In re PAUL SVEINBJORN JOHNSON, Attorney, Respondent.
No. 67740
Supreme Court of Illinois
December 21, 1989
Rehearing denied April 9, 1990
133 Ill. 2d 516
Thomas P. Sukowicz, of Chicago, for the Administrator of the Attorney Registration and Disciplinary Commission.
Michael L. Bolos, Ltd., of Shorewood (Michael L. Bolos, Jr., of counsel), for respondent.
JUSTICE RYAN delivered the opinion of the court:
On January 14, 1987, the Administrator of the Attorney Registration and Disciplinary Commission (Administrator) filed a three-count complaint charging the respondent, Paul Sveinbjorn Johnson, with numerous acts of professional misconduct arising out of the settlement of a claim of his client, Walter Geldzahler, against INA Life Insurance Company. Count I charged the respondent with commingling client funds with funds of the Icelandic Consulate and failure to prepare a closing statement upon settlement of the claim. Count I further charged that the respondent had forged the endorsement of co-counsel on the settlement draft, and that the respondent had attempted to shield the settlement funds from Geldzahler‘s creditors. Count II charged respondent with engaging in dishonest conduct by representing to co-counsel that he had not received settlement funds on behalf of Geldzahler, when in fact respondent had re
The complaint alleged that the respondent‘s conduct violated the following provisions of the Code of Professional Responsibility:
Respondent did not file an answer to the complaint. Consequently, the Hearing Board ordered that the allegations of the complaint be deemed admitted. The Hearing Board then ordered a hearing, at which it heard the testimony of Thomas Moore, the respondent‘s co-counsel in the Geldzahler claim. The respondent did not appear before the Hearing Board. The Hearing Board issued its report, finding that all of the misconduct alleged by the Administrator was proven by clear and convincing evidence, and recommending that respondent be disbarred. Respondent filed with the Review Board exceptions to
Respondent was admitted to the bar of Illinois in 1947. In addition to his legal practice, respondent serves as consul general for the Republic of Iceland. In 1982, the respondent agreed to represent Walter Geldzahler in connection with a claim on a disability insurance policy issued by INA Life Insurance Company. Walter Geldzahler is a United States citizen. His wife, Gudrun, is an Icelandic citizen. The respondent asked attorney Thomas Moore of the law firm of Kelly & Moore to join with him in representing Geldzahler. Geldzahler entered into a written contingent fee retainer agreement whereby he jointly retained the respondent and Kelly & Moore to prosecute the action against INA. Under the terms of the contract, attorney fees were to be one-third of the recovery. The respondent and Kelly & Moore orally agreed to a 50/50 division of the attorney fees.
In January 1984, Geldzahler agreed to settle his claim against INA for $35,000. The respondent and Moore agreed to reduce the attorney fees from the contractual one-third to $10,000. On January 15, 1984, the respondent received a settlement check in the amount of $35,000, payable to Walter and Gudrun Geldzahler, the respondent, and Kelly & Moore. The respondent then endorsed the settlement check in his own name, and in the name of Kelly & Moore. The respondent deposited the check in the account of the Icelandic Consulate at the American National Bank & Trust Company of Chicago. The Icelandic consulate account holds funds of the Icelandic government and of Icelandic citizens and is used to pay expenses of the Icelandic Consulate. The respond
Also in January 1984, the respondent told Moore that the case had been settled, but that the attorney fees would not be disbursed until the Geldzahlers’ financial problems were resolved. The respondent testified before the Inquiry Board that he did not wish to disburse the attorney fees immediately following the settlement because he feared that further litigation, including possible bankruptcy proceedings, and negotiations with the Geldzahlers’ creditors might well have been required. The respondent further testified that following the settlement with INA Life Insurance Company, the respondent did in fact engage in negotiations with the Geldzahlers’ creditors. Before the Hearing Board Moore testified that between January and September 1984, the respondent and Moore had several conversations concerning the settlement proceeds. Moore initially stated that “[h]e [the respondent] was never clear to me on whether or not he had received the check. It was my understanding that, due to creditors the Geldzahlers may or may not have had, I honestly don‘t know, that either he had not requested them [INA Life Insurance Company] to send the check or that he had the check but would not deposit it.” Moore later testified, “now that I have seen my complaint again, it‘s clear to me that he [the respondent] had said all along that the check had really not been issued and he didn‘t want it issued because of the creditors and would I please wait.” Also, between January and September 1984, a dispute arose between the respondent and Moore concerning the division of the attorney fees. The respondent determined that because he had done
In September 1984, the respondent informed Moore that the Geldzahlers had received their share of the settlement proceeds and that the respondent had withdrawn a portion of the respondent‘s share of the attorney fees in order to pay his taxes. The respondent refused at that time to pay Moore‘s share of the attorney fees.
