Hoyland versus Beam Ray Corporation

Page 1 of 3

Transcribed from the original 1939 Beam Ray Trial
Manuscripts by www.rifevideos.com
Copyright 2011

This is the complete transcribed manuscript of the 1939 Beam Ray Trial where Philip Hoyland tried, by court action, to gain complete control of Dr. Royal Raymond Rife’s machine and frequencies. Until now only parts of it have been available to read unless you were willing to read it from Bertrand Comparets (Dr. Rife’s attorney) original transcript on this site. Now it will be easier to read in this new transcribed format.

Attorneys
Comparet, Beam Ray.
Sapiro, Hoyland.

Judge Edward Kelley presiding.
Superior Court 6.

1. Comparet: attorney for Beam Ray opens proceedings by raising objection to the effect that the case should be thrown out of court for the following reasons. Only a stock holder can bring such action but Hoyland has declared that the issuance of all stock including his own is void, therefore he cannot be a stock holder. Also the suit is brought by Hoyland on his own. We have the affidavits of other stockholders objecting to the action.

2. Judge Kelley: denied the motion.

3. Sapiro: set forth Hoyland’s demands saying that Hoyland asks that present holders of office as directors be removed. That a new board of directors be appointed and that it be established by court order that the present directors cannot at any future time resume office. He asked also for full accounting of all company business.

4. Comparet: claims that only an officer of the Company can demand that. Hoyland claims that the stock was issued and or transferred fraudulently.

5. Sapiro: then declared that the status of the Plaintive is still that of a stockholder that therefore he’s within his rights in bringing suit before the court.

6. Judge Kelley: then said that he considered Hoyland a stock holder because the stock could not be declared void until a court of law so decreed. Comparet’s motion was therefore denied again by Judge Kelley.

7. Comparet: tried to prove that the case was not sound because a stockholder could bring an action on behalf of a corporation only when the corporation could do so or when it could be proven that the Corporation had suffered harm. He cited several cases to this effect and put forth that the Beam Ray Corporation suffered no harm since the exchange or transfer of stock was merely a private transaction.

8. Judge Kelley: denied this motion and called a recess.

Case resumed.

9. Sapiro: set forth that Comparet’s claims were based on laws existing before 1931. As the law now stands any stockholder can sue a corporation. He defined the action as a move to remove the officers because all failed to protect the corporation from fraud.

10. Sapiro: claimed that Hutchinson withheld from the corporation money collected on the sale of stock and that Hoyland asked the board of directors to protest this. That they refused and he therefore brought the suit himself.

11. Judge Kelley: ordered the case to proceed.

12. Sapiro: then summarized the complaints. (Referred to as complaints but regarded as a series of statements.)

1. Hoyland holds ten percent of the stock.

2. Corporation was formed in San Diego and all directors reside in that city. (There are five directors at present)

3. Lists former names of corporation. It is now known as Beam Ray.

4. That the number of directors was to be raised to nine.

5. That after arranging that all stock was to be issued to Cullen, Hutchinson, and Olmstead. These three directors then added new directors to the board.

6. That corporation took over the Rife machine and started to manufacture and distribute the same.

7. That in the transfer of stock Hutchinson insisted that the money went to the corporation. But plaintiff declares that Hutchinson kept $500.00 of the money.

8. On August 12th, 1938. Hutchinson first brought before a meeting of the board the transactions complained of.

9. After plaintiff was advised by his attorney that he had signed an illegal paper he protested.

10. Hutchinson presented to the company an illegal suggestion regarding a Dr. Yale.

11. Hoyland gave notice to the corporation that the contracts regarding transfer of stock were all wrong.

12. The affairs of the corporation have become muddled and confused.

13. Plaintiff has brought action in his own behalf and the interests of the corporation.

14. General accusation against all directors. He asks that they all be removed from office.

13. Comparet: then took the floor and pointed out that Sapiro was in error when he said that Plaintiff did not know what was going on in the company. That Hoyland attended all meetings, read the minutes, and was familiar with all the activities of all the directors.

Edwards called to the stand.

14. Sapiro: call Edwards to the stand. It was established that Edwards is secretary to Beam Ray Corporation, is member of the board of directors and holds fifty shares of stock. He is also custodian of the records of the company.

15. Judge Kelley: called noon recess.

Case resumed.

Edwards on the Stand.

16. Edwards: on stand again. Ledgers were introduced and accepted as exhibits. Edwards read the minutes of the meeting of the directors held June, 1st 1937 ditto June 25.

17. Sapiro: aimed to show by the introduction of these minutes that there was no record of certain activities of the three directors, Hutchinson, Cullen and Olmstead.

18. Edwards: explains his check for $500.00 made out in Hutchinson’s favor. He was thoroughly sold of what the Rife Machine would do and wanted to by stock from Hutchinson but Hutchinson told him that the stock was not for sale. But he said, I can give it to you. Hutchinson explained that the stock was impounded, but that he could give him fifty shares if Edwards would give him five hundred dollars. Edwards agreed and made the check out to Hutchinson under the distinct impression that the money would go to the Corporation. He said that he got a receipt from Hutchinson which he later returned to Hutchinson. He does not know where the receipt is now.

19. Judge Kelley: asked Edwards if he did not think it queer that Hutchinson would give him his own stock in exchange for money that was to go into the corporation for operating expenses.

20. Edwards: said no, he did not think it queer at the time.

21. Sapiro: asked when the money Edwards gave to Hutchinson was paid over to the corporation.

22. Comparet: objected and was sustained. (For once!!!)

23. Sapiro: then handed the ledgers to Edwards and asked him to find a record of when the money was paid into the corporation. Edwards could find no record but said that these particular records were not the original records. He then produced the old books and showed that on July 31st, Hutchinson turned in a note for $500.00 payable to the corporation.

24. Sapiro: asked if this note was overdue.

25. Comparet: objected and was sustained. It was brought out here through direct questioning that Hutchinson does not have the receipt he got from Edwards and does not know where it is.

26. Sapiro: then questioned Edwards regarding a meeting at which Williams said that the note was non-negotiable. Edwards did not remember. He said that Hutchinson paid back to the corporation about 75 dollars on one occasion and fifty dollars which Hutchinson had him apply on the note about six months back. Nothing has been paid since the note became mature. A notice to the corporation signed by Hoyland dated January 13th, 1939, was identified by Edwards in which Hoyland demanded collection on the note by the corporation. Edwards said that the board of directors met and went over the Hoyland demand and immediately took steps to get legal advice, but that nothing was done to collect the money from Hutchinson. Edwards said that only one machine had been sold since January. That one was sold to Dr. Disney, a chiropractor. Edwards said that Hoyland was discharged from the company in January. He said that six machines have been manufactured by the company.

Recess called.

Court resumed.

27. Edwards: was excused and…

28. Reynolds: was called to the stand. Reynolds is director of the Beam Ray Company and has stock in it. He testified that early in May of 1938 he talked with Hutchinson about acquiring stock in Beam Ray Company and Hutchinson said that the stock was impounded and could not be sold, but that he could give some of the stock to Reynolds. Record of the transaction was admitted as exhibit 12. Reynolds told of giving a check for the stock that was to be released from impoundage and of getting a receipt at that time. Later this receipt was taken by Mr. Cullen who gave him a note for $500.00 against Beam Ray Corporation in place of the receipt. This transaction was made under the former name of the corporation, that is, United Polytechnique Institute. Reynolds could not remember when he last attended the meeting of the board of directors of Beam Ray Company. He said that the Beam Ray Company was just barely able to keep its head above water.

29. Comparet: cross examined Reynolds and asked Reynolds about a demand made upon Hutchinson for the return of the $500.00 and showed him a document to that effect. Reynolds could not remember who suggested drawing up this document or anything else about it. He denied that he himself drew up the document and had no idea who it was who got him to sign it. It was established by Comparet that Reynolds had decided that he wanted stock before he ever talked with Hutchinson. Reynolds said that he fully understood the deal and what it meant.

30. Judge Kelley: asked Reynolds why people would not by the machine just because of the present litigation if the title of the machine is clear. Reynolds said he could not answer that very well. Reynolds was told by Henderson that when the stock was released he would get his shares. Reynolds did not know when the stock would be released and did not enquire. Hutchinson told Reynolds that he was transferring to him his own personal stock and Reynolds said that he though Hutchinson said it had been impounded by Fickerson.

31. Judge Kelley: asked Reynolds if the document signed by him demanded that Hutchinson pay up and set forth the truth. Reynolds though it did. Judge Kelley observed that Reynolds was not a very experienced business man. Reynolds was excused.

32. Iola Ernstein: was called to the stand. She stated that she is a stockholder in the Beam Ray Company although she has not yet seen the stock. She paid for it in May 1938. Her father also put up money for stock at the same time. Neither of them have yet received the stock. Checks were then presented to prove the transaction. Miss Ernstein delivered a check to Hutchinson and got a receipt which she later returned to him. About September 1st, 1938 and for which she received a note drawn on the Corporation. A document was introduced by Sapiro which she declared was sent to her by Sapiro and which she signed because she thought that Sapiro was to represent her and the other stockholders in their efforts to get their stock or have the money returned. Then she said, I would not have signed this had I known the truth. She said that she understood from Hutchinson that he could give her the stock and that it would later be released and that the $500.00 was in payment for the stock. She told of complaining about not receiving this stock after seven months went by. She said that when she gave the money to Hutchinson he told her that it would be impounded until the Corporation Commissioner released the stock. She expected Fickerson to hold the money until the transaction could be completed. When she found that the stock was not forthcoming she felt sure that she would get her money back.

Court was adjourned.

Tuesday June, 13th, 1939. 10 A.M.

33. Miss Ernstein: on the stand.

33. Sapiro: showed her a check for $2000.00 made over to Hutchinson and signed by her father and she identified it. She testified that she was told she would get 50 shares of stock eventually for her $500.00. She said the receipt she got for $2500 representing her own and her father's investment was signed by Henderson and Hutchinson, but she did not remember definitely how many shares were named.

34. Judge Kelley: questioned her. And she said that she thought that the receipt said that the money they paid was to be impounded and that they would receive two hundred and fifty shares of stock.

35. Sapiro: asked her when she first found out that she had made a loan to the Corporation. She said that when she found out that she could not get the stock until she gave Hutchinson her receipt she gave it to him and he gave her a note on the corporation. Her father also got a note. Nothing has been paid on either.

36. Comparet: questioned her and she testified that Henderson told her that Beam Ray could use some money, that she then went down to Beam Ray company and said that she and her father would like to buy stock. Here she explained to the court that her interest in the project grew out of the fact that her father took treatments on the Beam Ray machine and also new Roy Rife its inventor well. She said that Hoyland was present during part of a conversation in which Hutchinson explained that he could give her some stock in return for money. Henderson was also present. Next day she and her father went back to the Beam Ray office and put up their check to be impounded in exchange for Beam Ray stock. Hutchinson himself said that the check was to be impounded until the stock could be delivered.

37. Judge Kelley: asked her directly “When you gave Mr. Hutchinson your check for $500.00 did you understand that you were buying the stock.” She replied, “Yes.” Judge Kelley said “That is what I wanted to find out.” And called a recess.

After recess.

38. Judge Kelley: said, “That he would like to know what happened to all of the receipts and why not one of them could be found.

39. Comparet: said that his clients had never had them in their possession and suggested that he ask Mr. Hutchinson about that.

