1939 Beam Ray Trial Transcript

 

Pages 61-70

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Sapiro: “Was there a lawyer’s name on one?”

  Edwards: “Yes, Mr. Glen.”

  Sapiro: “You wouldn’t want to indicate that it was my name?”

  Edwards: “No.”

  Sapiro: “How did you find out that the oscillograph was owned half by Hoyland and half by the corporation?”

  Edwards: “There was a note about it.”

  Sapiro: “Did you ever ask Mr. Hoyland about the oscillograph?”

  Edwards: “No, I don’t think I did.”

  Sapiro: “At the meeting of January 10th of this year, was there a plan presented for trying to get everyone together?”

  Edwards: “Yes.”

  Sapiro: “Did all of them favor the plan?”

  Edwards: “We expressed ourselves in favor of presenting the plan.”

  Sapiro: “What is the location of the corporate offices?”

  Edwards: “Between Washington and University on Fifth Street.”

  Sapiro: “Is that both the factory and the headquarters?”

  Edwards: “Yes.”

  Sapiro: “Has there been any changes in the offices?”

  Edwards: “No.”

  Comperet took the witness.

  Comperet: “Going back to the meeting of January 10th, from what did you get the idea that the company had complied with the wishes of the British, was it from what Mr. Sapiro told you?”

  Edwards: “Yes.”

  Comperet: “Who presented the plan to avoid litigation?”

  Edwards: “Mr. Sapiro.”

  Comperet: “Of what did the plan consist, was it a plan whereby Mr. Hutchinson was told that he would have to give up his interest in the company?”

  Edwards: “Yes, I believe he was left out in that plan.”

  Comperet: “Was it further suggested that if he did not agree that a number of law suites would be started against him?’

  Edwards: “Yes, Mr. Sapiro suggested that.”

  Comperet: “And what was said about that?”

  Edwards: “The plan was that I should file a suit and the Ernsteins should file one, and Mr. Reynolds should have an investigation of the corporation set up and Mr. Hoyland was going to file a law suit himself.”

  Comperet: “And what else?”

  Edwards: “I think that was all.”

  Comperet: “And by means of all these law suites you were going to avoid litigation>?”

  Edwards: “I guess so.”

  Comperet: “Wasn’t Mr. Hutchinson expected to give up his interest in the Rife Ray machine?”

  Edwards: “Yes, that has been the whole trouble.”

  Judge Kelly: “Mr. Comperet, have the English received the frequencies or have they not?”

  Comperet: “(answering) They have not.”

  Judge Kelly: “Have you gotten the correspondence files with the British group?”

  Comperet: “I have not been able to get them.”

  Judge Kelly: “I would like to know what there is in the corporation that is worth fighting over, since the machines could not be patented?”

  Comperet: “Well the frequencies are still secret.”

  Sapiro then said that the machine coming from Dr. Rife would have a very great value because of the Dr.’s reputation and his long record of work.

  Judge Kelly: “Assuming that this machine is a great boom to humanity, what actually has the corporation got? I am not talking about the instrument. I want to know what good will exist? It doesn’t look to me as if there is any. You say that the British could build the machines and that you couldn’t stop them?”

  Sapiro: “That’s right, we couldn’t stop them.”

  Comperet: “I show you Mr. Edwards, a document headed, “Proposal to C.R. Hutchinson, January 11th, 1939. That he surrender all his interest in the corporation and the machine. Is that the plan that was presented at the time?”

  Edwards: “Yes.”

  Comperet: “Who drew up the plan?”

  Edwards: “I think this was drawn up by Mr. Sapiro, in Mr. Gordon Gray’s office.”

  Comperet: “I note that the first thing stipulated is that he surrender to the corporation all his rights in the stock in Beam Ray no matter in whose name the stock may stand. Did Mr. Hutchinson agree to be so frozen out of the corporation?”

  Edwards: “No.”

  Comperet: “So then the plan didn’t prevent litigation?”

  Edwards: “No.”

  Comperet: “When this plan was discussed did they specify and expect that this would intimidate?”

  Edwards: “Yes.”

  Comperet: “What was said and by whom?”

  Edwards: “As I remember it, Mr. Sapiro said that if Mr. Hutchinson got all of these law suites slapped on him at about the same time that he would just want to run.”

  Comperet: “Now going back to your assumption that Dr. Rife knew the frequencies, had Mr. Hoyland ever told you that Dr. Rife knew them?”

  Edwards: “No, he told me that Dr. Rife only thought he had them.”

  Comperet: “What did you think that meant?”

