Evening star., 1948-04-23
SEC Calls 3Lawyers
To Testify on Kaiser
Stock Cancellation

The Securities and Exchange Com
mission called three Cleveland
lawyers today for testimony on the
cancellation Of a $4,000, 900 Kaiser
Frazer stock offering.
The SEC is inquiring into the
withdrawal of Otis g. Co. Of Cleve-
land and the First California Co.
of San Francisco from contract
to sell 100000 shares Of the auto
company's stock.
The three lawyers scheduled to
testify are Walter J. Milde, Charles
e. Bodurtha and Carter Kissell, all
Of whom represented Otis In the
financing. ......r
MIR. Kissell, in testimony late yes
day, quoted Cyrus Eaton Of the Otis
firm as saying he did not feel "mor-
ally bound" to carry out the cor
tract. Mr.. Eaton probably will tes-
tify Monday, SEC counsel said.
After yesterdays hearing ad-
journed, Otis & Co. filed motion
asking the commission to reconsider
a ruling made the previous day.
Asked Dealer List.
The commission had upheld the
request of SEC Attorney ]. Russell
Kelly for a list of Kaiser-Frazer
dealers who, according to Otis Pres
ident william r. Daley. had said
they were getting more cars than
they could sell.
In its motion, Otis referred to the
lawsuit brought against the banking
firm by Kaiser-Frazer Corp. for
breach Of contract.
It said that in its defense against
the suit, Otis may Introduce testi-
mony Of these dealers, who "are
subject to the authority Of the
Kaiser Frazer Corp"
THE possibility Of retaliatory ac-
ton which would injure such dealers
and distributors cannot be ignored,
the motion said.
I'm addition, in. view Of their
vulnerability - these dealers and
distributors may be subjected to
pressures which will drastically
affect the nature Of their testimony.
Details OF Sult IOlO.
The motion asked that the deal
ers' named not be made public and
said Otis g. Co. will gladly submit
this list when compiled.
For the first time in the hearing,
detailed account Of the lawsuit
filed against Kaiser-Frazer on Feb
ruary 8 in Detroit was told by a
witness for the Otis firm yesterday.
The suit, filed by James F. Mas
terson, Philadelphia lawyer, gave
the bankers q loophole which, under
the terms of the contract, enabled
them to cancel the deal.
Mr.. Daley testified Wednesday
that Mr.. Masterson once had repre-
sented the Otis firm as local coun-
sell"
Charles M. Walton, jr., a Kaiser
Frazer attorney, testified last week
that the Masterson suit was
"phony."
Mr.. Daley said he had been read
ing newspaper hints and innuen-
does that the Otis company had in
spired the suit against Kaiser-Fra-
zer."
Visited Masterson.
The witness said that on advice
of his counsel, Joseph Weiner, he
visited Mr.. Masterson In Philadel-
phia two or three weeks ago.
"Otis g. Co. had nothing to dc
in any kind or character with this
lawsuit" Mr.. Daley said Mr.. Mas
terson told him.
Mr.. Masterson told him, the wit
ness continued, that he had bought
300 shares OF Kaiser-Frazer stock
at $22 a share. Later, when the
stock was selling around SIS. Mr.,
Masterson said he decided ''he was
going to get into this matter"
"Masterson said there was . great
deal of elf-dealing between Kaiser
and Frazer interests" Mr.. Daley
said.
The suit was filed on the morn
ing Of the day the bankers were to
have closed the deal to sell the
stock.
Mr.. Daley said substantial ad-
verse changes" in Kaiser-Frazer
had figured in the bankers deci-
sion to cancel the stock sale agree
ment.
If the Frazer directors
had bought back the 10000 shares
purchased by the corporation in
stabilization operations, I'VE would
have felt that at least they weren't
afraid of the situation" the witness
added