On November 9, 1984, Moore filed a complaint with the Administrator, charging that the respondent had lied to Moore concerning issuance of the settlement draft and that the respondent had forged Moore‘s signature on the settlement draft. The Administrator requested that the respondent reply to the charge and that the respondent produce all records related to any funds received on behalf of the Geldzahlers. The respondent did not respond to the Administrator‘s request. Moore finally received his $4,000 fee by a check dated December 22, 1984, drawn on the consular account into which the gross settlement proceeds had been deposited.
Pursuant to a subpoena duces tecum, the respondent appeared before the Inquiry Board on June 21, 1985. He testified that he had told Moore in January 1984 that settlement funds would not be disbursed until the Geldzahlers’ financial situation had been settled. He also stated that he would seek permission from the Icelandic Embassy for the release of the records requested by the Administrator, and that if permission were granted, he would transmit the records to the Administrator. The respondent did not transmit any such records to the Administrator.
On August 5, 1985, the Administrator issued a subpoena duces tecum to the American National Bank & Trust Company seeking release of account records of the Icelandic Consulate for the period from December 1979 through January 1985. On August 6, 1985, the respondent sent a letter to the American National Bank & Trust Company requesting that the bank, based on “well established rules of comity and international law,” refrain from complying with the subpoena. On September 18, 1985, the Administrator again requested that the respondent produce the account records relevant to the Geldzahler settlement. The respondent did not comply with this request.
The Inquiry Board then voted its complaint against the respondent. The respondent did not file a written answer to the complaint, nor did he appear before the Hearing Board. The Hearing Board heard the testimony of Thomas Moore, and then found the allegations set forth in the complaint were proven by clear and convincing evidence. The Hearing Board recommended that the respondent be disbarred. The respondent filed exceptions before the Review Board. The Review Board adopted the findings of fact and law of the Hearing Board, but recommended that the respondent be suspended for one year. The respondent has filed before this court exceptions to the findings of the Review Board. We address herein the charges of the complaint.
We first address the charge and the Hearing Board‘s finding that the respondent forged the endorsement of co-counsel, Kelly & Moore, on the Geldzahler settlement check. The respondent admits that, in addition to his own name, he inscribed the firm name “Kelly & Moore” on the check. The respondent further admits that neither Kelly nor Moore had expressly authorized him to do so. The respondent argues, however, that the endorsement cannot constitute forgery because he, as a matter of law,
Although the precise issue has not been previously addressed by this court, it appears well accepted in other jurisdictions that where lawyers between whom no general partnership relation exists jointly undertake to represent a client in a case, they may be regarded as joint venturers, or “special partners,” for the particular transaction. (See Duer & Taylor v. Blanchard, Walker, O‘Quin & Roberts (La. 1978), 354 So. 2d 192; Brauns v. Housden (1938), 195 Wash. 140, 79 P.2d 981; Bailey v. Griggs (1935), 174 Okla. 90, 49 P.2d 695; Harris v. Flournoy & Flournoy (1931), 238 Ky. 329, 38 S.W.2d 10; Fitzgibbon v. Henry A. Carey, P.C. (1984), 70 Or. App. 127, 688 P.2d 1367; Bunn v. Lucas, Pino & Lucas (1959), 172 Cal. App. 2d 450, 342 P.2d 508. See generally 46 Am. Jur. 2d Joint Ventures § 24 (1969); Annot., 73 A.L.R.2d 991, § 2 (1960).) “Thus, where an attorney retained on a contingent fee to prosecute a claim engages another lawyer to assist in the litigation, upon an