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Judge
Kelly:
“What interest was Hutchinson given?”
Hoyland:
“One third.”
Judge
Kelly: “How could that be?”
Hoyland:
“Originally there was just Rife and myself. Fifty-five percent
and forty-five percent. That was later divided, thirty to Rife,
thirty-three and a third to Hutchinson and thirty-six and
two-thirds to me.”
Comperet:
“(A copy is substituted for the original of this exhibit).
“I show you a document hand written, is that the one by which
Hutchinson’s one third is conveyed to him?”
Hoyland:
“Yes.”
Comperet:
“At that date, April 30th, had you yet reached a
definite agreement with regard to licensing Beam Ray to
manufacture machines?”
Hoyland:
“I don’t remember when we started to make drafts.”
Comperet:
“When you did make an agreement you understood that the work
would be divided – Dr. Rife to do laboratory work, you to
supervise the making of the machines and Hutchinson to do the
business end, including sales?”
Hoyland:
“Yes.”
Comperet:
“At that time there was no money on hand to start the
business?”
Hoyland:
“There was none. It was Mr. Hutchinson’s business to get the
money.”
Comperet:
“Did you have Carson, the man who came in to work with you,
agree that he would not tell anyone the secrets of the
machine?”
Hoyland:
“I told him, in confidence, the workings of the machines, and
I made him promise not to tell anyone.”
Comperet:
“Carson remained as long as you remained technical
director?”
Hoyland:
“Yes.”
Comperet:
“You know that Carson refused to give the corporation any
information concerning the making of the machine?”
Hoyland:
“Yes.”
Judge
Kelly: “Is this machine patented?”
Hoyland:
“It is impossible to patent it. You have to be very careful
who you give information to.”
Comperet:
“You said that Mr. Steiner was attorney for the British?”
Hoyland:
“That’s my understanding.”
Comperet:
“Wasn’t he also attorney for the corporation or for
yourself?”
Hoyland:
“No.”
Comperet:
“Where was the agreement between the three owners and
corporation prepared?”
Hoyland:
“Mrs. Willman typed it out.”
Judge
Kelly: “Did she construct it also?”
Hoyland:
“No, I don’t know who constructed it.”
Comperet:
“You yourself made some changes in it?”
Hoyland:
“I made some suggestions, but I don’t know whether it was
changed after that or not.”
Comperet:
“Didn’t you know that most of the final draft was prepared
in the office of Sloan and Steiner?”
Hoyland:
“No, I was in the shop most of the time, not in the office.”
Comperet:
“You read that contract before you signed it?”
Hoyland:
“I presume I did. Mr. Hutchinson was supposed to be taking
care of all the contracts at the time.”
Comperet:
“I show you this contract. Do you see the names Sloan and
Steiner on this paper? Does that refresh your memory?”
Hoyland:
“No it doesn’t.”
Comperet:
“Every bosy and cook and a hand in drawing up that
contract?”
Hoyland:
“Probably.”
Comperet:
“During the time that the negotiations went on between you and
Rife and Hutchinson for the taking over of the manufacturing end
of this thing by the corporation you were informed, were you
not, of how the stock in the corporation was to be divided?”
Hoyland:
“I was informed that Dr. Rife and I were to receive thirty
percent between us.”
Comperet:
“You were informed of other stock arrangements?”
Hoyland:
“He wrote it down and then destroyed it.”
Comperet:
“You knew who they were and what proportion of stock they were
to get?”
Hoyland:
“I didn’t know who they were, I merely heard the names.”
Recess.
Friday, June 1939, 10 A.M. Hoyland on the stand. Sapiro
explained that he has cases to handle in San Francisco and would
have to be absent from July 19 to July 26. Judge Kelly said that
he was determined to go thoroughly into the case and to give
plenty of time to it. He said he was puzzled as to what was the
affect of the issuance of the stock, and he said that the case
would have to be continued from noon Friday 15, until the 27th.
Comperet withdrew Hoyland and put Olmstead on the stand.
Comperet:
“What is your occupation?”
Olmstead:
“I practice law.”
Comperet:
“Were you one of the original corporators of the Beam Ray?”
Olmstead:
“I was.”
Comperet:
“Are you still a shareholder in that corporation?”
Olmstead:
“I am.”
Comperet:
“On June 1st, 1937 were you then a shareholder?”
Olmstead:
“I was.”
Comperet:
“On June 1st did the stockholders hold a special
meeting, and if so where?”
Olmstead:
“Yes, at Fickerson’s law office in Los Angeles.”
Comperet:
“Were directors meetings also held on that day?”
Olmstead:
“Yes.”
Comperet:
“Were you present at both meetings and can you tell us what
took place?”
