1939 Beam Ray Trial Transcript


Pages 71-80


Hutchinson: “No sir.”

  Comperet: “Did he ever get this stock?”

  Hutchinson: “No.”

  Comperet: “Why not?”

  Hutchinson: “Mr. Van Wort agreed to buy that from me if I would agree, subject to the agreement of the corporation commissioner.”

  Comperet: “Did Mr. Van Wort ever tell you that he had obtained from Belger whatever the rights Belger might have to the stock?”

  Hutchinson: “He did.”

  Comperet: “I show you here a letter addressed to yourself, signed Larry E. Belger. Did he send or deliver that letter to you telling you that the stock should be given to Mr. Wort instead of to himself?”

  Hutchinson: “Yes, he did.”

  Comperet: “Exhibit 00, an order from corporation commissioner consenting to the transfer of stock in escrow from C.R. Hutchinson to certain persons, including 20 shared to Van Wort, were these 20 shares that were to have gone to Belger?”

  Hutchinson: “They are.”

  Comperet: “I call your attention to the fact that this letter, exhibit pp, says: ‘I want to acknowledge receipt of diamond ring, etc, together with any and all claims Mr. Van Wort might have against me.’ Did either the ring or the money come to you?”

  Hutchinson: “No sir.”

  Comperet: “Calling your attention once more to the statement made in the application to the corporation commissioner that you had agreed to furnish the corporation a loan with money on which to get started on production. You did furnish some money, did you not?”

  Hutchinson: “I did.”

  Comperet: “When the corporation changed its business to the manufacturing of the Rife Ray machines, was it your plan then to furnish the company as a loan, money with which to get under way?”

  Hutchinson: “Not personally.”

  Comperet: “How?”

  Hutchinson: “Will you explain what you mean by how?”

  Comperet: “With regard to the money that was paid the Ernstein, Reynolds, and Edwards – what was to be done with it?”

  Hutchinson: “That money was to be put in as a loan, strictly to be used for the building of machines and to be paid before and salaries or dividends were paid.”

  Comperet: “Did you so state to these parties prior to the time they gave you the money?”

  Hutchinson: “13,000.00??? of it was turned into the company. $500.00 I kept for my own use with the approval of the company.”

  Comperet: “Why did you keep this money?”

  Hutchinson: “Because I could not handle this deal with the British or the business for America unless I was financed. It was charged to expenses.”

  Comperet: “Were these expenses in connection with the British?”

  Hutchinson: “Part of them.”

  Comperet: “That’s the same $500.00 for which you gave the corporation a promissory note and your assignment of your royalties?”

  Hutchinson: “It is.”

  Comperet: “I call your attention to Plaintiff’s exhibits 3 and 4. Pages of the minute book of the corporation dealing with stockholders and board director meeting June 7th, 1937, held in Los Angeles. At the time of these meetings were you a stock holder and a member of the board of directors?”

  Hutchinson: “I was.”

  Comperet: “Will you examine these minutes, particularly those of the meeting of the board of directors, exhibit 4, now in connection with these have you discovered that there is an inaccuracy in your statements and will you explain it?”

  Hutchinson: “The minutes reflect what was done at the two meetings, they are combined into one meeting as shown by the minutes.”

  Comperet: “Were you present at all three meetings?’

  Hutchinson: “I was. The first was a meeting of the board of directors and offer to Cullen was made, the offer was accepted and a resolution adopted to make an application for a permit to transfer the 4799 shares of stock for Mr. Cullen. Such motion was seconded and passed.”

   Comperet: “What did you do at the second meeting of the board of directors?”

  Hutchinson: “We elected additional members to the board of directors.”

  Comperet: “Besides yourself and Olmstead, who was present a these meetings?”

  Hutchinson: “Cullen, Fickerson and Mrs. Willman.”

  Comperet: “Who prepared the application for the permit?”

  Hutchinson: “Mr. Fickerson.”

  Comperet: “Among the shares that were transferred in escrow after the company became Beam Ray were some shares to Mr. Blewett. Did he pay for these shares?”

  Hutchinson: “No he did not.”

  Comperet: “Did he pay the corporation or Olmstead, or Cullen anything for them?”

  Hutchinson: “He did not.”

  Comperet: “If the transfer of one hundred shares to Dr. Bertol had been made how many shares would you have had left of the corporation stock?”

  Hutchinson: “One.”

  Comperet: “This order authorizing transfer of shares in escrow says that you can transfer to Winter 4799, did he buy these from you?”

  Hutchinson: “No.”

  Comperet: “Did Edith Henderson buy her shares?”

  Hutchinson: “She did not.”

  Comperet: “Did Beth Willman buy hers?”

  Hutchinson: “She did not.”

  Comperet: “Where are all these shares?”

