Order: Upon Trustee’s Cross Petition (August 27, 1952)

IN THE UNITED STATES DISTRICT COURT FOR THE
DISTRICT OF KANSAS

In the  Matter of
THE HUBBARD DIANETIC FOUNDATION, INC.
In Bankruptcy

No. 379 R-2
Bankrupt

ORDER UPON TRUSTEE’S CROSS PETITION

Now at Wichita, Kansas, on this 2nd day of July, 1952, this matter comes on for hearing upon the cross petition of the trustee, which cross petition was filed in answer to the motion filed herein by one L. Ron Hubbard on the 4th day of March, 1952, the trustee appearing by and through his attorney William Porter, and L. Ron Hubbard appearing by and through his attorney A. D. Wieskirch, and there being no other appearances. And thereupon the trustee makes his opening statement and presents his evidence and rests. And thereupon Mr. Wieskirch moves for a continuance in this matter and the trustee objects thereto, and the matter of a continuance is duly argued before the court. And the matter is duly continued until the 15th day of August, 1952, at Topeka, Kansas.

And now on this 15th day of August, 1952, at Topeka, Kansas, this matter again comes on for hearing pursuant to continuance granted herein, the same parties appearing, and opening statement is made on behalf of L. Ron Hubbard and his evidence is presented. And thereupon he rests his case, and this matter is duly argued before the court. And the court, having reviewed the file and considered the evidence and being well advised in the premises finds as follows:

1. L. Ron Hubbard has been enjoined from leaving the continental limits of the United States. Said injunction should be dissolved.

2. From May 1951 to the 12th day of February 1952 Ron Hubbard was Chairman of the Board of Directors of the bankrupt corporation, and during said period of time the said Hubbard completely dominated the affairs of the corporation and dominated the meetings of the Board of Directors to such an extent that only those matters which be approved were discussed at the Directors’ meetings and other matters were not considered. During such period of time, said Hubbard exercised complete control over the employees of the bankrupt to the extent that from time to time he countermanded the orders of the other officers and directors and ran the business of the bankrupt according to his own whim and choosing.

3. During such period of time, from time to time said Hubbard went to the bookkeeper of the bankrupt, or sent one of his agents to the bookkeeper of the bankrupt, and demanded that the bookkeeper prepare checks in various amounts payable to Hubbard or for the use of Hubbard. Upon some occasions such checks were, at the direction of Hubbard, paid directly to Hubbard’s personal creditors for Hubbard’s personal living expenses. Upon other occasions, said checks were paid as salary to persons who were employees of Hubbard in various private business ventures but wore not employees of the bankrupt. On many occasions such checks represent payments directly to Hubbard made solely because he requested them at the time. During such period of time, such payments to Hubbard, or to other parties for the use of Hubbard, amounted to Twenty Thousand Three Hundred Fifty-nine and 99/100 ($20.359.99) Dollars.

4. During such period of time, Hubbard was entitled to withdraw from the bankrupt the sum of five Thousand Six Hundred ($5,6o0) Dollars, representing funds that the bankrupt [end of page] Hubbard further was entitled to withdraw the sum of Five Thousand Four Hundred Seventy—three and no/100 ($5473.00) representing royalties owed Hubbard by the bankrupt by reason of the fact that the bankrupt was selling books which had been written by Hubbard.

5. The balance of Nine Thousand Two Hundred Eighty six and 99/100 ($9286.99) Dollars, was withdrawn from the corporation wrongfully by Hubbard during the tine that Hubbard was Chairman of the Board of Directors of the Bankrupt and Hubbard should return such [sum] to the Trustee.

6. In or about February of 1952 Hubbard wrongfully removed from the possession of the bankrupt tape recordings listed on Exhibit “A” to the Trustee’s cross petition herein, and Hubbard should return the same to the Trustee.

7. While Hubbard was Chairman of the Board of Directors of the Bankrupt, at his direction two soundscribers, one filing cabinet, two desks and two chairs were removed from the possession of the bankrupt corporation to Hubbard’s home. Such assets were the property of the bankrupt, and Hubbard should return them to the trustee.

8. The Bankrupt now has title to a certain 1951 Chrysler convertible automobile which was paid for by Hubbard, and equitable title to which is in Hubbard.

IT IS THEREFORE ORDERED:

1. That the injunction previously entered herein enjoining L. Ron Hubbard from leaving the continental limits of the United States be dissolved.

2. That Hubbard return to the trustee herein on or before the 2nd day of September, 1952, the following:

(a) $9,286.90 in cash.

(b) All the chattel set forth in Exhibit “A” to the Trustee’s cross petition herein.

(c) Two soundscribers, one filing cabinet, two desks and two chairs, all as mentioned in the findings above.

3. That upon the compliance of Hubbard with the above, the trustee transfer title to the 1951 Minister Convertible  automobile from the bankrupt to Hubbard.

[signed] E. R. SLOAN
Referee

APPROVED:
/S/WILLIAM PORTER
William Porter, Attorney for Trustee

/S/A. D. WIESKIRCH
A. D. Wieskirch, Attorney for L. Ron Hubbard

Filed August 27, 1952 HARRY M. WASHINGTON, CLERK

Notes