Olmstead:
“Yes, I was told by Fickerson to be in his office by ten. A
meeting of the board directors was called then. The minutes of
that meeting I presume had been prepared to advance
Olmstead:
“An offer was made from Mr. Cullen to transfer to the
corporation a contract which was held by Cullen at the time, in
relation to services for a correspondence school in aviation.
The corporation accepted the contract from Cullen”
Comperet:
“What did he ask in return for this contract?”
Olmstead:
“The issuance of four thousand nine hundred and ninety seven
shares of stock.”
Comperet:
“At this meeting was Mr. Cullen’s offer discussed by the
directors, and did they taken any action?
Olmstead:
“They passed a resolution accepting it.”
Comperet:
“What did they do regarding the matter of making an
application to the corporate commissioner for a permit?”
Olmstead:
“A resolution was passed authorizing Fickerson to prepare an
application for a permit to issue shares to Cullen, Hutchinson,
and Olmstead.”
Comperet:
“Was any further action taken by the directors prior to the
close of the meeting?”
Olmstead:
“No.”
Comperet:
“On the same day was there a stockholders meeting held?”
Olmstead:
“Yes, after the other meeting.”
Comperet:
“Who were the holders of all of the issued stock of the
corporation that day?”
Olmstead:
“Cullen, Hutchinson, and myself.”
Comperet:
“At the stockholders meeting what business was taken up?”
Olmstead:
“A resolution made to increase the number of the board of
directors from three to nine.”
Comperet:
“After the shareholders voted on this matter did they make any
provisions as to how the six additional places on the board were
to be filled?”
Olmstead:
“I explained how I could not be in San Diego regularly so they
decided to fill at least three of the places in San Diego in
order to have a forum without my presence.”
Comperet:
“Was there any other business?”
Olmstead:
“Three new members were elected to the board.”
Comperet:
“Going back to the first directors meeting held on that day,
after Cullen’s offer of contract in exchange for stock, was
there a copy made of the resolution?”
Olmstead:
“Yes, a copy was made by the secretary.”
Comperet:
“Do you know if an application was made to the corporate
commissioner for a permit?”
Olmstead:
“Yes, to Mr. Fickerson.”
Comperet
showed him a copy of the application and he identified it.
Comperet:
“What was done with the original?”
Olmstead:
“I expect it was sent to eh corporate commissioner.”
Sapiro:
“Did you prepare that application or sign it?”
Olmstead:
“I did not.”
Sapiro:
“Weren’t there some exhibits attached to the application?”
Olmstead:
“I don’t know.”
Sapiro:
“Will you read it and see if it doesn’t refer to some
exhibits?”
Olmstead:
“Yes.”
Sapiro tried to keep document out of exhibits but Judge Kelly
ruled it could be admitted.
Comperet:
“Did the corporation issue the 4997 shares of stock in
accordance with the permit?”
Olmstead:
“Yes, they were issued to Cullen, Hutchinson, and myself.”
Judge
Kelly: “How many to each?”
Olmstead:
“I received six hundred shares. I don’t know about the other
three.”
Comperet
showed the court how the issuance of the 5000 shares stood after
this meeting.
Comperet:
“On August 28, 1938, was there a special meeting of the
stockholders of Beam Ray in Fresno and were you present?”
Olmstead:
“Yes.”
Comperet:
“Were the other two there?”
Olmstead:
“Yes.”
Comperet:
“Were you three the only stockholders in the corporation?”
Olmstead:
“Yes.”
Comperet:
“At that meeting were the minutes of previous directors and
stockholders meetings read?”
Olmstead:
“Yes, we read all of the minutes of the meetings of the
corporation from its inception.”
Comperet:
“Was any resolution made regarding actions and taken
previously?”
Olmstead:
“Yes, minutes were all validated, a unanimous vote passed this
resolution.”
Comperet then showed Olmstead the minutes of this meeting and
Olmstead identified the resolution as one taken at that time.
Comperet:
“I show you a document which purports to be an application for
permission to transfer stock to various persons including Dr.
Rife, Mrs. Henderson, etc. Do you recall this document and did
you sign the original?”
Olmstead:
“Yes I did.”
Comperet:
“I call your attention to page four, which shows the transfers
which you propose to make, one from yourself to Mrs. Cullen,
another to Edwards. Did you do this?”
Olmstead:
“Yes.”
Comperet:
“Did you receive any payment for doing so?”
Olmstead:
“I did not.”
Olmstead:
“That’s right.”
Morning Recess.
Court resumes. Sapiro takes the witness.
Sapiro:
“I show you minutes of the meeting of June 1st,
1937. Will you look at the top right hand corner and read the
figures that are there and state what it is under the
figures?”
