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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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