Opinion
October 6, 1967. —
October 31, 1967.
ORIGINAL ACTION upon the complaint of the Board of State Bar Commissioners seeking the discipline of defendant, Philip G. Arneson, an attorney. Adjudged, defendant's conduct merits discipline. Discipline imposed.
For the plaintiff there was a brief and oral argument by Rudolph P. Regez of Monroe, counsel for the Board of State Bar Commissioners.
For the defendant there was a brief by William J. Gleiss of Sparta, attorney, and Peter Berg of La Crosse of counsel, and oral argument by Mr. Gleiss.
The defendant Philip G. Arneson is forty-seven years old. He graduated from the University of Wisconsin, later attended Harvard Business School, served three and one-half years in the Navy, returned to and was graduated from the University of Wisconsin Law School in 1947. He has practiced law in La Crosse for the last twenty years. He has been married twice and has six children.
On March 4, 1964, an indictment was filed in the United States District Court for the Eastern district of Wisconsin, charging the defendant with wilfully and knowingly failing to file a federal income tax return for the year 1960. The proceedings were transferred to the United States District Court for the Western district of Wisconsin. Defendant pleaded nolo contendere, was found guilty by Judge JAMES E. DOYLE on August 3, 1966, and was fined $1,500 and committed to the custody of the attorney general for one year, the first thirty days to be served in jail, and the remainder of the sentence of imprisonment to be suspended. The defendant served the thirty-day jail sentence in the Dane county jail. Defendant had also been indicted for failure to file a 1959 return, but the charge was dismissed on the motion of the Assistant United States Attorney.
The complaint in this proceeding also alleges that defendant failed to file Wisconsin income tax returns for the years 1962, 1963, and 1964. On August 31, 1964, the Wisconsin department of taxation (hereinafter the "department") mailed written notice to defendant to file a 1962 return. Defendant did not respond. On December 8, 1964, the department mailed written notice to defendant to file returns for 1962 and 1963. Defendant did not respond. On December 28, 1964, the department mailed written notice to defendant to appear before an auditor in Eau Claire on January 12, 1965, to explain his failure to file returns. Defendant did not respond and did not appear. On February 8, 1965, the department mailed written notice to the defendant to appear before the auditor on February 19, 1965. Defendant did not appear. On March 8, 1965, he responded and requested a new appointment. On March 11, 1965, the department mailed written notice to the defendant to appear before the auditor on March 23, 1965. Defendant did not respond and did not appear. On May 2, 1966, the department mailed written notice to defendant to file returns for 1962, 1963, and 1964. Defendant did not respond. On May 16, 1966, the department mailed written notice to the defendant of a jeopardy income tax assessment against him in the sum of $15,777.50, taxes for the years 1962-1964, plus interest. On May 31, 1966, the department filed a delinquent tax warrant with the clerk of the circuit court, La Crosse county, constituting a lien on defendant's property. On June 30, 1966, defendant applied for an abatement of the assessment, which was denied by the department on July 19, 1966, as not being timely. On August 8, 1966, defendant filed delinquency tax returns for the years 1962-1965. He reported net taxable income during those years ranging from $21,413-$34,092, and gross income ranging from $34,516-$47,039. He computed his total tax liability for the years 1962-1965 to be $7,919.24. Defendant has made no payments on his state tax liabilities for those four years. He presently has a case pending before the United States Tax Court in regard to his federal tax liability for the years 1959-1960. Defendant testified that he will attempt to clear up his state tax matters after the resolution of the tax court case.
The law firm, in which defendant was a partner during the years 1962-1965, filed timely partnership returns for those years. The returns disclosed nearly all of defendant's total income during each year. He signed such returns in 1963, 1964, and 1965.
The state bar commission filed its complaint with this court on February 21, 1966, charging that defendant's conduct, in regard to his failure to file the 1960 federal return and the 1962-1964 state returns, was an intentional violation of the tax laws of the United States and of Wisconsin respectively, and constituted unprofessional conduct. The Honorable E. J. MORRISON was appointed referee.