Olmstead:
“It says 22 in a circle, and under it CRH. Those are
Hutchinson’s initials.”
Sapiro:
“Is that his hand writing?”
Olmstead:
“I couldn’t say.”
Olmstead then read from the top of the pages of 22 to 27, all
initialed by Hutchinson.
Sapiro:
“Does it say in line five of the first paragraph that that
meeting took place at 10 A.M., June 1st, 1937?”
Olmstead:
“Yes.”
Sapiro:
“Was there a written notice sent out for that meeting?”
Olmstead:
“I was called personally by Fickerson.”
Sapiro:
“Were all the minutes of the meetings prepared in advance?”
Olmstead:
“Yes.”
Sapiro:
“Did you advise this?”
Olmstead:
“I had nothing to do with it at all.”
Sapiro then produced minutes, referring to the fact that the
meeting was called at 11 A.M.
Sapiro:
“Is there anything in the minutes that says anything about the
meeting adjourning and then reconvening?”
Olmstead:
“No.”
Sapiro:
“Did you read these minutes? You signed this affidavit that
you had read all of the minutes and that they were correct?”
Olmstead:
“Yes.”
Sapiro:
“You were present at both meetings, that is, the stockholders
and the board of directors?”
Olmstead:
“Yes.”
Sapiro:
“This affidavit was filed after the complaint in this action.
Had you read the complaint?”
Olmstead:
“I read parts of it, not all.”
Sapiro:
“You knew that it referred to meetings of stockholders,
etc.?”
Olmstead:
“Yes.”
Sapiro:
“You knew that this portion f your affidavit was definitely
aimed at something that the Plaintiff was trying to prove?”
Olmstead:
“Yes.”
Sapiro:
“Here the minutes of the meeting on August 28 in Fresno
prepared ahead?”
Olmstead:
“I presume so.”
Sapiro:
“Who was present at that meeting?”
Olmstead:
“Hutchinson, Cullen, and myself.”
Sapiro:
“And you signed the affidavit you made no exceptions, you were
present at all meetings?”
Olmstead:
“Yes.”
Sapiro then tried to point out that Olmstead claimed that he
read the minutes carefully but that his testimony does not agree
with the minutes. Olmstead replied heatedly that he merely said
that the minutes reflected the procedure of the meetings.
Sapiro:
“Did Hutchinson ever tell you about certain shares of stock
that would be given to Mr. Winter?”
Olmstead:
“Not that I recall.”
Sapiro:
“Did you ever ask why 500 shares were being given to
Winters?”
Olmstead:
“I don’t recall that I ever asked that.”
Sapiro:
“Did you ever try to find out about it?”
Olmstead:
“I recall that Mr. Winter was supposed to have given help to
Mr. Hutchinson.”
Sapiro:
“Was anything said about Mr. Winter having given Mr.
Hutchinson money for the stock?”
Olmstead:
“No.”
Sapiro:
“Did you ask anything at all about the various names on that
list of people who were supposed to get stock?”
Olmstead:
“No.”
Sapiro:
“You took Mr. Hutchinson’s word that the money was merely a
loan?”
Olmstead:
“Yes.”
Sapiro:
“Is it a fact that the list of proposed transfers were sent
out in full at this meeting in Fresno?”
Olmstead:
“Yes, as I recall it.”
Sapiro:
“Did you make any inquiry about these people at all?”
Olmstead:
“No.”
Sapiro:
“Did you ask when Mr. Hutchinson had received money from Mr.
Edwards?”
Olmstead:
“No, it was generally understood that these people rendered
services. I don’t know what
Olmstead:
“No.”
Sapiro:
“You were not curious about the distinctions?”
Olmstead:
“No.”
Sapiro:
“Did Mr. Hutchinson say anything about these people?”
Olmstead:
“No, I released some of my shares and In think that some of
them went to Winters.”
Sapiro:
“Was this at Mr. Hutchinson’s suggestion?”
Olmstead:
“Yes.”
Sapiro:
“Did you know that most of these people had given Hutchinson
money in varying amounts?”
Olmstead:
“No.”
Sapiro:
“You didn’t even make an investigation? In other words all
you did was to sign the minutes that were put before you?”
Olmstead:
“No, that is not right.”
Sapiro:
“Did you make any changes?”
Olmstead:
“No.”
Sapiro:
“You knew that Mrs. Willman was not present at this meeting,
yet you signed the minutes so saying?”
Olmstead:
“Yes, but inadvertently.”
Sapiro:
“What inquiries did you make about the financial state of the
corporation?”
Olmstead:
“I don’t recall that I every raised any.”
Sapiro:
“But you are a director, aren’t you?”
Olmstead:
“I looked over the statements.”
