Gray Eagle Oil Co., 112 Fed. 4, 14, 50 C. C. A. 79, 61 L. R. A. 230; Rooney et al. v. Barnette et al., 200 Fed. 700, 119 C. C. A. 116; Garthe v. Hart, 73 Cal. 541, 15 Pac. 93; Horswell v. Ruiz, 67 Cal. 111, 7 Pac. 197; Miller v. Chrisman, 140 Cal. 440, 447, 73 Pac. 1083, 74 Pac. 444, 98 Am. St. Rep. 63; Smith v. Union Oil Co., 166 Cal. 217, 224, 135 Pac. 966; McCormick v. Varnes, 2 Utah, 355; Hopkins v. Noyes, 4 Mont. 550, 2 Pac. 280.

That right of possession against all intruders this court in the case of Rooney v. Barnette, supra, expressly held is a right that the possessor can convey to another, as did the Supreme Court of California in Miller v. Chrisman, supra, and as have many other courts. The rights thus possessed by the locator to maintain his possession against intruders while in good faith seeking to discover minerals within the boundaries of his claim, and to convey such possession before discovery, are, as said in Miller v. Chrisman, rights of value. After discovery they manifestly become binding upon the government, and protected by the Constitution. While it is possible that at times oil may be found issuing from the surface of the ground (in which case discovery, of course, may be made without difficulty or expense), it is matter of .common knowledge that almost always drilling is essential to such discovery, and in many sections-particularly in the region where the lands in question are situate-drilling to great depth, involving heavy

costs.

The records show that the lands here involved are situate in an arid region, where water at the times in question was obtained with great difficulty and at heavy cost, and that drilling without some water was impossible; that in such circumstances the appellant McLeod, on the 25th day of June, 1909, leased upon a royalty basis to a corporation called Mays Oil Company, afterwards known as Mays Consolidated Oil Company, the south half of the northwest quarter, the north half of the southwest quarter, the northeast quarter, and the southeast quarter of the said section 28, under which lease the lessee entered into the immediate and exclusive possession of those tracts of land. The lease (subsequently acquired by the appellant Consolidated Mutual Oil Company) provided for the drilling of wells upon each of the quarter sections embraced by the lease, in the effort to discover and take oil therefrom, for continuous and diligent work by the lessee to that end, and for the working of all of the said claims as a unit. And it was shown in each case, upon the application for the appointment of a receiver, that during the brief period that intervened between the execution of the lease and the making by President Taft of the proclamation of September 27, 1909, entitled "Temporary Petroleum Withdrawal No. 3," the lessee built a two-inch pipe line more than three miles in length to connect with the main of a water company called Stratton Water Company, constructed a standard derrick on each of the claims, built on the northeast quarter of the section a water tank with pipe line connections, a bunkhouse and a cookhouse, containing a dining room. sufficient for the seating of 40 men, a kitchen, and bedroom; on the northwest quarter of the section it built another bunkhouse 20x30 feet in size; and on the southeast quarter it built a stabling yard for its

freight teams and for a buggy and horses-in addition to which it built a boiler house and erected machinery for operating one full string of tools for drilling at the derrick on the southwest quarter of the section.

It further appears that, not only did the said lessee have, on the day of the issuance of the President's proclamation, the undisputed possession of all of the property covered by the lease, but was then actually drilling a well by means of the derrick on the southwest quarter of the section, having commenced to do so the preceding month, and which well was then about 830 feet in depth. Moreover, it is shown without conflict that the lessee had abundant means to carry out its undertaking, and but for the impossibility of securing the necessary water would have been sinking at each of the derricks on the other quarters of the section; that it intended and had directed the successive sinking of the other wells as soon as oil should be struck in the first one, and was so intent on the speeding of the work as to offer and pay a bonus to its employés for extra work.

It is not contended that the land in question was not subject to location under the mining laws by the predecessors in interest of the appeilant McLeod, nor that the boundaries of the respective claims were not properly marked on the ground, nor that there was any intrusion upon the actual possession of the appellants or upon that of their predecessors in interest. Up to the time of the proclamation by the President, however, there had been no discovery of oil or any other mineral on any of the land, and consequently at that time the government was at liberty to at once withdraw it from any sort of disposition, either through act of the Congress or by order of the President, as was adjudged by the Supreme Court in the case of United States v. Midwest Oil Co., 236 U. S. 459, 35 Sup. Ct. 309, 59 L. Ed. 673—three of the Justices dissenting.

In pursuance of the power vested in him, President Taft on September 27, 1909, issued this proclamation:

"Temporary Petroleum Withdrawal No. 5.

"In aid of proposed legislation affecting the use and disposition of the petroleum deposits on the public domain, all public lands in the accompanying lists are hereby temporarily withdrawn from all forms of location, settlement, selection, filing, entry, or disposal under the mineral or nonmineral public land laws. All locations or claims existing and valid on this date may proceed to entry in the usual manner after field investigation and examination."