  Edwards: “Well, Mr. Hoyland told me about that time, that Dr. Rife measured the frequencies only by the length of the wire and that he did not take other factors into consideration.”

  Comperet: “Were the letters from the British mailed to the shop?”

  Edwards: “Yes, after Mr. Hoyland left we had a post office box.”

  Comperet: “Why?”

  Edwards: “So that the board of directors could get all of the mail.”

  Comperet: “Before this, had you found it hard to get the mail?”

  Edwards: “Yes, it was taken up to the shop and we wouldn’t know what was going on.”

  Sapiro then took the witness.

  Sapiro: “I show you Plaintiff’s exhibit 11 and I ask you if there was anything said about litigation that was not sent to all the members later?”

  Edwards: “I think there were some things said.”

  Sapiro: “Were you certain in saying I suggested that by bringing all these suits I expected litigation?”

  Comperet objected and Judge Kelly sustained him.

  Sapiro: “Did you say that I said no?”

  Edwards: “I didn’t say that. I was referring to the proposal to Hutchinson.”

  Sapiro: “Did you and the board think that this was the right thing to do?”

  Edwards: “At that time I did.”

  Sapiro: “Was it not planned at that meeting that Mr. Gray should see Mr. Hutchinson and offer him a cash settlement in return for his rights?”

  Edwards: “Yes, there was supposed to be consideration.”

 

  Sapiro: “Was Mr. Williams present at that meeting?”

  Edwards: “Yes.”

  Sapiro: “Do you recall that he was favorable to Mr. Hutchinson?”

  Edwards: “Yes.”

  Sapiro: “Do you remember any statement to the effect of what would happen if the suits were started against Hutchinson?”

  Edwards: “No.”

  Sapiro: “Was there anything I suggested with which you were in disagreement?”

  Edwards: “No, at the time we were perfectly in accord all the way down the line.”

  Sapiro: “You state that you based your opinion of the British question on what I said?”

  Edwards: “Yes, as soon as I knew the British had the frequencies I felt that the company had compiled with the terms of the contract.”

  Sapiro: “In answer to the suit filed against the corporation by the British, has your board of directors taken any action to authorize counsel what to do?”

  (missing words)

  Comperet objected. There was much bickering and Judge Kelly adjourned until Thursday.

  Thursday, June 29, Morning session.

Hutchinson on the stand. Comperet interrogating.

  Comperet: “What is your occupation?”

  Hutchinson: “For the past six to eight months I have been making an investigation into the conditions of the Beam Ray corporation?”

  Comperet: “Were you one of the original incorporators of the company which is now known as Beam Ray?”

  Hutchinson: “I was.”

  Comperet: “Trace the changes in the name of the corporation?”

  Then Hutchinson commenced involved examination which Comperet interrupted.

  Comperet: “Can you just trace the development of the company into Beam Ray in your own words.”

  Hutchinson: “About October of 1935, Mr. Cullen came to me with a contract for the organization of a correspondence school of aeronautics and asked me to either join his or advise him how he could put over and operate this school. At that time I was associated with Roscoe Turner in connection with an Aero device. I was also associated with Amelia Earhardt. I discussed this with them after many meetings. Mr. Fickerson stated that he was willing to go along as our legal advisor if I would accept the active management. We closed a contract for five western states for sales rights. We formed a California Corporation through Fickerson of Los Angeles. He was our attorney and handled the legal details. The organization consisted of Olmstead, Cullen and myself. That corporation was known as Aero Reserve School Western Division. The necessary permits were taken out and I made a trip east and contacted the then Virginia Corporation Aero Reserve School officers. I secured for Cullen, an additional contract showing and advising the Virginia corporation officials that it was to the best interest of all that the sales organization from the west coast if divided up would be better if the six additional western states were included. They gave such a contract. Before I go any further your Honor, and in order to establish a vital point I am waiving my constitutional rights, , and by offering my evidence without reservation. In order that I may set right for your Honor’s benefit things that have been brought out in this court, I would like to have exhibit Z of the defendants and the minutes of the books of the corporation to refer to certain items that will verify statements that I will make.”

  Comperet: “I show you exhibit Z which is an application for a permit to transfer stock and I show the minute book of the corporation.”