Sapiro
then showed Olmstead an item listed among the assets of the
corporation of approximately $51,000.00.
Sapiro:
“In the application which you signed following this meeting in
Fresno there is a statement to the effect that the Airplane
courses were abandoned?”
Olmstead:
“They were discontinued, not abandoned.”
Sapiro:
“Did you as a director not question the financial statement
that set out as an asset that $51,000.00 when you knew that the
courses had been discontinued?”
Olmstead:
“We still considered it an asset.”
Sapiro:
“Did you know that there was another corporation, U.A. Schools
in Nevada, set up by Hutchinson and Cullen?”
Olmstead:
“No, but that didn’t effect this organization.”
Sapiro:
“Did you know anything about it at that meeting?”
Olmstead:
“No.”
Sapiro:
“Didn’t you as a director inquire what the liabilities
were?”
Olmstead:
“No.”
Sapiro:
“You just signed the minutes as they were given to you?”
Olmstead:
“No, I didn’t that’s not right.”
Sapiro:
“Yet you don’t know what this liability to UAS was for?”
Olmstead:
“No, I know nothing about it at all.”
Sapiro:
“Did you do anything about the notes from Hutchinson?”
Olmstead:
“We accepted his notice.”
Sapiro:
“Do you remember any of the details at all?”
Olmstead:
“No.”
Sapiro:
“Where did you get information about these notes?”
Olmstead:
“From Fickerson and from Hutchinson.”
Sapiro:
“You didn’t get any information from Mr. Edwards?”
Olmstead:
“I have never met Mr. Edwards except in court.”
Sapiro:
“Did you know Mr. Van Wort?”
Olmstead:
“Yes.”
Sapiro:
“Did he hold an office in the corporation at that time?”
Olmstead:
“No.”
Sapiro:
“Didn’t you introduce a resolution which included a
reference here stated, (showing him the minutes)?”
Olmstead:
“Yes.”
Sapiro:
“How much of the minutes were read out loud at that
meeting?”
Olmstead:
“We read all of them.”
Sapiro:
“Who did the reading?”
Olmstead:
“I did.”
Sapiro:
“You and not Mrs. Willman?”
Olmstead:
“Not Mrs. Willman.”
Sapiro:
“How fast did you read them?”
Olmstead:
“I read very fast.”
Sapiro:
“Did you read them so that everybody present could hear
them?”
Olmstead:
“I think so.”
Sapiro then asked Olmstead to read a page of the minutes aloud
so that he could time him. Olmstead did, and was checked at two
minutes and fifty seconds a page.
Sapiro:
Before we go on I want to count the number of pages so that we
can compute the time it took to read these minutes. I want to
know how much other business besides the reading of the
Sapiro:
“Yet it says here that each item was fully discussed.”
Olmstead:
“Yes.”
Sapiro:
“How much discussion was there on any of these other
resolutions?”
Olmstead:
“(shouting) I couldn’t tell you!”
Sapiro:
“Now Mr. Olmstead, you wouldn’t want me to shout at you,
would you?”
Olmstead:
“I can take it.”
Sapiro:
“Alright, just show me one resolution were there was some
discussion.”
Olmstead pointed out and referred to the matter of
Hutchinson’s promissory note.
Sapiro:
“Well, how much time was devoted to discussion during the
meeting?”
Olmstead:
“I couldn’t tell you.”
Sapiro:
“Would you say one hour in the aggregate?”
Olmstead:
“Yes, there was. I would say more than that.”
Sapiro:
“You adjourned the meeting at two?”
Olmstead:
“I don’t know how long whether it was two, three or four
hours.”
Sapiro:
“You are therefore changing your testimony?”
The discussion between Sapiro and Olmstead was waxing hot when
Judge Kelly interrupted to court to inform them that the case
would have to be discontinued until Monday, June 27.
Morning session of June 27th.
A telegram from Olmstead saying that he was delayed but would be
in court for the afternoon session, was read. Hoyland took the
stand. Comperet interrogating. Comperet showed a paper which had
been Hoyland’s possession. It was Henderson’s resignation.
Comperet:
“Mr. Hoyland, how did you get this paper?”
Hoyland:
“It was put into my hands.”
Comperet:
“Do you consider this a technical matter?”
Hoyland:
“(No answer).”
Comperet:
“Now I call your attention to a letter dated September 5th,
1938, addressed to Beam Ray signed by H.S. Parsons, I quote,
‘I take it that you do not have the actual frequencies used
other than the markings on the dial of the oscillator. If you
would check your frequencies with a resometer you could have
kept them in code and sent them to me in code and this we could
have checked the instrument. If you do have the actual
frequencies, I should like to have them, or we will have to do
much difficult work etc…’ Now, at
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