Welch

Appeal has been taken by Obispo Oil Company, a corporation, from a judgment entered in its favor for $4,010.24 in an action brought by it against appellee to recover $266,162.43, alleged to have been illegally exacted from appellant on account of additional income and profits taxes for the year 1920. Appellee has also appealed, but will hereinafter be referred to as appellee.

The findings of fact made by the trial court are not in dispute.

Appellant was a successor to a claim of title held under a placer mining location, made in the year 1900, covering 40 acres of land in the Kern River district of California, and prior to the year 1914 was engaged in the development and production of crude petroleum.

The Secretary of the Interior classified the land in question as oil bearing on June 9, 1909. Such land was described in the Taft withdrawal order of September 27, 1909, which purported to temporarily withdraw such land from all forms of “location, settlement, selection, filing, entry or disposal.” The Taft order also contained the condition that “all locations or claims existing and valid at this date may proceed to entry in the usual manner after field investigation and…

(dissenting).

I dissent and will briefly indicate the reason therefor. With the holding of the *864 majority that the amount of money paid to the appellant by the government in connection with the settlement was not a gift, I am in full accord. I think, however, that the amount so paid was income to the taxpayer which was not subj ect to a deduction for depletion of the value of the land or of the oil content thereof by reason of the extraction of oil therefrom, because the land did not belong to the petitioner. The settlement authorized by Congress and entered into by the petitioner by its terms which authorized a lease from the government in effect required the petitioner to recognize that until the settlement, and after it, the title to the oil land and its oil content was in the United States. It follows that the petitioner by the terms of the settlement of its rights admitted, and was required by the act of Congress to admit, that it had no interest in the land which belonged to the United States and which had been withdrawn from entry. On the other hand, the government unqualifiedly admitted the right of the petitioner to seven-eighths of the money impounded in court. That…