*1 (No. 74615.
In re ROSIN, JOSEPH Attorney, Respondent.
Opinion July 22, 1993. Rehearing filed denied October 1993. McMORROW, J., part. no took FREEMAN, J., concurring.
HEIPLE, J., specially joined MILLER, C.J., dissenting. *2 for Siner, Chicago, P. Larkin and Jonathan
Jerome and Dis- Registration of the Attorney the Administrator Commission. ciplinary Block, of Hoover, Chicago, J. of Jenner &
Russell se. pro Rosin, and A. Joseph respondent, of the opinion BILANDIC delivered JUSTICE court: action against respondent, Joseph
This disciplinary that he Rosin, began charging with two-count complaint funds, and and that he had converted client commingled interest earned on also and converted the commingled that-respondent those funds. The Board found Hearing funds; however, had but not converted client Commingled make and conclusions regarding it did not any findings Hearing interest earned on those funds. The Board recom- censure. The Board that respondent mended Review found funds, and that he also had con- commingled had and the interest earned on those commingled verted censure, funds. The Review Board recommended condi- $7,374.83 restitution of to a tioned respondent’s paying former client for interest earned on her funds. re-
Neither filed to the Review Board party exceptions with The Administrator then filed a motion this port. its recom- court to and confirm the and approve report motion, argued mendation. In that the Administrator each and conclusion of the Review Board was finding legal Moreover, the facts and relevant case law. supported by the Administrator that the stated recommendation of cen- sure was consistent with of this prior precedent court.
This court denied Administrator’s motion to ap and confirm the prove findings Board, and ordered that briefs be filed and oral arguments held pursu ant to Rule 753(e)(1)(134 Ill. 2d R. 753(e)(l)). facts reveal that stipulated respondent was admit 1950,
ted to the Illinois bar in and in a engaged general practice law with a concentration in the area plaintiff personal and worker’s injury claims.1 compensation 1, 1981,
Between and December October re- firm spondent maintained business account at Bank Leumi in Chicago. completion of law cases Upon (by settle- ment or judgment), the satisfaction or was made payment with an insurance draft to the client payable jointly These respondent. drafts were drawn on out-of- usually First, State banks. fees and costs were deducted. attorney Next, the client would endorse the insurance draft and si- receive a settlement check for the net multaneously pro- ceeds due to the client drawn on business firm account at Bank Leumi. the client would Usually, *3 present check to Bank Leumi as soon as it respondent’s was received.
After the client, insurance draft was endorsed would also endorse it and it respondent deposit into firm business account at Bank Leumi during regular Often, course of clients their business. cashed checks be- fore the insurance draft. respondent deposited
In the normal course of
the insurance
banking practice,
draft would
five
company
require
business
approximately
to clear before it was credited to
busi-
days
respondent’s
Nevertheless,
ness firm account.
client settlement
every
1987,
suspended respondent
practice
1In
this
court
from
years
law for two
for his failure to limit business relations with a cli
alleged
ent
violations
misconduct at issue.
and other
unrelated
All
for
busi
payment.
when presented
check was honored
through
of the firm were conducted
ness transactions
cli
not maintain a separate
firm
did
Respondent
account.
its
1986,
this court
issued
ent
account until
when
trust
of In re Elias
On the bank February pay on funds into the account. deposited complaint clients that their charged never informed respondent interest, re- funds had earned and that the interest was 3, tained in the firm account. In particular, January a settlement check in the amount respondent issued of $162,000 client, Bell, to a as her Penelope portion in a Bell not proceeds wrongful death action. did deposit check into respondent’s the bank until 1983. Dur- July check, the seven months that Bell settlement ing held the $4,076.73 on those paid bank interest funds. made no ef-
The Review Board noted that respondent fort Bell that on the interest was earned settle- notify Board, ment According check. the Review failure to reimburse Bell for the interest which accrued during past the seven-month over period, compounded nine resulted in a total to Bell in years, obligation $7,374.83. amount of with the condi- Respondent complied Board, tion recommended and issued a $7,374.83 check to Bell In ad- for the earned interest. *4 206
dition, $5,770.74 to has respondent paid Lawyers Trust Fund for the interest attributable to the settlement checks.
