Talk about a trick question. If the attached file were a JPG, you would need to go back to the source in order to get undamaged image content or alpha to work with. Luckily, it's not actually a JPG. It's a PNG with the wrong extension. Changing the extension doesn't change the file format.
The error is because your filename string is empty. One way to fix:
% use zero padding to help enforce proper sorting
newname = sprintf('%04d.png', N);
If you're trying to automate the process of finding the rectangle:
[inpict,~,alpha] = imread('out.png'); % it's a PNG, not a JPG
mask = alpha>128; % reduce alpha to a logical mask
mask = bwareafilt(mask,1); % pick the largest blob
[~,rows,cols] = crop2box(mask); % get the extents of the blob
outpict = inpict(rows,cols,:); % crop that region
imshow(outpict,'border','tight')
... though if you know that the position is the same for all images, there's no sense in using a more expensive routine.