  Hutchinson: “Under Exhibit Z acting under authority of the meeting of August 21, 1936, in application for the permit on page 4, Par t9, reads as follows…”

  He quotes to effect that C.R. Hutchinson paid all fees etc…

  Hutchinson: “Referring to the meeting of the board of the Aero Corporation, November 2, 1936, Part 5, ‘The secretary presented the itemized count of Fickerson and Richardson, attorneys for the corporation, covering legal costs of the organization and franchise taxes for 1935 and 1936 as state filing articles: $29.18, State treasurer franchise tax: $25.00,  Minutes book: $5.00, sale: $5.50, county clerk: $1.00, commission corporation application: $15.00, State treasury franchise tax 1936: $27.45, title: $258.33, credits November 26 (by check): $120.00, August 19th: $110.65, September 4th (by check), $27.45. Total credits: $250.00 On motion duly made and seconded this account was approved and the secretary was instructed to set this amount to the credit of C.R. Hutchinson, on the books of the corporation to be paid when funds are available. In my statements to follow I will refer to these as they refer particularly to the set up of the Corporate Securities Charter.”

  Judge Kelly: “Dr. Rife was not interested in any of this Aero corporation,  he designed a machine he assigned certain interests in it to certain people. How was this divided?”

  Hutchinson: “One third to me, one third to Hoyland, one third to Dr. Rife.”

  Judge Kelly: “And the forming of the corporation followed?”

  Hutchinson: “Yes.”

  Sapiro: “The corporation was in existence and the name was changed.”

  Judge Kelly: “When you incorporated you first had a permit from the corporation commissioner to issue three shares of stock, one each to Cullen, Olmstead and Hutchinson?”

  Hutchinson: “Yes.”

  Judge Kelly: “Then you procured a permit for the issuance of 4496 shares of stock which brought it to 5000 shares altogether and these were issued to whom and in what proportion?”

  Hutchinson: “I prefer to consult the minute book to be accurate.”

  Sapiro head the division of stock and Hutchinson confirmed it by the minutes.

  Judge Kelly: “Let me see the defense exhibit Z.”

  Comperet: “Were you three: Olmstead, Cullen and yourself holders of all stock in the corporation?”

  Hutchinson: “We were.”

  Comperet: “There were no other stockholders?”

  Hutchinson: “No.”

  Judge Kelly: “Was there ever any modification to this permit or is this the last permit issued exactly as it now stands?”

  Hutchinson: “Yes.”

  Judge Kelly: “Where is it?”

  Comperet: “Do you refer to the permit to transfer shares to various other persons from you three original stock holders?”

  Hutchinson: “Yes.”

  Comperet: “I show you an application to transfer shares subject to escrow.”

  Judge Kelly: “I am not concerned about the application, what I want to know is what the corporation

(missing words)

  Judge Kelly: “Have you a copy or the original permit that was issued in response to this application?”

  Comperet produced one. It was a modification of the document asked for.

  Judge Kelly: “Now I think we have a record of the permits of the corporation commissioner.”

  Comperet: “I show you defendant’s exhibit being an order of commissioner for transfer of shares.”

  Hutchinson: “In the original application there is a…(transcript missing lines)

  Comperet: “…and you received consideration, did this happen?”

  Hutchinson: “No.”

  Comperet: “How did the corporation and the Rife Ray invention get together?”

  Hutchinson: “About April 1st, 1938, Mr. Cullen came to me and told me about the extensive work being done by Dr. Rife with the machine and wanted us to take it over and put it on the market. I declined. He made an appointment with Dr. Rife, he took me to the laboratory, and we discussed it with Rife. Cullen suggested to him that this machine be put on the market and that I originate a group to put it over. Dr. Rife, at the time, said that if Cullen would benefit by it as a friend of 25 years standing he would be glad to do it. About a week later Mr. Henderson brought Hoyland to the office. Henderson said the machine was very valuable to humanity. He insisted as one of the Aero School group, that it be taken on as part of our activities. I refused. Henderson told of the benefit received from the machine by his wife and I agreed to go to the laboratory again with them, and with the balance of our associates and gave them the benefit of such experience as I had previously had in order that they might put it over. A few days later Henderson and Hoyland advised me that there would be a meeting at Rife’s lab that evening to discuss this plan, or the plan that I might propose or suggest to them. Present at that meeting were Rife, Hoyland, Dr. Couche, Mr. Winter, Mr. Cullen, possibly one or two others and myself. After much talk about the machine itself I was asked how it could be put on the market and also if I would be interested in the organization of a group to do it. I positively stated at that meeting that I was not interested in this promotion.”

  Comperet: “I think we are taking too much time for these details. After some of these meetings did you finally decide to work with them?”

  Hutchinson: “At that meeting I outlined the ideas of the corporation which we now have, and I suggested that they get an Angel to provide finance for their organization.”

  Judge Kelly: “I see. So they went out and started looking for Angels?”

  Comperet: “Your Honor no doubt understands the theatrical term Angel?”

