Opinion
No. 21779.
December 8, 1952.
Reed O. Gentry, Kansas City, for Advisory Committee of Missouri Bar, informants.
Paul Van Osdol, Jr., Kansas City, for respondent.
This disbarment proceeding against Thomas Paul Downs, a member of the Bar of this state, hereinafter referred to as respondent, was instituted by the Advisory Committee of The Missouri Bar. The information was filed in this court on January 30, 1952, and on March 1, 1952, respondent filed an answer in the nature of a general denial. On March 11, 1952, the Honorable Frank P. Barker, an attorney in Kansas City, Missouri, was appointed special commissioner to hear the evidence and report his findings and recommendations to this court. Thereafter, respondent requested this court to appoint an attorney to represent him and that was done. Several witnesses, including respondent, testified at the hearing before the special commissioner; and by stipulation the transcript of the testimony given before the Advisory Committee prior to the filing of the information was admitted in evidence. The commissioner filed his report, wherein the charges contained in the information are set out, and the facts and the law applicable thereto fully analyzed and discussed. He recommended that respondent be disbarred. Respondent filed exceptions to that report. The matter was briefed and we heard oral argument.
The information charges that on January 12, 1949, respondent was appointed executor of the estate of Harry G. McKowen, deceased; that respondent took charge of the assets of said estate, and for more than two years and in violation of section 62.110 RSMo 1949, V.A.M.S., he failed to file an inventory and failed to file any settlements, although more than $30,000 had been collected by and paid to him as such executor; that of said sum, he retained and converted to his own use approximately $20,000; that he failed to pay Federal income taxes owed by the estate for the years 1948, 1949, and 1950, as a result of which the estate was compelled to pay interest on said taxes in the sum of $400; that the probate court, on April 27, 1951, revoked the letters testamentary theretofore issued to respondent and ordered him to account to his successor; that thereafter the respondent, or someone in his behalf, delivered to his successor money and certain securities which were accepted by the latter as all the money and property the estate was entitled to receive from respondent; that respondent has violated Rules 4.11 and 4.47 of the Supreme Court of Missouri, in that money or other trust property coming into his possession was not reported and accounted for promptly and was commingled with his own funds or used by him, and that he has been guilty of such misconduct that he should no longer be entrusted with the duties and responsibilities belonging to the office of an attorney. The informants pray that respondent be disbarred.
The evidence shows that respondent, at the time of the hearing before the special commissioner, was 41 years of age and married; that he had four children and was expecting another; that he is a college graduate; that he was graduated from law school in 1938, and admitted to practice in Kansas the same year; that during the following year he was an attorney for the United States Department of Agriculture in Kansas City, Kansas; that he was drafted into the army but was released from active duty after serving a few months and was later given an honorable discharge; that he worked as an adjuster for an insurance company for about two years; that during the latter part of 1943 and early part of 1944, he worked for the law firm of Stinson, Mag and Thompson in Kansas City, Missouri; and that from 1944 to April, 1950, he shared offices with several lawyers in Kansas City, Missouri, including James P. Aylward, Frank W. Aylward, and George V. Aylward. In 1945, respondent was admitted to the Bar of this state by reciprocity. He testified that after he left the Aylward office he had a small office in a suite of rooms occupied by Alfred Osborne, who at that time was a practicing lawyer in Kansas City, Missouri; that he occupied this office from April, 1950 to July, 1951; and that since July, 1951, he had been practicing alone with offices in the Temple Building, Kansas City, Missouri.
At the hearing before the members of the Advisory Committee, informants herein, and at the hearing before the special commissioner, respondent testified at length concerning his previous relations with Alfred Osborne and Ivory Johnson, alias "Seldom Seen." We do not deem it necessary to summarize this testimony, for it is not material to any of the questions presented for our determination. In fact, there is nothing in the record to show that respondent had any connection with cases tried by Osborne or that he was guilty of unprofessional conduct in representing Johnson on several occasions before the latter was charged with the murder of Matt Jones. As indicated above, the charges preferred against respondent are based upon his alleged misconduct as executor of the estate of Harry G. McKowen, deceased.