  Hutchinson: “Mr. Fickerson has records of the fact that these people own stock, but the people mentioned do not have the stock.”

  Judge Kelly: “Have any of these shares ever passed out of escrow?”

  Hutchinson: “No.”

  Comperet: “Did Dr. Bertol pay anything for these shares?”

  Hutchinson: “He did not.”

  Comperet: “Did Dr. Rife, or Hoyland, or Edwards, or Reynolds buy any?”

  Hutchinson: “They did not.”

  Judge Kelly: “What did these various people do to deserve the gift of these shares of stock, they all testified that they did nothing?”

  Hutchinson: “Mr. Winters allowed us to use his name for credit. He was reported as treasurer.”

  Judge Kelly: “Yu gave him a block of stock for that small favor?”

  Hutchinson: “It was other things that he could do.”

  Judge Kelly: “What did Mr. Henderson do?”

  Hutchinson: “He was out boosting the company.”

  Judge Kelly: “Mrs. Ernstein put up money, didn’t she?”

  Hutchinson: “Yes.”

  Judge Kelly: “And others also put up money?:”

  Hutchinson: “Yes.”

  Judge Kelly: “Did you consider this fair, to issue stock to some people who did not put any money?”

  Hutchinson: “At that time we did not think about it.”

  Judge Kelly: “Did you have a lawyer then?”

  Hutchinson: “Mr. Fickerson handled it, and MR. Glenn represented the other people.”

  Judge Kelly: “Did you personally ever have any experience with the Corporate Securities Act?”

  Hutchinson: “Some.”

  Comperet: “The application to transfer was drawn up in  August 1938. Was that the matter that was brought to Mr. Fickerson?”

  Hutchinson: “Yes.”

  Comperet: “The money paid by Reynolds and the Ernsteins was paid the previous May?”

  Hutchinson: “Yes.”

  Comperet: “Referring to the transfer to Hutchinson from Rife and Hoyland of one third interest in the Rife Ray machine saying: ‘We appoint you to act as our manager and to act on behalf of all matters.’ Did you ever receive a document supposed to cancel this authority?”

  Hutchinson: “Yes.”

  Comperet: “I show you a letter dated November 4, 1938, attached to which is an envelope addressed to yourself, bearing the return address of Hoyland, being Post Marked January 10, 1939. Have you ever seen these before?”

  Hutchinson: “I have.”

  Comperet: “Did you receive that letter?”

  Hutchinson: “Yes, I received it in a date or the following day.”

  Comperet: “This letter which purports to cancel your authority to act as manager dated November 4th. Did you see that, before you received it in January of this year?”

  Hutchinson: “(Didn’t get answer).”

  Comperet: “About when did you and Hoyland leave for New York to meet Dr. Gonin?”

  Hutchinson: “November 11, 1938.”

  Comperet: “That would be a week after this letter was written.”

  Hutchinson: “Yes.”

  Comperet: “Did Hoyland tell you that he and Dr. Rife had taken steps to cancel your authority to act as their manager?”

  Hutchinson: “He did not.”

(missing words)

  approved of the amendments. That is signed by Hutchinson and Hoyland. Did you show that letter to Hoyland before you signed it and did you discuss the contents with him?”

  Hutchinson: “I did.”

  Comperet: “Did it have to do with the reduction of the royalties?”

  Hutchinson: “Yes.”

  Comperet: “Did you go over that letter with Hoyland and did he read it, and did he make any objection to the terms?”

  Hutchinson: “Yes.”

  Comperet: “Did he say that you had no authority any longer to act as business manager or did he tell Gonin such a thing?”

  Hutchinson: “No he did not.”

  Comperet: “After Hoyland joined the company as technical director did you ever ask him to give the company the design of the machines or the frequencies?”

  Hutchinson: “Yes, many times, but he always refused.”

  Comperet: “At the time of the deal between the owners and the company regarding the license to Beam Ray corporation, did you take part in these negotiations?”

  Hutchinson: “I did.”

  Comperet: “Was anything said as to whether the license was to be exclusive?”

  Hutchinson: “They said that the group were to organize and put over the sale of the machines and that we would have the right to sell where ever we saw fit.”

  Comperet: “Mr. Hoyland said that it was expressly discussed that there would be other companies licensed in the United States and Canada, did this take place in your presence?”

  Hutchinson: “No.”

  Comperet: “Did Dr. Rife or Mr. Hoyland say that he proposed to permit other companies to compete with Beam Ray in the manufacture of the machines?”

  Hutchinson: “No.”

  Comperet: “Was it your intention that the license was to be an exclusive one and that the owners were not to give license to other companies to compete with Beam Ray?”

  Hutchinson: “Yes.”

  Comperet: “Was that the understanding of the other owners?”

  Hutchinson: “I thought it was.”