40. Judge Kelley: said he did not think that he would ask that. (!!!!!!!)

41. Henderson: was called to the stand. He said that he was a director in the company from sometime after they first organize, until July. He was also an officer in the Corporation. He wasn't sure but he thought he was Vice President. Discussion of a document executed between United Polytechnique Institute and owners of the Rife Ray machine, i e, Rife, Hoyland and Hutchinson. Did he recognize it and know what it was all about. Henderson did not know about it. Henderson said that his wife owns 500 shares of stock for which she received a receipt and for which she paid no money. The stock came from Hutchinson but the receipt was signed by Fickerson. Henderson said that he put $900 into a former business venture of Hutchinson. Henderson said that the receipt was given to Ernstein’s and that he might have read it but he did not remember what it said. He testified that he knew nothing whatever about the books of the Beam Ray company. He showed a receipt from Hutchinson for $900 cash he had given Hutchinson on a former deal.

42. Sapiro: asked if Mrs. Henderson had helped to put over the English deal for Beam Ray. Henderson replied with the following story. "His wife had been suffering from a malignant disease. They visited the Rife laboratory and saw the Rife machine. She took the Rife Ray treatment and was cured. After that they were both very keen about the Rife machine and when the English group were here they entertained them at their home. Mrs. Henderson is still taking treatments, one a week." Henderson said he left the organization in July, because there was too much confusion in the company. He called the courts attention to the fact that he has never wanted any stock nor does he want any part of the English deal.

43. Comparet: asked him about the discussions of the company.

44. Henderson: said these arguments were sometimes between Rife and Hoyland, or Hoyland and Hutchinson, or Hutchinson and Couche and Cullen etc., etc. Henderson said that they rowed about a large number of subjects. Henderson said that Hoyland was technical director for the Beam Ray Company. That he serviced the machines and was in charge of the designing and manufacturing. Comparet asked him where the basic designs came from and Henderson said that those were Hoyland's also.

45. Comparet: asked Henderson what is the substance of the conversation between Hutchinson and the Ernstein’s?

46. Henderson: said he remembered it quite clearly. That Hutchinson said the stock was a gift but that he did not recall his saying that the money would be impounded.

Noon Recess.

Tuesday afternoon June 13th, 1939.

Henderson on the stand.

Comparet interrogating.

47. Henderson: said that Hutchinson, Hoyland and perhaps Dr. Rife made a pencil memorandum regarding how the money was to be procured through issuance of stock to finance the company. This agreement was drawn up by Hutchinson. Henderson believes that Hoyland knew all about the arrangements for the Corporation. Hoyland made no objection to that plan. Henderson thinks that he told Mrs Ernstein that the money was to be used to finance the making of the machines. Gonin, Blewett and Parsons listed by Henderson as representatives of the British group. All three were entertained at the Henderson home where Mr. and Mrs. Henderson talk to them about the Rife machine and its effect upon Mrs. Henderson’s disease. Henderson said that he had something to do with the fact of a contract betweenHoyland and Rife, but he had no part in the drawing up of the contract. He was around when the contract between the owners of the machine and Corporation was effect, but he has no definite recollection of the negotiations. (Comparet got Henderson confused at this point and Henderson would not say who represented the Corporation). Henderson insisted that he represented nobody during the transaction.

48. Judge Kelley: questioned Henderson about the document that turned over to Mrs. Henderson 500 shares of Beam Ray stock.

49. Henderson: said that nothing was paid for this stock and…

50. Judge Kelley: wanted to know why such a gift was made?

51. Henderson: said that earlier Hoyland, Hutchinson and perhaps Rife, had decided that Mrs. Henderson should have the stock in spite of Henderson's saying that he didn't want any reward for any services he might be given.

52. Judge Kelley: then read aloud the document stating that Mr. Henderson was granted the shares as a reward for her services in helping to complete the deal with the Corporation and also the English deal. Judge Kelley wanted to know why the Beam Ray stock was given away so frequently and generously for practically nothing. Was there deception and on who was it practiced and why. Judge Kelley said he intended to find out all about this.

53. Henderson: testified that he received nothing for the Aero Corporation stock transaction.

Henderson excused.

Mr. Charles Winter called to the stand.

54. Winter: identified as Treasurer and a member of the board of directors and a stockholder in Beam Ray Company having 500 shares of stock. He could not remember when he was made a director and couldn't name the month when he thought he was made one. He thinks he was a director for about 10 months. He didn't know that the United Polytechnique Institute became Beam Ray Corporation in 1938 (On May 2nd, 1938). He was not very active in the company. His employee Williams took over the job of treasurer for the company about a year ago. Williams is on Winters payroll and has been for years. He didn't remember when the Corporation was first organized, but he was one of the incorporators. He has 500 shares of stock and he paid Hutchinson $5000 for them (that is, for the old stock, five or six years ago). He says the transaction was in cash and there is no record of it. It was strictly a gambling proposition on Winters part. He figured he was making a donation to charity; he gave no services to the company and did not act as the real treasurer. Winters said that he received the stock in return for the services of Williams who attended a meeting each month. Winters also goes to the meetings.

55. Sapiro: demand to know why Williams was considered to be giving services to the company when Winter attended the meetings anyhow in the capacity of director. (Winters lost his temper). As Treasurer Winters could not say how much money the Corporation has at this time, there was however, less than $100 in the treasury June 1st, 1939. Asked by Sapiro what provisions he was making to meet the $3500 overdue in notes. Winters said he was making none.

56. Sapiro: questioned Winters at length about the Nevada Corporation and the Aero Reserve School. Winters said that the Corporation never gave anything to the United Polytechnique Institute or to Beam Ray Company.

57. Judge Kelley: examine the minutes of certain meetings of the board of the Beam Ray Company and inquired about a man named Kitchen. Nobody had ever heard of him. Judge Kelley wanted to know who were the directors of the company and officers at present. Williams Vice President, Winter Treasurer, Edwards Secretary, Reynolds and Miss Ernstein directors. Judge Kelley asked Winters, what about these notes that have fallen due for $3500. Winters replied that he didn't know what was going to be done about it.

58. Sapiro: asked Winters if he received a document from Hoyland asking him to take action to protest the transfers of stock. Winters said yes he received it but he did nothing about it.

59. Judge Kelley: asked Winters what was wrong with the Corporation? Winters replied that there were too many bosses. Too much trying to manufacture too many machines without any money. The company now has six machines but no demand for them. Winters said he and Edwards get along notably if left alone but that the stockholders want to have as much to say in the running in the business as the directors. There are groups and cliques, the leaders have always been Hutchinson and Hoyland rivals, each trying to get everyone on his side. Winters has tried to keep neutral. He feels that his money is lost and he doesn't care who wins in the tussle. He doesn't know which group is the strongest; he has confidence in the machine but not in the organization. He thinks that everyone should be removed from office but does not think a receiver should be appointed as this would hold up the entire business for too long a period. Asked how many could operate the organization successfully he said that it could not be done until everyone was in his place. He gave a description of the meetings and of the confusion of bickering that took place. He does not think that the directors should be removed but they seem to need more power. All are money hungry and greedy and by all he means everyone who has five cents invested in the organization. Asked by Judge Kelley if he would be willing to continue on the board of directors if the stockholders stop their interference, he said that he would. He believes the machine is a great thing. Litigation he said has held up all contracts and no money comes in.

60. Sapiro: asked Winters to name the people whose greed for money makes the running of the organization so difficult. Winter would not mention any names. Sapiro named the directors in turn asking Winters if each of these or all of them were money greedy. Winters hedged and would accuse no one; he insisted that the directors and officers of the company were all fine people, but that it was the stockholders who were greedy. Sapiro wanted to know what stockholders attended the meetings. Winters did not know because he said he did not pay any attention to the business of the Corporation. Sapiro then demanded that Winters name some of these greedy people and Winters repeated everyone who has five cents in the company. Sapiro said that that must include Winters himself, as he had $5000 in the Corporation. Affidavit showed that 500 shares of Beam Ray stock had been transferred to Winters as a gift. Pressed by Sapiro, Winters admitted that there was no reason for Hutchinson and Olmstead to have given him this stock. Asked if Beam Ray owed any money to Aero Reserve School Winters could not remember nor could he remember any reason why they should owe any.

Recess.

Edwards back on the stand.

61. Edwards: (Cheshire grin) reported that he could not locate most of the documents he had been asked for on a previous day. Confusion over technical names of Corporation financial statements etc.

62. Sapiro: asked Edwards about the assets of the old Corporation and what happened to them. Edwards said he did not know. Sapiro pointed out discrepancies in the books for May 1938, January 1939. But Edwards declared that he is not a bookkeeper and could not explain it.

Comparet took the witness.

63. Comparet: asked Edwards what change there has been to the company financial condition since the beginning of the litigation. Edwards said that everything stopped. That all salesmen reported that they could not place the machines. It was brought out that the company leases the machines over a period of ten years. Potential leasers say that they have no guarantee that the Corporation will be in existence after the litigation is ended. Asked to tell the change in the company income since the beginning of the litigation, he said that the income has practically disappeared. He said that efforts were still being made to place the machines. At present they are not trying to place them outside of the state of California.

64. Judge Kelley: want to know if other cities besides San Diego know about this litigation and Edwards said yes they did. He said that the Beam Ray Company has about seven machines on hand ready for use but that they could not be disposed of because of the litigation.

65. Sapiro: asked Edwards if it isn't true that the reason that the machines do not sell is because they are too expensive, Edwards agreed. Sapiro spoke of conversations to this effect between Edwards and himself to the effect and Edwards remembered it.

66. Judge Kelley: wanted to know who was trying to place the machines.

67. Edwards: said the directors were.

68. Judge Kelley: thought that this was a little out of their line. It was brought out that the prices for the machines were fixed when Hoyland was on the board.

69. Comparet: then made a motion to discontinue the trial on the grounds that the evidence fails to show that any wrong was done the Corporation. This motion was denied by Judge Kelley. Throughout the trial many objections were made by both sides on the case but Judge Kelley overruled them stating he would not consider technicalities now and wanted to get the story of each person.

Wednesday June 14th.

Edwards on the stand.

70. Sapiro: asked Edwards to look up assets of contract with old company in amount $49,907. Edwards located this and said that later in July 1935 this was increased to $51,409 as recorded in the original books of the old Corporation.

71. Sapiro: asked was that item ever changed during the following years.

72. Edwards: said no, it had not been changed.

73. Sapiro: asked even though the whole project had been abandoned.

74. Edwards: said that's true.

75. Comparet: asked Edwards to find the entries in the books recording the payments into the Corporation of monies given Hutchinson by Edwards, Reynolds and the Ernstein's. While Edward studied the records Sapiro want to know if they were actually the original books.

76. Edwards: said no, that he was using a new compilation taken from the old books but that he had the original books with him.

77. Sapiro: showed old books. With the following notation May 9th, 1939. Item C. R. Hutchinson $2500 this was crossed out and beneath it written the names of Viola Ernstein and her father. Another item (did not get the date) C. R. Hutchinson, this was crossed out and beneath it written the name Ray Reynolds. Sapiro demanded to see the bank book which showed when these monies were deposited in the bank. Edwards produced it. It showed deposit on May 4th, of $600, May 9th, $2500, May 24th, $275.00 and May 26th, $225.00., There were shown to be a discrepancy between the deposit slips and the items in the bank book, but the money was all accounted for.

Philip Hoyland called to the Stand.

78. Hoyland: was identified as one of the owners of the Rife Ray invention. He first became connected with the Beam Ray Corporation on May 1st, 1938 as technical advisor. He remained so until date when he was discharged (did not get date). The Corporation began manufacturing the machines shortly after he joined the company.

79. Comparet: inquiring, did anyone beside yourself know what the frequencies were?

80. Hoyland: no.

81. Comparet: As Royal Rife took no part of the manufacturing activities you were the only person taking part in them who knew how to adjust the machines?