It appears that Harry G. McKowen, a resident of Kansas City, Missouri, died on January 7, 1949, leaving a will which named the respondent as executor, without bond. By this will the testator made three specific bequests of one dollar each, and gave the remainder of his property to his sister, Mildred McKowen Rhoades. Respondent was a friend of the McKowen family and he prepared the will. Upon respondent's application, and on January 12, 1949, he was appointed executor, without bond, by the probate court of Jackson County, at Kansas City. The estate consisted of certain personal effects, a bank balance of $629.49, an automobile, and claims against Midland Oil and Fuel Company of Tulsa, Oklahoma, for commissions upon contracts for the sale of fuel, oil, and petroleum products procured for said company by Harry G. McKowen. The evidence shows that respondent received from Midland Oil and Fuel Company six checks payable to him as executor. The dates and amounts of these checks are as follows:
Date Amount ---- ------
January 11, 1949 $ 2,000.00 March 26, 1949 5,000.00 August 9, 1949 5,870.24 March 9, 1950 10,000.00 October 10, 1950 5,000.00 December 7, 1950 3,000.00 ---------- Total .... $30,870.24
Respondent deposited the six checks in his executor's account in the City National Bank and Trust Company, Kansas City, Missouri. During the period between February 24, 1949, and May 16, 1951, he made withdrawals from his executor's account by checks payable to cash — about 35 in number and aggregating about $22,593.56 — and deposited these checks in his personal account in the same bank. Respondent admitted that he used about $5,000 of this amount for family living expenses; that he used about $8,000 in making "extensive" improvements on his residence, and approximately $2,000 for "interior furnishings," — "it was over quite some period of time, months"; that he invested $2,500 in a business, the nature of which he did not disclose; that he did not tell Mrs. Rhoades, the principal beneficiary under the will, that he was using the funds of the estate for his own purposes; and continued: "Q. Did you tell her you were drawing checks out of the fund you had received from the Midland Oil Company, payable to cash? A. No, sir, nothing was ever said, and nothing was ever asked. There was never any discussion about anything like it. Q. Did she ever discuss with you what the estate amounted to? A. Yes, sir, I told them. I took an itemized statement by the year out to Mildred's house and showed them to her and her husband, showing the proceeds for the oil sales by date. The entire breakdown of the profit and the distribution of it between Midland and McKowen."
As stated, respondent was appointed executor on January 12, 1949. Some time thereafter and without obtaining an order of court, he paid debts of the estate aggregating $3,640.45. After the death of her brother, Mrs. Rhoades took possession of his automobile. In February, 1950, respondent filed an application for an order authorizing distribution of the automobile as property to which Mrs. Rhoades was entitled under the provisions of the will and the probate court made such an order. When Mrs. Rhoades made demands for money in 1950, respondent distributed to her the sum of $2,000 on one occasion and the sum of $5,000 on another occasion, which distributions were made without authority, approval or order of the probate court.
On April 11, 1951, Mrs. Rhoades filed an application for an order revoking the letters testamentary issued to respondent, alleging therein that respondent had failed to file an inventory of the assets of said estate and had failed to file any semiannual or annual settlements, contrary to and in violation of sections 462.110 and 465.010 RSMo 1949, V.A.M.S., although more than two years had elapsed since the issuance of such letters. The hearing of this application was set for April 26, 1951, and respondent was duly notified. The records of the probate court showed that respondent had not filed an inventory or any settlements. On April 27, 1951, the court entered an order revoking respondent's letters, which order directed respondent forthwith to pay and deliver all money and property belonging to said estate to his successor and to file, within ten days, a complete settlement of his accounts as executor. On the same day, April 27, 1951, the court appointed Sam D. Parker administrator de bonis non with will annexed of said estate. Mr. Parker was Mrs. Rhoades' attorney. He testified that when he was employed by Mrs. Rhoades, about April 1, 1951, she told him "that she and her husband had attempted to get Mr. Downs to take some action in regard to closing the estate or at least letting them know what was going on, that they were not successful * * *."
