In re Magoon

16 Haw. 761 | Haw. | 1905

Per curiam:

The crucial questions are whether the relation of attorney and client was created between the respondent and Hustace by the payment to the former by the latter of the retainer of $150, and whether, if so, the matter in respect of which that retainer was paid was one in which the interests of the respondent’s two clients, the Kamalo Sugar Company and Hustace, were adverse. If either of these questions is decided in the negative, nothing remains in the case so far as the evidence shows that would call for the punishment of the respondent in this quasi-criminal proceeding.

While the respondent may have acted originally for the nominal plaintiffs in the Kamalo case the suit was in reality for the benefit of the company and at the times in question he-was apparently acting for the company itself, the directors of which had come, by reason of changes in their personnel, into harmony with the nominal plaintiffs. There was no reason why the respondent could not in such case act at the same time for the nominal plaintiffs and for the company, which, though nominally a defendant, was for all practical purposes the real plaintiff, and in favor of which rather than in favor of the nominal plaintiffs the decree was actually rendered.

With the consent of his client the company, the respondent might have pursued Egan and Foster by execution or creditor’s bill or otherwise before proceeding further by execution against Eustace, who had already paid what he supposed was his share under the decree. Ee was already, with such consent, as he supposed, proceeding against the property of Egan and Foster by execution before proceeding further against that of Eustace, and he supposed that he had such consent to so proceed by creditor’s bill or other suit also. The fact, if it was a fact, that Dee, who represented the nominal plaintiffs and the company in their dealings with the respondent and who communicated such supposed consent to him, did not have formal or strictly legal authority to such an extent from the directors or the stockholders is immaterial so far as the question of the quasi-criminal liability of the respondent is concerned, even if it would render him liable to criticism for carelessness or lack of good judgment- or perhaps render him civilly liable. The question of ultra vires does not affect this case, although there might be circumstances under which it might affect a case of this general nature. There is no doubt that the directors and most if not all of the stockholders were agreeable to proceeding against Egan and Foster by execution at least, before proceeding further against Eustace.

The respondent might also without being quasi-criminally liable, so far as his duty to his client the company was concerned, have discussed with Eustace as an adverse party and with the consent which, he supposed he had, of the company, the proposition of Eustace’s putting his property out of his name so as to enable the company to proceed by creditor’s bill against Egan and Foster on condition that Hustace should first give adequate security for the payment of the decree in case of failure to obtain satisfaction from Egan and Foster. The respondent did not advise Hustace to transfer his property for the purpose of enabling him to escape liability under the decree to the prejudice of the company. He suggested and perhaps advised that a transfer of the property might or should be made so as to remove a supposed legal obstacle to the bringing of the creditor’s bill against Egan and Foster, which obstacle was discovered in looking up the law preparatory to bringing the Creditor’s bill. The object was to proceed against Egan and Foster and to relieve Hustace only in so far as payment should be obtained from the others, and the transfer by Hustace was to be made, if at all, only in case he gave satisfactory security for the protection of the company. Apparently Hustace, in transferring his property, acted largely on the advice of others.

Proceeding against Hustace afterwards by execution upon the transfer of his property without giving such security was justifiable if the relationship of attorney and client did not exist between the respondent and Hustace.

Whether the course discussed or proposed or advised would, if consumated, have resulted in a fraud upon the court does not appear. The negotiations or propositions had not gone far enough to show what the result might have been in that respect. Apparently the respondent was doing what he believed was right and with no intention of perpetrating a fraud upon the court and with the idea of effecting justice to Hustace without either prejudice to his client, the Kamalo Sugar Company, or fraud upon the court. We may differ from the respondent as to the advisability or wisdom of his conduct in these respects and other respects to which no reference need be made, but cannot hold him quasi-criminally liable therein.

To return to the crucial questions set forth above, was the relation of attorney and client created between the respondent and Hustace by the payment of the retainer ? There is much to indicate that such was not the case but that the respondent was to act thereafter, as he had previously acted, solely as attorney for the Kamalo Sugar Company, and not as attorney for JIustace, and that Hustace paid the retainer simply on behalf of the Kamalo Sugar Company, which was supposed to be willing to proceed by creditor’s bill or other suit as well as by execution against Egan and Foster before proceeding further against Hustace, provided the latter would pay the expenses of such litigation. There is testimony in support of this, not only by the respondent and Dee, who, as already stated, was the representative of the company in its dealings with the respondent, but also by Hustace, the principal witness for the prosecution, although the testimony of the latter as a whole and some of Dee’s tends in the opposite direction, and some of the repondent’s upon this point is not as clear as.it might be. The responden! laso consulted several times with Mr. Robertson who was Hustace’s attorney in the Kamalo suit, although he also had several consultations with Hustace in his own office when Mr. Robertson was not present. 'The respondent also testified that in his discussions with Hustace he cautioned him not to disclose what property he had as he, respondent, might have to proceed against it later on. There is also other evidence tending in the same direction.