agreement to share the fee in case of success, otherwise to receive nothing, they become joint venturers.” (46 Am. Jur. 2d Joint Ventures § 24 (1969). See Mau v. Woodburn, Forman, Wedge, Blakey, Folsom & Hug (1964), 80 Nev. 184, 390 P.2d 721; Glover v. Maddox (1958), 98 Ga. App. 548, 106 S.E.2d 288; McCann v. Todd (1943), 203 La. 631, 14 So. 2d 469; Defrancesch v. Hardin (La. App. 1987), 510 So. 2d 42.) We accept this characterization of the relationship between two attorneys, like the respondent and the firm of Kelly & Moore in the present case, jointly representing a client on a contingent fee basis. This court has defined a joint venture as an association of two or more persons to carry out a single enterprise
This court has further held that partnership principles govern joint ventures (Bachewicz v. American National Bank & Trust Co. (1986), 111 Ill. 2d 444, 448; Burtell v. First Charter Service Corp. (1979), 76 Ill. 2d 427, 438), for a joint venture is essentially a partnership carried on for a single enterprise (Bachewicz, 111 Ill. 2d at 448; Smith v. Metropolitan Sanitary District (1979), 77 Ill. 2d 313, 318). This court has recognized that a partner has implied authority to endorse negotiable instruments made payable to the partnership. (Huston v. Newgass (1908), 234 Ill. 285, 290; Ryhiner v. Feickert (1879), 92 Ill. 305, 311. See also Link v. First National Bank (1942), 312 Ill. App. 502, 509; Grosberg v. Michigan National Bank-Oakland (1984), 420 Mich. 707, 715, 719, 362 N.W.2d 715; Lentz v. United States (1965), 346 F.2d 570, 171 Ct. Cl. 537; 68 C.J.S. Partnership § 161 (1950).) Section 9(1) of the Uniform Partnership Act (
“Every partner is an agent of the partnership for the purpose of its business, and the act of every partner, including the execution in the partnership name of any instrument, for apparently carrying on in the usual way the business of the partnership of which he is a member binds the partnership, unless the partner so acting has in fact no authority to act for the partnership in the particular matter, and the person with whom he is dealing has knowledge of the fact that he has no such authority.”
Based upon these principles we conclude that the respondent, by virtue of his relationship with the firm of Kelly & Moore, was invested with implicit authority to
The respondent asserts that the evidence fails to support a finding that the respondent intended to defraud Moore by affixing the name “Kelly & Moore” to the settlement draft. The respondent argues that the Hearing Board‘s finding of forgery was thus in error. We agree with the respondent on this point.
An essential element of forgery is an intent to defraud. (
For essentially the same reasons we find that the endorsement, by itself, did not constitute “dishonesty, fraud, deceit, or misrepresentation” within the meaning of
We do agree with the Hearing Board, however, that the respondent‘s subsequent dealings with Moore constitute unacceptable misconduct. The Hearing Board found that the respondent had repeatedly lied to Moore by telling Moore that the settlement check had not been issued. The evidence, consisting almost entirely of Moore‘s testimony, is certainly less than clear on the issue of whether the respondent had in fact blatantly lied to Moore concerning receipt of the settlement check. The evidence is clear, however, that the respondent displayed a woeful lack of candor with co-counsel. It was not until September 1984, some eight months after the respond
The Hearing Board further found that the respondent violated
The respondent asserts that the “separate identifiable” provision of
This court has observed that
When we state that the client‘s funds must be deposited in a separate, identifiable trust account, we do not mean that each client‘s funds must be deposited in a separate account. The rule is satisfied if a client‘s funds are deposited in an account identified as a client trust account, which is separate and distinct from an account in which the attorney has an interest.