82. Hoyland: yes.

83. Comparet: you constructed and supervise the making of the machines? As technical advisor it was your duty to make plans for the constructions of the machines and either personally put them together or supervise their construction, is that not so?

84. Hoyland: I supervise the construction of the machines. They were made under my ideas.

85. Comparet: no one else could do so?

86. Hoyland: not at that time.

87. Comparet: during the time you were technical advisor for the company all the machines were built under your supervision, weren’t they?

88. Hoyland: yes.

89. Comparet: after construction they had to be adjusted in order to work properly and that adjustment had to be done by one who knew the precise working of the machine.

90. Hoyland: I instructed one person in this work, but I still supervise the adjustments as I wanted the machines to be absolutely correct.

91. Comparet: were any experimental activities carried on in the lab?

92. Sapiro: objected on technical grounds, Judge Kelley overruled him, saying technicalities must not prevent the evidence from being brought out.

93. Hoyland: yes.

94. Comparet: these changes were incorporated into the machines from time to time in an effort to improve them?

95. Hoyland: yes.

96. Comparet: before you became technical director for the company was there a contract between the company and the owners of Beam Ray?

97. Hoyland: no, that was at a later date, after I had worked for the company for some time, it was made on June 1st, 1938.

98. Comparet: before this agreement was signed did the company manufacture any Beam Ray machines?

99. Hoyland: they started to about the first of May. Dr. Hamer was sold one.

100. Comparet: how many machines were built during May 1938?

101. Hoyland: there was one finished and delivered and I think we started on two others.

102. Comparet: there was in the first place an agreement between the three owners of the Rife Ray machine as to the proportionate interest each was to have in the profits.

103. Hoyland: yes, or do you mean the original two owners?

104. Comparet: no I mean the three owners.

105. Hoyland: I don't know what contract you are talking about.

106. Comparet: I mean the one between Rife, Hoyland and Hutchinson. Comparet then brought out that this contract referred to the company but was not signed by the company. Hoyland still did not recall the contract. But Comparet showed it to him. Hoyland read it and then recalled it, but did not remember whether or not it was signed by the company, he said there were so many contracts.

107. Comparet: about that time were negotiations pending between the Corporation and the English group?

108. Hoyland: the English were expected in San Diego shortly after June 1st .

109. Comparet: you knew that these three representatives of the English group were looking for a license to manufacture and distribute the Rife Ray machines in the British Empire.

110. Hoyland: yes.

111. Comparet: during the month between the time you began working for the company and when the contract was signed were negotiations going on regarding the license to manufacture the machines?

112. Hoyland: yes, Rife, Hutchinson and I were the parties concerned, the agreement with Beam Ray was signed just prior to the agreement with the British, a week or more elapse between them.

113. Comparet: how long were the three Englishmen here?

114. Hoyland: probably about two weeks.

115. Comparet: during that period you conferred with them in regards to terms etc. etc.?

116. Hoyland: I talked with them, yes.

117. Comparet: you were not willing that an agreement be entered into unless it met with your approval?

118. Hoyland: yes, that is right.

119. Comparet: you kept yourself familiar with what the negotiations were leading to?

120. Hoyland: yes.

121. Comparet: you checked over the final agreement?

122. Hoyland: I read it through.

123. Comparet: it was redrafted several times and you checked it all over each time?

124. Hoyland: yes, I read them through.

125. Comparet: you read through the final draft before it was actually signed?

126. Hoyland: yes: and I thought it satisfactory at the time.

127. Comparet: you made no objections?

128. Hoyland: it seemed all right at the time.

129. Comparet: you would not include Canada in the agreement and it was omitted?

130. Hoyland: we all agreed that they should not have Canada.

131. Comparet: the English group made certain payments at the time of the signing of the contract? Do you recall the amount?

132. Hoyland: yes, $10,000, later we got $15,000, I got $2900.

133. Comparet: you kept this money; you didn't give it back to the three Englishmen?

134. Hoyland: no.

135. Comparet: brought out the fact that the first license was for them personally to manufacture and distribute the machines and that later another contract was made by which they agreed to organize an organization to carry on the work of manufacturing etc. Comparet showed a contract between Beam Ray and the three Englishmen.

136. Hoyland: said this was the first written agreement with the English, it was dated June 4th, 1938.

137. Comparet: then showed him another contract between the same parties dated June 5th and asked if it was the second contract?

138. Hoyland: read it and said yes.

139. Comparet: brought out that the signing of the contracts was the result of a long series of conferences and that Hoyland had been familiar with what went on at most of them.

Recess.

Hoyland back on the stand.

140. Comparet: as far as you know the three Englishmen understood that these contracts that were signed correctly stated the entire deal?

141. Hoyland: I assumed they did.

142. Comparet: and you did not say that they were not correct?

143. Hoyland: no.

144. Comparet: you knew that the agreements sublicensing these three Englishmen were made by the Beam Ray Corporation?

145. Hoyland: yes, but the Corporation was more or less acting as agents for the owners.

146. Comparet: you understood that it was actually the Corporation that signed the agreements?

147. Hoyland: yes.

148. Comparet: it was your understanding that the three Englishmen were to be the only persons so licensed?

149. Sapiro: objected and Judge Kelley sustained the objection.

150. Judge Kelley: then asked Hoyland, if he fully understood the contract between the Beam Ray Company and the English?

151. Hoyland: said no.

152. Comparet: called Hoyland's attention to the first paragraph of the agreement setting forth that Beam Ray holds exclusive license to the Rife Ray machine and has agreed to grant the British the right to manufacture and distribute etc. Comparet stressed the word exclusive. Do you deny that the owners gave the Beam Ray Corporation an exclusive license?

153. Hoyland: yes.

154. Comparet: then why did you not call this to the attention of the English before you accepted their money?

155. Hoyland: that subject was brought up.

156. Comparet: you accepted the money under the terms of the contract I just read to you. Why didn't you call their attention to it?

157. Hoyland: I didn't notice that section of the contract; it was pointed out to me later.

158. Comparet: you knew that the three Englishmen understood they were to receive an exclusive license?

159. Hoyland: I presumed I understood it at that time.

160. Comparet: you knew also that Beam Ray could not grant this exclusive license if they did not possess it themselves didn’t you?

161. Hoyland: I am afraid I never considered it.

162. Comparet: have you ever stated to these three Englishmen that you had not given Beam Ray an exclusive license?

163. Hoyland: yes

164. Comparet: when and how?

165. Hoyland: I sent them a cable January, no December 26, 1938.

166. Comparet: how much money had you received at that time from the English?

167. Hoyland: $2900.

168. Comparet: did you return this money?

169. Hoyland: yes, I sent them a cable.

170. Comparet: will you produce it please?

171. Hoyland: produced a cable and after reading it asked to be allowed to make a correction, I did not send the money, I offered to return it.

172. Comparet: asked him if what he held was a copy of the cablegram and who made the copy?

173. Hoyland: Mr. Siner made the copy and it was sent on the advice of my attorney.

174. Comparet: where was this copy made?

175. Hoyland: in Dr. Rife's lab, from a long hand copy.

176. Comparet: this copy of the cablegram refers to a letter and proposed agreement received.

177. Hoyland: yes, a letter that the company received, the British wanted to make a new contract.

178. Comparet: previous to that date you and Mr. Hutchinson had gone to New York together and had made certain amendments to the contract?

179. Hoyland: yes.

180. Comparet: were you at that time an officer or director of the company?

181. Hoyland: we had both handed in our resignations and we were both authorized as agents to act for the company.

182. Comparet: you dealt with Gonin there and made changes?

183. Hoyland: yes, that is correct.

184. Comparet: these changes were reduced to writing in the form of a letter addressed to Dr. Gonin and which he accepted?

185. Hoyland: I don't remember in what form it was drawn up.

186. Comparet: how long did these conferences take?

187. Hoyland: we started them Wednesday at 9 AM; we left him Thursday at 1 PM.

188. Comparet: at that time did you say to Dr. Gonin that Beam Ray did not hold an exclusive license and that therefore the English could not have one?

189. Hoyland: yes.

190. Comparet: showed Hoyland a two-page document in the form of a letter to Dr. Gonin.

191. Hoyland: read it and said that it was one of the amendments, dated November 17th , 1938. (Hutchinson signed for Rife and himself, Hoyland signed as did Dr. Gonin)

192. Comparet: then showed another letter addressed to Dr. Gonin regarding two amendments which Hoyland and Hutchinson signed in the name of the Beam Ray Corporation.

193. Hoyland: identified this as the second amendment.

Recess.

June 15, Thursday.

Hoyland on stand.

194. Comparet: Hoyland testified that he received over $900 from Beam Ray. Judge Kelley thought this unimportant. Comparet established that Hoyland got $960 and showed a check for that amount.

195. Comparet: at about that time the British bought four of the Beam Ray machines and they were made under your supervision, you also received royalties on these machines amounting to $220, didn't you?

196. Hoyland: yes.

197. Comparet: at the time the British were here you had one of the four machines completed didn’t you?

198. Hoyland: yes, we showed them one complete machine.

199. Comparet: did not the company offer that machine to them as one of the four for sale?

200. Hoyland: no Sir.

201. Comparet: who conducted the negotiations with the British for the four machines?

202. Hoyland: Hutchinson and myself.

203. Comparet: wasn't the deal completed in Los Angeles between Henderson and yourself and the British?

204. Hoyland: yes, but it started in San Diego.

205. Comparet: what was the understanding with the British as to when the machines would be delivered?

206. Hoyland: one was to be delivered in New York before Parsons sailed, he kept in touch with us as to sailing time and we got it to New York in time.

207. Comparet: was this machine a Rife Ray or an oscillograph.

208. Hoyland: it was sent from San Diego, what we call a master oscillator and an amplifier which was capable of pulling out frequencies of the Rife machine.

209. Comparet: the four machines bought by the British were two so-called laboratory types and two so-called clinical types, what was the difference between the two?

210. Hoyland: the clinical type was similar in all respects to the Rife machine except that it did not have (word missing) of the (word missing) used on Mrs. Henderson.

211. Comparet: when were the three remaining machines delivered to the British?

212. Hoyland: I couldn't tell you the exact date, I guess August.

213. Comparet: but they were ordered in June?

214. Hoyland: I told the British that they would leave on the first boat for London but that ship did not stop at San Diego, later the machines were sent to Los Angeles.

215. Comparet: when were they ready to ship?

216. Hoyland: in a few days.

217. Comparet: how was the price of these machines fixed?

218. Hoyland: the price was decided from the cost of what it cost to manufacture the first machine that was sold to Dr. Hamer.

219. Comparet: how much was that?

220. Hoyland: I think it was $400 plus the royalty.

221. Comparet: wasn't it $500 plus royalty on the clinical type and $600 plus royalty on the laboratory type?

222. Hoyland: I don't remember.

223. Comparet: were not the British told that the machines were being sold to them practically at cost?

224. Hoyland: yes, they bought them on that understanding.

225. Comparet: were they also told that this would be confirmed by sending them to them after the machines were built, a statement of what the cost had actually been?

226. Hoyland: no, there was a statement sent them of the cost of parts and an estimate of the cost of labor.

227. Comparet: when was that sent to them?

228. Hoyland: I can't answer that question without seeing a letter sent to them at a later date which specifies the time at which that was sent.

229. Comparet: you saw the correspondence between Beam Ray and the British after they returned to England?

230. Hoyland: some of it.

231. Comparet: the British wrote to the company and cabled the company many times complaining of the delays in receiving the machines?

