was identicallv like that he had seen in the Kern Elver field just before striking oil, the witness having been present at the drilling of many successful producing wells in that field (E. 146-7). At the indicated depth drilling ceased "because there was such a general depression and oil got to be a drug on the market that we couldn't see our way clear to continuing the work." In addition he and his associates were greatly embarrassed financially (E. 147-8). He was certain that the well on section 11 of 31-24 found oil. "When the bit would come up, little drips of oil would break and run down in a streak. I am cer- tain that it was oil", he said (E. 150). At five hun- dred feet, when gas was encountered, they lit a paper and dropped it down the casing and, when it had gone down a few feet, there was a terrific exj)losion (E. 153). Ira M. Anderson (experience and qualifications E. 153-4), had found shale, gypsum and oil sands in the Elk Hills (E. 155). He found brea in the fields in the Elk Hills. He made chloroform tests of the earth and rock and shales found in the Elk Hills which showed oil. Quoting from the record: "As to my opinion as to whether or not the Elk Hills was oil producing territory, the formation was there to show that it was. The shale is there, the clay is there and the oil sand is there. I found blow-outs 127 in the Elk Hills. There was a place across from Miller & Lux' headquarters where the gas blew out" — eight or nine miles south and west from the head- quarters, on the east side of the summit line of the Elk Hills, pretty near the top of the ridge (E. 156). Chas. H. Allison, appellants ' witness, corroborated the testimony of F. D. Lowe that he found gas in his well in the Elk Hills, Allison having furnished him with a gas-head with which to retain the gas and pipe it to the cook shanty (R. 2002). David Kinsey, another of appellants' witnesses, also corroborated Allison both as to the finding of gas and as to the cause of the cessation of work (R. 1801). F. J. Sarnow (E. 164) had seen oil crops and sand in the Elk Hills on section 14 of 30-22 on the east side of the railroad and drv oil and overflow on the west side of the wagon road. At other places he saw several different spots where there were oil crops — four or five outcroppings of sands in the Elk Hills. He knew of oil sands in the hills southwest of Mil- ler & Lux' ranch about section 25 of 30-23 and sec- tion 30 of 30-24 (R. 169). The anticline that nms through the Elk Llills is that which goes through section 6 of 30-22 on which section he had drilled three producing wells (R. 173-4). M. S. Wagy located lands for oil in the Elk Hills in 1899-1900. He found in section 32 of 30-24 dead sand that had the odor of oil. It was oil sand 128 stained black (R. 175-6). He located lands in 30-23 and in 30-24. He used to throw on the fire the de- posit that he found there which, when it became heated, would blaze up and give an odor of oil or gas (E. 177-8). Near his locations in the Elk Hills shafts were later on dug by other parties twenty feet which exposed indications of oil (R. 178). Wit- ness regarded the Elk Hills as oil territory because they contained better indications than the Kern River field, where they were then getting oil (R. 180). There was an outcropping on section 26 of 30-23 (R. 181). B. K. Lee (qualifications, R. 224) found asphalt on section 11 of 30-22, saying that on the north flank of the anticline on this section there is a bed of coarse gravel and that, while a superficial exami- nation showed nothing but yellow gravel, yet, when it was broken into, it was found covered with dry oil. He also found an oil seepage on section 2 of 31-23 (R. 225). J. I. Wagy and associates made locations prior to patent ''all over the Elk Hills" in 30-23, 31-23 and 31- 24 (R. 238-9). In 1900 he discovered in a canyon in the Elk Hills a seepage that seemed to be an oil seep- age, very much like the seepages he had seen in the Sunset district. He made his discovery known to H. A. Blodgett, of the firm of Jewett & Blodgett, large oil and asphalt operators, who sent their superintend- ent, W. E. Youle, with the witness to examine it. This seepage was on section 32 of 30-24 and on the 129 strength of it witness in conjunction with Jewett and Bloclgett located the land (R. 242), the locations including the top of the Elk Hills and extending as far west from 32 of 30-24 as the Elk Hills them- selves extended (R. 243-4). These locations were kept up for several years (R. 253-255). Reloca- tions were made and, says the witness, "we had to go out there at 12 o'clock at night and lay in the sage-brush and pretty near freeze to death 'till 12 o'clock and then see if we could beat the other fellow to it." (R. 254). He had not renewed the location since the lands were withdrawn September 27, 1909 (R. 255). S. P. Wible before patent heard of the seepage on 32 of 30-23, but did not see it until afterwards. He said: "It is not what you call an oil seepage; it is what you would call a brea bed. Evidently oil or gas had been in it at one time and dried out at the present time." (R. 318-19). He stated that all the south half of 30-23, the specific lands in suit, lie in the Elk Hills right over the crest and west of the oil croppings in 32 of 30-24 (R. 320). He further testified that there is a decided oil showing in what he would call the north extension of the Elk Hills beyond the railroad to the west, consisting of "oil sand crops in a number of places" and that as early as 1901 and before 1903 there were two oil wells on section 6 of 30-22 and one on section 1 of 30-21, these wells being on the Elk Hills anticline. (See exhibit 157). 130 Charles Brisco (R. 334-5) about 1901 or 1902 found a small brea bed— dried oil— dried asphaltum — in the Elk Hills on the east slope about twelve or fifteen miles south and east of McKittrick. He re- ported it to several people and prior to 1901 took Josiah Owen, appellants' geologist, to see it (R. 335). It consisted of dry dirt and asphaltum mixed together and would burn. Owen explained to him that it was a fissure that had been blown out there. There was dried oil there — that is, it was dried in the dirt and shale (R. 339-40). Owen said to him: ''This is good enough, my boy; hang on to it." (R. 341). The witness' experience had been that, when you find brea, "it is an indication that there is an oil belt there or near there somewhere and it has been oozed out there by the gas". (R. 341). He be- lived oil to be in the Elk Hills "by reason of the contiguity to proven territory." (R. 342). W. G. Sylvester in 1899 found evidence of oil in the Elk Hills. His party was out to locate oil lands and started from the Headquarters Ranch. They had gone into the hills several miles when he saw indications of what he would call asphaltum, though he did not remember on what section. It was pos- sibly four or five miles west and possibly a little south of Headquarter 's Ranch. He found a rather recent oil seepage which was somewhat dried out, but would burn, giving off an odor like coal oil or gasoline. He found this seepage in a gulch and also found asphalt high up on the hills (R. 355-6). His party made many locations in 30-23, 30-24, 31-23 131 and 31-24. In 1901 the Empire Oil & Development Company, of which this witness was the heaviest owner, drilled a well on section 8 of 30-23 to a depth of 980 feet. That well was abandoned in 1901 be- cause there was so much gas that the drilling be- came so expensive that they "couldn't stand the pressure and had to quit" (R. 356-7-8). J. W. Kaerth assisted in the goverimient survey of 30-23, the camp being on section 33. He found as- phaltum reefs which showed up along the summit in a number of places. His party removed some por- tions of these reefs and came to do this in the fol- lowing way : they wanted rocks with which to mark corners and, thinking these reefs rock ledges, sent the camp man out to get some of them. When he came back, he reported that they were not rocks at all, but tar. The witness then examined and found they were cakes of asphalt. The party thereafter used it for camp fuel (R. 417-8). He remembered two or three oil seepages on the lands — what ap- peared to be oil seepages (R. 418). In the report of the survey the lands were characterized as mineral, such characterization being based upon what was seen, viz., the asphaltum reefs and oil seeps (R. 423). H. P. Dover in 1903 or 1904 found ''a kind of a blow-out in a large gulch" in 30-23 ''which showed indications of oil on both sides" — discolored clay and some sand. In his opinion it showed a stain of oil. He detected oil "a little with ether." This was in •I 132 the Elk Hills, he was positive. The formation he thought favorable for oil (R. 461). In 1903 or 1904 he went into the Elk Hills for the purpose of locat- ing oil lands ; but he had been in there on numerous occasions before that— he had worked stock there for Miller & Lux (E. 463). The little seepage in section 23 of 32-23, which he first saw in 1901, "was not like the seepage in 32 in the Elk Hills. There was oil in 32 oozing out of the groimd." (R. 467). Colon F. Whittier (for qualifications and experi- ence see R. 469) testified that there is asphaltum showing in the railroad gap — section 14 of 30-22 — , some oil sands — dry oil. The shales around Mc- Kittrick and those in the Elk Hills are practically the same (R. 469). Charles F. Haberkern knew of and visited the oil showing or outcrop on 32 of 30-24 in 1904 and it looked good enough to cause him to locate the land there (R. 350). Frank Barrett (for qualifications and experience see R. 478-9) first visited the Elk Hills in 1899 and found two or three places where there had been seepages. He took some of the outcroppings home with him. From the smell one could just get a little odor of oil; but, when he applied the chloro- form test, he got traces of oil. It was not asphalt- uni— it was oil. He would not be positive, but thought it was section 17 of 30-24. It was in 30-24 near section 23. He found the formation in the Elk Hills, around McKittrick and at Taft and Maricopa 133 similar (R. 479-80). He believed the lands in suit reasonably ^YO^th $200.00 to $300.00 an acre as oil lands (R. 481). He found some three or four seep- ages where oil had seeped out and caked. All of the lighter properties, of course, had evaporated. There was one blow-out that he saw that was a live seepage with actual oil coming out of it. It was not in the Buena Vista Hills— it was in the Elk Hills (R. 483). N. C. Farnum (R. 493) made a detailed examina- tion of the Elk Hills in 1899. He rode over "the whole hills" pretty thoroughly, making a very thor- ough investigation looking for oil sands that might crop out or gypsum — anything in the way of material upon which to base a location. He went to a place indicated by his guide which he later found was sec- tion 32 of 30-24. There he found evidence enough that "there had some time been some oil in this piece of ground on the surface." It was in a canyon and extended quite a distance down the canyon from what is often termed the blowout or gas fissure (R. 494-5). The witness tested the sand and found that it had been saturated with oil (R. 496). He found evidence of waste oil in the railroad gap in 14 of 30- 22— dry oil in the sand (R. 496). Parker Barrett (R. 523), who located the ground on which the famous Lake View gusher was drilled, as well as lands in the Elk Hills, knew of an oil seep in section 32 of 30-24 in those hills. That seepage assisted him to the conclusion that the lands were good oil lands, although he had determined that such 134: was the case before lie visited it. He had heard of the seepage many years (R. 523-4) and had talked with geologists, including Fairbanks, Ochsner and Owen. He also testified to the presence in the rail- road gap in section 14 of 30-22 in the Elk Hills of asphaltum beds or brea (R. 524-5). F. Oskar Martin, an expert for the government, testified that he found an oil seepage on 32 of 30-24 situated near a point at which the anticline had been somewhat deflected, giving the hydrocarbons a chance to exude to the surface; and that the existence of that seepage was plain evidence to him that the lands must be underlaid by petroliferous deposits (R. 613). W. E. Youle (qualifications and experience, pages of record 540-1-2-3-4) stands out upon this record as the practical oil man of the greatest experience and success of all the witnesses who were called. He saw oil sands in the Elk Hills in 1898 and made for his employers locations based upon his personal observation of the lands. He made chloroform and fire tests of the oil sands which he found in the Elk Hills and the result showed bituminous matter and gases. The land was full of gas, "It was burned with gas all over." This was evidence of a very vol- atile oil without much asphalt base (R. 551-2). (When, as will be shown later, a subsidiary of the Southern Pacific Company drilled wells in the Elk Hills, it found, as Youle had predicted, "a very vola- tile oil without much asphalt base" — indeed, oil of 135 the high gravity of 39 degrees Baume — a phenome- nally light, volatile oil for California.) Yonle saw oil sand near the summit of the Elk Hills. (R. 573). On two or three different days he got samples over a distance of a mile or more— got some in a gulch and some on the hills. He found no asphaltum, but sands percolated so much that you could put them on a fire shovel, heat them a little and they would blaze ; and in making the chloroform test, you could get particles of oil. He stated emphatically that "you could get oil" from the territory he examined on those occasions (R. 574). He found through the Elk Hills many evidences of gas, shown by the pe- culiar look of formation that had been attacked by gas — a grayish color, a glassy appearance which manifests itself when gas is escaping. At one or two places over near the apex he put a can over it and let it accumulate and then lit it (R. 574-5). The gas did not come through water — that was evident. Its occurrence was an indication of oil. The gas which he found was not marsh gas (R. 575). He would have advised any company to spend one hundred thousand dollars to develop these lands and the only reason his employers did not do so was because of the scarcity of money, the low price of oil and lack of transportation facilities (R. 577). Robt. E. Graham, a witness for appellants, had seen the deposit in 32 of 30-24 and, while he could not sav what it was, said ''there are two or three places dug out there and it looks as though it might have been at one time oil sand." (R. 2135-6). 136 Chas. W. Lamont (qualifications and experience, pages 579-80 of the record) went in the Elk Hills in 1899 and located lands with Drouillard and others. They took up some of the shale and sand at the blow-out on 32 of 30-24 — decomposed shale and oil sand, the shale being too hot to handle pleasantly. On the north and along the line of contact from Mc- Kittrick towards Sunset right close to the lake they saw live oil coming out of the ground, floating in the mud and water, towards the easterly and northerly end of the Elk Hills (R. 580-1). He also saw what looked like oil sand and brea on section 14 of 30-22 at the west end of the Elk Hills anticline (R. 581). L. E. Doan, a witness for appellants, testified to out-croppings of oil sands on sections 26, 22, 16 and 15 of 30-23 extending three miles (R. 2074). He also went to the seepage on 32 of 30-24 in 1902 with Farnum (R. 2074). As showing the general notoriety of the seepage on 32 of 30-24, the following evidence from appel- lants' own witnesses is referred to: E. J. Miley testified that, while he had never seen the seepage in question, he had heard of it several times and as early as 1901 or 1902 (R. 1742). Chas. H. Allison saw specimens of sand from out- croppings in 30-23 and believed in the oil character of the lands as prospects. Several of his co-locators went into the hills and, after examination, returned and brough with them and showed him numerous 137 specimens of bituminous rock and asphaltum which, when a match was applied, burned. The con- text shows that this was prior to 1904 (R. 2001-2). E. K. Howk had heard of the gas blow out in the early days in the Elk Hills, but never went to see it (R. 1844). B. M. Howe heard of an extensive oil outcrop- ping or gas blow-out in section 32 of 30-24 (R. 1906). Chas. T. Burks heard of it (R. 2067). Now, it is true that three of appellants' experts, Ochsner, Anderson and Taff, all in their employ as geologists, expressed the opinion that the outcrop- ping of sand or seepage on 32 of 30-24 is not an oil seepage, Ochsner saying that he saw it in 1909 and that it was an occurrence of organic material (R. 2173), as if oil were not organic; but from the ex- amination which he then made of them he concluded that the Elk Hills may have small scattering amounts of light oil. He did not burn any of it or test it with chloroform (R. 2215). He first formed an opinion of the Elk Hills as a possible or probable oil bearing territory as the result of his work in the fall of 1907 (R. 2203). F. M. Anderson first saw the gas blow-out or seepage on 32 of 30-24 in November, 1912, when sent out to examine the lands in suit by way of prepara- tion to testify as an expert in this case (R. 2589). His opinion was that it was a gas seepage — hydro- 138 carbon gas and partly sulphuretted hydrogen gas — • methane or marsh gas (R. 2475-6). He said that he tested the sandv material with benzine, chloroform and other reagents (R. 2476-7) and reached the con- clusion that the tests were entirely negative. He, therefore, expressed the opinion that the deposits were neither oil seepages nor asphaltum. Asked by counsel for appellee whether they were petroleum gas blow-outs, he answered: "I can't say that they are and I do not believe that thev are": thus refus- ing to commit himself to the proposition that they are not (R. 2478-9). This is particularly significant in view of the fact that he had already pronounced the deposit a hydrocarbon gas blow-out; for, as is well known, petroleum gas is a mixture of hydro- carbon gases. J. A. Taff, while agreeing with Anderson in the main, disagreed with his view that this deposit was a gas blow-out (R. 2843-4). He admitted that he did not even know the formula for methane or marsh gas and that he was not a chemist (R. 2837). He did not know what ethane is nor propane nor whether they are constituents of petroleum; but stated that it was his understanding that methane or marsh gas constituted from seventy to ninety-eight per cent natural gas (R. 2837-8) ; so that Anderson's opinion that the gas in the seepage in question was methane (R. 2475) amounts to a practical admission that it was petroleum gas. It is most manifest that the foregoing recital of the evidence concerning the existence in the Elk 139 Hills of evidences of oil is convincing that such evi- dences do exist and that they were generally known prior to the date of the assailed patent. Such men as Drouillard, Youle and others, practical and ex- perienced as they were in all of the phases of the oil business, could not have been mistaken. Thev saw these evidences and handled and tested them. Dr. Branner could not have been "taken in" bv them. When in 1874 Drouillard saw it, "the sand at that time was wet with oil", he declared. Youle and others, long before Anderson or Taff went near it, tested it with chloroform and found oil in it. From 1874 to Anderson's visit in 1912 thirty-eight years had gone by. Neither of them is shown or appears to be better qualified than Youle to make the chloro- form test and their argumentative testimony throws no suspicion upon the accuracy of the tests that had been made by others or of the existence of the oil which they saw. Especially is this true in the light of the admission of Anderson, Taff and Ochsner that they conceded the presence in the Elk Hills of a light, volatile oil. This is the very kind of oil which Youle said he expected to find there and which was later found in the wells drilled by the Associated Oil Company, a subsidiary of the Southern Pacific Company. (Exhibits 9-D and 9-0). Appellants extended themselves in vain to destroy the evidence of the existence of seepages and blow- outs in the lands in suit and immediately around them because of their recognition of the completion by it of the strict parallel between the facts of this 140 case and those of the Diamond Coal and Coke Com- pany case. In the latter there were the outcrop on the one side, the dip away from it towards the lands in suit and the occurrence of coal on the other side of the lands. Here we have the long line of seepages and many wells to the west of the lands in suit, the dip of the oil strata towards the lands in suit and the proven presence of oil on the other side of the lands. The known conditions in the one case are therefore in pari passu with the known conditions in the other. Indeed, while the seepage in 32 of 30-24 is beyond the lands in suit, the foregoing evidence proves the existence on the lands themselves of brea, asphaltum and gas blow-outs, so that this is a plainer case than the Diamond Coal and Coke Company case, since there there was no evidence whatever of an exposure of coal on the lands in suit. If, therefore, the question were now of first im- pression and for this court initially to pass on, the evidence is overwhelming that there were generally known seepages, gas blow-outs, brea and asphaltum in the Elk Hills. Since it has alreadv been resolved by the trial court in favor of the government, it would be difficult to conceive upon what principle appellants can now urge that Judge Bean's finding is without substantial support in the evidence oi that it is palpably or manifestly wrong. The Government's expert, Veatch, said the last word upon this subject. He testified with reference to the seepage of 32 of 30-24 that he examined it twice and found a stained sand exposed at intervals 141 for several hundred feet. This sand contams some sulphur. Tested with chloroform it gave no oil. The sand shows particles of carbon and it was his con- clusion that it represents an escape of gas from the oil bearing zone, the gas carrying some oil with it; that this oil has been deposited in the sand together with sulphur coming from the gas and has been fired — the gas has been lighted — ; and that, owing to in- complete combustion, a little carbon has been left in the sand, this fact making it probable that any one or more persons in the past could have tested it and gotten positive results of oil before it was burned out. It was probably, he said, a volatile oil (in which he agrees with Anderson, Oschner, Taff and Youle) that would evaporate. If there were other earth movements, it would be possible to get a posi- tive test of oil (R. 712-3). Thus, Veatch agrees with Anderson, Oschner and Taff that there is no oil there now and explains how its absence now is reconcilable with its presence when Drouillard and Youle tested it and found oil. The evidence shows that it was frequently set on fire by persons examining it, thus explaining the cause, while the preseiice of the particles of carbon demonstrates the result. (c) The significance of seepages, aspJialtum, brea and hlotv-otits. The presence of seepages, asphalt, brea and gas blowouts needs little comment. Their significance is patent. They do no less than prove the presence in 142 the lands in suit of oil. W. E. Youle foreclosed this question in these words: "You show me an oil seepage with a proper development and I will show you an oil field; and, if you can find any instance it is not so, it is something I don't know of. From my experi- ence in the California fields, I will say that such an oil sand indication is alwaj^s an indication of the presence of oil in paying quantities. I make tliis statement unqualifiedly and I know of no exception to it whatever" (R. 556). Even if it were conceded for purposes of argument that all of the many witnesses who testified that they tested the deposit in 32 of 30-24 and found oil were mistaken and that the tests made by Anderson and Oschner in 1912 proved not only that there was no oil there then but that none had ever been there, it would none the less remain that in 1904, prior to patent, this was generally regarded as an oil seepage and hence an evidence of the presence of oil in which many experienced oil men, including Youle, the principal expert of that day, and Blodgett, the largest operator at that time ,and even Josiah Owen, appellants' own trained, experienced geologist, be- lieved and upon which they relied to the extent that on account of it they made locations. This being true, it must be conceded that it constituted one of the "Known Conditions" which appellants were under the duty of considering; and that they had notice of it and believed in it follows from what has been shown concerning the examination of it by Owen and his estimate of it. If Owen believed it proof of the presence of oil, it was appellants' duty 143 to make this known to the Government and their failure to do so can only be explained upon the theory that they knew that to do so would defeat their purpose to obtain patent to the lands in suit. Undoubtedly the seepage of 32 of 30-24 and in 14 of 30-22 were a part of the "known conditions" which were such as to engender and did engender the belief that these lands were oil lands; and, while the Gov- ernment is far from conceding that the overwhelm- ing evidence of their true character as oil seepages is even questionable, as elements of the "known con- ditions" at the time of patent nothing would be taken from either their significance or probative force upon the question of fraud if it were to be now demonstrated that the many witnesses were deceived. If partly on account of their reliance or belief in these then accepted evidences of the oil character of the lands appellants fraudulent!}" sought and ac- quired patent to lands interdicted by the terms of the grant, it does not lie in their mouth to say now that they were mistaken and that, being mistaken, they ought not to be penalized for their successful fraud. Can it be doubted that, if instead of filing an affidavit that the lands were non-mineral agricultural lands, they had made known to the government their belief and the general belief in the existence in the Elk Hills of oil seepages or oil sands, no patent would have issued and the occasion for this suit never have arisen? Finally, appellants' leading expert, F. M. Ander- son, though he did not see this seepage until 1911, 144 saw and examined in 1903 and 1908 a similar deposit in the Buena Vista Hills and at both times believed and reported it to be asphaltum. These deposits in the Bnena Vista Hills, he stated, differed from that in 32 of 30-24 in the Elk Hills "chiefly in quantity and magnitude of outcrop"; so that it follows that, if in 1903 or even as late as 1908 he had seen the seepage in 32 of 30-24, he would have taken it to be asphaltum (E. 2478-9). (d) The significance of oil sands. Said appellants' expert and geologist, Oschner: "A cropjDing of oil-sand is a beginmng of first- hand evidence that petroleum is present in the neighborhood and it is the first step in the study. It would call forth the first suspicion, the first interest. A cropping of oil sand which shows unmistakable evidence of having been impreg- nated b.y petroleiun or bituminous matter is absolute evidence to the mind of any competent geologist that, if oil does not exist in that fomia- tion now, it must have existed at some time in the past. That is unequivocallv true." (R. 2212.) Eobeii: E. Graham, another of appellants' wit- nesses, a practical oil man, said that, if in the Elk Hills he had found well defined sand and taken that together with the natural geological structure of the hills, he would have regarded it as a good indication of oil territory. (R. 2136.) E. W. Kay, yet another of appellants' witnesses, testified that in 1901 an outcropping of sand in the Elk Hills would have been a conclusive indication of the oil character of the land. (R. 2086.) 145 B. M. Howe, a witness for appellants, testified that, in passing on the question of whether given land was oil territory, he would look for outcrop- pings of sand (E. 1901-2). W. E. Youle said: "In California the existence of oil sands is always a good indication of finding oil in paying quantities. " (E. 556.) And so the recital of the testimony might be pro- longed to show the value and faith placed in the presence of oil sands as indicative of the oil charac- ter of lands. Since, however, there is no dissent upon this proposition, the government is content to rest upon what has already been cited from one of its own witnesses, Youle, and appellants' witnesses, Ochsner, Graham, Kay and Howe, it being merely illustrative of what is shown with great distinctness and in various ways by the record. (e) Knowledge of Tread well and Owens. Finally, emphasis is placed upon the evidence showing knowledge of the existence of these oil indi- cations of two of appellants' servants, Treadwell and Josiah Owen. Treadwell from 1893 to 1903 had charge of the development and production of oil for appellants (E. 424). It was upon his recommendation that lands of the Southern Pacific Eailroad Company were withheld and withdrawn from sale because of their oil character (E. 426-7). In 1900 and 1901 he 146 was "working up the McKittrick district, determin- ing the strike of the anticlinal and the oil deposits on the outcrop" (R. 3420). He acted under the or- ders of H. E. Huntington, the direct representative of C. P. Huntington, Julius Kruttschnitt and E. H. Harriman (E. 424). John Jean reported to him the seepage in 32 of 30-24 and he and Treadwell, together Avith L. G. Sarnow, went to see it in 1899. Treadwell said it looked good and on the strength of it Tread- well, Sarnow, Jean and others located the land (R. 128), Treadwell admitting that he made out the notices and placed on them the names of himself and seven others, all save one of whom were related to him (E. 3426). He told F. J. Sarnow that he thought there was oil in the Elk Hills (R. 165) and admitted, when testifying, that he believed in 1899 that they were mineral lands. (E. 3427.) Josiah Owen, who took charge of the field as geologist for appellants in 1903, spoke several times with S. P. Wible about the seepage in 32 of 30-24 (R. 321). Chas. Briscoe took him into the Elk Hills to a place where there Avas "oil oozed up and dried in the dirt and shale. ' ' Owen explained to him that it was "a fissure that had been blown out there". This was in 32 of 30-24. On this trip Owen told Briscoe that the "Elk Hills were good oil territory." (R. 340.) After he had seen this seepage he said to Briscoe : ' ' This is good enough, my boy, hang on to it." (R. 341.) Chas. F. Haberkern spent five days in the Elk Hills with Owen in 1904. Together they went all 147 over them from one side to the other on both sides of the slope. They went into 32-23 and visited the oil seep in 32 of 30-24. Later they located lands in 30-23, the even-numbered sections, Owen telling Haberkern not to locate the odd or railroad sections, since he, Owen, w^as working for the railroad (R. 350-1). And so the evidence could be recited in great de- tail to show that Owen, not once, but many times was heard to speak of this seepage in 32 of 30-24. Upon the record there is no room for doubt that the two employes of appellants whose duty it was to know w^hatever there was to be known concerning the oil conditions knew by actual sight and from conversation with others of the existence of out- crops of oil in the very midst of the lands in suit before patent and at the very time of patent ; and it will hardly be disputed that, as a legal proposition, what they knew their employer knew or is to be held to have known. Citation of authorities upon so plain a question is not deemed necessary. Nor is it ad- mitted by the government that it was under any duty or burden to show actual knowledge on the part of appellants; for, if the Southern Pacific Eailroad Company had made the ''careful examination" which in his affidavit Eberlein, its acting land agent, swore that he had caused to be made, and which it was its duty to make, there is no escape from the conviction that there would have resulted the ascer- tainment of so conspicuous and generally known 148 a fact as the presence in the Elk Hills of the most cogent evidences of the existence therein of oil. 4. SEEPAGES, GAS BLOW-OUTS, ASPHALTUM, CKOPPINGS AND Olli SANDS IN THE VICINITY OF THE LANDS IN SUIT. As in the Diamond Coal and Coke Company case the coal outcrop to the east and the fact that the rocks in which the outcrop was found were the coal bearing strata of the region were among the "known conditions" upon which the Supreme Court predi- cated the coal character of the lands there in suit, so in the instant case it is now proposed to show the existence of an analogous outcrop of oil bearing sands, seepages, etc., to the east of and around the lands here in suit and found in the rocks which are the oil bearing strata of the region here in question. The existence of these indicia of oil is not denied by appellants ; but it is only proper that they be called to the attention of the Court and the evidence con- cerning them, their location and the notoriety attach- ing to them briefly reviewed. The presence of appellants' oil experts and geolo- gists in the region during 1903 and 1904, as well as before and after those years, is abundantly proven; so that it follows that Avhat others know they them- selves either knew^ or had opportunity to know, actual knowledge and opportunity of knowledge be- ing, for the purposes of this case, in legal conse- quence the exact equivalent the one of the other. Treadwell, the oil expert of appellants who preceded Dumble, Dumble himself, Owen and Anderson were 149 frequently in and around McKittrick prior to patent. This is not denied by appellants and to cite the many passages in the record which prove it would be a waste of time. Since, in reviewing the evidence upon this topic, frequent reference Vvill be made to certain towns in the oil territory on the west side of the San Joaquin valley, the location of each of them and the distance from the lands in suit are given : McKittrick, formerly called Asphalto, is in section 21 of 30-22, Mount Diablo Base and Meridian, four miles from the lands in suit. Fellows is in section 31 of 31-23, Mount Diablo Base and Meridian, six miles from the lands in suit. Taft is in section 13 of 32-23, Mount Diablo Base and Meridian, nine miles from the lands in suit. Maricopa is in section 2 of 11-24, San Bernardino Base and Meridian, twelve miles from the lands in suit. Sunset is in section 13 of 11-24, San Bernardino Base and Meridian, fifteen miles from the lands in suit. The evidence now under review relates in each instance to a period prior to the date of the assailed patent and to information and knowledge possessed by the witnesses at that time. Time geologically is reckoned by periods — not by years. It is obvious 150 that seepages and other indications of oil which existed in 1904 had been present for thousands, per- haps millions, of years. No reference is made to seepages discovered since patent. All the recited testimony relates to knowledge gained and things seen by witnesses prior to December 12, 1904, the date of the patent. There is, in fact, no evidence of the discovery since the patent of additional seepages, etc. All of them were known and were notorious before patent. Since it is both logical and convenient to do so, the seepages, etc., are grouped by to^\^iships: Toumship 30-21 : In section 12 of this township, six miles from the lands in suit, is the tar spring referred to by B. K. Lee (R. 224). Silas Drouillard referred to this spring as the Bond Spring, the tar of which was used in doctoring stock as far back as 1874 (R. 115, 118). Township 30-22 : This is the township in which McKittrick, which was formerly and at the time of patent known as Asphalto, is situated. It immediately adjoins the lands in suit on the west and the large seepages which occur along the folded structure south and west of the town are described by many witnesses. H. M. Shreve, who first came to this locality in 1888, testified: "In various portions of 30-22 in the 151 immediate vicinity of McKittrick there are large sliowings of liquid asplialtum oozing from the ground" (R. 455). Chas. Briscoe, who first went to McKittrick in 1897 and remained there until August, 1904, testified : "I know about oil seei3ages or oil indications in and about the town of McKittrick and the hills there. These indications consisted of oil running out of the ground and seeping and gas pockets and places where the gas was bubbling up. When it would rain the gas would bubble up and oil would run out down the hill. I guess I noticed this around there in a hundred places. I also noticed evidences of the waste of oil there in former times. There was wdiat we called a tar flat. We never did anything with that tar flat because in the summer time you could hardly get across it and dogs and squirrels and every- thing would get stuck in it. This tar flat was about a half mile south and east of McKittrick." (R. 335.) These are likewise described by F. J. Sarnow (R. 169) ; Ira M. Anderson (R. 155, 161-2) ; John Jean (R. 131) : H. A. Blodgett (R. 261-2-3) ; W. E. Youle (R. 545). Anderson on page 155 described the conditions and states that they were "known in general to the popu- lace around there at that time. It was a matter of common notoriety". On pages 161 and 162 he states that about a mile from McKittrick the flat is "all covered with asphaltum". In this same township Silas Drouillard described 152 oil sand cropping in section 5 (R. 127) ; and B. K. Lee, in sections 8, 17, 18, 20, 28, 29, 34 and 35 (R. 224-5). The seepage near the railroad track in section 14, which lies on the axis of the Elk Hills anticline, was mentioned by Ira M. Anderson (R. 163) ; Colon F. Whittier (R. 469) ; N. C. Farnum (R. 496) ; F. J. Sarnow (R. 169), and B. K. Lee (R. 225, 230). C. W. Lamont (R. 581), Ira M. Anderson (R. 163) and N. C. Farnum (R. 516) fixed this seepage at some distance from the railroad tracks in the hills. S. P. Wible refers to seepages in a nmnber of places west of the railroad tracks including sections 15 to 17 of this township (R. 321). S. P. Wible testified that in 1903, a year before patent, he told Professor Owen, geologist of appel- lantts, about these seepages and that Professor Owen said that he had found them and others as well (R. 321). Professor Owen, as elsewhere noted, was a geologist at that time in the employ of the Southren Pacific Company in search of minerals on unpatented lands of the railroad company and he was active during the years 1902-1903 in the examination of lands in search of evidences of oil for his employers. Exhibit "C", plat of survey of August, 1871, of this township shows oil springs in sections 20, 28 and 29; and Exhibit "D", survey of November 18, 1893, shows evidences of oil and asphaltum in sec- tions 19, 20, 27, 28 and 29. W. E. Youle described a heavy bed of asphalt about ten feet thick in section 153 24 (R. 547-8) ; Ira M. Anderson described asplialtum, oil sand and gas which he lighted in section 34 (R. 155-6) ; C. F. Whittier described asplialtum along in the fold running from the northwest to the south- east and cropping very prominently in sections 34 and 35 (R. 4700). All of the foregoing seepages and other oil indica- tions are within a distance of from one to four or five miles from the lands in suit. Township 30-23: This is the township in which the lands in suit lie and the evidences of oil therein have already been treated under topic 3, pages 120 et seq. of this brief. Township 30-24: This is the township immediately to the east of and adjoining the lands in suit and the testimony concerning: the evidences of oil therein has been set out under topic 3, pages 120 et seq. of this brief. Township 31-21: This township is located to the southwest of the lands in controversy, about ^even miles along the line of contact of the oil bearing sand with the Temblor Range. C. F. Whittier described a large cropping in section 14 and an oil seepage in section 24 thereof (R. 470). Township 31-22: This township corners on the southwest the town- ship in which are located the lands in suit. Ira M. 154 Anderson described an oil seepage in section 2 thereof similar to the asphalt and oil sand showing in section 34 of the same to^vnship to the north (R. 155-6). ]I. A. Blodgett. a man of large affairs at that time in and about McKittrick who, together with his partner, Mr. Jewett, owned many oil wells around McKittrick and Sunset, and his employee, Youle, spoke of a large seepage at the head of the Elk valley two and one-half or three miles southeast of a large seepage near McKittrick (R. 361). It was Jewett & Blodgett who, through their company, the Stand- ard Asphalt Company, went into partnership with the Southern Pacific Company and donated to the Southern Pacific Railroad Company the right-of- way for the railroad from McKittrick to Bakersfield to tap the oil resources of this region. C. F. Whit- tier testified concerning an oil seepage in section 19 (R. 470). Toivnsliip 31-24: This township corners with the lands in suit on the southeast. F. D. Lowe found on section 1, six miles east of the lands in suit, an oil sand 300 yards due north from the northeast corner of section 11 (R. 146), mentioning also another oil sand a half mile west of this point on the section line, which would be in the central portion of section 2. He also testified concerning a well which was drilled to a depth of 560 feet in 1901 which contained a small showing of oil and a gas supply which was piped to 155 the kitchen and used for cooking (R. 146-7), refer- ence to which in some detail has already been made in this brief on pages 125-6. Toivnship 32-22: This township is six miles to the south and some- what west of the township in which the lands in suit lie. C. F. Whittier testified to seepages in sections 1 and 2 (R. 470), the latter seepage being also men- tioned by B. K. Lee (R. 225). In the record this township is erroneously stated as 31-23, the error being corrected in the original record at page 319, but by oversight the correction was not inserted in the present transcript. Toivnship 32-23: This township is immediately to the south of the lands in suit and about six miles distant. C. F. Whittier testified to a seepage in section 6 and adds that there were several between that section and Maricopa (R. 470). B. K. Lee testified to outcrops of oil sands in sections 21, 22 and 26 (R. 225), the latter seepage being also mentioned by S. G. Drouil- lard (R. 115-6-7-8) who says on page 116: ''I know of seeps in 32-23 near the corner of 23, 24, 25 and 26 in the Midway. That is where I located. We found great blocks of asphaltum there. We lifted some of them up and there was oil on the under side of them seeping out." John Jean refers to asphaltum in the Midway region without specif jdng the locality (R. 131). 156 Toivnship 32-24: This is the township in which the Buena Yista Hills partly lie. A gas blow-out in section 11 is referred to b}^ Parker Barrett (R. 525) and by H. P. Dover (R. 462). B. K. Lee refers to this as the seep- age visited by Josiah Owen, the railroad geologist (R. 230). C. F. AVhittier described a blow-out caused by oil coming up through a crevice in the formation to which he set fire and which burned some two weeks or more (R. 470-1). This is given in the transcript as 31-24, but should be 32-24, as is shown bv the fact that he described it as "what is called the Buena Vista Hills". F. M. Anderson, appellants' geologist during the period under review and their leading expert witness at the trial, testified that in September, 1903, he and Professor Owen, another of appellants' geologists, were on the southwest corner of section 11 of this township and noticed the peculiar deposits in the western border of that section which they took to be deposits of asphaltum (R. 2401-2) and which he described as differing from the gas blow-out or seep- age in section 32 of 30-24 chiefly in quantity and magnitude of outcrop (R. 2478). Both in 1903, when he first saw these deposits, and at the time of his visit there in 1908 he believed them to be asphal- tum deposits and so stated and reported. (R. 2401-2 ; also bottom of p 2478 and p. 2479.) Seepages in the region of Sunset: F. J. Sarnow testified that there are seepages ex- 157 tending probably two or three miles from Sunset toward McKittrick (R. 169). John Jean also testi- fied concerning seepages in the Sunset region (R. 131). H. A. Blodgett described seepages and as- phaltum about McKittrick in 1888 and 1889 (R. 361). W. E. Youle testified that there were seepages along the line of contact around Sunset in a great many places and that the evidence there was very plain from three to five miles and impressed him very much (R. 545). H. A. Blodgett also testified to a seepage just south of the standard line in sec- tion 2 of township 11 N., range 24 W., S. B. B. & M. (R. 362). Exhibit A, the plat of survey of November 19, 1858, of township 11 N., R. 23 W., S. B. B. & M., and Exhibit ''B", survey of township 11 N., R. 24 W., S. B. B. & M., approved April 29, 1874, show several pitch springs. Concerning this region in general Ira M. Anderson testified as follows: "The Sunset, McKittrick and what has since become the Midway fields are all about the same. There is not much difference in them. I exam- ined them and investigated them. I discovered indications on the surface of the ground that showed that it was an oil country at that time. I discovered some of those evidences between Sunset and McKittrick. I found oil sands all through there and oil seeping out of the ground and gypsum all through that country. Where you find gypsum you will find oil. I found that in Sunset. At that time they were producing oil in Sunset and McKittrick. Between Mc- 158 Kittrick and Sunset the formation was about the same. There were these blow-outs through there, asphalt and oils and plaees where you could see what was asphalt around there and gas coming through the center of them. That con- dition extended srenerally from McKittrick to Sunset" (E. 154-5). H. A. Blodgett testified that prior to July 1, 1904, there was practicalh' a continuous proven field from southeast of Sunset to four or five miles northwest of McKittrick barring a slip from Fellows to Mc- Kittrick and that slip is now proven territory (R. 362). Tlie region nortliwest of McKittrick: Silas Drouillard, who visited these fields as early as 1874 and for forty-five years lived in and about Bakersfield and was a prospector and miner, testified that he followed the seepages extending northwest from McKittrick to Canary Springs, which is in to\^mship 29-20, fourteen miles northwest of Mc- Kittrick (R. 116). B. K. Lee testified to dry oil sands in sections 18, 35 and 36 (R. 255) and F. J. Sarnow also knew of the same sands in sections 36, near McKittrick (R. 174). 5. OIL DEVELOPMENT IN THE VICINITY OF THE LANDS IN SUIT. The patent in this case was issued December 12, 1904. The last of Eberlein's non-mineral affidavits was dated August 31, 1904. Before the latter date 281 producing oil wells had been drilled in the region from Sunset to McKittrick. It is undoubtedly true 159 that appellants knew the exact niunber of these wells and the location and production of each, for it has already been shown that their geologists, Treadwell, Diimble, Owen and Anderson, were constantly in and around McKittrick in 1902 and 1903 — for that mat- ter, Treadwell was there before that time. They were making examinations, explorations and investi- gations, preparing maps and reporting to their superiors. They could not have failed to know so patent a thing as the existence of these wells. But this is beside the question; for, w^hether they knew or not, since the duty of knowing all that it was necessary to know to the end that they might be qualified to make the proof required by law, namely, a non-mineral affidavit, rested upon appellants, im- posed by law, they are fixed with notice and knowl- edge. Dut}^ to know, certainly when coupled with opportunity of knowledge, is the exact equivalent, so far as liability is concerned, of actual knowledge. This again is so plain that no citation of authority is deemed necessary. The existence of the wells in question in 1904 is not understood by the government to be denied by appellants. It is proven by exhibits Ha, Hb and He, maps respectively of the McKittrick, Midway and Sunset oil fields made, published and distributed by Barlow & Hill prior to August 31, 1901. There is no suggestion that these maps do not faithfully and accuratel}^ portray conditions in the fields to which they relate. W. H. Hill, a member of the firm of Barlow & Hill, testified to the care with which the 160 maps were prepared and the accuracy with which they set forth conditions as they existed (R. 109, 110 and 111). The legends on the maps make it easy to read and understand them. The distance from McKittrick to Sunset is less than thirty miles; so that in 1904, prior to patent, there was an average of nine producing wells to the mile in the region lying between the two places. Twenty-five hundred of these maps were published and sold, probably two thousand of them in Kern County, the remainder in Los Angeles, the East and in Europe (R. 110). Among others, the Southern Pacific Company purchased copies, beginning its purchase at the time when the maps were first pub- lished (R. 2033-4). Exhibit Ha is the Barlow & Hill map of the "Mc- Kittrick Oil Fields". It shows a producing well in section 27 of 30-22, leSs than three miles west of the lands in suit. It shows six producing wells in sec- tion 34 of the same township, about the same distance from the lands in suit. It shows twenty-two pro- ducing wells in section 20 of the same towmship, four miles from the lands in suit. It shows seventeen producing wells in section 29 of the same township, four miles from the lands in suit. It shows two pro- ducing wells in section 28 of the same township, three and a half miles from the lands in suit. And many other wells are sho\^Ti in other sections of this township and of 30-21. 161 This map also shows two wells on section 6 of 30-22 on the very anticline located by Josiah Owen, geolo- gist of appellants, in 1903 on the map introduced as Exhibit 157. The exhibit in question, Owen's own handiwork, shows this anticline running from this section 6 of 30-22 through the lands here in suit. It was undoubtedly of this anticline that he wrote in his letter of March 25, 1903, to his superior, E. T. Dumble, chief consulting geologist of appellants: "Producing wells ought to be found along this ex- posure" (R. 1615, 1617). The significance of the relation of the wells shown on the Barlow & Hill maps to the lands in suit, obvi- ous as it is, will appear more fully in the discussion of the ensuing toj)ic. Exhibit Hd is the Barlow & Hill map of 1904 of the "Kern River Field". This oil field is about twent.v-eight miles northeast of the lands in suit and was discovered in 1899. The map shows that in it in 1904 there were several hundred producing oil wells. In Josiah Owen's letter of March 25, 1904, to Pro- fessor Dumble he wrote : "I have located the outcrop of the horizon all the way to the Sunset oil field and find there is but one oil sand and I believe it wiM he possi- ble to trace the same horizon to the Kern River fields. There are several reasons for helieving they belong to the same zone." (R. 1620.) The foregoing quotation from Owen's report to the chief consulting geologist of appellants is made 162 for the purpose of showing the connection between the lands in suit and the McKittrick field, on the one side, and the Kern Eiver field, on the other, and to point out the strict parallel between the evidence in this case and that in the Diamond Coal and Coke Company case. The outcrop and wells from Mc- Kittrick to Sunset, the dip of the strata from this outcrop towards the lands in suit and the existence of a developed oil field beyond the lands in suit, the two fields being underlaid by "but one oil sand" — these conditions present a situation stronger and far more convincing than that developed in the cited case. 6, GEOLOGICAL CONNECTION BETWEEN THE FOEEGOING LANDS AND THOSE IN SUIT. It has already been shown that the line of out- crop to the east of the lands in suit in the Diamond Coal & Coke Company case, constituting a most essential part of the "known conditions", is paral- leled in the instant case by the long line of seepages and wells to the east of the lands here in suit and extending from Coalinga to Sunset. It is proposed to now show the continuation of the parallel by demonstrating by the record that, as in the cited case another of the "known conditions" was the dip of the strata exposed in the outcrop towards and under the lands there in suit, so in the instant case the dip of the oil sands or strata exposed in the line of seep- ages from Coalinga to Sunset and developed in the two hundred and eighty-one wells mentioned is towards and under the lands here in suit. In other 163 words, it is established beyond cavil that there is oil in commercial quantities to the west of the lands in suit in the stratum or strata of oil sands there ex- posed by nature and shown to exist in wells drilled by the hand of man. Indeed, the existence to the west of and near to the lands in suit of oil fields ranking in production and economic importance with the greatest in the world is conceded. As the witness Youle is shown to have said, "that oil must have a direction somewhere"; and it is now proposed to show that its "direction" is towards and under the lands in suit — that is, that the sand strata which constitute the known reservoir of immense quanti- ties of oil to the west of the lands in suit "dip" towards and under them. F. Oskar Martin (qualifications and experience pages 609-10) testified that, having seen and exam- ined the oil indications near McKittrick, he found that the formation underlying those exudations or seepages extended easterly toward the Elk Hills and that, no break in the extension towards the east of the formation at McKittrick being visible, it was evident that the formations overlying the oil sand at McKittrick and in the Elk Hills are the same. He also testified that the formation of the Buena Vista Hills, whose oil character is admitted even by F. M. Anderson, appellants' expert geologist, is the same as that of the Elk Hills (R. 614). McKittrick is in section 21 of 30-22, onlv four miles from the lands in suit. 164 W. E. Youle (qualifications and experience, pages 540-1), speaking generally with reference to the Elk Hills and surroundings, said: "That country is a blanket" (R. 552), meaning that the formation is of blanket character, that is, covering the entire vicinity (R. 552). The strata exposed along the out- crop at Sunset dipped into the valley towards the river (R. 544-5). The conditions around McKittrick are about the same as at Sunset (R. 544-5). That country was not a shoestring at all, but a great big field. The formation did not dip into the hills — meaning, as shown by the context, the hills west of McKittrick — but into the valley — meaning the valley between McKittrick and the Elk and Buena Vista Hills (R. 550-1). He was familiar with the country inmiediately surrounding McKittrick for eleven years and was over it continually (R. 562). The strata were dipping away from McKittrick and were uplifting in the Elk Hills (R. 568). Yet again he said : "In my opinion the upheaval in the Elk Hills was probably caused by the shrinkage of the earth. As the formation is getting older and cooling off, it goes down here and turns up at any place and folds along. I believe that is ac- cepted by a great many men that are well posted in formations to be a very good theory and per- haps correct. As to what I mean by referrmg to the Elk Hills as being a fold, I will say that on the McKittrick side of the formation it is dipping at an angle of about 30 degrees, but the valley is nearly level. Now that was new to nearly evervone to find a formation dipping out into the valley. But I concluded that that for- 165 mation must, to a certain extent, conform to the shape of the valley, or else the valley could not have been there. It would have been uplifted hills like all that country is if it was not that way ; but the depth is hard to determine, because there was no way of determining- it without drilling a hole. But at the Elk Hills you could see it lifting up, with no evidence of faulty con- ditions like a running away of millions of tons of asphalt. That was why I thought it would be a good place to drill a well, because of that uplift. That is the difference between anticline and an uplift. That is folded without breaking it. The anticline is broken into and goes this way and that.. The distinction I desire to make between a fold and an anticline is that the anti- cline is a broken fold according to my way of determining it." (R. 572.) One of the evidences of the oil value of the Elk Hills which appealed to Youle was that the strata ex- posed at McKittrick were dipping towards the Elk Hills— the asphalt at McKittrick had faulted and broken; but on the Elk Hills side it was not broken so much, but folded up; and he made up his mind that there was a fountain-head of oil for all this alike (R. 579). A. C. Veatch, the eminent government expert already several times referred to, after speaking of the series of porous beds along the east flank of the Temblor Range ideally designed, on the one hand, to afford a reservoir for oil and, on the other hand, to prevent undue leakage and containing oil in com- mercial quantities, as shown by a line of seepages of thirtv miles extent and a great series of wells which 166 had been sunk prior to 1904 down tlie dip from these seepages, testified that this eastern flank of the Temblor Range dips in a general way towards the San Joaquin valle}^, the gentle slope being inter- rupted by folds which are, roughly speaking, parallel to the main fold of the axis of the Temblor Range and rise as a group of hills above the surrounding country, the general structure being evident to the most casual observer. These folds are the Elk Hills and Buena Vista Hills which he described as elongated domes of ideal structure for oil accumula- tion (R. 701-2-3). Mr. Veatch further testified that the geologic structure of the Elk Hills is so very evident that a geologist standing at McKittrick would naturally and at once suspect the character of the fold. If, in addition, he was aware in 1904 of the seepages along the east flank of the Temblor Range and the wells drilled down the dip from those seepages and knew the geological structure of the region thereabout, he could not but have known the anticlinal nature of the Elk Hills and from the development at McKit- trick must certainly have regarded them as an oil proposition (R. 717-8). He stated that this must have been true even in the entire absence of any knowledge or information that evidences of oil had been found in the hills themselves. In this connection Mr. Veatch testified that, fixing the length of the lines of seepages along the east flank of the Temblor Range as thirty miles through- 167 out the region adjacent to the lands in suit, it shows impregnation of oil strata extending at least fifteen miles from a given centre. Applying this distance of fifteen miles from the outcrop, it includes the Elk Hills and the Buena Vista Hills, both of which fall within the proven area from geologic determination (R. 702). If any corroboration were needed, it is found in the seepages in the Elk and Buena Vista Hills; and any question which might arise with re- gard to the persistence of the oil as shown by these seepages is conclusively set aside by the great series of wells which had been sunk prior to 1904 down the dip from these seepages showing that the seepages represented oil in commercial quantities (R 703). (While reference to the above pages of the record will show that this witness spoke of the length of the line of seepages as fifteen miles, he corrected this to thirty on pages 718-9, explaining satisfactorily how the error was made.) On cross-examination he again gave the reasons for considering the Elk Hills oil land in these words : "A. Along the east flank of the Temblor Range there is a series of porous beds exposed whic4i can be traced for many miles readily. Along this outcrop or near it where there has been a slight faulting there are seepages of oil. These seepages extend from below Sunset to north of McKittrick, showing a persistence of the oil impregnation in those porous beds. These porous beds dip to the eastward or northeast- ward, toward the San Joaquin valley, and are interrupted by a number of folds. That is, the gentle slope is interrupted by a number of folds, these folds being of ideal character for oil 168 accumulation. One of these folds is the Elk Hills. It is, broadly speaking, an elongated dome and from the persistence of the oil along the outcrop as shown by those seepages and that showing also corroborated by the great number of wells that have been sunk down the dip from this outcrop prior to 1904, indicates to me that the Elk Hills is very good oil land. " (R. 803-4.) He himself observed the dip of the formation towards and through the vallev in the direction of the lands in suit (R. 805). Attention has already been directed to a letter written by E. T. Dumble, chief geologist of appel- lants in 1904 and at the time of the trial, in which he transmitted to Mr. Kruttschnitt a map and ad- vised him that the newly formed Kern Trading & Oil Company should acquire by purchase or lease from the Southern Pacific Company such lands ''as we consider valuable for oil purposes' \ In this let- ter he wrote : "The attached maps show these under three heads: first, oil lands proven or practically proven, colored red; very probable oil lands, colored green; probable oil lands, colored blue. Of the oil value of the first two classes there is very little doubt ; the third depends in part upon the continuance of normal dips and conditions, but in addition it represents untested anti- clinals which show good indications of oil. I consider that all of these lands should be under the control of this company." (R. 2913.) The immediately pertinent language is the words ''the third depends upon the continuance of normal dips and conditions". 