IN RE COMPLAINT AS TO THE CONDUCT OF NEIL BROWN, Accused.
Supreme Court of Oregon
Argued December 6, 1971, accused suspended February 24, 1972
petition for rehearing denied May 24, 1972
262 Or. 171 | 493 P.2d 1376 | 497 P.2d 668
William G. Wheatley, Eugene, argued the cause for accused. On the briefs was John E. Jaqua, Eugene. Harold D. Gillis, Eugene, argued the cause for Oregon State Bar. With him on the brief was Jon A. Joseph, Eugene. Before O’CONNELL, Chief Justice, and DENECKE, HOLMAN, TONGUE, and BRYSON, Justices.
This is a disciplinary proceeding by the Oregon State Bar charging the accused with unethical conduct. Most of the charges in the complaint arise out of the accused’s acts, or failure to act, while serving as attorney and administrator in Lane County, Oregon, of the estates of Robert and Marion Beach and their two sons.
Mr. and Mrs. Beach and their two sons died intestate as a result of an airplane accident on January 28, 1957, and left a 20-year-old daughter, Garnet Claire Beach Ratley (hereinafter referred to as Garnet), as their sole heir.
The deceased parents were engaged in four sawmill and timber operations in Oregon at the time of their deaths. Two of the businesses were Oregon corporations, of which they owned all of the corporate shares, and two were conducted as partnerships. They also had an interest in and operated a timber, logging, and sawmill business in Siskiyou County, California.
The accused had been a friend of the deceased parents. He was appointed administrator of each of the four estates on January 9, 1958, upon the petition of Garnet, the sole surviving heir, who was then married and living in Mt. Shasta, California. As administrator, he acted as president of the two Oregon corporations and managed the partnership businesses.
Dr. Ratley, a dentist, and husband of Garnet, was appointed administrator of the deceased parents’ estates in ancillary probate proceedings in Siskiyou County, California. However, the accused made numerous trips to California and participated in an attempt to unravel the affairs of the California operation.
At the time of the deaths of the four members of the Beach family, most of the interested parties, including the accused, believed that the assets of the deceased parents were of substantial value. The value of the California operation and timber holdings was believed to be close to “a million dollars.” Within a few months the accused learned that much of the machinery and assets of the Oregon operations had been transferred to the California undertaking, and that the Oregon businesses (corporations and partnerships) were not profitable. He managed to terminate an unfavorable contract with the Bohemia Lumber Company and liquidated the assets of the Oregon logging ventures. The estates of the two deceased sons were of nominal value. Inventories in each of the parents’ estates were not filed until December 9, 1960.
In November, 1959, Dr. Ratley petitioned the Superior Court in California to terminate the ancillary probate proceedings on the basis that the assets in California were worthless. As early as October 25,
Garnet separated from her husband, Dr. Ratley, and moved to Eugene to attend the University of Oregon in 1962. In a deposition of Garnet taken on July 2, 1968, and received as an exhibit in the proceedings before the trial committee, she testified that she tried to get the accused to close the estates as early as the spring of 1962 and she could never find out why they were not closed. The accused was questioned regarding his financial problems and he stated, “Well, there isn’t any doubt about that. I was over-extended.” The ac-
The Bar charged the accused with eleven causes of complaint, setting forth various acts of misconduct and unethical practice. Nine of the complaints arise out of the accused’s mishandling of and failure to wind up the affairs of the four estates. The Board of Governors, nine voting, found the accused guilty as charged in seven of the causes of complaint. The accused appeals, arguing that the most that can be said against him is that he is guilty of procedural violations in his administration of the estates.
We cannot agree with this conclusion. The accused, on testimony before the trial committee, admits to his unexplained misconduct as an attorney. This is particularly so when judged in the light of his acting as a fiduciary and administrator of four estates.
The accused’s troubles began when he arbitrarily, without approval of the circuit court, attempted to continue the logging and sawmill operations of the deceased Robert and Marion Beach, and to deal personally with the partnership and corporate ventures. Several of the acts, or failure to act, charged by the Bar are used to support and are intermingled in the causes of complaint. The Bar charges that the accused willfully failed to obey directions of the Lane County Circuit Court, and further failed to show said court and its judges the respect, candor, and cooperation required of a member of the Oregon State Bar.