232. Hoyland: yes.

233. Comparet: about how many times, would you say five or six?

234. Hoyland: I think three.

235. Comparet: they also sent some letters complaining of failure to send them the information that was promised them?

236. Hoyland: they did not receive the information until after they had received the machines.

237. Comparet: this was in the latter part of September?

238. Hoyland: I should think so.

239. Comparet: how soon after that was the information sent?

240. Hoyland: I would have to see that letter.

241. Comparet: who sent them the information?

242. Hoyland: I sent most of the technical information.

243. Comparet: was it regarding the specifications of the machines?

244. Hoyland: I sent them schematics.

245. Comparet: did you also send them a list of the different frequencies?

246. Hoyland: I sent them a code list of the bacteria.

247. Comparet: what do you mean by that?

248. Hoyland: the bacteria had to be given in alphabetical letters.

249. Comparet: after you sent them the list did you send them a list for the right frequencies for the bacteria?

250. Hoyland: the dial of the master oscillators have these same letters on them (there followed a description of how the machine was to be operated).

251. Comparet: the value of the information that you sent them depended upon the accuracy of the setting of the master oscillator?

252. Hoyland: no they could still get it.

253. Comparet: didn’t they demand the actual numerical frequencies?

254. Hoyland: I explained to them how they could do this.

255. Comparet: you understood did you not that the British proposed to build a large number of these machines and that therefore they would have to be able to adjust them after they built them in order to have them working properly?

256. Hoyland: they promised to send a man over here to be trained in all of this.

257. Comparet: if you wanted to treat one with typhoid for instance wouldn't you have to set the machine so that it would be on a particular frequency?

258. Hoyland: no, the machines were made so that they varied over a band of frequencies.

259. Comparet: that band used for the treatment of each disease was different from the other bands for other diseases, wasn't it?

260. Hoyland: the whole list of bacteria that the machine was treating was divided into four bands.

261. Comparet: the only information that you sent the British as to frequencies consisted of the information that for certain particular bacteria they could set the dial at certain points?

262. Hoyland: (missed Hoyland’s actual reply but it amounted to an admission that this was so).

263. Comparet: did the dials on the master oscillator show in numerical frequencies what particular Ray was being put out?

264. Hoyland: yes.

265. Comparet: did you see that these machines were in working order and did you adjust them correctly and test them before they were shipped?

266. Hoyland: yes I checked them personally.

267. Comparet: were they shipped in an assembled condition?

268. Hoyland: they were partially disassembled.

269. Comparet: then it would be necessary for the British to reassemble them again?

270. Hoyland: yes.

271. Comparet: and new adjustments would be necessary?

272. Hoyland: it should not have been.

273. Comparet: didn’t you know that the British repeatedly wrote to the company complaining that the machines were not in correct adjustment, that they differed from each other and that they could not determine from the machines what the frequencies should be, and they asked for a list of the frequencies?

274. Hoyland: they said in their letter that the machine had been damaged and that one was about 15% off, throughout its scale.

275. Comparet: that was a letter from Mr. Parsons?

276. Hoyland: yes, I saw it and read it later.

277. Comparet: did you send them the correct frequencies?

278. Hoyland: I explained to them how to arrive at new figures through recalibration.

279. Comparet: did you not refuse to tell them what the frequencies were when they demanded them?

280. Hoyland: most emphatically no.

281. Comparet: what did you do with Parsons Letter complaining about the machines being improperly calibrated?

282. Hoyland: that letter was directed to me personally.

283. Comparet: then you kept it, I suppose. I call your attention to a letter dated October 18th , 1938 isn't that the letter referred to just now or a copy of the letter?

284. Hoyland: (after reading the letter) yes I think so.

285. Comparet: will you please produce the one you have….

286. Hoyland: produced a letter and Comparet checked it with the first letter.

287. Comparet: this letter is addressed to Beam Ray Corporation but you retained it in your possession?

288. Hoyland: because I was technical director.

289. Comparet: you didn't leave it in the company records?

290. Hoyland: no I didn't, I wasn't supposed to.

291. Comparet: who told you you could retain such correspondence?

292. Hoyland: it was just understood.

293. Comparet: then your answer is no one told you.

294. Hoyland: we had discussions about it many times.

295. Comparet: (showing Hoyland the letter) Parsons says here, the calibration of your machine was 15% out and without a promised list of figures they could not adjust or work the machines, he complains here also that the coded list did not agree with the dials, and that they are still waiting for; No. 1, detailed cost of parts and labor, No. 2, specification of coil transformers. No. 3, frequencies in figures. (Words missing) were the plugs?) not before machines were shipped, what information did you send?

296. Hoyland: I think I wrote them asking them to send out a man to get familiar with the machine.

297. Comparet: but you did not send the information they asked for?

298. Hoyland: I sent them the specifications and gave the checks and the transformer to Dr. Gonin in New York. I explained to him how to arrive at the frequencies even if the machines were off.

299. Comparet: in the same letter it says that the other laboratory instrument was off by about 5%. Did you tell them how these instruments could be made correct, seeing that they differed from each other?

300. Hoyland: no.

301. Comparet: he asked for the frequencies again?

302. Hoyland: the letters around the dial and the figures would have given them the frequencies.

303. Judge Kelley: wanted to know, why Hoyland did not give them this information they asked for.

304. Hoyland: they were afraid that if the frequency were lost somehow someone could have figured it out and built the machines.

305. Judge Kelley: I can't see why you didn't send them the information they wanted. Did you work it out fully for them and give the information in code?

306. Hoyland: I told them the complete range while they were over here.

307. Judge Kelley: does he mean in this letter that the figures on the dial, or that your information in code was off 15%.

308. Hoyland: I suppose that the machines had moved and shifted in being shipped and had gotten out of place, I mean the calibration had shifted.

309. Judge Kelley: is he mistaken when he says, (he Parsons), needs the code frequencies in figures?

310. Hoyland: he was absolutely. He could have adjusted it just as we did.

311. Judge Kelley: did you know that this could have been done in England?

312. Hoyland: it was not so difficult; any good radio man could have done it, if he had had experience in that line.

Recess.

Hoyland resumed the stand after 11 A.M. recess.

313. Hoyland: suggested that he would like to make a diagram of how the coded information he sent the British could be applied. Large paper was tacked up on the black board and Hoyland drew a diagram.

314. Comparet: this coded information consisted more of telling the British what particular disease was cured at a particular point on the dial?

315. Hoyland: no, starting from zero, etc., (he listed diseases).

316. Comparet: this is not the only letter from the British addressed to Beam Ray Corporation that is in your possession, is it?

317. Hoyland: I don't know which letters are directed to me or to the Beam Ray Corporation.

318. Comparet: will you just look for and produce any letters, telegrams, or cablegrams that are directed to the Beam Ray Corporation by the British?

319. Hoyland: produces a number of them.

320. Comparet: I show you a letter directed to Beam Ray signed by Mr. Parsons, dated September 20th, 1938. Has this been in your possession ever since it was received in the office of the company?

321. Hoyland: it says attention Mr. Hoyland.

322. Comparet: this letter calls attention to the fact that there is a great discrepancy in the machine and says that they can do nothing with it until they get the other machines out of the customs. They ask for more information which they promise will be kept confidential. Did you send any reply to that letter?

323. Hoyland: yes.

324. Comparet: here are a number of cablegrams which you have produced. One dated October 10th and addressed to Beam Ray, Quote, four machines received two inoperable, all four require extensive overhaul, this and previous delays make our position extremely difficult, still awaiting information promised, Hoyland letter July 18th . Did they get this information?

325. Hoyland: I would have to find out what I promised them on that date.

326. Comparet: I will read from a cable dated October 31st, distressed no reply to our recent cable, can you send representative authorized to act to meet Gonin in New York November 17th. Reply. You have had that ever since it was received haven't you?

327. Hoyland: yes.

328. Comparet: another one of November 3rd, 1938, addressed to Hutchinson, all convinced you do not get our cables or letters, could you meet me in New York November 17th with power of attorney to discuss situation, fear losing funds offered us, signed Gonin. Didn’t you get that cable at the office at the Beam Ray Company?

329. Hoyland: I don't think so; Mr. Hutchinson gave it to me before we went to New York.

330. Comparet: didn’t you know that the situation was such that the British sent their correspondence in duplicate, one going to Mr. Hutchinson?

331. Hoyland: yes.

332. Comparet: did you show their letters or cables to the board of directors after receiving them?

333. Hoyland: no, I kept them, because it was all technical.

334. Comparet: did you think that the board of directors should not know that the British wanted this information?

335. Hoyland: they all knew it in the office, and I knew Hutchinson was receiving copies.

336. Judge Kelley: did anyone reply to any of these letters?

337. Hoyland: I replied to some but I thought the company should reply to others.

338. Judge Kelley: who was Secretary to the company at that time?

339. Hoyland: Mrs. William.

340. Judge Kelley: is she here?

341. Comparet: no, she can be called.

342. Comparet: calling your attention to this letter from Mr. Blewett, did you know that he was making such complaints at that time?

343. Hoyland: I have never seen this letter before.

344. Comparet: then asked Hoyland to read the letter through.

Court recessed until 2 P.M.

Afternoon session.

345. Hoyland: read the Blewett letter.

346. Comparet: you knew such complaints were being made by them over a period of a good many weeks?

347. Hoyland: I had seen the cables, yes.

348. Comparet: including the one saying they were convinced that you did not get their cables?

349. Hoyland: yes.

350. Comparet: during this period did not the officers and the director of the Corporation request you to send the information asked for. Didn't George Edwards or Mr. Hutchinson ask you to do this?

351. Hoyland: I don't remember that any of them did. I am sure that Mr. Edwards never asked me to.

352. Comparet: when did you send them the list of what the letters on the dial stood for?

353. Hoyland: I think that was in August.

354. Comparet: what was promised them in San Diego?

355. Hoyland: (pointing to the diagram) this was.

356. Comparet: read more of the complaints from the British letters in which they asked repeatedly why they were not sent the numerical frequencies. What was your reason for withholding these?

357. Hoyland: they were to get them this way (pointing to the diagram).

358. Comparet: in a number of letters the British asked for a statement of the costs of the machine. Had you sent them these figures?

359. Hoyland: yes.

360. Comparet: did you tell them that trained men could assemble the parts in one day?

361. Hoyland: yes I did.

362. Comparet: do you recall the cost for parts for one machine?

363. Hoyland: I think it was about $245.

364. Comparet: you charged them $500 plus $150 royalty for clinical machines and 600 plus $150 for laboratory machines. Now, what did this difference represent?

365. Hoyland: when you are starting you can't manufacture machines as cheaply as when you are in production.

366. Comparet: what were the men paid?

367. Hoyland: five dollars.

368. Comparet: that would mean that it took one man fifty five days to put the machine together.

369. Hoyland: I had three men working on them at that time; they knew that we were manufacturing the machines especially for the British in England.

370. Comparet: did you explain the difference in price?

371. Hoyland: I didn't write them any explanation.

372. Comparet in reply to these two cables asking for a representative to meet Dr. Gonin in New York, you and Mr. Hutchinson were the authorized agents or the Corporation and dealt with the British?

373. Hoyland: yes.

374. Comparet: when you met Dr. Gonin, didn’t he present you with this letter along with two memorandums explaining the points upon which the amendments were to be made?

375. Sapiro: objected to the line taken by Comparet and…

376. Judge Kelley: said he was confused himself, as to what Comparet was leading up to.

377. Comparet: consulted the allegations in the pleading and quoted from one of the amended complaints. "The Corporation has made certain contracts with British representatives and that said British have cabled threats to the Corporation, stating their intention to start suit." We propose to show that the directors of the Corporation took all the action that they could take.

