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Additional Testimony
January 20, 1922
In the District Court of the United States For the Eastern District of Michigan Southern Division.
In the matter of Universal Book Stores, Inc. Bankrupt
In Bankruptcy. No. 4946.
Before Referee Marston, January 20, 1922.
Examination of Albert W. Ryerson.
Appearances: Grover Morden for the Trustee. Mr. Wasey for the Bankrupt.
Mr. Albert W. Ryerson, previously sworn, testified as follows:
Examined by Mr. Morden.
Q: At the last examination, I showed you a letter—Exhibit 22—which you said was very unfair, because Mr. Crowley had written you a letter which prompted the reply. Have you got Mr. Crowley's letter?
A: I think Mr. Wasey has it.
(Letter produced)
Q: Is this the agreement for the purchase of The Equinox? A: That's the original contract.
Q: Where is the original of this Exhibit L?
A: This was a contract which was never completed. Understand this is the original drawn by Mr. Lodge [Frank T. Lodge], and Dr. Hill objected to that phrase of it, which is stricken out, and Mr. Crowley signed it just before taking the Wolverine Ltd. for New York and supposed to be signed and mailed to him. But Mr. Jones [Charles Stansfeld Jones] had complete charge of the sale of books, and Dr. Hill objected to his handling the money.
Q: The 14th day of April. The letters you have handed me, Mr. Ryerson, are of later date. Some of them are undated.
A: There was quite a little conversation over this deal, as made originally in Mr. Lodge's office.
Q: There was some disagreement over the signing of this contract. Who actually signed the contract for the purchase of this Equinox besides yourself?
A: Well, I don't remember. It was, I think—The order was placed in a letter of which there should be a copy in the files. Mr. Jones was the active man, complete charge of the department at that time. He had complete charge of the sale of The Equinox, as it will show under the details under which he was to operate in that original agreement.
Q: He had no power to bind the corporation in regard to the selling of the 2,000 volumes of The Equinox?
A: As manager of that particular department, his recommendations and his promises—and I say promises—his intentions to market it among certain organizations in Europe with which he was in touch and largely involved in buying them, although I didn't wish to take over 500 and I insisted they were to be placed on consignment.
Q: Who changed your idea?
A: Dr. Hill, for the simple reason 500 would cost us $3.80 apiece approximately; that by taking the balance of 1500 after the type was set up, we could have them at $2.22 apiece and because of Mr. Jones' promises and because we had orders on hand to make the company a profit of $800. The doctor and some of the directors thought we had better take the larger amount and make the larger profit; and then the agreement thereof placing the goods on consignment, Mr. Lodge in his wisdom as our attorney had those goods originally placed, the discount to be paid for as sold and Mr. Jones to manipulate the sale. But because of the little extra profit and the representations of establishing lodges throughout in this country, that Mr. Jones had promised to do and they went ahead and were prevailed upon to order the larger amount. The chief objection was all moneys that were received for the books—stated in there, stricken out by Dr. Hill—was to be placed in the hands of Mr. Jones, and the doctor was very much provoked over that particular phase of it. He thought the moneys ought to be turned into the company, and we should make a straight purchase.
Q: Are you trying to shift the blame on the shoulders of Mr. Jones?
A: I am not trying to shift any responsibility. I am not trying to avoid any obligation—
The Court: I think you should confine yourself to the issue.
Q: Haven't you written letters to Mr. Crowley in which you state that this wasn't a business proposition, the purchase of this Equinox, but rather a—
A: This letter that Mr. Crowley wrote us will show purely my attitude. I was in a difficult position between my stockholders and fulfilling an obligation which was made to Mr. Crowley, and I had to be considerate of Mr. Crowley in order to prevent his taking legal action to compel the fulfillment of the contract.
Q: I show you this Exhibit M and ask you if that is a carbon copy of the letter that you wrote to Mr. Crowley.
A: That letter was apparently dictated by me. I presume that that is correct; there's no mark to indicate it otherwise.
Q: Exhibit M is a letter dated June 5th, 1919, to Mr. E. Crowley by Mr. Ryerson. This letter, Mr. Ryerson, you state to Mr. Crowley that the following sentence, "I think you will concede it isn't entirely a commercial proposition."
