Business: Kettleman Kitty

Washington Henry Ochsner, a Swiss-born oil geologist, died in 1927 at 47 in a Portland, Ore. hotel, alone and virtually penniless. Behind he left a widow, two former wives, three children, a host of disgruntled backers and oil royalty rights on 2,538 gullied, sun-scorched acres in California’s Kettleman hills. The year after Ochsner died, pay sands were struck in those hills, opening up one of the country’s major oil pools. From the Ochsner acres nearly $1,000,000 of royalties have already accumulated, and estimates of the eventual total run as high as $10,000,000. Yet until last week no one had ever received a penny of these Ochsner royalties because they had been impounded by the courts pending settlement of the mos labyrinthine litigation in California his tory.

Even before Ochsner died the legal battle had begun in a desultory skirmish the luckless geologist having been given to vague, if not sly, business methods Somewhat the same methods also seemed to have carried over into his marital relations. While he was a student at the University of Wisconsin in 1903 he elopec with a nurse named Frances Anna Strasilipka, a Bohemian shoemaker’s daughter whom he deserted five months later, leaving her with child, which died at birth That was the last Wife No. i ever heard of Washington Henry Ochsner until someone sent her a clipping reporting his death Meantime Ochsner got a divorce in Goldfield, Nev., later married one Lena Jessie Nelson, who for no apparent reason became known as Nancy. They had two children, were divorced in 1925. Wife No. 2 married a man named Warren E. Baldy of Carson City, Nev., and restless Mr. Ochsner went on to Wife No. 3, Miss Hilda Carling, who bore him one son and remarried a onetime Chicago capitalist named Francis William Hinckley after Ochsner’s death.

At the dazzling signal from Kettleman hills, all three women rushed for the courts. Wife No. 3 asked that a worthless property settlement be set aside, claiming her husband died intestate. Wife No. 2 suddenly produced a will which she claimed left all to her two children. It remained for Wife No. 1, to lay down what looked like the ace. She never knew that she had been divorced. On the ground that papers were never served, she had the Goldfield decree vacated. In the eyes of Nevada law, Wife No. 2 and Wife No. 3 had never been wives at all.

To establish this contention in California was another matter. Moreover, the embattled wives by this time were being flanked by an outsider. It looked as if the entire kitty might be snatched by one of Ochsner’s old partners, Frank C. (“Pat”) Daugherty, a big, breezy Pasadena oilman who had been properly done in by the vague geologist.

Pat Daugherty was by no means the only outsider who laid claim to the Kettleman Kitty. As far back as 1910 Ochsner had been wildcatting on the public domain around Kettleman. Ghosts from this early period arose in the courts by droves. Some 50 people from around Fresno, Calif., known as the Morrow Group, sued for 50% on the ground that they helped Ochsner assemble the claims. Another roup on the same ground asked for 20%. An Ochsner wildcatting promotion called Medallion Oil Co., which lost $100,000 for number of Wall Streeters including Bernard Mannes (“Barney”) Baruch, sued not only for the royalties but the entire lease, pipe, well and derrick.

Another category of litigation dated rom the Federal oil land leasing law of 1920, which washed out old claims. As soon as that went into effect Oilman Pat Daugherty, who learned about leasing in Texas, hopped into his big old Cadillac, turned up the road to Kettleman, staked out nearly four square miles identical with Ochsner’s old claims. He offered to ile them in Ochsner’s name in return for a 10% interest, which was legitimate practice, Daugherty knowing land office ropes which Ochsner did not. Indeed, Ochsner tried to file his own claims—after looking at Daugherty’s papers—but the land office found them so irregular that the application was refused. After that Ochsner came to an understanding with Daugherty, though the geologist never got to the point of signing his name. And once while Daugherty was away on a trip, Ochsner sold the claims, which eventually wound up with General Petroleum. Of course, Ochsner retained the royalty rights. These were shuttled around in various private holding companies with assistance of various parties, most of ‘whom also subsequently jumped into the legal fray. Daugherty started his particular lawsuits in 1924, dragging them on with no success for ten years until he suddenly established, on the basis of his original verbal agreement, his partnership rights. If that victory was upheld on appeal, which will be heard this week, Daugherty would get the entire kitty.

Both Daugherty and the Ochsner wives were willing to hedge against that decision. So last month the courts approved a settlement whereby the Ochsner heirs got 60%, Daugherty 40% of the royalties, past and future, derived by the Ochsner estate. The estate meanwhile had settled with the private holding company which holds the royalty rights at the moment, the estate receiving 42% of the total royalties. The balance goes to the heirs of an old Ochsner crony, R. H. Arnold. If Daugherty is sustained in the appeal from his victory the Arnold interest will go to him also.

When the Daugherty threat grew serious the embattled Ochsner wives formed a united front, agreed among themselves on an intramural settlement. Wife No. i, anxious to see that her husband’s children were taken care of even if they were not her own, was satisfied with 10% the family’s share. Wife No. 2 took with another 20% each for her two children. Wife No. 3 got 25% with another 20% for her child. Though several suits are still pending by outsiders, San Francisco’s Judge Frank H. Dunne last week decided that it was high time to dig into the Kettleman Kitty, ordered the first distribution, about $130,000, of the impounded funds.