378. Sapiro: insisted that the Corporation knew all about the complaints by the British, but…

379. Judge Kelley: felt that perhaps Hutchinson and Hoyland had both conspired to keep the information from the Corporation.

380. Comparet: put the blame for the failure to give the British the information they desired entirely on Hoyland and…

381. Judge Kelley: ruled that he might be allowed to so prove if he could.

382. Sapiro: started to remove marks on a document.

383. Comparet: caught him doing it and a tussle ensued.

384. Judge Kelley: told Sapiro very firmly that he was not to make marks on any document and then reprimanded him, finally told both attorneys to sit down and behave themselves.

385. Sapiro: then inspected the document.

386. Judge Kelley: asked him why he had put the marks there in the first place?

387. Sapiro: evaded the question murmuring that he did so in December.

388. Judge Kelley: said, that what the court is especially interested in right now is, what is the status of the people who hold the stock and if the stock which they received is void by reason of the ruling of the Corporation Commission, what is the status of the directors. He continued, Quote. "There is evidence here of rather strange transactions. Mr. Hutchinson said that he could give away stock, but he could not sell it, and people were paying money to him for stock which they expected to receive later. Can this be done legally? Or were these merely gifts from the people. Did Mr. Hutchinson ever intend that the money should get to the Corporation? How much of all this was known to the directors of the Corporation and what had they done about it? This issue seems more important at the time than the British suit.

Comparet resumed the cross examination.

389. Comparet: at that conference you negotiated these two amendments?

390. Hoyland: yes.

391. Comparet: and after Dr. Gonin returned to London he sent this cable dated December 10th?

392. Hoyland: that's right.

393. Comparet: the cable says among other things, "sending new agreement." Now when you were first on the stand you produced a type written copy of a cablegram, sent by yourself to Dr. Gonin in response to proposed contract sent by British. In this cable, you say, letter and proposed agreement received, your letter misstates fact regarding specification also that the Beam Ray Corporation has basic rights, this not correct, all basic rights remain with original owners, you have breached contract by failing to send payments. Now do you mean to say that Beam Ray Corporation holds no exclusive license to the Rife machine?

394. Hoyland: yes, I mean that.

395. Comparet: you say also in this cable "your proposed new contract comprehends a wrong first party." Who did you mean would be the right party? Yourself, Rife and Hutchinson?

396. Hoyland: yes.

397. Comparet: so by your statement you mean that the Corporation did not have the authority to give such a license as this proposed contract would give to the British and such authority would have to be obtained from the owners?

398. Hoyland: that's right.

399. Comparet after you sent this cable to Dr. Gonin in which you informed him that the Corporation did not have the right to make such a contract, did you inform the Corporation?

400. Hoyland: I told Edwards, he saw the cable before I sent it.

401. Judge Kelley: was Mr. Edwards the only director you showed the cable?

402. Hoyland: I think so.

403. Comparet: you explained to him the meaning of it as you have explained it here so that he would understand what it means.

404. Hoyland: yes I made it clear to Edwards.

405. Comparet: in reply to that cable Dr. Gonin sent this cable, dated September 30th, did he not?

406. Hoyland: yes.

407. Judge Kelley: after reading Gonin cable. When did you reach the conclusion that the Corporation did not have the exclusive license?

408. Hoyland: I took my papers to my attorney in Los Angeles.

409. Judge Kelley: you examined the contract with the British didn't you?

410. Hoyland: I'm not a lawyer, Hutchinson was appointed to take care of our interest.

411. Judge Kelley: is Hutchinson a lawyer?

412. Hoyland: he always said he was as good as any lawyer.

413. Judge Kelley: we’ll find that out when we get him on the stand. Did you receive any money after you had learned that the contract was wrong?

414. Hoyland: no.

415. Judge Kelley: when did you get this information from your attorney?

416. Hoyland: before I sent this cable.

417. Judge Kelley: did neither you nor the company have a legal counsel other than Mr. Hutchinson before you consulted your attorney in Los Angeles?

418. Hoyland: the first contract with the British was drawn up in the offices of Mr. Fickerson and I was relying on Mr. Hutchinson to set Dr. Rife and myself right.

419. Comparet: wasn't the agreement submitted to Mr. Steiner?

420. Hoyland: no, he was the attorney for the British.

421. Comparet: did he come to the company's office?

422. Hoyland: I didn't see him there.

423. Comparet: did you intend this license to the British should be exclusive?

424. Hoyland: yes.

425. Comparet: then why the change in December?

426. Hoyland: my attorney pointed this out to me at that time.

427. Comparet: when you showed your cable to Edwards did you tell him what you proposed to do if Beam Ray Corporation tried to go ahead with the contract?

428. Hoyland: we discussed it, Mr. Edwards, Mr. Sapiro and myself. There was a directors meeting which Mr. Sapiro attended and a cable was sent to the British.

429. Comparet: I show you a cable addressed to Beam Ray Corporation dated January 5th, 1939. How did it get into your possession?

430. Hoyland: that was delivered to the Beam Ray offices. I took it down to Mr. Edwards and he gave me a copy and I kept the original.

431. Comparet: do you think that this refers only to the technical matters that concerns you and not the company?

432. Hoyland: no, the owners and the company were both interested.

433. Judge Kelley: you say you took the cablegram to Edwards and he made a copy and gave you the original, what did you do with it?

434. Hoyland: I put it among my papers. Edwards had a copy of it.

Recess.

435. Comparet: quoting from a cable sent to the Beam Ray Company by the attorneys for the British, to the affect that Beam Ray had broken the original agreement, had ignored requests by the British, that the British were willing to return the machines and expected to get their money back. You say in your complaint that the rights of the Corporation have been challenged, do you mean your own challenge, saying that the Corporation does not have an exclusive license and therefore could not deal with the British?

436. Hoyland: yes, that is what I mean.

437. Comparet: I show you here a copy of a notification you served on the directors of the Corporation. You say, "Wherefore I demand that you release and surrender your agreement with the owners and all rights." You complain that the directors should have adjusted with the owners this difference about the rights of the Corporation. Is that your idea of adjusting the matter?

438. Sapiro: insisted that the entire exhibit be shown to the court and not just the section quoted by Comparet.

439. Hoyland: read the entire document and answered, "If they couldn't adjust them this is the answer. We ask for a new contract."

440. Comparet: on your own terms?

441. Hoyland: yes.

442. Comparet: what was your occupation before you started your work on the Rife machine?

443. Hoyland: Radio business.

444. Comparet: you conducted a little radio repair shop?

445. Hoyland: yes.

446. Comparet: when did you do your first work on the Rife machine?

447. Hoyland: August 1934.

448. Comparet: what was the first work you did?

449. Hoyland: repairing Dr. Rife's machine.

450. Comparet: when did you begin to devote your whole time to the work on the Rife Ray machine?

451. Hoyland: from August 1934 I was almost continually in touch with Dr. Johnson in Pasadena. Later I was given an order to build a machine. I took the first machine to Pasadena and later to Los Angeles where we ran a clinic, from October 1935 to June 1936. I worked three days a week with Dr. Johnson and then I came to San Diego for three months and was there continuously devoting my full time to the Rife machines [Building the Beam Ray Clinical instrument]. I went back in September of 1936. We ran a clinic in Pasadena at the old folk’s home three mornings a week.

452. Comparet: during this period you were working only part time on the Rife machine weren't you?

453. Hoyland: I was trying to run my business at the same time.

454. Comparet: that made it a struggle didn't it to keep going on at that time?

455. Hoyland: the clinic interfered with business and I lost business.

456. Comparet: during this period your income was not very much?

457. Hoyland: it wasn't as much as when I started.

458. Comparet: now in May of 1937, did you get down to devoting full time to the Rife Ray machines?

459. Hoyland: from then on I did, I quit my business.

460. Comparet: from then on until your contract with the Beam Ray Corporation was severed you devoted yourself to work on Dr. Rife's machines?

461. Hoyland: we did other things at the laboratory.

462. Comparet: have you received any dividends as a stockholder of Beam Ray Corporation?

463. Hoyland: no Sir.

464. Comparet: but you have received some money and some royalties on the machines released in the U.S., and on the British deal?

465. Hoyland: there have been 11 or 12 machines sold.

466. Comparet: from May 1937 to June 1938, how were you supporting yourself?

467. Hoyland: I had money in the bank and lived on my savings account, and continued to support myself on that money after I joined Beam Ray Corporation.

468. Comparet: while you were technical director of Beam Ray Corporation you received additional compensation, 1 1/2% of each machine didn’t you?

469. Hoyland: one half percent, the one percent was to be paid when the machines were all paid for.

470. Comparet: you received about $2900 from the British contract and $200 royalty on four machines sold to the British, you received some $3500 from Beam Ray Corporation?

471. Hoyland: approximately that.

472. Comparet: did you ever pay back that amount to Beam Ray Corporation?

473. Hoyland: no but I offered to.

474. Comparet: when you offered it did you show them the money, did you have it in cash?

475. Hoyland: no.

476. Comparet: on January 13th , you served a demand upon the board of directors of Beam Ray Corporation signed by you and you thereby demand that the directors do certain things, number of which is that they take steps to collect back from certain persons including yourself all moneys paid in connection with the British deal. If you didn't have the money why did you want to do this?

477. Hoyland: I had property, real estate and a house near Arrowhead Lake.

478. Comparet: a mountain cabin?

479. Hoyland: I said a house.

480. Comparet: a cabin is a house.

481. Hoyland: yes, but a house isn't always a cabin.

482. Comparet: I understood you to say that the first machine built by Beam Ray Corporation was built in the month of May 1938, and the money with which to buy the parts for that machine came from money paid in by Edwards and Reynolds?

483. Hoyland: I suppose so. I know we got some money somewhere and bought parts for that machine. The machine was sold to Dr. Hamer.

484. Comparet: when was that machine started?

485. Hoyland: I can't remember.

486. Comparet: you had met Mr. Hutchinson before you became connected with Beam Ray Corporation hadn’t you?

487. Hoyland: yes.

488. Comparet: on about the 15th April Mr. Cullen, Mr. Henderson and yourself went to the office and about four days after you were again at the United Polytechnique Institute office in the Broadway building?

489. Hoyland: yes.

490. Comparet: on these occasions there was a discussion to the effect of having Mr. Hutchinson take over the job?

491. Hoyland: yes.

492. Comparet: you knew that the British were on their way to make a deal and you were hoping to be able to license them to manufacture in England, and you wanted a Corporation with which to deal with them?

493. Hoyland: yes.

494. Comparet: and the United Polytechnique Institute was the Corporation to do that?

495. Hoyland: yes

496. Comparet: at that time you had no stock in United Polytechnique Institute?

497. Hoyland: there was a promise that Dr. Rife and I would receive 30% of the stock.

498. Comparet: you received a written assignment of 55% of the stock from Dr. Rife didn’t you?

499. Hoyland: yes.

500. Comparet: was this before or after you discussed business with Mr. Hutchinson?

501. Hoyland: I think that it was put in writing after.

502. Comparet: do you recall a conversation at which yourself and Rife and Mr. Gordon Gray were present which took place at Rife's laboratory at which you demanded that an interest in the invention be assigned to you?

503. Hoyland: no, that was from the other side.

504. Comparet: at that time did Mr. Gray suggest that you receive 20% interest?

505. Hoyland: no Sir. Dr. Rife and I had always had the understanding that we shared evenly, as I had done all the development work.

506. Comparet: what do you mean by that?

507. Hoyland: I had done all of the building and designing of the machines other than the one original machine that he had in his laboratory. I had brought that to a state where it could be carried around.