169 One of the maps. Exhibit 119, shows that these dips are from the direction of the east flank of the Temblor Range towards the valley and the lands in suit. As already pointed out on page 80 of this brief, his course of reasoning was identical with that of Mr, Veatch, viz., that, since at one point or several points oil was found either in seepage or well, it would be found at a distance along the continuation of the stratum found to contain oil at the point of starting, provided the dip and conditions continued normal. This it is sho^vn both that he recognized the dip of the strata towards the lands in suit (for he speaks of untested anticlincils in the line of the dip, necessarily referring to the Elk and the Buena Yista Hills) and did not scorn the so-called ''horizon theory" of Mr. Veatch. Professor Dmnble assumed the continuation of normal dips and conditions — Veatch did no more, Dmnble's assumption carried hun beyond the lands in suit, as shown by the lands included in his third class, probable oil lands, colored blue on Exhibit 119. F. Oskar Martin, as has been shown, found no break in the formation and thereupon considered the Elk Hills oil land because of their relation to proven lands. Thus it appears that experts for both parties agreed upon the reliability of the assumption that, if you start at the outcrop and follow the stratiun along the direction of the dip to points favorable to the accumulation and retention of oil, namely, anti- clines, you will, by sinking wells, find oil. What could chief geologist Dumble have meant when he 170 indicated to the personal representative of the president of the Southern Pacific Company that the oil character of certain lands depended upon the continuation of normal dips and conditions other than that, if the dip and conditions continued nor- mal, the lands in his third class would be found to be oil lands? He assumed that they were necessarily oil lands because along the line of the dip of the strata which outcropped in seepages and had been developed in wells to the west of the lands in this third class. It will be recalled that the letter under considera- tion related to lands to be transferred to the fuel department of the Southern Pacific Company, the Kern Trading & Oil Company. The other map which accompanied the letter was not identified or produced. Appellants endeavored to assimilate it to their Exhibit 120 ; but the legend and the coloring of that exhibit manifestly exclude it. The government contended that Exhibit 157 is the map in question. However that may be, there is manifestly and neces- sarily close connection between the map referred to in the letter in question and the list of lands actually transferred to the Kern Trading & Oil Company by the lease of August 2, 1904, Exhibit YY (R. 1101- U)\ The court may confidently look to this letter to find the lands in Professor Dumble's third class. The lands in the McKittrick district on pages 1106-7-8 of the record include section 31 of 30-23 which cor- ners with section 29 of that township, one of the 171 sections in suit; sections 5, 9, 13, 23 and 25, which are farther away from the outcrop than some of the lands in suit ; and sections 31 and 33 of 31-24 and sections 3, 11 and 13 of 32-24 are also farther re- moved from the outcrop than the lands in suit. From all of which it follows that appellants' geolo- gists, Dumble and Owen, pursued the plan of start- ing from the outcrop and following the dip of the sands throughout a distance even greater than that laid down by Veatch as the basis for determining by geological deduction the oil character of lands. In this connection special attention is invited to the testimony of E. T. Dumble on pages 3001, 3002, 3003, 3004 and 3005, as follows: "Under certain conditions I regarded at that time anticlinals as good physical evi- dence in an oil field of the presence of oil, petroleum. The conditions would depend en- tirely upon the facts as I found them or understood them from my assistants. When an anticlinal, which in addition to being an anticlinal, shows indications of oil I thought it was a good one. It might and it might not be a fact that when I found an anticlinal in lands which were in the immediate vicinity of oil lands, proven oil lands, it would be an indication to me of possible oil land; it would at least induce me to look into it if I had any interest in it. So far as I know that anti- cline running across township 30 south, 23 east, })assing through sections 19, 29, 25 and 27, was an untested anticline, but it does not fall within the description which I gave Mr. Kruttschnitt of probable oil lands where I state 'It represents untested anticlinals which 172 show good indications of oil'. Defendants' exhibit 115 is a map that Mr. Owen obtained from the Land Department of the Southern Pacific Company in September, 1902. There appears upon this map the legend 'All shaded tracts reserved from sale because in or near oil territory.' The shaded tracts in township 30-23 are sections 3, 5, 6, 9, 11, 13, the northwest quarter of 17, northwest quarter of 19 and all of section 31 ; and the shaded tracts in township 30 south, 21 east, as shown by this exhibit, are sec- tions 1, 7, 17, 19, 21, 23, 25, 27 and 35. There is nothing on that map to show one way or the other, on the date of the delivery to Mr. Owen of this map, or just prior to that time when this map had been constructed, that the lands in this suit appear not to have been patented nor does it show the patenting of sections 29, 33 and 31 in township 30-24. "Q. Now, will you show, beginning at the Buena Vista Lake, the nearest lands to the Elk Hills, and particularly the lands in this suit, w^hich were shaded, beginning at Township 31 South, Range 24 East, beginning at this end of the lake, that is, along here? (Indicates.) '*A. 15, 17, southwest quarter of 7. "Q. Now, in 31-23? *'A. South half of 13, all of 15 and the east half of 17, all of 9, 5. "Q. Now, the lands which you have de- scribed completely enclosed on the north, the northwest and the south and the west, the lands in this suit, did they not? *'A. They do. **0. Those were the lands which had been re- served from sale because they were in or near oil territory in 1902, is that correct 173 a A. According to the legend of this map, but they were a part of a blanket reservation, gen- eral reservation. "Q. Yes, they had been reserved from sale, had they not ? ''A. They had been reserved from sale. "Q. And vou so miderstood from Mr. Tread- well? *'A. I had no knowledge from Mr. Treadwell of what lands were reserved. This is my own information as to what lands were reserved. "Q, Now, with reference to the line of oil outcrop along the eastern flank of the Temblor Eange, running from McKittrick in a southeast- erly direction towards Sunset, how much further away is the nearest land which was then resented by the railroad company from sale because in or near oil territory, in Township 30 South, Range 24 East, than the furthermost lands from that line of outcrop of the lands in this suit ? "A. Well, I never estimated it. ''Q. Well, it would be at least six miles, wouldn't it? It would be across a township? ''A. It would be across a township. "Q. And that would be six miles, wouldn't it? "A. In that location, No. 1, it would be six miles. "Q. And also in this location here it would be six miles ? "A. It would be six miles from that line. "Q. Then, when you took charge of the geological affairs of the Southern Pacific Com- pany in California in reference to the oil lands 174 of the Southern Pacific Eailroad Company, you found that it had been the policy, which you say you did not disturb after you took charge, to hold in reservation from sale, because in or near oil territory, all of the lands which were owned by the Southern Pacific Railroad Com- pany in township 30-23 and in township 30-24? "A. That was their policy. "Q. And you found that to be a fact, did you not, Mr. Dumble? '*A. Yes. sir. "Q. Now, if the lands in suit had been patented at that time, and basing your answer solely upon what you know of that reservation order, what you were told by Mr. Treaclwell, and upon that exhibit which you yourself brought into court, those lands would most cer- tainl^y have been reserved with the others, would they not? ''A. If a blanket reservation had been put on covering all lands in the valley as that was it would certainlv have covered any lands they might have had in 30-23 or 30-24. "Q. Yes, and would certainly have covered the lands in this suit ? ''A. Unquestionably. "Q. So that if the patent had been issued to the lands involved in this suit and you had found that policy in effect, reserving those lands because they were in or near oil territor}^ you would not have disturbed it, would vou % a A. I would not." The foregoing extract shows that prior to patent appellants had withdrawn from agricultural sale lands which enclosed on the north, northwest, south 175 and west the very lands here in suit — again demon- strating that appellants prior to 1905 classified as oil lands territory immediately surrounding the lands in suit and that they would have so classified the very lands in suit had they been then patented. Appellants' geologist, Ochsner, while expressing the view that the Elk Hills were "too far out to fill," but that in them would be found scattering amounts of oil (R. 221-2), admitted that to a geologist the details of the evidence would go a long way towards an opinion in favor of the Elk Hills being oil territory and that on less evidence than existed with reference to the Elk Hills in 1904 he had advised the investment of money in the Kettle- man Hills where he had found an ideal anticlinal structure, but no seepages within seven miles, the relation of the seepages to the anticlinal structure being- the onlv evidence of the oil character of the Kettleman Hills (R. 226). He first formed an opinion of the Elk Hills as a possible or probable oil bearing territory as the result of work done in 1907 (R. 2203). He had been in the Buena Vista Hills and pronounced them similar in structure and formation to the Elk Hills and an uplift of the same geological period (R. 2210). Assuming a cropping of oil sand in the Elk Hills in connection with the correlation of the oil sand outcroppings along the McKittrick front and down as far as Sunset where the valley makes contact with the Temblor Range, he would say that the facts would be a strong element in favor of warranting a com- 176 petent geologist to advise the investment of money there with the hope of developing a producing oil property and he believed that many competent geolo- gists had advised the investment of capital on less evidences (E. 2211-2). Counsel for appellants, by the very form of his examination of the witness Anderson on pages 2422-3, admits the dip of the formation towards the valley and the lands in suit. F. M. Anderson was appellants' principal ex- pert, his evidence covering three hundred type- written pages. Upon him they greatly depended. He went into the region about McKittrick in 1903, entering the employ of the Southern Pacific Com- pany as geologist under Professor Dumble; but he did not set foot in the Elk Hills until April, 1911 (R. 2459), at which time he went there to prepare as a witness in this case. He was there next in November, 1912 (R. 2461). As will be sho^m, he expressed conclusions at variance not onl}^ with those of Dr. Branner, Veatch and Martin, govern- ment experts, but with appellants' own expert, Ochsner, and with their deceased geologist, Owen. While Ochsner testified that the Elk Hills and Buena Vista Hills were very similar in structure and formation and were uplifts of the same geo- logical period (R. 2210), Anderson stated that they were altogether different and dissimilar (R. 2451-2). Since Owen was not a witness, it serves no useful purpose to here show their differences — they will be noted later upon another phase of the case. 177 Mr. Anderson noted an anticline and subsidiary anticlines in the Elk Hills and represented them on a map which was used in connection with his testi- mony (R. 2441-2) ; but concluded that the Elk Hills were too far away from the outcrop to be valuable (R. 2388), the distance being six miles (R. 2441). He did not believe that the Etchegoin sands, which he pronounced the oil-bearing sands of the region, could ever be carried to the Elk Hills and, if they were, only in very thin strata (R. 2455). The Elk Hills, he said, might at some time have contained an avenue along which oil migrated, but that, if any oil is there now, it would be the tail end of the procession and not in commercial quantities (R. 2456). He admitted that in 1903 and 1904 his conclusion as to the likelihood of the Elk Hills being then or ever oil territory was negative; that, at least, it was not commercially oil territory (R. 2454). But in 1903-1904 he recommended the inclusion in the lease to the Kern Trading & Oil Company of section 31 of 30-23, which is in the Elk Hills and corners with the very lands in suit (R. 2415 and 2702). Thus, he excluded the lands in suit on the ground that they were too far away from the outcrop, but included in a lease for oil purposes to the fuel department of his employer a section which is equall}^ far removed from the outcrop. Mr. Anderson brought himself into sharp con- flict with Dr. Branner and A. C. Veatch. He dis- sented from the latter 's '* horizon theory," which he 178 was actually applying in classifying section 31 of 30-23 as oil land; nor could lie lend countenance to tlie position of Dr. Branner tliat a geologist who saw the Elk Hills in 1903 and observed the sur- rounding conditions and who did not conclude that the Elk Hills were oil lands did not know his business (R. 2546-7). No charge against him of timidity or modesty could be sustained. In 1903 Anderson thought the Buena Vista Hills, which his colleague, Ochsner, pronounced very similar in structure and formation to the Elk Hills and an uplift of the same geological period, highly prospective oil land (R. 2102-3). One of the things which contributed to this conclusion was the large deposits in sections 11 and 15 in the Buena Vista Hills which both he and Owen in 1903 and in 1908 thought asphaltum and so reported (R. 2478-9). These deposits differ from that in 32 of 30-24 chiefly, he said, in quantity and magnitude of out- crop (R. 2478). He did not see the latter, how- ever, until November, 1912 (R. 2473), at which time, differing with Dr. Branner, Veatch, Martin and manv other skilled scientists, he concluded that it was a gas seepage— partly hydrocarbon gas and hydrogen sulphide— not necessarily petroleum gas- largely methane (R. 2474-5). To be consistent, he then changed his view as to the character of the deposits in the Buena Vista Hills. At that time, it may be stated parenthetically, some of these lands in the Buena Vista Hills had been bought for oil purposes under the advice of Anderson and a 179 notable well had been brouglit in by the Honolulu Consolidated Oil Company which was accepted as. demonstrating the immense richness of the land as oil territory. When in 1903 and later Anderson and Owen were working together, ' Owen, as was known to Anderson, was seeking to acquire this land in the Buena Vista Hills under agricultural scrip for himself and Professor Dimible, all three of them being at the time geologists of the Southern Pacific Company (E. 2562-3-4-5-6-7-8-9-70). When Bumble told Anderson that he was obtaining the land for orange or eucah^otus culture, the latter *' smiled more or less at the likelihood of raising oranges there" (R. 2568-9). Owen located sec- tions 2 and 10 of 32-24 in the Buena Vista Hills for gypsum. Anderson and Owen visited both sections in 1903 and agreed that they were oil lands. Ander- son had never seen any commercial gypsum on them (R. 2576-7). Diunble told him that the Buena Vista Land & Development Company held interests for him and Owen in these lands (R. 2579). They were subsequenth sold to Captain Matson, head of the Honolulu Company, upon Anderson's advice that they were oil lands (R. 2580). Owen let Ander- son know that the lands were for sale and Anderson offered them to Crandall, attorney for Matson (R. 2581-2). Anderson knew that the Buena Vista Land & Development Company was trying to secure agricultural patents to these lands which he, Ander- son, knew were mineral lands (R. 2582-3). Ander- son knew that Owen and Dumble were contrib- uting geological advice to the Buena Vista Land & 180 Development Com]3any as to tlie oil value of these lands which it was seeking to acquire by the use of agricultural scrip (R. 2583-4-5-6). Anderson admitted on cross-examination that, if he had known in 1903 and 1901 of the gas blow-out in 32 of 30-24, he would temporarily have believed the Elk Hills oil lands (R. 2626); and yet they were as far away from the Temblor outcrop then as now and the presence of the gas seepage cer- tainly made them no nearer. As already shown, he testified that he had in his own mind in 1903 condemned them and utterly cast them out because of their distance from the outcrop ; but at the trial he admitted that knowledge of the gas seepage would have induced a different conclusion. Can it be that this admission was made because necessary to free him from embarrassment in view of the fact that, while condemning the Elk Hills, he appraised their neighbors, the Buena Vista Hills, as oil lands though practically the same distance from the out- crop to the West? Confronted with the similarity between the two uplifts, the one of which he pro- nounced good and the other bad, he had the "im- pressive" deposit in the Buena Vista Hills to buttress his favorable opinion, while in the Elk Hills he had not then seen the deposit which he afterwards claimed differed from that in the Buena Vista Hills chiefly in magnitude. And he admitted that, after all, the nearest point of the Elk Hills was distant only four miles from his so-called Etchegoin shore-line (R. 2648). 181 Admitting that section 31 of 30-23 rises on the slope of the Elk Hills and that he in 1903 deter- mined that it was prospective oil land and recom- mended its inclusion in the lease to the Kern Trading & Oil Company, Anderson said that if it was prosiDective oil land in 1903, perhaps all of the lands in this suit were prospective oil lands at that date (R. 2702-3) ; and that, if they had been patented at that time, he perhaps would have in- cluded them in the Kern Trading & Oil Company lease, though he was doubtful about this (R. 2703). Taking all of the foregoing together, it is mani- fest that Anderson clearly recognized in 1903 the relation of the Elk Hills to the surrounding oil country. His reference to the migration of oil from the Temblor contact, where the seepages and long line of outcrop are, towards the lands in suit shows that he recognized the dip of the strata away from the Temblor Range and towards the valley and the Elk and Buena Vista Hills (R. 2155-6). There could manifestly be no "migration of oil" in that direction unless the oil strata dipped in that direc- tion. Indeed, his testimony is filled with statements showing his recognition of the favorable structure and situation of the lands in suit, insomuch that it savors throughout of a confession and avoidance; and it is all crowned with the reluctant admission that, if in 1903 he had known of the deposits in 32 of 30-21, he w^ould temporarily have regarded the lands in suit as oil lands (R. 2626). In other words, if Anderson in 1903 had seen these deposits, 182 as had Owen, his fellow geologist, he would, as Owen and others will be shown to have done, have regarded the Elk Hills as oil lands. 1903 is the time bv which events are to be measured in this case. What was thought, what was believed, what was known in 1903 and 1904 — these are the im- portant things in this controversy; for the inquiry is as to conditions then and whether they were svich as to engender the belief that these lands were valuable oil lands. Anderson says, in eifect, that, if he had known what Owen, appellants' trusted, skilled geologist, knew, it would have engendered in him the belief that these lands were oil lands. Anderson^ with commendable frankness, admitted that the fact that the log of a well drilled in 1910-11 b}^ the Associated Oil Company, a sub- sidiary of the Southern Pacific Company, in sec- tion 26 of 30-23, in the immediate midst of the lands in suit, showed 159 feet of oil sand did "not seem to harmonize with my theory — it does not fit my theory very well to see so much sand repre- sented in the log." (R. 2651.) He had said that the Elk Hills were too far away from the shore- line which he had conveniently discovered, one of whose points was seen at McKittrick, for the current to have carried the sands to them. The log in question was brought into court b}" apjDellants and showed, as indicated, 159 feet of sand, while Ander- son admitted that the average thickness of sands in the Midway, Sunset and McKittrick districts was much less than sixty feet and that there were only two wells in those districts showing greater thick- 183 iiesses than 159 feet (R. 2635-6). And, finally, this witness, to save his face in view of subsequent developments, admitted that, notwithstanding all that he had said in condemnation of the Elk Hills, in 1903 and 1904 he thought that there might be some insignificant deposits of oil in them (R. 2454). And this, too, from the expert who projected and stood sponsor for the proposition that the drill is the only test of oil land. He said : ''There are obviously four essentials to oil territory, the failure of any one of which might be fatal. The territory must have the proper structural conditions, the proper stratigraphic conditions, the proper source from which oil may be derived in the unmediate surrounding country and, last and most important of all, it must have oil in the reservoir, whatever it might be." (R. 2548.) Asked how you can determine whether it has oil in the reservoir, he replied : "You can determine it only by drilling wells" (R. 2548). Measured bv his own test, how could he have determined that, if the Elk Hills contained oil, it was only in insignificant amounts'? How much oil there is at any place can, he says in one breath, be determined only by the drill ; and in another breath he says that he determined without the drill that such oil as was in the Elk Hills was insignificant in amount, at least not commercial. His unfavorable view of the Elk Hills is condemned by his own test — ^he is "hoist by his own petard". 184 It must already be apparent that there is no real controversy in the evidence as to the favorable structure and stratigraphy of the lands in suit, whether one considers the testimony of the appel- lants or of the govermnent. Nor is there doubt of the presence of oil in commercial quantity in the "im- mediate surrounding country". Anderson says that these in combination mean nothing until they have been followed by the drill — the exact counterpart of the contention of the Coal Company in the Diamond Coal and Coke Company case which was condemned by the Supreme Court. B. K. Lee testified to an outcrop on section 35 of 30-22, which is within less than two miles of the nearest of the lands in, suit (R. 224-5). Colon F. Whittier testified to a very prominent outcrop in the same section (R. 470). From this it appears that the lands in suit are considerably nearer the outcrop than Mr. Anderson was willing to admit. His proximity theory would not permit of too great nearness. Surely two miles qualifies as "immediate surrounding country ' '. Owen's map, Exhibit 157— not a government exhibit, but appellants '—shows the Elk Hills anti- cline from section 6 of 30-22 and through the lands in suit. On this section 6 in 1904 there were at least two oil wells. F. J. Sarnow drilled them eight or nine years prior to the tune when, in April or May, 1912, he testified as a witness (R. 174). N. C. Farnum testified that there was a well there before 1904 (R. 498-9) ; and these wells are shown on the 185 Barlow & Hill map of the McKittrick oil fields, Exhibit Ha, already referred to. It thus appears that before patent wells had been drilled and had found oil in the very structure which Owen showed running through the lands in suit. It also is shown that within two miles of the lands in suit the oil sands outcropped and that within less than three miles there were iDroducing oil wells. Undoubtedly, these were among the things that induced Dr. Branner to say that no competent geologist would in 1904 have failed to form the opinion that these lands were oil lands. Owen was in and repeatedly over this region and upon the lands in suit at that time and he was a competent geologist. It is not matter of wonder, then, that he formed the correct conclusion; nor is it surprising that he and Pro- fessor Humble, whose diligence in behalf of gaining information for appellants was second only to their forehandedness in securing for themselves oil lands by agricultural entries and otherwise, located even- numbered or non-railroad lauds in the Elk Hills. It is beyond question that section 31 of 30-23 was in the third class of lands to which Humble referred in the notable letter to Mr. Kruttschnitt, Exhibit 119, already quoted, in which he classified the lands to be transferred to the Kern Trading & Oil Company as "proven", "very probable" and "probable". This third class, he wrote, "depends in part upon the con- tinuance of normal dips and conditions, but in addition it represents untested anticlinals which show good indications of oil", obviously having in 186 mind the wells tlien on section 6 of 30-22, the very anticlinal formation running through the Elk Hills (E. 2913). Thus, again, the geological connection between the lands in suit and the surrounding oil territory is not onlv^ shown, but is seen to have been understood and appreciated bj^ appellants' chief geologist even before patent. Nor can there be doubt that the lands in the Elk Hills and especially those on the anticline so clearly drawn by Professor Owen on Exhibit 157, already referred to, and running through the very lands in suit, were in his mind when he reported : "The fold north of the McKittrick and run- ning nearly parallel passes through sections 5-9 between 11 and 15 through 13 of town 30 R. 22. This fold exposes the oil sands in severed places and in some of the exposures the sands are strongly impregnated ivith asph and producing wells ought to he found along this exposure." (Italics supplied.) (R. 1617.) This letter was written March 25, 1903, was ad- dressed to Professor Humble and is an unanswerable document showing Owen's knowledge of conditions generally and his full appreciation of the relation of the Elk Hills, the lands in suit, to the surrounding oil territory. The Elk Hills anticline, as traced by him on appellants' Exhibit 157, is the fold or anticline — geologically "fold" and "anticline" are synonymous and interchangeable words — north of the McKittrick fold or anticline "and running nearly parallel" and it continues on into the Elk Hills and through the lands in suit. Owen recog- 187 nized and appreciated the significance of this con- nection of unproven territory with proven and con- fidently predicted, reasoning from the certain to the probable, that ''producing wells ought to be found along this exposure". As already seen, there were at that time oil wells on section 6 of 30-22 through which the same anticline or fold runs. (The Owen letter in question appears at pages 1615-1620 of the record.) Exhibits 4Sa and 4Sb, pp. 44 and 45 of the plat book which Owen kept with him in the field, show the same anticline and indicate the land here in suit as "possible oil lands". Furthermore, Prof. Owen in this same letter savs : "In the direction of Midway I find that the McKittrick fold flattens out in the valley, but other hills further on in the same direction would indicate that it may extend to near the Kern Lake." (R. 1617-18.) Kern Lake is in township 31-27; so that Owen's view of the persistence of oil sands goes far beyond the requirements of Veatch's so-called horizon theory and is in direct conflict with the narrow zone view which Anderson ascribed to himself. The closing paragraph of the letter in question is eloquent of Owen's recognition of the connection of the Elk Hills and the lands in suit with the known oil territory. He writes: "I have located the outcrop of the horizon all the way to the Sunset oil field and find there is but one oil sand, and I believe it tviU he possible 188 to trace the same Iwrizon to the Kern River fields. There are several reasons for believing tliev all belong to the same zone." (Italics supplied.) (R,.^1620.) It is thus seen that he had traced from McKittrick to Sunset the exposures or outcrop of the oil bear- ing sands and that he believed that these sands extended all the way to the Kern Eiver fields and that it was all the same sand. From McKittrick to Sunset is about thirty miles and from the center of the line of outcrop from McKittrick to Sunset to the Kern Eiver fields is twentv-eight miles. Throughout this entire area Owen, the field geologist of appellants who was in and about McKittrick from early in 1903 to long after patent, December 12, 1904, believed that there was but one oil sand. In this he was in entire accord with Dr. Branner, Mr. Veatch and, indeed, all of the witnesses except one or two geologists of appellants who evolved the specious and convenient theory that there were sev- eral oil sands and that they had no connection with each other. Owen, in fact, differed with Dr. Branner and Mr. Veatch in that he went far bej^ond them in his view of the persistency of the oil sands. He connected the distant Kern River fields with the Coalinga-to-Sunset field and believed them the same in origin — and he was the expert, trusted servant of appellants and lieutenant of their chief geologist. Prof. Dumble, who paid him the tribute of saying that he "was a very remarkable man", meaning *'that he had a faculty of carrying underground conditions in his mind more perfectly than any man I ever met". (E. 3037.) 189 No question arises upon this record of the outcrop to the west of the lands in suit at places no farther away than two or three miles. No question arises as to the dip of the oil-bearing formation or strata towards the lands in suit. In 1899 oil had begun to be produced in the Kern Eiver fields, twenty-eight miles to the east of the lands in suit, from sands which Prof. Owen believed to be the same sands outcropping from Coalinga to Sunset. The testi- mony fully establishes the existence in the im- mediate midst of the lands in suit of oil-bearing sands and proves that Owen knew of this outcrop and believed in it. Is there occasion for surprise then that he believed in the oil character of the lands in suit? That- he did so believe and acted upon his belief will be the subject of later treat- ment. Pause is made here merely to point out that, from the record, from the standpoint of Dr. Bran- ner, Veatch and others, all of the elements com- bine to complete the perfect parallel between the instant case and the Diamond Coal and Coke Com- pany case. Prof. E. T. Dumble testified that, if in 1902 he had found an actual oil seep in a break in section 32 of 30-24 and the same was taken in connection with the anticlinal structure found by Owen, he would have regarded the lands in that vicinity in the Elk Hills as favorable to expect the occurrence of oil there (R- 3039) ; and this comes from appellants' chief geologist who himself had made no examination of the Elk Hills country at that time (R. 3040). 190 The surroundings must have been very suggestive, very impressive, and their geological relation to the lands in suit very evident and persuasive to wrest from him so damaging an admission! For what he says amounts to this: if to his knowledge, prior to patent, of the outcrop, exposures and wells to the west and in the vicinity of the lands in suit in strata dipping away from the Temblor Range and towards the valley and the lands in suit, together with the fact that oil had been developed com- mercially in the Kern River fields many miles to the east, there had been added knowledge of the exposure or deposit in section 32 of 30-24, he would have pronounced the lands in suit oil lands. His admission shows that, had he had Owen's knowl- edge, he would have entertained unreservedly Owen's belief. Of the belief of both of them more will follow later herein. His self -ascribed lack of belief, clearly, is predicated upon his lack of opportunity to examine. The relation of the surrounding country to the lands in suit has been shown to be such that ap- pellants' chief geologist would, if he had known of the deposit or seepage on 32 of 30-24, upon it have predicated the oil character of the lands in suit. Having that information, Owen, another of their geologists, believed the lands to be of oil character; and Anderson, the only other geologist whom they had at the period in question, placed himself along- side of Dumble and admitted that, if he had known of the deposit in 32 of 30-24, he would temporarily 191 have believed the Elk Hills to be oil lands (E. 2626). It is already shown that of the three Owen was the only one who had been in the Elk Hills prior to 1905. Owen was the geologist who reported on the lands to be leased to the Kern Trading & Oil Company. He was the field geologist and questions important and mighty were committed to his de- cision. As will hereafter be shown, both he and Dmnble thought so well of the Elk Hills that they sought to acquire for themselves lands therein. It is true that Dumble testified that he thought he could say positively that Owen did not tell him of the deposit in 32 of 30-24; but the fact remains that he did not swear that he did not and he, in making locations, acted as if Owen had told him. 7. NON-AGRICULTURAL CHARACTER OF THE LANDS IN SUIT. That the lands in suit are wholly without value for agriculture and are totally worthless for any other than oil purposes convincingh^ appears from the evidence. That this is true will appear more material when later in this brief the solicitude and extraordinary efforts of appellants to secure patent thereto are shown. First will be brieflv recited the testimonv of numerous government witnesses upon this question, followed by the testimony of a number of appellants' witnesses to the same effect. S. G. Drouillard testified that the Elk Hills had no value for crops; that early in the Spring, for about 192 two or three months, the land had some value for grazing purposes; but that there is no possibility of water for irrigation purposes unless it could be gotten by artesian wells, there being no surface indication of water and the country being badly broken and cut up by small, short canyons (R. 117). John Jean testified that the general formation of the surface is broken, reminding him of an ash-pit ; that there is a little sage brush now and then in the hills and that part of it ma}" be susceptible of agri- cultural development and part of it not; that he did not know whether crops could be raised, never having seen it tried (E. 129). F. J. Sarnow testified that the lands are not valuable for agriculture, the surface of the ground being rough and barren and the only vegetation some sage-brush, unless there is an amount of rain, when a little grass grows which does not remain very long (R. 165). He also stated that there is no water there and that the land is not susceptible of economic agriculture (R. 181). B. K. Lee testified that he never saw any water in there and very little vegetation, what little vege- tation there was consisting of sparse sage-brush and some grass ; that the hills are rather barren and not susceptible of agriculture and have only a slight value for grazing (R. 228). J. I. Wagy testified that he had been over every section and that the lands are without value for 193 agTiculture ; that since he had been in the country there was not sufficient rainfall to raise a crop; that the surface is too rough, the climate being rather a dry, warm, desert climate, but that in ordinary years during sixty or ninety days there was sufficient vegetation to graze sheep (R. 248-9). I. N. Chapman testified that the Elk Hills were dry and parched when he was there ; that their ele- vation is about seven hundred feet and that they did not seem to be very valuable for agriculture (R. 316). S. P. Wible testified that the lands in 30-23 have absolutely no value for agricultural purposes as they are too hillv to be cultivated and there is not enough level land to do anything with; that in the Spring of the year they have some value for pasturage, but that this is true only in a good season and that the value of the lands is for mineral (R. 324). W. G. Sylvester testified that: "As to the agri- cultural possibilities of the Elk Hills for raising crops I think a man would have a picnic raising a crop there, as the hills are pretty steep' and there is absolutely no water" (R. 358). Jacob Kaerth testified that he did not consider the lands of any value for agricultural purposes, they being bare, very rough and precipitous and cut up badly by gulches and ravines and having no water (R. 418). 194 H. P. Dover testified: "The Elk Hills have no value for crop raising or agricultural pursuits that I have ever known of. For farming it was no good. It was rough and dry. Nothing seemed to grow there. In the Spring of the year of a wet Spring there might be a little feed for a month or so. The chief value of the Elk Hills is for oil, if for any- thing" (E. 462). C. F. Whittier testified that the Elk Hills have not much value for grazing, there being nothing there to keep the stock long; that they could not live while they were going across; that there had been some sheep around through the country there ; and that he did not know of any use that had been made of the land (R. 475). Frank Barrett testified: "As to their value aside from the oil value, I do not think you could raise a black-eyed pea on them, I would not have them to pay taxes on them for agriculture. I do not think they have any value at all for agri- cultural purposes — for raising crops. As to their value for grazing, I suppose when the winter rains occur the filaree would grow there, but it would not last very long, probably not over six weeks or two months in a very good season" (E. 481). M. T. Hubbard testified that if the Elk Hills had no value for oil, he did not think them worth any- thing (E. 491). N. C. Farnum testified that township 30-23 has a 195 value as oil land and nothing else unless for gypsum or fullers-earth (R. 508). Parker Barrett testified that the Elk Hills, in- cluding township 30-23, have no value for agricul- ture ; that he could not say that they had absolutely no value for grazing, but that they did have a little value for that ; that sheep occasionally ranged across there and found very little feed even in a good sea- son; his reason for saying that they have no agri- cultural value being that ver}^ little of the land lies so that, even if there were water on it, it could be cultivated; that, if you turned water on a good deal of it, it would all wash away (R. 526). W. H. McKittrick testified that the Elk Hills are absolutely worthless for agricultural purposes; that a sheep man would not pay taxes on it even as a grazing proposition; that he never saw a drop of water all through there; and that the surface is so eroded that nothing could be done in the way of agri- culture, even if there were water (R. 539). W. E. Youle testified that the lands have no value other than for the purpose of drilling for oil (R. 577). Chas. W. Lamont testified that he had been over most of the Elk Hills in 30-23 and 30-24 and that he did not think the lands valuable for agriculture and had never found any water there; that he had of- fered to rent the ground that he had located for ten dollars a section to a sheep man, but the sheep man 196 would not give it unless he would agree to put water there (R. 582). F. Oskar Martin testified that he had examined the soils of the lands involved in this suit and had found them residual gravely sand; that on that account their drainage would be excellent, but that for the same reason they are not capable of retaining suf- ficient soil moisture to induce plant growth ; that in view of the slight rainfall it was apparent to him that no agricultural crops could be raised on them; that he saw evidences on the west half of section 16 of 30-23 that about ten acres of land had been plowed or scraped over ; that he found a stack of barley, but that the crop had not been a plentiful one and had not matured (R, 615). Jas. M. Gleaves identified copy of plat of survey of 30-23, approved by the Surveyor General of Cali- fornia August 1. 1902, marked plaintiff's Exhibit ''E" and showing that the lands in suit were re- turned by the Surveyor General as mineral lands (R. 107). The following is from the testimony of wit- nesses for appellants : J. B. Treadwell, oil expert of appellants in charge of their operations in the region around McKittrick prior to patent, admitted while on the stand as a witness for appellants that the lands in suit had no agricultural value at all except for grazing in the Spring of the year (R. 3473). 197 L. D. Bell testified that he knew the value of agri- cultural lands in the region in question, having been in the business of agriculture and grazing for a num- ber of years, and that the Elk Hills have no value for agriculture or farming (R. 1805). H. J. Hart testified that the lands would be valuable for agricultural purposes, if water could begotten (E. 2112). T. M. Storke testified that he would not give eight- een cents an acre for the whole Elk Hills for anv purpose (R. 2045). John Lang testified that except for about four months the season in the Elk Hills was dry and that they were absolutely valueless except for the miner- als that they contained ; that personally he would not give much for them as a grazing proposition (R. 1967). Samuel Shannon testified: "The Elk Hills are a desert country not absolutely devoid of desert vege- tation, but of a desert character; a region of very light rainfall and sparse sagebrush. The Elk Hills are a barren group of hills somewhat similar in ap- pearance to the Buena Vista Hills" (R. 2143). W. H. Cooley testified that, while the lands would be very prolific if there were water, he did not know of any chance to get water and that he did not think that they had any value as farming lands (R. 1815). R. K. Howk testified that the lands in the Elk Hills in their present condition have absolutely no value for agricultural purposes (R. 1849). 198 It is submitted that, in view of the foregoing evidence, there can be no question that the Elk Hills are without substantial value except for the miner- als which they contain, insomuch that, if the question were to be determined in the first instance by this court, it must be resolved in favor of the govern- ment; a fortiori, there is nothing in the findings of the lower court even suggestive of palpable or mani- fest error. L. J. King, superintendent of oil properties of the Associated Oil Company, a subsidiary of the Southern Pacific Company, called as a witness in a mineral contest before the land officers at Visalia, testified that the land in the Elk Hills cannot be cul- tivated because it is rolling and uneven, without artificial irrigation, and even then is not susceptible of cultivation ; it has no agricultural value and a ren- tal value of ten cents per acre per annum for graz- ing purposes ; contains no vegetation except scattered growth of sage-brush and is without water by stream or springs. He said that section 26 adjoining the lands in suit was chiefly valuable for oil, particular- izing the section which was involved in the contest. Exhilnt 9-R. T. E. Barnes, testifying under the same circum- stances and with the same connections, said the Elk Hills could not be cultivated without artificial irri- gation. They are rolling and uneven, the land pos- sesses no agricultural value and but a nominal value of ten cents per acre per annum for grazing. Xo 199 vegetation exists except a scattering growth of sage-brush and the hills are cut with no streams and contain no snrino's. He also said section 26 was chiefly valuable for oil. Exhibits 9-F ; 9-N, and 9-E. B. BELIEF, GENERAL AND SPECIFIC. In the Diamond Coal and Coke Company case the court, after reviewing the testimony concerning the known physical indicia upon which the expert for the government, whose views were adopted, based his conclusion that the lands there in suit were coal lands, sets out certain conduct on the part of the coal company which indicated its belief in this coal character, stating that the conclusion reached by the expert "had substantial support" in the conduct in question. The following is the pertinent passage : "The expert for the government proceeded upon the theory that, when the known surround- ings are such that practical coal men would in- vest in particular lands for coal mining or ad- vise others to do so, those lands are to be deemed coal lands, even though coal has not as yet ac- tually been disclosed within their limits. And having in mind the outcropping coal bed, the direction and inclination of its dip, the char- acter of the rocks with which it was interstrati- fied, the quality and thickness of the coal at the outcrop, the proximity of the lands to the out- crop and the topographical and structural fea- tures of the vicinity, he gave it as his opinion that the coal bed extended into and through the lands in question and that practical coal men would regard the lands as valuable for coal and invest in them as such. He accordingly pro- nounced them coal lands within his acceptation of that term. This conclusion had substantial 200 support, not only in the facts already recited, but also in the fact that the company's maps, made three years before the suit was begun, showed that it was intended to project its min- ing operations westward from the outcrop a mile and a half and had designated the inter- vening lands, which included some of those in controversy, as coal lands, and in the further fact that the company had returned lands ex- tending westward a similar distance, likewise including some now in controversy, as exempt from direct taxation by reason of a local statute substituting an output tax upon coal mines. Laws Wyo. 1903, chapter 81, p. 101. The return for the year in which the maps were made claim- ed an exemption of substantially six sections in two tiers of three sections each, although the work of developing the mine (No. 4), as shown by the maps, was still within the east half of the middle section in the eastern tier." (Page 942.) The Supreme Court proceeded upon the basis that, the question being whether a given belief would be engendered by certain found conditions, proof that that belief was engendered was competent to show the probative value and effort of the found con- ditions. Holding that the kno\^Ta conditions were such as to engender the belief, it checked its own conclusion by conduct on the part of the defendants showing that, with no knowledge other than that fur- nished by the known conditions, they entertained that belief. This record is writ large with evidence showing the belief of appellants in the oil character of the lands in suit, that belief appearing both in the words and acts of various responsible officers and agents of 201 the Southern Pacific Company and the Southern Pacific Bailroad ComiDany. There is also much testi- mony as to the general belief in and notoriety of the oil character of these lands, as well as of the belief of individuals. Accordingly, first will be set out the evidence of general belief in and notoriety of the oil character of the lands in suit; next, evidence of the belief of appellants; and last, evidence of the belief of individuals not connected with appellants. 1. General belief in and notoriety of the oil character of the lands in suit. The evidence in support of the contention that there was prior to patent general belief in and no- toriety of the oil character of the lands in suit fol- lows. It is not suggested that this was one of the conditions which showed the lands oil lands, but that it is related to those conditions as effect is related to cause, it plainly appearing that those conditions led to the belief and caused the notoriety in ques- tion. The evidence incidentally demonstrates knowl- edge by the appellants of the knoT\ai conditions. S. G. Drouillard testified that the Elk Hills looked as good as any other land in that country and in 1899 was generally regarded by competent oil men as oil territory, everyone who saw it, people that were sup- posed to be oil men, saying that it was good oil land (K. 122). He further stated that there were num- erous locations and that the lands were supposed to be in the oil belt and all of the ground that was in the oil belt was supposed to be oil land (R. 124) ; and 202 tliat people regarded the entire buncli of hills known as the Elk Hills as good oil territory, township 30- 23 being located in the middle of the Elk Hills and being regarded as good oil territory (E. 125). John Jean testified that the Elk Hills were re- garded as oil territory in 1904 and that he regarded them as snch and would not otherwise have made locations there (E. 131). L. G. Sarnow testified that he thought the Elk Hills good for oil and that J. B. Trea dwell, oil ex- pert of the Southern Pacific Company, thought them good for oil, but that both of them thought that it was deep (E. 135). He further stated that in his opinion a competent geologist, who knew the forma- tion of the Elk Hills, its comparison and similarity to the general McKittrick formation along the east- ern flank of the Temblor Eange, the develoxmient of oil sands by actual drilling along the Temblor flank from Sunset to McKittrick, the oil seep that he had mentioned in the Elk Hills and such other evidences of oil character as were plainly conspicuous upon the ground, would in 1904 have reconnnended the invest- ment of money in the Elk Hills with reasonable ex- pectation of developing paying oil property (E. 139- 140). He also stated that, even if the samples taken from the blow-out in 32 of 30-24 failed to respond to tests for j^etroleum made by competent and dis- interested persons according to the best approved methods, he would still say that it was a cinch that the lands were oil hinds (E. 142). 203 F. D. Lowe testified that prior to patent he talked with people whose opinion was worth something and that they believed that there was oil in the Elk Hills, C. A. Barlow, a witness for appellants, among others, saying "I don't doubt it". He further stated that people believed that oil was there in paying quantities and that that belief was generally entertained by men interested in the commerical pro- duction of oil and in the business at that time (E. 149-150). He further stated that, Avhile no pros- pectus was ever gotten out by his company, the Lakeview Oil Company got out one in the Summer of 1901, when his company was down about 500 feet in the Elk Hills, and in it stated that there was every indication of his striking oil (R. 150). Noth- ing occurred from the time he made his location in section 11 of 31-24 until the fall of 1904 to change his opinion of the territory as oil property. He still held to the opinion that there was oil there and still believed that it was a good oil country (R. 151). The opinion of oil men of this land was good and their opinion was that there was oil underneath the surface. C. A. Barlow told him that he didn't doubt that it was good oil land. The McCutchens, who are drillers and operators in the Sunset field and with whom he talked, in 1901, 1902 and 1903, were of the opinion that the land was good and believed that there was oil there (R. 152). Ira M. Anderson, stating that the Sunset, McKit- trick and Midwav fields are all about the same and that the existence of oil evidences there were known 204 in general to the people around there at that thne, testified that the chloroform test which he made of the earth, rock and shale in the Elk Hills showed oil and oil sand and that the formation was there to show that the Elk Hills were in his oj)inion oil pro- ducing territory. He found blow-outs in the Elk Hills (E. 156). F. J. Sarnow testified that he had been in the Elk Hills and considered them oil territory, although expensive ; that he talked with Treadwell about dif- ferent lands and that Treadwell thought there was oil in the Elk Hills, although it would be expensive (R. 165), explaining that it was expensive because there was no water in that country (E. 171). M. S. Wagy testified that prior to patent he lo- cated lands in 30-23 and 30-24, eight or ten sections (E. 177) ; about as early as 1899 he regarded the Elk Hills as oil territory because there were the same indications there as where he was getting oil and better indications than in the Kern Elver field where oil was being produced; that he talked with Silas Drouillard about the Elk Hills and that he, Drouillard, in 1900-1901, thought they were good (E. 180). He further stated that he knew Josiah Owen and talked with him in 1900. Owen thought that that was an oil district (E. 182-3). B. K. Lee investigated lands in the Elk Hills in 1903 and upon his recommendation 159 acres in section 36 of 30-23 were bought for mineral possi- bilities for oil. He found more clays and sands ex- 205 posed in 30-23 than in the country immediately ad- joining the McKittrick oil field and recommended the purchase of the lands for their oil value (E. 229). Josiah Owen told him that the Buena Yista Hills was a great gas country; that he had found evi- dences of gas there in eleven different places where he could stick a bar into the ground and get a flash of light; he also found an oil sand in section 11 of 32-24 (R. 230). J. I. Wagy with Jewett, Blodgett and Youle, pioneer oil men and operators, located all over 30- 23, also in 30-24, 31-23 and 31-24, some 50 odd sec- tions, for oil (E. 239). He discovered the seepage in 32 of 30-24 in 1900. He reported it to Mr. Blod- gett of the firm of Jewett & Blodgett who sent over their oil expert Youle to examine it. Youle exam- ined it and said that it looked pretty good to hun and that it was worth spending money on (R. 240). As a result of this a meeting was held, a company formed and the lands located. Surveyors were pro- cured, surveys made, ground mounded and location notices posted (E. 243). Witness said he surely resarded the Elk Hills as oil territorv at that time or he would not have spent his time there. They went on and made locations on Youle 's advice as much as am^thing else (E. 245). They built a house and a stable and cut a road on their locations and had a crew of men digging shafts for several weeks (E. 246). He remembered the stampede in the Elk Hills about 1901 (E. 247). They thought all their locations were oil lands (E. 250) and spent $5,- 206 000.00 on tlie south half of township 30-23 (E. 251) which is that portion of the township occupied by the lands in suit. In making re-locations which they continued doing for six or eight years (E. 253) they went out at midnight and lay in the sagebrush to "beat the other fellow to it" (E. 254). The west- ern portion of the Elk Hills which would include the lands in suit he considered to be oil-bearing lands at the time of locating there and at the time of testi- fying in this case since, as he expressed it, he didn't know anything to change his former opinion (E. 266-7). He "most assuredly considered the Elk Hills oil territory or he would not have spent his time and money there". (E. 269.) In 1912 a Mr. Myers called on witness looking for information for the Southern Pacific Company in regard to the Eik Hills and asked him if he was the Wagy on the early locations in there and on being told that the witness was, asked this question: Did you consider that oil territory? And the witness replied: "Most assuredly I did, or I would not have spent my time and money there." To this Myers rejoined: "I don't think you will do me much good" and bade him good-day (E. 269-70). W. E. Ott testified that he first went to McKittrick in 1901 and that he always thought there was oil in the Elk Hills and that it was the general belief among oil men about McKittrick that the Elk HiDs were oil territory; that he heard it talked about all the time he was there as early as 1901-1902, and Josiah Owen, in speaking to him of the territory in 207 general from McKittrick to Sunset, which is known now as the Midway district, said that it would be a great field (R. 277) ; that there was a general be- lief amongst oil men that the Elk Hills w^as oil territory, all the time he was out in that country and up to the present time (R. 286). In fact there were rigs over in portions of that field at that time which had more or less oil on them. Wible told him the Elk Hills was oil territory in 1901 (R. 286-7). Treadwell also thought the Elk Hills was good oil territory, as also lots of oil men around there (R. 288). Youle and Blodgett also told him it was oil territory prior to January 1, 1905 (R. 290). I. N. Chapman about 1893 surveyed the eastern boundary of township 30-23 and regarded it as very probable oil land. "It is all the right formation in which to find oil". That was true of the hills there known as the Elk Hills and clear over to the Car- issa plains (R. 315). When he spoke to the United States Suiweyor General about the probability of oil in 30-23, the latter advised him not to mention it be- cause it was a difficult matter to prove. He talked the matter over with his men there at that time and told them that he believed there would be oil dis- covered in that country and that there would be a great boom in oil (R. 316). He said a man would be justified in investing money with a reasonable expectation of getting oil upon the indications that he saw (R. 317). S. P. Wible discussed with Josiah Owen the oil possibilities of lands in the vicinity of McKittrick. 