This action and lack of respect on the part of the accused is contrary to the statutory duties of an attorney as provided in
“In all cases where a person dies while engaged in any trade or business, [other than a partnership] * * * the court having jurisdiction of the administration of the estate of such decedent may, in its discretion, authorize the * * * administrator of the estate to continue and carry on such trade or business for a period not to exceed 12 months after the death of the decedent. The court shall require such * * * administrator to file such additional undertaking, conditioned upon his faithfully carrying out his trust and all orders of the court, * * *.”
“In the conduct of a trade or business, the * * * administrator shall keep full and accurate account of all receipts and expenditures, and also of all accounts payable and receivable, and shall make monthly * * * reports to the court * * *.”
In the instant case, the accused failed to petition the court for such authority, failed to post additional undertaking, continued the operations in excess of twelve months, failed to keep full and accurate account of receipts and expenditures, and completely failed to make monthly reports thereof to the court. In all, the accused’s actions as attorney and administrator in these estates are a serious breach of his fiduciary relationship and the duties implied upon him by law.
The Bar further charges the accused with unethical conduct in borrowing $25,000 from the sole heir of the estates, Garnet, between August and December, 1963. We have previously reviewed most of the pertinent evidence in regard to this charge. This charge is similar to one discussed in the recent decision of this court in In re George C. Staples, 259 Or 406, 410, 486 P2d 1281 (1971). The accused did testify that he advised Garnet to consult with other counsel before lending him the money, but he further stated he did not know if she consulted with any of them. He knew that she was required to place valuable securities with the bank as security for this loan, and he failed to give her any instrument of security or a note evidencing his debt to her. The Garnet notes to the bank were not paid. He agreed to and did pay the interest on the Garnet notes to the bank. However, he acknowledged that two of the payments, a total of $1,865.56, were made from assets of the estate, yet there is no showing in the accounting made to the court that such sums were paid for his benefit. An attorney borrowing money from a client not engaged or knowledgeable in the ways of business should insist upon such a client being represented by independent counsel. In the instant case, Garnet was required to employ an attorney to bring action against the accused in order to effect settlement of her claim. There is no reason for us to repeat our reasoning, which is fully stated in Staples.
In this case, the evidence reveals that the client, Garnet, did suffer a loss because of the conduct of the accused. The wrongful conduct is further enhanced by the attorney-administrator taking from the client, Garnet, an assignment of all of her interests in the estates of her parents.
The remaining charges against the accused arise out of the probating of the estates and pertain to the sale of certain property in the estates and the handling of funds received from such sales. The accused admits that some $20,000 of funds received by him belonging to the estate did not go through the estate banking accounts, but were deposited to his account or used by
The Board of Governors recommended that Neil Brown be suspended by the Supreme Court from the practice of law in the State of Oregon for a period of two years. We agree that this is the most appropriate discipline.
The accused is suspended from the practice of law for a period of two years and thereafter until he has made application for reinstatement and until he shall affirmatively show that he is in all respects again able and qualified to resume his position as a member of the Bar of this state and that his resumption of the practice of law will not be detrimental to the Bar or to the public interest.
The Oregon State Bar is also awarded judgment against the accused for its costs and disbursements incurred in the disciplinary proceeding in accordance with
IN RE COMPLAINT AS TO THE CONDUCT OF NEIL BROWN, Accused.
262 Or. 181 | 497 P.2d 668
Supreme Court of Oregon
ON PETITION FOR REHEARING
In our opinion, 262 Or 171, 493 P2d 1376 (1972), we agreed with the Board of Governors of the Oregon State Bar and suspended the accused from the practice of law for a period of two years. The accused petitions this court for rehearing, contending that we “erred in this decision by imposing an extremely severe form of discipline,” and that it was “not warranted by the facts.” Three of the assignments warrant further expression by this court. The opinion stated:
“* * * In a deposition of Garnet taken on July 2, 1968, and received as an exhibit in the proceedings before the trial committee, she testified that she tried to get the accused to close the estates as early as the spring of 1962 and she could never find out why they were not closed * * *.”
The petition is correct in stating that the deposition, as an exhibit, was rejected by the trial committee. The statement “that she tried to get the accused to close the estates” could well have been omitted
The record also discloses that Richard Bryson, attorney at law, was called as a witness and testified:
“She [Garnet] came to me to consult about the estates of her parents and brothers. The Beach estates. There were four of them. She expressed some dissatisfaction with the way they had been handled and the length of time it had taken, and asked me to look into them and advise her.”