508. Comparet: did Rife then say that he would give you 55%?

509. Hoyland: no, he said 60%, and that was reduced to 55%.

510. Comparet: did you suggest that reduction?

511. Hoyland: I told him that I would accept 55%.

512. Comparet: he then put that in writing didn’t he?

513. Hoyland: yes.

514. Comparet: if you have that written document will you produce it please?

515. Hoyland: did so and the document was identified.

516. Sapiro: in whose handwriting is that written?

517. Hoyland: Dr. Rife's. (N.B. Copy was substituted for original Rife letter for court exhibit).

518. Comparet: when did Mr. Hutchinson receive the assignment of an interest of the invention?

519. Hoyland: I think about the same time (Dr. Rife wrote it).

520. Judge Kelley: what interest was Hutchinson given?

521. Hoyland: one third.

522. Judge Kelley: how could that be?

523. Hoyland: originally there was just Rife and myself. 55% and 45%, that was later divided, 30% to Rife, 33 1/3% to Hutchinson and 36 2/3% to me.

524. Comparet: I show you a document hand written, is that the one by which Hutchinson’s one third is conveyed to him?

525. Hoyland: yes. (N.B. a copy was substituted for original of this exhibit).

526. Comparet: at that date April 30th had you yet reached a definite agreement with regard to the licensing of Beam Ray to manufacture machines?

527. Hoyland: I forgot whether that was at that date or not, but we understood that Mr. Hutchinson would be manager and a company would be formed or the United Polytechnique Institute would be used as that company and we would receive stock in that company.

528. Comparet: on a previous day were you at the office of the United Polytechnique Institute working over some rough drafts for contracts proposed to be entered into with companies who manufacture and distribute Rife machines?

529. Hoyland: I don't remember when we started to make drafts.

530. Comparet: when you did make an agreement you understood that the work would be divided. Dr. Rife to do the laboratory work, you to supervise the making of the machines and Hutchinson to do the business end, including sales?

531. Hoyland: yes.

532. Comparet: at that time there was no money on hand with which to start the business?

533. Hoyland: there was none, it was Mr. Hutchinson's business to get the money.

534. Comparet: 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?

535. Hoyland: I gave him in confidence, the workings of the machines and I made him promise not to divulge them to anyone.

536. Comparet: Carson remained as long as you remained technical director?

537. Hoyland: yes.

538. Comparet: you know that Carson refused to give the company any information concerning the making of the machine?

539. Hoyland: yes.

540. Judge Kelley: is this machine patented?

541. Hoyland: it's impossible to patent it. You have to be very careful who you give information to.

542. Comparet: you said that Mr. Steiner was attorney for the British?

543. Hoyland: that's my understanding.

544. Comparet: wasn’t he also attorney for the Corporation or for yourself?

545. Hoyland: no.

546. Comparet: where was the agreement between the three owners and the Corporation prepared?

547. Hoyland: Mrs. William typed it out.

548. Judge Kelley: did she construct it also?

549. Hoyland: no, I don't know who constructed it.

550. Comparet: you yourself made some changes in it?

551. Hoyland: I made some suggestions, but I don't know whether it was changed after that or not.

552. Comparet: did you know that most of the final draft was prepared in the office of Sloan and Steiner?

553. Hoyland: no, I was in the shop most of the time, not in the office.

554. Comparet: you read that contract before you signed it?

555. Hoyland: I presume I did. Mr. Hutchinson was supposed to be taking care of all the contracts at that time.

556. Comparet: I show you this contract, do you see the names Sloan and Steiner on this paper, does that refresh your memory?

557. Hoyland: no it doesn't.

558. Comparet: every boss and cook had a hand in drawing up that contract?

559. Hoyland: probably.

560. Comparet: 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?

561. Hoyland: I was informed that Dr. Rife and I were to receive 30% between us.

562. Comparet: you were informed of the other stock arrangements?

563. Hoyland: he wrote it down and then destroyed it.

564. Comparet: you knew who they were and what proportion of stock they were to get?

565. Hoyland: I didn't know who they were, I merely heard the names.

Recess.

Friday, June 15, 1939. 10 A.M.

Hoyland on the stand.

566. Sapiro: explained that he had cases to handle in San Francisco and would have to be absent from July 19th to July 26th .

567. Judge Kelley: 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 the 15th , until the 27th .

Comparet withdrew Hoyland and put Olmstead on the stand.

568. Comparet: what is your occupation?

569. Olmstead: I practice law.

570. Comparet: were you one of the original incorporators of Beam Ray Corporation?

571. Olmstead: I was.

572. Comparet: are you still a shareholder in that Corporation?

573. Olmstead: I am.

574. Comparet: on June 1st , 1937 were you then a shareholder?

575. Olmstead: I was.

576. Comparet: were you also at that time a director of the Corporation?

577. Olmstead: I was.

578. Comparet: on June 1st did the stockholders hold a special meeting and if so where?

579. Olmstead: yes in Fickerson's law office, in Los Angeles.

580. Comparet: were directors meetings also held on that day?

581. Olmstead: yes.

582. Comparet: were you present at both meetings, and can you tell us what took place?

583. Olmstead: yes, I was told by Fickerson to be in his office by 10 A.M. A meeting of the board of directors was called then. The minutes of that meeting I presume had been prepared in advance by Mr. Fickerson.

584. Comparet: at that meeting what business was transacted by the directors?

585. Olmstead: an offer was presented from Mr. Cullen to transfer to the Corporation a contract which was held by Cullen at that time, in relation to services for a correspondence school in aviation. The Corporation accepted the contract from Mr. Cullen.

586. Comparet: what did he ask in return for the contract?

587. Olmstead: the issuance of 4997 shares of stock.

588. Comparet: at this meeting was Mr. Cullen's offer discussed by the directors and did they take action?

589. Olmstead: they passed a resolution accepting it.

590. Comparet: what did they do regarding the matter of making an application to the Corporation Commissioner for a permit?

591. Olmstead: a resolution was passed authorizing Fickerson to prepare an application for a permit to issue shares to Cullen, Hutchinson and Olmstead.

592. Comparet: was any further action taken by the directors prior to the close of the meeting?

593. Olmstead: no.

594. Comparet: on that same day was there a stockholders meeting held?

595. Olmstead: yes, after the other meeting.

596. Comparet: who were the holders of all of the issued stock of the Corporation that day?

597. Olmstead: Cullen, Hutchinson and myself.

598. Comparet: at the stockholders meeting what business was taken up?

599. Olmstead: a resolution made to increase the number of the board of directors from 3 to 9.

600. Comparet: 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?

601. Olmstead: I explained that 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.

602. Comparet: was there any other business?

603. Olmstead: three new members were elected to the board.

604. Comparet: going back to the first directors meeting held on that day, after Cullen's offer of the contract in exchange for stock was there a copy made of that resolution?

605. Olmstead: yes a copy was made by the secretary.

606. Comparet: do you know if an application was made to the Corporation Commissioner for a permit?

607. Olmstead: yes, to Mr. Fickerson.

608. Comparet: showed him a copy of the application and he identified it.

609. Comparet: what was done with the original?

610. Olmstead: I expect it was sent to the Corporation Commissioner.

611. Sapiro: did you prepare that application or sign it?

612. Olmstead: I did not.

613. Sapiro: weren't there some exhibits attached to the application?

614. Olmstead: I don't know.

615. Sapiro: will you read it and see if it doesn't refer to some exhibits?

616. Olmstead: yes.

617. Sapiro: tried to keep the document out of exhibits but Judge Kelley ruled it could be admitted.

618. Comparet: did the Corporation issue the 4997 shares of stock in accordance with the permit?

619. Olmstead: yes, they were issued to Cullen, Hutchinson and myself.

620. Judge Kelley: how many to each?

621. Olmstead: I received 600 shares, I don't know about the other three.

622. Comparet: showed the court how the issuance of the 5000 shares stood after this meeting. On August 28th , 1938 was there a special meeting of the stockholders of Beam Ray Corporation in Fresno and were you present?

623. Olmstead: yes.

624. Comparet: were the other two there?

625. Olmstead: yes.

626. Comparet: were you three the only stockholders in the Corporation?

627. Olmstead: yes.

628. Comparet: at that meeting were the minutes of previous directors and stockholders meetings read?

629. Olmstead: yes, we read all of the minutes of the meetings of the Corporation from its inception.

630. Comparet: was any resolution made regarding actions taken previously?

631. Olmstead: yes, minutes were all validated; a unanimous vote passed this resolution.

632. Comparet: then showed Olmstead the minutes of this meeting and Olmstead identified the resolution as one taken at that time. 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., etc. do you recall this document and did you sign the original of it?

633. Olmstead: yes I did.

634. Comparet: I call your attention to page 4 which shows the transfers which you propose to make, one from yourself to Mrs. Willman, another to Edwards. Did you do this?

635. Olmstead: yes.

636. Comparet: Did you receive any payment for so doing?

637. Olmstead: I did not.

638. Comparet: you have 100 shares left in your own name after making the transfer?

639. Olmstead: that's right.

Morning recess called

Court resumed, Sapiro takes the witness.

640. 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 is under the figures?

641. Olmstead: it says 22 in a circle and under it CRH. Those are Hutchinson's initials.

642. Sapiro: is that his hand writing?

643. Olmstead: I couldn't say. Olmstead then read from the top of the pages of 22 to 27 all initialed by Hutchinson.

644. Sapiro: does it say in line 5 of the first paragraph that that meeting took place at 10 A.M. June 1st , 1937?

645. Olmstead: yes.

646. Sapiro: was there a written notice sent out for that meeting?

647. Olmstead: I was called personally by Fickerson.

648. Sapiro: were all the minutes of the meetings prepared in advance?

649. Olmstead: yes.

650. Sapiro: did you advise this?

651. 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.

652. Sapiro: is there anything in the minutes that says anything about the meeting adjourning and then reconvening?

653. Olmstead: no.

654. Sapiro: did you read these minutes? You signed this affidavit that you had read all of the minutes and that they were correct.

655. Olmstead: yes.

656. Sapiro: you were present at both meetings that is, the stockholders and the board of directors?

657. Olmstead: yes.

658. Sapiro: this affidavit was filed after the complaint in this action. Had you read the complaint?

659. Olmstead: I read parts of it, not all.

660. Sapiro: you knew that it referred to meetings of stockholders etc., etc.?

661. Olmstead: yes.

662. Sapiro: you knew that this portion of your affidavit was definitely aimed at something that the plaintiff was trying to prove?

663. Olmstead: yes?

664. Sapiro: were the minutes of the meeting on August 28th in Fresno prepared ahead?

665. Olmstead: I presume so.

666. Sapiro: who was present at that meeting?

667. Olmstead: Hutchinson, Cullen and myself.

668. Sapiro: and you signed the minutes of that meeting stating that they were correct?

669. Olmstead: yes.

670. Sapiro: when you signed the affidavit you made no exceptions, you were present at all the meetings?

671. 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.

672. Sapiro: did Hutchinson ever tell you about certain shares of stock that would be given to Mr. Winter?

673. Olmstead: not that I recall.

674. Sapiro: did Mr. Hutchinson say anything about having received any money from Mr. Winter?

675. Olmstead: not that I recall.

676. Sapiro: did you ever ask why 500 shares were being given to Winters?

677. Olmstead: I don't recall that I ever asked that.

678. Sapiro: did you ever try to find out about it?

679. Olmstead: I recall that Mr. Winter was supposed to have given help to Mr. Hutchinson.

680. Sapiro: was anything said about Mr. Winter having given Mr. Hutchinson money for the stock?

681. Olmstead: no.

682. Sapiro: did you ask anything at all about the various names on the list of people who were supposed to get stock?

683. Olmstead: no.

684. Sapiro: you took Mr. Hutchinson’s word that the money was merely a loan?

685. Olmstead: yes.

686. Sapiro: is it a fact that the list of proposed transfers were sent out in full at this meeting at Fresno?

687. Olmstead: yes as I recall it.

688. Sapiro: did you make any inquiry about these people at all?

689. Olmstead: no.

690. Sapiro: did you ask when Mr. Hutchinson had received money from Mr. Edwards?

691. Olmstead: no, it was generally understood that these people had rendered services. I didn't know what particular service had been given by any of them.