208 Owen was very familiar with the formation of that countiT and particularly with reference to the Elk Hills including 30-23. Owen told him that he be- lieved the oil measures lay under the Buena Vista Hills and that he thought they lay very deep under the Elk Hills (R. 320). Owen before 1904 spoke several times about the oil showing in section 32 of 30-24 and from a conversation concerning the Elk Hills as oil territory he knew that Owen regarded them as such (R. 321). Owen seemed to feel quite sure that there were oil lands in the vicinity of oil croppings on 32 of 30-21. The locations in the Elk Hills in 1901 and 1902 were not made only by part- ies who were speculating in the possibilities of oil. Most of the operations were carried on under the advice of a geologist and he considered Josiah Owen one of the best in the field. All of his lo- cations were made on the advice of competent men, among whom he considered Treadwell and Youle under whose advice he and his associates made locations in 1901 (R. 332). The formation of the lands in 30-23 and 30-21 is shale, sand- stone and clay, fuller 's-earth and gypsum and in that formation fuller 's-earth and gypsum generally occur in conjunction with oil. Mr. Owen, he said, thought that the oil formation dipped very fast from the west towards the east so as to make it deeper in the easterly end of the field. If Mr. Owen heard of any seeps he looked them up. Witness and Owen were stockholders in the Eight Oil Company which located even-numbered sections in 30-23 and 30-21 for oil. Owen furnished infoiToation of a geological 209 character of tlie holdings of the Eight Oil Company. "He showed several of us the fuller 's-earth and gypsum there and told us that it was possible that the oil measures lay under there at a depth that could be reached. At that time we didn't think it possible at the depth that he stated to drill profit- ably for oil. We had confidence in his report so far as the existence of minerals was concerned. Owen put up his share of the money for doing the develop- ment we did there and the locations of the lands and the organization of the company. Those lands were located for oil, fuller 's-earth, gypsum and other minerals." The value of that land, meaning the lands in 30-23, is for mineral (R. 323-4). Owen told him "if the railroad selected those lands they would be selecting mineral lands. In other words, they had no right to select them as he had reported them as mineral land." (R. 325.) It was in 1903 or the early part of 1904 that this conversation took place. Owen said he was employed for the purpose of examining lands and classifying them as to their mineral character. Witness testified that, as a man of experience in the oil-fields, he would not make a location of land which had no indication of mineral value on the ground at that time (R. 327). "Mr. Owen said he belived the Elk Hills might contain oil. He said the oil measures lay under them and he thought that they were probably so deep they could not be reached and made to pay. I had some conversation with him in reference to some land in 30-23 in which he told me that oil could be reached at 3,000 feet or over and we didn't drill because we 210 didn't figure that it would pay to drill for it." We regarded 3,000 feet as prohibitive from the stand- point of cost. "Mr. Owen said there was a good chance." Continuing, witness said: "At a number of places through the Elk Hills running from north- west to southeast I found evidence of an anticline. There are two on the east part of it and one on the west. I have heard it said, although I have never been able to trace it, that there are evidences of two at the west and that they come together at the east. I know what an anticline is. I found both slopes of the anticline running through the Elk Hills. Both slopes are revealed in those canyons and are very well defined. The north slope is best defined. I found probably twelve or fifteen indications show- ing the north slope of that anticline. I did not find the south slope in so many points, but where you find the north slope you can find the south slope. I never went in there to find the anticline particidarly, but I noticed it as I was going through. I am certain that I found stratification showing the south flank of tlie anticline. The south anticline was Cjuite plain in sec- tion 30 of township 30 south, range 24 east, and you can find indications of that south slope of the anti- cline in section 32, township 30 south, range 24 east, where I found this blow-out. You find the forma- tion dipping to the south and to the north. The thickness of a section of the stratification revealed on the south side was probably fifty feet. That line of stratification dips to the southwest. The materials shown in these strata are sandv clav and fuller's- 211 earth. The fuller 's-earth strata show very promi- nently." (R. 328-90 C. F. Haberkern, engaged in the development and prospecting of lands in the Elk Hills and vicinity, testified that in August or September, 190-1, he, with Josiah Owen, w^ent all over the Elk Hills and at that time they visited the oil seep in section 32 of 30-24. Owen, he said, made a careful examination of the lands and they discussed the possibility of finding oil, fuller 's-earth and gypsum. Owen said he thought there w^as oil there, but that it was very deep and would not pay to go after it then. From three to four thousand feet. It would not pay at that time because oil was very low at that time (R. 354). He testified that the lands in 30-23 looked good enough to him to afterwards locate them and he and his associates, in pursuance of the examination made bv him and Ow^en, later located the lands in 30-23. They located on the even-num- bered sections and, although he wanted to locate the odd-numbered sections also, they did not do it, be- cause Owen told him he was working for the rail- road company and not to take any railroad land, meaning, of course, the odd-numbered sections (R. 350). This witness was also a stockholder in the Eight Oil Company When a particular section was pointed out b}^ the witness to Owen the latter said: ''Mr. Haberkern, don't locate that land. It is rail- road land. I am working for the railroad company myself and it wouldn't look good for me to locate the land"; and it was marked "S. P. R. R." on a 212 map he had with him. This was in August or Sep- tember, 1904, when Owen also said to him that the odd-numbered sections in the Elk Hills were as good as the even; that the railroad lands in that township (30-23) were just as good for mineral as the even sections (R. 355). H. A. Blodgett sent Jewett & Blodgett's oil ex- pert, Youle, into the Elk Hills to make an examina- tion. Youle reported that the Elk Hills showed in- dications of being oil bearing and Blodgett and his associates made locations there in December, 1899, which they kept up for six years, spending a good deal of money on them. He believed that the indi- cations in the Elk Hills were good and had never had any reason to change his oi3inion (R. 367). It was the intention of himself and associates to prospect that country and develop it for oil (R. 371). The reasons for not developing the property in the Elk Hills was that there was no market for oil, the price being so low that, if he had had a thousand barrels on hand in the Elk Hills, he could not have trans- ported it and it would not have been worth a cent (R. 390). The reason he did not drill in the Elk Hills was that oil had no value (R. 391). The only development that he did was right alongside of the railroad track which gave the oil a little more value under the conditions then existing than if it was in the Elk Hills (R. 392). There was coasiderable oil excitement in that country in 1900, '01 and '02, when a great many com- petent oil men came in and located lands for oil (R. 213 383-4). While this witness was developing the ter- ritory lying at the foot of the Temblor Range near the outcrop at the time in question, he did not con- sider that more valuable for oil than the Elk Hills because the latter were further away from the out- crop; indeed, he said the Elk Hills were east ''and in exactly the right direction"; that lack of trans- portation facilities alone underlaid their failure to drill in the Elk Hills (R. 392, 395). H. P. Dover, although having been in the Elk Hills before, went into the Elk Hills in the Spring of 1903 or 1904 to locate oil lands and did locate several claims. He saw the seepage in 32 of 30-24 (R. 461). He found shale in the Elk Hills which formation he thought was favorable for oil and had no reason to change his opinion at the time of testi- fying. The chief value of the Elk Hills is for oil, if for anything (R. 462, 467). He located section 30 of 30-24 near the gas seepage or blow-out. The Elk Hills, he said, looked to be pretty good territory to him and looked promising to all of them, speak- ing of his associates. They believed and thought there was oil there, the same as in the Midway where they had drilled, but didn't put any money into it because oil was down so cheap (R. 468). C. F. Whittier in 1902 talked with personal friends as to the situation in the Elk Hills and in- tended to go in there and make some locations and do development work and get a patent to the land, but was unfortunately crippled so that he could not go over there then (R. 471-472). It was the general 214 impression of the oil men of his acquaintance around McKittrick as early as 1904 that the Elk Hills would be proven to be oil bearing. He regarded them as good prospective oil territory and was making ar- rangements in 1904 to get money to locate some of the land and do the assessment work which the law required at that time and get patent; but an in- jury to his knee kept him confined to the house sev- eral years and prevented him from doing so (R. 474). He regarded the Elk Hills as no more of a gamble than other oil ventures, though more of a gamble than it would be at places closer to the crop- pings. Assuming that there is a cropping in 32 of 30-24, he stated that there was no more of a gamble in drilling on lands within two or three miles of that or in that vicinity than there was on other landh (R. 477). F. Barrett first went into the Elk Hills in 1899 in the employ and interest of a gentleman by the name of Hilbish who paid him one hundred dollars a day and his expenses to go down there. He rode over the entire township diagonally finding oil indica- tions at two or three places where there liad been seepages. As the result of his investigation he made in writing a favorable report on the Elk Hills and recommended them as good oil bearing territory and had had no reason since that time to change his opinion (R. 479-481). N. C. Farnum had been many tunes in the Elk Hills and three times before patent. He went there for the purpose of making examinations and took 215 other means of satisfying himself aside from his own personal examinations. In 1899 he was satisfied that there was a fair chance of getting oil there. He went over 30-23 and was on every one of sections 15, 17, 19, 21, 23, 25, 27, 29, 33 and 35 and his opin- ion as to the oil character of the land included these sections as well as the even-nmnbered sections (R. 496-497). He was interested with Jewett & Blod- gett for whom Youle made his investigation and re- port. That report was very favorable and stated that there had undoubtedly been oil in 32 of 30-24 and that the country between there and section 14 of 30-22 had the appearance to him of oil land (E. 497-498). He formed the opinion absolutely that the territory in the Elk Hills was oil territory, having had no reason to change that opinion and still be- lieving it to be oil territory (E. 499). He knew that his associates did not regard the land which they located as merely a prospect. He and they con- sidered it better than a prospect. They spent a good deal of money there and a man does not usually spend a great deal of money on a prospect. They were assured in their own minds as well as they possibly could be without drilling that it was oil territorv; and he still considered it as such. Know- ing of the conditions then existing, they would have sunk a well for the reason that they had determined to drill a hole in the Elk Hills no matter what the cost as far as they could go and as far as money would go. That was their absolute determination, not to be deviated from until the government with- drew the land. AYhen the government withdrawal 216 was removed in 1904, the conditions had changed very materially from 1901 and 1902, money was hard to get, the price of oil was so low it didn't pay to produce it and transportation conditions were in- adequate (R. 512). C. W. Lamont regarded the Elk Hills country prior to patent as good oil territory and the only conclusion to which he had since come was that it was better than he thought it was in the first place (R. 581). W. H. Hill was a member of the firm of Barlow & Hill who in 1904 published a map of the California oil fields at Kern River, Coalinga, Sunset, Midway and McKittrick. He stated that on his maps a drill- ing rig is indicated by a circle with a dot in the center ; a derrick is indicated only by a circle ; where oil was struck, the whole interior of the circle is black. If the well was abandoned, four short marks are made on the opposite sides of the circle. The date on the maps is 1904 and they are correct pictures of the oil conditions in the particular townships which they purport to picture at that time. He testified that his firm published 2500 copies and sold all of them, probably two-thirds in and around the oil fields in Kern County and the balance in Los An- geles and San Francisco excepting a few which were sent East by mail and to the old country. This map was completed and published before Au- gust 31, 1904 (R. 110). C. A. Barlow, the other member of the firm of Barlow & Hill, testified that the Southern Pacific 217 Company, as well as almost everybody else, bought these maps from his firm and that he presumed that the Southern Pacific Company began purchasing them from the time when he began to publish them (R. 2033-2034). The maps in question were intro- duced in evidence as plaintiff's Exhibits Ha, Hb, He and Hd. These maps, the general sale and distribution of which have been shown, delineate the conditions with reference to seepages and development along the Temblor Eange prior to 1904. They show a large number of seepages and wells and must have sharply called attention to the oil character and oil possi- bilities of the lands in general in the San Joaquin valley and Kern County and particularly around McKittrick. The following testimony is from witnesses in be- half of appellants: James A. Ogden testified that, while he did not make the locations and was not in the coountry when they were made, he had some locations at one time in the Elk Hills. He could not say that at that time he considered the Elk Hills to be oil land, as he was not an oil man and thought very little about it. He had not heard oil men discuss the Elk Hills as possi- ble oil land, but there were a great many people going in and locating land there (R. 1982-3). D. S. Ewing did not think that there was much gen- eral opinion in 1900-1901 as to how far into the val- 1M8 ley the oil went. The idea was that from the outcrops of the oil sands along the easterly side of the Coast Range mountains the stratification would dip at cer- tain angles toward the plains and that the closer you kept to the outcrops of the oil sands on the hill- side the more certainly vou would strike oil, but in less quantities; and the further you got on the dip and the deejDer down you went, if you struck oil at all, you would get it in better quantities (E. 2250). He was not a geologist and made no examination of the Elk Hills. He looked for outcrops of sand or other indications of oil and found nothing that at- tracted his attention or fancy to make him think there was oil there (R. 2251). Robert E. Graham testified that it was a general idea among oil men from 1901 to 1904 that the oil was along the edge of the hills and he always figured that there was oil out in the flat, but that it would be deep; and that he guessed that everj^body, the majority of them, anyhow, figured the same way (R. 2132). He didn't think the Elk Hills oil land; but he didn't know (R. 2133). E. W. Kay testified that in 1901 the general im- pression among oil men with whom he came in con- tact was that the oil territory was around through the valley from McKittrick to Sunset along the edge of the main Range (R. 2085). In 1901 he made a trip into the Elk Hills with two other men hunting for oil lands, but found no indications of oil and made no locations (R. 2085). He was looking for 219 croppings of oil-saiids and at that time they probably would have been a conclusive indication to him of the oil character of the land (R. 2086). M. H. AVhittier testified that up to 1905 there may have been some people who considered the Elk Hills as oil lands, but that he was not particularly inter- ested in them and never had been; that there was a time when people thought the Elk Hills oil territory and that the Associated Oil Company wTnt in there by the advice of very good people, but that he thought they were kind of sick of it (R. 1985). J. P. Kerr came to the conclusion in 1901 that the Elk Hills country was too much of a "wildcat" for him to tackle (R. 2121). He thought the formation stood up too steep to reach far out into the valley that runs towards the Elk Hills and he thought that that opinion was entertained by every oil man there (R. 2125). He said, however, that, if he had in 1901 found the stained sand formed by impregnation of oil in 32 of 30-24, it would have been evidence to him of the existence of petroleum and he would have con- sidered that pretty good "wildcat" territory. Even if the oil had been dried up fifty years, he would have considered it a good chance to drill, because he would have expected to find oil below the surface (R. 2127). F. H. Hall testified that in 1901 some thought that the oil belt would run out into the flat, while others contended that, if you got down off the hills, no oil would be obtained at all. When he first went into the Elk Hills, he had no fixed opinion. He thought 220 there might be a possibility of oil being there (R. 1826). There were other witnesses for appellants who testified in similar vein. 2. Belief of appellants in the oil character of the lands in suit. Obviously the belief of appellants can only appear and be proven by the belief of their agents and officers. John R. Scupham's belief: John R. Scupham had been a civil engineer in the employ of the Central Pacific and Southern Pacific Railroad companies. About 1874 he was recalled from field work and was given an office in the engi- neering department and served as consulting en- gineer to the directors of the two railroad companies named, the Southern Pacific Company, The Western Development Company and the Pacific Improvement Company. He reported to the directors of the sev- eral companies who were Leland Stanford, Charles Crocker, Mark Hopkins, C. P. Huntington and afterwards D. D. Colton, Judge F. B. Crocker, Colonel C. F. Crocker and A. N. Towne, the last named being general manager of the Central and Southern Pacific railroad companies. He examined mineral lands in which these companies or their directors w^ere interested (R. 584-585). In 1887 he was asked by Mr. Towne if he thought that the asphalt deposits west of Bakersfield would justify the building of a road in there and was directed to 221 inspect the deposits and report to Mr. Towne. After viewing the asphalt deposits around Asphalto, now McKittrick, he went to the southwest into the pass between the hills and examined the country lying to the southwest. He went into the Elk Hills where he found seepages, discovering the best oil seepage of all in section 32 of 30-24. He examined the land as he passed over it and thought that it was underlaid with oil. On his return to San Francisco he de- scribed to General Manager Towne what he had seen at Asphalto and then told him that he thought ''those hills lying to the east were overlying the oil measures and that they would turn out to be very important in their future development", referring to what are now called the Elk Hills. Mr. Towne sent for Colonel C. F. Crocker and, when Mr. Crocker came in, said to him: "Scupham thinks those hills south of Miller & Lux' ranch are overlying an oil deposit" or words to that effect. Mr. Crocker replied : "Well, it is a good thing that there is some value of that kind in that land, otherwise it would be a very poor asset for the company." Colonel Crocker, Mr. Towne and Scupham sat down together and Scupham at the request of Colonel Crocker went into details and explained thoroughly the reasons for his opinion. He thought at the time that the Elk Hills were valuable lands and much more important than the lands lying to the west and north, so stating to Towne and Crocker (R. 587-8). His impression was that in this conversation he informed Mr. Towne and Colonel Crocker that the 222 Elk Hills were better oil lands than those around McKittrick because the formation sloped from Mc- Kittrick towards them, while to the northwest and west it was faulted and badh^ fractured and not so likely to be productive of oil as where the forma- tion w^as more uniform in its slope as in the Elk Hills (R. 596). Of course, he did not know mathe- matically that the oil was there in paying quantities, but he thought from the manifestations which he observed on the surface that such was the case. The seepage in 32 of 30-24 indicated most positively that there was oil in its vicinity. It was a fresh seepage and not in an exhausted oil sand. It showed fresh- ness of the outflow of oil, the stain being a fresh stain, and, while he could not detect actual oil, the stain was necessarily recent and there had not been complete evaporation of the oil — a condition which he did not think could obtain in a bed of oil sand that was not productive (R. 597). J. B. Treadwell's belief: J. B. Treadwell was first sworn in this case as a witness in behalf of the government and testified that from the Spring of 1893 until the Summer of 1903 he was employed by the Southern Pacific Com- pany in developing and producing oil for them. He knew Collis P. Huntington, H. E. Huntington and Julius Kruttschnitt and acted under their orders; subsequently under Mr. Hayes and E. H. Harriman. He was succeeded by Professor E. T. Himible (R. 424). Subsequently Mr. Treadwell was called as a witness for appellants (R. 3413). 223 When on tlie stand as a witness for tlie govern- ment Treadwell testified that at different times he caused lands of the Southern Pacific Railroad Com- pany to be withdrawn from sale by the land depart- ment of that company, explaining that he did this for the reason that Jerome Madden, the land agent of the company at that time, had through ignorance sold valuable oil lands as agricultural lands and at agricultural prices. On cross-examination he stated that he knew^ the Elk Hills and that none of his with- drawal orders took in any portion of them, saying that he had been over in the EUv Hills in connection with some location notices in which he was interested and, after seeing the land, did not consider it at that time oil land of any value. Accordingly, he did not ask to have any of the lands there withheld from sale (R. 435). On re-direct examination, while repeating that he had at no time recommended the withdrawal from market of lands in the Elk Hills, he admitted that he may have included section 31 of 30-23 in a with- drawal. He said he did not consider that in the Elk Hills (R. 439). During the interval of months be- tw^een the time w^hen Treadwell was on the stand as a witness for the government and his resumption of the stand as a witness for appellants, Exhibit 115 had been produced in evidence showing the with- drawals made by him and bearing the legend "All shaded tracts reserved from sale because in or near oil territory." When confronted with this Tread- well admitted that the shaded tracts included the 22-1: following sections in township 30-23: 3, 5, 7, 9, 13, 14, 17, 31 and the NW14 of 19, the very township in which lie the lands in suit; also in township 30-24 sections 1, 7, 19, 21, 23, 24, 26, 35; also several sec- tions in 31-24 (R. 3423). Treadwell admitted that at least eight sections in the Elk Hills in 30-24 were reserved from sale be- cause in or near oil territory and that all of township 30-23 in the Elk Hills was included and reserved from sale except those sections which appeared to be unsurveyed (E. 3424; see also 3458). Thus it appears that, while Treadwell as a witness for the government denied his belief in the oil character of the Elk Hills, his action in withdrawing lands therein from sale prior to patent proves that he thought them oil lands; for, if he did not think them oil lands, why would he have withdrawn them from sale 1 The record show^s that Treadwell himself prior to patent made mineral locations in the Elk Hills, tv\^o miles from the lands in suit. Section 33 of 30-24 was located December 13, 1899, by J. B. Treadwell, May Treadwell, E. D. Treadwell, C. C. Boynton, F. Bovnton, W. L. Hardison, Guv Hardison and R. S. Ashton, all of the seven last named except R. S. Ash- ton being related to him (R. 3426-7). He stated that at that time he evidently believed that it was mineral land (R. 3427). At the same time he made several other locations in the Elk Hills (R. 3427-8-9). This section 33 of 30-24 was patented to the Southern Pa- 225 cific Railroad Company in May, 1902, under patent numbered 111, Exhibit "6-A" (R. 3452-3-4-5-6). Tlius, in 1899 Treadwell, oil expert and geologist of the Southern Pacific Company, located for petroleum purposes the very section of land which his employer, the railroad company, secured in 1902 under an agricultural patent. It is true that Treadwell testified that, after ex- amination of the lands in the Elk Hills covered by his location, he came to the conclusion that they possessed no value for oil; but this self-serving declaration does not comport with the testimony of other disinterested witnesses nor with his own acts in reserving these lands for oil purposes. John Jean testified that he reported to Treadwell his discovery of the seepage in 32 of 30-24 and accom- panied Treadwell and L. G. Sarnow to inspect it in 1899. Treadwell and Sarnow examined the oil sands and Treadwell said they looked good. On the strength of that discovery Treadwell, Sarnow, Jean and others made locations of the lands about there. L. G. Sarnow testified that, upon inspection of the seepage in question, he thought the land good for oil and that Treadwell^ who was a mineralogist and with him at the time, thought it was good for oil, but that both of them thought it was deep. He corrobor- ated Jean that on the strength of that showing Treadwell and Jean and he located the land (R. 135-136). Treadwell testified that, if he said anything to 226 Sarnow about the possibilities of oil in the Elk Hills, he said it was not good (E. 442), thus bringing him- self into sharp conflict with Sarnow. It would be difficult to conclude that an experi- enced oil man, who in 1899 and 1900 was withdraw- ing from sale and reserving for oil purposes for his employer lands immediately in the Elk Hills and wdio himself was seeking by mineral locations to acquire lands there, did not believe in their oil character. His words as a witness do not comport with his acts either as an individual or as an officer and servant of appellants. Actions speak louder than words and the government appeals from his words as a witness to his acts as a geologist of appel- lants and as an individual bent on private gain — to his withdrawals and to his locations. E. T. Bumble's belief: Professor Dumble became consulting geologist of the Southern Pacific Company in 1897, first becom- ing acquainted with the California fields in 1901. Formerly he had been located in Texas. From 1901 he acted in an advisory capacity to the manager of the Southern Pacific Company (R. 2896-7-8-9) and was in charge of all matters pertaining to oil — he chose Josiah Owen in August, 1902, to take charge of appellants' oil territory in California (Rd. 2900) ; Treadwell, the oil expert of appellants, left Cali- fornia in 1903 and Dumble put Owen in his place (R. 2907) ; in March, 1903, he employed Frank M. Anderson as a geologist for the Southern Pacific 227 Company (E. 2909) ; when the Kern Trading & Oil Company was organized, he was put in charge (R. 2911) and determined what Southern Pacific Rail- road Company lands were to be transferred to it to be developed for oil (R. 2911). In his own language, March 18, 1903, he opened an office in San Francisco and "took active charge of the oil operations of the Southern Pacific Company" (R. 2907). When he testified in the case in 1912 he was still in the employ of and bore this responsible relation to appellants (R. 2896, 2979) and drew a salary of ten thousand dollars per annum (R. 2951). Professor Dumble repeated many times the state- ment that he had never been in the Elk Hills (R. 2959-3079). After the Kern Trading & Oil Company was organized, Mr. Kruttschnitt placed in his hands the examination of all of the Southern Pacific Railroad Company's oil lands that were to be turned over to it. His testimony at this point is as follows: "I determined that the lands ivhich we he- lieved to he oil lands, owned bv the Southern Pa- cific Comjjany, and also lands or oil lands which had been bought by Mr. Treadwell for the Southern Pacific Company, should be turned over to the Kern Trading & Oil Company. That included other lands than those which were actually developed by wells. The company owned everything that we thought at that time would he eapahle of producing oil commercially ; I don't mean capable of producing oil com- mercially at that time. Most of the lands was quite a way from any jDroducing wells, and it 228 was taken up with the idea of furnishing the Company with oil for a long period." Special attention is invited to the test as defined b}^ Professor Dumble to be applied to the lands to be transferred: "lands which we believed to be oil lands". Again, in his letter of September 21, 1903, to ]Mr. Kruttschnitt he recommended that the Kern Trading & Oil Company "should acquire by purchase or lease such lands now belonging to the Southern Pacific Company as ice consider valuable for oil purposes" (R. 2913). In another place he testified : "Mr. Owen and I decided on a list of lands that were to be trans- ferred to the Kern Trading & Oil Company" (R. 2925). TSHien he referred to the Southern Pacifi-C lands he meant the Southern Pacific Railroad Com- pany's lands (R. 2912). Exhibit 118 was a letter written by Dmnble to Owen for the purpose of getting the latter 's ideas as to what lands should be included in the lease (R. 2910). Owen replied by maps (R. 2910) and Dumble included in the lease every parcel of land recom- mended by Owen. Xow, the lands transferred to the Kern Trading & Oil Company included section 31 of the very town- ship in which the lands in suit lie and cornering with one of the sections in suit (R. 3061-5), Dumble testi- fying that he included it because Owen had put it on his map "as possible oil territory because of an anticline that ran tlu'ough it" (R. 2953). 229 It is hardly conceivable that in 1903 Dumble and Owen could have considered section 31 oil land with- out so considering other land contiguous to it. Dumble says that Owen considered section 31 "possi- ble oil land because of an anticline that ran through it," as just noted. This leads to tw^o observations: First, that Owen does not appear to have limited it to "possible oil land", Dmnble himself having stated that the test was "what we consider valuable for oil purposes" and it plainly appearing that the Kern Trading & Oil Company was not organized for the purpose of dealing in oil lands, but exclusively to develop oil for fuel purposes— it further being shown that in his report to Mr. Kruttschnitt of the lands to be included in the lease Dumble hunself states that the unprospected lands are "simply probable oil lands which, from our investigations, we believe will prove valuable'' (E. 2927). Second, that the presence of the anticline was, according to Dumble, the reason for the inclusion — of course, he naturally had in mind also the relation of the section to the proven oil territory. In view^ of the fact that an anticline runs through the lands in suit and was plainly delineated on Owen's map. Exhibit 157, and that the lands in suit have exactlv the same relation to the proven oil territory as section 31, the conclu- sion is irresistible, his words and statement as an interested witness to the contrary notwithstanding, that Professor Dumble must have believed the lands in suit oil lands. He says that he put section 31 in "because Owen put it on his map" — he followed Owen's opinion, agreeing with hun necessarily as to 230 the significance of the presence of the anticline taken in connection with the surrounding conditions. It will hereafter be conclusively shown that Owen re- garded the lands in suit as oil lands and it is fair to assume that Dumble, having never been in the Elk Hills, as he says, but following Owen in all other known instances, must have shared the opinion of Owen, who was often in them, of the oil character of the Elk Hills. Owen at that time was working under Humble and "had charge of the oil fields" (R. 2907). Humble had a very high opinion of Owen, saying that he w^as "a very remarkable man" and "had a faculty of carrying underground conditions in his mind more perfectl}^" than any man whom he had ever known (E. 3037). Then, too, Humble, in his letter of February 2, 1904, to W. F. Herrin, chief counsel, concerning the lands to be leased to the Kern Trading & Oil Company, writes that "none of the lands in the McKittrick . . . districts . . . . . . have been actually proven by wells and, while we believe that there is a strong prohability that all of the lands here mentioned will produce oil, it will require drilling to make this certain" (R. 2930). Two observations become pertinent: one is that "we" evidently referred to Humble and Owen; the other is that Humble and Owen believed — and it is belief that is the subject under discussion — that section 31 of 30-23 would produce oil. Humble made several trips through the oil lands about McKittrick and elsewhere with Owen (R. 2919). September 21, 1903, he wrote Mr. Krutt- 231 schnitt a letter in which he divided the lands into three classes, the third, as he wrote, depending ''in part upon the continuance of normal dips and condi- tions, but in addition it represents untested anti- clinals which show good indications of oil" (R. 2913). Undoubtedly, the Elk Hills anticline, so con- spicuously traced on Exhibit 157, Owen's map, was one of those in Bumble's mind, although he as a witness asserts the contrary (R. 3075), saying that the letter in question showed which anticlines he in- tended to include. But the letter includes section 31 of 30-23 which is in the Elk Hills. Professor Humble testified that, if he had known in 1902 of an actual oil seep in 32 of 30-24, that fact, taken in connection with the anticlinal structure found by Owen, would have caused him to regard "the lands in that vicinitv in the Elk Hills as favor- able to expect the occurrence of oil there" (R. 3039). It is inconceivable that Owen did not communicate this knowledge to him. It will be convincingly shown hereafter that Owen knew of and believed in this seepage. Admitting that the lands in suit were surrounded on all sides by "shaded" or withdrawn oil lands (R. 3040) and that the reservations from sale of lands because in or near oil territory extended six miles farther from the outcrop than the lands in suit, Humble stated that, when he took charge of the geological affairs of the Southern Pacific Company in California in reference to oil lands, he did not 232 disturb the polic}^ established before he took charge, of holding in reservation from sale because in or near oil territory all of the lands in 30-23 and 30-24 owned by the Southern Pacific Railroad Compan}"; and he further stated that, if the lands in suit had been patented and included in a reservation, he would not have disturbed the reservation (R. 3003- 4-5). George A. Stone, of whom more will be related hereafter, was in 1903 and 1904 assistant to Eberlein, the acting land agent, who filed selection list 89 and made affidavit of the non-mineral character of the lands in suit, and took part in the preparation of that list under the direction of Eberlein. At the time of testifying he was a pensioner of the Southern Pacific Company (R. 1028). As a witness for the government he made the following statement : "I regarded the selection of these lands as irregular. Mr. Dumble, as the geologist, I thought pressed the selection for reasons best known to himself. I supposed, as geologist, he thought they were oil lands. He pressed the selection of this land probabh^ within thirty days prior to the list in 1903, not earlier than September or later than November." (R. 1030.) Dumble denied this ; but he was a deeply interested witness, being in the employ of appellants and him- self and his acts under fire. No possible reason can be assigned for a false statement at this point by Stone; for he was a pensioner of the Southern Pa- cific Compan,y and stood to gain nothing by swearing contrary to its interests, but was in danger of losing his pension. 233 What possible motive could have induced Dumble to press the selection of these lands except belief in their oil character? He had charge of the oil affairs of the Southern Pacific ComiDany and was concerned only with oil lands and the production of oil. C. W. Eberlein, the acting land agent who made the selection of the lands in suit and the affidavits of their non-mineral character, testified that in 1901 he protested against the practice of Professor Dumble and Dumble 's men of examining lands not yet pat- ented to the railroad company. He made protest to Judge Cornish, his chief in Xew York, Vice-Presi- dent of the Southern Pacific Company, and to C. H. Markham, General Manager of the Southern Pacific Company, taking the position that examinations so made would charge the company with notice of the mineral character of the examined lands (R. 1091- 2-3). These protests began in 1901 and continued into 1908. On February 22, 1908, Eberlein wrote a letter to Henry Conlin, his assistant and subsequent successor as acting land agent, which is set out on pages 1091 and 1095 of the record. This letter was written in New York where Eberlein w^as at the time and because of its importance is here set out in full: Februarv 22, 1908 If "Mr. Conlin: "The New York Office has forbidden the giv- ing out of any more printed lists of lands be- cause of the unsatisfactorv condition of our titles which must not be disclosed. The exami- nation of our S. P. lands not yet patented by our oil experts must be stopped as inf onxiation that 234 tliey may obtain or give as to mineral character prior to patent will forever prevent our getting titles. Should Mr. Calvin call for any lists please take this memo, to him and explain our situation and refer him direct to the New York of&ce. Please advise him too of the pressing necessity of the return of lists sent in a year ago for entry of lands to be reserved for company purposes. Mr. Dumble and his men should not be furnished by us with any data whatever ex- cept as to patented lands. For reasons above given such information will be embarrassing to them and us and may make them witnesses against this company in mineral contests here- after. (Signed) ''Charles W. Eberleix, "Acting Land Agent." (R. 1094-5.) The statement in this letter was but a continuation of the accustomed protesting which Eberlein started at the time when the Kern Trading and Oil Com- pany lease was presented to him for signature (R. 1098). This matter is referred to because of its bearing upon the activity of Dumble and his assistants and is significant as showing that in advance of patent they were examining government lands for the pur- pose of ascertaining their mineral character. It serves not only to show Eberlein 's state of mind, but to throw light upon the purposes for which Dumble was employed by the Southern Pacific Company. While Dumble testified that he had nothing to do with and no interest in the selection of the lands in 235 suit (R. 3014), nevertheless on December 7, 1904, five days before the date of tlie patent, he wrote a letter to W. H. Bancroft, Acting General Manager of the Southern Pacific Company, in which he stated that he had had a conversation with Eberlein and that "it seems for reasons of policy regarding certain un- patented lands that it will be best not to execute the lease of lands between the Southern Pacific Eailroad Company and the Kern Trading and Oil Company at present", suggesting that the lease of lands in the McKittrick district be held up for the present (E. 1072-3). In March. 1907, a controversy having arisen between Dumble and Eberlein, the former wrote the latter a letter in which he undertook to refresh Eberlein 's memory concerning events connected with the attempted Kern Trading & Oil Company lease of 1904 (R. 2855-6-7-8). The pertinent part of the letter in question follows : "Early in December we had a further con- ference on the matter and you explained that you were rushing certain lands for final patent and that the immediate execution of the lease showing our idea of what were oil lands might interfere with you and we agreed to defer the execution until that danger was passed. ' ' From the foregoing it clearly appears that in De- cember, 1904, Dumble shared in the apprehension of Eberlein that the Kern Trading & Oil Company lease, conveying, as it did, to an oil development com- pany railroad lands adjoining the lands in the list of lands to which Eberlein was endeavoring to secure patent, would endanger the success of the effort. 236 Accordingly, Diimble says, "we agreed to defer the execution until that danger was passed". In his testimony Dunible seeks to belittle the significance of the danger in question ; but the letter is evidence that he regarded the danger as real and it is apparent that the only danger which he and Eberlein apprehended was the failure to secure patent to the lands in suit because of action on the part of Dumble and others which betokened their belief in the oil character of lands in the immediate vicinity of the lands in suit and consequently of the lands in suit themselves. Reservations from sale, as has been shown, were made of lands "because in or near oil territory", showing that appellants' geologist predicated the oil character of unproven lands upon the proximity thereof to proven lands. If Dumble did not share in Eberlein 's belief in the danger presented by the Kern Trading & Oil Company's proposed lease, why should he have recommended to the General Manager that the execution of the lease be deferred? He could possibly have meant nothing other than that their execution should be deferred until the patent was secured, the idea being that the issuance of the patent w^ould mark the passing of the danger. If Dumble did not believe in the oil character of the lands in selection list 89 and now in suit, he could not have sympathized with Eberlein 's fear. Dumble 's testimony is contradictory of his acts and brings him into open conflict with the witnesses who, unlike him, were under no inducement to speak other than the exact truth. AYhy should Eberlein 237 have given false testimony in behalf of the govern- ment? Why should Stone have perjured himself in opposition to the interests of the company which paid his pension? Professor Bumble's credibility may be tested both by the agreement or disagreement of his testimonv with that of other witnesses and by the light which his own evidence concerning himself and his acts throws upon the transactions in which he w^as concerned. Dumble admitted the ownership of 2667 shares of the capital stock of the Eight Oil Company which owned or claimed to own sections 20, 22, 24, 26, 28, 30, 32 and 34 of township 30-23, the township in which the lands in suit lie. These sections are imme- diately interspersed with the sections in suit and adjoin them. That company also owned or claimed to own sections 26, 30, 32 and 24 of township 30-24, all in the Elk Hills ; as also sections 4 and 8 of town- ship 31-23. It is true that Dumble did not acquire his stock in the Eight Oil Company until 1909 and that he stated that he never heard of the Eight Oil Company claiming any lands in 30-23. His testi- mony concerning his connection with the Eight Oil Company is set out on pages 3044 et seq. and is inter- esting reading. He states that Josiah Owen, a geolo- gist under him, induced him to put money in the Eight Oil Company and that he absolutely had nothing to do with the taking up of the sections in the Elk Hills. Such ignorance on the part of so eminent a geologist and one versed in oil affairs in the region of McKittrick is somewhat astonishing. 238 It would seem that one who held so large a number of shares in a company whose success was dependent upon the sound advice of oil geologists and who had received one dividend of twenty thousand dollars (R. 3049) would have taken the pains to acquaint himself more intimately with its transactions and business than Professor Dumble's testimony would lead one to believe that he took. It is hardly to be believed that the Eight Oil Company, of which Pro- fessor Dumble was one of the largest stockholders, would have sought to acquire several thousand acres of land in the Elk Hills without submittting the mat- ter to him and it is a fair inference that what was done was done with his knowledge and upon his advice and, if this be true, it follows that in 1908 at least the consulting geologist of the Southern Pacific Company believed in the oil character of the lands interspersed with and adjoining the lands here in suit. Professor Dumble owned one-tenth of the capital stock of the Buena Vista Land and Development Company, that company claiming to own a great deal of land in the Buena Vista Hills and vicinity that was taken up under agricultural scrip, having bought from S. P. Wible scrip title to five or six sections. When examined about these matters Pro- fessor Dumble admitted that the Buena Vista Land and Development Company was seeking to secure patents to lands in the vicinity of the Buena Vista Hills as agricultural lands the while he knew that they were mineral or oil lands. Asked if he did not 239 think that it was his dut}^ as a stockholder in the Buena Vista Land and Development Company, be- lieving as he did that these lands were petrol emn lands, to disclose his belief to the United States Land Office where the contest Avas pending, he replied: "I don't consider that I have anv dutv whatever in the premises" (E. 3055-6-7-8-9). It is submitted that the point of view of Professor Bumble as shown by his attitude towards the effort of the Buena Vista Land and Development Company to secure agricultural patents to lands known by him to be mineral is marked by mental obliquity and that it furnishes a sound test by which to determine the credibility of his testimony in this case. The govern- ment insists that the evidence, fairly considered, proves that he in 1904 entertained the belief that the Elk Hills, including the lands in suit, were oil lands. Josiah Owen's belief: Josiah Owen, according to the testimony of his son, Erwin W. Owen, was a geologist and mineralo- gist and from 1902 until the time of his death, De- cember 19, 1909, was employed by the Southern Pacific Company or the Southern Pacific Railroad Company or by both and by the Kern Trading & Oil Company as a geologist. He had been in the employ of the Southern Pacific Company in 1898 or 1899 in Mexico, having prosecuted his work as a geologist for 35 years before that time and having gotten "his training in the hills together with what reading he could do". He reported to Professor 240 Durable, who was consulting geologist of the South- ern Pacific Company or the Southern Pacific Rail- road. Compam^ The witness, Erwin W. Owen, was the administrator of Josiah Owen's estate and in that capacity took and had possession of certain papers and letters belonging to his father, some of which were introduced in evidence. It is now proposed to show the belief of Professor Owen in the oil character of the Elk Hills by refer- ence to his maps, letters, declarations and his own locations or those of the Eight Oil Compam^ in which he was a stockholder. In September, 1902, Owen was ordered by Dumble to report to Mr. Kruttschnitt in San Francisco and he inmiediately thereafter began work in the region around McKittrick (R. 1609, 2900). March 25, 1903, Owen wrote Dumble the letter set out on pages 1615 to 1620 of the record and enclosed a map which was introduced in evidence as Exhibit 157. This map delineates the McKittrick anticline and the principal Elk Hills anticline. In the letter enclosing the map this is not called bv Owen the Elk Hills anticline, but "the fold north of McKittrick". Of it he says: "The fold north of McKittrick and running nearly parallel passes through sec. 5 and 9 be- tween 11 and 15 through 13 of 30-22. This fold exposes the oil sands in several places and in some of the exposures the sands are strongly impregnated with Asph and producing wells ought to be found along this exposure, the as- phaltum exudes through overlying clays in many places" (R. 1617). 241 In a report introduced as exhibit 4-R referring to the Elk Hills anticline, Owen says: "Town 30 S, Range 22 E, M. D. M. The anti- clinal fold mentioned as running through Town 30 S, Range 21 E continues through this town- ship. This anticline is not as sharp as the Mc- Kittrick anticline and as a consequence the area of available oil sands are much more than the McKittrick fold. This anticline enters the town- ship near the northwest corner of section 6 and leaves it near the corner of section 25. Two producing oil wells have been drilled in section 6 on this anticline and bituminous deposits are found in numerous places along the anticline." (R. 1634.) The reference here is to the fold north of the Mc- Kittrick fold and running nearly parallel, above referred to, and it is clear that Owen meant the Elk Hills anticline which on exhibit 157 he delineates as entering township 30-22 in section 6 and extending through sections 9, 20, 29, 28, 27, 26, 25 and 36 of township 30-23; and it is of this anticline that he says: "Producing wells ought to be found along this exposure", thus indicating his belief in the oil character of some of the very sections in suit. In 1904 Owen approved the list of lands to be transferred from the Southern Pacific Railroad Company to the Kern Trading and Oil Company, which list included section 31 of 30-23, the township in which the lands in suit lie (R. 1611-12-13-14),* thus showing his belief in the oil character of a pat- ented section adjoining the lands in suit which were then unpatented. 212 Professor Owen's knowledge of and belief in tlie oil cliaracter of the lands in suit prior to patent is shown by the testimony of numerous witnesses for the government who knew him at that time and came in frequent contact with him in the region around McKittrick. M. S. Wagy testified that in 1900 he showed Owen sand taken from the seepage or blowout on 32 of 30-24 and that subsequent to that time, in 1900 or 1901, Owen said he thought that that country was good and later told him that it was oil territory (R. 182-3-4-5). W. E. Ott testified that Owen told him that the territory in general from McKittrick to Sunset would be a great field (R. 277) ; that Owen went everywhere around that country examining land. S. P. Wible testified that in 1903 and 1904 he went through the Elk Hills with Owen who had been there previously and was going to show him the outcrop on 32 of 30-24. Owen was examining and classify- ing Southern Pacific Railroad land and was going around the countrv in the vicinitv of McKittrick for !-■■ *■' a year or more, seeming to be very well posted. He examined practically all the railroad lands in Kern county and in the Coalinga field, classifying them. He had examined lands in the Elk Hills in behalf of the Southern Pacific Railroad Company, having first gone there in the Fall of 1901 or the Spring of 1902 (R. 319). Wible had discussed with Owen the geo- logic conditions and oil possibilities of lands in the 243 Yicinitv of :\IcKittriek a great deal and Owen was very familiar with the formations of that country and particularly with reference to the Elk Hills, including township 30-23, as well as the other town- ships there. Owen told him that he believed the oil measures lay under the Buena Vista Hills and thought they lay very deep under the Elk Hills (R. 320). Owen was acquainted with the Elk Hills anti- cline and knew of it before he and AYible went into the hills together. As early as 1901 there were two oil wells on section 6 of 30-22 and one on section 1 of 30-22 on the Elk Hills anticline. Before 1904 Owen spoke with him several times of the oil show- ing in section 32 of 30-24 and from a conversation concerning the Elk Hills as oil territory Wible knew that Owen regarded them as such (E. 321). Owen seemed to feel quite sure that there were oil lands in the vicinity of the oil croppings in 32 of 30-24. If Owen heard of any oil seeps he hunted them up, they being one of the main things he was looking after when Wible first met him. Owen carried maps or plats of the different townships in the Elk Hills and elsewhere and put down on them information that he obtained with reference to the mineral character of the land. Wible was intimately acquainted with Owen from 1902 down to the time of Owen's death (E. 322) ; and Erwin Owen, the son of Josiah, testi- fied that Wible was his father's most intimate friend and that whatever he said of him could be believed. Wible discussed with Owen the lands in 30-23 in 1904, about the time ivlien they were selected hy list 244 89, and Oiven told him tliat, if the railroad selected those lands, they woidd he selecting mineral lands; that the railroad had no right to select them, as he had reported them as mineral layid, this remark hav- ing been made on the road between tlie Elk Hills and Headquarter 's ranch. Ko one was present but Owen and Wible and Owen stated that he had reported those lands as mineral lands. He was quite sure that this conversation took place in 1904 (R. 324-5). Charles F. Haberkern knew Josiah Owen very intimately and had been in the Elk Hills with him as long as five days at a time. They looked all over the count rv and he showed Owen the minerals he found there (R. 349). In August or September, 1904, Haberkern and Owen went all over the Elk Hills from one end to the other on both sides of the slope. Haberkern knew township 30-23 and stated that in their examination they passed over the lands in that township which lie in the hills and constitute the south half of the township. (This includes the lands in suit.) They also went to the townships to the east and west of 30-23. The witness knew of an oil showing or outcrop or gas blow-out in the northwest quarter of 32 of 30-24. In August or September, 1904, he and Owen visited that oil seep and went all over the township. Owen making a careful exami- nation of the lands, and at that time they discussed the possibility of that country for oil, fuller 's-earth and gypsum. Owen told him that the land was very valuable for fuller's earth and gypsum, but that he thought that there was oil there, but that it was very 245 deep and it would not pay to go after it (R. 350). Owen told him that there was a possibility of oil in the Elk Hills, but that it was from three to four thousand feet deep. It would not pay at that time because oil was very low at that time. Charles Brisco about 1901 or 1902 found a small brea bed — dried oil, dried asphaltum on the east slope of the Elk Hills about 12 or 15 miles south and east of McKittrick and reported his discovery to several people. Sometime before 1904 he took Josiah Owen, who he said was a mineralogist for the Southern Pacific, over to this brea bed in the Elk Hills (R. 335). "When I told him about my discovery he wanted to know if I could take him to it and I did." Owen made a careful observation and examination of the lands as they passed through them. When they came to the brea bed, he showed it to Owen. Owen lighted it (R. 336). Owen told Brisco what his business was— that he was an expert experting the territory as a mineralogist for the Southern Pacific. On the occasion in question while they were traversing the Elk Hills, Owen told Brisco that it was good oil territory, saying that he thought it would he the best territory of any, hut ivould he very deep. He was not certain whether this conversation was on that particular trip. He had several con- versations with Owen in regard to these lands before August, 1904. Owen took samples of shale or sand of the different sections they traversed. Just before giving his testimony Brisco went with F. Oskar Martin, a mineral inspector of the General Land 246 Office, over the route which he followed when he took Owen into the hills and Martin made notes as they went along to identify places to which they went (R. 337) ; and Martin testified that the location of the oil seep to which Brisco referred was in sec- tion 32 of 30-24 (R. 343-4). Brisco further stated that Professor Owen re- ferred to the character of the oil which would be pro- duced in the Elk Hills and stated that he thought it would be better, as it would be deeper, and there would be more gases in it (R. 338). Brisco explained that he had some land located in the Elk Hills and, thinking that Owen had good judgment, "dug into him to ask about that land". He said to Owen : "I have got some land located there myself and I would like to have you go in there to see what you think about it." After getting Owen in there, he asked him two or three times what he thought of it and finally got this answer: "This is good enough, my boy. Hold on to it." N. C. Farnum, who had had large experience in oil matters, met Professor Owen in Bakersfield in 1903. Owen stated to him that he thought the whole country from 30-22 clear to the lake teas oil territory, as he had examinM it carefully. The lake referred to is the Buena Vista lake situated in township 31 South, range 25 East. He testified that that would include townships 30-22, 30-23, and 30-24 and that it was in the Spring of the year 1903, he thought, when Owen told him this (R. 508). 