Show T ea Pot Oil Case Lost By Sinclair In Supreme Court Setting Aside of Naval Oil Leases Ends Three Years Y cars of Litigation Growing Crowing out of Senate Senath Inquiry Little Black Bag Is Recalled WASHINGTON WASHINGTO Oct 10 Bj By The Associated Press The Thc The VV vy supreme court today set aside Harry F. F Sinclair's Sinclair lease on Tea Pot lot Dome naval na oil in the reserve Wyoming The courts court's opinion in the case which was argued before the summer recess was read by Associate Justice Butler Its effect was to affirm the decision o of the Eighth circuit court of appeals rendered by br Judge e Kenyon Ken on cancelling the lease and contract on the ground of fraud frau and corruption The Tile supreme court held that the Tea Pot lot Dome lease question was controlled bj- bj its recent decision in the Pan Pan- American cases brought by Edward vard L. L Doheny involving in leases and contracts on the Elk Hills naval reserve r in Cali California fornia Cornia which the court ordered cancelled c The decision handed down today covers the civil action end of ot the t. t e Tea TeaPot TeaPot TeaPot Pot Dome litigation Sinclair who is isa isa a a. millionaire and ana an 1 prominent as a A. sportsman is to go on trial here next Monday with Albert B. B Fall secre scene secretary secretary tary of the Interior when the lease was signed on a charge of ot conspiracy to tl defraud the government in connection with the lease TALL FALL ASSAILED ASS Justice Butler was severe fevere in his criticism of oC men fez Secretary Falls Fall's ac activities ac- ac activities that the leasing of the naval reserves was primarily for lor thi purpose of oC using the tile proceeds for fortha forth forthe the tha th construction of oC worth of ot of storage st rage for the navy on the At- At AtI Atlantic Ian lantic tic and Pacific instead of oC deposit deposit- depositing depositIng I ing big the money in the treasury The Tile Justice declared that there had been no danger of drainage that Fall Fan knew it and that representation to W the th contrary was in tad I ad faith but had been used as the basis for making the lease and contracts FAITHLESS F. OFFICER Touching en the governments government's al allegations at- at allegations legations that Fall Pall received In hi liberty bonds from the Sinclair in interests In- In in connection with the leas less leasing lessing ing 1 Justice Butler declared the l e evidence dence showed Fall was a faithless public officer and that the company organized In New York to 00 purchase oil out of ot which the bond transaction arose was WIlS for no legitimate purpose The Tea Pot Dome lease leae made by byn n JY the court as J s shaving having been procured by fraud r and corruption LONG LITIGATION The decision in the Teapot Dome case ends three years ears of ot litigation growing out of the Senate oil in investigation In- In Investigation Investigation which was wu initiated after aUer the lease of the Wyoming naval oil resene to Harry F F. Sinclair by Al Albert Al- Al Albert Albert bert B. B Fall FaIl as interior secretary The other naval oil reserve In Involved In- In that of oC Elk Hills Ellis Calif Call awarded to Edward L. L Doheny by Fall was restored to t the government by the supreme court in a decision early this year ear Fraud and corruption were charged ed by the government in both cases with alleged Liberty bond payments to 00 Fall figuring prominently in the Teapot Dome case and the payment to Fall by Doheny in es- es change for a personal note featuring featuring ing the ER Elk Hills litigation LITTLE BLACK m. BAG G The little black bag transaction between the then interior secretary and the California oil operator as S aswell Swell aswell well as one payment of in Liberty bonds to Fall by the lessee of ot Teapot Dome after Fall left the cabinet were developed by the tile sen sen- senate senate en- en enate ate committee after aUer months of oC in investigation In- In Investigation investigation It remained for special government oil counsel appointed by direction of the senate to ro bring the th further start start- startling startling startling ling charge that within a few weeks after aeter the Sinclair Fall negotiations had been completed in Lib Liberty Liberty erty bonds found their way from Crom the oil operator to ro the then interior sec sec- secretary secretary and his son-in-law son M. M T. T Ev- Ev Everhart erhart ot of Pueblo Colo Cob The government go attacked the Sin Sin- Sinclair Sinclair Sinclair clair lease lea as invalid not only on the ground of ot fraud and corruption but also on the ground that it was not authorized by law The Fed Fed- Federal Federal Federal eral District court at t Cheyenne Wyo Wo disagreed on both contentions and sustained the lease and the supple supple- supplemental mental l contract under which Sin Sin- Sinclair Sinclair clair was to 00 build a B pipe line to the Teapot Dome reserve and construct storage for the navy nary on the Atlantic coast In exchange for roy roy- royalty royalty royally alty ally oil accruing to the government u tile the f lease l ev e u m u m In n an a opinion by Judge William S. S Kenyon a 0 former United States senator the eighth circuit court c urt of ot appeals sustained the district court courton on the proposition that there thue was au flu- authority In law for Cor making the lease lea but canceled it on the ground that fraud and corruption ran rae through the whole transaction between Sin Sin- Sinclair Sinclair clair air and Fall The wealthy oil oU operator and sportsman then appealed to W the su supreme su- su supreme supreme preme court contending that the i evi evidence dence had failed to 00 show fraud and corruption and Insisting that as both bothof bothof bothof of the lower courts had declared that there was authority in the tile law for forI leasing I the naval oil reserve to pro pro- protect p tort it f from drainage ln ger the lease r e and J the contract must be sustained SINCLAIR'S mS CONTENTION CO On the other hand the govern gotem- ment asserted that the facts dis dis- disclosed disclosed dis- dis disclosed closed by the evidence In the trial the court were ample to 00 warrant action cf of the circuit court In cancel cancel- canceling cancelIng ing log the th lease and contract and in Continued d on Page Fare Two Tn-o. TEA POT LEASE IS SET ASIDE Continued from Pare Page One refusing to compensate the Sinclair I Crude Oil Purchasing company and the Sinclair Pipe P Line company c tor f ir expenditures upon n the e reserve be because be- be because cause they had been wilful trespass trespass- trespassers ers Sinclair Insisted that the questions at Issue before the supreme court were materially ml different from those pre presented In itt the Doheny case C The government eminent contended that under the sweeping decision In the Doheny case the Sinclair lease was Invalid for want of authority to make It It also Insisted that had hod the lease been authorized by law It must be canceled for fraud and corruption Counsel for Sinclair urged that the lease was as Justified because b use of or the danger of the tho drainage of Teapot Dome but government attorneys re replied re- re replied plied that facts did not warrant a ft conclusion of danger of drainage and nd that the real purpose of the tease lease was to enable naval officials to u use Ule e royalty oil for the erection of storage for which congress had re refused re it fused to appropriate |