Witness: I object if I may, to what is called The Equinox. If you want to get this evidence correctly, read the letter.
The Court: Mr. Ryerson, I think your attorney is here and will look out for you on this question. If any objection is to be made, it will be made by your attorney in a proper way.
A: I don't think that any sentence of any letter should be picked out to give a misconstruction. I don't think that is the way to do it.
Mr. Wasey: A good many things in this whole matter have been seemingly played up for the newspaper. This is an inquiry to determine what the cause of the bankruptcy was, and if any claims are to be had against any particular person. I think if any letter is to go in, I think the whole think should go in. If this letter is introduced in evidence, that's about all there is to it. There's nothing for your Honor or any jury to pass upon in this way.
The Court: I don't want to have anything but the fullest investigation of this bankruptcy case. Do you wish to ask some question about the letter?
Mr. Morden: Of course I don't care to read the letter, only merely for directing it to Mr. Ryerson's attention, to previous testimony that has been given here today.
The Court: I think that you can answer any question of that kind.
Q: You stated, Mr. Ryerson, that this was a commercial proposition, several times, the purchase of The Equinox?
A: As far as I was concerned.
Q: And in this letter to Mr. Crowley you stated to him, "I think you will concede it isn't entirely a commercial proposition, that either Dr. Hill or myself when we agree to take over the distribution of The Equinox, of a fair and honest desire on the part of both of us, etc."
A: Will you read the previous sentence to that?
Q: To take up the previous sentence about marketing with Mr. Norwood?
A: I mean previous to that?
Q: I will be glad to read any part of it. I am not trying to be confusing at all.
A: It's all irrelevant.
Q: Is it true what you say in there, that it isn't merely a commercial proposition with you or Dr. Hill?
A: In a general way , there was some other phases, it is marketed with a certain class of people. As I explained before, we handle all kinds of out-of-the-way religious literature all over the world, anything that is odd we stock, any distribution of any literature for any school. We had the dramatic school and all that literature, and this particular school of literature was to be marketed among organizations already established in Europe, not established here, and while it was really a commercial proposition because we knew very little about the organization except in a general way, the general scope of the philosophy was interesting, not as it has been pictured to the world, in a vulgar manner through the newspapers, but as a philosophy which applied to any refined or cultured person of moral character.
The Court: We aren't going into the question of what kind of philosophy, we will stick directly to the issue.
Q: Did you or did you not say to Mr. Crowley, "I stand behind you"?
The Court: Suppose he did. What has that to do with the reason—
Mr. Morden: It shows expenditures of money of the bankrupt corporation with this man Crowley.
The Court: I suppose it did.
Mr. Morden: A liability of the corporation.
The Court: How does that change the rule, whether he was interested in the philosophy or money was spent?
Mr. Morden: Your honor, the Book Stores were organized for certain purposes.
The Court: Sure.
Mr. Morden: The charge will name the specific purpose for which the Book Stores were incorporated. I am showing, and I think that letter does show, that the directors and the officers of the company were using the company's funds for a different thing.
The Court: Show what those were and what they were used for, but as to the nature of the company or the nature of the business it was used for, we surely don't have to go into all that do we?
Mr. Morden: Yes, your Honor, for the reason Mr. Ryerson has stated previously: this was merely a commercial proposition. I want to show it was a personal proposition.
The Court: I will let you show the amount of money that may have been paid in by this company and discuss the liability afterwards, but as going into it further, I don't think it's material in this issue, and I will sustain the objection.
Q: Concerning the 42 Larned Street, Mr. Ryerson, when did you lease the Ryerson Building?
A: I think a year ago last June. I don't know, I think that's it.
Q: That's 1920; June 1920.
A: Yes, I think so.
Q: This was a personal proposition?
A: It was offered to certain directors of the bookstore and they laughed at it.
Q: Well any money put up in the beginning was your own personal money?
A: Yes, sir.
Q: What did you pay for the down payment for the lease?
A: $100.
Q: What were the terms?
A: Do you want the details—
Q: Go ahead; yes, I would like to know.
A: This proposition was one that helped the bookstore; and as I say, this Equinox had nothing to do with the enlargement of the bookstore. But this building had been vacant for seven years.
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