Respondent did not comply with the order of April 27, 1951, and on May 8, 1951, Parker, as administrator, filed a motion alleging that respondent had not made a settlement of his administration of said estate; that monies and assets of the estate in the amount of $30,870.24 had come into the hands of respondent and remained unaccounted for; and praying that the court ascertain the amount of money in the hands of respondent and belonging to the estate and render judgment against respondent for the amount so ascertained. The court issued a citation returnable on May 21, 1951, and respondent acknowledged service on May 8, 1951.
On May 17, 1951, respondent filed his first and only settlement showing a cash balance of $20,859.28, but he did not pay this amount to his successor as appears below. On the same day the court entered an order approving the disbursements made by respondent in the payment of debts of the estate aggregating $3,640.45. Parker filed exceptions to respondent's settlement, alleging that he had failed to file tax returns for the estate and to pay the taxes due from the estate. On July 18, 1951, Parker filed an inventory and appraisal showing certain personal property appraised at $2,574, and claims against Midland Oil and Fuel Company of "unknown" value. Thereafter, respondent arranged to make a final settlement of his accounts as executor, the details of which appear below.
On August 4, 1951, Parker filed a receipt which reads as follows: "Now on this day comes Sam D. Parker, Administrator de bonis non with Will Annexed of the estate of Harry G. McKowen, deceased, and states to the court that he has been authorized by Mildred McKowen Rhoades, the sole beneficiary of said estate (except for 3 specific bequests of $1 each), to acknowledge receipt of all money and property to which the estate is entitled from the former executor of said estate, Thomas Paul Downs." On the same day Parker withdrew the motion to compel an accounting by respondent as former executor. Parker filed his first settlement on November 28, 1951, and his second settlement on February 21, 1952. It appears from his first settlement and other evidence in the record that on July 30, 1951, he received from respondent the following:
(a) Cash $ 6,454.60
(b) Secured note dated Jan. 20, 1945, 10,680.92
(c) Secured note dated June 1, 1951, 3,723.76 ---------- $20,859.28
As to Item (a), respondent's testimony tends to show that $5,000 of this item was money which he had withdrawn from his executor's account and deposited in his personal account. Other testimony indicates that the balance of the cash item came from the sale of a note furnished by an acquaintance. Item (b) is a note secured by a second deed of trust on hotel property in Kansas City, Missouri, which was furnished by the same acquaintance. Respondent gave said acquaintance a note for $12,000 secured by a second deed of trust on his residence. The first deed of trust on respondent's residence, securing a note for $6,000, was held by an insurance company. Item (c) is a note signed by respondent and secured by a third deed of trust on his residence. The notes secured by the three deeds of trust on respondent's residence totalled $21,726.76. Respondent estimated the value of this property to be $22,500. Parker's settlements showed that the monthly installments on Item (b) were being made currently, and that on February 18, 1952, he received $1,312.50 from respondent on Item (c).
The evidence showed that respondent did not file tax returns covering income received by decedent in 1948, and that he did not file returns for the estate in 1949 and 1950. Later the returns were filed by Parker and the taxes, and $484.26 interest, were paid by Parker. Respondent reimbursed the estate for this interest on January 8, 1952, the day before he appeared on the hearing conducted by the Advisory Committee.