247 On cross-examination Farnum testified as follows : "I met Mr. Owen in Bakersfield in 1903. We discussed the general trend of the Elk Hills. I asked him whether he thought we would likely get oil and he said 'Yes'— I don't know his exact language. He said something about the depth we would have to go, but I can't say what it was now. I am not sure whether he said it was three or four thousand feet. I think he said it would be deep. I thought myself it would be at least two thousand feet, but Mr. Youle always con- tended it was shallow territory by reason of the uplift. The hill, he said, made an uplift ; it was not caused bv erosion, but by an elevation from below." (R.521.) Now, it is true that appellants' chief expert wit- ness, F. M. Anderson, testified that in March, 1903, he and Owen stood on a hill north of the Temblor valley, where they had a very good view-point of all the surrounding regions towards the valley and along the flank of the Temblor Eange, and had a conversa- tion in which Owen told him that he had been there about a month and had visited about all parts of the vallev contiguous to McKittrick. Owen told him what he had seen over in the Elk Hills and told him that it looked to him like an anticline running throuo-h these hills from northwest to southeast, but that there was no outcrop on the surface from which he could learn anything. Anderson asked Owen if it looked anything like oil land over there and Owen, he claims, said that he had seen nothing that looked like oil and that he did not think it was an oil dis- trict or that it was oil land. Anderson remarked that it appeared to him that the Elk Hills were "a 248 long ways out" from the foothills of the Temblor Eange where the oil was likely to be and that Owen said "yes, it appeared that way to him"; that was about as much as Anderson recalled of the conversa- tion (R. 2381-2-3). The foregoing evidence of An- derson is relied upon by appellants to contradict the testimony of witnesses whose evidence has been stated above. Anderson was a vitally interested wit- ness for apj)ellants, while the witnesses whose testi- mony is given above had no interest in the result of this litigation. Furthermore, their testimony is con- sistent with Owen's written declarations found in the letters above quoted from, w^hile the views attributed to him by Anderson are contradictory thereof. In addition, that the belief attributed to Owen by Wagy, Ott, Wible, Haberkern, Brisco and Farniun was Owen's actual opinion appears from certain locations in the Elk Hills in which he was interested; and his effort to secure for their mineral value lands lying there is not consistent with the views attributed to him by Mr. Anderson. As already stated, in August or September, 1904, C. F. Haberkern took Professor Owen to the out- crop in section 32 of 30-24. In pursuance of the examination thereof made bv Owen and himself, he and his associates located lands in township 30-23. They located only the even-numbered sections for the reason that Owen said that he was working for the railroad company and told Haberkern not to take any railroad land. By railroad lands he under- stood that Owen meant the odd-numbered sections o 49 of 30-23. That township was not surveyed in 1901. Afterwards the Eight Oil Company was organized. Owen told Haherkern that he wanted to get some stock in that company for William Hmit and Prof. Dumble and arrangements to that end were perfected. The statement which Owen made to him about keep- ing off the odd-numbered sections in 30-23 was made in August or September, 1904 (R. 350-1). The first location he made in township 30-23 was made in 1907. He had been there about a dozen times with Owen and in 1907 he followed Owen's suggestion about not locating anything except even-numbered sections (R. 351). Perhaps a month before Haberkern and his associates made their locations in 1907 they talked the matter over with Owen and Owen told them to locate on the even-numbered sections in 30-23. He knew that it was in August or September, 1904, that he showed Owen the railroad land in the Elk Hills w^here the mineral was and said: "How about locating thoseT'; and Owen said "No." (R. 352.) He was positive that it was in 1904 and not in 1907 that Owen told him that he was working for the railroad company and that it would not look good for him to locate the odd-numbered sections in 30-23 (R. 354-5). The Eight Oil Company was organized in April, 1909, and at the time of its organization Josiah Owen had eight thousand shares of its capital stock (R. 347). The other stockholders were T. E. Klipstein, H. T. Tupman, E. W. McCutcheon, W. E. Richardson, Charles Haberkern and his wife. When this com- 250 panv was organized, it had even-numbered sections in township 30-24 and some of the people that were interested in it had some lands in 30-23 (E. 323). Professor Owen furnished information of the geologic character of the holdings of the Eight Oil Company to that company. Captain W. H. McKittrick in 1899 made an in- vestment in some mining property in Mexico on the advice of Josiah Owen which did not turn out very well and Owen constantly apologized for mak- ing a bad investment for him. The witness met Owen on an Oakland boat in 1903 or 1901, when Owen said to him: "I am awfullv sorrv about our investment down there, but I have something that I will put you onto that will make you more money than the mine we might have had in old Mexico." The witness asked Owen what it was and Owen replied that he was not at liberty to tell him then, but would tell hun when the proper time came. In 1907 the witness met Owen in Bakersfield and Owen told him that he was then ready to put him onto what the}' were talking about in 1903. Otcen told him that he had been working out in the Elk Hills for a number of years and that no one knew that he had been out there at all and that the iritness shoidd saij notJiing about Ins being out there; that he had been out there in the employ of the Southern Pacific Railroad and had located large deposits of fuller 's-earth. Owen stated that he would name four men and that the witness could name four and that thev would go out there and take as manv sec- 251 tions as thej^ cared for, as they would all be open on the first of January, 1909. Owen said at that time that there was a possihility of oil there, but that oil could not be found under 3100 feet. Owen told the witness on several occasions that Professor Dumble was his partner in any venture that he might make (E. 527-8). Owen told him that he knew in 1903 that there were thousands of tons of fuller 's- earth in the Elk Hills; that there might he a possi- hility of oil there, hut that it would not he found within less than 3100 feet and that he could not tell whether it was in paying quantities or yiot, hut that he helieved that oil was there at that depth (R. 535). The lands were located in 1909— sec- tions 20, 22, 21, 26 and 28 of 30-23 (R. 536). The witness thought that they had developed fuller's earth on all of the sections mentioned, but that they didn't sell any of it. They applied for patent on the basis of their fuller 's-earth discoveries and their applications were contested by certain persons backed by the Associated Oil Company who con- tended that the land was oil land and at the time of trial patents had not issued (R. 536-7). The foregoing evidence of Captain McKittrick shows clearly that as early as 1903 Professor Owen thought that there was oil in the Elk Hills. It is true that he thought that it lay deep; but it no- where appears that he thought that its probable depth was prohibitive. The fact that none of the alleged fuller's earth was ever sold shows that it was not of commercial quality and sheds a flood of 252 light upon the view of Josiah Owen that this enter- prise would more than compensate Captain Mc- Kittrick for his losses in Mexico. The true signifi- cance of the situation lies in the fact that, if patents could have been secured by reason of these surface discoveries of fuller 's-earth, the oil that lav at depth in the land would have become the property of the patentees. It required large outlays of money in those days to drill wells and a single discovery made possible a patent to an area not greater than 160 acres. Thus, to have secured patents to several sections in the Elk Hills because of discoveries of oil would have necessitated a very large expenditure of money, while a mere pittance might, if the scheme had been successful, have enabled the interested parties to secure patents based upon surface dis- coveries of fuller's earth. The only possible con- struction to be placed upon this situation is that Owen thought that, by claiming the lands on account of the discovery of fuller 's-earth, he and his asso- ciates could secure patents to them and thereafter develop or lease or sell them for their value as oil lands. This view of the matter explains the secrecy of his movements and of the enterprise — the secrecy with which he made his investigation and the secrecv which he enjoined upon Captain McKittrick. If Owen's faith had been in the "thousands of tons of fuller's earth", there would have been no point to his idea that secrecy was the part of wisdom and expedience. It is respectfully submitted that the testimony 253 recited conclusively establishes Josiah Owen's belief in 190i in the oil character of the lands in suit. C. W. Eberlein's belief: Much will be said of the testimony of this official of the Southern Pacific Eailroad Company in con- nection with the discussion of the subject of fraud. It suffices at this tune to say that he was the acting land agent of the Southern Pacific Eailroad Com- pany who signed the application to select the lands in suit and filed list 89 accompanied by an affidavit that the lands in suit were non-mineral lands of the character contemplated by the grant. It is true that, when testifying as a witness for the govern- ment, Eberlein stated that he did not at the time of fihng the selection list suspect the oil character of the lands in suit. However, there are just two things to contradict this statement. After the original selection list No. 89 had been filed bv Eberlein and had been rejected by the Redster and Eeceiver because of the outstanding suspension of February 28, 1900, already herein at some length discussed, Eberlein wrote a letter to D. A. Chambers, the Washington, D. C, attorney of appellants, concerning the matter of an appeal from the decision of the Eegister and Eeceiver to the Commissioner of the General Land Office. That letter is set out in full on 1577-1580 of the record. After discussing the matter of procedure with ref- erence to the appeal and the wise course to follow 254 to the end tliat the patenting of the lands in suit might be expedited, Eberlein writes: "I am particularly anxious in regard to this list as tlie lands adjoin the oil territory and Mr. Kruttsclmitt is very solicitous in regard to it." (Italics supplied.) Eberlein testified that he had recently taken charge of land matters for the railroad company in California and that he knew little or nothing con- cerning these lands ; but one thing with reference to the state of his knowledge is perfectly plain and that is that he knew that "the lands adjoin the oil territory" and realized the significance of that fact. The other circumstance reflecting light upon Eber- lein 's thought concerning the lands in suit is his unwillingness that the geologists of the Southern Pacific Company should examine unpatented land, that unwillingness being based upon his appre- hension that they might discover things which would charge the applicant railroad company with notice of the mineral character of the lands to which it was endeavoring to secure agricultural patents. And what were those things which expert oil geologists could and inevitably would discover in making an examination of lands "adjoining the oil territory" — lands on the apex of a "dome" considered the most favorable structure for the accumulation of oil? It will be remembered that the regulations made by the Secretary of the Interior required that each selection list be accompanied by the affidavit of the land agent of the applicant railroad to the effect 255 that tlie lands applied for were non-mineral agri- cultural lands and of the cliaracter contemplated by the grant of 1866. As heretofore pointed out, this imposed upon Eberlein the duty of so informing himself as to he ahle to speak the truth. The re- quirement in question went further than as just indicated and made it obligatory upon him to make oath that he had caused the lands apphed for to be examined as to their mineral or non-mineral char- acter by employees of the applicant company. Not- withstanding this Eberlein insisted that an embargo be placed upon the examination of unpatented granted lands of the railroad by geologists of the Southern Pacific Company, who have been shown to have been Professors Dumble, Owen and Anderson, for fear that they might discover and disclose that these lands, instead of being agricultural, were min- eral in character And so Eberlein protested to his chief in New York, Judge AY. D. Cornish, Vice- President of the Southern Pacific Company and an officer of the Southern Pacific Railroad Company as well, against the practice of Mr. Diunble and his men of examining lands not yet patented to the railroad company. He stated that he protested and protested vigorously and also had talks with Mr. Markham, General Manager of the Southern Pacific Company, about the matter, pointing out to him that "people acting without any kind of knowl- edge of what they were doing, without any reference to the selection list of the company, without any reference that even the lands w^ere patented or even surveyed — that it was charging the company with 256 notice, that it didn't charge Mm with notice, but it certainly would be the ground on which to get in and protest the patents or protest the lists — and so the fact turned out to be" (R. 1090-1-2-3). Eberlein's protests culminated in 1908 in an order made by the New York Office forbidding the giving out of printed lists of lands and the examination of unpatented lands by oil experts. Subsequently, it was provided that Dumble and his men should not be furnished with any data whatever except as to patented land, for the reason that such information would be embarrassing to them and to the company and might make them witnesses against the com- pany in mineral contests. This is the substance of the letter written Feb- ruary 22, 1908, from New York by Eberlein to his chief clerk, Conlin. The letter was written under the authority of Judge Cornish who had charge of the land affairs of the Southern Pacific Railroad Com- pany (R. 1094-5-6). Eberlein testified that the statement in this letter — "the examination of our S. P. lands not yet patented by our oil experts must be stopped, as information that they may obtain or give as to the mineral eharacter prior to patent ivill forever prevent our getting patents" — was a con- tinuation by him of the accustomed protesting which had started as soon as the Kern Trading and Oil Company lease had been offered to him for execution in 1901 (R. 1097-8). 257 Another side-light is thrown upon Eberlein's thought concerning the lands in suit in a letter written by him to Judge Cornish September 3, 1904, in which he used this language: "We have selected a large body of lands interspersed with the lands sought to be con- veyed by this lease and which we have repre- sented as non-mineral in character"; and "should the existence of this lease become known it would go a long way toward establishing the mineral character of the lands referred to and which are still unpatented." Eherlem testified that that lease put Mm on in- quiry as to ivliy the lands included in it were to he conveyed to the Kern Trading and Oil Company, am oil development company, ivJien they were sup- posedly non-mineral lands (R. 1090) ; and he said "/ felt and I knew certainly it ivoidd ivork against the company'' (E. 1091). Enough has been said to show that Eberlein, the acting land agent, whatever may have been the state of his actual knowledge concerning the lands in suit, suspected in 1903 and with good reason that they were oil lands; and, if he did not admit belief in their oil character, it was for the reason that to have done so would have stultified him and con- victed him of a serious dereliction of duty; for, while he might still have taken the position that at the time of making the first non-mineral affi- davit he really knew little or nothing about the lands selected, yet, in the light of what he learned 258 afterwards and in view of the fears which he ex- pressed and the protests which he made, it is not conceivable that he did not suspect and, indeed, believe in the oil character of the lands which he was assisting his employer to secure under an agri- cultural grant. George A. Stone's belief: At the time of testif.ying as a witness for the government George A. Stone was a pensioner of the Southern Pacific Company. He was in the employ of the Southern Pacific Company from 1865 to the latter part of 1907. During the last years of his employment he was clerical assistant to the acting land agent, C. W. Eberlein, and under his direction prepared in 1903 selection list nmnl^er 89. He was acquainted with township 30-23, but made no examination of the lands in suit for the purpose of selecting them, such knowledge as he had being general in character from his general knowledge of the countr}^ (R. 1028-9). As already indicated in connection with the belief of Professor Humble, Mr. Stone thought that Humble pressed the selection of the lands in suit because he thought that they were oil lands. At the end of Hecember, 1907, Stone was discharged from the service of the Southern Pacific Company by Eberlein. January 8, 1908, Stone wrote a letter to E. E. Calvin, General Manager of the Southern Pacific Company, in which he referred to his dismissal by Eberlein and expressed the hope that Mr. Calvin, 259 in fairness to him and for tlie best interests of the company, would carefully investigate the matter and arrange for a transfer to some other employ- ment (R. 3118). He sent a cojjy of this letter to Mr. Kruttschnitt on the same day. His letter to Mr. Kruttschnitt is plaintiff's Exhibit 5-N and is as follows : "Dear Sir: I enclose herewith copy of letter mailed to- day to Mr. Calvin asking for transfer from Land Dejit., to other service. As land examiner and asst. land agent I have obtained a knowl- edge of the lands and records not possessed by any other official or employee of the company, but notwithstanding this, and though I have for several years borne a large part of the burden, Eberlein has seen fit to force me out. I think the equality of my work and the confidential character of my employment in land department indicate that the best interests of the company will be served by not turning me down after long and faithful service. Mr. John D. Isaacs has known me for many years. "Yours respectfully, "Geo. A. Stone, "169 Tenth Street, ' ' Oakland, California. ' ' (R. 3117-18). Having received no favorable reply to the letters above mentioned. Stone on March 23, 1908, wrote Mr. Kruttschnitt another letter in which he reviewed his dismissal and former letters with reference thereto and wrote as follows: li' I served the company faithfully and well many years and hoped that its interests would always be mine, but if a hearing and fair treat- ment are not accorded me without further delav 260 my services will be at the disposal of the news- paper press, the United States Attorney General and others." (R. 3116). Subsequently Stone was placed on the Southern Pacific Company's pension list and he was its pensioner while testifying as a witness for the goyernment. When subpoenaed as a witness he went of his own accord and informed Mr. Singer, of the law department of apioellants, of that fact and on the yery morning on which he was sworn as a witness he had told counsel of record for appellants in this case that selection list 89 was made up at the suggestion of Professor Dumble. Whatever the state of Stone's knowledge or ignorance of the lands in suit may have been, it is obvious that the con- clusion which he drew from what he knew concern- ing their selection was that they were mineral lands and were coveted by appellants as such. D. Burkhalter's belief: D. Burkhalter in 1899, 1900 and subsequently was Division Superintendent of the Southern Pacific Company with headquarters at Bakersfield (R. 3429). He did not testify as a witness in this case and consequently there is no record of any expression in words of his belief concerning the character of the lands in suit; but there is an ex- pression in his acts. December 13, 1899, together with others he made four attempted locations cover- ing the several quarters of section 33 of township 30-24 (R. 3427-8-9). Thus, in 1902 the Southern Pacific Railroad Company obtained an agricultural 261 patent to a section of land which in December, 1899, one of its division superintendents had at- tempted to locate under the placer mining laws as oil land. Comment seems hardly necessary. Burk- halter's belief is obvious. Julius Knittsclmitt's belief: As a witness for appellants Mr. Julius Krutt- schnitt. former General Manager and at the time of testifying Chairman of the Executive Committee of the Board of Directors of the Southern Pacific Company, was most loud in his protestations of ignorance of the character of the lands in suit at the time of their selection in 1903 and at the time when the patent thereto was obtained in 1904. The active and responsible head of a gigantic railroad system would not be expected to remember nine years after they had happened all of the details of transactions which had come under his notice. A contemporaneous record of what a man thinks is far more reliable than his memorv of what he thought or believed. Without ascribing to Mr. Kruttschnitt any desire to tell other than the whole truth, it is perfectly fair to hold that those who came in contact with him rebus gestihus and reduced to writing their knowledge of his state of mind were in a more favorable position to give a fair version of what he thought and stated than he could possibly have been nine years after the event ; and so attention is invited to the statement of C. W. Eberlein in his letter of December 10, 1903, to D. A. Chambers, Washington attorney of aiDpellants. In 262 that letter, writing witli reference to his efforts to secure patent to the lands in suit and referring to secelction list No. 89, he says : "I am particularly anxious in regard to this list as the lands adjoin the oil territory and Mr. Kruttschnitt is very solicitous in regard to it." (Italics supplied.) There is something peculiarly suggestive in the connection between Mr. Kruttschnitt 's solicitude and the fact that the "lands adjoin the oil territory". This declaration or statement of Eberlein was made contemporaneously with the main event, to wit, the effort to secure patent to the lands in suit. How Eberlein could have arrived at a conclusion with reference to Mr. Kruttschnitt 's attitude towards the matter, unless he had heard some expression from him, it is difficult to conceive. It has already been shown that Professor Dumble as a witness for appellants claimed that the letter which he wrote to Mr. Bancroft suggesting that the lease to the Kern Trading and Oil Company be held up until ''that danger was passed" was prompted solely by a desire to accommodate and appease Mr. Eberlein. Mr. Kruttschnitt in his testimony places himself on similar ground and states that a certain telegram which he sent to Mr. Chambers was transmitted solely for the purpose of helping Eberlein along. There should be little wonder then that Eberlein, when testifying as a witness, contended that others tried to get from under and "pass the buck" to him. It is manifest that there is an intimate connection 263 between Mr. Kruttsclmitt's ''solicitude" and the fact that "the lands adjoin the oil "territory." F. M. Anderson's belief: F. M. Anderson was a geologist in the employ of appellants in 1903 and one of their expert witnesess at the trial. He was most positive in testifying that the Elk Hills were not oil territory, his state- ment being that he did not believe the sands of the Etchegoin shoreline could have been carried to the position of the Elk Hills and, if they ever were or any part of them ever reached there, they would exist in very thin strata only sufficient in thick- ness to allow a flow of oil in its progress of migration elsewhere; but he never expected to find in the Elk Hills any considerable thickness of sand in the position of Etchegoin or any other for the reason that they were in their geological position so far awav from the source of sand and material. This idea was expressed elsewhere by saying that the Elk Hills were too far away from the outcrop to fill (R. 2455-6). He stated that the Elk Hills were "a long ways out" in the interior basin — from six to fourteen miles from the outcrop of the oil-bearing source (R. 2441). Notwithstanding his opinion that distance from the outcrop w-as con- trolling and therefore eliminated the Elk Hills from the category of oil-bearing lands, he collaborated with Dmnble and Owen in the determination in 1903 of the lands to be included in the lease to the Kern Trading and Oil Company for oil development purposes (R. 2406) and reconnnended the inclusion 264 in tliat lease of section 31 of 30-23, a section in the very township in which the lands in suit lie and as distant from the outcrop as they (R. 2415). Ref- erence to the last cited page of the record will .show that Mr. Anderson first very boastfully testified that he had never recommended to Professor Dumble or to anybody the inclusion of any land in township 30-23. Then, when the suggestion came from counsel for appellants, wdio knew better than Anderson what Anderson had done, that he had recommended the inclusion in that lease of section 31 of 30-23, a section in the very township in which the lands in suit lie and as distant from the outcrop as they (R. 2415), Anderson proceeded to modify his fomier positive statement. That which is of interest and concern here is not what Anderson testified to and thought in 1912, but his opinion or belief in 1903 and 1904. Asked by counsel for appellants as to his own individual opinion in 1903 and 1904 as the result of the work and examination which he had made in that territory as to the Elk Hills being oil lands, he replied: "My conclusion as to the likelihood of the Elk Hills being then or ever being oil territory was negative. That is to say, that I did not believe the}^ were oil-bearing or ever would be found to be oil-bearino-, at least not in paying quantities, not commercially oil-bearing. / suppose that I did expect there might be insignificant deposits of oil found in there, as there might be in any part of the country between Sunset and Coalinga if there was a well put down in those beds." (R. 2454.) 265 This is a concession from the expert who testitied that "it obviously is impossible for any geologist to look into the ground below the surface very far. He might infer various things and come to some kind of conclusion, but he certainlv cannot reac^h a sound conclusion that a given piece of land will be oil producing without actually drilling it"; and that drilling "will not be sufficient to determine the prob- lem of its commercial value. Its commercial value cannot be detemiined by drilling alone, but, in the event that oil is reached, the well will have to be put on the pump and pumped for a definite number of months or for a definite period of time in order to prove satisfactorily its productive capacity. The final and ultimate test of the value of oil lands is the actual production over a period sufficient to recover all costs and pay interest on the costs and to pay a proper dividend above all the costs and above all the interest." (R. 2548-9). It thus appears that in 1903 Mr. Anderson reached a conclusion upon geological evidence alone that the Elk Hills probabl}^ contained oil, but not in commercial quan- tities ; so that at that time he was determining with- out the drill what in 1912 he said could be deter- mined only with the drill and sustained production. From what has been said with reference to the testimony of Mr. Anderson it seems clear that in 1903 and 1904, during the time of the proceedings which resulted in the patent now assailed, he enter- tained the belief that the Elk Hills contained oil. To be sure, he savs that he doubted whether the oil 266 was present in commercial quantities, tliougli ex- pressty contending that that fact is capable of deter- mination only by the drill and subsequent sustained production. If the Elk Hills contained oil in the quantity in which Anderson believed that it existed there, if one had drilled a well and had encountered it, he obviously could have secured from the govern- ment a patent to the land under the placer mining act. If this be true — and it is necessarily true — , then the lands in suit were not such as were subject to selection by the railroad as non-mineral agri- cultural land. That is to say, the granting act plainly excluded lands both within the primary and indemnity limits which were subject to acquisition under the mineral land laws. The necessary conclusion from the testimony of Mr. Anderson, read in the light of the pertinent laws of the United States, is that in 1903 and 1904 he believed the Elk Hills, including the lands in suit, to he territory subject to acquisition under the mineral land laws of the United States and con- sequently not subject to selection by the railroad as non-mineral agricultural lands. Belief of Appellants as evidenced by reservations of land and with- drawals of land from sale: This subject has already been covered and it has been shown that in 1899 J. B. Treadwell, oil expert of appellants, withdrew large areas of land from sale as agricultural land so that they might be 267 developed for the production of oil; and that these withdrawals included lands several miles further from the outcrop than the farthest lands in suit and that the lands in suit themselves would have been included in these withdrawals, if they had then been patented. Mr Kruttschnitt himself threw con- siderable light upon the policy of appellants in this reo^ard and the followino- extracts from his testi- mony are informing: "Eef erring particularly to the lands which are involved in this suit, the first information I now recollect ever having received concerning that land or any land in the vicinity was in 1903. Mr. Harriman had instructed me to push the use of oil fuel on our locomotives. I had done a little in this direction during Mr. Hunt- ing-ton's life and Mr. Harriman was much impressed with the economies that might be effected in this way. ''Under these conditions one of the first things to be done was to ascertain what lands the com- pany had which were available for oil pro- duction. Mr. Treadwell. after the excitement resulting from the finding of oil in Southern California, had recommended for reservation from sale nearly all of the indemnity lands in Southern California. It was evidence to me that this reservation was entirely too broad. It took the company's lands entirely off the market, so when Mr. Humble was put in charge of this work- one of the first things I told him to do was to revieiv these reservations of lands from sale and to mal^e up a list of those lands the department should not he permitted to sell (R. 3082). "I instructed Mr. Humble to make this ex- amination some time in 1903. The examination 268 was made and maps showing the results were sent to me in the autumn of 1903. * * * "In 1903, Mr. E. T. Dumble was under mv direction and control and I may say in a gen- eral way he has been under m^^ direction the entire time he has been with the company. But in 1903 he was vmder my immediate direction as I was the executive officer in control of the oil production of the company during that time (R. 3083-4). "The Kern Trading & Oil Company was formed for the purpose of developing oil on lands owned by the railroad company and also for the purpose of collecting royalty oil on some lands that at that time had been leased to out- siders. In addition to this it was to purchase oil for the operation of the railroad. I do not know at whose suggestion the company was incorporated. It was really organized as a fuel oil development and purchasing department of the Southern Pacific Company (R. 3084). "As I have said, I was put in charge of the development of oil. To facilitate this develop- ment the Kern Trading & Oil Company was in- corporated in the early part of 1903. One of the first questions considered was what land this company should begin operating on and also what land should be reserved from sale. I wanted all such lands turned over to this com- pany so as to have control over them and pre- vent their sale. We had had trouble some years before as the land department had sold ex- tremely valuable oil lands. I did not want that repeated and I wanted the lands placed under the control of Mr. Dumble so as to be positive that thev could not be sold. This led to my telling him, I think in June, 1903, to have an examination made of lands owned by 269 the companv, so that we coukl take them off the market and, as far as their sale and develop- ment was concerned, take them out of the con- trol of the land department. "It was mv purpose to have all lands that were considered to be either actual oil lands, probable oil lands or possible oil lands, turned over to the Kern Trading & Oil Company so that it could control them." (R. 3085.) From the foregoing it appears that the policy of withdrawing lands from sale was begun during the regime of Treadwell and was renewed and con- tinued after Dumble succeeded him. From all of which it appears that Treadwell, Dumble and Owen regarded as oil lands sections further removed from proven oil territory than the lands in suit, thereby showing that in 1903 and in 1901 appellants' own geologists were by their acts agreeing with the method outlined by the government experts. Dr. Branner and Mr. Veatch, for determining in ad- vance of development whether given lands are oil lands or not. It will be noted, too, that, while Mr. Kruttschnitt thought Treadwell 's reservations "entirely too broad", he and Dmnble and Owen did not think that the withdrawn or reserved lands in the Elk Hills were a part of the excessive breadth, because, when Mr. Kruttschnitt told Dumble to "review these reservations" of Tread- Well, Dumble and Owen did so, but did not take the Elk Hills land out of the reservations. 270 Belief of Appellants as evidenced by the construction of tne railroad from Bakersfield to McKittrick: It is not necessary to argue at length concerning this matter. The testimony of H. A. Blodgett, a disinterested witness, demonstrates that this road was built for the purpose of tapping the oil fields and securing the vast tonnage which their develop- ment would produce. The following extracts from his testimony are in point: "I remember when the Southern Pacific Rail- road Company was put into McKittrick. I had something to do with the proposition of putting it in there. The inducement that promoted the construction of the road was the. prospect of a profitable traffic that was to come out of the production of asphalt and oil in that district. I think the road was put into McKittrick in 1893. At that time I was operating an as- phaltum business in the vicinity of McKittrick. I interested the Southern Pacific Railroad Com- pany people through Henry F. Williams, who was at that time residing in San Francisco but spent much time in Kern and who was selling town lots in Kern for the Pacific Improvement Company. I knew Mr. Williams to be on very close and cordial terms with the railroad people and that is why I went to him. I took the matter up with the railroad authorities, par- ticularly Mr. A. N. Towne, the general manager. I had a number of interviews with Mr. Towne and visited him several times at San Francisco. I helped to organize the Standard Asphalt Company. I would say that the Standard Asphalt Company was one of the subsidiaries of the Southern Pacific Railroad Company as it was organized to acquire property that was to be conveyed in consideration of the building of that railroad. The first officers and directors 271 of tlie Standard Asphalt Company, I think, were Mr. Towne, Mr. Dowtey, Mr. Wilhams Mr. Jewett and myself, I think. One half of the stock was held by the directors of the Pacihc Improvement Company. One half of the stock of the Standard Asphalt Company was owned by Mr. Jewett and myself and the other halt bv the Pacific Improvement Company represent- ing the Sonthern Pacific Eailroad Company. The railroad was pnt there in pursuance of these arrangements about the organization of the Standard Asphalt Company in the trans- ferring of the stock and has been operated ever since. The right of way from Bakersfield to McKittrick was obtained by Mr. H. Williams and me. It was largely donated. There were a number of odd numbered sections which had been patented to the Southern Pacific Railroad Company crossed by this road from Bakers- field to McKittrick and I do not think any right was specifically obtained. The railroad owned the sections and there was no necessity for giving them what they already had. The interests of Jewett and Blodgett were trans- ferred to the Standard Asphalt Company m accordance with the agreement for the building of this railroad. At that tune Jewett and Blodgett had some leases of oil lands in the McKittrick field and some lands in fee in the Sunset field, all of which were conveyed to the Standard Asphalt Company pursuant to the arrangement. At that time we had extensive lease-hold interests at McKittrick and also a great deal of land in Sunset. At that time we had shipped several hundred tons of asphalt. Prior to that time it was a paying business. We had to transport a long distance by team from Sunset and ^IcKittrick to Bakersfield and it was very expensive but we had delivered a good deal of ' asphalt and we were satisfied that it would be a paying business and would justify 272 the construction of a railroad which would furnish transportation. The future probabili- ties of that district or the country tributary to the Southern Pacific branch into McKittrick as an oil producing and oil shipping community figured largely in the inducements which lead to the putting of the road in there at that time. The portion of the road from Lokern to Mc- Kittrick was built to furnish transportation for the production of oil and asphalt from that McKittrick field. The probabilities of a great production of oil and shipment of oil in the future from that district was understood by the railroad officials as an inducement to get them to build a road through there as I had personally brought that matter to Mr. Towne's attention. I told Mr. Towne that the deposits of asphaltum in evidence in that district was a drop in the bucket only to the quantity of oil that was tanlved underneath and that would be produced. In other w^ords, the visible evidence of tonnage was as nothing, practically, compared to what was underneath." (R. 363-4-5.) The testimony of Mr. Blodgett is thoroughly cor- roborated by that of W. E. Youle and John R. ScuiDham; and while William Hood, the engineer of appellants who superintended the construction of this road, stated that it was constructed from Bakersfield to Lokern primarily to develop the agri- cultural business and particularly that of Miller and Lux and that the continuation of the road from Lokern to McKittrick was for the purpose of tapping the asphaltum deposits and that, as far as he knew, there was no idea of oil development at that time, he showed very plainly that his acquaint- ance was with the actual facts of construction rather 273 than with the purposes or ends which it was in- tended to subserve. The suggestion that this road was built because of the opportunities offered by the agricultural develop- ment of the country through which it ran is, to say the least, naive in view of the fact that the region, as heretofore shown, was a semi-arid desert in which practically the only enterprize at that time was the operations of Miller & Lux in cattle raising. Of course, it is not asserted that the construction of this road evidences the belief of appellants in the oil possibilities of an}^ particular or specific part of what has since been developed as the oil territory of the great Midway region, but that it is convincing proof of the belief of the enterprising men who were at the head of the affairs of the Southern Pacific Company in the future development of the region as an oil producing tributary to the railroad. If the country was not good for oil, it was good for nothing. Colonel C. F. Crocker, a director of the Southern Pacific Company and one of the master minds of that great corporation, remarked to Mr. Scupham, when the latter expressed the opinion that "those hills south of Miller & Lux' ranch are over- lying an oil deposit", as follows: "Well, it is a good thing that there is some value of that kind in that land, otherwise it would be a very poor asset for the company." (R. 588.) 274 Belief as shown by mineral locations: In the volume of "Documents and Evidence Not Printed ' ' there is a memorandum abstract of notices of location of mining claims recorded in the office of the County Recorder of Kern County, California, covering the period from 1899 to 1906 and affecting or relating to sections in township 30-23. This memorandum begins at page 600 and extends to the end of the volume on page 786. No digest of these locations will be here attempted. The attention of the Court is merelv invited to their number, their continuity and the names and character of the large number of the persons who participated in filing them. It was suggested below by counsel for appel- lants that these notices meant nothing and involved nothing for the assigned reason that they were merely the result of the excitement attendant upon the discovery of oil in the Kern River field in 1899 and were made by people who knew nothing of the characteristics of oil land or lacked that acquaint- ance with surface indications and structural re- lationship necessary to the proper determination of the oil character of land. In answer to this sug- gestion it seems only necessary to point out the identity and qualifications of a large number of men who participated in filing these notices, the record cited showing that a great number of the locations were repeated year after year. Among those who filed the notices in question are: S. G. Drouilliard, who had mined and prospected thirty years and was engaged in the oil business from 275 1899 to 1904 and was intimately acquainted with the Midway and McKittrick regions (R. 114) ; C. W. Lamont, who had mined and prospected since 1879 (R. 580) ; M. S. Wagy, who since 1898 had been developing oil in the Kern River field and at McKittrick and Temblor (R. 176) ; H. A. Blodgett, who was a pioneer in the Sunset, McKittrick and Midway fields and was at the time in question the largest operator in that region, hav- ing been engaged in the oil business for twenty-three years at the time when he testified (R. 360) ; J. I. Wagy, who had been in Kern County since November, 1893 (R. 237) ; N. C. Farnum, whose principal business for many years had been connected with oil lands in Kern County (R. 493) ; W. E. Youle, so often referred to as the principal oil expert in the McKittrick region and w^hose long history of connection with the development of oil lands is set out in the record at pages 540-1-2-3-4 ; S. Jewett, the senior member of the firm of Jew^ett & Blodgett, the principal operators in the Mc- Kittrick and Midway country at the time in ques- tion; A. T. Lightner, appellants' witness, who at the 276 time of testifying thought nothing good of the Elk Hills, but in 1903 was joining with others in locating lands therein for oil purposes (R. 1977). Timonthv Spellacy, who was mentioned by appel- lants' witness E. J. Miley as having said that the ^'fellows in the flat were playing pretty much of a sucker game" (E. 1723) ; but who had on September 16, 1903, located sections 14, 15 and 16 and in 1905 liked the Elk Hills so well and had such faith in their oil character that he went out and re-located section 16 and actually located section 27, one of the sections here in suit, on February 12, 1903; H. W. Thomas, another of appellants' witnesses, who testified to his long connection with and inti- mate knowledge of oil lands and oil development (E. 1828) ; Charles A. Brisco, who went to McKittrick in 1897 and knew all about the countr}^, having been a driller and prospector (E. 335) ; H. P. Dover, who was interested in oil locations in the Midway and in the Elk Hills (E. 463) ; C. H. Allison, another of appellants' witnesses, who stated that he was familiar with all of the oil development that had been carried on in the west side fields (E. 1999) ; D. B. Hoy, who was interested with F. D. Lowe in drilling in 1900 the well on section 11 of 31-24 in 277 the Elk Hills in which gas was encountered at 500 feet and a small showing of oil (E. 146-7) ; C. H. Meves, another of appellants' witnesses, who was agent for the Southern Pacific Eailroad Com- pany at Buttonwillow near the Elk Hills from 1893 to 1905 (R. 2003) ; C. A. Barlow, maker of the Barlow & Hill maps, a member of Congress, engaged in the oil business and mining business and a witness for appellants (R. 2006) ; W. H. Hill, the other member of the firm of Barlow & Hill, map makers, who knew all about the oil conditions in the region in question (R. 109) ; W. G. Sylvester, who made examinations of the surface indications and whose party ran a foot race with Jeff Packard and his party to see which side would get in first (R. 356) ; D. Burkhalter, division superintendent of the Southern Pacific Company at Bakersfield (R. 3429) ; John Jean, who located on the strength of the advice of J. B. Treadwell and L. G. Sarnow (R. 128) ; L. G. Sarnow, who was emplo3^ed by the Southern Pacific Railroad Companj^ and had charge of its drilling and operations in the McKittrick field and who had had large experience in oil matters (R. 133); 278 F. J. Sarnow, a brother of L. G. Sarnow and him- self an experienced oil man (R. 164) ; And last, but not least, J. B. Treadwell, appel- lants' oil expert and in charge of all of its oil development and operations in 1899 and several suc- ceeding years, already manj^ times herein referred to. The wide experience in oil matters of the persons above mentioned affords most emphatic answer to the contention of appellants that the locations in the Elk Hills were made only by "tenderfeet" and men who by reason of the excitement caused by the discovery of oil in the Kern Eiver field in 1899 were attempting to secure lands for oil purposes where- ever they might be situated and whatever their con- dition. The memorandum of these locations covers 185 pages and the names of Drouillard, Blodgett, Youle, Jewett and Spellacy and others of the most prominent oil men in the California fields appear not once nor twice, but many times, showing that they located many quarter sections and re-located them for a period of several years. E. J. Miley, one of appellants' witnesses most relied upon and who was most unsparing in his condemnation of the Elk Hills, is the gentleman to whom the witness L. D. Bell referred when he stated that he "heard that Miley was located all over the Elk Hills" (E. 1805) ; and Bell Avas a witness for appellants (R, 1802). Appellants say that the fact that, with the ex- ception of the Lowe well on section 11 of township 31-24 which encountered gas and a small amount of 279 oil at a depth of 560 feet, there was no develop- ment in the Elk Hills proves that many mineral locations made there were not hona fide. The answer to this contention is that the record shows that the failure to develop the locations between the period from 1899 to 1904, when the patent was issued, was due to four causes: 1. The suspension of the lands from all forms of acquisition by the govermnental order of February 28, 1900,' of which somewhat has already been said in this brief; 2. The low price of oil; 3. The lack of transportation facilities; and 4. Lack of funds on the part of the locators. H. A. Blodgett was certainly not biased in behalf of the government. As already indicated, he was the most prominent and experienced oil man around McKittrick in 1900. He had large interests in the region round about. He promoted the building of the railroad from Bakersfield to McKittrick and made a gift of the right of way. He it was who brought W. E. Youle into the field, the most ex- perienced oil expert of that day, who did more for the development of the oil resources of the San Joaquin valley than any other man. Mr. Blodgett testified that there was a considerable oil boom in Kern County in 1899 and 1900 which kept up for three vears or more and was shared in by geologists and competent men of experience in oil matters; but that the low price of oil made it unprofitable to produce oil under any circumstances and that that 280 fact was tlie reason for the end of the excitement, the lack of cars for transportation having also con- siderable to do with it, the two factors, the low price of oil and lack of transportation facilities, making the marketing of oil practically prohibitive. Oil could not be produced profitably and investors lost interest. That condition paralyzed the region and development ceased. The Associated Oil Company w^as the only concern that could secure trans- portation and it was furnishing oil to the Southern Pacific Company (E. 366, 370). Formerly the Southern Pacific Eailroad Company bought oil from all producers in all of the fields in Kern County, but later only from the Associated Oil Company (R. 370). The oil boom which began in 1900 ended in the summer of 1902 (P. 383). Many competent oil men came in during the excitement (P. 384). It w^as his intention to develop from lo- cations in the Elk Hills, but during the period from 1902 to 1905 or 1906 the conditions of the oil busi- ness were such that it would have been ridiculous to spend any money. He retained possession, but did no development work (P. 389). His reasons for not developing the property in the Elk Hills was that there was no market for oil. The following are his own words: "The price was so low that, if you had had a thousand barrels a day in the Elk Hills, you could not have transported it — it wouldn't be worth a cent." (P. 390.) The reason he did no drilling in the Elk Hills w^as 281 that oil had no value (R. 391). "The only develop- ment we did was right alongside of the railroad track. That would give it a little more value— not niuch— than if it was in the Elk Hills, under the conditions that existed— that is, a little more value under the conditions that existed at the time you mention, 1902-1903, than if it was in the Elk Hills, but it did have a little percentage." (R. 392). This was true although he regarded the property in the Elk Hills as more valuable than any land lying west of the track or the outcrop (R. 392). The only rea- son for developing the property lying nearer the ridge instead of that in the Elk Hills was that it was right beside the railroad. The distance of the Elk Hills from the outcrop had no influence in causing him to refrain from doing development work (R. 394). The depression in the price of oil existed all along the Pacific Coast (R. 395). He thought that the shortage of cars was not simply one symptom of a very general condition of lack of ability to handle increased production, but that it was a symptom of a desire on the part of the railroad company not to furnish the facilities (R. 396). It was true that at that time the purchase of tank cars increased quite rapidly, but there was only one company, the Asso- ciated Oil Company (a subsidiary of the Southern Pacific Company), which could obtain cars (R. 397). He was told by the railroad company that more cars were coming and that he could secure some, but, when they came, the letters "S. P." on them were painted out and "A. O." put on instead (R. 398-9). No one except the Associated Oil Company was able 282 to deliver oil with any certainty (E. 401). When the railroad was asked for cars, its agent simply asserted that they didn't have the cars (R. 402). S. G. Drouillard testified that his abandonment of the Elk Hills was due to the order of withdrawal (R. 125). John Jean stated that it was not possible to get people interested in the oil business and that his attempts to borrow money with which to do work proved failures, even though the Elk Hills were promising oil territory. He gave up his expecta- tions on account of lack of finances (R. 130-1). L. G. Sarnow abandoned his locations because oil went down to nothing. (R. 142). F. D. Lowe held to his opinion that there is oil in the Elk Hills and that it is good oil country; but the depression in the price of oil continued for a long time after 1901 (R. 151). B. K. Lee stated that he drilled a well into the oil sand about the time the slump came in the price of oil in 1901 and that from then on until the winter of 1903 things were very quiet, the price of oil not justifying the expense of putting in a pipe-line (R. 231). J. I. Wagy, although four or five thousand dollars had been spent in township 30-23, was deterred by the withdrawal from further effort to develop (R. 251-3-5). 283 S. P. Wible testified that locations in 1900 and 1901 were made by parties other than those who were merely speculating and most of the operations were carried on under advice of a geologist, of whom he considered Josiah Owen the best in the field, and that all of his locations were made under the advice of competent men. referring to Treadwell and Youle. From 1903 to 1908 the oil business in the McKittrick vicinity was very dull and there was practically no new development on account of the price of oil and lack of facilities for getting rid of it. It was only once in a while you could get cars and for that rea- son you could not contract for the oil. The activity stopped almost entirely. In 1903 oil sold at eleven cents a barrel (R. 332-3-4). Charles Brisco testified that there was a depression in the oil business in McKittrick in 1901, 2, 3, and 4, the cause being inability to sell because of lack of facilities for transportation. He would order cars, but he could not get them. He was actively en- gaged in prospecting and developing (R. 338-9). W. G. Sylvester was prevented from developing his property in the Elk Hills because of the low price of oil. He believed those lands to be oil lands susceptible of development and production on a commercial basis. In 1901 he drilled 980 feet in section 8 of 30-23 (in the Elk Hills), but abandoned it because there was so much gas that the drilling became so expensive that he could not stand the pressure and had to quit (R. 357-8). 284 C. F. Whittier, an oil man of large experience, intended to do development work in the Elk Hills, but suffered an accident which made it impossible (R. 471-2). He regarded the oil character of the Elk Hills strong enough to warrant the expenditure of money in an attempt to prove its possibilities as early as 1904 and was making arrangements at that time to get money in order to locate there and do assessment w^ork; but an injury to his knee kept him confined to the house several years and so pre- vented him (R. 474). H. P. Dover abandoned his locations because of the slump in the oil business in Kern Countv where- by oil became a drug on the market for two or three years and no one would put money in oil property (R. 467). N. C. Farnum and his associates spent and paid out quite a sum of money for and on their loca- tions which they kept up until 1906, building roads through the country, doing assesment work, build- ing a camp and maintaining at least one man there, sometimes as high as a dozen. They built a camp consisting of a one-room house and a stable about the same size, hauling water into the hills for the animals and men and all of their feed and pro- visions. They were about to move a rig over from Kern River into the Elk Hills to prepare for drill- ing, but were prevented by the action of the govern- ment in withdrawing the land (R. 501-2-3). In 1902 there was a depression in oil and a great shortage of 285 cars. The lack of railroad transportation facilities had something to do with the general depression of the oil business (R. 504). W. E. Youle attributed failure of development in the Elk Hills to a lack of water, low price of oil and financial embarrassment (R. 569). He said that money was spent on the locations made on his recom- mendations in the Elk Hills, roads being built and assesment work done ; but money was scarce and oil was cheap and transportation hard to get (R. 576). C. W. Lamont held two sections for ten years, but didn't do any assesment work on them because he was "broke"— not because he didn't consider them worth sufficient attention. There was an oil depres- sion in 1901 lasting for several years and it was "just as good as insulting anybody to ask them to put their money into it at that time". That was the whole reason for our failure to try to influence people there or get money to carry out the locations" (R. 583). John R. Scupham testified that the Buena Vista Company did not prove a success on account of lack of transportation (R. 603). Robert E. Graham, a witness for appellants, tes- tified that in 1901 oil was sold in the field for $1.00 a barrel to other rigs. None of it was hauled out. As soon as drilling was suspended, there was no sale for oil and drilling was suspended because the oil fell off to 12 and 15 cents a barrel about 1903 or 1904 (R. 2137). 