692. Sapiro: didn’t it occur to you that some people were getting 50 shares, some were getting 500, didn't that seem strange?

693. Olmstead: no.

694. Sapiro: you were not curious about the distinctions?

695. Olmstead: no.

696. Sapiro: did Mr. Hutchinson say anything about these people?

697. Olmstead: no, I released some of my shares and I think that some of them went to Winters.

698. Sapiro: was this at Mr. Hutchinson's suggestion?

699. Olmstead: yes.

700. Sapiro: did you know that most of these people had given Hutchinson money in varying amounts?

701. Olmstead: no.

702. Sapiro: you didn't even make an investigation, in other words all you did was to sign the minutes that were put before you?

703. Olmstead: no. that is not right.

704. Sapiro: did you make any changes?

705. Olmstead: no.

706. Sapiro: you knew that Mrs. Willman was not present at this meeting, yet you signed the minutes so saying?

707. Olmstead: yes, but inadvertently.

708. Sapiro: what inquiries did you make about the financial state of the Corporation?

709. Olmstead: I don't recall that I ever raised any.

710. Sapiro: but you are a director aren't you?

711. Olmstead: I looked over the statements. Sapiro then showed Olmstead an item listed among the assets of the company of approximately $51,000.

712. 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?

713. Olmstead: they were discontinued not abandoned.

714. Sapiro: did you as a director not question the financial statement that set out as an asset that $51,000 when you knew that the courses had been discontinued?

715. Olmstead: we still considered it an asset.

716. Sapiro: did you know that there was another Corporation, United Aero Schools in Nevada, set up by Hutchinson and Cullen?

717. Olmstead: no, but that didn't affect this organization.

718. Sapiro: did you know anything about it at that meeting?

719. Olmstead: no.

720. Sapiro: didn’t you as a director inquire what the liabilities were?

721. Olmstead: no.

722. Sapiro: you just signed the minutes as they were given to you.

723. Olmstead: no, I didn't. that's not right.

724. Sapiro: yet you don't know what this liability to United Aero School was for?

725. Olmstead: no, I know nothing about it at all.

726. Sapiro: did you do anything about the notes from Hutchinson?

727. Olmstead: we accepted his notice.

728. Sapiro: do you remember any of the details at all?

729. Olmstead: no.

730. Sapiro: where did you get information about these notes?

731. Olmstead: from Fickerson and from Hutchinson.

732. Sapiro: you didn't get any information from Mr. Edwards?

733. Olmstead: I have never met Mr. Edwards except in court.

734. Sapiro: did you know Mr. Van Wart?

735. Olmstead: no.

736. Sapiro: did he hold an office in the Corporation at that time?

737. Olmstead: no.

738. Sapiro: didn't you introduce a resolution which included a reference here stated (showing him minutes).

739. Olmstead: yes.

740. Sapiro: how much of the minutes were read out loud at that meeting?

741. Olmstead: we read all of them.

742. Sapiro: who did the reading?

743. Olmstead: I did.

744. Sapiro: you and not Mrs. Willman?

745. Olmstead: not Mrs. Willman.

746. Sapiro: how fast did you read them?

747. Olmstead: I read very fast.

748. Sapiro: did you read them so that everybody present could hear them?

749. 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 2 minutes 50 seconds a page.

750. Sapiro: before we go on I want you 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 minutes was taken up and how much time was given to it.

751. Olmstead: very little business was taken up, and scarcely any time was given to other business.

752. Sapiro: yet it says here that each item was fully discussed?

753. Olmstead: yes.

754. Sapiro: how much discussion was there on any of these other resolutions?

755. Olmstead: (shouting) I couldn't tell you.

756. Sapiro: now Mr. Olmstead, you wouldn't want me to shout at you?

757. Olmstead: I can't take it.

758. Sapiro: all right, just show me one resolution on which there was some discussion?

759. Olmstead: pointed out and referred to the matter of Hutchinson's promissory note.

760. Sapiro: well, how much time was devoted to discussion during the meeting?

761. Olmstead: I couldn't tell you.

762. Sapiro: would you say one hour in the aggregate?

763. Olmstead: yes, there was I would say more than that.

764. Sapiro: you adjourned the meeting at two?

765. Olmstead: I don't know how long, whether it was two, three or four hours.

766. Sapiro: you are therefore changing your testimony (the discussion between Sapiro and Olmstead was waxing hot when Judge Kelley interrupted the court to inform them that the case would have to be discontinued until Monday, June 27th .)

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.

Comparet interrogating.

767. Comparet: showed a paper which had been in Hoyland's possession, it was Henderson's resignation. Mr. Hoyland how did you get this paper?

768. Hoyland: It was put into my hands.

769. Comparet: do you consider this a technical matter?

770. Hoyland: no answer.

771. Comparet: 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 thus 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 that time, you knew the actual frequencies for the various diseases which could be treated with this instrument?

772. Hoyland: I did not know all of them, as they were only on the dial of the master oscillator.

773. Comparet: let me see if I understand you, at that time you did not know all of the frequencies?

774. Hoyland: I say that I did not know the numerical frequencies; they were all on the dial.

775. Comparet: who prepared these dials and calibrations?

776. Hoyland: I did.

777. Comparet: who did you get the information from in order to calibrate these dials?

778. Hoyland: they were taken off the last machine that was built by Dr. Rife, I transferred them from one machine to another.

779. Comparet: you didn't write them down?

780. Hoyland: no.

781. Comparet: prior to shipping these machines to the British you made some notes on these frequencies?

782. Hoyland: we had two machines here, one was my own personal property and I own most of the material in the other, they were in the shop.

783. Comparet: therefore, by just going to the dials of the machine in the shop you could have procured the actual frequencies needed by the English (pointing to Parson's letter). Did you ever reply to this?

784. Hoyland: without looking at all the letters I wrote them I couldn't say.

785. Comparet: I call your attention to another document produced from your custody, being a cablegram from Blewett in London, addressed to Hutchinson. It says, "Referring to your letter July 18th , no letter received, require circuit diagrams and frequencies and parts". Message continued to effect that this delay was holding things up and making it very difficult for the English group. How did you get this cablegram?

786. Hoyland: it was turned over to me by the office.

787. Comparet: by whom in the office?

788. Hoyland: by Hutchinson.

789. Comparet: there is a date written on this, who wrote it?

790. Hoyland: I did, it is the date of the cablegram.

791. Comparet: in reply to this did you send them the circuit diagrams and the list of frequencies?

792. Hoyland: I sent them the diagrams.

793. Comparet: when?

794. Hoyland: I would have to look at my letters again.

795. Comparet: will you do so please. (Hoyland found a letter and showed it to Comparet).

796. Comparet: you have produced here a carbon copy of the letter addressed to Mr. Blewett. Is it a carbon copy of the original written by yourself?

797. Hoyland: I don't remember whether I typed it or if Mr. Lyle did.

798. Comparet: was it typed at your dictation and was the original letter sent by you to Mr. Blewett?

799. Hoyland: yes.

800. Comparet: quoted from a letter, as follows "your cable addressed to C.R. Hutchinson received, Mr. Hutchinson being out of town at the time I opened it, presuming it to be company business," this letter also states, "regarding frequencies of the machine you will remember me telling you that the frequencies used are not the same as the ones on the Rife machine, they were in the upper bands. I am sending you schematics etc." (N.B. The rest of the letter was read so rapidly that I could not take it down, but he referred to the code and there were vague and secretive references to what I told you etc., etc.) That letter contained all the information you ever sent to the British and when you state that you sent them certain information concerning the frequencies you were referring to this letter weren’t you?

801. Hoyland: yes.

802. Comparet: during this period of the late summer and fall of 1938 were you devoting your full time to your work as technical advisor to the company?

803. Hoyland: during that period I was supervising the building of the machines, I was taking care of the buying of the parts and helping to sell the machines.

804. Comparet: you were on duty with the company for your whole time?

805. Hoyland: yes, it was a full time job.

806. Comparet: that work was done here in San Diego except for a few trips to Los Angeles?

807. Hoyland: yes, and except for a trip or two to Loma Linda.

808. Comparet: I call your attention to another letter which you produced in court this morning dated October 25th , 1938, addressed to Beam Ray Corporation signed H.S. Parsons. I will quote you a few bits from this, "referring to my letter to you of last week I have not been able to do much more in straightening out various items I covered in that letter. I have been expecting a letter from Hoyland which would help us to use the one laboratory machine which seems to work, but we need further information before I can get the treatment machine operating. There follows a reference to a short circuit and that the original laboratory machine was quite useless" it continues, "how may we hope to duplicate these machines unless we have the specifications. It looks as though Mr. Hoyland is the only one to write from Beam Ray and he seems to be away so much, it is hard to get answers to letters or cablegrams." Did you reply to that letter Mr. Hoyland?

809. Hoyland: I replied to parts of it.

810. Comparet: how did you get this letter?

811. Hoyland: it was among the letters I got before I went to New York to represent the company in the meeting with Dr. Gonin.

812. Comparet: you never returned them to the company later.

813. Hoyland: I put them away in my file and they remained there.

814. Judge Kelley: do you know if any other members of the organization saw this letter from Mr. Parsons?

815. Hoyland: yes, it was given to me by the secretary of the company.

816. Comparet: you said you believed you had a copy of your letter in reply to certain portions of this letter of Mr. Parsons, will you produce it? Hoyland was not able to find the letter. Here is another cablegram addressed to Beam Ray which was also in your possession dated January 16th , 1939, it states in effect, "confirm letters and cables, you broke agreements, all machines were purchased out right”. How did this cable come into your possession?.

817. Hoyland: it was turned over to me by Mr. Edwards.

818. Comparet: when?

819. Hoyland: about the time it came.

820. Comparet: at that time did Mr. Edwards say to you that all the directors wished to sign the pending agreement with the English?

821. Hoyland: it had been talked over between Mr. Edwards, Mr. Sapiro, and myself. We looked over the new amended contract and decided that it should not be signed. Mr. Sapiro talked it over with us and suggested it best that it be brought up at the directors meeting, which it was.

822. Comparet: didn't you say to Mr. Edwards that you would not permit the signing of this agreement by the company?

823. Hoyland: yes.

824. Comparet: until you made this statement to Mr. Edwards he had stated that he was in favor of signing it up to that time?

825. Hoyland: I don't think that he ever said he was willing to sign it; there was quite a lot of talk between us regarding that contract.

826. Comparet: didn't he state definitely that the contract should be signed?

827. Hoyland: no, I pointed out some points that I didn't think were right.

828. Comparet: didn't he still think that it should be signed?

829. Hoyland: no.

830. Comparet: are you positive?

831. Hoyland: as positive as I can be.

832. Comparet: your refusal to sign was on advice from Mr. Sapiro?

833. Hoyland: yes.

834. Comparet: I’ll show you another cable among those produced by yourself, this is dated November 24th , 1938 addresse Hutchinson, Beam Ray signed by Gonin. "Without prejudice must not pay checks since payment under original contract is to company not individuals." How did this come into your possession?

