[78-L] Advent of Electrical Recording

[Geoffrey Wheeler]

Mike Biel provides a lot of interesting information. Yes, I am the 
“author” and about 23 letters that were exchanged between Columbia 
Phonograph and Western Electric are published verbatim in my book 
Columbia Phonograph: Pioneer in Recorded Sound... I pulled the book 
from publication several years ago to better clarify issues regarding 
the circumstances under which CBS acquired the assets of Columbia 
Phonograph from a defunct corporation after the fact and without any 
documented proof that such transfer was legal. In essence, Columbia 
Phonograph became instantly defunct when its Board of Directors 
resigned and all its assets were conveyed to Sacro Enterprises Inc. 
Although Columbia Phonograph was dead as a corporation, its name was 
never removed from the New York State book of registered corporations 
because neither the court nor the estate filed to have it removed and 
an unnamed source (most likely Consolidated Film Industries) continued 
to pay all the required fees and axes and to file all the required 
documents. In essence, Sacro was a shell corporation; its incorporation 
papers served as “boiler plate” for the incorporation of Masters 
Records Inc. in early 1937. The wording of most paragraphs is virtually 
the same throughout. By the time CBS acquired ARC effective January 1, 
1939, all the Columbia Phonograph assets had been commingled  with 
those of ARC and Brunswick Record Corporation so it would probably be 
difficult or impossible to declare which assets belonged to which 
corporation. This would not only include factories and offices, but 
desks, chairs, waster coolers, etc.

In that sense CBS did not acquire a distinguishable corporation with 
distinguishable assets but a corporate name which CBS could manipulate 
to its own purposes and, very important, make sure nobody else could 
file for the “Columbia Phonograph” name should the first CP be removed 
from the New York State corporate registry. Once a corporate name is 
removed from the books, anyone could come along and incorporate under 
that same name. To forestall anything like that happening, CBS 
engineered a “take over” of Columbia Phonograph the corporation by 
creating a new corporation with the same name but a new charter, 
declaring the old corporation had passed on its assets to the new 
corporation. This was not true. When Sacro died in December 1938, 
ownership rights to all Columbia Phonograph assets died with it. Since 
Sacro was not a legally constituted entity entitled to conduct business 
it could not grant or otherwise transfer these assets to the “new 
Columbia Phonograph without benefit of the courts. In essence, the 
Columbia Phonograph assets have been locked in legal limbo since 1939. 
The second step was to change the corporate name of American Record 
Corp. to Columbia Recording Corp. and then later fold Columbia 
Phonograph into Columbia Recording Corp. erasing any difference between 
the assets of ARC-Columbia Recording Corp. and Columbia Phonograph. 
Columbia Recording Corp. then became Columbia Records and Columbia 
Records, CBS Records, etc. Every corporate change is documented so 
there is a paper trail. The only break in the trail is Columbia 
Phonograph to Sacro and documentation showing Sacro conveyed the 
Columbia Phonograph assets to CFI, ARC, or CBS. Throughout its 
existence, Sacro was always an independent corporation and there are no 
papers identifying Sacro as being owned by any other entity but its own 
“straw” board of directors, which were employees of the law firm filing 
the incorporation papers. Since only the courts could make a 
determination of what would happen to the assets, under the laws of 
escheat they may well belong to the State of New York. I took this 
matter to the office of New York’s Attorney General, Eliot Spitzer. One 
of his associates told me this matter wouldn’t fall under the purview 
of the AG’s office because its chief constituents were “widows and 
orphans.” It was also an election year and why would Mr. Spitzer want 
to antagonize the media by investigating one of their own? I asked the 
assistant if the AG’s office was allowed to choose which laws to defend 
and which to ignore. I got no response.

Geoffrey Wheeler