286 O. E. Hotchkiss. another of appellants' witnesses, testified as follows: "I went to Bakersfield prior to m}^ trip to MeKittrick on that occasion (1900). Bakersfield was a central town for the various dis- tricts in which the oil excitement then existed. The town was very much congested with oil men, locators and speculators. The hotels were so crowded it was ver)' difficult to get rooms at all and in the evenings one would have to elbow his w^ay in the lobby, as it was fairly packed. This excitement continued up to the time of the discovery of oil in the Beaumont district in Texas. This drew a great many people from Kern county and the excitement died down along in 1902 or 1903. After that excitement died down everything was Yery flat there for some years. Oil went down to 12 and 14 cents a barrel and there was hardly any profit in producing oil even if you had a well already drilled" (R. 2091-2). C. H. Meves, another of appellants' witnesses, was^ interested in numerous locations in the Elk Hills, but after the drop in the price of oil at MeKittrick lost interest in them. He did not think enough of the land to want to put any money in it as no com- panies were coming down that way to prospect the land so that he could get a line on what was in it (R. 206). E. J. Miley, another of appellants' witnesses, shut down drilling in 19 of 30-22 in 1903 because he had not gotten enough production to warrant operation at the then price of oil (R. 1710). He drilled in 287 section 10 of 30-21 about 1500 feet ; but, getting no oil, moved over to section 11 of the same township and there got some oil ; but the money ran out and the oil business was bad and he had to quit and abandon his location in 1901 (R. 1710-11). S. J. Dunlop, another of appellants' witnesses, in 1900 promoted the Mount Diablo Oil Company and commenced the actual development of section 26 of 32-23, putting a well in each quarter and making a discovery and obtaining patents from the govern- ment. After that there was quite a slump in the oil business and he let the property lie until a railroad should be built in there and there was further de- velopment (R. 1820). L. B. McMurtry, who had been a railroad con- ductor on the Southern Pacific and testified for ap- pellants, remembered that in 1901 oil was do^\m to fifteen cents a barrel and there was no market and no transportation and the oil industry seemed falling off considerably at that time (E. 2082). Even F. M. Anderson, appellants' chief expert and their geologist around McKittrick in 1903, admitted that the price of oil in 1903 and 1904 in the vicinity of McKittrick was from 15 to 25 cents a barrel. L. J. King, superintendent of the Associated Oil Company, a subsidiary of the Southern Pacific Com- pany, testified in the Land Office contest at Visaha that cessation of drilling in the majority of cases in the Elk Hills was due to lack of money and ma- 288 chineiy and not because the land was not considered valuable for oil, and that this was true in some cases as to the Associated Oil Company, but that its cessation w^as only temporary (R. See Ex 9-B to O). In the same proceeding W. A. Williams, geologist for the Associated Oil Company, testifying that the lands in the Elk Hills are more valuable for oil than for any other purpose, explained why several of the wells drilled about 1910 failed, some because they did not continue to drill long enough, others because they were unfavorably located and yet others on account of water troubles (Ex. 9-E; 9-M). SUMMARY OF KNOWN CONDITIONS. Summarizing, these were in outline the outstand- ing known conditions : to the west of and as near as two miles to the lands in suit a long line of outcrop of oil sands whose conmiercial productivity had been proven by two hundred and eighty-one oil wells — the dip of the strata in which the outcrop and wells are towards the lands in suit — the existence in the midst of and near to the lands in suit of evi- dences of oil, consisting of seepages, asphalt and gas blowouts — the existence of an oil field to the east of the lands in suit, distant, to be sure, twenty-eight miles but underlaid by the same sand found in the McKittrick hokl to the west — the conspicuously ideal anticlinal stru(-ture of the lands in suit. These are the conditions which were actually known to appellants; these are the conditions which 289 led Dr. Branner, one of tlie greatest oil geologists of the world, to exclaim that ''a geologist who was ac- quainted with them and failed to form an opinion that the Elk Hills were oil in character and that there was an oil bearing zone beneath those hills did not know his business"; these are the known conditions which the goverimient with great confidence con- tends were plainly such as to engender in 1904 the belief that the lands in suit were mineral lands and therefore not properly patentable to the Southern Pacific Railroad Company under the grant of 1866; these are the conditions which did engender that belief in appellants and, as the result of that belief, such a desire to have and secure these lands that they were willing, in order to do so, to falsely represent them to be agricultural in character and commit a fraud involving moral turpitude in order to acquire them. * LEGAL EFFECT OF THE FOREGOING. The government confidently asserts that the legal effect of the facts established by the evidence re- cited concerning the known conditions, taken in con- nection with the non-mineral affidavits offered by ap- pellants in connection with selection list No. 89, is such as to entitle it, without further showing, to a decree annulling the assailed patent and, of course, to an affirmance of the challenged decree; and that such a decree would be the result of the application to these facts of the elementary and fundamental equitable principle formulated for the purpose of 290 remeclyiug the effects of fraud practiced in securing the execution of instruments. One of the essential averments in the affidavits in question is admittedly false; for Mr. Eberlein testified that he had made no examination of the lands in suit and George A. Stone, upon whose knowledge of the lands Eberlein said that he relied, testified that he had made no ex- amination of them for the purpose of selecting them and that such knowledge as he had was general in character from his general knowledge of the country (R. 1029). Furthermore, Eberlein testified that he sent no one to make an examination of the lands (R. 1137). Therefore, the statement that he had caused the lands to be carefully examined by em- ployees of the railroad company was manifestly false and, taken in connection with the continued protests which he said he made from 1903 to 1908 against examinations of unpatented lands by oil experts of the Southern Pacific Railroad Company on the ground that what they might discover might prevent the issuance of patents, makes the material- ty of the falsity of the avennent in question con- spicuous. As a matter of fact, it will be shown hereafter by positive and documentary evidence pro- duced under subpoena duces tecum that Eberlein and his superiors believed in the mineral character of the lands in suit and went to great lengths to se- cure patent thereto for that reason; but, even if it were assumed that Eberlein 's conduct and statements were due to ignorance, the legal result would be the same. This, of course, does not refer to the par- ticular statement mentioned above, the falsitv of 291 which could not have been unknown to Eberlein, but only to that part of the affidavits in which he repre- sented the lands in suit to be agricultural lands and of the character contemplated by the grant. In Prewitt vs. TrimUe, 92 Ky. 176, 181 ; 36 Am. St. 586, Biglow on Fraud is thus cited : "For it is elemenatr}^ doctrine that a false representation ma}^ in contemplation of law, be made with knowledge of its falsity, that is, made scienter so as to afford a right of action in damages, and a fortiori, ground for equitable proceedings (1) without actual knowledge of either its truth or falsity, as when the party has affirmed his knowledge by a positive statement which implies knowledge; (2) when made under circumstances in which the party ought to have known, if he did not know, of its falsit.y; as when having 'special means of knowledge' it is his duty to know. Biglow on Fraud, 599, 615." The rule is thus laid down b}^ Kerr: "If a man makes a representation as of his own knowledge, not knowing whether it be true or false, and it is in fact untrue, he is guilty of fraud, as much as if he knew it to be untrue. It is in law a willful falsehood for a man to assert as of his own knowledge a matter of which he has no knowledge. It is wrong to state as true what the person making such statement does not know to be true, even though he does not know it to be false, but believes without sufficient grounds that the statement will ultimately turn out to be correct, ' ' 292 Kerr on Fraud and Mistake, 53, 54 (Am. Notes by Bump). See also : Ainslie vs. Medlycott, 6 Ves. 13, Smool vs. Wbertj, 10 M. & W. 10, Bennett vs. Judson, 21 N. Y. 238, Harding vs Randall, 15 Me. 332, 335. Continuing, the same author says : " If a man says what is false within his knowl- edge or what he has no reasonable ground for believing to be true and makes the reiDresenta- tion with the view to induce another to act upon it, who does so accordingly to his prejudice, the law imputes to him a fraudulent intent, al- though he may not have been in fact instigated by a morally bad motive." Idem 55, 56. Mr. Pomeroy^ in his Equity Jurisprudence, Sec. 885, savs: "It is fuUv settled by the ablest courts, Eng- lish and American, that there mav be actual fraud — not merely constructive fraud — in equity without any feature or incident of moral culpability; that the actual fraud consisting of misrepresention is not necessarih^ immoral. A person making an untrue statement without knowing or believing it to be untrue and without any intent to deceive may be chargeable with actual fraud in equity. Whatever would be fraudulent at law will be so in equity; but the equitable doctrine goes fartehr and includes in- stances of fraudulent representations which do not exist in the law." 293 Continuing, the same author says : "Where a person makes an untrue statement and has at the time no knowledge of its truth and there are no reasonable grounds for his be- lieving it to be true, he is chargeable with fraud, although he had no absolute knowledge of its un- truth and mav claim to have had a belief in its truth. This is the mode in which the rule is ordi- narily laid down by courts of law and sometimes by courts of equity. The equity cases have, how- ever, settled the rule in somewhat broader terms, omitting entirely the qualification 'that there are no reasonable grounds' for the person's believ- ing his statement to be true. In other words, it is settled in equity by an overwhelming weight of authority that, where a person makes a state- ment of fact which is actually untrue and he has at the time no knowledge whatever of the matter he is chargeable with fraud and his claim to have believed in the truth of his statement can- not be regarded as at all material. The definite assertion of something which is untrue, con- cerning which the party has no knowledge at all, is tantamount in its effects to the assertion of something which the party knows to be untrue" Idem, section 887. "Where a person makes a statement of fact which is untrue, but at the time of making it he honestly believed it to be true and this belief is based upon reasonable grounds which actually exist, the misrepresentation so made is not fraudulent either in equity or at law. This gen- eral proposition is subject, however, to the fol- lowing important limitations : • 5. Where such an untrue statement is made in the honest belief of its truth, so that it is the result of an innocent error, and the truth is after- wards discovered by the person who has inno- cently made the incorrect representation, if he 294 then siijffers the other party to continue in error and to act on the belief that no mistake has been made, this, from the time of discovery, becomes in equity a fraudulent representation, even though it was not so originally. 6. Finally, if a statement of fact, actually untrue, is made by a person who honestly believes it to be true, but under such circumstances that the duty of know- ing the truth rests upon him, which, if fulfilled, w^ould have prevented him from making the statement, such misrepresentation may be fraud- ulent in equity and the person answerable as for fraud ; f orgeti'ulness, ignorance, mistake, cannot avail to overcome the pre-existing duty of know- ing and telling the truth" Idem., section 888. This doctrine has been adopted by the Supreme Court of the United States which says : "Whether the party thus misrepresenting a fact knew it to be false or made the assertion without knowing whether it were true or false is wholly immaterial, for the affirmation of what one does not know or believe to be true is equallv, in morals and law, as unjustifiable as the affirmation of what is known to be positively false. And even if the party innocently mis- represents a fact by mistake, it is equally con- clusive ; for it operates as a surprise and impo- sition of the other party. Or, as Lord Thurlow expresses it in Nevill vs. Wilkin son, 'It mis- leads the parties contracting on the subject of the contract'." Smith vs. Richards, 13 Pet. 25, 36 ; 10 L. Ed. 42. And even in an action at law the same court has approved even stronger language, for in Lehigh Zinc & Iron Co. vs. Bam ford, 150 U. S. 665, 673, it approved the fohowing instructions: "A person who makes representations of ma- terial facts, assuming or intending to convey 295 the impression that he has actual knowledge of such facts, when he is conscious that he has no such knowledge, is as much responsible for the injurious consequences of such representations to' one who believes and acts upon them as if he had actual knowledge of their falsity." Eberlein, by resolution of the board of directors of the Southern Pacific Railroad Company of Sep- tember 2, 1903, was given full power to manage, con- duct and carry on the business of the land office of that company and he was thereby fully authorized and empowered to represent that com- pany in the United States Land Offices or before the officials thereof in person or through persons em- ployed by him for that purpose and to represent the company in all matters pertaining to its lands at all times and places (Ex D D.). It is undisputed that Stone represented the company as fully as the Land Agent for all purposes except those limited person- allv to Eberlein bv said resolution. The making of the false affidavit by Eberlein that he had caused the lands selected (in suit) to be care- fully examined by agents and employes of the Southern Pacific Railroad Company as to their mineral or agricultural character and that, to the best of his knowledge and belief, none of said lands contained in said list were mineral lands and that said lands were vacant, unappropriated and were not interdicted mineral or reserved lands and were all of the character contemplated by the grant (July 27, 1866). was the act of the Southern Pacific Railroad 296 Company, for the principal is liable for the agent's fraud. "In the first place, it is ven^ clear that when an agent, in doing the business of his principal and acting within the scope of the authority conferred upon him, makes fraudulent represen- tations or concealments with the knowledge or consent of his principal, expressed or implied, so that the act of the agent is virtually that of his principal, then the principal is liable in the same manner, to the same extent and for the same remedies as though the fraud were com- mitted by himself personally; he may even be liable in * an action at law for deceit. The doc- trine is carried much farther. When the agent acts beyond and even in direct opposition to his express authority, but within the scope of his implied authority— that is, within the apparent authority contained in and conferred by the terms of his commission or the nature of his official functions or of his emplojTiient or ap- pearing from a prior course of dealing with or on behalf of his principal or from any other mode of his being held out to the world as ap- pering to possess the authority, and the prin- cipal is personally innocent of any fraud — the principal cannot acquire and retain any benefit obtained under such circumstances from the fraud, representiitions or concealments. If the principal, upon learning of his agent's fraud, should expresslv ratify and adopt the trans- action, he would make the fraud his own. An express ratification, however, is not necessary. If the principal receives and retains the pro- ceeds of the au-ent's fraud — the property, money and the like obtained through an executed trans- action — or claims the benefit of or attempts to enforce an executory obligation thus prornired, he renders himself liable for the fraudulent acts of his agent. The defrauded party is entitled 297 to sneli remedies, legal or equitable, as are ap- propriate to the nature of the transaction. The only mode in which the principal, under these circumstances, can escape liability is by repudi- ating the acts of his agent and refusing to ac- cept or retain any benefit of the transaction immediately upon his discovery of the fraud," Pomeroy's Equity Jurisprudence, (3d Ed.) Sec. 909. It is somewhat difficut to follow the reasoning of appellants leading to the conclusion urged by them that the non-mineral affidavits of Eberlein were im- material and "mere red tape". The record shows that it was the onh^ evidence offered to the govern- ment of the character of the lands in suit. Under the grant patents could be secured only to agricul- tural lands, mineral lands being expressly reserved to the United States. As heretofore shown, the Secretary of the Interior in the exercise of authority conferred by Congress required that every selection list be accompanied by an affidavit identical with that filed with list No. 89. How the only evidence offered by the applicant concerning the only matter to be ascertained could be considered immaterial and ''mere red tape" passes understanding. Certainly the government, which through its Department of' the Interior promulgated July 9, 1894, the regula- tion which prescribed in effect that no patent to lands granted to railroads should issue unless the selection thereof was accompanied by the affidavit in question, can b}' no sort of reasoning be held to 298 have regarded such an affidavit as immaterial and mere matter of form. That it was the most import- ant and most material thing in the entire process of selection is manifest. In Cosmos Exploration Company vs. Gray Eagle Oil Company, 104 Federal, 33, an affidavit similar in form to the Eberlein affidavit came under review. Judge Ross, who decided that case, held that, even if it were conceded that the affidavit was not required either b}^ the statute or by any rule or regulation of the Land Department, the fact remained that "the affidavits were made and filed in support of the selection and constituted a representation and one of the means by which the selectors sought to secure the lands ; and, being made and used for the purpose of evading and defeating the laws of Congress, as well as of defrauding the claimants under the min- ing laws, no court of equity should lend them its aid in securing the fruits of the fraud." This language of Judge Ross answers conclusively the contention of appellants in the instant case ; and here the case is stronger for the reason that the Eber- lein affidavits were absolutely required by valid regu- lation of the Land Department and without it the selection list would and could not have been con- sidered by the Land Department, the language of the regulation being "the railroad company will be required to file with the local land officers an affi- davit by the land agent of the company setting forth in substance that he has caused the 299 lands mentioned to be carefully examined" etc (19 L. D. 21.) In support of the contention of the government that, upon the showing hereinbefore referred to and without regard to the positive evidences of fraud hereafter to be presented, it is entitled to a decree in this court affirming the decree below annulling the patent, reference is once more made to the case of Cosmos Exploration Company vs. Gray Eagle Oil Cofupany, supra, the leading case in this circuit upon the question here involved. In that case the assignee of a forest lieu selector who had applied for certain public lands under the exchange provisions of the act of Congress approved June 4, 1897, brought suit to enjoin the defendants who had gone upon the selected lands and were engaged in developing and removing oil therefrom. The selector had filed the usual non- mineral affidavit alleging that the land did not con- tain minerals and was not mineral land. It was claimed on behalf of the defendants that the land was known to be mineral land at the time of the selection and that the selection was made because of that fact and with the sole purpose of acquiring mineral lands excluded from the operation of the act in question. It was contended by the plaintiff, as by appellant in the instant case, that, inasmuch as there had been no actual development or discovery of oil upon the land at the time when the forest lieu selection was perfected, consequently the lands were not known mineral lands at that time and therefore could not with propriety be selected. From the 300 evidence adduced Judge Eoss found that the selector at least believed the lands selected to be oil lands and not agricultural, and thereupon, referring to the non-mineral affidavits, savs: "If, instead of these palpably false and fraudulent statements, the affidavits accompany- ing and in support of the selection had stated the truth — had stated that the applicants at least believed the lands sought contained oil and that they wanted them for that purpose and for that purpose only and desired to select them under the law authorizing agricultural lands to be taken in exchange for lands situated within a forest reserve that had been surrendered to the government — one cannot doubt that the officers of the local land office would have refused to file or receive the selection of such lands under the forest reserve lieu land act." If in the instant case Eberlein had told the truth and had represented that he had caused no exami- nation of the lands in suit to be made, but that he and other officials of the Southern Pacific Eailroad Company and the Southern Pacific Company be- lieved that they contained oil, it does not admit of doubt that the Resfister and Receiver at Visalia would peremptorily have rejected the attempted selection. If Eberlein had done even less than this and had made an affidavit that he had not caused the lands to be examined by the servants of the railroad company and knew nothing whatever of their charac- ter, whether mineral or agricultural, as were the actual facts in this case, as appears from his own testimony, it cannot be doubted that the attempted selection would have suffered the same fate. In a 301 word, if Eberlein, instead of making false repre- sentations, had told the truth or even a substantial part of the truth, the assailed patent would never have issued. The government cannot, in closing the argument upon this phase of the case, do better than adopt the following language of Judge Ross in the Cosmos Exploration Company case: "In Finn vs. Hoyt, D. C. (52 Federal 83), a suit was brought by the United States to cancel two patents that had been issued by the govern- ment to defendants in the suit for certain lands alleged by complainant to be mineral lands and that were known to be such by defendants at the time they were purchased as agricultural lands and concerning whose character the defendants made to the government officers at the time of the purchase false and fraudulent statements. The court found that the preponderance of the evidence showed that the lands were valuable for mineral and that the defendants knew that fact at the time they represented them to be agricultural and, accordingly, acquired the pat- ent, citing a number of cases in support of its decision. Surely, if a court of equity would annul a patent issued under such circumstances, as it undoubtedly would, it should not grant any equitable relief in advance of patent in respect to claims based upon like false and fraudulent representations. ' ' (The citation of Finn vs. Hoi/t is an error, as the title of the case is U. S. vs. Culver.) It is confidently submitted that by far more than "the preponderance of the evidence" in this case it 302 is proven that the lands in suit at the time of their selection were valuable for mineral and that the de- fendants knevv^ that fact. Judge Ross says that a court of equity, under such circumstances, "undoubt- edly would" annul the patent. 4. FRAUD. The proofs by appellants Southern Pacific Railroad Company of the character of the lands in suit offered in connection with its selection thereof were false and fraudulent and were calculated and intended to and did deceive the land officers of the government. Introductory: Enough has already been shown to warrant the conclusion that Judge Bean committed no error in rendering the decree from which this appeal is prosecuted and the government might with great assurance rest its argument at this point; but the record is so filled with positive and documentary evidence of the fraud and deception practiced by appellants that the government is under the duty of inviting the attention of the court to it and of set- ting it out somewhat in detail. Of the evidence upon this phase of the case Judge Bean, after finding that the statement in the affi- davits of Eberlein that he had caused the lands to be carefully examined was admittedly false and that Eberlein himself testified that he knew nothing of their character or contents at the time when he made the several affidavits and that the insistence of the appellants throughout the case had b(^en that no examination of the lands to ascertain their mineral contents had been made prior to the issuance of the 303 patent, although tliey had for a year or more main- tained a corps of expert oil geologists who were actually engaged in examining and classifying lands in the vicinity for the purpose of ascertaining their character, says: "I think it clearly appears from the docu- mentary evidence in the case and particularly from the correspondence from Eberlein's files (a portion of which was kept separate from the o-eneral files of the office and guarded with the utmost secrecy until compelled to be produced on this hearing) that at the time the selections were made and patent issued the officers of the companv in charge of the matter were conscious that the lands were, if not actual, at least prob- able oil-bearing and that the selections were made and strenuously urged to patent for that reason and not because of their agricultural value." (R. 72-3.) A history of selection list No. 89 has already been set out in this brief and will not be repeated here except insofar as may be necessary to a proper understanding of the evidence. Direct and positive evidence of fraud: This evidence consists of certain oral proofs and admissions and, in addition, a series of secret and confidential papers embracing the correspondence between high officials of appellants, the acting land agent of the Southern Pacific Eailroad Company and legal counsel in San Francisco and Washington, D. C, of both the Southern Pacific Railroad Com- pany and the Southern Pacific Company. A portion of this correspondence had been, at the suggestion of 304 Judge W. D. Cornish, vice-president of the Southern Pacific Company and president of the Southern Pacific Eailroad Compan}^ (E. 1132-3), carefully seg- regated from the general files of the land agent and preserved in a file in the safe-deposit vault of the California Safe Deposit and Trust Company in San Francisco, while a portion of it of a secret and confi- dential nature had been segregated from the files of the office of Judge Cornish in New York and placed for safe keeping in a desk in the latter 's private residence in East Orange, New Jersey. An exami- nation of this correspondence will hereafter make clear the reasons for its concealment. Prefatory to an extended examination of this correspondence, however, it may be well to consider the following evidence in the record in support of the finding of Judge Bean that the correspondence in question "was kept separate from the general files of the office and guarded with the utmost secrecy until compelled to be produced on this hearing" (Pv. 73). Eberlein testified that the correspondence in ques- tion was not kept in the files, but in the safe-deposit vaults of the California Safe Deposit and Trust Company and, when needed, was brought into the office and kept in the safe (R. 1082). This corre- spondence related to the projected lease to the Kern Trading and Oil Company of which much has already been said and of which more will hereafter be written. Judge Cornish, the high officer to whom 305 Eberlein was responsible and reported, instructed him to keep them to himself, saying that they might thereafter be necessary for the protection of both of them. Both of them recognized at least the very ambiguous position in which they were placed, if the lease to the Kern Trading and Oil Company were made and especially if Eberlein made the lease, he having also made the selection list which was at that time unapproved (R. 1128). In support of that list he had made an affidavit under oath that the lands in- cluded therein were non-mineral in character. "The fact that he had made such an affidavit, believing the fact to be as stated, it did not seem good policy for him to turn around and make a lease of lands which were in juxtaposition to the selected lands and he believed and Judge Cornish believed thoroughly that it might give rise to trouble" (R. 1129). He "na- turally would expect that, if the lease were made at that time, with those lands mixed up as they were or adjacent, that the government of the United States, having in mind that they were very active about that time in 'nosing' into everything that affected rail- road lands, would be very apt to call that lease at least in question and make an effort at least — or hold it up or entirely knock it out". In other words, he said, the effect would have probably been to com- pletely preclude the possibility of the Southern Pa- " cific Railroad Company acquiring title under that list (R. 1130). After the fire of 1906 Judge Cornish, assuming that Eberlein 's copies of this correspond- ence had been destroyed, notified him in his private car out of Ogden in the Fall of 1907, that, "inasmuch 306 as these letters, reports from me, that he held having come from me in all these years, inasmuch as the papers of the company in the land office were de- stroyed, v:liY. he destroyed those" — Eberlein under- standins" him to say that he had destroyed all of the papers which he, Cornish, had received from him, Eberlein (E. 1074-5). As a matter of fact, while the correspondence in question was damaged by the fire of 1906, it was not actually destroyed and thereafter copies were caused by Eberlein to be made from the scorched remains. George A. Stone had charge of this work and as- signed the copying to Lottie Abrams who subse- quently married and testified as a witness for the goyernment under the name of Charlotte Dorothy Cunningham (E. 1319). She identified her initials on each of Exhibits "JJ" to "SS" inclusiye, con- stituting the correspondence in question, as also the initials "H. K." of Herman Koch, a fellow employee in the land office of the Southern Pacific Eailroad Company. The copying was done two weeks after the San Francisco fire of April 18, 1906 (E. 1320). She copied these exhibits from the burned originals of letters which were handed to her by George A. Stone who told her to keep them as they were and compare them with Herman Koch and then return them to him. Stone. Stone told her to go over and sit at one side of the room near a little bay window and compare them with Koch in an undertone. He cautioned her not to allow them to get out of her hands, Ijut to keep them herself and to return them 307 to him personally (R. 1321). She was impressed by Stone's manner with the fact that "these papers were practically private". While she and Koch were comparing them, "Mr. Stone hovered around a great deal" (R. 1323). George A. Stone's threats of exposure. Light is thrown upon this situation by the subse- quent use to which Stone with success put his knowl- edge of the contents of the papers constituting this correspondence. Differences arising between him and his chief, Mr. Eberlein, the latter advised him that his services would terminate December 31, 1907 (R. 1029). The fact that, when subpoenaed as a wit- ness for the government. Stone at once went to the general counsel of the railroad and to counsel for appellants and notified them that selection list No. 89 was made up at the suggestion of Professor E. T. Dumble, shows that he was an unwilling witness for and hostile to the United States (R. 1030). He Avas at the time a pensioner of the Southern Pacific Com- pany and on the payroll of the Southern Pacific Railroad Company (R. 1030). He testified that he wrote to Mr. Kruttschnitt about his discharge, but that he had no recollection of stating that he would lay before the Department of Justice and give to the press what he considered an irregularity in the selection of the lands in suit unless he was re-instated (R. 1031), but that he probabh^ threatened at. one time to do so. The letters which Stone actually wrote in this connection were not in evidence at that time. Later, Mr. Julius Kruttschnitt, formerly general 308 manager and at the time of testifying the highest officer of the Southern Pacific Company, no doubt familiar with the fact that Stone had testified that he had jDrobably written threatening letters, made a virtue of necessity and, when called upon for the letters in c^uestion, produced them. The first of these letters, dated January 8, 1908, was addressed to E. E. Calvin, then vice-president of both the South- ern Pacific Company and of the Southern Pacific Railroad Company. Calvin first appears as an offi- cial in 1905, the year following the date of the patent, when he succeeded Mr. Kruttschnitt as vice-president. He, therefore, was presmnably ignorant of the fraud in question and therefore Stone's letter to him was of a character cjuite different from those which he thereafter wrote to officials who he doubtless thought had guilty knowledge of the transactions resulting in the assailed patent. His letter to Mr. Cahin was as follows : *'Dear Sir: Have received a letter from the Acting land agent of the Southern Pacific Rail- road Company advising me that my resignation as assistant land agent was accepted, to take effect December 31, 1907. As I have not ten- dered my resignation and am not aware of any good cause for dismissal, it would appear that I am to be dropped to satisfy the whim or preju- dice of an erractir- official, and as this is not the kind of treatment usually accorded to emj^loyes by the Southern Pacific Company, I hope that you will, in fairness to me and foi' the best in- terests of the company, carefully investigate the matter and arrange for a transfer to some other emplo^Tnent. I commenced service as a flag- man with engineering party of Central Pacific 309 R. R. Co. July, 1865, and have been in active service of the Harriman System over thirty -five years, during that period serving as engineer on reconnoissance, location, construction and main- tenance under Mss. Montague, Clement, Curtis and Hood, and for the past ten years in the Southern Pacific Land Dept. as land examiner under Madden and assistant land agent under Eberlin. "Recent illness and death in mv familv have t.' t/ prevented my earlier submission of the matter. Yours respectfully, "Geo. a. Stone. "169 10th St., Oakland, Cal." "Copy to Mr. Kruttschnitt, "Copy to Judge Cornish. (Ex. 5-0; R. 3118-19.) A copy of the foregoing letter was mailed the same day to Mr. Kruttschnitt and in the letter trans- mitting it language is used the aptness of which could not fail to be apparent to one who shared in Stone's guilty knowledge. That letter follows: "Dear Sir: I enclose herewith copy of letter mailed today to Mr. Calvin asking for transfer from Land Dept. to other service. As land ex- aminer and assistant land agent I have obtained a knowledge of the lands and records not pos- sessed by any other official or employee of the company, but notwithstanding this, and that I have for several jcrys borne a large part of the burden, Eberlein has seen fit to force me out. I think the quality of my work and the confi- defdial character of my employment in land 310 department indicate that tlie best interests of the company will le served by not turning me down after long and faithful service. Mr. John D. Isaacs has known me for many years. Yours respectfully, "Geo. a. Stoxe, "169 Tenth St., "Oakland, Calif." (Ex. 5-N; E. 3117-18.) In reading the foregoing letter it requires no great gift of penetration to recognize the element of threat and appeal to fear. Stone could have been no more forceful nor effective if he had simply written: "Be careful how you turn down a man who knows as much about the record of the Southern Pacific Com- pany in connection with securing patents as I know. If you are not willing to consider me, you will do well to consider the interests of the company." Mr. Kruttschnitt testified that he regarded this letter as "impudent and cryptic", but that he did not have Stone peremptorily discharged because he had no jurisdiction of him or Mr. Eberlein (R. 3119). At that time Mr. Kruttschnitt held a very important position in Southern Pacific affairs and his explana- tion that he overlooked impudence on the part of a subordinate for the mere reason that he was in another department is far from satisfactory. If he actually lacked the power to discharge, a mere word from him to Judge Cornish would have been suffici- ent to rid the service of an "impudent" subordinate who wrote "cryptic" letters. That he was in fact 311 disturbed is sliown by the circumstance tliat lie took Stone's letter with him on a trip to New York and conferred concerning its contents with Judge Cor- nish; for on Febraar}^ 13, 1908, he wired Judge Cornish as follows: "You were to advise me further in regard to George A. Stone." Although he is not shown to have heard from Stone in the meantime, he again, namely^ February 19, wired Judge Cornish from Chicago asking the latter to let him know what the trouble was with Stone (R. 3121). February 2J: Judge Cornish wired Mr. Krutt- schnitt : "As near as I can judge George A. Stone was dropped in the interest of economy and because he was no longer fit for the kind of work he preferred to do." On the same day Mr. Kruttschnitt wrote Mr. Calvin as follows: "Referring to letter to you from George A. Stone dated January 8, a copy of which he sent to me, in reference to the matter of termination of his services with the Southern Pacific Com- pany. I quote below a telegram from Mr. W. D. Cornish of this date which explains the action taken in this case," quoting telegram of that date already set out. In the meantime, on February 14, 1908, Stone, having received no satisfactory answer, wrote El)er- lein as follows : "Dear Sir: "Will you kindly advise me whether the com- pany is willing in any way to show its apprecia- 312 tion of my faithful service of over thirty-five years? If the company has no further use for my services, as would appear from recent corre- spondence with yourself and other officials, it seems to me that, as I have nearly doubled the length of service required for retirement, I may properly be placed on the shelf with disabled and superannuated veterans. Thanking you in advance for your kindly offices in my behalf, I remain, "Yours truly, "George A. Stone/' (Ex. 5-M; R. 3117.) On March 23, 1908, coming squarely into the open, Stone addressed Mr. Kruttschnitt at San Francisco in language of unveiled meaning as follows: "Dear Sir: "On January 8, 1908, I addressed you at Chi- cago enclosing copy of a letter I had that day sent to Mr. E E. Calvin relative to action taken by Mr. Eberlein in forcing me out of my position as assistant land agent. To this letter Mr. Cal- vin replied briefly that he had no jurisdiction over the affairs of the land department and could offer me no other emplojanent. "On February 14, 1908, I addressed a letter to Mr. Eberlein (copy enclosed herewith) sug- gesting retirement if my services were no longer desired by the company. To this letter no reply has been received. "I served the company faithfully and Avell many years and hoped that its interests would always be mine, but if a hearing and fair trcat- 7neni are not accorded me witlwnt further delay my services will he at the disposal of the news- paper press, the United States Attorney General mid others. 313 "Trusting that you will be able to give this matter some attention while in San Francisco, I remain. Very respectfully yours, "George A. Stone, "2635- A Channing Way, "Berkeley, Calif." (Ex. 5-L; E. 3116-17.) Mr. Kruttschnitt's reply to this letter, it is sub- mitted, is not such as would be expected from one who was conscious both of his own innocence and a clean record in the affairs of the company whose trusted officer he was. If Stone had been bluffing or attempting blackmail and Mr. Kruttschnitt had be- lieved that he was doing so, it requires no effort of the imagination to conceive that his reply would have been radically different from that which he actually made. Stone's letter was dated March 23d. The answer from Mr Kruttschnitt was written the same day. No comment is needed either upon that circum- stance or upon the compromising and conciliatory character of the reply that he had no jurisdiction over the land department and was referring Stone's letter to Judge Cornish (R. 3120). The result of the correspondence thus cited, to-wi t, the immediate pensioning of Stone, is eloquent of the effectiveness of his threats and of the fear under which they put those to whom they were addressed. As long as he spoke in terms of his long service and devotion to his employer, deaf ears were turned to his request ; but, as soon as he changed his course and wrote boldly of what he would do if his demands 314 were not met, "impudent" though he was to his superior officers, he received the reward of the faith- ful. As long as he was "cr3^ptic", he was ineffective ; as soon as he became open and direct, he was success- ful. That he was pensioned Stone himself testified (R. 1030). Mr. Kruttschnitt testified that, if Stone was entitled to a pension, granting it was no favor to him, since it was a right alread}^ given him and all other employees 3^ears before by the board of direc- tors (R. 3121). It is passing strange that the rail- road's action under the circumstances was such that Stone was compelled to have recourse to the impu- dent and insulting language set out in his letters. Eberlein takes charge of the Southern Pacific Railroad Company's land office. Reverting for a moment, it is important at this point to note that prior to the events last treated C. W. Eberlein had come to San Francisco in June, 1903, to take up the matter of the consolidation and reorganization of certain land grants and that later, about August 3, 1903, he was appointed acting land agent of the Southern Pacific Railroad Company. The formal resolution of the board of directors ap- pointing him acting land agent was adopted Septem- ber 2, 1903, and is set out on pages 1038-9 of the record. The last paragraph of the resolution, by ratifying and confirming all acts theretofore done by Eberlein as acting land agent within the purview of the resolution, shows that Eberlein had begun his work before the resolution was adopted. It was dur- ing the very next month, October, that the original 315 selection list No. 89 was prepared pursuant to Pro- fessor Bumble's coming in and pressing the selection of the lands in suit (R. 1029) ; and it is to be remem- bered that it was then that Eberlein, new to the work in California and without knowledge, as he himself testified, of the lands in suit, but relying, as he said, upon the knowledge of George A. Stone (R. 1136), who in turn testified that such knowledge as he had of the lands was general in character based uj^on general knowledge of the country (R. 1029), made one of the non-mineral affidavits alleged by the gov- ernment to have been false and fraudulent. The list and affidavit were prepared by Stone and were pre- sented to Eberlein for his signature (R. 1136-7). Stone had at no time examined the lands in suit (R. 1029) ; Eberlein knew nothing whatever of them (R. 1137) and sent no one out at any time to make an examination of them. In the light of this situation the positive and unequivocal character of the affi- davit is, to say the least, interesting. It is here re- peated : '^Charles W, Eberlein beinsr dulv sworn, de- poses and says that he is acting land agent of the Southern Pacific Railroad Company; that he has caused the lands selected in said company's list No, 89 to be carefully examined by the agents and employees of said company as to their min- eral or agricultural character and that, to the best of his knowledge and belief, none of the lands returned in said list are mineral lands, ' ' The patent was issued December 12, 1904. In February, 1900, the lands in suit, together with forty- four other townships, had been suspended from dis- 316 position by the Commissioner of the General Land Office (Ex. QQQ ; R. 1524-5). The township contain- ing the lands in suit had not then been surveyed and, consequently, the lands in suit were not susceptible of any form of entry under the land laws of the United States. The township was surveyed during 1901 and 1902 and the survey, including the plat and field notes, was formally approved and filed August 1, 1902 (Ex. "E"; R. 107). In that survey the lands in suit, because of their supposed oil character, had been returned as mineral lands and within a mineral district. Meanwhile, following up the geological examinations in 1887 by the railroad company through John R. Scupham, consulting engineer of the directors of the Southern Pacific Company and the Southern Pacific Railroad Company (R. 585), the railroad continued its examinations through J. B. Treadwell, oil expert of the Southern Pacific Company, with the result that Treadwell prepared a certain map bearing the date of September 17, 1902, and introduced in evidence and kno^^^l as Exhibit 115, on which he showed in red color all of the odd sections of land falling within the indemnitv limits of the railroad company's grant which he at that time caused to be reserved from sale for agricultural uses ''because in or near oil territorv", therebv indi- eating his belief that they were oil lands. This policy on the part of the railroad of withdrawing its oil lands from sale, instituted presumably by Treadwell, was adopted and followed up by those who succeeded him in the railroad's employ. The map in question bears witness to the withdrawal by Treadwell because 317 of their oil possibilities and the reservation from sale for agricultural uses of lands immediately adjoining the lands in suit on the north, west, south and east, those on the south in the same and adjoining town- on the west in the same and adjoining townships, those on the south in the same and adjoining town- ships and those on the east in the same and adjoining townships. Thus, Treadwell had in 1902 reserved from sale, because in or near oil territory, twenty- three sections or parts of sections actually in the Elk Hills, including all of the sections or parts of sections in the township containing the lands in suit patented to the railroad company, nine in number. Treadwell first took the stand as a witness for the government and, when questioned on cross-examina- tion by counsel for appellants, said: "I know the Elk Hills. None of my withdrawal orders took in any portion of the Elk Hills" (E. 435). Exhibit 115, the map in question, was not introduced in evi- dence until several months later, when Professor E. T. Humble, consulting geologist of the Southern Pa- cific Company, was on the stand as a witness for appellants. There ivas originally no suggestion from Treadtvell that his reservations or withdrawals in- cluded lands other than those which he helieved contained oil; but later, when as a witness for ap- pellants he was confronted with Exhibit 115, his own map, and was face to face with a record made by himself in 1902 which flatly contradicted his testi- monv in 1912 that he made no withdrawals in the Elk Hills, he confessed and tried to avoid by saying that 318 while his reservations had included lands in the Elk Hills and in the very township in which the lands in suit lie (R. 3423) and he got the data or information upon which he made reports respecting withdrawals from personal examinations, his reservations went beyond where he ever expected to get oil (R. 3424). In explanation of the fact that, although he shaded as oil lands the sections on all sides of the lands in suit, he did not so shade the lands in suit, he said that the reason for not doing so was that they were then unsurveyed (R. 3458-9). Suiwey of the lands in suit, as heretofore noted, had been filed and ap- proved in the month preceding that in which Exhibit 115 was made ; but Treadwell did not know of this, as is shown bv the fact that the section lines across the lauds in suit are dotted broken lines which indicate unsurveved lands. At the time in question Treadwell was subject to the orders of C. P. Hunting-ton, H. E. Hunt- ington and Julius Kruttschnitt, vice-president of the. Southern Pacific Railroad Company and assistant to the president of the Southern Pacific Company (R. 426), as well as of E. H. Harrunan, president of both the Southern Pacific and the Southern Pacific Railroad Companies. When a controversy arose between Treadwell and Jerome Madden, the prede- cessor as land agent of Mr. Eberlein, on account of Treadwell's recommendations of the withdrawal of lands from sale by the railroad at agricultural prices, Mr. C. P- Huntington settled it by ordering Madden to withdraw from sale anv lands that Tread- 319 well recoiimiended (R. 426-7). During this time Treadwell made reports to H. E. Huntington and Julius Kruttsclmitt ; so that, as early as September 17, 1902, the date on which Exhibit 115 was prepared, Treadwell had not only examined the lands in suit, which were then unsurveyed, as he thought, but all of the lands in the Elk Hills adjoining the lands in suit on all sides and had indicated upon his map and doubtless in liis reports as oil land every section of land in the Elk Hills which at that time was either surveyed or patented, omitting the lands in suit from his recommendation that they be reserved from sale because of their oil character, not because he did not believe them to contain oil, but solely because at that time they were unsurveyed, as he believed, and un- patented (R 3158-9). The circumstances under which Josiali Owen be- gan his labors as oil geologist of appellants around McKittrick and the work which he did and the re- ports which he made have already been set out. Before leaving San Francisco Mr. Owen, after con- ference with Mr. Kruttsclmitt, was provided with maps showing the company's holdings, including Exhibit 115 which Treadwell had returned to Jerome Madden, the land agent at that time. Humble testi- fied that he received the map from the latter in December, 1902, and had kept it in his possession until produced in this case (R. 2901). Thus, it has been shown that both Owen and Humble were familiar with the policy of withdrawing oil lands from sale as early as 1902, which policy Dumble con- tinued in force (R. 3001). 320 Owen went from San Francisco to McKittrick during September, 1902. In November Dumble accompanied Treadwell to the McKittrick field to inspect the oil properties (E. 2902-3-4) and reported to Kruttschnitt by letter of December 4, 1902, the results of his trip (Ex. 117; R. 2906), the report being in the form of a letter which concluded as follows : "I propose to take up their examination in a systematic way during the coming year in order to determine as far as can be done from surface indications and geological structure tvJiere oil is to be expected in this region icitli especial refer- ence to deposits near any of the lands. So far as I can judge from a trip which I have just made over this territory, this work promises results of the greatest value to the company" (E. 2907). In March, 1903, Dimible took active charge and assumed full direction, Owen working under him and having charge of the oil fields (E. 2907). There- after followed Owen's report of March 25, 1903, heretofore referred to, in which he stated that there was but one oil horizon and that he had traced its outcrop all the way to Sunset and found that there was but one oil sand which he believed it would be possible to trace to the Kern Eiver fields (E. 1619-20). Some time in the Fall of the year 1903 and after a thorough examination made by Owen in the field and report to Dumble which Dumble in turn trans- mitted to Mr. Kruttschnitt (E. 2912), Dumble went 321 into the land department of the Southern Pacific Eailroad Company in San Francisco and, in the presence of George A. Stone, assistant to Eberlein, the acting land agent, suggested that the lands in suit be selected. Stone's words as a witness were: "The lands mentioned", meaning the lands in suit, "were placed in that list at the suggestion of Mr. E. T. Dumble, I think" (E. 1029). He also said : "I regard the selection of these lands as irregular. Mr. Dumble, as the geologist, I thought pressed the selection for reasons best known to himself. I supposed as a geologist he thought they were oil lands. He pressed the selection of this land probably within thirty days prior to the list in 1903, not earlier than September nor later than November, 1903. This occurred in October of that year." After Dumble came in and pressed the selection of these lands. Stone, under the direction of Eberlein, started the office force to prepare the list and, be- cause of the hurry incident to Dumble 's "pressing," caused to be set aside the work of making up new records and lists of lands in which they were busily engaged at that time (R. 1030). It has already been shown that Stone at no time made any examination of the lands embraced in list No. 89 and had no knowledge of them except such knowledge as was general in character from his general knowledge of the country (R. 1029). A brief review of some important evidence is necessary as introductory to and explanatory of what is to follow: 322 March 25, 1903, Owen had made to Dumble his report in which he described the "fold north of the McKittrick" and transmitted the map, Exhibit 157, showing the anticline running from section 6 of 30-22, on which there were two producing wells (Exhibit Ha), through the lands in suit. "This fold," he wrote, "exposes the oil sands in several places and in some of the exposures the sands are strongly impregnated with asphaltum and producing ivells ouglit to he found along this exposure.' yf A comparison of Exhibit 157 with Exhibits 4-Sa and 4-Sb, a plat contained in a note-book carried constantly in the field by Josiah Owen and produced under subpoena duces tecum by his son (E. 1638), shows the former to be but a finished reproduction of the latter. It is evident that the plat book was in existence prior to March 25, 1903. The Exhibit 4-Sc, which is a portion of the plat-book near the end, is dated "October 15, '04," while Exhibits 4-Sa and 4-Sb are pages 44 and 45 of the same plat book found considerablv in advance of the middle of the book. It is to be presumed, therefore, that Exhibits 4-Sa and 4-Sb were made by Owen prior to the entries following it many pages after and that, since Exhibit 4-Sc, found near the end of the book, is dated October 15, 1904, Exhibits 4-Sa and 4-Sb were made considerably prior to that date. Dumble admits that he recteived Exhibit 157 with the report of March 25, 1903, from Owen (R. 2977) and, although he admits that on September 21, 1903, 323 he sent two maps to Kruttschnitt, he denied that Exhibit 157 Avas among them (R. 2977). Appellants offered in evidence as one of the maps sent Mr. Kruttschnitt by Dumble September 21, 1903, Ex- hibit 156; but the letter in question speaks of "the attached maps" and this must mean at least two. Whatever the other map or maps was or were, no offer of it or of them was made by appellants. Mr. Kruttschnitt also denied having received Exhibit 157. The fact remains that Bumble's letter of September 21, 1903, to him referred to "untested anticlinals which show good indications of oil" which repre- sented the third class of "probable oil lands" re- ferred to in the same paragraph. The only map produced in evidence in this case which shows an untested anticline is Exhibit 157, which was trans- mitted to Dumble in Owen's letter of March 25, 1903, the untested anticline being, in the language of Owen, "the fold north of the McKittrick." Ap- pellants showed great ability to procure old maps from persons with whom the government failed. For instance, Treadwell as a witness for the govern- ment stated that all his maps burned in the San Francisco fire of 1906, while, when called as a wit- ness for defendants, he produced several that acci- dentally had found their way into certain files in Los Angeles and had thereby escaped the destroying flame. Professor Dumble in the letter of September 21, 1903, speaks of maijs; but appellants have pro- duced only one. It seems fairly certain, then, that Mr. Kruttschnitt was in error in denying that he received a copy of Exhibit 157. Exhibit 156 shows 324 no "untested anticlinals" and it is the only map which appellants are willing to admit that Mr. Kruttschnitt received. It is res]DectfullY submitted that the map which delineated the only "untested anticlinal" shown upon am^ ma23 introduced in evidence is, logically and with great ceiH;ainty, the map which Dumble would have sent and actuallv did send to Mr. Krutt- sclmitt. Five days after receipt of this letter from Dumble of September 21, 1903, referring to the untested anti- clinal maps Kruttschnitt received from Eberlein what we mav here term for convenience the first or beginning of the correspondence containing positive and direct evidence of the fraud of aj^pellants in securing the assailed patent. That letter itself is not in the record, but that it was written appears from a letter of October 12, 1903, from D. A. Chambers, the Washington, D. C attorney of api3ellants, to Mr. Kruttschnitt in which the former writes : "Mr. Eberlein says that no selection of any of these lands had, when he wrote, been made by the Southern Pacific Railroad Company, but that he expected to tender a selection list within a week or ten days from the date of his letter to you and he suggested that you might ask that special attention be given here to the patenting of this list." (R. 1474-5.) In the first paragraph of the letter acknowledg- ment is made of the receipt of a copy of a letter from Eb^erlein to Mr. Kruttschnitt of September 26 ; 325 so that the date of Eberlein's letter to Kruttschnitt is fixed as of September 26, five days after the receipt by Mr. Kruttschnitt of Dumble's letter referring to untested anticlinal maps (R. 1474-5). October 12, 1903, Chambers wrote to Kruttschnitt the letter from which the foregoing is quoted and stated that, as soon as Eberlein tendered the list for the lands in suit and it w^as transmitted to the Gen- eral Land Office, he would "at the earliest possible date urge the issuing of a special patent for the lands selected" (R, 1475). He added, however, that the lands in 30-23, together with those in a great many other towmships, had been suspended from dis- posal by telegraphic order of the Commissioner of the General Land Office of February 28, 1900, ''upon allegations tJiat the said townships contained petro- leum'^ (R. 1476) ; that upon inquiry he had found that this withdrawal had not been revoked "and will not be until a special agent has reported that said lands are not petroleum lands", but that, if Eberlein would write him "just w^hat lands he de- sires to select in township 30 S., Range 23 East," he could ask the Commissioner of the General Land Office to direct special agent Ryan to examine said lands as quickly as possible and make special report as to their character (R. 1476). He presumed that the Register and Receiver would not approve the selection because of the outstanding order of Febru- ary 28, 1900, and enclosed a copy of his letter to Mr. Kruttschnitt to be handed to Eberlein. On the wit- ness stand Mr. Kruttschnitt denied that he knew 326 anything whatever about these lands ; but this state- ment does not appear to agree with his acts at the time of the proceedings which resulted in the patent. On October 19, 1903, Chambers wired Eberlein to select the lands regardless of their suspension (R. 1479) ; and on October 24, 1903, he again wrote Eber- lein suggesting that, if the Eegister and Receiver refused to accept the list he should take an appeal to the Commissioner (R. 1480-1). Thus, it is shown that Mr. Kruttschnitt's action is contradictory of his statement as a witness in 1912 that he was whollv imorant of any knowledge of the lands in suit. On October 9, 1903, Mr. Kruttschnitt thought so much of these lands that he wrote the quoted let- ter to Mr. Chambers while en route and requested the latter to endeavor to secure special attention to patenting them. During the correspondence to which reference has just been made George A. Stone was busy preparing list No. 89 following Dumble's visit to the land office of the railroad on which he pressed the selec- tion of the lands in suit. Eberlein stated that he knew nothing whatever of the lands and Stone, his assistant, had never been on them, nor had Eberlein sent anyone out to examine them before making his non-mineral affidavit. Do not these facts of them- selves point to the belief of Dumble in the mineral character of the lands and to the truth of Stone's statement that he, Duml)le, pressed their selection for that reason? At that very time Dumble had in 327 his possession Treadwell's map of September 17, 1902, Exhibit 115, showing withdrawals because in or near oil territory of lands surrounding on all sides the lands in suit; Owen's report of March 25, 1903, in which he stated that the oil sands were ex- posed in several places and that producing wells ought to be found along the exposure; and Exhibit 157 delineating the Elk Hills anticline across the lands in suit. Other work in Eberlein's office was placed aside so that list 89 could be promptly pre- pared and a few days later, September 26, 1903, Eberlein wrote Kruttschnitt that he expected to tender a selection list of the lands in suit within a week and suggested that he ask that special atten- tion be given to the patenting of that list, despite which Mr. Kruttschnitt testified that he knew no more about these lands than if they were at the North Pole. Immediately thereafter, that is, on November 7, 1903, Eberlein, because required by pertinent regulation of the General Land Office, attached to the list an affidavit in which he falsely swore that he had caused the lands to be examined by agents and employees of the company and that none of them was mineral land. The list in question, accompanied by the non-mineral affidavit, was then tendered to the Eegister and Eeceiver at Visalia and was received by them November 14, 1903 (R. 3752). It is again pointed out that Eberlein on the witness stand admitted that he had never examined the lands nor instructed anyone else to do so and personally knew nothing whatever of their character (R. 1088). 