Mr. Hollis H. Arnold was the first man to be examined in the U.S. Court for China under the new court order regarding assets when he appeared before Judge Milton J. Helmick on Tuesday (Sept. 11). Mr. Arnold was, cited Into Court by Anderson Meyer Ca, represented by Mr. C. S. Franklin of Franklin & Harrington, fon the order issued on August 31 by Judge Helmick. In the witness box he answered Mr. Franklin's questions regarding a judgment of $22,000 against him granted Anderson Meyer Ca. some time ago.
Mr. Arnold stated that he haa a car for which he pald $200, and Mr. Franklin directed questions to the witness regarding the stoct.holders of the corporation, Hollis H. Arnold, Me. through which Mr. Arnold does business at 6, Kiukiang Road. his replies, Mr. Arnold declared that she stockholders included himself, his wife, and his son-in-law, Mr. A. B. Henningsen, ana that its business was consulting engineering. He stated that the corporation pays his expenses, and added "minimum ex-ses"
"What are minimum expenses?" asked Mr. Franklin, and elicited the reply that these ranged between, $500 and $1500. Mr. Arnold revealed that no minimum was specified for his expenses, that his rental was "around $200", and when questioned regarding his clubs by Mr. Franklin he' named. three.
Further interrogations regarding tls expenses brought forth the statement that Mr. Arnold's expenses sometimes fall as tow as $500 a month." Mr. Franklin countered, "Your expenses fare as low as $500 a month and your rent is $300 per month?" The witness answered "I didn't say they did, said they might. I try to keep them around $1,000 per month. Sometimes they fall lower."
The Court then put questions covering the identity of the person who drew the cheques, and Mr. Arnold replied that his con-in-law was the treasurer, but that he had written them during his son-in-law's absence from Shanghai.
In answer to direct questions, the witness stated that the authorized capital of the corporation bearing his name was $90,000, and that the paid-capital was $25,000, "tent it more like $2,500?" asked Mr. Franklin, snd the witness protested his own lack of knowledge on this point.
"Are you the president of this corporation?" queried Mr. Franklin, and Mr. Arnold: said, "I think so" He said that he was present at the two meetings which he said had been held by the corporation, and 'Mr. Franklin again countered with a Question, "Well, if you don't know whether' or not you are an officer, how could you be present?
'TAs a shareholder!" replied Mr. Arnold, Unable to give an idea of the receipts of the company for the past year, Mr. Arnold explained that there were no books, and that the accounts were loosely kept in a journal through memos, and that it took him some time to look matters up when he had occasion to do so. He said that he had just finished a job and that he was working on designs.
"Designs for what?" queried Mr. Franklin.
"I don't know, rely" replied Mr. Arnold. Further questions br: ught fut the fact that the designs in question were for mechanical and furnace ferred to was for the New Life Movement Company Dairy. He stated that he had not earned enough to pay expenses during the past year.
"Did you sell your assets?" asked the Judge, and the witness replied that there was some cash in the company, whereupon the judge continued to question the witness as to when ther the funds were from the capital or earnings, and asked, "Has the money for living come from an} source other than the corporation?" Mr. Arnold replied that it all came from the corporation. He stated that hho received no fees from any company and declared that he had been In competition with "engineers who were willing to do work for nothing and have tried to ruin my business ever since it was undertaken."
Requested to bring the books "of this family corporation into court," the witness was doubtful and finally in a direct question, "Do you keep Books?" replied "No;" elucidating that he'kept a journal which had in accounts receivable because they. were so few that he "emembered them. Pressed as to the number of these Mr. Arnold stated that there were only two or three on the list, anyway.
"Tell us the names of these," "ald Mr, Franklin, but Mr. Arnold object ed on the grounds that he "didn't wish to make it appear that the people in question were unsound Since the accounts were sent out about a year ago." He finally agreed that there. were three accounts receivable which totalled about $3,000.
Mr, Franklin then addressed the Court and said, "I should like to see these books unless the Court has had enough of this corporate fiction Mr, Arnold objected and stated that there was "no corporate fiction" in the question, that he had been "swindled out of everything" he had made for the past 20 years by unfair methods, and that it was not for himself that the corporation existed. He declared that he could live on $100 per month but that it was impossible for his wife to do this, or fo be asked to do it, and that the corporation had been' set up for the: protection of others and not for himself. Mr, Franklin explained shat the words "corporate fiction" were used purely in a legal sense and bore no Personal implication, that he wa merely an attorney doing his best properly to represent his client, and.
Arnold after accepting the explanation stated that, in that Mfr. Franklin was "representing bunch of swindlers."
The Judge cut short his remarks by asking the witness how much. money. his son-in-law had actually ut into the business, and Mr. Arnold Stated, "$3,000", later modifying this to "between $3,000 and $5,000". He' again observed that the business "was, conducted rather informally" when queried by Judge Helmick regarding' company purchases.
"Have you any other property?" asked the Judge, and Mr, Arnold stated that Mrs. Arnold owned the furniture in their apartment. "Do you own any jewellery?" asked the Court.
"Well—a watch and chain' responded the witness.
"The query, "How did the company: acquire the car?" brought forth the reply that the witness bought it, paid' $200 for it, and had never changed the licence. Questioned again on details of his corporation by Mr. Franklin, Mr. Arnold said, "You should have the men who' incor porated the company here to answer These technical questions......and 1 believe that you can state that I am the president. T think that was agreed upon after the first meeting. we had some time ago."
"You owned a home on Avenue an. Roi Albert?" asked Mr. Franklin, and. the witness answered in the affirmative, but stated that it was sold in 1929.
"You re-invested the money?
"It was Mrs. Arnold's", elated the witness, "It was transferred to her: tone year before the sale." Again examined on the earnings of the company, the wiiness thought they were.close to what had been spent, and that if he could collect the out-sanding accounts, he would show a Droft; if not, be would show a loss.
was also' brought out that Mr. Henningen is the branch manager for Getz Brothers.
"Your son-in-law takes no active part in the business then," remarked the Court.
"Oh, yes he does," said the witness, explaining that Mr. Henningsen aided in the "business end" of the concern.
'When the subject of the books was again raised, Mr. Arnold stated that they had been kept by a-girl who had never been used to keeping' books, "When the receipts of the company fall short, where does the Jmoney come from?" asked the Court once more.
"The cash is checked out by my son-in-law or by myself," said Mr. 'Arnold, who. stated that' there was now $3,000 or $4,000 in the bank.
The Court adjourned the case until October 9 in order that the books
Text read from the printed page and cleaned; old type leaves the occasional error.