On the other hand there is evidence of a more or less forcible character, some of it, unfortunately for the respondent, consisting of statements approved or made, both orally and in writing, by himself, which tends to show that even he considered that he was retained to a certain extent at least to act for Hustace as well as for the Kamalo Sugar Co. For instance, in his written communication of February 24, 1905, to the “Advertiser” he says, “In this distress he (Hustace) came to me. I, representing the Kamalo Sugar Company, was the only person in all the world who could help him. My antagonist came lo me asking for mercy and justice. Fool, that I did not turn a deaf ear; but I was only too willing to come to his aid provided I could do so without prejudicing my client, the Kamalo Sugar Co., the directors of which have approved of all that I have done. All I asked of Hustace was $150 retainer, out of which I would be obliged to advance costs; this he freely paid. A moderate retainer alone would have been $500, and the work I did amounted to more than the $150, which I received.” And in his answer the respondent relies upon and sets forth what he considers a ratification of his acts signed by the directors of the company, in which the latter say, among other things, “We therefore heartily approved of the suggestions made by Mr. Dee, that proceedings should be attempted against Egan and Foster, and it was perfectly agreeable to us that Mr. J. Alfred Magoon should act as attorney for Mr. Hustace with the above end in view, provided Mr. Hustace should see fit to employ him.” This document was apparently prepared in Mr. Magoon’s office and was taken around to the directors for their signatures by Mr. Lightfoot of Mr. Magoon’s office. The retainer was recently returned by the respondent to Mr. Hustace.

The fact that the suits were to be brought in the name of the company does not show that the respondent was not retained by Hustace any more than the fact that the retainer was paid by Hustace would necessarily show that he was retained by Hustace.

If the relation of attorney and client was created between the respondent and Hustace, was it a matter in which the interests of the Kamalo Sugar Company and Ilus+ace were adverse ? The retainer was paid for the institution of suits by the Kamalo .Sugar Company against Egan and Foster for the purpose of relieving Hustace from further payments in so far as payments could be compelled from Egan and Foster. If the bringing of such suits for the purpose of enforcing payments from Egan and Foster, or even for the purpose also of relieving Hustace thereby, had been the sole object of the 'retainer, there would have been no impropriety in accepting it, for to that extent the interests of the Kamalo Sugar Company and Hustace were not adverse. But that was not the sole object. It could not very well have been the sole object in fact, and was not the sole object contemplated as shown by the testimony of all the witnesses. The proposition contained by implication the postponement of further proceedings against Iiustace for a time at least. If the respondent was the attorney of the company alone he could properly have proceeded at any time against Hustace upon instructions to do so from the company, notwithstanding the institution or prosecution of the suits against Egan and Foster. But if he was attorney for Hustace as well under a retainer given by Hustace for the very purpose of relieving him so far as possible from further payments and for proceeding against Egan and Foster solely for that purpose, he could not properly proceed upon instructions from his client the company against his client Hustace until proceedings had first been taken against Egan and Foster. That the interests of the two clients were adverse to a certain extent was very soon shown by the subsequent developments above set forth. The fact, if it was a fact, that the respondent acted in this dual capacity by the consent of both clients would not make it right for him to do so although it would be a mitigating circumstance to be considered in determining the amount of the penalty.

In our opinion the relation of attorney and client was created between the respondent and Hustace in a matter in which a similar relation existed between the respondent and the Kamalo Sugar Company and in which the interests of the two clients, the company and Hustace, were adverse. But such relationship between the respondent and Hustace was of a very loose character. The respondent was regarded by all as primarily at least the attorney for the company. So far as bringing the suits against Egan and Foster was concerned, which was the direct object of the retainer, the interests of the respondent’s two clients, the company and Hustace, were not adverse. So far also as relieving Hustace by compelling payment from Egan and Foster was concerned, which was the indirect object of the retainer, the interests of the two clients were not adverse. The particular in which such interests were adverse was the delay in proceeding further against Hustace — a matter of implication, in respect of which it was not clear at that time that there would be any occasion to 'act in a manner adverse to the interests of one of the clients. The moving canse of Hustace’s paying the retainer was the avoidance of the expense to the company. The mistake consisted in accepting it as a retainer from Hustace instead of having it paid so that it would clearly be a retainer from the company alone. These matters occurred nearly three years ago. The respondent supposed that he was doing only what was proper and with the consent of his client, the company. But he should have known better.

S. M. Ballou, deputy attorney general, for the prosecution. Respondent in person; J. Lightfoot and W. A. Whiting with him.

The respondent is found guilty of professional impropriety and misconduct, but in view of all the circumstances it is deemed sufficient to severely censure him and require him to pay the costs of this proceeding, and it is so ordered.