328 Departing for a moment from the chronological order of the events now being outlined, attention is directed to a letter of December 10, 1903, from Eber- lein to Chambers in which the former wrote as follows : "I am particularly anxious in regard to this list as the lands adjoin the oil territory and Mr. Kruttschnitt is very solicitous in regard to it." (R. 1577, bottom of page.) The reference is to selection list 89 and the lands in suit and this contemporary statement illy com- ports with the subsequent pose of ignorance on the part both of Mr. Eberlein and Mr. Kruttschnitt. On November 17, 1903, as expected, the Register and Receiver rejected the list because the township containing the lands therein described had been sus- pended from acquisition (R. 3756). On November 30, 1903, Chambers asked the General Land Office to have an investigation made (R. 1483) and wired Eberlein on the same date recommending an appeal to the Commissioner of the General Land Office from the rejection by the Register and Receiver at Visalia of the list in question (R. 1481). On December 10, 1903, Chambers wired Eberlein that the Commissioner of the General Land Office had on that date directed an examination of the lands in suit to be made and that he presumed the special agent was ^Ir. Ryan, but he was not advised positively of this (R. 1482). Here we find the Washington attorney of the Southern Pacific Com- 329 pany and the Southern Pacific Railroad Company successfully predicting ^Yho would be the special agent chosen by the Commissioner to make report. On the same date, December 10, 1903, Eberlein wrote Chambers the letter already referred to in which he stated that he was particularly anxious in regard to list 89 "as the lands adjoin the oil terri- tory and Mr. Kruttschnitt is very solicitous in re- gard to it''. This letter is set out on pages 1577, 1578, 1579 and 1580 of the record. It was written a year and two da^^s before the date of the assailed patent and its contents demonstrate that both Eber- lein and Kruttschnitt believed in the oil character of the lands thus sought to be secured by appellants as agricultural lands, when in truth and in fact they were and Kruttschnitt and Eberlein verily believed them to be oil lands. The taking of testimony in this case began Ai^ril 16, 1912, and consumed more than a year, ending in December, 1913. As early as Julv, 1912, the letter now under review was de- manded by the govermnent under subpoena duces tecum, but it was not produced until August 2, 1913, several months after Mr. Kruttschnitt was on the stand as a witness for appellants. In July, 1912, Mr. A. A. Hoehling, Jr., who had succeeded D. A. Chambers, then deceased, as the local attorney of appellants in Washington, D. C, was placed under subpoena to produce all the correspondence between Chambers and officials of the railroad company re- lating to the selection of these lands which were then in Hoehling 's custody (R. 1463). Prior to that time 330 Mr. Hoeliliiig had not appeared as an attorney in this case; but on July 30, 1912, on motion of Mr. Charles R. Lewers, Mr. Hoehling was entered as attorney for appellants other than the Equitable Trust Company of New York (R. 1339-40). This was while evidence was being taken in the city of Washington and the record will show that Mr. Hoeh- ling attended as counsel the hearings in that city. On August 2, 1913, it is shown on page 1478 of the record that this letter of December 10, 1903, was the subject of a colloquy between counsel for the government and counsel for appellants, Mr. Hoeh- ling stating that he had turned that letter over to Mr. Lewers and that Mr. Lewers afterwards ad- vised him that he had sent the letter out to San Francisco. This statement was made in the presence of Mr. Lewers and was not denied bv him; so that it thus appears that a letter which one of counsel for appellants was under subpoena to produce was delivered to another of appellants' counsel and mailed by him to a city three thousand miles distant from that in which testimony was being taken and which the other of counsel was under subpoena to produce. (The following facts do not appear in the transcript of the record in this case, but they do appear in the original record as taken by the special examiner and it is the purpose of the government to ask counsel for appellants to stipulate that they be considered as in the transcript. On page 2871 of the original record it appears that on December 4, 1912, counsel for the government again demanded the production of this letter from Eberlein to Cham- 331 bers of December 10, 1903, and that Mr. Chas. E. Lewers, counsel for appellants, stated that he had not seen the letter since August 2, 1912. Pages 6286 and 6287 of the original record show that on April 7, 1913, immediately before Mr. Kruttschnitt took the stand as a witness in behalf of apx3ellants, counsel for the government called upon counsel for appel- lants to produce the letter in question which had been delivered to him in Washington in August, 1912, by Hoehling and which counsel for appellants had promised to produce; so that at the very time when it was desirable to examine Mr. Kruttschnitt concerning the reference in the letter to him it was withheld. Pages 6611 and 6616 of the original record show that this demand was again repeated on June 2, 1913.) As a matter of fact the letter was not produced until August 2, 1913, a full year after the time when its production was required by suh- poena duces tecum upon Mr. Hoehling who, instead of producing it, delivered it to Mr. Charles E. Lewers who in turn mailed it from Washing-ton to San Francisco and did not produce it until August 2, 1913. The record of its production is noted on page 1676 of the record where the date of the pro- duction is stated as August 2, 1912. This will be conceded by appellants to be an error and that the date should be 1913 and, apart from concession, this sufficiently appears from reading the first three lines of page 1577 of the record where counsel for appel- lants is noted as sajdng: "This is offered at this time because of the fact that it is a part of the correspondence which 332 was introduced in evidence at Washington in August of last year/' The letter of December 10, 1903, whose production required so much of time and caused so much of trouble and pains and effort, was written by Eber- lein a month after he had filed the first selection list in this case and two or three months after Mr. Dumble, according to George A. Stone, went into Eberlein's office and, in the presence of Stone, pressed the selection of the lands in suit. The fol- lowing is the letter in full : ''(6-15-03-2M) Ansd Dec 16 SC 19 B "Laxd Departmext of the "SOUTHERX PaCIEIC RaILROAD COMPANY. San Francisco, Cal. •'December 10, 1903. •'Subject: Visalia Main Line Indemnitv List No. 89. (I Mr. D. A. Chambers, McGill Building, 908 G St., N. AV., "Washington, D. C. "Dear Sir: ""Referring to our correspondence in regard to this matter, I beg to say that under date of December 9th, :\[r. AYm. F. Herrin advises me that he has taken an appeal from the Register and Receiver's rejection of Main Line In- demnity List No. 89, recently filed, and that a copy of his appeal has been forwarded to you. "Tn this letter, evidently written by Air. Singer, occasion is taken to criticise somewhat the proceeding of this department. The follow- ing appears in his letter: 333 a i\ The best course, it seems to me, was to ac- company the selection list with affidavits setting forth that the lands are vacant and unappro- priated non-mineral lands, and asking that the order of suspension be released. Such affidavits and petition would, I believe, have procured a hearing to be ordered, and if sustained should entitle our list to nunc pro tunc filing but if not, still our list would be ordered filed simultane- ousty with the release of suspension; and pen- dency of our selection would cut off inter- mediate settlement.' "It is possible that Mr. Herrin has written you in the same tenor, when sending you copy of the appeal. "This is a matter of practice, as to which I am willing to act under advice. "It seems to me, however, that the first and most necessary step to take was to file our list, as advised by you. "We, of course, knew of the suspension, and if there is any virtue in the filing of an affi- davit I don't see why it cannot be done now as well as at the time of the filing of the list. Will you give me the benefit of your advice as to what is best to be done '^ "I am particularly anxious in regard to this list as the lands adjoin the oil territory, and Mr. Kruttschnitt is very solicitous in regard to it. "I have had in mind the suggestion you made sometime ago in regard to inducing Mr. E. C. Ryan, special agent at Los Angeles, to make his report. "I am not acquainted with Mr. Eyan, and it is a matter for serious consideration as how to approach him. It would not do, certainly, to 334 ask for a report recommending the release of the lands selected by us, from suspension. In my opinion it would not be politic to ask for a "release in any particular district. Mr. Ryan would, in all probability, jump at the conclusion that the railroad had some special information in regard to that district, and the result would probably be that our request would have the opposite effect from that desired. "All that I could do would be in a general way to ask him to submit a report of the lands covered by the order of suspension, which, as you know, embraces a very large area. "How would it do to ask the Department to suggest to Mr. Ryan that he make a report of so much of the "lands within the suspension limits as he has examined up to this time? It might be that such a report would cover the very district in which we are operating, and we would then be relieved from the danger of having called particular attention to any locality. "There is a point of land office practice as to which I would like your opinion. "Since succeeding Mr. Madden two lists have been filed by this department and rejected. In both cases, "following out what appears to have been the rule in this department heretofore, I have written to the Law Department, stating the facts of filing, rejection, etc., and asked that a proper appeal be drawn and sent to me for execution and filing. In both cases the Law Department has not only drawn but has per- fected the appeal and filed it without reference to this department. I do not know that there is any point involved, and the only reason that I am asking for your opinion is that heretofore I find, by reference to our office fik^s, the appeal has been drawn in the Law Department and signed by the Land Agent, and by hun for- 335 warded to the Register and Receiver for filing. It is mereh^ a question of what is the proper procedure. ''I presume the General Land Office has its own ideas as to what officer should make the appeal, and I do not wish to vary the practice in such a matter as to confuse the Department, and hereafter lead to complications which might be very annoying. "Yours very truly, "Charles W. Eberlein, "Acting Land Agent." (Exhibit 199, R. 1577-78-79-80.) The W. F, Herrin referred to in the first para- graph of the letter appears elsewhere in the record as the general counsel for the Southern Pacific Com- pany and Chairman of the Executiye Committee of the Associated Oil Company, one of its subsidiaries. Attention is again directed to the pregnant mean- ing of the following paragraph: "I am particularly anxious in regard to this list as the lands adjoin the oil territory and Mr. Kruttschnitt is yery solicitous in regard to it." This excerpt would be a sufficient explanation of the fact that counsel for appellants withheld for an entire year the production of the letter. It eyi- dences Mr. Eberlein 's anxiety and Mr. Kruttschnitt 's solicitude and demonstrates that the anxiety of the one and the solicitude of the other arose out of the fact that the "lands adjoin the oil territory". The 336 circumstance that the lands adjoined the oil terri- tory was a sufficient explanation and evidently El)er- lein thought that a word to a wise man like Chambers was sufficient. One cannot read this sentence with- out concluding that Eberlein himself believed the lands to be oil lands or escape the conviction that he spoke authoritatively when he attributed to Mr. Kruttschnitt solicitude and predicated that solicitude on the fact that the lands adjoin the oil territory. And these are the lands whose selection was pressed by Dumble. These are the lands examined by Owen, Bumble's associate geologist, as shown by Exhibit 157 and the report or letter of March 25, 1903, and Treadwell's map, Exhibit 115, all of them in the possession of Dumble at the time when Stone says he pressed their selection. It will later appear that Judge W. D. Cornish, vice-president of the Southern Pacific Company and president of the Southern Pacific Railroad Company, was also advertent to the proximity of the selected lands to the oil terri- tory and the import thereof. It is not out of place here to note the fact that counsel for appellants, in his cross-examination of Mr. Kruttschnitt, evidently had in mind the lan- guage of the quoted sentence, as shown by reference to page 3094 of the record where Mr. Kruttschnitt, while the letter in question was in the possession of counsel for appellants and many months before it was produced, disclaimed that he was solicitous about obtaining patent to the lands in suit, thus entering in advance of the joroduction of the letter a denial 337 of the state of mind attributed to him by his subor- dinate ; but the fact remains that the record of IMr. Kruttschnitt's state of mind made by his subor- dinate was contemporary with the events under review, while Mr. Kruttschnitt's testimony was matter of memory of those events eight years after they had transpired. No conceivable motive can be attributed to Eberlein for representing in 1903 that Mr. Kruttschnitt was solicitous and it is evident that he wrote what he understood to be the truth. Cerainly his contemporary declaration, made when there was no motive to do other than speak the truth, stands on a higher plane of credibility than the denial of Mr, Kruttschnitt eight years later when all of the circiunstances combined to influence and prompt a contradiction. It has already been shown that the selection was rejected by the Register and Receiver because of the outstanding suspension of February 28, 1900, and that Chambers had requested that a special agent be instructed by the Commissioner to make an investigation and report. In the letter of Decem- ber 10, 1903, Eberlein, having in mind the suggestion made by Chambers in regard to inducing Ryan to make his report, replied that he was not acquainted with Ryan and that it was a matter for serious con- sideration as to how to approach him ; that it would certainly not do to ask for a report recommending the release of the lands in suit and that in his opinion it would not be politic to ask for a release in any particular district, because Ryan would in all 338 probabilit}^ jump at tlie conclusion that the railroad had some sj)ecial information in regard to that district. These are Eberlein's very words: "jum^D at the conclusion that the railroad had some special information in regard to that district". It is perti- nent to inquire why he entertained such a fear un- less there was basis for it. Eberlein then proceeds to suggest that it might be well to ask the depart- ment to suggest to Ryan that he make a report of so much of the lands within the suspension limits as he had examined up to that tune, since such a report might over the A'ery district involved and would thereby relieve them from the danger of having called particular attention to any locality. Could one employ plainer language to impart guilty knowl- edge and fear of danger? What danger could there be unless there was an effort to do that which was unlawful and wrongful? It is manifest that both Eberlein and Chambers recognized the peril in which they and the selection list would be placed if Eyan's attention were directed to the lands in suit and Eberlein must manifestly have felt that such action would bring about a result opposite in etfect to that desired. Ryan made his first report on Januarj^ 22, 1904, recommending that the lands in suit be relieved from suspension. At the date of this report the appeal taken by the railroad company was still pending in the General Land Office, but on receipt of Ryan's report the order of suspension was revoked Feb- ruary 20, 1904, as to the lands in suit by order of 339 the Commissioner sent to and received by the Eegister and Receiver at Visalia February 26, 1904 (E. 3758). The railroad thereupon abandoned its appeal. Previously, on December 16, 1903, W .F. Herrin, chief counsel of the Southern Pacific and Southern Pacific Railroad companies (R. 1348), who had taken an appeal in behalf of the railroad com- pany, had been notified by Chambers that the lands in suit had been suspended in 1900 because of alle- gations that they contained oil, but that he was endeavoring to have the order revoked and on November 30 had requested the Commissioner to direct a special agent to examine and report on them and had been advised that this was done. The letter from Chambers to Herrin follows : "Visalia Main Line Indemnity List No. 89, Lands in Tp. 30 S., R. 23 E., MDM. "December 16, 1903. "Hon. W. F. Herrin, ' ' San Francisco, Cal. "Dear Sir: — "I have vour letter of the 9th instant, with copy of an appeal taken on behalf of the Southern Pacific Railroad Company from the rejection by the Register & Receiver of the above list, on the ground that the lands were suspended from disposition by Commissioner's telegram of February 28, 1900. "The Register & Receiver in rejecting said list conformed to the rulings of the Department in like cases. "This blanket suspension of February 28, 1900, on allegations that a large area of land in California contained petroleum, we endeavored 340 to have the late Commissioner Hermann revoke, but the best he would do was to direct his special agents to examine and report on all lands within railroad limits in Southern California. We have never been able to learn that any report w^as ever made by special agents. "As to the lands on this list 89, on the 30tli ult., I requested the Commissioner to have an investigation of them made immediately by a Special agent, and on the 10th inst., he advised me that a special agent had been instructed to examine and report on them. On the same day I advised Mr. Eberlein of said action of the Commissioner. "It did not seem advisable to me that the company at this time should take steps to get a hearing as to these lands, for if the special agent reports favorably, the lands would be released from susj^ension without expense to the com- pany, and if, as to any of the lands, his report shall be adverse, it will then be time enough for us to apply for a hearing as to such lands with submission of affidavits in support of our appli- cation. "I will look after this appeal when received at the General Land Office from the Visalia local office. "Yours trulv, (Signed) "D. A. Chambers." (R. 1483-84.) It is to be noted that Chambers, Washington coun- sel of appellants, did not think it "advisable that the company at this time should take steps to get a- hearing as to these lands". On the same date, 341 December 16, 1908, Chambers wrote a letter to Eber- lein in which he warned him, if he met Ryan, to merely say that it wonld be acceptable to the company if Ryan would make a speedy report (R. 1484-5) — a warning in line with fears expressed in a previous letter from Eberlein to Chambers, already noted, to the evident effect that Ryan might discover the ulterior motive that underlaid their desire to secure these lands. January 13, 1904, Chambers again wrote Eberlein a letter in which he referred to the latter 's letter to him of January 6 in which he was taken to task for calling the attention of the Commissioner spe- cifically to the lands in suit ; for Chambers says : "I received your letter of the 6th instant, in which you say that my action in respect to the lands in the above list 89 has not been in accord- ance with your suggestion in your letter of the 10th ult." It is evident that this was the letter in which Eberlein, fearing that to do so would result in the discovery by the Commissioner of the real reason for which they were desired, warned Chambers not to ask for a special report upon the lands in suit. Chambers continues: "Please bear in mind that these two requests for the examination of specified lands by a special agent were made and the action of the Commissioner taken before I received your letter of December 10 to which you now call atten- tion. Since the receijDt of your letter of the tenth of December I have not made and shall not make 342 any request for examination by a special agent of any of the suspended lands within the grant of the railroad company, unless you so request." (R. 1487.) Further along he writes: "If I had know^n your views when writing my letter of October 7 and November 30 to the Commisioner, I could have made said letters conform thereto and asked action upon all suspended lands without specification of any. But the Commissioner's letter of December 10 to special agent Ryan^ which, confidentially^ I have been allowed to read, suggests that he now report whether there is any necessity for the continuance of the suspension of any land in three districts ; and this is apparently the kind of official action that you desire." (R. 1488.) It has already been pointed out that Mr. Hoehling was subpoenaed to produce all the correspondence between Chambers and Eberlein and it is significant that this letter of January 6, referred to in the fore- going letter, in which Eberlein evidently chided Chambers for his indiscretion in directing the attention of the Commissioner to the lands in suit, was not produced. Because section 29 of the lands in suit w^as in- advertently omitted in the order revoking the sus- pension of the lands from disposition, the Com- missioner decided to relieve it also and that fact was reported to Eberlein by Chaml)ers on February 13, 1904 (R. 1490-1). 343 By letter of March 8, 1904, Eberlein called Cham- bers' attention to some error in selection list 89 of the lands in suit. This letter was not produced by appellants and is not in the record, but it is clear from Chambers' letter to Eberlein of March 15, 1904 (R. 1495), which is in terms a reply thereto, that Eberlein again urged prompt attention to the patenting of the list. In this reply Chambers prom- ised that he would give due attention to the patenting of the list, but that he could not make any progress with it until the May returns from the Visalia office had been received; and Chambers advised Eberlein not to submit a new list because of the great amount of trouble which they had had with the pending list (R. 1497). This letter was written seven days subsequent to a personal visit made by Eberlein to Chambers in Washington, as is shown by the fact that a telegram from Eberlein to Stone of March 8, 1904, was produced from the letter-press of D. A. Chambers by his successor, Mr. Hoehling (R. 1492-3). It could not have been in Chambers' letter-press unless it was sent from his office by Eberlein. That document is as follows: "Telegram: "March 8, 1904. "George A. Stone, "Land Department Southern Pacific R. R., "Wells Fargo Express Bldg., "San Francisco, Cal. "Referring to your letter February 29th to Mr. Chambers regarding Visalia Indemnity List 344 eighty-nine : Do not wait on motion of Register and Receiver at Visalia, but take active steps to have list eighty-nine approved as directed by Commissioner's letter. Notify Mr. Chambers by wire and by letter of date of approval of Register and Receiver and date when they returned the list to the Commissioner. Act promptly. (Signed) "Charles W. Eberlein." "D.H. 2083 (R. 1493.) This brings the record down to March 22, 1904, when special agent Ryan submitted an additional report involving all of the lands which he had been originally instructed to investigate, 45 townships including the lands in suit, in which report he recom- mended that all lands on which there were no oil wells producing oil in paying quantities be relieved from suspension (R. 1560-1-2-3-4-5-6-7). Thereafter the railroad company through its land agent on June 20, 1904, again submitted a false and fraudulent affidavit in support of its application for selection of the lands in suit (R. 1572-3). This affidavit was tendered with a new selection of the same lands (R. 1572-3) and it was made after the Register and Receiver had required publication of the list because within six miles of mining claims (R. 3776-7). Following is the affidavit: "City and County of San Francisco — ss. "State of California, "Charles W Eberlein, being duly sworn de- poses and says that he is the acting land agent 345 of the Southern Pacific Eailroad Company, that the lands selected by the Southern Pacific Rail- road Company for patent in its Visalia Indem- nity Limits List No. 89 have been carefully examined by the agents and employees of said Company as to their mineral or agricultural character, and that, to the best of his knowledge and belief, none of the lands returned in said List No. 89 are mineral lands. (E. 1572-3.) (Signed) "Charles W. Eberlein. The new list No.. 89 of June 20, 1904, was for- warded by the Register and Receiver to the General Land Office on July 14, 1904, and received at the General Land Office July 20, 1904 (R. 1572-3; 3776-7). It has already been shown herein in connection with the History of List 89, at pages 5 et seq. of this brief, that a third list was filed September 6, 1904, because of failure of the former list to conform to the regulations of the General Land Office in the matter of assignment of base lands. Accordingly, on August 31, 1904 (R. 3850-1), another non-mineral affidavit was made and sworn to by Eberlein as acting land agent and, accompan3dng the new and revised list, was filed with the Register and Receiver on September 6, 1904 (Exhibit 12-R; R. 3772). The affidavit in question follows: "(10-22-03-100) Form 3304. "State of California, "City and County of San Francisco— ss. "Charles W. Eberlein being duly sworn de- poses and says that he is the acting land agent 346 of the Southern Pacific Railroad Company, that he has caused the lands selected in said Com- pany's List No. 89 to be carefully examined by the agents and employees of said company as to their mineral or agricultural character, and that to the best of his knowledge and belief, none of the lands returned in said list are mineral lands. (Ink handwriting) "Charles W. Eberlein. The Kern Trading and Oil Company lease. The eyidence now to be reyiewed will show that on August 2, 1904, a lease transferring to the Kern Trading and Oil Company, organized as the fuel dej^artment of the Southern Pacific Company, 35,600 acres of oil lands including one section in the yery township in which the lands in suit are situate and actually adjoining the lands then under selection but not yet patented, was presented to Eberlein for execution in behalf of the Southern Pacific Eailroad Company. It was executed in his presence by C. H. Markham (R. 1100) in behalf of the Kern Trading and Oil Company of which he was president, he being also general manager of the Southern Pacific Company. Eberlein at once recognized the anoma- lous position in which the execution of such a lease for oil purj^oses would place one who had signed and tendered a non-mineral affidayit in support of a selection of lands adjoined by the lands thus sought to be transferred for oil deyelopment purposes. He noticed the signature of E. T. Dumble, the Southern Pacific geologist; endorsed on the lease and certify- 347 ing to the correctness of the description of the lands described therein (R. 1100). Eberlein stated that Dmnble's certification was a surprise to him, since he did not know that Dumble knew anything at all about the grant lands of the Company (R. 1140) and aroused in his mind a suspicion that Dumble had knowledge of the lands which he, Eberlein, did not have (R. 1307-8). This was four months before the patent was issued and while the application was under consideration in the Land Office; and it is evident that the impression that Eberlein meant to produce was that Dumble knew that the lands in suit were oil lands, but that he, Eberlein, did not know it. The fact, however, that this testimony was given by Eberlein a year prior to the production in evidence of his letter of December 10, 1903, to Chambers, the Washington attorney of the Southern Pacific inter- ests, and before Eberlein had any knowledge or sus- picion that its contents would ever be disclosed in this suit, is significant. In that letter, it will be re- called, it appears that Eberlein knew the oil char- acter of the lands in suit eight months before the lease in question was tendered for his signature or certainly, at least, that he was particularly anxious about them and that Mr. Kruttschnitt was very solicitous about them because they adjoined the oil territory. It would be difficult to conceive why the proximity of lands to oil territorv would be the occasion of anxiety or solicitude to secure them unless that proximity imported that the desired lands were of 348 like character with the oil territory. Accordingly, it may be safely asserted that, while Eberleiii sought to convey the impression that Bumble's connection with the Kern Trading and Oil Company lease aroused a suspicion in his mind that Bumble knew something that he, Eberlein, did not know, as a matter of fact it merely added fire to a flame which had been lighted as far back as December 10, 1903. At the time when on August 31, 1904, Eberlein filed the third and last non-mineral affidavit, he had had in his possession for nearly a month the lease to the Kern Trading & Oil Compan}^, already exe- cuted in behalf of the fuel department by Mr.' Mark- ham and awaiting signature in behalf of the Southern Pacific Railroad Company. It is evident that Eberlein refused to sign the lease because the lands sought to be conveyed for oil purposes were adjoining and interspersed with the lands then under selection and he was apprehensive lest the execution by him of the lease, at the time when he was swearing to the non-mineral character of the lands in suit, would, if made public, result in the conviction that he had filed a false and fraudulent non-mineral affidavit. Of the large area of oil lands 2oroposed to be thus transferred 25,000 acres were situate adjacent to the lands in suit and stretched along the eastern base of the main chain of moun- tains from a point northwest of McKittrick as far southeast as Sunset and scattered along which at that time were 281 producing oil wells. Notwith- standing these confessed suspicions of Eberlein, 349 which subsequenth' led to a series of letters which will be set out, he on August 31, as already noted, executed the non-mineral affidavit in support of the selection list on which the assailed patent finally issued and tendered it to the Register and Receiver at Visalia w^ho received it on September 6, 1904 (R. 3772). Co-incident with these events and ]3roceedings in the railroad and local land offices there was a con- versation in the field to which Josiah Owen was a party which confirms the charge of fraud. S. P. AYible testified that "just about the tune of the selection" Owen told him that, if the railroad com- pam^ selected the lands in township 30-23, it would be selecting mineral lands which he had reported to it as such (R. 324-5). This, then, was the situation: Although he had made no examination of the lands in suit, although he himself had caused none to be made by others, although he susi3ected that Dumble, Southern Pacific geologist, knew something about them that he didn't know, although he was apprised that the lands ad- joining and in the immediate vicinity of the lands which he was attempting to select had been included in a lease to an oil development company and al- though he had been strenuously protesting against such a thing because of the damning character of the evidence which it would create, Eberlein on August 31, nevertheless, again coimnitted himself under oath to the false and fraudulent statements contained in 350 the last of the three non-mineral affidavits. Great must have been his particular anxiety and great must have been Mr. Kruttschnitt 's solicitude thus to have forced him to assume such risks ! Great, too, must have been the prize involved in securing* lands tvhich adjoined the oil territory! Alarmed by the attempt of General Manager Markham and his other superior officers to force through this lease with consequent stultification to him, Eberlein on September 3, 1904, addressed a letter to Judge W. D. Cornish, vice-president of the Southern Pacific Company and president of the Southern Pacific Railroad Company, in v^hich he very boldly announced his apprehension of the possible discovery by the United States Land Office of the fraud then in process of perpetration. The letter which was received in due course by Judge Cornish and subsequently became the subject of a confidential and personal conference in New York between the writer and the addressee follows : "Dictated. "Personal. "September 3, 1904. "Hon. W. D. Cornish, "Vice-President, Southern Pacific Co., "120 Broadway, New York. "Dear Sir: "As you are aware, the Kern Trading & Oil Company has been organized. "I am totally in the dark as to the objects, rights, etc., of this corporation. I have asked for information several times, but it has never been furnished me. / iras told in a 351 general tvay that this company teas organized for the purpose of taking over the oil lands of the Southern Pacific Railroad Company and operating same. A lease has been made for the term of ten j^ears from the first of Jan- uary, 1904, with a renewable term of the same period. The lease is made by the Southern Pacific Railroad Company to the Kern Trad- ing & Oil Company and covers all the lands now in the ownership of the company that either are or are supposed to he oil hearing. The consideration for this lease is a royalty of one-tenth of the gross product, or, 'one- tenth of the gross amount of moneys received from the sale of said minerals, substances and products'. This lease was concocted without any reference to me, and it has now been sent over for me to execute on behalf of the South- ern Pacific Railroad Company. "I don't know that there is any particular objection to it, as perhaps one-tenth of the product mav be fair. The company now re- ceives one-fifth in some cases and in other cases one-eighth, and this is at a still lower rate. However, I do not object to that. ''I am, however, somewhat slow about sign- ing this document and tying the railroad com- panv up for a series of years. Of course, I know that it is for the benefit of the Southern Pacific Company, but there is one feature which seems to me to be important. Inas- much as the lease is made by the Land Depart- ment, and the head of that department is taking the responsibility therefor, it does not seem proper that the Southern Pacific Rail- road Companv shall have nothing to say m regard to the disposition of its royalty oil. The lease provides that the oil may be sold and the one-tenth of the moneys received be 352 turned over to the Land Department. It leaves the matter entirely in the management of the Southern Pacific Compan}^ or the Kern Trading & Oil Company, I don't knov^ which. In all events it is possible for some man not connected with the Land Department, nor with the Southern Pacific Railroad Company, to make a price on royalty oil belonging to the railroad company and sell it. There is no pro- vision in the lease that the price to be received, in case the oil is sold, shall be the market price, or any other price. You can see that there is a wide open door for the disposition of the Land Department property at ruinous prices, thus depriving the Land Department and the bond holders of a fair return for their property. "I feel that it is incumbent upon me to look somewhat into this instrument and into the future. I know that it is hardly probable but still it is possible that the control of this oil company may by some contingency pass out of the present hands, and if it should fall into hostile control the railroad company would get very much the worst of it. "As I have already stated, this matter has been hatched for my signature without sub- mission to me or without consultation. I know the answer, in case the question was raised, would be that it is all a family matter and that I need not concern myself about it. ''However, I take it that you are somewhat interested in this matter, and 1 want your ad- vice as to what you think would better be done to protect us against future complications. Do you think it would be wise and expedient and would it serve the purpose of protection if I were to demand action of the Board of Directors of the Southern Pacific Railroad Company 353 ratifying and confirming the lease as it stands and directing the land agent to sign the lease? "It seems to me that some such action is not only desirable but necessary, inasmuch as it conveys control of the most valuable lands in the grant for a long term of years. "This lease has been lying here for some time during my absence and 1 may be called upon for it at any time. I would therefore esteem it a great favor if you would give me any sug- gestions you may have by wire. "I can stave off the delivery of this document for some time yet, I think, for the reason that if the knowledge of this lease heeame puhlic property it will prohahhj eause us a great deal of trouble in the United States Land Office, and nianj result in the loss of a large hodij of ad- jacent lands which may hereafter turn out to he mineral and oil bearing. "I found on taking charge of this office that a large body of our lands, especially Indemnity lands in the Coalinga, McKittrick*^ and Sunset fields, had been withdrawn by the United States from entry, pending examination as to their mineral character. "I have worked very hard and very steadily to get the United States to complete its report and dispose of this matter. I have just suc- ceeded in getting the special agent in charge to make a report releasing our land from inter- dictment. ''If it becomes known that we have executed a lease of lands interspersed with those already under selection by us, and that the lease is for oil purposes, it seems to me that it will im- mediately encourage oil speculators to file upon the lands so selected and that the government will have good ground for refusing patent, inas- 354 much as tve liave practicallij fixed the mineral status of the land by this lease. "Yours very truly, (Signed) "Charles W. Ebeiiein, JEH "Acting Land Agent." (R. 1075-6-7-8-9.) The reading of the foregoing letter written Sep- tember 3, 190-i, while selection list 89 was pending before the United States Land Office, can leave no basis for doubt that Eberlein, who wrote the letter, and Judge Cornish, the very head of land affairs, who received it, appreciated exactly what the real situation was. What possibly, other than that he understood the purpose of the selection and the character of the lands, could Eberlein have meant in saying: ''If the knowledge of this lease became public property it will probably cause us a great deal of trouble in the United States Land Office and may residt in the loss of a large body of adjacent lands tvhicli may hereafter turn out to be mineral and oil-bearing f When testifying as a witness, Eberlein freely admitted that this language un- doubtedlv referred to the lands then under selection and now in suit. The significance of this letter is accentuated by the fact that it is one of a series of letters and documents which Eberlein was compelled by the government to produce under subpoena duces tecum, these letters and documents having been kept by him apart from the general files for the protec- tion of himself and Judge Cornish, as already shown. It has also been shown that Judge Cornish, to whom 355 the letter was addressed, was Eberlein's chief in land matters, a fact also shown by the testimony of Mr. Kruttschnitt already set out that, when Stone's threatening letter was received by him, he referred it to Judge Cornish who was the head of land affairs. In addition to the letter in question and others to follow, Eberlein had frequent conversations with Judge Cornish and C. H. Markham in which he protested and pointed out the effect which would be produced in the United States Land Office by the activity of Mr. Dumble and his geologists in the examination of unpatented lands ; and this occurred at the very time when the lease was under consider- ation (E. 1091-2). In the case of Cosmos Explor- ation Company vs. Gray Eagle Oil Company, supra. Judge Ross declared that if the parties, instead of filing the non-mineral affidavit, had represented to the local land officers that they at least believed the lands there in suit to be oil lands, it could not be doubted that their selection would have been promptly rejected. If in the instant case Eberlein, upon whom the responsibility was devolved both by the law which required that the non-mineral affi- davit be executed by the land agent and by the reso- lution of the board of directors of the Southern Pacific Railroad Company appointing him acting land agent, had, upon being apprised of the purpose to convey lands adjoining the lands in suit to an oil development company, made that fact known to the United States Land Officers instead of recklessly and falsely representing to them that he had caused an examination of the lands to be made and that 356 they were non-mineral in character, can it be doubted that the selection list would have been rejected and the assailed patent would never have issued and the institution of this suit would not have been a neces- sity? What he in e fleet said was: "I swear that these lands are non-mineral", in saying which he mani- festly did not speak the truth. Giving him the benefit of every doubt and assmning that, when the first non-mineral affidavit was made, he knew noth- ing whatever about the character of the lands in suit, yet, when he did learn of facts which put him on notice, having put his hand to the plow he would not turn back — having started out to secure patent to the lands in suit and having sworn that they were non-mineral, he shows both by his correspondence and his testimonj^ that his purpose was to carry the enterprise through to the end notwithstanding any knowledge that might come to him. It is manifest that, when he initiated the proceed- ings intended to eventuate in patent to the lands in suit, Eberlein was bent upon the success of his effort regardless of the real character of the se- lected lands and, as in the Diamond Coal & Coke Company case, "without care as to the means". This is clearly shown by the fact that he falsely swore that he had caused an examination of the lands to be made for the purpose of determining their char- acter when in truth he had not done so. He testified as a witness that he knew nothing of them and yet 357 as acting land agent lie swore that they were non- mineral. However this may be and while it is by no means conceded that he had no guilty knowledge at the time of filing the first non-mineral affidavit, yet, on the other hand, if for purposes of argument it were admitted that he was ignorant at that time of their true character, it is manifest that on Sep- tember 3, 1904, when he wrote his "personal" letter to the chief, Judge Cornish, he realized the mineral character of the lands in suit and stated in the con- cluding paragraph thereof that the fact of the execution of the lease to the Kern Trading & Oil Company and what it imported constituted ''good grounds for refusing patent inasmiicli as we prac- tically fix the mineral status of the land". It is manifest that, since there were "good grounds for refusing patent", he was under the solemn duty of making those grounds known to the United States to whose officers he had sworn in effect that there w^ere not good grounds for refusing patent. The only "good grounds for refusing patent" would be the mineral character of the lands, since such were the only lands excepted from the operation of the granting act; and the sole question involved in the application for patent was the character of the lands. In this connection attention is again invited to the resolution of the board of directors of the Southern Pacific Railroad Company appointing Eberlein acting land agent by which he was "fully authorized and empowered to represent this com- pany in the United States Land offices or before the officers thereof" (R. 1038-9). There can remain' 358 no doubt that on September 3, 1904, three months before the patent issued, Eberlein had notice and knowledge of the mineral character of the lands in suit and that his notice and his knowledge consti- tuted notice and knowledge to the Southern Pacific Railroad Company and that every act done by him in support of the selection of the lands in suit was, by reason of the resolution in question, the act of appellants. Two days after mailing the foregoing letter to his chief in Xew York Eberlein transmitted the third and last non-mineral affidavit to the Regis- ter and Receiver at Visalia. If, instead of trans- mitting a false oath as to the character of the lands in suit, he had made known to the Register and Receiver what he had made known to Judge Cornish, the assailed patent would never have issued and the govermnent would never have been under the neces- sity of instituting this suit; and apj^ellants will hardly suggest that Eberlein had the right to with- hold from the United States any information which he received during the pendency of the proceedings which resulted in patent. The legal effect of with- holding material information concerning the true character of lands sought to be patented is the same as oifering false evidence. Eberlein did both. Although in the foregoing letter Eberlein had stated that he would esteem it a great favor if Judge Cornish would give him any suggestion he might have by wire (R. 1078), he received no answer either by way of letter or telegram (R. 1212). Judge Cornish ''never would go on record about anything 359 hj letter if he could possibly avoid it" and, as a con- sequence, Eberlein said that he spent a great part of his time running back and forth between San Francisco and New York, spending half of his time in the latter place (E. 1243). Consequently Eber- lein went to New York late in the Fall or early in the Winter of 1904 and held a conference with Judge Cornish about the subject matter of the letter in question (R. 1125-6). It is best to let that con- ference be related in the Avords of Eberlein himself and accordingly the questions and answers from the transcript are here given: *'Q. Now, will you relate, as nearly as you can recollect, what the substance of the con- versation was with Mr. Cornish with respect to what I have read from that letter, Mr. Eberlein ? Before entering upon that, may 1 ask you whether you took with you at that time this attempted lease which has been introduced in evidence and such correspondence as has also been introduced? u A. Yes sir. "Q. Saved bv you from the conflagration of 1906? "A. Yes sir. This matter was taken up by Judge Cornish and myself and discussed at that time. *'Q. Did you talk over that phase of the letter, specifically, which reads as follows: 'If it becomes known that we have executed a lease of lands interspersed with those already under selection bv us and that the lease is for oil purposes it seems to me that it will immediately encourage oil speculators to file upon the lands so selected and that the government will have 360 good ground for refusing patent, inasmuch as we practically fix the mineral status of the land by this lease.' *'A. Yes; we discussed all phases of the matter and agreed as to the imjDropriety of a lease at that time. "Q. The lands referred to by you in that letter, I believe you stated once, were the lands in suit in township 30 South, Range 23 East, Mount Diablo Meridian? "A. I understand now the lands in suit are the lands covered by that selection list 89 ? "Q. Yes sir. ''A. Yes sir. ''Q. And those were the specific lands to which you referred in your letter and in your conversation which occurred with Mr. Cornish? a A. Must have been. " Q. Now, state, as nearly as you can recollect, what conversation you had with Mr. Cornish about the execution of that lease? a 'A. We took this matter up with all the papers; looked them through, and I asked him what he wanted done with them and he was very positive in his instruction that I was not to sign it or to recognize it. He considered it an improper lease to be made, having reference to the selection list of lands in the immediate neighborhood. He furthermore told me that I was to keep all those papers in my own posses- sion, so that they might not be in the office where they might be considered as going where anyone would have any knowledge of the docu- ment, so that it could not be acted upon in some way during my absence ; that is, he particularly cautioned me against the approval of those 361 vouchers whieli were beginning to come in at that time for pipage. "Q. Well, did he, at that time, instruct you positively to keep the papers which have been introduced, constituting the correspondence be- tween yourself and other officials of these roads, and have them filed separately from the other files of the Land Department of the Southern Pacific Eailroad Compan}^? "A. His instruction was that I was to keep those to myself. He said they might hereafter be necessary for my protection. They have been kept by me ever since — and incidentally for his own protection. "Q. Did you and Mr. Cornish at that time recognize any troulDle which might arise in the future from the making up there of those docu- ments ? a 'A. We naturally recognized at least the very ambiguous position in which we would be placed, both of us, by that lease, if that lease were made — and especially if I made the lease, I having also made the selection list which was at that time unapproved. "Q. That is, it had not gone to patent? ''A. It had not gone to patent. It had been apj^roved but not patented. "Q. And in support of that selection list re- ferred to by you which has been introduced in evidence, you had made the usual non-mineral affidavit^ testifying under oath that the lands, so far as you laiew, were non-mineral in char- acter ? "A. Yes sir. "Q. Now, did the fact that you had made that non-mineral affidavit and the further fact Q 62 that the lands were in process of administration in the Land Department of the United States, and no patent havino^ issued, give you notice of the trouble which would ensue if you executed that lease? "A. I don't know as I understand that ques- tion exactly; but I simjDly state, as I have already stated, that the fact that I had made a non-mineral affidavit covering a large selection list, in perfect good faith, believing the fact to be as set forth in that non-mineral affidavit, it didn't seem good policy, to say the least, for me to turn around and make a lease of lands which were in juxtaposition to these same lands, and I believed, and Judge Cornish believed thor- oughly, that it might give rise to trouble. ''Q. Now, what trouble would you expect from that and what trouble did you have in mind ? "A. Naturally would expect that if the lease was made at that time, with those lands mixed up as they were, or adjacent, that the govern- ment of the United States, having in mind that they were very active about that time in nosing into everything that affected railroad lands, would be very apt to call that lease at least in question and make effort, at least — or hold it up or entirely knock it out. "Q. In other words, to completely preclude the possibility of the Southern Pacific Railroad Comi^any acquiring title under that list? 'A. Yes, very probably would." u It has already been related that in the Fall of 1907 Eberlein met Judge Cornish in the latter 's private car leaving Ogden and that at that time Judge Cornish, ])eing under the impression that the 363 papers and correspondence relating to this fraud liad been destroyed in the San Francisco fire of 1906, told Eberlein that he had destroyed his file of that correspondence. For some reason which does not appear Eberlein did not at that time inform Judge Cornish that this incriminating correspond- ence had been saved from the fire and Judge Cornish died in the belief that none of these papers had sur- vived the flames. September 10, 1904, seven days after the date of his famous letter to Judge Cornish and a little more than a month after C. H. Markham, general manager of the Southern Pacific Company and second vice-president of the Southern Pacific E ail- road Company, had presented the proposed lease to the Kern Trading & Oil Company to Eberlein for his signature, Eberlein, the lease being still un- executed by him. addressed a letter to Mr. Markham in which he w^arned him that he had selected in behalf of the railroad the lands now in suit and had represented them to be non-mineral in character (R. 1053-4-5-6). This letter, so far as it is here pertinent, reads as follows: "In addition to this there is a very urgent reason for delaying the execution of these pa- pers. We have selected a large body of lands interspersed with the lands sought to be con- vej^ed by this lease and which we have repre- sented as non-mineral in character. Should the existence of this lease become known it tvould go a long wajj toward establishing the mineral character of the hoids referred to and which are still unpatented" (E. 1055-6). 364 This letter is a contemporaneous record made by Eberlein himself at the very time when he was swearing to the non-mineral character of the lands in suit and demonstrates his knowledge of the sit- uation and of the real character of the lands in suit. It will be remembered that throughout this time and for years subsequent Professor Dumble, the Southern Pacific geologist, was frequently "butting in", as Eberlein expressed it, on lands within the Southern Pacific Eailroad Company's grant which were still unpatented (R. 1043). Dumble kept up this practice of making geological examinations of unpatented lands within the grant to the Southern Pacific Railroad Companj^ — a custom established by Treadwell several years previously (R. 3471) — his only conceivable purpose being to determine their mineral character, over the continuous objection of Eberlein until it resulted in a vigorous letter written by Eberlein on February 22, 1908, to Henry Conlin, his assistant land agent. This letter reads as fol- lows: "Feb. 22, 1908. "Mr. Conlin: "The New York office has forbidden the eiv- ing out of any more printed lists of lands be- cause of the unsatisfactory condition of our titles which must not be disclosed. The exami- nation of our S. P. lands not yet patented by our oil experts must be stopped as information that they may obtain or give as to mineral char- acter prior to patent will forever prevent our getting title. Should Mr. Calvin (^all for any lists please take this memo, to him and explain our situation and refer him direct to the New 365 York office. Please advise liim too of the press- ing necessity of tlie return of lists sent in a year ago for entry of lands to be resented for company purposes. Mr. Dimible and Ms men should not be furnished b}^ us with any data whatever except as to patented lands. For reasons above given such information will be embarrassing to them and us and may make them witnesses against this company in mineral contests hereafter. (Signed) "Chas. W. Eberlein, "Acting Land Agent." (R. 1904-5.) The "New York office" reference was to Judge Cornish who, it has been heretofore shown, exer- cised authority in land matters (E. 1095-6). Eber- lein explained that Bumble's examination of un- patented lands was at the date of the letter a con- tinuation of conduct begun in 1903 and that the letter was a continuation of his, Eberlein 's, re- peated protests (R. 1097-8). He had protested to Judge Cornish, as also to Mr. Markham, to whom prior to patent he had pointed out that "people acting without any kind of knowledge of what they were doing, without any refernce to the selection list of the company, without any reference to whether the lands were patented or even surveyed —that it would charge the company with notice". He claimed that it did not charge him with notice, "hut it certain] ij would he the grounds on ivhicli to get in and protest the patents or protest the lists and so the fact turned out to he" (R. 1092-3). It thus appears that in 1904 Eberlein foresaw the 366 trouble that was in store and made a prediction wliicli had its fulfilhnent in the institution of this suit. After the lease had been submitted to him on August 2, 1904, Eberlein left for Denver (E. 1191) and on August 4 wired his assistant, George A. Stone, that no land would be for sale at any price and instructed him to hold the lease until his re- turn (E. 10-18). On August 5 Stone informed Markham that Eberlein had gone to Denver and would take up the matter of the lease immediately upon his return (E. 1019). September 5, 1901, ]Markham wrote Eberlein acknowledging receipt of Stone's letter of August 5 and asking when he might expect the lease. This resulted in Eber- lein 's warning of September 10, 1901, the letter al- ready referred to (E. 1053-4-5-6). September 19, 1904, Dmnble wrote Markham a letter in which he returned Eberlein 's letter of September 10 to Markham (E. 2950-1). Dumble's letter shows clearly by its references that he had carefully read the letter from Eberlein to Mark- ham and he admitted that it was the letter re- ceived bv him from Mr. Markham with the latter 's letter of September 15, 1904. AVhether it was ident- ical with it or not he stated that he could not say "after this lengih of time" (E. 2951); but he did not remember the most material parts of it, es- pecially the damaging and incriminating portions (E. 2951-2). Dumble's testimony at this point 367 leads to one of two conclusions : either that his fail- ure of memory was most convenient or that Mr. Markham, in sending him a copy of Eherlein's letter, ^^I'^^^l^iitly deleted the incriminating jdo^'- tions, a presumption not easily indulged. Following the letter of September 10, 1904, from Eberlein to Markham and the continual verbal pro- tests made by the former against Dumble's activi- ties in the examinations of unpatented lands, on October 5, 1901, Dumble requested by letter an in- terview with Eberlein evidently for the purpose of discussing the bearing of the proposed lease upon the selection list then pending before the Register and Receiver at Visalia. To that letter Eberlein replied : ''October 7th, 1901. ''Mr. E. T. Dumble, ' ' Consulting Geologist "Bldg. "Dear Sir: "Referring to your note of Oct. 5th, I beg to say I will be glad to take matters up with you as suggested any time tomorrow that will be convenient to you. I would suggest that you might find it more convenient to come to room 71 where we can have a room to ourselves and not be disturbed. If, however, you prefer I should come to your room, please advise me. "Yours truly, (Signed) "Charles W. Eberlein " 'Donaldson' "Acting Land Agent." "Compared bv: H. K. "L. A. (R. 1065-6.) 368 Immediately following this conference Eber- lein, throngh his assistant Stone, on October 8, 1904, forwarded to Dumble ''plats showing the statns of lands within the Southern Pacific Railroad grant in" certain townships including the town- ship containing the lands here in suit (R. 1067). Following this conference between Dumble and Eberlein in room 71, the former on December 7, 1904, wrote the following to Mr. W. H. Bancroft, acting general manager of the Southern Pacific Company : ' ' Southern Pacific ComiDanj^, "San Francisco, Cal, Dec. 7, 1904. "Mr. W. H. Bancroft, "Acting Genl. Mgr., City. "Dear Sir: — "In connection with our correspondence re- garding the transfer of property to the Kern Trading & Oil Company, I have had a conver- sation with Mr. Eberlein and it scetns for rea- sons of policy regarding certain unpatented lands that it will he best not to execute the lease of lands hettveen the S. P. B. R. Co., and the K. T. & 0. Co., at present. "I would, therefore, suggest that the papers covering the transfer of property from the S. P. Co., to K. T. & O. Co., be executed and that the lease of lands in the McKittrick and Coa- linga districts from the S. P. R. R. Co. to the K. T. & O. Co. be held up for the present. "Yours very truly, "D-R (Signed) "E. T. Dumble." "CC-C. W. E. "Compared bv: H. K. "L. A." (R. 1072-3.) 