Through ranching, Saunders and his cousins became associated with large rancher
John Tunstall, who in 1877 with the backing of the powerful
John Chisum opened a rival business to the Murphy businesses, with partner
Alexander McSween. This enraged Murphy and partner
James Dolan, who hired members of both the
Jesse Evans Gang and the
John Kinney Gang, in addition to the
Seven Rivers Warriors to goad Tunstall into a fight. Tunstall, in turn, hired gunmen of his own, to include Bonney, Bowdre, Brewer, the Coe brothers, Saunders, and Scurlock. On February 18, 1878, Tunstall was murdered by
Jesse Evans and members of his gang, sparking the Lincoln County War. Saunders remained allied with the McSween faction, and became an original member of the "Regulators", formed to counter the corrupt sheriff's office of
William J. Brady, allied with Dolan-Murphy. On March 6, 1878, the Regulators arrested Frank Baker and Bill Morton, who were present at Tunstall's
murder. Three days later Baker, Morton and Regulator William McCloskey were killed by the Regulators at Agua Negra, with McCloskey believed to have betrayed the Regulators. On April 1, 1878, Regulators Bonney,
Henry Newton Brown,
Jim French, McNab,
John Middleton and
Fred Waite shot at the sheriff and his deputies through makeshift
portals of the
adobe wall they were behind. Bonney was wounded by Deputy Matthews while attempting to recover the rifle taken from him by Brady. Sheriff Brady and Deputy Hindman were killed. On April 4, 1878, the
Gunfight of Blazer's Mills took place, during which
Buckshot Roberts was killed, along with Regulator leader Brewer, in addition to Billy the Kid, Bowdre, George Coe, Middleton and Scurlock being wounded. McNab was elected as the new leader of the Regulators following Brewer's death. On April 29, 1878, while en route to the Coe Ranch, Frank Coe, McNab and Saunders stopped off at the Fritz Ranch to rest, where they were ambushed by members of the Seven Rivers Warriors. In the ensuing gun battle, McNab was killed and Saunders was shot through the hip and badly wounded, with Frank Coe captured. Because of his injury, Saunders was left behind. The following day, George Coe, believing his brother had been killed and knowing that Saunders was wounded, shot and wounded Seven Rivers member "Dutch Charlie" Kruling in Lincoln. Seven Rivers members John Galvin, Tom Green, Charles Marshall, Jim Patterson were also killed that day in Lincoln, and the Regulators were blamed. However, it is believed just as possible that they were killed by other Seven Rivers members, as the gang had a lot of in-fighting among themselves by that point. Saunders, during that time, was just starting his recovery from his wound. On May 15, 1878, the Regulators stormed
Seven Rivers, New Mexico, killing gang member Manuel Segovia, who was believed to have shot and killed McNab. By July, Saunders had made a fair recovery from his wounds, but was not present during the
Battle of Lincoln — the largest armed conflict of the Lincoln County War — during which McSween was killed. That battle, for all practical purposes, ended the Lincoln County War. Several others would die in the next four years or so because of their involvement in the war. ==Later life and death==