* * * * *
“Q. (By Mr. Joseph) Did Mrs. [sic] Beach [Garnet] express to you any concern over the estates?
“A. Yes, she—she expressed concern over the estates, particularly with reference to the length of time they had taken.
“Q. Did she express concern about any money being missing?
“A. She expressed concern at the lack of accountings.
“Q. Did she indicate to you that she had attempted to get information from Mr. Brown?
“A. Yes, she said that she had been unable to get an accounting from Mr. Brown * * *.”
No objection was taken to this portion of the testimony. While this testimony relates to a time much later than the “spring of 1962,” it does indicate that Garnet tried to get the accused to close the estates.
Our opinion also stated that “the evidence reveals that the client, Garnet, did suffer a loss because of the conduct of the accused.” Petitioner contends that
“* * * The accused admits that some $20,000 of funds received by him belonging to the estate did not go through the estate banking accounts, but were deposited to his account or used by him in defraying expenses that he advanced on behalf of the estate. The exhibits and accountings filed by the accused are in such an unorganized and disarranged condition that we cannot find by a preponderance of the evidence whether the funds were or were not used or diverted by the accused. There is evidence to indicate that the accused did not personally gain * * * from these transactions * * *.”
We have again reviewed the meager accountings filed with the court by the accused, acting as attorney and administrator of the four estates, together with the exhibits received by the trial committee and the transcript of testimony at the time of the trial. We are again impressed with the reason why this accused finds himself in such an embarrassing position. He attempted to continue the logging and sawmill operations of the deceased Robert and Marion Beach and to deal personally with the partnership and corporate ventures rather than as administrator of the assets of these estates, all without approval of the court.
In an effort to unravel the accused’s transaction as administrator, the certified public accountant firm of Lee, Coleman, Allen & Bedint was employed to secure an analysis of the financial transactions involving the estates of Robert G. Beach and Marion J. Beach. It was stipulated that the “analysis” be received in evidence as a joint exhibit. A summary from that accounting firm attached to the exhibit reads in part as follows:
“As you know, there was certain property listed
in the two estates which took the form of corporate stock, or partnership interests. We were not furnished any financial information on these companies, and therefore, we are not able to state how these interests were disposed of. Obviously, some of the transactions contained in our analysis represent the sales of certain properties which were owned by these corporations and partnerships. However, we are unable to say whether this represents all of the property of these organizations, or only a part thereof.”
From our review of the record we are met with the same problem expressed by the firm of accountants. The accused did not keep adequate records. A comparison of the inventory and appraisement filed in the estates with records of personal property disposed of shows that the records, as far as they disclose the estate assets and transactions, are not complete. The testimony discloses that the accused, without approval of the court, attempted to salvage the assets of a business previously operated by the deceaseds in northern California and that he used funds from the Oregon estates in this effort. This, by his own language, is apparently where he met his downfall. Mr. Brown gave the following testimony at the hearing before the trial committee:
“Q. Now, was the manner in which you handled this estate different or abnormal or unusual from the manner in which you approached other legal matters, including other estates?
“A. Well, after a time I took an intense interest in trying to solve or salvage or do something about that—that horrible loss in California, I’m sure that it must have exceeded three hundred and fifty thousand dollars, but it didn’t work.”
The record is replete with testimony describing the attempt to salvage assets from the California oper-
One of the other charges against the accused was in connection with his borrowing $25,000 from Garnet, the sole heir of the estates. She, in turn, had borrowed this money from the bank on her personal notes, which were not paid. The accused was to pay the interest. However, he acknowledged that two of the interest payments, totaling $1,865.56, were made from assets of the estate.
From reviewing all of the evidence, we must conclude that Garnet, the sole heir of the estates, did suffer loss because of the conduct of the accused as administrator and attorney of the four estates.
Petitioner criticizes our stating that the assignment of the client-heir’s interest to the accused was wrongful.
The assignment was in settlement of the heir’s claims against petitioner and petitioner’s claims against the client. The settlement document states that the heir’s claim is settled for $20,000. The settlement was accomplished in part by paying petitioner’s obligation to the heir with estate funds. This, without further explanation, is obviously wrongful. The petitioner denies this occurred but had no explanation
On the basis of the evidence in the record, we adhere to our characterization of the assignment as “wrongful conduct,” having in mind that this arrangement and the assignments of the sole heir’s interest in the estates were not approved by the probate court.
The petition for rehearing is denied.