  Judge Kelly: “Oh yes, I know all about Angels, spiritually and otherwise. Court is now recessed.”

  Thursday, June 29. Court resumed.

  Judge Kelly: “Gentlemen, it is your understanding that anyone with a knowledge of science could take this finished product, this instrument that Rife designed, and by examination and tests, without any information supply, could ascertain these frequencies? Do you know whether this could be done Mr. Sapiro, you’re pretty wise?”

  Sapiro: “I seem to detect a bark in that remark, my interest in this machinery is naturally for Mr. Hoyland. He says that anyone who reads the numbers on that dial and then sees the band and the code letters can tell these specific frequencies.”

  Judge Kelly: “But suppose someone should break a band, would there by any way a scientist could figure out these frequencies?”

  Sapiro: “I don’t understand.”

  Judge Kelly: “Could anyone without the dial and the code discover the frequencies of the machine?”

  Hutchinson: “They couldn’t discover what the frequencies of that machine were, the whole secret of the machines was the frequencies.”

  Judge Kelly: “Was the great secret the frequencies that would heal a certain disease?”

  Comperet: “Yes.”

  Hutchinson: “Each disease has its own particular frequency.”

  Judge Kelly: “Then what was it that these people wanted to guard so fiercely?”

  Sapiro then explained rather vaguely about the bands of frequencies.

  Judge Kelly: “Could anyone do it?”

  Sapiro: “No, a person who has not the key to these dials and bands could not make the machine work properly.”

  Judge Kelly: “:But anyone could duplicate the machine itself?”

  Comperet: “Yes.”

  Judge Kelly: “The corporation had no exclusive right to make these machines?”

  Sapiro: “No.”

  Judge Kelly: “The only secrecy then, was regarding the frequencies, since anyone could have copied the machine?”

  Comperet: “Anyone copying it would have to experiment until they found the right frequencies.”

  Judge Kelly: “Apparently several people have and know these frequencies. Hoyland, Rife, Carson, and how many of the English have it?”

  Sapiro: “At least three: Parsons, Gonin, and Blewett.”

  Judge Kelly: “It doesn’t look to me as if we are fighting over very much here, but go ahead, get on with it.”

  Comperet: “There is nothing over except the Plaintiff asked the receivership to do this, to cancel the old contract with the owners and to negotiate for some new contract with the English.”

  Judge Kelly: “You understand that the receiver would have the right to demand and receive the code for the frequencies?”

  Comperet: “Would the receiver have a greater right than the company?”

  Sapiro: “Yes, they certainly would.”

  Judge Kelly: “Then the receiver would have the secret. Well, go on, if you want to litigate it proceed, but I haven’t been sitting here trying to figure out what this is all about, apparently the only secret is what the frequencies are. I want to know if a test can be given the machine that will (missing words)

  Sapiro: “Dr. Rife’s name is valuable.”

  Judge Kelly: “Well, all you have to do is dig up another fellow named Rife.”

  Sapiro: “I think that could be stopped.”

  Hutchinson: “I think I can clarify this question.”

  Judge Kelly: “I am not at all sure that you can, but go ahead, you have my permission to try.”

  Hutchinson: “There are about 40 frequencies discovered by Dr. Rife that have not yet been released to the public, and have not been included in the machine. Even if there are other machines the company would still have a tremendous advantage in that they have research to prove that Dr. Rife is still bringing out new frequencies.”

  Judge Kelly: “Do you think the company has a claim on all further discoveries of Dr. Rife along this line?”

  Hutchinson: “Let me see that contract. (after reading it) I don’t see that you have any claim on the ingenious Dr. Rife’s future experiments and discoveries.”

  Comperet: “At that conference at the lab, you said that you gave those present there some explanation of a plan to market the machine?”

  Hutchinson: “Yes, I suggested that Dr. Rife and those he desired to give an interest to have an agreement among themselves and secure a group interested in putting this instrument on the market, and that they form a California Corporation, similar to the corporation that we had used, that is, the U.P.I. and then figure out the proportional parts that each of the group would be entitled to and make an application to the corporation commissioner as we had done. And operate under that plan. And that they secure in their group or through it someone that would secure the money to make it possible to build the necessary machines to operate a small business. I offered to give them the benefit of our organizing experience in getting it in motion and any advice that I could give.”

  Judge Kelly: “Did you understand that Dr. Rife bound himself to keep the frequencies secret from anyone?”

  Hutchinson: “I understood him well enough to know that when he said he would put this information in the hands of the right people he would do so.”