At the hearing held before the referee on October 28, 1966, the defendant testified that his wife became mentally ill in 1959-1960 and that he "spent every nickel I had on very extensive medical care, with her down in Milwaukee with a psychiatrist and that sort of thing." Thereafter he was divorced from his first wife and has remarried. The dates of divorce and remarriage are not disclosed by the record, but defendant listed his first wife as his wife on his 1962 state return and his second wife as his wife on his 1963 state return.
He testified that it was impossible for him to come up with funds to pay his income taxes because his investments were in closely held concerns. He "deferred paying income taxes," until he could make liquidations. He also testified that he put aside his personal problems and lost himself in his extensive law practice.
Defendant expressed contrition and stated that he had delegated the entire handling of his financial matters to a certified public accountant. He testified that he was a trial lawyer and had handled no income tax matters for clients during the last ten years.
Five members of the La Crosse county bar, three judges from the area, and six La Crosse businessmen testified at the hearing. Two more judges from the area and a member of the Wisconsin employment relations board filed affidavits in the proceeding. All testified or averted that defendant was a lawyer of the highest ability, honesty, and integrity and that he could continue to practice law without any harm to his clients or the public. All the businessmen testified that they would continue to retain defendant as counsel, because he did excellent work.
Referee MORRISON filed his findings of fact and recommendations to this court on December 14, 1966. He found that defendant had been guilty of unprofessional conduct and recommended that he be fined $1,000 and required to pay the expenses and compensation of the referee and plaintiff's counsel.
The referee stated that he gave much consideration to recommending a short suspension but decided against it, because of the high recommendation given defendant by the five judges, "leading lawyers" in the La Crosse area, and many "substantial" businessmen; his first wife's mental illness caused him heavy anguish and expense; his heavy practice and domestic problems rendered him temporarily mentally affected with resulting hospital and psychiatric care (this occurred during the spring and summer of 1966); there was no evidence of dishonesty or attempt to deceive in regard to his nonpayment of taxes; he had already been fined $1,500 and served thirty days in jail; a suspension of his license might cause a recurrence of his recent mental disbalance; and substantial clients in La Crosse depended on his services. He found that defendant was a leading trial lawyer in the La Crosse area, had reformed, and would be a distinct credit to the legal profession in the future. He felt that his recommended penalties would be sufficient to alert the public and attorneys that conduct such as defendant's cannot go unpunished.
The state through the Board of State Bar Commissioners excepted to the referee's recommendation and has moved this court to enter judgment suspending defendant's license to practice law for a period of not less than six months or for such other disciplinary judgment as the court may deem proper.
State v. Roggensack held that the intentional failure to file income tax returns by a lawyer constitutes unprofessional conduct which subjects him to discipline. The reasons for this conclusion are fully set forth in that opinion and need not be repeated here. Roggensack overruled State v. McKinnon wherein this court had determined like conduct on the part of a lawyer was not unprofessional conduct.
(1963), 19 Wis.2d 38, 119 N.W.2d 412.
(1953), 263 Wis. 413, 57 N.W.2d 404.
The discipline imposed in Roggensack was a reprimand and the payment of the costs and expenses. The prior ruling in McKinnon was one of the material factors that caused the court not to impose a suspension.
Subsequent to Roggensack this court rendered decisions in four more disciplinary proceedings in which lawyers were charged with unprofessional conduct for intentional failure to file income tax returns. All four involved failures to file returns for years which antedated our decision in Roggensack rendered February 5, 1963. In keeping with the discipline imposed in Roggensack the four defendants in these four subsequent cases were reprimanded and required to pay all, or a portion, of the costs and expenses of the proceedings.
State v. Bunge (1963), 20 Wis.2d 493, 122 N.W.2d 369; State v. Hartman (1963), 20 Wis.2d 499, 122 N.W.2d 372; State v. Hayes (1963), 20 Wis.2d 501, 122 N.W.2d 373; State v. Coleman (1965), 27 Wis.2d 282, 134 N.W.2d 89.
Apart from the instant proceeding, we have had but one other disciplinary proceeding involving an intentional failure to file income tax returns where any of the conduct in failing to file occurred subsequent to Roggensack. This was State v. Howard, St. No. 26, August Term, 1966. Howard had failed to file returns for the years 1960-1964; his net taxable income during these years ranged from $1,869.35-$8,355.44; and his delinquent taxes ranged from $4.96-$311.20. The referee recommended an eight-month suspension. The board moved this court for judgment in accordance with such recommendation. The defendant offered no opposition. On March 21, 1967, this court issued an order, without opinion, suspending defendant's license for three months.