Mindful of the fact that misconduct at issue alleged to the Elias occurred we now prior ruling, address (1) whether: the overdraft between protection agreement and Bank Leumi from respondent precluded respondent funds; client converting (2) client funds were commingled account; in (3) the firm and respondent commingled converted the interest earned on client funds. “
Conversion has been defined this court as un ‘any act, authorized which a man deprives property per ” (In re Thebus or for manently (1985), an indefinite time.’ Union Stock & Transit Yard 255, 259, 108 Ill. 2d quoting Co. v. Son & Zimmerman Co. Mallory, (1895), 157 Ill. 554, The essence of an action for conversion is the from the entitled wrongful deprivation property person v. Kazak Glaser to its possession. (1988), Ill. 3d App. Service, ex rel. v. Lincoln People Carey Towing 108, 115; Sales, Inc. Hobson’s Inc. Truck 61; 54 Ill. 3d (1977), App. v. Carroll Inc. Trucking, 2 Ill. 3d 978. App.
The Board found that because respondent $600,000 bank, maintained a line of credit with the funds in his law firm account were and no con- protected version occurred. We agree. law commercial as statutory governing paper, ap issue, con to the facts leads unmistakable
plied (Ill. clusion did not convert client funds. 3—101 et 1989, 26, Rev. Stat. ch. The settlement par. seq.) instrument, check is a negotiable issued by respondent it contained an order a fixed amount of pay money (Ill. demand to the client at the time it was issued. Rev. Stat. ch. As set forth sec 104(lXa).) par. 3— Code, a negotia tion of the Uniform Commercial 202(1) *5 is negotiated to by delivery ble instrument order payable 1989, 26, ch. Stat. 3— (Ill. par. and indorsement. Rev. check, settlement the maker of the 202(1).) respond As at the time that he it. signed ent’s was established liability 1989, 26, 401(1).) ch. When (Ill. respond Rev. Stat. par. 3— client, ent check to the he trans signed and delivered the the ferred to the client all had to funds rights which were the matter of check. Rev. Stat. subject (Ill. 1989, 26, In the event the check was 201(1).) ch. par. 3— of dishonored the client’s cause action upon presentment, as maker of issue. against respondent accrued date upon (I 1989, 26, Rev. Stat. ch. par. 122(l)(b).)Appli ll. cation of the sections of the foregoing Uniform Commer cial Code establishes that when clearly respondent issued check, settlement he was legally bound transfer pos session of firm specified client, funds account to the who, turn, had an right enforceable those funds. arguendo, that in the firm ac
Assuming, balance count was less than the stated amount of the check when the client it for section of presented payment, 4—401 Uniform Commercial Code that a bank explicitly provides item may charge against customer’s account which any is otherwise from that account even properly payable though charge (Ill. creates an overdraft. Rev. Stat. 1989, 26, ch. 401(1).)Moreover, section 4—401 was par. 4— subsequently amended to that an item is provide properly customer, if it is payable authorized and is in ac cordance with between the customer and any agreement bank. Ill. Rev. Stat. 401(a). ch. par. 4— testimony the bank indicated that re- manager $600,000 was a spondent well-regarded customer with a line of credit, and had arranged guarantee payment all checks written his account. It is against undisputed that no settlement check the bank, was ever dishonored by nor had client voiced a any complaint, experienced delay, or incurred a financial loss as a result of respondent’s stated, As arrangement. wrongful deprivation
banking perma from the entitled to property person possession of a or for an indefinite time is an essential element nently re Thebus (In cause of action conversion.