Respondent testified that prior to his appointment as executor of the McKowen estate he had never acted as an executor, had never studied probate law, and had never handled any matter in the probate court; that he had heard about semi-annual and annual settlements and knew "that settlement should be made" but "just procrastinated on the thing"; that when he used the funds of the estate for his own purposes he thought he had the right to do so; that he relied upon Limbaugh's Missouri Practice, Vol. 2, secs. 861 and 862, p. 310; and continued: "I looked it up in Limbaugh. * * * That was my understanding, that the court could require me to pay eight percent interest * * *. I thought I was right, that I was not doing anything illegal. There was no intention on my part to defraud the estate. * * * I knew the estate would get the money. * * * I knew that I had to account for it. * * * Q. You know now definitely that there is no authorization in Limbaugh or anything else? A. I most certainly do." Respondent further testified that when he began to use the funds of the estate, he expected to receive sufficient income from his law practice to repay the estate, and at all times intended to do so; that if he "didn't make an outright serious mistake," he "certainly did a most foolish thing"; that he "shouldn't have fooled around or taken any money out of there"; and that "it was not the proper thing to do."
Six well-known and highly respected members of the Bar testified in substance that so far as they had been able to determine in their association with respondent, he was honest and of good character; and that prior to the publicity given to the matter at hand his reputation was good. So much for the facts.
Rule 4 of the Supreme Court sets forth certain basic principles governing the conduct of members of the Bar, but the particular matters therein mentioned are not all-inclusive. In the preamble to the rule it is stated that our system for dispensing justice cannot be developed to a high point of efficiency and so maintained that the public will have absolute confidence in the integrity and impartiality of its administration "unless the motives and conduct of the members of the legal profession are such as to merit the approval of all just men." Rule 4.11 declares that "trust property coming into the possession of the lawyer should be reported and accounted for promptly, and should not under any circumstances be commingled with his own or be used by him." Rule 4.47 declares, in part, that a lawyer shall not willfully commit any act against the interest of the public; nor violate his duty to the courts or his clients; nor be guilty of any misconduct whereby, for the protection of the public and those charged with the administration of justice, he should no longer be entrusted with the duties and responsibilities belonging to the office of an attorney. Respondent violated both of these rules.
The undisputed evidence shows that more than $30,000 was collected by and paid to respondent as executor of the McKowen estate; that he did not promptly report and account for the same and commingled more than $20,000 thereof with his own funds; and that he appropriated to his own use approximately $20,000 of the funds of the estate. The Supreme Court has uniformly held that such conduct justifies disbarment. In re Conner, 357 Mo. 270, 285, 207 S.W.2d 492, 499, and cases cited.
Respondent concedes in his brief that his conduct as executor of the McKowen estate constitutes grounds for disbarment, but insists that his "personal character and his record of good professional conduct (other than that single course of misconduct with which he is here charged), his frank and full disclosure of all the facts connected with this proceeding, the fact that restitution has been made, his present realization of the seriousness of his misconduct, and the necessity of his providing adequately for a large family and discharging other substantial financial obligations, are important mitigating circumstances indicating that a suspension, reprimand, or other sanction, rather than disbarment, would be adequate to protect the courts, the public, and the profession." In this connection, respondent states that "total disbarment has heretofore been ordered only in the most aggravated cases, in which there has been a continuing course or repeated acts of misconduct, or in cases in which the accused attorney was guilty of additional unprofessional acts of defiance of authority after institution of disciplinary proceedings against him, and mitigating circumstances were not present," citing In re Conner, supra; In re German, 348 Mo. 859, 156 S.W.2d 678; In re Block, Mo.App., 136 S.W.2d 358; State Bar Committee v. Stumbaugh, Mo.Sup., 123 S.W.2d 51.
