Opinion
D.D. No. 56
Decided May 27, 1964.
Attorneys at law — Misconduct — Misappropriating money of client — Drawing checks with insufficient funds — Disciplinary action — Acts warranting disbarment.
ON CERTIFIED REPORT by the Board of Commissioners on Grievances and Discipline.
In the late 1950's, Peter Nick and his wife sold a residence in Maple Heights, Ohio, to John Levine and Jack Herman, doing business as Jay Jay Company, taking as part of the purchase price a note and mortgage on the property. The balance due on the note and mortgage in October 1960 was approximately $25,000.
Respondent was retained to dispose of the note and mortgage for the Nicks. The note and mortgage were refinanced with the Metropolitan Savings Association which loaned $23,000 on the property. As an inducement for Jay Jay Company to refinance the 5% mortgage with a 6% mortgage, the Nicks agreed to discount the note approximately 10%. It also was agreed that the Nicks would leave $5,000 in a savings account with the Metropolitan Savings Association until the amount of such loan would be reduced to $15,500, at which time they could withdraw the amount pledged.
On October 31, 1960, respondent, without written authority of either Nick or his wife, gave written instructions to the Metropolitan Savings Association to pay $17,582.19, the balance due the Nicks, "to the order of SIEGEL SIEGEL, as attorneys for PETER NICK and MARY NICK." Upon receipt of the check for such balance on November 16, 1960, respondent deposited it in his personal bank account and used the money for his own purposes.
On December 13, 1960, less than two hours before Nick was scheduled to leave for Greece, respondent delivered to h im his personal uncertified check dated December 13, 1960, and payable to Peter Nick and Mary Nick in the amount of 582.19, which Nick carried to Greece where it was deposited for collection. This check was dishonored because of "insufficient funds."
In April 1961, Nick returned to Cleveland and demanded an accounting from the respondent. Respondent offered Nick a promissory note for $18,300 covering the amount of the dishonored check, plus interest and $200 expense incurred by Nick in protesting the check at Athens, Greece. Nick refused the note which, as drawn, would be due in four months. The following day, the respondent executed another note to the Nicks for $18,300 payable in five days. The note not being paid when due, Nick employed Clarence J. Snyder, an attorney, to collect the money from respondent.
Snyder demanded payment from the respondent on April 28, 1961, and in the course of the next year collected from the respondent for the Nicks the following amounts:
May 19, 1961 $4,000.00 July 17, 1961 4,000.00 August 17, 1961 7,500.00 December 29, 1961 2,000.00 April 2, 1962 855.24
The check dated April 2, 1962, had endorsed upon it by respondent "Payment in full of note dated April 20, 1961," together with a list of the above payments. During the negotiations with Snyder, the respondent agreed to pay Snyder's fees for collection in the amount of $250.
Following some controversy regarding the interest due to the Nicks, on November 7, 1962, respondent sent Snyder a check in the amount of $332.34 covering the interest due. He stopped payment on this check before it was collected. Thereafter, in January 1963, respondent sent his check postdated January 30, 1963, to Snyder payable to Peter Nick (Mrs. Nick having died in November 1962) in the sum of $332.34. When this check was deposited for collection it was dishonored for "insufficient funds." After the complaint was filed in this case, respondent on May 16, 1963, sent directly to Nick, without notice to Snyder, a check for $338.98, which cleared.
On December 7, 1962, respondent issued a check for $250 to Snyder in payment of legal fees but stopped payment thereon before it was collected. On January 28, 1963, respondent gave Snyder a check for $250, which cleared.
The only witnesses heard by the panel were the respondent, Peter Nick and Clarence J. Snyder. However, in addition to numerous stipulations of fact relative to these transactions, the evidence included such instruments as the checks and notes, the closing statement of the Metropolitan Savings Association, and correspondence between respondent and the association and between respondent and one or both of the Nicks.
Respondent admitted depositing the $17,582.19 in h is own bank account and using it. However, at the time of the hearing before the panel of the board of commissioners, he claimed that Nick had agreed to loan him the entire amount for the purpose of attempting to save his investment in a supermarket which respondent, his mother, his sister and others were building in Fremont, Ohio. Nick denied that he had ever promised to lend respondent any money or had even discussed doing so. Snyder testified that at no time did respondent intimate that Nick had promised or agreed to lend him any money. The only evidence indicating the possibility of a loan other than the testimony of the respondent is the endorsement which respondent placed on the final check in the amount of $338.98 which he sent to Nick after the complaint had been filed in this proceeding. Such endorsement, in effect, represented that this check was payment in full of a loan from Nick to the respondent. Nick's subsequent endorsement of the check is explained by his concern over the collection of the money due him.
The panel, which heard the witnesses, was convinced "without question, that the Respondent's statements that Mr. Nick had agreed to lend him any money were untrue." The board concluded from the evidence before it that respondent was guilty of embezzlement of $17,582.19 in violation of Canons 11 and 29 of the Canons of Professional Ethics, and that the respondent lacks understanding of the ethics of the profession and the duties of a lawyer to his clients and to the public. Accordingly, the board recommended that the respondent be permanently disbarred from the practice of law.
The matter is now before this court for consideration of the report of the board and the objections of the respondent.
Mr. Allen N. Corlett, Mr. John D. Cannell and Mr. Wilton Sogg, for relator.
Messrs. Day Berkman, for respondent.
After a careful review of the entire record, including the affidavit of respondent's mother in support of his motion for an order to reopen the hearing, this court finds it impossible to believe the belated claim that the misappropriated funds of respondent's clients were a loan. Even if Nick's testimony denying any discussion of loaning or intention to loan the money to respondent is disregarded, the circumstances regarding the respondent's use of Nick's funds, the correspondence between respondent and Nick, the cancelled checks and other documentary evidence, the failure of respondent to indicate in any way to Snyder that this transaction was a loan, and the fact that there was no claim that there was a loan until after the complaint was filed herein, establish that there was in fact no loan.
In this case, not only has the respondent violated Canon 11 of the Canons of Professional Ethics by misappropriating money of his client, but he also has issued two checks, dishonored by reason of "insufficient funds," apparently contrary to the laws of this state. The totality of his conduct violates Canon 29 of the Canons of Professional Ethics.
Under the circumstances of this case, the recommendation of the Board of Commissioners on Grievances and Discipline that the respondent be permanently disbarred from the practice of law should be approved. Accordingly, the objections to the recommendation of the board are overruled, the report is confirmed and judgment is rendered permanently disbarring the respondent from the practice of law in this state.
Report confirmed and judgment accordingly.
TAFT, C.J., ZIMMERMAN, MATTHIAS, O'NEILL, GRIFFITH, HERBERT and GIBSON, JJ., concur.