Ill. from 2d Such wrongful deprivation property Indeed, in the client never occurred in this case. the event dishonored when it was that the insurance draft had been he alone would have shouldered presented by respondent, the client had received a check already the risk because to be collectible. guaranteed
II cli commingled next consider whether We *6 102(a) (107 Rule ent funds in violation Disciplinary 9— rule in relevant 102(a)). part: Ill. 2d R. That provides 9— firm, lawyer “All of clients to a or law includ paid funds belonging part presently in to a client and in ing part funds firm, deposited or law shall be potentially lawyer or trust accounts in a separate in one or more identifiable loan maintained in the savings bank or and association office is situated.” 107 Ill. 2d R. 9— State in which law 102(a). an be analogy
The Administrator draw attempts above, and the as outlined respondent’s practice tween Elias, (In Elias case. re sanctioned misconduct in the we consider Elias distin However, factually Ill. 2d at Elias, a check from case. In when guishable present client’s injury in settlement of a personal was received main of six bank accounts claim, it into one deposited turn, issued In respondent. tained representing check to the client current or post-dated However, check. these settlement client’s share The check presentment. not guaranteed upon checks were six named ac drawn on one of the the client was given which the account into counts, on the necessarily but not occa eight On at least deposited. draft had been insurance sions, the issued check was dishonored due to insufficient funds when presented Most of the checks payment. were paid upon representment, although two checks were short, dishonored second In upon presentment. Elias and knowingly under false pretenses obtained the short- term use large sums of money belonging to clients to finance his and personal business activities.
Admittedly, respondent have in may been vi- technically olation of Rule Disciplinary 102(a) because he did not have a identifiable trust account. separate, However, the misconduct Elias decision. alleged at issue predated After the Elias holding expressly clarified that it is man- for an datory attorney establish and maintain a sepa- rate, identifiable trust account into which cli- all any ent funds are to be deposited regardless of the manner in which an attorney chooses to handle final disbursement of the funds, respondent voluntarily modified his banking practices and established a trust account. Most Elias, importantly, contrast we note the ab- sence of any client complaints that was lost or money clients experienced delay obtaining money as a result of respondent’s practice. stated, Simply the settlement prac- tice employed by respondent accomplished the same result as if a separate client trust account had been maintained.
Ill Finally, we consider whether respondent commingled and converted the interest earned on client funds. Penel- *7 Bell ope $162,000 held the settlement check issued re- spondent for a period seven months. The Board recom- mended that respondent $7,374.83 Bell pay as restitution for the initial interest payment and accrued in- subsequent terest, which respondent has voluntarily paid. find, however,
We that it was unnecessary respond- . ent to have reimbursed Bell for the interest Bell earnings. was not entitled to that interest because she could have re- from moment that she first the check
deposited stated, check was ceived it. As settlement from guaranteed collectible and was payment immediately it was issued and for thereafter. The every day day $162,000 set- that Bell would delay negotiating fact check for seven months after the insurance tlement drafts had been collected was an which unpredictable occurrence neither intended nor Respondent controlled. should not incur the interest penalty having pay these funds because a client chose not to cash her simply months. check for seven reasons,
For contained foregoing charges counts I and II are dismissed.
Dismissed. no in the consider- part JUSTICE McMORROW took ation or decision of this case. HEIPLE, concurring:
JUSTICE specially in this of the court join fully thoughtful opinion Rosin was will- case. lawyer discipline Although attorney ask that the of censure and did not ing accept finding in their charges majority quite ap- be dropped entirety, rules in this fashion sua sponte and tailors propriately justice result as requires. is
I write to the true issue on At issue clarify appeal. not client trust fund was be required whether fore In re Elias suggested 114 Ill. 2d as Ill. 2d at the dis (156 213-14). As dissenting justice notes, Rule has such an senting justice 102(a) required since and this court’s of the obli recognition account to maintain the of client funds separate identity gation 1932. as as expressed early Instead, the more issue of the this case subtle presents client’s interest in a settlement draft after extent of a firm knew lawyer it for a law check which the exchanged *8 All parties agree would honored upon presentment. be cash, a draft or a that, had client received bank that draft, the settlement order in for money exchange would have retained no interest whatsoever in the settle- ment that exchanging draft. Rosin made a fair inference check that he knew would be honored likewise rendered his client with no interest in the settlement draft. of Elias is not the clarification of