The respondent testified before the Inquiry Board that one reason he deposited the funds into the Icelandic account was that Mrs. Geldzahler and the Geldzahlers’ child were Icelandic citizens, and that they were planning to move to Iceland in the near future. The respondent stated that depositing the funds into the Icelandic account would more readily facilitate disbursement of the client funds. However unobjectionable the respondent‘s motives may have been in this respect, the mere ease with which client funds may be disbursed does not
The respondent admits that he deposited the check into the consular account in order to shield the funds from the Geldzahlers’ creditors. The Hearing Board and the Review Board found this conduct to be improper. The Administrator likens the respondent‘s conduct to a fraudulent conveyance of property with the intent to hinder creditors. (
The respondent correctly notes that he owes no duty to his clients’ creditors equal or paramount to his obligation to his clients. (See In re Harris (1987), 118 Ill. 2d 117, 123; Pelham v. Griesheimer (1982), 92 Ill. 2d 13, 23.) The respondent, however, mischaracterizes, to some extent, his obligation as an attorney with regard to clients’ funds. An attorney‘s obligation to protect his clients’ funds certainly does not require that the attorney hide the funds from those who may have valid claims against the funds. There are proper forums for the determination of the validity of creditors’ claims. If such claims are valid under the law, then the attorney has no right to obstruct their enforcement. If the claims are invalid, however, then there is no need to conceal the funds in the manner the respondent chose here. We must assume that the law will afford the clients all the protection to which they are entitled.
We find in the present case, however, that the respondent did not intend to defraud or deceive the Geldzahlers’ creditors. We find nothing in the record to suggest that the respondent intended to permanently
With respect to the respondent‘s repeated refusal to produce before the Administrator records of the Icelandic consular account related to the Geldzahler settlement proceeds, we agree with the Hearing Board and the Review Board that the respondent‘s conduct was clearly improper. The respondent‘s obstinance in response to the Administrator‘s repeated requests for cooperation constitutes conduct which tends to defeat the administration of justice and to bring the courts and the legal profession into disrepute. Respondent‘s obstinance has been demonstrated repeatedly throughout these proceedings. Such conduct clearly falls within the prohibition of this court‘s
The respondent argues that, under principles of international law, the records of the consular account were exempt from process and that the Administrator was, therefore, not entitled to such records. (See Vienna Convention on Consular Relations, opened for signature April 24, 1963, art. 61, 21 U.S.T. 77, T.I.A.S. No. 6820, 596 U.N.T.S. 261.) The respondent further asserts that the breadth of the subpoena duces tecum issued to American National Bank was “excessive to the point of abuse,” and that he was, therefore, justified in requesting that the bank not comply with the subpoena.
We need not address the validity of the respondent‘s claim that the Vienna Convention exempted from process the records of the consular account. Whatever the validity of that claim might be, it does not usurp the respondent‘s fundamental obligation as an attorney to cooperate with the Administrator in the investigation of possible acts of attorney misconduct. (In re Weston (1982), 92 Ill. 2d 431, 439-40. See In re Brody (1976), 65 Ill. 2d 152.) Nor is this obligation in any way affected by the respondent‘s capacity as consul general for the Republic of Iceland. This is not to say that the respondent‘s dual capacity as consul general and as an attorney licensed in this State is necessarily incompatible. We recognize rather that the respondent must not allow his consular position to interfere with his duties as an attorney. If the respondent was obligated to assert the privilege of consular immunity with respect to the records of the consular account, then it was certainly improper for him to deposit client funds into the account. If he was not so obligated, then the respondent should not have asserted the privilege in this instance because the privilege necessarily interfered with his obligation as an attorney to cooperate with the Administrator‘s valid requests with regard to the account records. While Mrs. Geldzahler and the Geldzahlers’ child, both of whom are Icelandic citizens, may have had an interest in the settlement proceeds, it must be remembered that the nominal plaintiff in the claim against INA Life Insurance Company was Walter Geldzahler, an American citizen. It was in settlement of Walter Geldzahler‘s claim for disability benefits that the funds were disbursed. We find no merit in the respondent‘s assertion that he was entitled to utilize his capacity as the consul general of Iceland in order to hold inviolable funds belonging to an American citizen. With regard to the scope of the subpoena duces tecum, we note that had the respondent cooperated with
Finally, the respondent admits that he failed to prepare a written closing statement “setting forth in detail all information necessary to present a definitive statement of the application of the contingent fee agreement in the action,” as required by
We note that no creditor of Geldzahler has complained of the respondent‘s handling of the settlement proceeds. Similarly, there has been no complaint from Geldzahler, his wife or child. This is purely a dispute between two attorneys concerning the division of fees. Several of the serious charges made by Moore could not be substantiated. By the same token, no complaint would ever have been filed with the Attorney Registration and Disciplinary Commission if respondent would have been candid with his co-counsel. Certainly, the manner in which respondent dealt with his co-counsel is deserving of sanction. Also, his stubborn insistence in impeding the disciplinary process and his lack of cooperation must not be rewarded. In addition, there are the deposit of the settlement check into a fund that does not qualify as a client trust fund for the admitted purpose of putting the proceeds beyond the reach of creditors, and the failure of the respondent to provide the client with a detailed closing settlement statement. We conclude that the sum of this conduct warrants a suspension from the practice of law for six months.