Respondent further states that "in those cases in which disbarment was ordered as a result of a single violation, it will be found that few, if any, mitigating circumstances were presented, or the accused by other acts of misconduct either before or during the progress of the disciplinary proceedings aggravated the offense with which he was charged," citing In re Ellis, 359 Mo. 231, 221 S.W.2d 139; In re Buder, 358 Mo. 796, 217 S.W.2d 563; In re Conrad, 340 Mo. 582, 105 S.W.2d 1; In re Marshall, 178 Mo.App. 16, 160 S.W. 531; In the Matter of Z____, 89 Mo.App. 426. Respondent also points out that the courts of this state have long recognized that the purpose of a proceeding is not to punish the attorney, but to protect the courts, the public, and the profession, and quotes from the case of In re Williams, 233 Mo.App. 1174, 1192, 128 S.W.2d 1098, 1108: "Disbarment will be decreed only when the court is convinced of its necessity for the protection of the profession, the courts and the public, and a removal from the bar should not be decreed where any punishment less severe, such as reprimand, temporary suspension, or fine, would accomplish the end desired."
We are indebted to counsel for respondent for a detailed statement of the facts in the cases cited above. It is obviously impossible, within the limits of this opinion, to review all of them. It is sufficient to say that we have read the cases and find nothing in the opinions inconsistent with the conclusion which we have reached in the instant case. There is no hard and fast rule for determining whether an attorney found guilty of misconduct should be reprimanded, or suspended from the practice for a definite time, or permanently disbarred. Each case must be determined according to its own facts. "The disciplinary action to be meted out in each case rests with the sound discretion of the court, and in reaching its decision it should consider all the facts and circumstances, keeping in mind at all time that disbarment should be resorted to only when no other action will suffice." In re Gardner, 232 Mo.App. 502, 521, 119 S.W.2d 50, 61. See Supreme Court Rule 5.10.
We agree with the special commissioner that respondent's testimony to the effect that he relied on Limbaugh's Missouri Practice, Vol. 2, secs. 861 and 862, is incredible. The author, in these sections, deals with sec. 465.080 RSMo 1949, V.A.M.S., which has to do with the liability of executors "for interest accruing on money belonging to the estate, loaned or otherwise employed by them". It is hardly necessary to say that there is nothing in that text which can be construed to mean that an executor has the legal right to use funds of the estate for his own purposes. As our commissioner has pointed out, the author, in sec. 862, refers to such use as a "breach of trust" and "wholly inconsistent with the provisions of the statutes." Respondent testified that he had never studied probate law prior to his appointment and had no experience in handling estates, but even an inexperienced lawyer, or a layman for that matter, ought to know it is wrong for an executor or administrator to appropriate funds of the estate to his own use. As stated in the Buder case, supra, 217 S.W.2d loc. cit. 571: "The fiduciary relationship of executor and legatees connotes trust and confidence. It contemplates good faith in all transactions rather than mere naked legal obligation. It comprehends integrity, loyalty, fidelity and trustworthiness more than it relates to credit or ability. * * * Of necessity it must comprehend the safekeeping and separate holding of all monies received which the fiduciary is in law and good conscience bound to pay over to those for whom he is acting."
Several lawyers of the highest standing testified to respondent's previous good conduct and reputation. Where, however, a serious violation of law and of the ethics of the profession is shown, evidence of previous good conduct and reputation should not control the decision of the court as to whether the attorney should be disbarred or merely suspended. In the instant case we are not dealing with an isolated instance of departure from recognized standards of professional conduct. To repeat, during the period between February 24, 1949 and May 16, 1951, inclusive, respondent made withdrawals from his executor's account by checks payable to cash — about 35 in number and aggregating $22,593.56. He deposited these checks in his personal account. As indicated, the last transfer of trust funds from his executor's account to his personal account occurred on May 16, 1951. Now the evidence shows that prior to that date, and on April 27, 1951, the probate court entered the order revoking respondent's letters and directing him "forthwith" to deliver all money and property belonging to the estate to his successor, Sam D. Parker, and to file a complete settlement of his accounts within ten days. But that is not all. As stated, respondent was appointed executor on January 12, 1949. He never filed an inventory, and he never filed a settlement or report of any kind until May 17, 1951, about three weeks after the probate court revoked his letters and ordered him to account. He made a partial distribution of $7,000 to Mrs. Rhoades, but without obtaining an order of court. He did not file income tax returns for the estate. He did not tell Mrs. Rhoades that he was using the funds of the estate for his own purposes; he made no disclosures until after Mrs. Rhoades instituted the proceeding to revoke his letters. In short, the undisputed evidence shows that respondent's misconduct extended over a period of more than two years and involved numerous transactions which he concealed from the probate court and the beneficiaries of the estate; and that he actually transferred funds from his executor's account to his personal account after the court had revoked his letters and ordered him to pay such funds to his successor. He testified that he did not attempt to conceal his use of the funds of the estate; but the facts speak for themselves.