Thus, significance the need for a client trust account. It is the clari fication that such a check does not the client of all divest his interest in the settlement draft. Once this clarification court, was down this Rosin attorney voluntarily handed ceased his method and the trust fund payment adopted ap Elias was He did this that proach. the fact despite argua *9 dealing. concurrence. FREEMAN in this joins special
JUSTICE MILLER, dissenting: JUSTICE CHIEF Rosin, in a two- charged was respondent, Joseph The client converting and commingling count with complaint interest converting and and (count I) commingling funds funds The dismisses (count II). majority earned on client counts, the evidence finding both charges against to sustain the insufficient wrongdoing allegations the majority, him. Unlike the believe case, the record in this were established by the complaint I dissent. accordingly re- evidence, largely stipulated, The which was parties’ would respondent deposit proceeds veals ac- in his firm’s business general or settlements judgments on that ac- to his clients checks drawn count and issue From time to share of the award. count for client’s fall below the in the firm’s account would time the balance ever dishon- to clients. No check was amount then payable extended bank ored, however, for a line of credit than sufficient cover more always the respondent occasions, clients in the account. On other shortfall any had re- they the checks immediately negotiate would not the law as a consequence, the respondent; ceived from interest attributable credited with firm’s account would be the ba- formed These arrangements to those client funds. against respondent. sis for the filed charges The concludes that the should not majority be found client funds with his own guilty commingling here charged funds because conduct this preceded court’s in In Elias 2d decision re Ill. 321. The notes that the majority respondent established separate client trust account after Elias clarified that it “expressly is for an mandatory attorney establish and maintain” such an account in regardless of manner which the at torney (156 distributes funds. Ill. 2d at further majority asserts that the respondent’s procedures functioned much same as a trust ac way separate count. to the
Contrary view, the rule com- majority’s against client funds mingling was not need of clarification prior to this court’s decision in Elias. Rule 9— Disciplinary 102(a) the Code of Professional Responsibility provided, throughout relevant period here: “All paid firm, funds of clients to a lawyer or law includ ing belonging funds in part to a client and in part presently or potentially lawyer firm, or law shall be deposited in one or more identifiable trust accounts in a *10 savings bank or and loan association maintained in the State in which the law office is situated.” 107 Ill. 2d R. 9— 102(a).
Rule
102(a)
took effect on
1980. Even before
July
9—
time,
however, this court had
the
recognized
obliga
tion of
to maintain the
attorneys
of client
identity
(See,
funds.
e.g., People ex rel.
Bar Association v.
Chicago
Hachtman
326;
350 Ill.
In
(1932),
(1968),
re Bloom
39 Ill.
Thus,
2d
in
In re Clayter (1980),
78 Ill. 2d
matter
disciplinary
decided
prior
effective date of
the Code of Professional
this court took the
Responsibility,
to admonish the
“opportunity
bar of this State that it is
absolutely
for an
impermissible
attorney
commingle his
funds with those of his client or
with
holds as a
money
Clayter,
This court’s 9—Rule at that time were expressed which principles, 102(a): mandatory, is admit provision
“It that this is manifest Repeatedly, for reason. this court ting exceptions any of no foregoing unambig the embodies an provision has held that and attorney that an must establish requirement uous identifiable trust account into which separate, maintain a clients belonging, part, in whole or in any and all funds in of the manner which an deposited regardless are to be of these to handle final disbursement attorney chooses 261, 268; In re En (1986), 112 Ill. 2d funds. In re Cutrone 410, 417-18; (1983), 98 In re Cohen strom 104 Ill. 2d Elias, 133, 139.” Ill. at 332. Ill. 2d 2d depositing pro- here practice firm’s general settlements ceeds of and judgments clients their shares account and paying business repre- on that account clearly with checks drawn awards cash, not receive the bank sented Clients did commingling. concurring drafts, jus- or orders mentioned money both tice, containing checks on an account but drawn firm’s own operat- and the law of client awards proceeds challenge makes no Notably, funds. ing Review Board’s determinations Board’s and Hearing 102(a). funds violated Rule handling that his of client 9— the re- case, with together the clear evidence in this Given that he was violation acknowledgment spondent’s Board’s Hearing uphold Rule would 102(a), was the respondent Board’s determinations com- in count I of the as alleged guilty commingling, plaint. the respondent is the whether question
Less clear during periods of client funds of the conversion guilty fell below the firm’s account when balance cor- The respondent to clients. belonging amount then dishonored, ever that no client’s check was *11 the of substantial line credit extended to the respondent was more than bank sufficient cover over- any the during drafts that occurred time The ma- question. with the of jority agrees that the existence the line of the credit conversion of effectively prevented any client funds during period.
