1939 Beam Ray Trial Transcript

 

Pages 21-30

 

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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