In support of the contention that respondent should not be disbarred, because there are mitigating circumstances in this case, respondent says that from the time the principal beneficiary requested his removal as executor, he made no effort to conceal the facts; that when he was called before the Advisory Committee and the special commissioner, he appeared and fully disclosed all facts of which he had knowledge; and that he placed no obstacle in the way of a complete investigation of his conduct as a lawyer and as executor of the McKowen estate. It is true that respondent appeared before the Advisory Committee and the special commissioner after being cited; that he admitted at both hearings that more than $30,000 had been paid to him as executor; that he had commingled more than $20,000 thereof with his own funds; and that he had spent at least $17,500 of the trust funds for the purposes mentioned above. He also testified at length concerning other matters relating to his conduct as executor. However, there could be no question about his having received $30,870.24 from the Midland Oil and Fuel Company, for this appeared from the records of that company. It appeared from the records of the probate court that he never filed an inventory and that he did not file a settlement until after his letters had been revoked. Furthermore, he did not testify before the commissioner or the Advisory Committee until after his derelictions and defalcations had been discovered. Under these circumstances, we must reject the suggestion that we should be lenient in this case because respondent appeared before the Advisory Committee and our commissioner and testified as stated above.
As to restitution, respondent says that he arranged for a full settlement as soon as possible after he was removed as executor; that although the settlement was not entirely in the form of cash, the securities delivered to his successor were sound; that the settlement fully satisfied his successor and the beneficiaries of the estate; and he insists that the settlement should be considered as a mitigating circumstance in determining the terms of the judgment in this case. When it is shown in a proceeding of this character that the attorney appropriated to his own use money belonging to another, the fact that he made restitution does not preclude disbarment. In re Conner, supra; State Bar Committee v. Stumbaugh, supra; In re Conrad, supra. "The court will not permit matters affecting the character of its officers to be settled by private arrangement." 7 C.J.S., Attorney and Client, § 25, page 767. It has been held by some courts that repayment of money misappropriated by an attorney is not even a mitigating circumstance. In some cases, however, restitution has been considered along with other circumstances in determining whether the attorney should be suspended rather than disbarred. See In re Conrad, supra; Anno. 43 A.L.R. 54, 66, 75. In the instant case respondent was given a receipt in full, but the settlement made by him did not constitute full restitution. Even if he had made full restitution in cash at the time he made the settlement, it would not prove that he had become a fit person to engage in the practice of law. The evidence shows that the settlement was not made until after respondent's letters had been revoked and his successor had filed a motion in the probate court praying that the court ascertain the amount of money in the hands of respondent belonging to the estate and render judgment against respondent for the amount so ascertained. A settlement made under such circumstances affords no ground for leniency. See In re Conner, supra.
It is clear that the evidence justified the conclusion of the special commissioner that respondent's conduct has been such that for the protection of the public, the courts, and the profession, he should no longer be entrusted with the duties and responsibilities belonging to the office of an attorney. We do not find anything in the record to justify any other conclusion. The respondent should be disbarred and the costs of this proceeding taxed against him.
SPERRY, C., concurs.
The foregoing opinion of BOUR, C., is adopted as the opinion of the court. It is ordered that the respondent be and he is hereby disbarred from the practice of law in this state, and that the costs of this proceeding be taxed against him.
All concur.