Bartlett, In re

• Decision Date: 12 September 1978
• Citation: 584 P.2d 296,283 Or. 487
• Parties: In re complaint as to the conduct of Richard C. BARTLETT, accused. TC 1329; SC 25691.
• Court: Oregon Supreme Court

Page 296

584 P.2d 296

283 Or. 487

In re complaint as to the conduct of Richard C. BARTLETT, accused.

TC 1329; SC 25691.

Supreme Court of Oregon.

Argued and Submitted July 11, 1978.

Decided Sept. 12, 1978.

Albert J. Bannon, Portland, argued the cause and submitted a brief for the Oregon State Bar. With him on the brief was Joseph Voboril, Portland.

Thomas E. Cooney, Portland, argued the cause and filed a brief for the accused.

Before HOLMAN, P. J., and HOWELL, BRYSON, LENT and LINDE, JJ.

PER CURIAM.

This is a disciplinary proceeding in which it is clear that the accused has violated the ethics of the profession. The Trial Board recommended suspension for one year. The Disciplinary Review Board recommended suspension for "not less than" six months. The accused contends that his misconduct merits no more than a public reprimand and a one-year probation period with a special condition that he take and pass a course in Legal Ethics "at Northwestern College of Law, Lewis and Clark College, in Portland, Oregon." ¹ Alternatively, the accused suggests that if any suspension is imposed it be limited to 30 days. We find that six months' suspension from the practice of law is the appropriate sanction.

The accused has conceded that the attorney-client relationship existed between himself and clients named Johnson at the material times with which we are concerned. The Bar charged the accused with five unethical actions set forth in five causes of complaint. The first, second and fourth causes are concerned with dealings between the accused and the Johnsons with respect to certain duplexes. The third cause is concerned with dealings with Johnsons with respect to investment in a limited partnership in which the accused was a general partner. The fifth cause charges the accused with unethical conduct by his combined actions with respect to the first four causes. The Trial Board found the accused guilty of the first, second, third and fifth causes and not guilty of the fourth cause. The Disciplinary Review Board agreed with the Trial Board that the accused was guilty of the first, second and third causes and that he was not guilty of the fourth cause. ²

The accused was admitted to practice in 1964 in Oregon. He was an associate for three years with a firm which primarily practiced business and tax law. For the next year he associated with another firm primarily engaged in business and securities law. He then became a partner in a smaller firm which conducted a general practice until about 1971, at which time the emphasis of the partnership practice focused upon real estate and business law. For about one year prior to the hearing before the Trial Board, he had practiced as a sole practitioner.

Sometime prior to April 1, 1975, the Johnsons retained the accused as their attorney and paid to him a retainer to represent them in connection with a business dispute, the facts of which are not important to this decision. While the accused was acting as Johnsons' attorney in that matter, Johnsons acquired approximately $10,000, which they wished to invest. They were interested in purchasing a business and consulted the accused with respect to the purchase thereof. The owners of the business failed to make available to their broker's salesman After the Johnsons had decided against purchase of that business, the accused made known to them the fact that he had certain interests in income-producing real property and that he was attempting to liquidate some of those investments in order to place himself in a better cash position. He first gave them the address of a 6-plex which he owned, and they drove by it a couple of times but decided that because of their inexperience this would not be a good venture for them.

the accused, and the Johnsons sufficient information to evaluate the worth of the business, and the accused so advised them. There is no evidence that the accused so advised them in order to sell them his own property.

We shall now consider the evidence with reference to the first and second causes of complaint together, since those charges both relate to a transaction which we shall call the "duplex transaction." Following that, we shall consider the evidence concerning the third cause of complaint, which relates to what we shall call the "limited partnership transaction." ³

DUPLEX TRANSACTION

The accused was owner of the vendee's interest in certain contracts of sale for several duplexes in Gresham, Oregon. A short time after the Johnsons had looked at the accused's 6-plex, he took them to Gresham to see the duplexes. After considering the matter, the Johnsons decided to purchase two of the duplexes. The vendor, under the contracts in which the accused held the vendee's interest, was Standard Investment Company, which at the time of the assignment from the accused to Johnsons was the defendant in an action filed by the Securities & Exchange Commission in United States District Court, and Standard Investment Company's assets were being liquidated by a receiver. No conveyance of the property was possible without the receiver's consent. These facts were known to the accused at the time of his assignment of his interests to Johnsons. The accused did not even suggest to the Johnsons that they seek independent legal counsel before purchasing his interests in the duplexes.