It is insisted on behalf of the government that the exemptions from the effect of the order of the President therein provided for cannot be properly held to apply to any land upon which at the time of its promulgation no mineral had been discovered, even though, as in the present cases, the land had been located under and by virtue of the mining laws, its boundaries properly marked on the ground, and the assignees of the locators then in its bona fide actual possession, actively engaged in seeking mineral therein.

A discovery of mineral in the ground under such conditions would manifestly have perfected the locations, not only against third parties, but also against the government, and would have given to the owner of them an equitable title against the United States, and have entitled the

owner to the legal title upon compliance with the statutory requirements respecting annual assessment work and payment, which rights would have been secure under the provisions of the Constitution of the United States. Such locations upon which discovery had then been made needed no protection through any order of the President. Said the Supreme Court in Belk v. Meagher, 104 U. S. 279, 283 (26 L. Ed. 736): "A mining claim perfected under the law is property in the highest sense of that term, which may be bought, sold, and conveyed, and will pass by descent."

It is not, therefore, added the same court in Sullivan v. Iron Silver Mining Co., 143 U. S. 431, 434, 12 Sup. Ct. 555, 36 L. Ed. 214, "subject to the disposal of the government.'

President Taft, who had himself been a distinguished federal judge, of course well knew this, and we think it altogether unreasonable to hold that the words employed by him in his order, "All locations or claims existing and valid on this date may proceed to entry in the usual manner after field investigation and examination," were intended, or can be fairly construed, to apply to lands upon which discovery had already been made and to which its locators had already acquired an equitable title, but, on the contrary, that they were intended, and should be held, to apply to all locations and claims existing at the time of the making of the withdrawal order to which the locators or claimants had some valid right. See United States v. Winona & St. P. R. Co., 165 U. S. 463, 478, 479, 17 Sup. Ct. 368, 41 L. Ed. 789.

That the appellants then had in the lands here in question valuable rights of possession and conveyance, which the courts of the country would protect and enforce, and consequently valid rights, has already been shown-rights, too, acquired by the license, if not by the invitation, of the government, and in the pursuance of which the lessee of this property had then, according to the records, already expended more than $20,000, and which land it continued to diligently explore and develop at very large additional expense for years, without objection by the government or by any third party so far as appears. And by its act of June 25, 1910 (36 Stat. 847), entitled "An act to authorize the President of the United States to make withdrawals of public lands in certain cases," Congress expressly declared:

"That the rights of any person who, at the date of any order of withdrawal heretofore or hereafter made, is a bona fide occupant or claimant of oil or gas bearing lands, and who, at such date, is in diligent prosecution of work leading to discovery of oil or gas, shall not be affected or impaired by such order, so long as such occupant or claimant shall continue in diligent prosecution of said work."

This was the first legislative recognition ever made by Congress of any right on the part of an occupant or claimant of oil bearing lands prior to the discovery of oil thereon. By that act, which was obviously a remedial statute, and therefore to be liberally construed to effect its object, Congress expressly gave to the good-faith occupant or claimant of either oil or gas bearing lands, who, at the date of the act, was "in diligent prosecution of work leading to discovery of oil or gas," a status. That the appellants were at the time of the passage of the act in the actual and exclusive possession of the lands here in controversy and in diligent prosecution of work on one of two contiguous claims for

the benefit of both, as well as other contiguous ones, in the effort to discover oil thereon, which continuous work resulted in the discovery of oil in each of the quarter sections here involved in large quantities, is clearly shown, and that the appellants continued from the date of the passage of the said act "in diligent prosecution of said work" is undisputed. We therefore regard it as clear that the appellants also come within the express provisions of the act of June 25, 1910.

In deciding adversely a much stronger case for the government than are the present ones, the Circuit.Court of Appeals of the Eighth Circuit, in the recent case of United States v. Grass Creek Oil & Gas Co. and Ohio Oil Co., 236 Fed. 481, 487, 149 C. C. A. 533, 539, in speaking of the act of June 25, 1910, said:

"It is claimed that actual drilling operations were not commenced until July 1, 1914, on the northwest quarter, and on July 31, 1914, on the east half of the southwest quarter, and that until the actual drilling was begun there was no prosecution of work within the meaning of the act of Congress. We are of the opinion that this is too narrow a view to take of this statute. The enactment of this proviso by Congress could have had but one object in view, and that was to protect the rights of all persons who, at the date of an order of withdrawal, are occupying or claiming oil-bearing lands in good faith, for the purpose of acquiring them under the laws of the United States, and are diligently prosecuting the work leading to the discovery of oil. Before the enactment of this statute discovery of the mineral was essential to make a location. As frequently-in fact, in most instances-prospecting was necessary in order to determine whether oil or gas are on the public lands, and large sums of money were necessarily expended to ascertain this fact, Congress by this proviso in the act of 1910 extended its protecting arm to those acting in good faith in an effort to ascertain whether there was oil or gas under them. In our opinion, when a citizen of the United States in good faith enters upon public land for the purpose of discovering oil or gas, takes possession of the land by placing a caretaker thereon while he is taking proper steps to obtain the material necessary for the work of constructing the camps, enters into contracts for drilling, acting as expeditiously as possible in erecting camps and preparing for the drilling, spends money and enters into contracts whereby he becomes liable for sums of money to prosecute the work leading to the discovery of oil or gas, and as soon as it is possible, by the exercise of proper diligence, begins the work of drilling, and continues it diligently and expeditiously until oil is discovered in commercial quantities, he is within the protection of this proviso."

The facts in the cases of United States v. Midway Northern Oil Co. (D. C.) 232 Fed. 619, were very different from those in the present cases, as will clearly appear from this excerpt from the opinion of the learned judge who decided them:

"No discovery of oil had been made on any of the lands at the date of the first withdrawal order, nor was any one in possession thereof at that time actually engaged in work looking to a discovery. In suits 47, A-2, A-3, and A-30 sundry parties had, prior thereto, posted on the land involved in each of the suits and caused to be recorded a notice claiming a location of the land as a petroleum placer mining claim under the mining laws of the United States; but no discovery of oil had been made or any work done thereon, except some so-called assessment work, which consisted in excavating sump holes, building small cabins, and the erection of a couple of derricks on one of the tracts, which derricks were never used or equipped for drilling, but were subsequently taken down and removed to other parts of the premises. After the first withdrawal order, parties claiming as lessees of the so-called locators in the four cases referred to, and in the other two without any previous notice of location, commenced drilling operations in each of the tracts

involved in the fall of 1909 or early in 1910, and continued thereafter until the discovery of oil, which they were extracting and disposing of when these suits were commenced against the parties in possession, the so-called locators, the purchasers of the oil, and others."

Moreover, Congress by its act of March 2, 1911 (36 Stat. 1015, c. 201 [Comp. St. 1916, § 4637]), gave statutory recognition of the right of transfer or assignment by the locator, under the mining laws, of any land containing oil or gas, to any qualified person, persons, or corporation "prior to discovery of oil or gas therein," provided "that such lands were not at the time of inception of development on or under such claim withdrawn from mineral entry."

But, over and above what has been said, the records show that upon due application to the Land Office of the United States the appellant McLeod was permitted to enter the lands here in question, for which he paid to the government $1,600, receiving therefor its register's final certificate of entry, issued October 31, 1914, which certificate it appears remains uncanceled, and concerning which the bills in these suits, filed as above stated October 25, 1915, are entirely silent. In speaking of a similar receipt issued to the Brick Company in the case of El Paso Brick Co. v. McKnight, 233 U. S. 257, 34 Sup. Ct. 498, 58 L. Ed. 943, L. R. A. 1915A, 1113, the Supreme Court said: "The entry by the local land officer issuing the final receipt was in the nature of a judgment in rem (Wight v. Dubois [C. C.] 21 Fed. 693), and determined that the Brick Company's original locations were valid and that everything necessary to keep them in force, including the annual assessment work, had been done. It also adjudicated that no adverse claim existed and that the Brick Company was entitled to a patent. From that date, and until the entry was lawfully canceled, the Brick Company was in possession under an equitable title, and to be treated as though the patent had been delivered to' it. Dahl v. Raunheim, 132 U. S. 260, 262 [10 Sup. Ct. 74, 33 L. Ed. 324]. And, when McKnight instituted possessory proceedings against the Brick Company, the latter was entitled to a judgment in its favor when it produced that final receipt as proof that it was entitled to a patent and to the corresponding right of an owner."

Not only has no attack, so far as appears, been made by the government on the register's final certificate of entry, but there is in these cases not the slightest showing of any fraud or lack of good faith at any time on the part of the appellants or of any of their predecessors in interest. True, the bills of the government, which were verified. by an agent upon information and belief, alleged that the location notices under which the appellants claim were posted by "mere dummies" to enable "defendant McLeod or some one else" to obtain the land; but that allegation was put in issue by positive denial under oath and there was no undertaking whatever to sustain the charge. Among the affidavits filed in opposition to the appointment of receivers was one made by the president of the appellant company, stating as facts the following, which were uncontradicted:

"That the said Consolidated Mutual Oil Company acquired and entered into possession of said properties in the month of February, 1914, and from that time forward this deponent has been the president of said corporation, and has had the active management of its affairs; that at the time that the Consolidated Mutual Oil Company took possession of said section 28, as aforesaid, there were situate on the said section six completed wells in which oil had

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