  Judge Kelly: “You knew that he was interested primarily in humanity and the benefit his machines could give to the sick and if he felt that humanity needed it he would give the information to anyone who would help him in his good work?”

  Hutchinson: “I guess so.”

  Comperet: “Was the decision finally reached to take over U.P.I. corporation to be used as a corporation to release the machines?”

  Hutchinson: “Later, when Mr. Gordon Gray, representative of Mr. Rife, this was decided upon.”

  Comperet: “What was the final agreement in this regard?”

  Hutchinson: “When Rife, Hoyland, Henderson and one or two others came into the office and they asked me to organize, they stated that speed was necessary, because the English group were expecting soon. Within a few weeks. And that quick action was wanted, and that none of them had any experience in organization or any business ability. They asked what was the quickest way we could get the machine on the market and he prepared to deal with the British and get the million dollars that the British were supposed to pay.”

  Judge Kelly: “Where did you hear about the million dollars?”

  Hutchinson: “From Hoyland and Dr. Couche.”

  Judge Kelly: “Did you see any correspondence to this effect?”

  Hutchinson: “No, but I saw a letter saying that they had 10,000 pounds to be put into the machine. Dr. Couche had sold them on the value of the machine.”

  Comperet: “Well, how did you come to use the U.P.I. corporation?”

  Hutchinson: “I suggested that as the contract that we had was for eleven Western States for the school, and as I doubted if we could deliver this course, and I had formed a Nevada Corporation based upon this new contract, and which contract and corporation expected to offer me a contract similar to the contract held from the Aero Reserve School, that for the sake of speed in the organization of the group we drop all ideas of carrying on the school and form among ourselves a group to operate the organization and own and control the same. That was to put this machine on the market and deal with the British and that what we applied to the corporation commissioner to transfer stock owned at one time by Cullen, Olmstead, and myself to these parties. And that this stock be transferred and impounded at that time without consideration, and that we use the present corporation for the new organization, and that we set up a fund to be paid to the group who had paid the expenses of the organization of the U.P.I., not exceeding $1,500, to reimburse such sums or pay such accounts as might be designated at that time. The majority of our U.P.I. directors were either present or were approached and approved. Olmstead had advised Cullen and myself that he was, because of his contracts, going to be forced to withdraw from active part of the work and that he would give and assign when approved by the corporation commissioner any interest that he might have in our organization. It was agreed upon at that time, that due to the speed necessary this would be the move, and Cullen and myself, approved by Olmstead, stated that they would make such an application for transfer of this stock to any of the parties designated, in amounts to which they would agree, and that when that was done we would freely give our stock if and when approved. All agreed that this was the thing to do and we proceeded to prepare for our million dollars.”

  Comperet: “What was done about determining the relative interests of the parties as it got under way on its new business?”

  Hutchinson: “No agreement had been made at that time with any group other than the division of the interests which Dr. Rife gave to Hoyland and myself. I suggested that Dr. Rife have their percent of whatever the corporation would be and his statement and that of Hoyland to me at the time, was that because of the fact that Dr. Couche had made the contract with the British he was entitled to decide with them. The statement was made that Hoyland, Couche and Rife would receive $5000.00 of the $50,000.00 and that the others would receive proportionally small amounts. Hoyland objected to Couche receiving $5000.00 and suggested that it should be $6000.00 to Rife, $6000.00 to Hoyland and $3000.00 to Couche. The other divisions were made accordingly it finally ended up that Mr. Hoyland asked for and received $7500.00 or 15 percent of the entire stock.”

  Sapiro: “Has this witness been talking about money or stock?”

  Judge Kelly: “I don’t know, perhaps I am not supposed to know. Are they talking about two different things, that is the witness and the counsel?”

  (missing words)

  Cullen, and Mr. Lyle, dealing with Hoyland,  Henderson and their associates set up and presented amounts in which they wanted this stock delivered. That list was made out as shown and presented to their attorney, Mr. Glenn, who approved it. It was forwarded to Fickerson and the application was filed.”

  Recess called until 2 P.M.

  Afternoon session. Hutchinson on the stand.

  Comperet: “Who is Larry Belger mentioned during this trial, is he a stockholder in the Beam Ray corporation?”

  Hutchinson: “I know him and he is not.”

  Comperet: “Did you contemplate giving him some stock?”

  Hutchinson: “I did.”

  Comperet: “What were the dealings?”

  Hutchinson: “Belger wanted to hold some stock and I told him that I would give him 20 shares of my stock if I could get permission to do so.”

  Comperet: “Did he pay any money to you or the corporation for the stock?”

 

 

 

 

 

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