  Comperet: “Did you know that the language used in the agreement between the owners of the corporation was not sufficient in itself to confer a license?”

  Sapiro objected and was sustained.

  Comperet: “At the time you signed this was it your understanding that you were conferring an exclusive license to Beam Ray at that time?”

  Hutchinson: “It was.”

  Comperet: “That was your intention?”

  Hutchinson: “Absolutely.”

  Comperet: “Did Hoyland at any time during the negotiations state to you that he did not intend to make this an exclusive license?”

  Hutchinson: “He did not.”

  Comperet: “Did you take part in this deal with the British regarding their license?”

  Hutchinson: “I did.”

  Comperet: “Did Hoyland sit on these conferences?”

  Hutchinson: “He did.”

  Comperet: “Was anything said as to whether the license that the British were to receive should be an exclusive one within the territory it covered?”

  Hutchinson: “Yes, it was agreed that they should get an exclusive one.”

  Comperet: “Was this agreed in Mr. Hoyland’s presence?”

  Hutchinson: “It was.”

  Comperet: “Did Hoyland object to this anyway?”

  Hutchinson: “He did not.”

  Comperet: “I call the courts attention to the agreement between the Beam Ray Inc. and the three Englishmen. This instrument fails to say that the license is exclusive.”

  Judge Kelly: “Dose it say anywhere in the contract that the license is not exclusive?”

  Hutchinson: “No.”

  Judge Kelly: “Who drew up the contract?”

  Comperet: “It was drawn up in the office of Steiner but everybody and hid dog had a hand in it. That was the trouble.”

  Judge Kelly: “I was wondering with whom that first license first originated. Didn’t the license to the corporation precede the deal with the British group?”

  Comperet: “A paper dated the first day of June, 1938, sets out the division of interest in the machine, Rife 33, Hoyland 36 and 2/3, Hutchinson 33 and 1/3. That is not signed however, by the corporation, it does not use the word license, it says that the company agrees not to sell the machine but to lease it and that any improvements will belong to the owners.”

  Sapiro: “I think the law is fixed on matters of patents, that they are not exclusive unless so stated, or unless it so states it is not.”

  Judge Kelly: “We will have to consider the circumstances, I think that they apply an exclusive right on this agreement between the others.”

  Comperet: “The term license is not used in that paper, but the agreement between Beam Ray and the owners and between Beam Ray and the British uses the word license.”

  Judge Kelly: “You say both of these documents were finally drafted in the officers of Sloan and Steiner.

(missing words)

  the last three pages. It was a matter of unskilled labor, I would say. I will call your attention to defendants exhibit E. A contract between Beam Ray and the British, it says: ‘Whereas the Beam Ray Corporation holds an exclusive license, etc…’ (to Hutchinson) Did Mr. Hoyland object to that language and did he read it?”

  Hutchinson: “He read it and he did not object.”

  Comperet: “When you and Hoyland went to New York and dealt with Gonin, did Hoyland then say that Beam Ray had no authority to grant an exclusive license to the British?”

  Hutchinson: “He did not.”

  Comperet: “Did he say that Beam Ray did not have an exclusive license?”

  Hutchinson: “No.”

  Comperet: “At that conference with Gonin, did Gonin then deliver a letter and two memorandums from him complaining that the British had not received what they bargained for?”

  Hutchinson: “Yes he did.”

  Comperet: “You and Mr. Hoyland took part in these conferences with Gonin?”

  Hutchinson: “We did.”

  Comperet: “I call your attention to cablegram signed by Dr. Gonin and addressed to yourself, dated October 31,  1938: ‘Distressed no reply to our cables, can you send representative, etc.’, and another saying…etc. Did Gonin refer to these matters that he mentioned there?”

  Hutchinson: “Yes, he did.”

  Comperet: “Did Mr. Hoyland give him any explanation as to why the company had not gotten these cables, did he say, I have the correspondence?”

Sapiro objected and was sustained. Comperet rephrased the question.

  Hutchinson: “He did not.”

  Comperet: “I call your attention to a letter addressed to yourself from Blewett. Did Dr. Gonin deliver that letter to you in New York?”

  Hutchinson: “He did.”

  Comperet: “I call your attention to Hoyland’s testimony, he said he has seen the letter at the (text missing)…this letter complains about the corporation (missing text). Did Hoyland give any explanation in reply to these complaints when he read the letter?”

  Hutchinson: “Only about the frequencies, he told them that they had them in code.”

  Comperet: “Did he say to whom he had given them in code?”

  Hutchinson: “I can’t say.”

  Comperet: “Did Hoyland say anything as to giving them any further information about the frequencies?”

  Hutchinson: “He stated that he had given them the frequencies in code, and  that by using the instructions they had they should be able to figure it out, but Dr. Gonin asked for the frequencies in figures, ,and Hoyland said again no, ‘I gave them to you in code’.”

