Summary
In Stark Cty. Bar Assn. v. Osborne (1982), 1 Ohio St.3d 140, 1 OBR 175, 438 N.E.2d 114, the court held that the respondent used a confidence to his own advantage in violation of DR 4-101(B)(3).
Summary of this case from Findlay/Hancock County Bar Ass'n v. FilkinsOpinion
No. 82-15
Decided August 4, 1982.
Attorneys at law — Misconduct — Indefinite suspension — Acts warranting.
ON CERTIFIED REPORT by the Board of Commissioners on Grievances and Discipline.
The Stark County Bar Association, relator herein, filed a complaint and supplemental complaint with the Board of Commissioners on Grievances and Discipline, charging respondent, Harry K. Osborne, Jr., with various violations of the Code of Professional Responsibility.
A hearing on this matter was held in Canton, Ohio on May 18 and 19, 1981. Respondent was present and represented by counsel. At respondent's request the hearing was declared to be private.
Respondent and relator filed a joint stipulation which, in conjunction with the evidence adduced through several witnesses, reveals the following:
The original complaint, filed September 26, 1980, asserts numerous counts concerning several transactions involving Austin M. Cranston, a client, social friend and confidant of respondent. At various times respondent prepared ten to 15 wills, several deeds, an antenuptial agreement and various other documents for Cranston, as well as handling Cranston's wife's estate. Respondent and Cranston spent a large amount of time together and Cranston frequently called upon respondent for advice and counsel. During the period 1974 to 1978, when the matters giving rise to the instant grievances occurred, Cranston appears to have been suffering from alcoholism, cirrhosis and diabetes. Various witnesses, including Cranston's own doctor, described Cranston as being physically and mentally incompetent to conduct business affairs at this time.
Cranston owned a restaurant and a 23-acre farm residence in the Canton area. He was also an avid collector of paintings by a local artist named Singer. In 1973, Cranston sold his restaurant to H.P. Enterprises (hereinafter "H.P.") for $50,000, with Cranston taking back a mortgage and security agreement for $35,000. By 1975, H.P. was defaulting on its payments and Cranston sought respondent's advice on the matter.
In October of 1975, respondent's girlfriend and future wife, Georgia Litt, negotiated to purchase this restaurant from H.P. The agreement included a provision whereby Cranston would surrender his $35,000 mortgage and security agreement in exchange for $6,000 down and $5,000 deferred. Respondent handled the negotiations for Litt and ultimately cosigned the obligation with Litt. At the time of the purchase Litt worked in a factory and had some prior restaurant experience. After Litt obtained the restaurant the respondent assumed an active role in the ownership and management of H.P. Respondent and Litt were married in May of 1976.
In early 1977, respondent indicated an interest in purchasing Cranston's farm. Respondent suggested a valuation of $65,000 to $70,000 for the farm, while Cranston wanted $80,000.
Later in 1977, Cranston expressed a desire to return to the restaurant business, whereupon respondent and his wife entered into an agreement with Cranston to trade his farm for the restaurant. This transaction was completed in November of 1977, with Cranston reserving a life estate in his farm. The deed also purported to convey all of Cranston's personalty in the farm to the respondent and his wife upon Cranston's death. Respondent prepared all of the documents involved in these transactions, as well as representing himself and his wife. In January of 1978, for no consideration, and without being represented by counsel, Cranston quitclaimed the life estate in the residence to respondent and his wife.
Later in 1978, an attorney, Joseph A. Casale, who was then representing Cranston, phoned respondent concerning many Singer paintings which were missing from the restaurant. Respondent denied knowledge of their whereabouts. Some time later respondent called Casale and informed him that an individual, whose identity he refused to disclose, had approached him and offered to sell him approximately 16 Singer paintings. Respondent stated that he had made a deal with the individual that he, respondent, would not reveal this individual's identity if this individual would surrender the 16 paintings for return to Cranston. Casale became indignant and told respondent he would send Cranston's banker to pick the pictures up. At the time the pictures were picked up, respondent had the banker sign a receipt and release for the paintings. The release expressly absolved the undisclosed person and "his attorney, Harry K. Osborne" from any liability in connection with these pictures. At the hearing respondent refused to identify the person.