We have not imposed a more severe sanction because of respondent‘s 42 years of practice with an otherwise unblemished record.
Respondent suspended.
JUSTICE MILLER, concurring in part and dissenting in part:
With the exceptions noted below, I agree with the majority‘s resolution of the charges of professional misconduct brought against the respondent in this case, Paul Sveinbjorn Johnson. I do not agree with the sanction imposed by the majority in this case, however, and accordingly I dissent from that portion of the court‘s opinion.
The respondent and co-counsel, an attorney from a separate firm, agreed to represent the client, Walter Geldzahler, in a dispute involving a claim on a disability insurance policy. The matter was eventually settled. After endorsing the settlement check with the name of the other attorney, the respondent, who also served as the Icelandic consul general in Chicago, deposited the proceeds in the consulate‘s bank account, where they remained for a lengthy period of time, commingled with consulate funds. Following the deposit of the funds in the consulate account, the respondent repeatedly misled co-counsel about the status of the settlement. At some point the respondent withdrew at least part of his share of the fee in the matter and distributed to Mr. and Mrs. Geldzahler their portion of the settlement proceeds. After further delay, the respondent eventually paid co-counsel his fee, once the second attorney consented to accept a share that was smaller than the division the attorneys had originally agreed upon. The respondent maintains that he deposited the proceeds of the settlement in the consulate account so that the funds would be protected from the Geldzahlers’ creditors. The respondent also as
I agree with the majority that the respondent was implicitly authorized to endorse co-counsel‘s name on the settlement check, for the purpose of depositing the proceeds in an appropriate account. Such conduct would be consistent with the two attorneys’ status as joint venturers in their representation of the client. Unlike the majority, however, I am not so ready to conclude in this case that the respondent‘s conduct in endorsing the settlement check was not fraudulent. It is difficult to square the respondent‘s claim of innocence with his decision to secret the funds in the consulate account and with his subsequent activity in misleading co-counsel about the status of the settlement.
Moreover, I do not agree with the majority‘s statement that the respondent‘s deposit of the settlement proceeds in the Icelandic consulate account may have been technically proper under
The majority‘s characterization of the present case as simply a fee dispute between two attorneys ignores the evidence of the respondent‘s misconduct with respect to his treatment of the client funds. I would note that the respondent‘s mishandling of the settlement proceeds is not attributable to careless bookkeeping or mere inadvertence; the majority correctly determines that the respondent‘s hopes of thwarting the client‘s creditors should not be condoned. Nor can the respondent‘s improper deposit of the client‘s funds in the consulate account be excused simply because the client acquiesced in that activity or was ignorant of what occurred. Contrary to the majority‘s view, it is of no significance here that the client did not complain about the respondent‘s representation and apparently was not harmed by it. The client had no reason to complain: he and his family were the intended beneficiaries of the respondent‘s actions. The respondent‘s misconduct was aggravated by his lack of cooperation in the present proceedings. The respondent failed to answer the Administrator‘s complaint, did not appear before the hearing panel, and resisted the production of records pertaining to the matter.
The Hearing Board recommended that the respondent be disbarred; the Review Board recommended that the respondent be suspended from practice for one year. The majority suspends the respondent for a period of six months. I believe that a six-month suspension is, on the present record, too lenient. Although the recommendations of the Hearing Board and Review Board are not binding on this court (see In re Kitsos (1989), 127 Ill. 2d 1, 10; In re Hopper (1981), 85 Ill. 2d 318, 323), I see no reason in the present case to impose a sanction that is less severe than the one-year suspension recommended by the Review Board.