The accused did not record the assignment of his contract to the Johnsons, nor did he furnish a title insurance report or title insurance to them. A title insurance report, presumably, would have shown the facts with respect to the SEC action and the receivership as well as a federal tax lien against the property arising out of a tax claim against one Major, who had sold the duplexes to Standard Investment Company.

The assignment from accused to Johnsons took place on April 1, 1975. In July 1975, the accused did order a title report, which showed the federal tax lien arising out of the claim against Major and that the assignment to the Johnsons was unrecorded. The accused still failed to advise the Johnsons of either of these facts.

By September 1975, the federal government claimed and filed of record a further federal tax lien of approximately $4,000 on the duplexes. This lien arose out of taxes owed by a corporation in which the accused was an officer.

In early 1976 the Johnsons decided to sell their interest in the duplexes. Earnest money agreements were signed, but the deal collapsed when preliminary title reports showed the existence of the two tax liens and the lack of recordation of the assignment to Johnsons. The sale of the duplexes, had it been completed, would have resulted in a substantial profit to the Johnsons.

Ultimately the Johnsons sold both duplexes one to a third party and the other back to the accused. Although there is room for argument as to whether they were in fact made whole, the Johnsons apparently conceded before the Trial Board that they believed that they had been made whole from a financial standpoint. For the

purposes of this opinion, we assume that the Johnsons were made whole financially.

LIMITED PARTNERSHIP TRANSACTION

Prior to the time the Johnsons went to Gresham to look at the duplexes, the accused, one Wong, and two other individuals had entered into a limited partnership in which those four were the general partners. The name of the partnership was "CONTROLLED ENVIRONMENTAL PRODUCTS, LTD." (hereinafter CEP).

On the day that the accused and Johnsons had gone to Gresham to look at the duplexes for the first time, the Johnsons were also introduced to Mr. Wong, and as a part of the excursion to Gresham the Johnsons gave Mr. Wong a ride to the premises where CEP was to conduct its business of raising exotic mushrooms. Johnsons expressed an interest in investing in CEP, but the accused declined to consider it at that time. A few weeks later, however, the accused approached the Johnsons about investing in CEP. The accused concedes that he was still representing Johnsons as their attorney at that time. The accused told Johnsons that CEP needed another investor as a limited partner for $10,000, that no investment less than $10,000 would be acceptable, that it was necessary to commit to the investment within a few days, that the investment was venture capital and could be lost, and that the Johnsons could seek other advice about the investment.

Prior to investing $10,000 in CEP, Johnsons were shown a copy of the partnership agreement, which stated that:

"The initial capital of the Partnership is the amount set forth below as allocated among the various members of the Partnership. Next to each Partner's name is his percentage interest in the Partnership and the number of Units held by him. All of the capital of the Partnership has been contributed in cash."

The agreement then went on to show that the accused had contributed $5,000, as had each of the other three general partners. In fact, the accused had not contributed $5,000, but had contributed only approximately $650. The accused did not inform the Johnsons as to the true extent of his capital contribution.

The Johnsons did invest $10,000 for a purported 5% Limited partnership interest. At the time the Johnsons received their purported 5% Limited partnership interest, 100% Of the partnership interest was already outstanding, with each general partner owning 221/2% and two earlier investing limited partners each owning 5%. The accused failed to file the certificate of limited partnership required by ORS 69.180.

CEP failed financially, and it appeared that Johnsons would lose their investment. Eventually, however, the Johnsons did receive back their $10,000 plus some attorney fees, and at the time of the hearing before the Trial Board, Johnsons indicated that they felt they had been made whole. We assume, for the purposes of this opinion, that they have been made financially whole with respect to the limited partnership transaction.

THE SPECIFIC...