Evening star., 1948-04-14
Banker >Testifies Eaton
Sought Out in Stock
Contract With Kaiser
" me A.,se;ut.d Pres,

By tts Assseiafsd Press
Harold Allen, New York banker,
testified today that Cyrus Eaton,
Cleveland financier, had instructed
his lawyer to see if . contract to
sell Kaiser-Frazer stock included
any outs"
Mr.. Allen testified before the Se-
curities and Exchange Commission,
which is inquiring into the with
ldrawal February . Of two banking
firms from . contract to offer 900,-
500 shares Of Kaiser-Frazer COM
mon stock at $13 . share.
Mr.. Allen is = partner Of Allen
& Co, one Of the banking Arms
which agreed to sell the stock. The
other two are Otis q Co. Of Cleve-
land, headed by Mr.. Eaton. and the
First California Co., San Francisco.
Otis g. Co. and the First California
Co. Withdrew.
Describes Meeting on Feb. 3
Mr.. Allen told of . meeting on
February S. He said Mr.. Eaton,
William Daley of Otis & Co., H. T.
Birr of the First California Co. and
Carter Kissell, Otis counsel, at
tended.
The witness said Mr.. Daley told
him that some hundreds Of thou
sands of shares had been sold, but
that he Daley was very vague"
about the amount.
At this point, he said, Mr.. Eaton
turned to Mr.. Kissell and said,
Read that contract thoroughly and
see II there are any outs in 1t =.
I've never seen 1t to fail when you
lawyers didn't have some out in a
contract"
Heated Discussion Recalled.
After that, Mr.. Allen said there
was a heated discussion. He did
not elaborate. He added, Eaton
said that if he would pick up the
stock it could 60 down to IS a share
- and that he did not intend to
take his stock up
Il said" Mr.. Allen testified. this
would jeopardize our position
greatly. 1 said that Allen G Co.
would make their contract good"
Mr.. Allen added that Mr.. Birr
had then said he would take up his
stock "ev&n II it costs me my bottom
dollar"
Mr.. Birr then said to Mr.. Eaton,
the witness said, ICY. do you want
me to tell Kaiser you won't take
up the stock?" Mr.. Easton then
gave Mr.. Birr permission to say this
to Mr. Kaiser, the witness said. He
referred to Henry J. Kaiser, chair
man of the Kaiser-Frazer Corp.
Eaton Statement Quoted.
Mr.. Allen testified. Eaton said
he would rather have a lawsuit on
his hands than be dead broke"
Charles Allen, brother of the
witness and a partner in Allen &
Co., had been scheduled to testify
this morning, but was not present
when the hearing opened.
Yesterday Charles M. Walton, jr,
a Kaiser-Frazer lawyer. testified
about law suit filed in Detroit on
February 9, by James F. Masterson,
Philadelphia lawyer and owner Of
100 shares of Kaiser-Frazer stock.
1t contended the company's liquid
capital had been impaired.
Lawyer Calls Suit "Phoney."
Mr.. Walton said the stock sale
contract provided that the bankers
could withdraw from the deal If
material law suit should be filed
against the corporation before 10
m. February g." an, - ''
He testified that on that day he
attended a meeting with representa-
tives of the Otis firm and told them
'if there ever was phoney suit
this Is a ,phoney suit"
Mr.. Walton said there had been
much discussion at the meeting
about two small suits" That after
noon, around 2:45 pm, the witness
asserted somebody said, Il guess
we had better let them have it."
Was Shown Story Of Action.
At this point, he added, he was
shown a newspaper report of the
suit which had just been filed"
in Detroit by Mr. Masterson.
MIR. Walton said he had told
those present at the meeting no
body knew Masterson" and that
this comment had been greeted with
dead silence"
The fact that Masterson was an
unknown plaintiff lends additional
significance to the facts he said.
He added that it developed that
Mr.. Masterson had been counsel
for Otis 6z Co.
Milton Kroll, trial examiner, Or
dered the latter remark stricken
from the record.
Pustor to Be lnstu1ed
CHARLES TOWN, w. Va, April