As a result of the above transactions the board concluded Cranston sustained losses when he sold his restaurant to Litt, when this restaurant was traded for his farm, and, particularly, when he released his life estate in the farm.
The supplemental complaint, filed April 20, 1981, arises from a series of convoluted transactions involving a 15 1/2 acre plot of land initially owned by Mr. and Mrs. Stephen Myers. By a sales agreement dated May 5, 1972, the Myerses agreed to sell this real estate to Mr. and Mrs. Donald Bush. The agreement provided for $3,500 down, with the Myerses taking a second mortgage for $9,500. The Myerses thought their second mortgage would be second to a mortgage of approximately $30,000.
After entering into the sales agreement, Mr. Myers went to respondent's office prior to the closing to discuss the situation with respondent and inquire about respondent's knowledge of the purchasers. According to the board, respondent felt he represented the purchasers Bush. Respondent did admit Myers could have assumed he, Myers, was being represented by respondent.
The closing took place on May 10, 1972, in respondent's office. Both the deed from the Myerses to the Bushes and the promissory note were prepared by respondent. Thereafter, on August 24, 1972 a mortgage was filed from the Bushes to Minerva National Bank in the amount of $25,000. Respondent, who was an officer, director and former attorney for the Minerva National Bank, prepared this mortgage and also represented the Minerva National Bank.
Mr. Myers called the real estate salesman in November of 1972 after failing to receive his second mortgage. Some weeks later, Myers received the mortgage from the recorder's office and it was revealed that his mortgage had been recorded three minutes after another mortgage to the Minerva National Bank in the amount of $40,000. Consequently, Myers' security was behind $65,000 instead of $25,000 as expected. Respondent had personally filed both of these mortgages.
The Bushes defaulted and the Minerva National Bank, represented by the respondent, proceeded to file foreclosure proceedings. At this point, respondent had perfected a personal judgment lien against this real estate for an obligation owed to him by the Bushes. This lien was in the amount of $6,375. In addition, a real estate corporation personally used by the respondent for real estate transactions, Hosko, Inc., held a mortgage in excess of $25,000 on this same piece of property. In this foreclosure action the respondent represented the Minerva National Bank, himself and Hosko, Inc. At the ensuing sheriff's sale, the respondent successfully bid on his own behalf against a representative of the Minerva National Bank. The bank was made whole by the foreclosure sale while the Myerses received nothing. Despite the adverse and conflicting interests of these parties respondent represented the Minerva National Bank, the Myerses, the Bushes, himself and Hosko, Inc., at one time or another throughout this event.
Based upon the testimony, the exhibits and stipulations, the board concluded:
"* * * respondent has violated Disciplinary Rules DR 5-101(A) and DR 5-104(A) by entering into business relationships with a client when there are differing interests and when the exercise of his professional judgment would be affected by his own interests; DR 4-101(B)(3) by using a confidence or secret of his client for the advantage of himself or a third person; DR 5-105(A) and (B) by representing multiple clients when the exercise of his independent professional judgment on behalf of a client was likely to be adversely affected by his representation of another client; and, of DR 1-102(A)(5) and (6) by conduct prejudicial to the administration of justice, which adversely reflects on his fitness to practice law."
It was the recommendation of the board of commissioners that respondent, Harry K. Osborne, Jr., be indefinitely suspended from the practice of law.
Mr. Charles W. Kettlewell, Mr. Eugene Andrews and Mr. Victor R. Marsh, Jr., for relator.
Mr. Harry W. Schmuck, for respondent.
Upon examination of the record and the findings of the board of commissioners, we conclude there is ample evidence to justify the board's findings that respondent violated DR 1-102(A)(5) and (6), and DR 4-101(B)(3), DR 5-101(A), DR 5-104(A) and DR 5-105(A) and (B) of the Code of Professional Responsibility.
Accordingly, respondent is hereby indefinitely suspended from the practice of law.
Judgment accordingly.
CELEBREZZE, C.J., W. BROWN, SWEENEY, LOCHER, HOLMES, C. BROWN and KRUPANSKY, JJ., concur.