  Judge Kelly: “Did Gonin deny he got them in code?”

  Hutchinson: “No, he denied that he could read the code.”

  Comperet: “During the time of the trip in November, had it been brought to your attention that the British were complaining?”

  Hutchinson: “Yes, many times.”

  Comperet: “Did you take this up with Hoyland?”

  Hutchinson: “Yes, and he always replied: ‘I give it to them in code’.”

  Comperet: “Did you ask him to send them the frequencies?”

  Hutchinson: “Yes, many times.”

  Comperet: “What did Hoyland replay?”

  Hutchinson: “’I gave it to them in code’.”

  Sapiro took the witness.

  Sapiro: “Will you find the minutes of November 2nd, 1936 regarding the expenses of the corporation, will you show me the list.”

  Hutchinson did so.

  Sapiro: “You paid this money to Fickerson and Richardson yourself?”

  Hutchinson: “I did.”

  Sapiro: “This contains an item: minute book – five dollars?”

  Hutchinson: “Yes, I see it does.”

  Judge Kelly: “Is that the minute book you brought?”

  Hutchinson: “Yes.”

  Sapiro: “Did you file this, knowing what the issues in this case were?”

  Hutchinson: “I thought I did.”

  Sapiro showed him the item regarding the minute book of the corporation and showed that the book was an old one used to save expenses.

  Sapiro: “Now turn to the minutes of the meeting June 1st, in the upper right hand corner is a number in your handwriting. What does that say?

  Hutchinson: “Number 22, that is a series of numbers that I put on the pages to see that there are no changes made in the minutes after I left the organization.”

  Sapiro: “What time does it say that that meeting took place.”

  Hutchinson: “June 1st at ten o’clock.”

  Sapiro then took him through several pages, getting Hutchinson to read the headings, bringing out that the minutes were not accurate, the minutes imply that there was only one meeting but it was actually broken

(missing words)

  minutes, did you mean it?”

  Hutchinson: “I did.”

  Sapiro: “Did you ever get paid $250.00?”

  Hutchinson: “Yes, from a new group moving through the corporation.”

  Sapiro: “How much did the organization collect in tuition?”

  Hutchinson: “I would say perhaps $250.00.”

  Sapiro: “Is there a record of that?”

  Hutchinson: “I presume so, I n the records of the corporation.”

  Sapiro: “I would like to see that.”

  Comperet: “I don’t see the materiality of this anyway.”

  Sapiro: “Suppose I am just disproving the credibility of the witness.”

  Judge Kelly called recess, saying ‘Let’s see what the secretary can do during recess’.

  After recess, Sapiro questioning. Hutchinson on the witness stand.

  Sapiro: “I show you a book that has been delivered to us from Mr. Edwards. Is this the first book of accounts of the old corporation?”

  Hutchinson: “No, it’s my personal ledger.”

  Sapiro: “Is it in your handwriting?”

  Hutchinson: “No.”

  Sapiro: “Can you tell from what book what amounts were paid ad tuition fees into the organization?”

  Hutchinson: “This book has no connection with those accounts, it is my personal ledger taken from my personal files without my consent.”

  Sapiro: “Don’t blame me, it was given to me by Edwards.”

 Comperet tried to have this book kept out of evidence, and Judge Kelly sustains his objection.

 Sapiro: “Did you receive $4400.00 in cash from Mr. Winters, May 25, 1937?”

 Hutchinson: “If I may have my personal ledger so that I can check up, I will see.”

 Comperet wanted to have the ledger returned to Hutch, but Kelly rules otherwise.

  Hutchinson: “I received as a personal gift some money but I ordered it set up in my personal ledger. It was a loan from Winter, some $5300.00.”

  Judge Kelly: “Were these shares of stock given to Winter in return for that money?”

  Hutchinson: “Absolutely not.”

  Judge Kelly: “Was that money used in the corporation for anything?”

  Hutchinson: “No.”

  Sapiro: “Will you look at the top of the next page, does it show a loan to J.W. finch? Did he give you that money for a personal consideration?”

  Hutchinson: “He didn’t give me the money.”

  Sapiro: “To whom then?”

  Hutchinson: “To Mr. Cullen.”

  Sapiro: “Was he promised 50 shares of stock for that money?”

  Hutchinson: “No.”

  Sapiro: “Was the $500.00 returned to Finch six months ago?”

  Hutchinson: “It was, in June, by myself.”

  Sapiro: “Why did you do this, what were the circumstances?”

  Hutchinson:” He produced a note signed by Mr. Cullen and endorsed by me. I have it with me.”

  Sapiro: “May I see it?”

  Hutchinson: “You may (giving it to him).”


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