369 The notation at the bottom of the letter ''CC-CWE" indicates that a carbon copy of that letter was sent to C. W. Eberlein. In this letter it clearly appears that Dumble had been advised by Eberlein that it would be im- politic, in view of the pendency of selection list 89, to execute the lease to the Kern Trading & Oil Company. The letter points to the falsity of Bumble's testimony denying knowledge of the min- eral character of the lands in suit and shows be- yond question that he concurred with Eberlein prior to the issuance of patent in the policy of concealing from the United States' land office the truth as to the lands under selection. This is confirmed bv another letter of Mr. Dumble dated March 15, 1907, and addressed to Eberlein in w^hich the former re- viewed certain facts in connection with the selec- tion of the lands in suit. Eberlein consistently re- fused to recognize any rights of the Kern Trading & Oil Company in the lands embraced in the pro- posed lease which he had never executed. He therefore carried things to the extent of denying knowledge regarding the lease, so anxious was he to avoid the stultification which would arise from his course in representing the lands in suit to be non-mineral when he had notice of the purpose to lease lands lying around them for oil development purposes. In 1907 it served Dumble 's purpose to attempt to refute Eberlein 's denial of knowledge concerning the lands and accordingly he wrote a letter to him in which he called attention to certain 370 correspondence between various officials of the Southern Pacific Company and the Southern Pa- cific Railroad Company and among other things reminded Eberlein as follows: "The matter of differences in the land I took up with you personally and under date of Oc- tober 8, 1904, you sent me corrected maps showing exactly what lands were to be covered by the lease as drawn. Early in December we had a further conference on the matter and you explained that you were rushing certain lands for final patent and that the immediate execution of the lease showing our idea' of ivhat were oil lands might interfere with you and we agreed to defer the execution until thai danger tvas passed. On December 7, 1904, I wrote Mr. Bancroft explaining this and suggesting that the lease be held up temporarily, the pa- pers having been approved by all concerned and being in the hands of the management, I considered that I had nothing further to do with them." (R. 2957.) In this letter, written five years before this suit was brought, Dumble put it on record that he and Eberlein prior to patent discussed the "danger" of the situation and were in agreement that the pro- posed lease to the Kern Trading & Oil Company showed Bumble's idea of what were oil lands; and, when it is remembered that a part of these lands were in the township containing the lands in suit, it is evident that Dumble shared Eberlein's appre- hension that, if the facts tvere made known to the Land Office, patent wotdd be denied. He was so convinced of this situation that he ivrote the acting 371 general manager and suggested that the lease he held up temporarily. Reverting for the moment to the conference be- tween Eberlein and Judge Cornish in New York: Eberlein testified that in their conversation they discussed the effect of the Kern Trading and Oil Company lease upon the pending applications. Said Eberlein: "That was the thing that was more interesting to him than anything else. I don't think he bothered himself about these details that I mentioned. I think he thought that was a matter to leave to the gentlemen in charge here. But as to that matter, he was very positive" (E. 1246). Nothino' could more clearlv show Eberlein 's state of mind than his own testimony as recorded on pages 1249 and 1250 of the record where he said, referring to the Kern Trading & Oil Company lease : "If what indirect information I had was correct, the lands were to be transferred to an oil development company, and what I refer to here, badly expressed as it is, is my fear that the government would take the very narrowest view possible of the situation and simply say 'here you, the land agent, land officer of the Southern Pacific, are making the lease of these lands h'ing here to an oil development com- pany and at the same time you have got an application for lands non-mineral lying ad- jacent'. I simply say that my experience with the Department has always been that it takes very much less than that to make them hold things up and perhaps take things away from you, because a railroad company has very lit- 372 tie chance in its dealings with the United States General Land Office." (R. 1249-50.) The "what I refer to here badly expressed as it is" relates to the sentence in his letter of Septem- ber 10, 1904, in which he said : " If it becomes known that we have executed a lease of lands interspersed with those already under selection by us and that the lease is for oil purposes, it seems to me that it will immediately encourage oil speculators to file upon the land so selected and that the government will have good grounds for refusing patent, inas- much as we practically fix the mineral status of the land b}^ this lease" (R. near top of page 1249). It is not surprising, then, that, when asked what he meant when he said "inasmuch as we practically fix the mineral status of the land by this lease", he replied: "That is just it. It raises a presumption and what I was afraid of then I think has been fully confirmed now. It does not say, I don't mean to sa,y, or be understood, that these are oil lands or I thought thev were oil lands. I merelv sav the two acts taken together create a presumption which the government would not be slow to take advantage of" (R. 1250). Is this not tantamount to a confession on the part of Mr. Eberlein of knowledge before patent of the mineral character of the lands in suit? On the trip to New York to confer with Judge Cornish Eberlein testified that he carried the secret 73 files of correspondence with him. For a while these papers were kept in his desk and separate from the general files of the land department of the railroad company because of his fear that dis- coveiT of them might compromise both himself and his superior officer, Judge Cornish, who was re- sponsible to Mr. Harriman and the board of di- rectors in Xew York for land affairs (E. 1256). Eberlein's fear that the papers relating to this transaction would become public property led him always to keep them in his individual possession (R. 1261). When asked whether the file remained constantly in his individual possession he replied: ''Yes sir, until the day it was pried out of me down in Los Angeles" (R. 1272), referring, of course, to the time when under process of court he was com- pelled to produce the contents of it for purposes of evidence in this suit. It is evident from the testimonv that others, subordinates in the land department of the rail- road company, George A. Stone, Charlotte Dorothy Cunningham and perhaps others, were aware of the latent possibilities slumbering in this correspond- ence and the importance of it upon the considera- tion of the pending selection list or in a suit there- after to cancel the patent because of fraud. It was undoubtedly the discernment and calculating in- telligence of George A. Stone, who had, as we have seen, had access to these papers at one time, which turned them to profitable account in his threats of exposure resulting in his pensioning. 374 It is natural that Eberlein should seek to justify Ms own actions ; and it is pert ecth^ plain that it was his policy to appear to know as little as possible about the lands of the Southern Pacific Railroad Company to which he was endeavoring to secure patent. Referring to his letter of February 22, 1908, to Conlin (R. 1094) he said: "You remember the last letter introduced in evidence is a protest of mine against Dmnble examining unpatented lands without any knowledge of or reference to or cooperation with the land department. I think it is a very reasonable thing for any man charged with the duties that I was charged with — the duty of making a non-mineral affidavit on the very best information he could obtain, as I did — to have the feeling that some man examined those lands and charged the company with notice, but without charging me with notice. Now, that is as far, I think, as I can go in this matter" (R. 1038). Again, referring to the same letter, he testified: "O, yes, it is evident from the letter that that is just what I meant — that I, for instance, might make a selection of lands depending on my examination and a trained geoh)gist might have been over the same ground without my knowl- edge and, whether I was right or wrong, I felt that, inasmuch as he was connected with the Soutliern Pacific there might be a chance of a claim that I was charged with notice in some way. I coukl not be; still the claim might be made. It must be remembered that all the time, at least, that I was in the service, it was the ruling of the Department, as I understood it, that surface indications was all that gov- erned in the matter of the selection of lands." (R. 1316.) 375 From the foregoing it is obvious that it was Eberlein's policy to appear to know as little as possible of lands to which he was seeking patent. ^'The duty of makmg a non-mineral affidavit on the very best information that he coidd obtain" was to him an incentive to complete ignorance in- stead of an argmnent for advice and all procurable data. Had he desired "the very best information he could obtain" he might well have turned to Pro- fessor Dumble in the conference in room 71 about October 5, 1904, and asked him to tell him the true character of the lands under selection. He said that he suspected Dumble or the geologists of the South- ern Pacific Company of knowing things that he did not know. Why, when the opportunity offered, did he not take advantage of it and secure from the head of the geologists of the Southern Pacific Com- pany the information so carefully gathered in their examinations of unpatented lands against which he, Eberlein, had so vigorously and so continuously protested ? This leads to the observation that it seemed to be the policy of the high officials of appellants not to let their right hands know what their left hands did. Eberlein says that he had no connection with and got no information from Dumble and the other geologists. Owen told Wible that he had nothing to do with selections (B. 326). Dumble said the same thing (R. 3084). Treadwell also disclaimed (R. 434). If there were any mystery in this case, it would 376 disappear as the light shed by these considerations comes in. The land department and the geological department were separate and distinct. "The Jews have no dealings with the Samaritans." It could not have been mere accident that reports by the geological department never reached the land department. It could not have been mere accident that the geologists of appellants had nothing to do with selections and patents. The reports that they made and the information which they gathered must have had a clearing-house somewhere. All that appears is that it was not in the land depart- ment. It is entirely conceivable that such reports and maps would have proven very embarrassing when it came to making selections and applying for patents. Hence the wisdom of keeping the two departments severely separate and this could only have been accomplished by the act of some official or officials of commanding position and, for that matter, of discerning and discriminating intelli- gence. Even a little knowledge on the part of the land agent might prove a very dangerous thing; and so it was the policy of appellants to foster and nourish his ignorance. Eberlein had a very good idea of the duty cast upon him by his position and by the law and it was no bad formula by which he expressed it — "the duty of making a non-mineral affidavit on the very best information he could obtain". The trouble lies not with the formula, but with the application of it. With Eberlein "the very best information he could 377 obtain" was, tested by the conduct which he as a witness ascribed to himself as land agent, synony- mous with neglect of opportunity to learn and the very highest measure of willful ignorance of which he could be guilty. He knew that Dumble and Owen and Anderson were examining unpatented lands within the limits of the railroad grant — per- haps the very lands which he was selecting for patent; and yet, if he is to be believed, he never sought nor received any information which was theirs to impart. The reason of his pose is plain and inheres not so much in Eberlein himself as in the sj^stem under which he wrought. It is true that Eberlein was called and sworn as a witness for the government ; . but it is manifest that this was ex necessitate. His testimony was in- evitably influenced by the exigencies of the situa- tion in which he found himself. He was the instru- ment of appellants through whom the assailed patent was secured. He it was who signed and filed the selection list; he it was who executed and ten- dered the non-mineral affidavits the falseness of which is so manifest. Called to the witness stand by the government which was seeking to invalidate an instrument secured through his acts and oaths, it is entirely natural that he should strive to justify his conduct and himself. Under these circum- stances he could hardly have been expected to go further in the j)ath of admission than he actually went when, referring to his letter of February 22, 1908, to Conlin, in which his protests against exami- 378 nations of unpatented lands by Dumble and the Southern Pacific geologists reached their culmina- tion, he said: i(.' You remember the last letter introduced in evidence is a protest of mine against Mr. Dum- ble 's examining unpatented lands without any knowledge of or cooperation with the land de- partment. I think it is a very reasonable thing for any man charged with the duties that I was charged with — the duty of making a non- mineral affidavit on the very best information he could obtain, as I did — to have the feeling that some man examined those lands and charged the company with notice, but without charging me with notice. Now, that is as far, I think, as I can go in the matter." (R. 1308.) It may be admitted that that is about as far in the matter of a confession as he could have been expected to go. The strange thing, however, is that he did not realize that the duty resting upon him of "making a non-mineral affidavit on the verv best information he could obtain" laid him under the necessity, if he had reason to believe or even fear that another had made an examination and ascer- tained things that he, Eberlein, did not know, of making inquiry of such person to the end that he might qualify himself to discharge his duty accord- ing to his own formula. He either did not want to be infonned or he did not want to appear to be informed. He did not want to be ''charged with notice"; and it is obvious that, for some reason which will be indicated in a moment, he was irre- vocably bent upon securing a patent, to the lands in suit and bitterly resented and constantly pro- 379 tested against action on the part of others which wonld imperil the enterprise. This is illustrated by the objections and protests just referred to, as well as by his refusal to execute the Kern Trading & Oil Company lease when insistently urged to do so by General Manager Markham. He could not plead ignorance of that lease and all that it un- ported if he signed it — he would stultif}^ himself if he subsequently denied knowledge of an instrument which he himself had executed. He had already filed selection list 89 and the accompanying non- mineral affidavit and, having set his hand to the plow, was unwilling to turn back. His decision was prompt; he declined to be a party to its execution, aj)pealed to his chief in New York, Judge Cornish, segregated and secreted his correspondence with reference to it and thenceforth feigned entire ignor- ance of the whole affair — ^an amazing course for an intelligent being to follow, but absolutely necessan^, as he thought, to clear his skirts of the guilt implied in persisting in representations to the government of the non-mineral character of lands the while "we practically fix the mineral status of the land by this lease". (R. 1079.) If the ostrich is justl}" called a foolish bird be- cause of the habit ascribed to it of burying its head in the sand and assuming that it cannot be seen, how serious and severe must be the condemnation of a human being who takes refuge behind a screen of feigned ignorance while there exist written memo- rials of his knowledge! Eberlein, deciding after 380 conference with Judge Cornish not to execute the lease and following his chief's instructions to re- move the correspondence from the general files, goes forward with his proceedings looking to patent of lands "adjoining the oil territory" and assumes to forget that he ever heard of a lease to an oil de- veloping company of lands lying around those which he was seeking to acquire. As late as 1907 — to be exact, February 6, 1907 — Eberlein wrote a letter to Mr. Seger, auditor of appellants, "denying any knowledge or information of any lease, agreement or understanding made or entered into with the Kern Trading & Oil Company for production of oil on the lands of the Southern Pacific Railroad Company," (R. 2955), thus consistently to the bitter end striving to avoid being "charged with notice". Nor does Eberlein stand alone in the condemna- tion which these revelations merit. His chief, Judge Cornish, while he is not shown to have insti- gated, at least approved his course and himself initiated the counsel of prudence that the corre- spondence be segregated and secreted. In the Fall of 1904 Eberlein had a conference in New York with Judge Cornish concerning the lease (R. 1126). Judge Cornish "considered it an improper lease to be made, having reference to the selection list of lands in the immediate neighborhood". (R. 1127.) At this conference Judge Cornish instructed Eber- lein to keep "those" papers to himself. "He said they might hereafter be necessary for my protec- tion", Eberlein testified. "They have been kept by 381 me ever since — and incidentally for his own pro- tection," he added (R. 1128). Judge Cornish, as alread}- shown, kept his file of "those papers" segregated and secreted. He pre- served them until he believed that the fire of 1906 had destroved Eberlein's file in San Francisco. He informed Eberlein on his private car out of Ogden in 1907 that, since the fire had destroyed Eberlein's copy of the file, he had caused his to be destroyed (R. 1074). For some reason Eberlein did not in- form his chief that he had with great secrecy, aided by George A. Stone, caused copies to be made from the scorched remains of his, Eberlein's, file and, as far as the record discloses, Judge Cornish died in ignorance of the existence of the letters and documents the production of which was compelled by subpoena duces tecu)ii. Is it possible to escape the conclusion that Judge Cornish was not ignorant of Eberlein's fraud and guilt? But the chapter does not end here. Julius Krutt- schnitt is convicted out of his own mouth of no higher sense of duty or obligation than that which Judge Cornish and Mr. Eberlein entertained. At the period of time here under review he was in charge of the affairs of apiDcllants on the Pacific Coast and therefore he may be held to speak ex cathedra. He testified that ''it was none of Mr. Dumble's business to examine unpatented lands; 382 but, if he did so, I think it is quite natural that Mr. Eberlein should object. The assumption that Mr. Dumble did make such examinations is altogether hypothetical; but, if he did so, Mr. Eberlein 's fear of being embarrassed in the land office in getting patents was quite natural. He had had experience of this sort because the land office had in 1900 kept back a large area of lands and delayed patenting them for several years because of suspicions that there was oil in them and after this long delay they finally issued the patents. //' I had known that Mr, Bunible was doing anything of that kind^ I tvotdd have stopped it" (R. 3101). It now becomes mani- fest that the system referred to was endorsed and fostered by Mr. Kruttschnitt himself. It may be said in behalf of Mr. Eberlein that his outlook was naturally narrow and confined to the limits of the. land department whose duty it was to select lands and secure patents to them apparently at whatever cost; but no extenuation can be urged in behalf of Mr. Kruttschnitt. It may be assumed that the land department and geological dejDartment were co- ordinate branches ; but over and above and directing them was Mr. Kruttschnitt himself. Whatever the land department knew and was doing he knew; whatever the geological department knew and was doing he knew. He could not keep his right hand from knowing what his left hand did. The fore- going excerpt from his testimony throws a flood of light upon the question presented by this record. Mr. Kruttschnitt says in effect that, if he had known it, he would not have allowed Dumble to 383 examine imiDa tented lands because of the embar- rassment which information which he might secure of their mineral character would cause Eberlein. In other words, while appellants were maintain- ing a corps of expert geologists, it was not their policy to permit knowledge acquired by them to reach the land department upon which rested the duty of securing patents and, in connection there- with, of making known to the United States gov- ermnent the truth about lands to which it was en- deavoring to secure patents. For what purpose, except to guide in selections, were the Southern Pacific geologists examining unpatented lands? To whom did they report ? Not to the land department (E. 1043 and 1091) ; but to Mr. Kruttschnitt (R. 3080-3). Mr. Kruttschnitt 's complacence, it may be respectfully submitted, is amazing. He tran- quilly shuts his eyes to the fact that both the land department and the geological department were parts of a common w^hole and that, in their re- spective spheres they represented the Southern Pa- cific interests. It does not lie in the mouth of ap- pellants to say that, because they purposely strove to keep knowledge acquired by the geological de- partment from the land department, they were ignorant of what either of these departments knew. It cannot be doubted upon this record that Eberlein believed in the mineral character of the lands in suit; but, whether he did or not, the knowledge which his superiors possessed is imputable to him. The non-mineral affidavit which he made was know- ingly false ; but for the purpose of this case it is not 384 necessary that it api^ear that it was known hy him to be false. His act in making it was the act of the Southern Pacific Railroad Company and, insofar as it is concerned, the affidavit was false and fraud- ulent, if for no other reason, because the Southern Pacific Railroad Company had knowledge through another department that the facts in it represented to be true were false. Mr. Kruttschnitt, fixed mth knowledge imparted to him by his geologists and knowing of and aiding Eberlein in the matter of securing action upon the selection list, was, in con- templation of law, as much responsible for the falsity of the non-mineral affidavits as was Eberlein himself. In giving the testimony above set out Mr. Krutt- schnitt evidentlv was endeavorino; to refute Eber- lein's evidence of Dumble's examination of unpat- ented lands including the lands in suit; but Dmn- ble in his testimony contradicts him at this point. Witness his evidence on pages 2985-6-7 of the record, where it clearly appears that he in effect admitted to Eberlein that he had made such exami- nation, but says that he denied that they would have the effect which Eberlein feared. When Dumble was asked what danger he referred to in his letter of March 15, 1907, to Eberlein in which he wrote: ''Early in December we had a further con- ference on the matter and you explained that you were rushing certain lands for final patent and that the immediate execution of the lease, showing our idea of what were oil lands, might interfere with you and we agreed to defer the execution until that danger was passed," 385 he answered as follows: "The danger that I referred to was just as I stated; danger of interfering with him and the danger that these lands might he delayed and not he patented heeaiise of their nmieral character/' Enough has already been shown to demonstrate Dmnble's appreciation of the position in which appellants' selection list was placed by what was imported in the proposed lease to the Kern Trad- ing & Oil Company. He not only agreed upon this point with Eberlein, but wrote the letter to acting general manager Bancroft in which he suggested that "for reasons of policy respecting unpatented lands" the execution of the lease be deferred until that danger is passed". ii May it not with propriety be here stated that, if Mr. Kruttschnitt and Mr. Dumble and Mr. Eberlein were afflicted with the ignorance concerning the lands in suit which they as witnesses claimed for themselves, they were guilty of culpable and inex- cusable negligence? All of them knew of the selec- tion list and necessarily of the non-mineral affidavit which accom]3anied it without which no patent could issue. If Eberlein had been negligent in ascertain- ing the true character of the lands in suit or had purposely refrained from causing examinations to be made in order that his mind might be charged with no knowledge of their character at the time when he executed and tendered the several non- mineral affidavits, the government would be legally 386 entitled to a cancellation of the patent. A false representation may be made in contemplation of law without actual knowledge of either its truth or falsity, as in the case where a party has affirmed his knowledge by a positive statement that implies knowledge; or when made under circumstances in which he ought to know, if he did not, of its falsity, as where, having special means of knowledge, it is his duty to know. But the case disclosed by the evidence is much stronger than this. It appears that Kruttschnitt, Herrin, Stone, Cornish, Owen, Markham, Bumble and Eberlein believed, if they did not know, at the time when the non-mineral affidavits were made and tendered, that the lands in suit were mineral in character. Their knowledge or the knowledge of any one of them was the knowl- edge of appellants. Reviewing briefly, it is quite clear that prior to Becember 10, 1903, Mr. Krutt- schnitt was anxious and solicitous in regard to list 89; that he was urging prompt action in arranging for the selection and believed that the lands were mineral lands; that it was such a belief on his part that prompted his letter to Chambers urging special attention; all of which caused Eberlein 's declara- tion that he was "particularly anxious in regard to this list as the lands adjoin the oil territory and Mr. Kruttschnitt is very solicitous in regard to it". It was Mr. Kruttschnitt who originated the organiza- tion of the Kern Trading & Oil Company (R. 3085). He held many conferences with Eberlein in the matter of securing patents (R. 3081). It was his purpose to have all lands that were considered to be 387 either actual oil lands, ]3robable oil lands or possible oil lands turned over to the Kern Trading & Oil Company so that it could control them (R. 3085). He received Dumble's letter of November 20, 1903, enclosing a list of lands to be leased to the Kern Trading & Oil Company and maps (R. 3086). This is the letter in which Dumble described the lands other than those having wells on them as "probable oil lands" (E. 2926-7). (In this classification came section 31 of to^^Tiship 30-23 which corners with the lands in suit.) Each important step in this matter was referred to him. He first learned, he said, that land in township 30-23 had been selected and patent was being applied for when this lease was in course of preparation (R. 3087). He knew of the friction between Eberlein and Dumble w^ith reference to the lease (R. 3081). From the foregoing it is established by Mr. Kruttschnitt 's own admissions that he knew of selection list 89 and knew, while it was pending, that his geologists had advised the inclusion in a lease to a "fuel oil development" company (R. 3081 )of lands in the unmediate vicinity of the lands described in list 89, one section being in the same township. Complete ignorance on his part, therefore, of the selected lands is not compatible with the high order of intelligence and ability nec- essary to fit one for the discharge of the duties of the responsible position filled loy Mr. Kruttschnitt. Or did he, by closing his eyes to obvious things, think to achieve a feat paralleling that essayed by 388 Eberlein who, knowing all that the lease to the Kern Trading & Oil Company imported, strove to absolve himself from the responsibility which that knowl- edge imposed by merely declining to execute it? After three years Eberlein denied all knowledge of the lease! Was Mr. Kruttschnitt 's memory in pari jMssu with that of Eberlein? CONCLUDING SUMMARY. The grant under which appellants claim excepts from its operation all "mineral lands", the broadest reservation in any of the acts of Congress affecting the disposition of the public domain except the home- stead act under which by a late amendment the same reservation is made. In Davis vs. Weihhold, 139 U. S. 507, and in the other cases urged upon the attention of the court by appellants the exception is more restricted, a fact pointed out by Judge Hook in the decision of the Circuit Court of Ap- peals for the Eighth Circuit in the Diamond Coal and Coke Company case, 191 Federal, 786, and by Judge Ross in the Cosmos Exploration Co. case, 104 Fed. 47. In the Supreme Court of the United States Mr. Justice Van Devanter, citing as authority Defehach vs. Hawke, 115 U. S. 392; Colorado Coal & Fuel Co. vs. United States, 123 U. S. 307; Davis vs. Weihhold, supra, and other cases, announces that, to justify the annulment of a home- stead patent as wrongfully covering mineral land, it must appear that the Icnown conditions at the time of the proceedings which resulted in the patent were plainly such as to engender the belief that the 389 lands contained mineral deposits of such quality and in such quantity as would render their extrac- tion profitable and justify expenditures to that end. The announcement thus made in this, the latest and highest authority upon the question, is the criterion by which is to be determined whether the lands in this case were in contemplation of law within the exception of "mineral lands" in the grant at the time of the proceedings which resulted in the as- sailed patent. It is the resolution by the Supreme Court of all antecedent cases and authorities into the doctrine and proposition of law that a patent to lands as agricultural or non-mineral lands will be set aside when it distinctly appears that the known conditions with reference to them were plainly such as to engender the belief that they were valuable mineral lands and it is needless and futile to review the authorities thus crystallized into a standard by which the question in this case is to be finally decided. 223 U. S. 236 ; 58 L. Ed. 936. It is manifest that the belief described in the formula extends not only to the existence of the mineral, but to its quality and quantity. If ap- pellants do not depart from the position taken by them upon the argument before Judge Bean, they will contend here that, in the absence of absolute knowledge, no fraud or imposition can be attributed to them. This contention begs the question. The inquiry is, Were the known conditions with refer- ence to the lands in suit plainty such in December, 1904, as to engender the belief that they contained 390 commercial oil? It was accordingly not necessary for the government to show that the lands actually contained oil in commercial quantities, but only that the known conditions were plainly such as to engen- der the belief that the}^ did. In the Diamond Coal & Coke Company case there was no evidence that the eve of man had ever seen an ounce of coal on the lands there in suit; and yet the Supreme Court held that the patent in that case should be annulled for the reason that the evidence proved that the known conditions there were plainly such as to engender the belief that they contained commercial coal. In the case of United States against Southern Pacific Company et al. pending in the District Court of the United States for the Southern District o± California — A case involving questions similar to those in the instant case — the defendants on a motion to dismiss, heard November 13, 1914, put forward the same contention made here. Their counsel then said: "To sum up, our position is this: Knowledge, necessary to form the basis of a fraud such as is here charged, means more than mere belief or hope or even speculative geological deduction. It can be derived only from actual dis- covery and certain demonstration." The reductio ad ahsiirdum of the contention there made and here repeated is reached in the necessary conclusion that, if upheld, it would follow that the Southern Pacific Railroad Company would under the grant of July 27, 1866, be entitled to all oil lands 391 within the limits of the grant except those upon the legal subdivisions of which wells had been drilled prior to patent from which oil had been produced and to all other mineral lands upon which actual discover}^ of minerals in paying quantities had not been made. It has already been indicated herein that this contention is identical that that made in the Diamond Coal and Coke Company in the Dia- mond Coal and Coke Company case. Its brief is printed in connection with the report of the case in volume 58 of the Lawvers' Edition of the United States Supreme Court reports and, for convenience, the following portions thereof, beginning on page 936 thereof, are set out: (a) "The construction given to statutes by those charged with the duty of executing them is always entitled to the most respectful con- sideration and should not be overruled without cogent reasons." (b) "The established practice of the Land Office which should be regarded as a rule of property has been to deny entries of lands as coal lands or mineral lands unless the same are shown to contain within their limits developed and opened mines, or deposits of coal of com- mercial value, or other minerals in quantity sufficient to justify the development and ex- ploitation of the land, and to render it more valuable for mineral than for other purposes; and it has been the uniform practice to require evidence of the existence of coal or other min- eral deposits upon the land itself. The fact that the land was surrounded by land contain- ing either coal or other mineral or that it was adjacent to mineral lodes or coal veins or even that the land itself contained small quantities 392 of mineral or surface cropping of coal unde- veloped, has always been held insufficient; and, where the character of the lands as mineral or coal lands was not established by such proof and evidence of mineral value, the land has always been held properly enterable under the homestead and other non-mineral acts." (c) "The views of the Land Office were not erroneous; on the contrary, they have been re- peatedly approved by the decisions of this court and of the lower Federal courts and State courts which have had occasion to consider the ques- tions involved." (d) "From the decisions of the courts and the Land Office, we believe that it can be said without successful contravention, that the fol- lowing propositions are firmly established: * * * * * "Second, in order to bring the land within the allegations of the bill, that is, to render it only enterable under the coal land law, it must have been shown that it contained known mines or deposits of coal, of a workable character, and of sufficient extent to make the lands more valu- able on account of their existence for coal min- ing than the lands would be for agricultural purposes. "Third, the mere presence of coal croppings or coal mines in the vicinity of the lands in question cannot detennine the character which must be assigned to the land. On the contrary, it must be judged by the known phj^sical fea- tures of the identical lands in question. yy It has already been shown that the foregoing con- tentions were resolved against the Diamond Coal and Coke Comj^any and in favor of the goverimient. 393 The learned judge before whom the motion to dis- miss the case of the Undted States vs. Southern Pa^ cific Company et al. in the Southern District of Cali- fornia was argued likewise decided the contention in that case against the defendants and in favor of the government. (225 Fed. 197.) Notwithstanding the decision in the Diamond Coal & Coke Company case and the adverse rul- ing of the District Judge in the case of United States vs. Southern Pacific Co. et at. in the Southern District of California and vet other de- cisions of like character appellants fail to dis- criminate between the instant case, where the gov- erimient charges that appellants by fraudulently representing lands to be non-mineral in character secured patents to mineral lands in violation of the terms of the granting act, on the one hand, and the cases of an applicant for a mineral patent who is required to show a discovery before he can secure his patent and of a contest between rival mineral locators where it is required that a showing of ptnor discovery be made in order to establish a right to patent, on the other hand. The case of Miller vs. Chrism an, 140 Cal. 440; 197 U. S. 313, upon which appellants appear to rely, was a contest between two rival mineral claimants and consequently can have no application or bear- ing here. By section 2320 of the United States Revised Statutes a mineral patent can only be ob- tained where there has been an antecedent location 394 perfected by "the discovery of the vein or lode within the limits of the claim located", section 2329 providing for placer claims "like circmnstances and conditions" provided for vein or lode claims. Under such circumstances discovery is affirmatively made the sine qua von of patent; but the doctrine applies only to cases involving patents under the public mineral land laws of the United States. The Su- preme Court in the Diamond Coal and Coke Com- pany case squarely held that a discovery is not neces- sary to constitute land mineral land in cases like the one now under review. In announcing the rule that it is "the known conditions" which are determi- native of the question the opinion states that the argument of counsel had departed from "settled rules of decision applicable in cases like this" and that therefore "it will be appropriate to recite these rules before turning to the evidence." Thereupon the court laid down the criterion that lands are min- eral lands when the known conditions are plainly such as to engender the belief that they contain valu- able mineral deposits. The doctrine in question is not new in the Ninth Circuit, but has long been recognized here as well as elsewhere in the United States. Co IV ell vs. Lammers, 21 Fed. 206; Francouer vs. Newliouse, 40 Fed. 621. In both of the foregoing cases Judge Sawyer wrote the opinion and he uses this language: By the words (mineral lands) must be II' 395 understood lands Iviiown to be such or which there is satisfactory reason to helieve are such at the time of the grant or patent." Manifestly the language just quoted negatives the idea that the discovery of minerals in paying quantities must be made before lands can be classed as mineral lands. In Cosmos Exploration Co. vs. Gray Eagle Oil Co., 104 Fed. 20, Judge Ross recognized and gave expression to the same doctrine. This case has already been reviewed herein and pause is here taken only to refer to the fact that in that case, as in the instant case, a non-mineral affidavit w^as filed. Judge Eoss found that the parties under whom the Exploration Company claimed at least Relieved that the lands which they sought to acquire under an agricultural patent or selection contained oil and held that, if, instead of filing false non-mineral affi- davits, they had made known to the land officers the fact of their belief, "no one can doubt that the local land officers would have refused to file or re- ceive the application." Judge Eoss stated that, if under such circumstances the selectors had obtained patents, the patents would have been cancelled at the suit of the govermnent, citing Finn vs. Hoyt, 52 Fed. 83, when in fact he had in mind United States vs. Ctdver. In United States vs. Cidver the government sought to cancel certain patents issued pursuant to cash entrv from which mineral lands were excluded. It 396 appeared that the parties had personally examined the lands and had had them examined by a mineral expert who reported to them his belief as to their true mineral character. The Court said in part: "Their act in buying them by cash entry as agricultural land, with such knowledge as to their true character, would vitiate the sale by the government to these parties, and they would not be entitled to hold the land because of the fraud perpetrated by them upon the officers of the government. It is claimecl by the defendant that these lands were thrown open to purchase bv cash entry by the proclamation of President Rutherford B. Hayes, of October 8, 1877. If they were lands valuable for mineral, they were not so thrown open to purchase by the said proclamation, as the same expressly ex- empted from sale 'all lands appropriated by law for the use of schools, military or other purposes. ' * * * if there had been no fraudu- lent concealment by Culver and Julian Ramse}^, but, under the law, the lands were reserved from sale, the rule is well settled that the de- defendants obtained no title by their purchase; that the sale is absolutelv void. Morton vs. Nebraska (21 Wall. 660). "* * * The prepon- derance of evidence shows that the lands were valuable for mineral, and that the defendant Culver and Julian Ramsey, the ancestor of the other defendants, knew this fact at the time of the purchase of the land. "Upon both grounds above set out the patent must be held void, and a decree should be en- tered for the cancellation of the same, and it is so ordered." It is submitted that the evidence in the instant case at all points fulfills the requirement of the 397 standard laid down by the Supreme Court. In short, the goverinnent has proven by that class of evidence which commands respect and that amount of it which produces conviction the following propo- sitions : 1. That the test laid down by the Supreme Court in the Diamond Coal and Coke Company case with reference to coal lands is likewise applicable to oil lands. 2. That the structure of the lands in suit is ideally favorable to the accumulation and retention of oil. 3. That the lands in suit were in a recognized oil belt and were surrounded on all sides by surface evidences and exposures of oil, gas, asphaltmn and brea. 4. That oil development in the vicinity of the lands in suit had reached such proportions in 1904 that from McKittrick to Sunset, a distance of thirty miles, there were two hundred and eighty-one pro- ducing wells, a number of them being within two or three miles of the lands in suit. 5. That the strata of oil-bearing sands out- cropping in the exposures mentioned and proved by the wells mentioned to contain oil in commercial quantities dipped and extended towards and under and beyond the lands in suit. 6. That the lands in suit themselves showed surface evidences of the presence of oil underneath, 398 being situate upon a fold or anticline which is a continuation of the fold or anticline at the westerly end of which in 1904 there were two producing oil wells and along whose extension towards the lands in suit there were exposures of oil-sands impreg- nated with oil and asphaltum. 7. That the lands in suit had no value for agri- curtural purposes and only negligible value for grazing purposes and were practically worthless un- less valuable for oil. 8. That by reason of these conditions the belief was general in 1904 that the lands in suit were oil lands, this belief manifesting itself in many at- tempts to locate the lands under the mineral land laws of the United States by persons skilled and unskilled in oil geology and oil development. 9. That appellants themselves believed in 1904 in the oil character of the lands in suit, as shown b}^ the declarations, admissions and acts of their skilled and trained geologists who examined and investigated the lands in suit and in some instances sought to acquire them for themselves, as well as by the acts and declarations of other responsible offi- cials. 10. That appellants, in order to secure patent to the lands in suit under an act of Congress granting to them only agricultural lands, expressly excepting mineral lands from the operation thereof, believ- ing them to be mineral lands, not only withheld the 399 knowledge which they had of their true character, but falsel}^ and fraudulently represented them to be non-mineral agricultural lands of the character contemplated b}^ the grant, the evidence of these facts consisting of the acts, declarations and admis- sions of responsible officials and agents of ap- pellants, as also of a series of letters and documents bearing positive and direct witness to the knowledge and belief of appellants of and in the oil character of the lands in suit and their design and purpose to deceive the land officers of the government in regard thereto. In addition to the foregoing it is submitted that it has been clearlv shown herein bv reference to the evidence and undoubted facts, as well as to the pertinent authorities, that prior to patent the gov- ernment neither investigated nor ascertained the true character of the lands in suit, but had the right to rely upon and did rely upon and was deceived by the proofs offered by appellants. As stated at the outset of this brief, the govern- ment is mindful of the respect due to its patent, the presumption that all the preceding steps required by law were duly observed and the requirement that, in order to annul the patent here called into question, it must bear the burden of proof and sus- tain it hj that class of evidence that commands re- spect and that amount of which produces convic- tion; and the government confidently submits that it has successfully met these tests and that, even if 400 the question were now one of first impression and to be decided originally by this appellate court, it must be resolved in its favor; a fortiori should it be so resolved in view of the presumptive correctness of the decision of the trial court the judge of which had before him for his guidance the full transcript of the evidence by questions and answers, which in this court is, under the rules of practice in equity, presented in condensed form, in many instances no more than the mere substance being stated. PART II. DEVELOPMENT SUBSEQUENT TO PATENT ON EVEN-NUMBERED OR NON-RAILROAD SEC- TIONS ADJOINING THE LANDS IN SUIT. From Part I of this brief the government has sought to exclude reference to all evidence of trans- actions occurring and knowledge derived after the issuance of the assailed patent. It is pointed out in the Diamond Coal and Coke Company case that, since applicants' proofs and the findings of the land officers were directed to the situation at the time of the issuance of patent, so the inquiry by the court as to the question of mineral character must be directed to the situation at that time. In that case there was evidence that after patent a slope was driven from the outcrop of coal to the east to within five feet of the vertical boundary of one of the sections in suit ''and in good coal all the way"; but the court held that while this was "a 401 fact proved", it was not to be considered "because in the nature of a discovery subsequent to the en- tries". Accordingly, when appellants undertook at the trial to introduce evidence concerning wells drilled in the Elk Hills (but not upon the specific lands in suit) in 1910 and thereafter, the government took the position that the evidence was incompetent. This evidence was offered prior to the decision of the case in question under the authority of which it is clearly incompetent and "not to be considered here". However, while it was introduced by ap- pellants for the assigned purpose of proving the non-mineral character of the lands in suit, it has the opposite effect and demonstrates that upon lands lying in the midst of the several sections in suit successful and productive oil wells were drilled in 1910 and in 1911 by the Associated Oil Company, a subsidiary of the Southern Pacific Company. It is, accordingly the office of Part 2 of this brief to point out both the utter failure of appellants to prove by the evidence in question the non-mineral character of the lands and the notable effect of the evidence in corroborating the competent evidence of their mineral character. By way of parenthensis, it may not be out of place to comment on the position taken by appel- lants with regard to this matter. That position necessarily is that, even if the kno'^m conditions prior to patent were such as to engender the belief 402 that the lands were mineral in character and even if they practiced fraud in acquiring patent to them, nevertheless, if subsequent to patent there have been developments which tend to negative mineral char- acter, the government ought not to succeed in this suit for the reason that it has not been damaged. Appellants' argument amounts to this: However cogent was the proof by the known conditions prior to patent of the mineral character of the lands and however fraudulent may have been their eiforts to secure patent to them, they ought not be penalized for a mistake of their officers and sen^ants in rely- ing upon the known conditions and in believing that they were securing patent to interdicted mineral lands. The evidence which they introduced to this end, far from subserving the purpose for which it was introduced, will be shown to have reacted and demonstrated the combination in certain officers and servants of appellants at the time of the proceed- ings which resulted in patent of good judgment and bad morals. In addition, the evidence in question absolutely demonstrates the soundness and correctness of the position of the government that the evidence proves that the known conditions were plainly such as to engender the belief that the lands in suit were valu- able oil lands. This necessarily follows from the fact that the Associated Oil Compan}^ a subsidiary of the Southern Pacific Company, in 1910 and with- out addition to the sum of human knowledge in 1904 concerning the lands in suit entered upon the 403 development of them and expended in that enter- prise, as appellant' witnesses have testified, more than half a million dollars (R. 3123). The position of the government is that these known conditions were plainly such as to justify expenditures. The proof by appellants is that their subsidiary enter- tained that opinion and, having faith in it, spent five hundred thousand dollars. To adopt Mr. Jus- tice Van Devanter's phrase concerning the Dia- mond Coal and Coke Company, "The Associated Oil Co. was a joractical concern operated by practical men. It was hardly intending to make an aimless or grossly excessive expenditure". Nevertheless, wdth no greater knowledge or information than that possessed by Blodgett, Youle, Ow^en and Treadwell in 1904, because of belief and faith in the oil char- acter of the Elk Hills it spent lavishly of its stock- holders' money and, while it ceased operations on some of its wells because of poor judgment in locat- ing them, it succeeded in bringing in three com- mercially productive wells. Appellants will doubtless assert that prior to the Associated Oil Company's operations in the Elk Hills a large well had been brought in in the Buena Vista Hills by the Honolulu Oil Company and that this fact w^as a contribution to knowledge of the conditions in the Elk Hills. They have heretofore deprived themselves of the use of this contention by the evidence of their expert geologist and wit- ness, F. M. Anderson, who testified, as already shown, that there is absolutely no connection be- 404 tween the two uplifts, tlie Bueiia Vista Hills and the Elk Hills, and that the formations in the two are in nowise correlated. By reference to this position the government does not mean to agree with it and only cites it because of the fact that it prevents appellants from now saying that a success- ful well in the Buena Vista Hills is evidence of oil in the Elk Hills. Indeed, both Anderson and Ochs- ner testified to their firm belief and conviction of the high character of the Buena Vista Hills as oil lands in 1904 at the very time when they now say they condemned the Elk Hills. Moreover, as already shown, there were in 1904 producing Avells two, three and four miles from the lands in suit, while the Honolulu well is in section 10 of township 32-24, nine miles distant from the nearest of the lands in suit. It is not easy to believe that "a practical con- cern" like the Associated Oil Company was influ- enced by the psychology of panic and excitement following the Honolulu discovery, as appellants have endeavored to explain the enterprise of others in locating oil lands. The argument from, psy- chology will hardly reach the Associated Oil Com- pany, the chairman of whose board of directors is shown by the evidence to have been Mr. Wm. F. Herrin, who was likewise general counsel of the Southern Pacific Company. The record shows that Mr. Herrin was present and presided at sundry meetings of the executive committee of the board of directors of the Associated Oil Company when the questions of operations and expenditures in the Elk Hills were up for consideration (R. 3613-47). 405 Passing from manifest things to the evidence concerning the result of the operations upon the even-numbered sections in the Elk Hills, it is dis- closed that on three of them, 24 and 26 of 30-23 and 30 of 30-24, which will hereinafter be referred to as 24, 26 and 30, respectively, large and successful producers were drilled. Some wells were drilled by the Associated Oil Company and other concerns that did not prove successful; but in this comiection let it be remembered that there is probably not in the entire world an oil-field in which there are not un- successful wells. On September 2, 1912, by executive order the President of the United States withdrew and re- sented the lands in this suit and the adjoining and continguous sections of land in township 30-23 and 18 sections in other townships in the Elk Hills, in all 42 sections, to be held for the exclusive use and benefit of the United States Xavy. This withdrawal was based on geological investigations of Eobert Anderson and other geologists of the United States Geological Survey. In August, 1912, after stating that Mr. A. C. Veatch and Dr. John Casper Bran- ner had considered the lands in this suit as probably oil lands, Mr. Anderson in a report to the United States Geological Survey, in which he referred to the wells drilled in the Elk Hills which had not proven successful, stated that he believed that in most cases the tests were not adequate, but called attention to the three successful wells of the Asso- ciated Oil Company which he understood from 406 varying reports would produce from forty to five hundred barrels of oil per dav of from 27 to 29 degrees gravity (Ex. 5-T). In November, 1912, Mr. Anderson reported re- sults of a recent visit to the Elk Hills and stated that it was his opinion that the area would yield a large quantity of oil which, to be conservative, he estimated at 100,000,000 barrels (Ex. 5-V). He had originally estimated the oil content of the Naval Reserves to be 250,000,000 barrels. In this report he refers to the various wells that had been drilled in the Elk Hills region and came to the conclusion that the southwest fringe of the hills, along which were drilled the unsuccessful wells, would not be as productive as the sununit region where the lands in suit lie. He then proceeds to say that the only three wells drilled to an adequate depth in the central part of the hills were those of the Associated Oil Company and that each of these struck zones in which the oil was under pressure and spouted, that on section 30 having produced at least 150 to 300 barrels per day for several days and then sanded up ; another on section 24 having come in at the rate of a thousand barrels per day and having yielded an average of 200 l^arrels per day for a week and also sanded up (R. Ex. o-Y). He also reported that showings of oil had been found in almost every one of the deep wells in the hills, proving that a con- siderable amount of oil is disseminated through the strata, and indicated that a more productive source mav occur below. 407 In the further discussion of this question this brief will separate the successful and unsuccessful wells and will first proceed to set out the evidence which shows that the former justified the expendi- tures involved in their drilling and place beyond question or peradventure the oil character of the lands in suit, and will follow with the details of the evidence concerning the unsuccessful wells showing the reasons for their failure. SUCCESSFUL WELLS OF THE ASSOCLA.TED OIL COMPANY. There is no question whatever that in 1910 and 1911 the Associated Oil Company was a subsidiary of the Southern Pacific Company, the latter owning and holding a majority of its capital stock (R. 3593). Mr. Wm. F. Herrin was general counsel and a director of the Southern Pacific Company and at the same time president and a director of the Associated Oil Company and chairman of its executive committee (R. 1392, 1400; 3107-8, 11-12; 3597-8; 3602-3-4-5; 3613-47). P. G. Williams, who testified first as a witness for appellants, was called by the government in rebuttal on November 28, 1913. He was secretarv and auditor of the Asso- ciated Oil Company and had general custody of the records of the corporation including the minutes of meetings of the board of directors, the executive committee and stockholders, as also the annual statements issued by the company from the date of its organization, October, 1901, to the year 1912. The annual statements for the several vears show the officers throughout that time and are set out on 408 page 3593 et scq. of the record. The minutes of the meetings of the executive committee of the board of directors were read into the record and are found on page 3613 et seq. These minutes contain and expose the history of the proceedings by which the Associated Oil Com- pany acquired possession of the lands in question and the successive steps in the matter and progress of drilling on sections 24, 26 and 30. At practically all of the meetings Mr. Wm. F. Herrin presided. It is interesting to note that on March 21, 1911, it was reported to the committee by the general man- ager that the mineral filings on which the company's title was based were made subsequent to September 27, 1909, the date of the withdrawal by President Taft of a large area of land including all of the Elk Hills. Finding that other persons, Messrs. Mc- Kittrick, Jastro, Tevis and others, of Bakersfield, had located sections 24, 26 and 30 prior to September 27, 1909, for fuller 's-earth, the general manager recommended the acquisition of the McKittrick et al. titles "for the reason that they were made prior to September 27, 1909", and because the work which the Associated had already done, if applied against these filings, would insure the issuance of a patent to the Associated upon the discovery of oil on each quarter-section, which, to use the general manager's own words, "I think probable". The proceedings with reference to this matter and the consequent action are set out on pages 3623-4-5-6 of the record. 