835. Hoyland: Mr. Hutchinson gave it to me in his office.

836. Comparet: this opening statement about checks, were these checks referred to given to you at the time the amendment was negotiated in New York?

837. Hoyland: yes.

838. Comparet: an additional payment was made at the time of the new agreement, and certain of these checks were made payable to yourself and to each of the other owners?

839. Hoyland: one to Mr. Hutchinson, one to myself, and the balance to the company.

840. Comparet: payment was later stopped on these checks and a new payment was made for the same total amount through the company?

841. Hoyland: yes.

842. Comparet: you did however, get your payment finally?

843. Hoyland: yes.

Recess until 2 P.M.

Afternoon session June 27th , 1939.

Judge Kelley asked to have Olmstead on the stand for cross-examination by Sapiro.

844. Sapiro: I show the minutes of the meeting of stockholders of August 28th , 1938. When did you sign these?

845. Olmstead: I signed them in the P.M., and left Fresno about 6 P.M.

846. Sapiro: according to these minutes there were two transfers to be made out of your stock, 447 shares to Beth Willman and 53 shares to Charles Winter. What consideration did you receive from Beth Willman?

847. Olmstead: none.

848. Sapiro: did Mr. Hutchinson speak to you about this transfer?

849. Olmstead: yes.

850. Sapiro: was there any consideration from anyone?

851. Olmstead: no.

852. Sapiro: and you did all this at the request of Mr. Hutchinson?

853. Olmstead: yes.

854. Sapiro: you had 101 shares left after the transfer?

855. Olmstead: yes.

856. Sapiro: were you present at a meeting of the board of directors May 7th , 1938?

857. Olmstead: I am not sure, I would like to refresh my memory (after checking the minutes) no I was not present.

858. Sapiro: when did you sign these minutes?

859. Olmstead: I can't tell you that, I made a waiver and then signed them; I can't remember where I signed them, possibly in Los Angeles.

860. Sapiro: would the color of the ink help you remember?

861. Olmstead: no. I used Brown ink most of the time in my own fountain pen.

862. Sapiro: then pointed out that Olmstead used his own Brown ink to sign all of the minutes.

Comparet then took the witness.

863. Comparet: did you sign the minutes of some of the meetings at the office of Mr. Fickerson in Los Angeles?

864. Olmstead: yes.

865. Judge Kelley: you had 600 shares Mr. Olmstead and you transferred 499?

866. Olmstead: I guess so, I have 101 now, I transferred 447 to Beth Willman and the balance to Winters.

867. Judge Kelley: did you understand that either of these parties would put up some money in return for the stock?

868. Olmstead: not that I recall, I had confidence in Mr. Hutchinson. I was traveling in the northern part of the state and was not in touch with the organization. I had to depend on Mr. Hutchinson and Fickerson, then realizing that I couldn’t be of any service I resigned.

869. Judge Kelley: had these people rendered some service to the Corporation at the time you made the transfer?

870. Olmstead: that was my understanding.

871. Judge Kelley: did you have conversation with anyone before this transfer took place?

872. Olmstead: yes, Mr. Hutchinson told me about what they had been doing.

873. Judge Kelley: when you received your shares did you understand that you were receiving them for services rendered?

874. Olmstead: yes.

875. Judge Kelley: did you know that others had received stock and then were then transferring it out to others who were giving services. Was this the plan of the organization?

876. Olmstead: yes.

877. Judge Kelley: was there any conversation by the members of the board of directors regarding these transfers at any time?

878. Olmstead: yes, there were discussions about it.

879. Judge Kelley: did you examine the permit from the Corporation Commissioner at that time?

880. Olmstead: I don't believe I did.

881. Judge Kelley: was there anything said by Mr. Hutchinson as to the limitations by the Corporation Commissioner as regards the transfer of stock. Was there anything said about the fact that you could not sell the stock but that you could give it away?

882. Olmstead: that was the understanding at the time.

883. Judge Kelley: how did you arrive at that conclusion?

884. Olmstead: I don't know, I think I just arrived at it.

885. Judge Kelley: when was the last stockholders meeting held?

886. Olmstead: I'd have to see the books.

887. Judge Kelley: well about how long, a year ago or more?

888. Olmstead: I think it was in August last year.

889. Judge Kelley: there has been no meeting since then?

890. Olmstead: not that I know of.

Olmstead was excused by Judge Kelley, and Hoyland took the stand.

Comparet questions Hoyland.

891. Comparet: I notice on these cablegrams saying that if the English conditions are agreed upon etc., there is a penciled note saying terms acceptable?

892. Hoyland: Mr. Hutchinson and I discussed this, and decided to send an answer saying that the terms were acceptable.

893. Comparet: when you say "we" whom do you mean? Who sent the cable?

894. Hoyland: Mr. Hutchinson and I.

895. Comparet: have you a copy of it?

896. Hoyland: no.

897. Comparet: when you built the first Rife Ray machine were you informed by Dr. Rife of the frequency range that the machine was required to cover?

898. Hoyland: he talked to me about that and what his machine covered.

899. Comparet: he informed you about it from high to low?

900. Hoyland: no, he didn't.

901. Comparet: that first machine you built under your agreement with the University of Southern California was built by you under Dr. Rife's supervision?

902. Hoyland: that's the way the contract read.

903. Comparet: did you violate the contract?

904. Hoyland: I was left to build the machine my own way.

905. Comparet: in June of 1935 was when you made the agreement with the medical research to build a Rife Ray machine, you did build it soon after that?

906. Hoyland: yes.

907. Comparet: you had an agreement with them that all work was to be done under Dr. Rife's direction?

908. Hoyland: that's what the contract called for.

909. Comparet: did you do this work without getting the frequencies from Dr. Rife?

910. Hoyland: I recalibrated the machine according to the bacteria.

911. Comparet: what specifically did you do that constituted this recalibration?

912. Hoyland: I used a standard oscillator against his machine to see what frequencies he was using.

913. Comparet: he set his machine and you measured his frequencies?

914. Hoyland: yes.

915. Comparet: did you make any memorandum of these particular frequencies?

916. Hoyland: yes, I gave Dr. Johnson and Dr. Rife a list of them.

917. Comparet: did you ever furnish a list of any of these frequencies to Beam Ray Corporation or any of the officers?

918. Hoyland: no.

919. Comparet: you refused to do this?

920. Hoyland: yes, I refused, but Mr. Edwards had a sealed letter containing them for some months.

921. Comparet: you had not shown Mr. Edwards that the frequencies were in the envelope, you sealed the paper without showing them to him?

922. Hoyland: he asked me to give them to him sealed and I did so.

923. Comparet: when Edwards was talking to you about signing the redraft of the agreement with the British, I call your attention to the fact that the contract has a place for certain places to be filled in with the frequencies and the design of the machine. When you were discussing this didn't Mr. Edwards then say that he wanted you to give the Corporation the necessary information to send on to the English?

924. Hoyland: no he did not.

925. Comparet: are you positive of that?

926. Hoyland: yes I am positive.

927. Comparet: this letter in which you say you have the frequencies was sealed by you without being shown to any of the officers of the company?

928. Hoyland: yes.

929. Comparet: you told Edwards that he was not to open that envelope during your lifetime?

930. Hoyland: that was the understanding, that if anything happened to me he could open it.

931. Comparet: didn’t you tell Edwards that in the event of your death the envelope should be delivered to your attorney and that he would then give him the frequencies?

932. Hoyland: no, I had two papers.

933. Comparet: was your attorney Mr. Sapiro at that time?

934. Hoyland: no not at that time.

935. Comparet: I understood you to say that the frequencies used in the machines put out by the Corporation were not set to the same frequencies as Dr. Rife's machine?

936. Hoyland: that is correct.

937. Comparet: did you inform the board of directors of Beam Ray that the machine you built was not the same as Dr. Rife's?

938. Hoyland: I had spoken to them about it.

939. Comparet: who did you tell about this?

940. Hoyland: Mr. Hutchinson on our way to New York.

941. Comparet: who else did you explain it to?

942. Hoyland: to Mr. Edwards.

943. Comparet: when and where?

944. Hoyland: at his house, one evening.

945. Comparet: when, what evening?

946. Hoyland: I can't remember when.

947. Comparet: about that time were you still a member of the board of directors?

948. Hoyland: yes.

949. Comparet: when did you become a director of Beam Ray Incorporated?

950. Hoyland: in September 1938, I believe.

951. Comparet: you resigned when?

952. Hoyland: in November 1938, just before I went to New York.

953. Comparet: then it was during that period between September and November that you told Edwards at his home that the machines you were building were not putting out the same frequencies as Dr. Rife's machines?

954. Hoyland: yes.

955. Comparet: how did you explain that?

956. Hoyland: in the summer of 1936 I designed a new machine or rather I checked it there at the laboratory. I had designed it in Pasadena, and we tested it out then and the frequencies were not the same as on Dr. Rife's machine.

957. Comparet: did you tell him how great the difference was?

958. Hoyland: I explained that there was quite a fundamental difference.

959. Comparet: who else on the board of directors did you explain this to?

960. Hoyland: Mr. Henderson, in the late summer of 1938.

961. Comparet: anyone else?

962. Hoyland: I don't think so.

963. Comparet: when were you first informed that the members of this British group were coming to San Diego to discuss a contract?

964. Hoyland: when Dr. Couche returned from England in the spring of 1938, about a month before the British arrived.

965. Comparet: during the period from that time until the British arrived there was considerable discussion, was there not, regarding the desirability of having a Corporation to deal with them?

966. Hoyland: we were looking for a man to manage the affairs.

967. Comparet: and that lead to Mr. Hutchinson being procured for that purpose?

968. Hoyland: yes.

969. Comparet: wasn't there also talk about forming a Corporation?

970. Hoyland: yes.

971. Comparet: and that manufacturing rights would be given?

972. Hoyland: they were to be given a license to do that.

973. Comparet: you were not selling the invention?

974. Hoyland: no.

975. Comparet: it was decided that the Corporation would make the final deal with the British whereby they would receive the license to manufacture, isn't that so?

976. Hoyland: that went through the company, yes. (Then Hoyland said) but that is not correct, the company had to have unanimous consent of the owners.

977. Comparet: did you read either of the original two contracts with the British those of June 4th or 5th ?

978. Hoyland: no Sir, I did not.

979. Comparet: you were one of the owners at that time were you not?

980. Hoyland: I was.

981. Comparet: I believe you said that you read the contracts before they were finally executed and you say that these contracts were signed only by the Beam Ray Corporation, and the British?

982. Hoyland: yes.

983. Comparet: wasn't it the understanding that you had prior to that time that the Corporation would be the one that would sign the contract after it had been agreed upon finally?

984. Hoyland: that they would sign it, yes, but that the owners had to agree to the contract.

985. Comparet: did you understand that the Corporation could not convey to the British any greater rights than the Corporation already had?

986. Hoyland: that's right.

987. Comparet: you said that you realized at the time that the British wanted an exclusive license to manufacture and distribute the machines with certain territorial rights?

988. Hoyland: yes.

989. Comparet: but you yourself signed no contract with the British in June 1938?

990. Hoyland: no.

991. Comparet: none of the other owners of the Rife Ray machine signed that did they?

992. Hoyland: no.

993. Comparet: before the negotiations with the British began, negotiations were under way between the owners and Beam Ray Corporation regarding what kind of license was to be given the Corporation weren't they?

994. Hoyland: yes.

995. Comparet: who took part in these discussions?

996. Hoyland: Hutchinson and I and Dr. Rife, sometimes.

997. Comparet: anyone else?

998. Hoyland: I think Mr. Henderson.

999. Comparet: did Mrs. Willman, the Secretary, type out several agreements?

1000. Hoyland: I don't think several.