Conversion is that the upon established bal showing ance in an account in which client funds are held being falls (In re below amount then to clients. belonging Cheronis In 2d Young re 527, 534-35; 114 Ill. (1986), 111 Ill. 2d 102-03.) We have not con previously sidered, however, credit, the effect of a line of or other form of overdraft protection, of operation that gen eral rule.
In light respondent’s practice of immediately re client mitting the client’s of a share set judgment or tlement, the balance the respondent’s business account might have innocently fallen below the total amount be to clients if a longing happened his check present for payment before the respondent’s bank had collected proceeds particular In instances, award. certain however, it appears that the account balance fell below the level even after necessary proceeds an award had been collected bank. respondent’s Applying that conversion principle occurs once balance in the ac count falls below amount of client funds held in being account, one must conclude that conversion occurred at least on those occasions. the line of Although credit ex tended to the respondent by his bank would pro have tected clients against loss when the any com mingled overdrawn, account was the line of credit would not have prevented conversion from occurring the first instance. course, credit, Of termination of the line reason, whatever would have placed those client funds in See In Clayter re jeopardy. (1980), 78 Ill. 2d 281. *12 the with charged respondent II of complaint
Count the of earned on cli- and conversion interest commingling the The concludes that majority in his possession. ent funds charges. Addressing is not of these respondent guilty the Bell, waited client who seven Penelope case of only $162,000 respond- a check issued deposit months to Bell not entitled ent, believes that was majority she could have imme- that sum interest earned on because The her chose not to do so. check diately negotiated yet no role de- that had respondent majority emphasizes Bell to the check. negotiate decided termining finally when found the respondent The Board properly of interest and conversion commingling guilty in the firm’s general on client funds law deposited earned It no to as the say, majority account. is answer business whatever he does, right might a client must forfeit that because simply earned on his funds have interest The issued to him. a check immediately negotiate fails funds not have client with commingled should respondent certainly he could own funds in first place, on client funds no to the interest earned gain right greater if he initially placed than had through arrangement that do not in a trust account. separate Attorneys those funds inter to retain for their own use somehow entitled become them commingling funds merely by est earned In funds, here. this respondent own as the did with their on a of interest earned State, beneficiary the appropriate or the Law client himself client’s funds is the individual the in Illinois, of of as administrator yers Trust Fund (See program. accounts (IOLTA) terest on trust lawyers’ 1.15(d), (e).) The 134 Ill. 2d Rules 102(d); Ill. 2d R. firm retained the that the respondent’s record here shows in the deposit held on earned on client funds interest reasons, allega For these I believe firm’s account. established II of the were complaint tions count this case. evidence
The respondent’s
offense was his failure to
primary
maintain a
client trust account. Misconduct
this
(In
creates
substantial risk of harm to clients.
type
re
Clayter
78 Ill. 2d
281.)
rules
applicable
are clear and unambiguous, designed to forestall the po
problems
tential
arise
may
from those activities.
Moreover, it
may be noted that
previ
from the
ously suspended
practice
law for a
period
two
for misconduct
years,
unrelated
the present
(See In re Rosin
charges.
(1987), 118 Ill. 2d
In the
case,
present
however, the
actions
apparently
were motivated
more
by nothing
than what might be
re
termed
(In Walner
“misguided sense of
efficiency”
*13
Ill. 2d
525). Because of the
of
line
credit
bank,
extended to the
respondent by
none of the re
spondent’s
loss,
clients ever incurred any
or
temporary
permanent, as a consequence of the respondent’s com
mingling and
addition,
conversion
client funds. In
respondent
$7,374.83
has made
restitution
to client Bell
for the
amount
interest earned
respondent
her award; separately, the
has
paid .the Law
yers Trust Fund of Illinois
sum $5,770.74,
which
represents interest earned on other client funds held by
Like the
respondent.
Hearing
and the
Board
Board,
believe that censure is the appropriate sanction
here.
not on
As the
notes
bly
point.
(
Notes
notes rectly