Our friend Bill Mullins alerts me to an article in the September 1939 issue of Flying Magazine about Cecil B. DeMille and his aviation interests. It was DeMille's company, Mercury Aviation, that rented the two "Jenny" biplanes used in Houdini's The Grim Game from "DeMille Field No. 1" in Santa Monica.
The article includes an account of the famous accident while filming. What's interesting is it blames Houdini's stunt double, Robert E. Kennedy, for causing the collision. This is the first I've ever heard of blame being placed on anyone for the accident. Here's the excerpt:
Money came in rapidly from airplane rentals to film companies. Harry Houdini made a picture at the DeMille fields, called "The Grim Game." A wing-walker, doubling for Houdini, got down on his ladder and "froze." The pilots jockeyed and jockeyed – and finally locked wings. They started a double flat spin, broke apart. One pilot landed with the wing-walker still clinging to the ladder, with a shattered upper right wing. The other came in with more serious damage, rolled over on its back.
"No one was injured," DeMille recalled. "The pilots jumped from their ships, took out after the frightened wing-walker to vent their wrath, for he was the cause of the accident. They didn't catch him. So far as I know, he's never been back to Hollywood since."
One clarification to the above is that Kennedy was hanging from a rope, not a ladder. Ladders were more typically used by wingwalkers for this kind of stunt. The accident footage is especially clear in the new TCM restoration of the film, but its still hard to tell exactly what happened. A few times the planes come in close, but Kennedy never seems close enough to safely transfer, and at one point he comes dangerously close to the propellers. Perhaps DeMille just wanted to shield his pilots from any blame.
Of course, publicity for The Grim Game claimed it was Houdini himself dangling from the end of the rope and who survived the crash. Houdini never denied it.
UPDATE: You can read more about the happless stuntman Robert E. Kennedy at Joe Notaro's HHCE: How did Kennedy get the plane-changing job? and What happened to Kennedy after the plane incident?