409 The ''Messrs. Mc Kittrick, Jastro, Tevis et al. of Bakersfield" were the gentlemen who claimed ad- versely to the Associated Oil Company and whose application for patent based upon an alleged dis- covery of fuller 's-earth was protested by the parties under whom the Associated claimed, leading to the contest in the Land Office at Visalia in which the officers and servants of the Associated Oil Com- pany, including L. J. King, its superintendent, W. A, Williams, its chief geologist, testified that these lands were oil lands and chiefly valuable as such; that there was no commercial fuller 's-earth in them; that the Associated Oil Company had drilled successful Avells and that such wells as had been drilled elsewhere in the Elk Hills and were unsuc- cessful had failed to get oil in commercial quantities because of unfavorable location, errors in drilling or for other reasons (Exhibits 9-C, 9-E, 9-M and 9-0). In the meantime drilling was proceeding and on August 29, 1911, the general manager advised the committee that he had issued instructions to pro- ceed with the drilling of wells No. 3 on 24 and well No. 1 on 30; and, with reference to the well on 26, to discontinue work as soon as the field department had completed perforating the well and testing it to see the result (R. 3633). He also gave in- structions to stop work on certain specified wells (R. 3633). The explanation of the order for the cessation of work on the specified wells appears in the minutes of the meeting of Novemberr 28, 1911 (R. 3637). At that meeting the general manager reported in part as follows: 410 "This well on section 30 is now 3,836 feet deep, having passed through 12 feet of oil stratum at 2,713 feet. We have already ex- pended on the five sections of land which we hold under lease in Elk Hills $418,000. The Field Department advises that if we forfeit these leases, apj^lying for patents on the 160 acres in sec. 26 and the 160 acres in sec. 30, on which we have made discoveries of oil that we can remove material which will effect a salvage of approxi- mately $100,000, the net result being that we would be in position to ask for patents on 160 acres in sec. 26 and 160 acres in sec. 30, which will be done at once, and doing no further work on any of the other lands. Under those conditions these two wells will have cost us $318,000, provided the salvage is $100,000, as stated above. Our legal department is unable to advise us definitely what the action of the Interior Department will be in regard to these lands, but construes the Pickett bill to mean that in order to hold lands and eventually ac- quire patent thereto, we must legitimately carry on the work on each of the twenty quarter-sec- tions involved in a manner to make a discovery of oil. This would mean that to be safe we must select these quarter-sections at tliis time on which we deem it advisable to carry on such work. The work on each quarter-section would cost approximately $5,000.00 per month in order to conform to this construction and if work is carried on on the eighteen quarter-sections on which discovery has not been made this would mean an expenditure of approximate! v $90,000.00 monthly. There are also r^onflicting mineral claims on these lands o^Mied by other parties who claim title by reason of discovery of fuller 's-earth. These claimants are carrying on work on each quarter-section and have made applications for patent on portions of sections 411 24 and 30. We would be obliged to contest these applications in the Land Office. ''In view of the uncertainty as to the status of our right to obtain patents to any of these lands, even if discovery is made, I recommend that we discontinue work entirely on these lands with the exception of the pumping of well on section 26 and the deepening of well on section 30." (R. 3638-9-40.) The foregoing recommendation of the general manager was approved (R. 3640). The Pickett bill referred to is the Act of Congress of June 25, 1910, by which it was provided, among other things, that withdrawals of public lands should not impair the rights of claimants or occupants who at the date of the withdrawal were in the diligent prosecution of work leading to discovery and thereafter continued in such diligent prose- cution of work until discovery. It is therefore manifest that the reason for the cessation of work on wells other than the three wells now under re- view lay in the fact that the so-called locations under which the Associated Oil Company claimed were made after the withdrawal of September 27, 1909, a fact pointed out and admitted in the minutes of the meeting of December 20, 1910 (R. 3622). For the purpose of showing the non-commercial character of the three deep wells of the Associated Oil Company in the Elk Hills appellants called as a witness that company's auditor, P. G. Williams (R. 3122), who testified that to December 31, 1912, the well on 24 cost $56,000.00, that on 26 cost 412 $57,000.00 and that on 30 cost $66,000.00 (R. 3124). This witness stated that he had prepared from the record of his compan}^ a tabulation of the pro- duction of its wells in the Elk Hills, these tabu- lations being made up from regular reports or letters of advice sent in by the superintendent in charge from time to time. He thereupon offered the tabulation of the production of each of the wells (R. 3125-6). Following Mr. Williams came Mr. W. E. White, crief clerk of the chief engineer of the Associated Oil Company, A. F. L. Bell. White testified that from reports made to the office of the Associated Oil Company from the field force he had made certain graphic logs of the three deep wells in question and these so-called graphic logs were intro- duced in evidence by appellants for the purpose of showing the history of the drilling and production of the wells. They are Exhibits 172-3-4. By refer- ence to pages 3159 et seq. of the record it will be seen that counsel for appellants desired to intro- duce these so-called. graphic logs instead of introduc- ing the original reports from which the witness stated that he had made them. Counsel for the government objected to the introduction of the so-called graphic logs unless the original drilling reports which counsel for appellants stated that he then had with him in court were introduced. There- upon counsel for the government offered in evidence the drilling reports in question and they are con- tained in the volume of "Documents and Evidence Not Printed". Subsequently, it will be seen by reference to page 3196, these drilling reports were 413 read into the record by counsel for the government. An examination of them, the original records and reports from the field, shows a condition of affairs and production radically different from and con- tradictory of that shown on the so-called graphic logs and diagrammatic charts prepared by the witnesses White and Williams and introduced bv appellants. It was the evident purpose of these logs and charts to minimize the productive capacity of the three wells in question; but the drilling reports themselves speak the real truth as to this matter and, accordingly, a more or less detailed exami- nation or analysis of these is necessary. Exhibit 172 is the graphic log or production chart of sections 30 of 30-24 ]3repared by the witness White, as he said, from the daily drilling reports (E. 3159). Exhibit 173 is a similar log or production chart of section 26 of 30-23 (R. 3167-8). Exhibit 174 is a similar log or production chart of the well on section 24 of 30-23 (R. 3168). On these logs or charts the witness stated that he attempted to make a condensation of several hun- dred daily drilling reports. Necessarily, this process called for an interpretation by him of the meaning of the daily drilling reports. His cross-examination, beginning at page 3191 and covering more than a hundred pages, discloses many admissions of mis- takes, inaccuracies and errors of interpretation on 414 Ms part. The details are so great that it would unduly prolong this brief to set them out. It matters little to the court what construction or interpretation the chief clerk to an engineer of the Associated Oil Company placed upon the daily records of drilling and production made by the men in the field in charge of the work and transmitted con- temporaneously to headquarters. L. J. King was superintendent of the Midway division of the Associated Oil Company, which in- cludes the Elk Hills (R. 3155), and it was by him that daily reports of the drilling operations on the wells in question were made (R. 3155). T. E. Barnes was the Associated Oil Company's superin- tendent of drilling in the Elk Hills (R. 3193, 3275). L. J. King is the same gentleman who testified as a witness for the locators under whom the Associated Oil Company claimed in the Yisalia Land Office contest. In that proceeding, in which it appears from the minutes of the executive committee of September 17, 1912 (R. 3646-7), that the Associated Oil Company was protesting through the locators under whom it claimed the right of certain parties to a patent to a portion of section 24 of 30-24 based upon an alleged discovery of fuller 's-earth, this same Mr. King appeared as a witness and testified strongly to the mineral character of the Elk Hills and the success of the wells drilled on 24, 26 and 30 (Ex. 9-C, 9-0), as did also T. E. Barnes (Ex. 9-F). For obvious reasons these gentlemen were not pro- duced as witnesses in this case, although they prob- 415 ably knew more about the three deep wells under discussion than any other persons in the world. Having testified in a contest in the Land Office where the success of the Associated Oil Company depended upon proof of the mineral character of the lands on which these deep wells were drilled and having borne strong witness to their rich mineral character and the eminent success of the wells drilled thereon, they were disqualified to appear as witnesses in this case in which it is appellants' object to prove the non-mineral character of the lands and the non- success of the wells. However, the daily reports of their drilling operations, while not offered in evi- dence by appellants, were forced into evidence by the government and they may be looked to as faith- ful expositions of the progress and success of the work of the Associated Oil Company in developing these lands and bringing in highly productive wells. These daily drilling reports begin on page 43 and extend to page 562 of the volume of "Documents and Evidence Not Printed" — contemporaneous records of the work actually done, the formations actually passed through and the gas and oil actually pro- duced. A thorough anal^^sis of these drilling reports which constitute 500 pages of the typewritten transcript is manifestly impossible without unduly prolonging the discussion and wearying the court with details. The unfairness and inaccuracies of these graphic logs and diagrammatic charts offered by appellants sug- gest that they are related to the obvious difficultv 416 on the part of the trial court in going through and analyzing and digesting these contemporaneous rec- ords of drilling and production. For the purpose of showing the utter lack of reliability of these graphic logs and charts and for the further purpose of show- ing that the three deep wells in question were emi- nently successful wells and demonstrate the mineral character of the lands surrounding them, the govern- ment will content itself with asking the attention of the court to the drilling reports setting out the work on and production of the deep well on section 24 for the months of June, July and August, 1912, ending with the twenty-third day of August, at which time, under the orders of the executive com- mittee of the Associated Oil Company of which the chairman was Wm. F. Herrin, general counsel of the Southern Pacific Company, all of the Associated Oil Company's wells in the Elk Hills were shut down. An examination of the specific reports in question will furnish conclusive answer to the suggestion that these wells were shut down because of their un- productive character and will naturally lead the in- quiring mind to the question whether the motive which inspired that action was not ulterior and closely connected with the inquiry in this suit as to the mineral character of the lands patented to the Southern Pacific Railroad Company under patent No. 135 of December 12, 1904, here assailed. The following reports of the drillers concerning the well on section 24 of 30-23 is taken verhatim from pages 555-6-7-8-9 and 560 of the volume of "Docu- 417 merits and Evidence Not Printed". It will be noted that each paragraph begins with a date and is fol- lowed by a second in parenthesis, the explanation being, taking for example the first excerpt, that the report was dated June 3, the first date mentioned, and covered the operations of June 1, the parenthetic date. June 3 (1), 1912, piunped 40 barrels oil, 20 barrels M. & B. S. mostly shale, about 12% water. June 3 (2), 1912, pumped 2500 feet, 45 barels oil, 25 barrels bluish shale or rotary mud, 10 barrels water. June 4 (3), 1912, pumped 50 barrels oil, mud and water. June 5 (4), 1912, pumped 90 barrels oil, 10 barrels M. & B. S. in 9 hours. Still pumping and shows great improvement. June 6 (5), 1912, pumped 190 barrels oil and 10 barrels M. & B. S. last 24 hours. Well greatly improving, showing quantities of gas and would not be surprised if it started flowing. June 7 (6), 1912, pumped 105 barrels net last 24 hours, only slight trace of water. June 8 (7), 1912, pmnped 105 barrels, shows some water. June 10 (9), 1912, pimiped 175 barrels pure oil, showing quantityof gas. June 10 (8), 1912, pumped 115 barrels practically all oil and pure. Gravity 21.8 cut .9 water .2 B. S. Jmie 11 (10), 1912, pumped 120 barrels. Showing large quantity of gas. (R. 555). June 12 (11), 1912, pulled to put on tight gas head. June 13 (12), 1912, well flowed almost continuously while pulling tubing to put tight head on be- tween 8-inch and 6-inch casing. This morning 418 started flowing between casings. At present time is making 800 to 900 barrels. This may not keep up at this rate. June 14 (13), 1912, stopped flowing, put tight casing head between 6-inch and 8-inch after this was done, well flowed once through 6-inch casing. Now placing well on pump. Gravity 19.7 cut 3% water, 13% B. S. June 15 (14), 1912, flowed 250 barrels through 614- inch casing, reduced to 2-inch outlet. Will place tubing in well to-day. June 17 (15), 1912, flowed 300 barrels through 6-inch casing. June 17 (16), 1912, flowing through 6-inch casing spasmodically, put out great quantity of sand. Also making good clean oil, produced at lowest figure 750 barrels oil yesterday. Without doubt will increase in flow. June 18 (17), 1912, flowed steadily last 24 hours, made 325 barrels. June 19 (18), 1912, flowed steadily 225 barrels, run- ning bailer to agitate and make flow. Stronger. June 20 (19), 1912, flowed 200 barrels, hole bridged over at 2940 feet, impossible to clean out with sand pump, putting up tools to break bridge. June 21 (20), 1912, flowed 200 barrels, placing bull wheels in derrick and stringing up tools to break bridge at 2940 feet. June 22 (21), 1912, flowed 175 barrels, completed rigging up tools and ready to break bridge. June 24 (22), 1912, splicing cable, flowed 150 barrels. (R. 556). June 24 (23), 1912, well flowed 150 barrels. Finished splicing cable and ready now to clean out bridge. June 25 (24), 1912, cleaning out at 2940; well flowed 175 barrels. Sand comes in about as fast as taken out. 419 June 26 (25), 1912, cleaning out at 2940 ; well flowing continually about 150 barrels. So far sand comes in as fast as taken out. June 27 (26), 1912, cleaned out to 2950 feet; well flows continually ; made 125 barrels. June 28 (27), 1912, cleaned out to 2990 feet; gas blows sand out of bole as fast as tools mix it up in bottom. Well flowed 100 barrels. June 29 (28), 1912, cleaned out to 2990 feet; comes in as fast as taken out ; made 100 barrels. July 1 (29), 1912, cleaning out and preparing to " wash out bridge with oil in tubing. July 1 (30), 1912, connecting up pump to wash bridge out by use of tubing and oil. July 1 (30), 1912, connecting up pump to wash * bridge out by use of tubing and oil. July 2 (1), 1912, running in tubing to wash out bridge. July 3 (2), 1912, just got tubing to sand bridge. Start washing today. July 5 (3), 1912, washed hole to 2700 feet with tub- ing and oil. July 5 (4), 1912, cleaned out to 2970 feet with tub- ing and oil. Hole filled with oil and exceeding gas pressure. July 6 (5), 1912, washed down to 3220 feet; shows no signs of gas at present time. July 7 (6), 1912, washed to 3250 feet; plugged tub- ing in bottom and pulling out. (R. 557). July 8 (7), 1912, pulled out tubing and placing same "back to continue washing at 3250 feet. July 9 (8), 1912, cleaned out to 3275 feet. July 10 (9), 1912, washed do^\Ti to 3500 feet. July 11 (10), 1912, cleaned out to 3700 feet; now pulling out to place on pump. July 12 (11), 1912, placing well on pump. 420 July 13 (12), 1912, placed on pump at 2500 feet; flowing about 350 barrels per day through tub- ing. As yet has not flowed all oil out that was put in to wash hole out. July 15 (13), 1912, stopped flowing; washing out tubing. July 15 (14), 1912, pulling well. Started flowing through 6-inch casing. Made about 360 barrels. Pulling again this morning. July 16 (15), 1912, pulled pump. Same was sanded up. Ean in with bailer, found sand at 2500 feet. Well flowing 75 barrels; no fluid above sand. July 17 (16), 1912, flowing 75 barrels. July 18 (17), 1912, flowing 75 barrels. July 19 (18), 1912, flowing 75 barrels; hole filled up to 2500 feet ; in same condition as before washed out. July 20 (19), 1912, flowed 100 barrels. July 22 (20), 1912, flowed 75 barrels good oil; filled up with sand to 2550 feet. July 22 (21), 1912, filled up with oil to clean out. July 23 (22), 1912, flowed 75 barrels, agitating with bailer. July 24 (23), 1912, filled up with oil and cleaning out at 2600 feet. (R. 558). July 25 (24), 1912, repairing clamps between cas- ings. July 26 (25), 1912, making clamps to pack off be- tween 6-incli and 8i/4-inch casing. July 27 (26), 1912, filled with oil from sump, cleaned out to 2600 feet; preparing to put on new set packing clamps. July 29 (27), 1912, cleaning out; holding gas down with oil. 421 July 29 (28), 1912, placed new clamps between cas- ings; cleaned out to 2560 feet. July 30 (29), 1912, sand heaved; now cleaning out at 2390 feet. July 31 (30), 1912, cleaned out to 2470 feet. Aug. 1 (31), 1912, cleaned out to 2525 feet. Aug. 2 (1), 1912, cleaned out to 2555 feet. Aug. 3 (2), 1912, cleaned out to 2600 feet; well blew out ; making considerable quantity of sand, only small quantity of oil. Aug. 4 (3), 1912, cleaned out to 2560 feet; flowing at rate of 50 barrels. Aug. 5 (4), 1912, cleaning out to 2560 feet; shows bad place in casing; well flowed at rate of 100 barrels. Aug. 6 (5), 1912, cleaning out at 2560 feet; flo^\ing 100 barrels. Aug. 7 (6), 1912, cleaning out 2560 feet. Aug. 8 (7), 1912, cleaning out 2570 feet. Aug. 9 (8), 1912, jumped pin on bit of small tools, fishing. Aug. 10 (9), 1912, fishing for bit. Aug. 12 (10), 1912, fishing for lost drilling bit; well flowing trifle over 100 barrels per day, actual measurement in tank. Aug. 12 (11), fishing for drill bit; well flowing 100 barrels per 24-hour day; also flowing regularly with oil a quantity of 3,200,000 cubic feet gas equal to 4 inches mercury in 6-inch outlet. (R. 559). Aug. 13 (12), 1912, flowing 100 barrels oil; 3,000,000 cubic feet gas; fishing for drill bit. Aug. 14 (13), 1912, flowing 100 barrels oil; 3,000,000 cubic feet gas ; fishing for drill bit. Aug. 15 (14), 1912, flowing 100 barrels oil; 3,000,000 cubic feet gas; fishing for bit. 422 Aug. 16 (15), 1912, flowing same prior report; mak- ing special fishing tool to fish for lost bit. Aug. 17 (16), 1912, flowing same as yesterday; will fish for bit today. Aug. 19 (17), 1912, flowing same, fishing for bit. Aug. 19 (18), 1912, flowing and trying to get hole cleaned out down to bit ; sand running in badly. Aug. 20 (19), 1912, unable to recover drill bit; will therefore cap well as directed. Aug. 22 (21), 1912, closing well in tight to shut down. Aug. 23 (22), 1912, capping and will be closed down today. Aug. 24 (23), 1912, Elk Hills. All wells shut down. (R. 560). It appears from the foregoing records, so strictly contemporaneous with the actual operations as to be almost a part of the res gestae, that during the month of June, 1912, the well on section 24, although shut down because of work being done on it during five of the days, produced 4410 barrels of oil or an average of 190 barrels per day; and this despite the fact that on June 19 the well bridged over at 2940 feet and continued bridged over throughout the remainder of the month in the face of strenuous effort to break through tlie bridge. In other words, the production was all from a point above the 2940 foot level and it is noted that on June 24 and there- after sand was coming in as fast as taken out. Surely, in the face of such conditions as these the record of this well for the month of June, 1912, was phenomenal and such as to demonstrate its high commercial character. 423 The production attributed to this well by auditor Williams of the Associated Oil Company on page 3126 of the record is 2965 barrels, figures which can- not be reconciled with the figures contained in the daily drilling reports. Appellants sought to do so upon the ground that the drilling reports were mere estimates ; but it is hardly to be conceived that such an expert as L. J. King, superintendent of the Asso- ciated Oil Company, who had had 25 or more years experience in such matter, could have been as radically wrong as appellants would have the court believe. Furthermore, the Associated Oil Com- pany's so-called monthly record of production was admittedly based, not on production, but on the amount of oil sold, for the witness White, speaking of this matter, says on page 3232 of the record that the totals which he showed — which were identical with those shown by Auditor Williams — was the "amount of oil sold". The court is not concerned with the amount of oil sold by the Associated Oil Company from the well on section 24, but with the amount of oil which that well produced, a fact shown only on the drilling reports under review. It does not lie in the mouth of appellants to throw doubt upon their own con- temporaneous records. This incident concerning the well on 24 illustrates all of these production charts introduced by appel- lants in lieu of the original drilling reports. Auditor Williams furnished a report of the production of 424 each of tlie three deep wells and they are found on pages 3125 and 3126 of the record. Their pur- pose was undoubtedly to show that these wells were failures. If the well on 24, as indicated on page 3126, was doing its best — was allowed to do its best — and was producing the entire time and yielded only 240 barrels in May, 2965 in June, 247 in July and 150 in August, these facts, unexplained would go far towards establishing appellants' thesis that this well was a failure; and appellants were abso- lutely silent and failed even to hint that during May thev were continuously at work on the well and that during the first ten days of the month they were not pimiping from the true bottom of the well, but only at a depth of 2500 feet and during the re- mainder of the month, that is, until the 28th or 29th, they were constantly at work on it perforating the casing and, in fact, finishing the well preparatory to production. This will more fully appear upon read- ing the drilling reports for May on pages 553, 554 and 555 of the volume of ''Documents and Evidence Not Printed". That the work then done was needed and resulted in success is shown by the performance of the well during June, as already set out. As a matter of fact, the well was not ready for the pump until June and what it did in May is of no more importance than what it or any other well does be- fore completion. The fact of non-production before completion shows nothing as to production after completion. 425 The production, despite unfavorable conditions and five days of idleness during June, has already been shown to have been 4410 barrels. Now, for July : On the first, second, third, fourth, fifth, sixth, seventh, eighth, ninth, tenth and eleventh the well was shut down while the drillers were at work on it, as appears on pages 557 and 558 of the volume of "Documents and Evidence Not Printed". On the twelfth it was for the first time during the mouth placed on the pump at 2500 feet the while it was flowing 350 barrels a day through the tubing. On the thirteenth it stopped flowing and was not pumped. On the fourteenth, while at work on it, it flowed 350 barrels. On the fifteenth the pump was pulled and found sanded up and the hole was filled with sand to the 2500 foot level, notwithstanding which condition the well flowed 75 barrels. On the. sixteenth, seventeenth and eighteenth, although filled with sand up to the 2500 foot level, the well flowed 75 barrels a dav. On the nineteenth and twentieth, notwithstanding the fact that it was still filled with sand to the 2500 foot level, it flowed respectively 100 and 75 barrels. On the twenty-first it was in process of cleaning and preparation and this con- tinued on the twentj^-third, twenty-fourth, twenty- fifth, twenty-sixth, twenty-seventh, twenty-eighth, twentv-ninth and thirtieth. Even a casual exami- nation of pages 557, 558 and 559 will show that the well was in trouble during the entire month of July. Consequently, what it produced was in spite of trouble and effort to restrain production during 426 work. Then, too, the actual production shown by the charts is considerably less than that shown by the drilling reports. For August the drilling reports show the follow- ing history: During the first seven days "cleaning out" was in process, notwithstanding which the well on the third was flowing at the rate of 50 barrels, on the fourth at the rate of 100 barrels and on the fifth it actually flowed 100 barrels. On the eighth the drilling-bit was lost in the hole and throughout the time from then until the well was shut down on the twenty-fourth they were trying to recover it, notwithstanding wliich the well on the tenth flowed a "trifle over 100 barrels per day actual measure- ment in tank"; on the eleventh, while still fishing for the drill-bit, it again flowed 100 barrels a day and three million, two hundred thousand cubic feet of gas. On the twelfth, thirteenth, fourteenth, fif- teenth and sixteenth the performance of the eleventh was duplicated. On the seventeenth it flowed — on the eighteenth it was flowing and the sand had come in from the bottom so that it covered the drill-bit for which they were still fishing. On the nineteenth it was flowing while they fished. On the twentieth, unable to recover the drill-bit, they proceeded to cap the well "as directed" and were engaged in closing it until the twenty-second, on which day the report is, "capping and will be closed down to-day". See pages 559 and 560 of the volume of "Documents and Evidence Not Printed". 427 Now, Auditor Williams' and clerk White's charts imexplaiiied show a production for August of 150 barrels and tliev undoubtedly intended that this should be taken to mean that the best the w^ell could do during that month was that amount of oil. The drilling reports just referred to show that during the entire month the well was off the pump and filled with sand up to the 2500 foot level; and that on the eighth the drillers lost in the hole the drilling- bit and spent the remainder of the time before clos- ing down in unsuccessfully fishing for it. Now, this drilling-bit weighed, according to apjDellants' witness White, author of the graphic production charts, two hundred or two hundred and fifty pounds and was six inches in diameter, the casincr in which it was lost being six and one-quarter inches (R. 3278). Here is what the Associated Oil Com- pany's drilling reports show: a well four thousand feet deep, but filled with fifteen hundred feet of sand that comes in faster than it is cleaned out and that has stuck in it at the depth of 2500 feet a two hun- dred and fifty pound steel bit that lacks only a quar- ter of an inch of being as large in diameter as the casing in which it is lodged. On this well drillers are constantly at work in efforts to clean out the in- coming sand and find and extricate the lost bit. If, under these circumstances, the well produced not a barrel of oil, it would be neither matter of surprise nor show it unproductive; but, on the remarkable other hand, despite these unfavorable, nay, seeming- ly prohibitive conditions, the evidence of the Associ- ated Oil Company, subsidiary of the Southern Pa- 428 cific Company, shows that its well on 24 was flowing one hundred or more barrels a day! If that does not speak convincingly of huge productive capacity, surely there is need of the invention of a language better suited to express productivity. It is no w^on- der that on June 16, when it produced "at lowest figures 750 barrels oil", Superintendent King joy- fully predicted: "without doubt will increase in flow" (Volume of "Documents and Evidence Not Printed", page 556) — a prediction which undoubted- ly would have been fulfilled but for the influx of sand and the lodgment of the drilling-bit. A well that flows one hundred barrels of oil under such adverse conditions is surely no mean well. It might easily under favorable conditions flow one thousand bar- rels a day. If appellants rely upon the unskillful work of the drillers of the Associated Oil Company to prove non-mineral character of the lands in suit, they would be nearer success than in urging that the well on 24 constitutes such proof. The one conten- tion w^ould be as sound as the other. Both would, it is with great respect submitted, be absurd! The inaccuracies and misrepresentations concern- ing the well on 24 are duplicated in the graphic logs or production charts with reference to the wells on 26 and 30. The former came is as a gusher produc- ing five thousand barrels a day of a very light, vola- tile oil, 39° Baume, and the latter produced, accord- ing to the estimate of Mr. Maxwell, of the Associated Oil Company, made in the presence of L. J. King, superintendent, and J. W. Kingsbury, a mineral in- 429 spector of the General Land Office, at the rate of five thousand barrels a dav. Of course, this was in- itial production. Later, when the well had "blown its head off", Kingsbury on Januarj^ 24:, 1912, with Mr. McCabe, head driller of the Associated Oil Com- pany, gauged it and found it "producing 385 barrels per twenty-four hours and the gravity of the oil was 24.2° Baume." (E. 3688-9; also 3733). Both the drilling reports and appellants' dia- grammatic log show 159 feet of oil sand in the well on 26. That they so show and that the thickness represented is far greater than the average in the oil fields of California and greater than any of the wells in the Midway save one or two are facts ad- mitted by even so hostile a witness as F. M. Ander- son (R. 2629, 2635). But these logs omit to show that boulders were re- ported by the drillers in the three wells. An expla- nation of this omission was asked of White, the au- thor of the logs, as will appear from reading pages 3349 et seq. of the record. His reply amounts to this: that, when drillers find boulders, they so re- port ; but that, since they sometimes call other things boulders, he did not in his logs represent the bould- ers, because he assumed that the drillers meant other than they said. AVhite admitted that his logs failed to show "to some extent" the formations as re- ported exactly by the drillers (R. 3356), also stating that he did not take occasion to interview any of the drillers to ascertain, when they reported "boulders", 430 whether they meant what they said or something else (R. 3356). This is more important than it seems and justifies the following reference to the matter. After much insistence White was induced to "ex- plain the reason for making up the report", refer- ring to his logs and charts, Exhibits 172, 173, 174, 175, 176 and 177. Having first said that at the time he made up "that schedule" he did not know that it was to be brought into court nor for what purpose it would be used and that he made it up of his own accord because he thought "it was more desirable than to introduce all our telegrams and all our of- fice records in any court proceedings that might take place," (E. 3423-4), he finally stated that he would explain the reason for making up the report. He said that Mr. E. G. Jeffress, a representative of counsel for appellants, called at the office and wanted some data; that he. White, thought it would be ad- visable to give Jeffress a summary of the office records; that he knew from other sources that the data were to be used in this case and "for the pur- pose of supporting the contention that certain lands adjoining the lands affected by the summary were not mineral in character; and that with these facts in mind he constructed the three charts known as de- fendants exhibits 172, 173 and 174. " (R. 3225). He further stated, with reference to exhibits 175, 176 and 177, tliat they were prepared under the super- vision of W. A. Williams, chief geologist of the Associated Oil Company, and he. White, understood that they were foi- use in any litigation which the company might have affecting these lands, par- 431 ticularly this litigatiou (R. 3324). He further ad- mitted that Williams in effect prepared the logs (R. 3325). Finally he was asked this question: "I understand the log was practically made up by Mr. Williams or in his office and then was checked and the tracing made and this blue- print made from that. Is that correct? "That is about the proceeding, as I remem- ber." It is interesting in this connection to consider what is disclosed by the record concerning Mr. W. A. Williams, chief geologist of the Associated Oil Com- pany. He was one of the principal witnesses in the Visalia contest in which the Associated Oil Company, backing the locators under whom it claimed, set up the oil character of the lands in the Elk Hills on which these deep wells had been drilled. It will be recalled that certain persons had filed application for mineral patent to some of these lands on the ground that they had made valid discoveries thereon of fuller 's-earth. The locators under whom the Asso- ciated Oil Company claimed contested the applica- tion and introduced evidence on the hearing before the Register and Receiver at Visalia to prove that the lands were not valuable for fuller 's-earth, but for oil. He testified that he advised the Associated Oil Company to prospect this land and otherwise bore witness to its oil character, testifying that the wells drilled thereon by the Associated Oil Company dem- onstrated the oil character of the land (Ex. 9-E). The following situation is therefore presented: Mr. 432 Williams, the chief 'geologist of the Associated Oil Company, as a witness for his employer in a Land Office proceeding testified strongly to the mineral character of the lands under discussion. Later, for use in a proceeding in the Federal courts, he pre- pared diagrammatic logs and charts for the purpose of i3roYing the ojDposite, that is, the non-mineral character of the same lands. Admittedly, these charts omit to show much of importance and signi- cance that appears in the original drilling reports upon which they are supposed to be founded and from which witnesses for appellants say thej^ were made. Reverting to the matter of boulders, it will be re- called that appellants' expert witness, F. M. Ander- son, testified that the Elk Hills were too far removed from any ancient shore-line to contain sands capable of furnishing a reservoir for oil in considerable quantity. When asked why the same argument would not condemn the Buena Vista Hills, in whose oil character he believed and to which he bore wit- ness, he explained by saying that the Buena Vista Hills themselves contain a shore-line. Further asked if the same might not be true of the Elk Hills, he answered in the negative. He was also asked what are the jjresent evidences of shore-line conditions, and, in reply, indicated the presence of ''boulders". If appellants' diagrammatic logs and charts had shown the presence of boulders, all of the props would have been knocked from under Mr. Ander- son's argument, since the boulders would prove the 433 presence of a shore-line in the Elk Hills and thus refute Mr. Anderson's contentions. It is hardly mere accident that the diagrannnatic charts and logs omit to show the boulders which the drilling reports show and their omission cannot be explained by the frivolous argument of Mr. White that he did not in- sert the boulders because drillers sometimes report boulders when they mean something else. The ir- resistible conclusion from all of the foregoing is that the dereliction at this point is attributable to some one whose training and experience and ready mind realized what would have been imported by the offer of evidence on the part of appellants of the existence in the Elk Hills of the very thing whose presence would absolutely refute the argument of appellants' leading expert against the oil character of the lands in suit. Counsel for appellants at the time of intro- ducing the graphic logs and diagrammatic charts, exhibits 172, 173, 174, 175, 176 and 177, declared that it was not his purpose to introduce in evidence the original drilling reports from which it was clained that these exhibits were made (E. 3157) ; and these daily drilling reports, as already indicated, were forced into evidence over the protest of counsel for appellants, the latter contending that they were private documents belonging to the Associated Oil Company and that he was not at liberty even to leave them with the Special Examiner (R. 3159-60). It is not the intention of the government to ques- tion the good faith or integrity of counsel for ap- pellants in the trial court. Counsel for the govern- 434 ment conceive it to be their duty to invite the atten- tion of the court to the manifest inaccuracies and misrepresentations in the diagrammatic logs and charts in question and to the omission therefrom of many facts and circumstances reported by the drill- ers and contained in their daily drilling reports. That these inaccuracies, misrepresentations and omissions are proved by a comparison of the dia- grammatic logs and charts with the original daily drilling reports is beyond question; and that the original daily drilling reports demonstrate the truth of the situation, namely, the rich mineral character of the lands in suit and the commercial character of the three deep wells under discussion, is likewise bej^ond question. UNSUCCESSFUL WELLS DRILLED IN THE ELK HILLS SINCE PATENT. Much was made by appellants of the fact that a number of wells were drilled in the Elk Hills in 1910 and 1911 that did not produce oil in commercial quantities. As already suggested, a few unsuccessful wells do not prove the non-mineral character of the lands. Dr. Branner testified that, while he could not, when he first examined the Elk Hills, have given ''an assurance" that oil in valuable quantities could have been found, he could do so at the time of testi- fying on the basis of wells that had been put down there and found oil. He further stated that he would not hesitate to advise operators to go ahead with prospecting even if there had been twenty-eight wells drilled and indications of oil had been found 435 in only two of them, saying that it depended on how the wells were located. If put down without refer- ence to the geologic structure, he said they might go to an enormous depth without getting oil, while they might move off to one side and put do^Ti a well with- in a thousand or two thousand feet and get entirely different results. He added: "The general structure of the Elk Hills is so favorable to the accumulation of oil in that region that, if they had gone to five thousand feet and not found oil, I should still advise a company to not give up hope of finding it." (R. 1008). This evidence was elicited on cross-examina- tion and is here cited for the purpose of substanti- ating the statement that a few unsuccessful wells do not i)rove the non-mineral character of a large area, especially where there are successful wells — a matter of common knowledge. The government admits that in 1910 and 1911 sev- eral wells were drilled along the fringe of the Elk Hills which were apparently unproductive and some of which were temporarily abandoned. Their fail- ure, however, to find oil in commercial quantities throws no light whatever upon the question of the mineral character of the lands in suit which is abun- dantly otherwise proved. By unduly prolonging the discussion of unessential points the government could show from the testimony of numerous and un- impeachable witnesses that these wells were unsuc- cessful either because badly located with reference to the axis of the anticline or because drilled to an inadequate depth. As a matter of fact, in well nigh 436 every one of them gas and oil in greater or less quantities were encountered. Even appellants' lead- ing expert, F. M. Anderson, admitted that these unsuccessful wells, which he had observed on the fringe of the hills and which were not in operation when he visited them, were removed from the axis of the anticline and all in very unfavorable positions and that this was true of those that were located on the anticline. (R. 2640-1.) Much was said by appellants of the David Kinsey well on section 12 of 31-24. Kinsey himself testified that in it he got a showing of oil at 3700 feet and struck gas from 3700 to 4500 feet (R. 1795). He admitted that this well is on the eastern end of the hills (R. 1800) and it elsewhere appears that it is situated where the Elk Hills anticline is plunging rapidly downward and that, even if he had drilled to a depth of ten thousand feet, he might not have reached the oil-bearing sands. Section 12 of 31-24 is more than six miles distant from the nearest of the lands in suit. Appellants have much to say of unsuccessful wells drilled at great distances from the lands in suit, but are silent upon the large num- ber of successful wells drilled nearer to the lands in suit than are the unsuccessful wells upon which they animadvert so freely. Like or similar con- ditions to those obtaining in the case of the Kinsey well might, if space permitted, be duplicated in the case of other unsuccessful wells; but the fact re- mains that in practically every one of them there was 437 at one depth or another a showing of oil, proving the dissemination of oil through the strata. Four unsuccessful wells are joarticularly referred to on page 53 of appellants' "Brief Upon the Facts", which hajDpens to be served on counsel for the gov- ernment at almost the very moment at which the government's brief is in process of passing to the printer. It may be well, therefore, to give the court the benefit of certain information concerning these four unsuccessful wells not imparted in the brief of appellants. They rely upon their witness John Lang and his views are set out on page 84 of their brief. With reference to the Redlands Oil Company's well on section 30 of 30-23 which was drilled to a depth of 2850 feet, Lang testified that gas was found at 520 feet and at 1050 feet a color of oil (R. 1954). At 1300 feet the derrick was burned by the ignition of gas produced from the well (R. 1956). Lang testified that the depth of this well was not sufficient to test the territory and that there is a possibility of oil in commercial quantit}' at greater depth (R. 1963). This is the well which appellants' witness, W. J. Luke, Jr., designated on his map as a dry hole (R. 2303) ; but he admitted on cross-examination that the log showed sixty feet of sandy shale with a showing of oil at a depth of 2720 to 2780 feet (R. 2306). With reference to the Midwav Pacific well on 32 of 30-23, which was drilled to a depth of 2425 feet, Mr. Lang says that it was not thoroughly tested and 438 that, if drilled deeper, would more thoroughly test the territory (R. 1963) and that they quit too soon to thoroughly test it (R. 1964-5). In this well the drillers found eighty feet of brown shale between the 1510-foot level and the 1590-foot level and the log of this well bore the notation "trace of oil and gas at 1536 feet". (R. 2314). The Hillcrest Oil Company's well on section 28 of 30-23, 1670 feet deep, was, according to Lang, of in- sufficient depth (R. 1963). This is not an aban- doned well nor is the territory abandoned, since the company still keeps a watchman there and still enter- tains the hope by drilling deeper of making a good well, the present obstacle in their way being a lack of funds. This is upon the authority of Mr. Lang (R. 1960). This is further stated by the Associated Oil Company's geologist W. A. Williams in the Vi- salia contest. The log of this well shows one hun- dred and sevent3^-eight feet of gas sand (R. 2311-12). The Scottish Oil Fields' well on section 20 of 30-23 was not located upon the advice of a geologist, ac- cording to appellants' witness, T. M. Storke, who was one of the organizers of that company (R. 2045). This well found (^^nsiderable gas at 2600 feet and thereafter (R. 2044). The well was started in No- vember, 1910, and Storke testified that, since that was subsequent to the withdrawal orders of 1909 and 1910, if they. had discovered commercial and paying quantities of oil before they pulled their tools from the well, they were uncertain as to the validity of any 439 title they might acquire from the government (R. 2045). Upon this point appellants' witness Lang also testified, saying that the fact that the govern- ment had withdrawn the land in the Elk Hills had something to do with their failure to go further with their locations, since it made, it doubtful whether or not they could get title to the land. He said further: ^'The withdrawal, I think, has also had a tendency to discourage capital and has discouraged locators because of their inability to get capital in- terested." Moreover, the log of this well (Exhibit No. 11) shows seventeen feet of shale showing gas and oil (R. 1955). Lang also testified of his own knowledge that oil had been discovered on sections 26 and 30 and gas on sections 32, 30, 20, 28 and 26 of 30-23 and 30 of 30-24 (R. 1956). Appellants have sought to create the impression that the Associated Oil Company, which drilled the three successful wells on sections 24 and 26 of 30-23 and on 30 of 30-24, has utterly abandoned these wells and the lands around them. As a matter of fact, this is not true and nothing is necessary to prove it be- yond the testimony of appellants ' own witness M. H. Whittier who was a director of the Associated Oil Company from 1902 or 1903 to 1910 and from 1911 to the time when he testified. He stated that he owned over ten thousand shares of capital stock of that company of the par value of a hundred dollars each (R. 1986). As stated, he was appellants' own witness. There can be no suggestion that he did not know of what he was talking. He testified that the 440 Associated Oil Company had not abandoned any of its property in the Elk Hills (R. 1987). This fact is further shown by the evidence of the govermnent's witness J. W. Kingsbury who in April, 1913, ex- amined the wells in question and took photographs of them w^hich were introduced in evidence as ex- hibits 11-E, 11-S, 11-T, 11-U, 11-V, 11-W, 11-X, and 11-Y (R. 3692-6). Kingsbury testified that the gates of these wells were at that time locked with chains and all three of them were capped. He could hear gas escaping from the wells on sections 24, 26 and 30 (R. 3694). Men were working around the wells painting the boilers and fixing them up for the Associated Oil Company and none of the wells ap- peared to have been abandoned. They had merely the appearance of being closed down. From the well on 26 oil was coming out between the casing and running into the sump about three hundred feet away, the pressure on the gauge showing three hun- dred and twenty pounds. He estimated four hun- dred barrels of oil in the sump at that time. Other facts are set out in the record showing clearly that there was no abandonment, but a mere temporary cessation of work (R. 3695-6). CONCLUSION OF SUBSEQUENT DEVELOPMENT. It is manifest that in 1910 and 1911 the Associated Oil Company drilled three highly successful and commercial wells in the Elk Hills. It is true that during the same period other wells were drilled in or near the Elk Hills which for one reason or an- 441 other did not prove successful. It is possible that in the case of the Kinsey well no amount of drilling might have encountered oil because of the plunge of the^ anticline and the consequent depth of the oil sands. Others were failures for the same reason. In most instances, however, failure was due to in- sufficient depth and consequent discouragement on the part of drillers to which the problem of title presented by the withdrawal and lack of funds were contributing elements. The fact of the non-success of these wells has not even a remote bearing upon the question of the mineral character of the lands in suit, while the three successful wells of the Associated Oil Company demonstrate that part of the Elk Hills is commercial oil territorv. The evidence of development subsequent to patent offered by appellants demonstrates the mineral char- acter of the lands in suit. It is bevond doubt that the Associated Oil Company but for the withdrawal of September 27, 1909, would have been entitled to and could have secured patents based upon the discov- eries which they made upon sections 24, 26 and 30. This would be true even if the wells drilled thereon had been as ghastly failures as appellants have at- tempted to represent them. None would have the temerity to suggest that the oil found in any of these three wells did not constitute a discovery. Necessarily, then, such discovery proved the mineral character of the land ; for a mineral patent is based upon a discovery and it will not be denied that a mineral x^atent can be obtained only as to mineral 442 land. The foregoing propositions are not even de- batable. Their soundness is self-evident. The grant excepted mineral lands and made pro- visions for indemnity for losses T^'ithin the primary limits occasioned by locations prior to selection by the railroad. It necessarily follows that the railroad could not secure patent to land upon which a quali- fied person had by discovery perfected a mineral location. If the Southern Pacific Railroad Com- pany were to-day to file a selection list of lands with- in its indemnity limits upon which qualified persons had exactly duplicated the wells which appellants represent were drilled on the sections in question, it is not conceivable that it could succeed in securing patent over the protest of such persons. Unques- tionably, such wells would preclude the issuance of an agricultural patent to the railroad ; for, otherwise, there would be presented the paradox of the same land being open to acquisition by one party as min- eral land and by another as non-mineral land. The wells on 24, 26 and 30 demonstrate the mineral char- acter of the lands on which the}^ are. Both in the General Land Office and in the courts a discovery entitling its maker to a mineral patent is such a finding of mineral as would warrant a man of ordinary prudence in the further expenditure of money in the reasonable expectation of developing a paying property. Miller vs. Chrisman, 140 Cal. 440; 197 U. S. 313. 443 Both ill the Land Department of the govermnent and in the courts it has been repeatedly held that a finding of mineral in commercial quantity is not necessary to a discovery. Castle vs. Wimble, 19 L. D. 455 East Tintic Cons. Min. Co., 43 L. D. 79 Nevada Sierra Oil Co., vs. Home Oil Co., 98 Fed. 673 Book vs. Justice Mining Co., 58 Fed. 106 Cascaden vs. BartoUs, 146 Fed. 739 Lange vs. Rohinson, 148 Fed. 799 Miller vs. Chrism a/n, supra. The opinions in Nevada Sierra Oil Co. vs. Home Oil Co. and Cascaden vs. BartoUs were written re- spectively by Judge Ross and Judge Hunt of this court. A discovery is the foundation of the right to a mineral patent. A mineral patent issues only as to mineral land. A finding of mineral in commercial quantity is not necessary to a discovery. Does it not inevitabh^ follow that a finding of mineral in commercial quantity is not necessary to prove land to be mineral land? Compare the requisites of a discovery with the test laid down by the Supreme Court in the Dia- mond Coal & Col^e Company case for determining in advance of actual development what are mineral 444 lands. In the one case it is such a -finding or dis- covery as will justify further expenditures in the reasonable expectation of developing a paying prop- erty. In the other it is such known conditions as engender the belief that one is justified in further expenditures. The common element is the justifica- tion of expenditures. It cannot have been mere chance that led the Supreme Court to adopt in the Diamond Coal & Coke Company case a standard similar to that which that court had approved as the requisites of a discovery. But it is to be remembered that among the known conditions was not included a discovery — the rule is not so strict as in the case of an application for a mineral patent. If, then, there has been a discovery upon lands, obviously those lands may not be acquired as non-mineral lands, since they are mineral lands. The wells on 24, 26 and 30 are beyond all question discoveries. Accordingly, the lands are not patentable as non- mineral lands. To be sure, 24, 26 and 30 are not in suit ; and there are no wells on the lands in suit. But the evidence as to these wells was offered by appellants upon the idea that it would prove the lands in suit non-min- eral. If good for that purpose, though ineifective, it is both good and effective to prove the mineral character of the lands in suit. By the line of argument last set out the govern- ment does not intend to concede that the wells in question are sur-h as appellants have attempted to 445 represent them to be. On the other hand, it con- tends most emphatically and confidently that the record proves them commercially productive and commercially profitable wells. All that is intended is to show that, even if they were no more and no better than appellants would have them appear, they demonstrate the essential mineral character of lands adjoining the lands in suit and hence, instead of casting- doubt u^Don the character of the lands in suit, justify the belief entertained by appellants in 1904 which led them to covet them and made them willing to perpetrate a glaring and reprehensible fraud in order to acquire them — as they also justify the belief of the Associated Oil Company evidenced by the large expenditures which it made in 1910 and 1911. Respectfullv submitted, F. P. HoBGOOD, Jr., Special Assistant to the Attorney General, Attorney for United States, appellee. 446 ADDENDUM. Appellants' briefs were filed as the government's brief was passing to the printer and, therefore, too late to admit of answer herein. However, one posi- tion is taken or statement made by counsel for ap- pellants which is the occasion of surprise. At three places in their brief entitled "Points and Authori- ties", namely, on pages 75, 94 and 128, appellants state that there was before patent and while the selection list was pending a hearing in the land office upon the question of the character of the lands in suit. On page 128 the statement is : "There was also a hearing in the Land Office after eight weeks' no- tice to the public" and reference is made to page 3860 of the record, an examination of which dis- closes, not that there was a hearing, but that, in accordance with a requirement of the Department of the Interior, a notice was published to the effect that protests or contests against the claim of the South- ern Pacific Eailroad Company to the lands in suit "on the ground that the same is more valuable for mineral than for agricultural purposes will be re- ceived and noted for report to the General Land Office at Washington, D. C." The foregoing notice was published pursuant to a regulation of the Department of the Interior made July 9, 1894, which requires such notice when lands under selection "are found upon examination to be within a radius of six miles from any mineral entry, claim or location." 19 L. D. 21, 22. It is entirely clear that the record does not support the categorical 447 statement of counsel tliat there was a hearing in the instant case and that appellants are unable to show any distinction between the instant case and ZJ. S. YS. 3Iinor, 114 U. S. 233, 239, and Washrngton Se- curities Co. 1 :. U. S., 234 U. S. 76, 78, cited on page 94 of their brief and elsewhere herein. These cases are admitted by appellants to be authority for the position of the government that, to use their lan- guage, ''where the proceedings are purely ex parte, where no issue teas framed, where no hearing was Jiad, the findings by the patent are not conclusive''; and appellants' specious attempt to import into the instant case a hearing which is not even suggested in the record leaves the cited cases without differ- entiation. Tulare Oil & Mining Co. vs. Southern Pacific Fail- road Co., 29 L. D. 269, is a case in which there was a hearing — with what result will be shown. This case was cited below upon another point by appellants, but is not mentioned in their briefs in this court. There the Southern Pacific Railroad Company had filed a selection list, similar to that in the instant case, to lands in the McKittrick district in 30-22. Protest was filed by the Tulare Oil & Mining Com- pany and, in order to deceive the land office and suppress the true facts, negotiations were entered into by the Southern Pacific Railroad Company with the Tulare Oil & Mining Company as the result of which an agreement was entered into that the pro- test should not be urged, in consideration of which the railroad agreed to deed and did thereupon deed 448 to the Tulare Company several months before patent a certain portion of the selected land upon which oil was then being actually produced. That deed was executed by H. E. Huntington as ijresident of the Southern Pacific Eailroad Company February 21, 1900, (R. 449, 450, 1, 2 and 3) ; and the patent, No. 104, is dated May , 1901. The foregoing facts, which are not contradicted, ajDpear in the testimony of H. M. Shreve, vice-president and manager of the First National Bank of Tulare, California, and Sec- retary of the Tulare Oil & Mining Company. His testimony is brief and is found at pages 446 to 462 of the record. The Tulare case is important for two reasons. It shows that, even where there is a hearing between rival claimants — and all of the cases cited by ap- pellants on page 94 of their brief show by their titles that thev were between rival claimants and that the govermnent was not a party — , the government, not being represented, is afforded no protection and may be easilv overreached bv fraud and collusion. It also exposes the record of the Southern Pacific Rail- road Company and demonstrates its entire willing- ness to acquire lands from the govermnent in the very manner in which it acquired the lands in suit, viz., by fraud and misrepresentation and "without care as to the means" by which it profits at the ex- pense of the public. Its conduct in the Tulare case gives more than color to its capacity and entire con- tentment to do the things with which it is charged in the instant case. Moreover, it is matter of serious 449 doubt whether, when there is a hearing between individual claimants, the findings are conclusive against the government. It is not a party and the binding effect of the finding would seem to be limited to the parties. °AY AND TO $I.OO o,f Jh^ """^ ''°''''^" OVERDUE. ^^ ^"E SEVENTH DAY -C££JZMI^8AM L. Sonthem Pacifio compai y et al., appellants, vs, United St a tes of Americ a p..- S74 c c 404520 UNIVERSITY OF CALIFORNIA LIBRARY J