This court imposed the discipline of suspension because it felt that the Roggensack and Bunge Cases had given the legal profession adequate warning that this might well be the kind of discipline that would likely be imposed for this type of professional misconduct. In Bunge, we stated:
". . . This is not to say that a reprimand will always be deemed sufficient for deliberate failure to file income-tax returns. . . .
Supra, footnote 3, at page 498.
Defendant Arneson received the same warning from Roggensack and Bunge, and evinced the same silent contempt of the tax agencies. Judge DOYLE termed his offense "a flagrant case of failure to file." Judge DOYLE noted defendant's pattern of delinquencies on the federal side. On the state side, in addition to the failures already mentioned, defendant failed to file his returns for 1959 and 1960 until on or about November 23, 1961. Despite a substantial income he has not yet paid his state income taxes for the years 1962-1965. Defendant has placed himself above the income tax laws of the United States and the state of Wisconsin.
He would have the court excuse him, because of his first wife's mental illness in 1959-1960, his own mental problems in 1966, and the press of his heavy law practice. Since, at least, 1959 he has taken the law into his own hands and "deferred" paying income taxes. His personal problems do not excuse such a long and consistent history of dereliction. Even busy men must take time off to pay taxes. Defendant's problems and entanglements on the federal side of the ledger in no way excuse his obligations to his state government. Defendant seems to treat the taxing arms of the federal and state governments as one obtrusive entity, which one must put up with and deal with only when one has to.
Since punishment is not the primary purpose of disciplinary proceedings, defendant's argument that he has already been punished is not conclusive.
Defendant also seems to assume that since his propensity not to file tax returns or pay taxes has no effect on his effectiveness in the courtroom, and since his clients feel the same way, his intentional violation of tax laws is not as grievous as another lawyer's might be. Defendant's skill as a trial lawyer does not allow him to relegate his responsibilities as a lawyer to merely serving his client's needs. As this court stated in Roggensack:
"`Of all classes and professions, the lawyer is most sacredly bound to uphold the laws. He is their sworn servant; and for him, of all men in the world, to repudiate and override the laws, . . . argues recreancy to his position and office, and sets a pernicious example to the insubordinate and dangerous elements of the body politic. It manifests a want of fidelity to the system of lawful government which he has sworn to uphold and preserve.'"
Supra, footnote 1, at page 45.
Defendant's license to practice law should be suspended. The quality of mercy may be strained, but the credulity of the public would be strained if defendant received any lesser form of discipline. A reprimand or fine would not be sufficient. In State v. Bunge this court quoted from State v. Kern to the effect that:
(1930), 203 Wis. 178, 182, 233 N.W. 629.
"`. . . disciplinary measures should be at least coextensive with an effective judicial disapproval of the confessed misconduct, so that they cannot be misunderstood or "construed as an implied judicial indorsement of defendant's misconduct, even taking into consideration all of the mitigating circumstances urged in behalf of the defendant." State v. Kiefer, 197 Wis. 524, 531, 222 N.W. 795.'"
Supra, footnote 3, at page 497.
Defendant's conduct is as blameworthy as Howard's. The fact that defendant is an older and more experienced lawyer, rather than detracting from the gravity of the offense, adds thereto. His license to practice should be suspended for a sufficient length of time to inculcate respect in him for the law, and to serve as a deterrent to his fellow members of the legal profession.
Therefore, it is ordered and adjudged, that the license of defendant Philip G. Arneson to practice law be suspended for a period of six months from the date of the entry of judgment herein and thereafter until reinstatement; that the costs of these proceedings, including the fees of the attorney for plaintiff, which costs aggregate $2,307.03, shall be taxed and charged to defendant, and $1,000 thereof shall be payable not later than six months subsequent to the entry of judgment and the balance shall be payable not later than twelve months subsequent to judgment; and that after the expiration of five months defendant may apply for reinstatement of his license to practice law upon compliance with sec. 6, Rule 10, State Bar Rules.
HEFFERNAN, J., took no part.