Brownstein, In re, 1282

Decision Date14 November 1979
Docket NumberNo. 1282,No. 26187,1282,26187
Citation602 P.2d 655,288 Or. 83
PartiesIn re Complaint as to the Conduct of Richard J. BROWNSTEIN, Accused. Trial Board; Supreme Court
CourtOregon Supreme Court

Clifford N. Carlsen, Jr., of Miller, Anderson, Nash, Yerke & Wiener, Portland, argued the cause and filed briefs for the accused.

David J. Buono, of Lindstedt & Buono, Portland, argued the cause for the Oregon State Bar. With him on the brief was Desmond D. Connall, Portland.

Before DENECKE, C. J., and HOLMAN, TONGUE, HOWELL, LENT and LINDE, JJ.

PER CURIAM.

The accused is charged with a conflict of interest arising out of a transaction involving a small, closely held corporation, its stockholders and a third party who loaned money to the corporation and became a stockholder as part of the transaction. The accused was found guilty by the trial and review boards, both of which recommended a reprimand.

James Woods first consulted the accused in 1973 concerning the incorporation of his janitorial business. The incorporation was never consummated. Thereafter, in the fall of 1973, at the request of Woods, his father, and one Ogston, the accused incorporated a drapery manufacturing and sales business with a capital of $15,000. Woods and his father each received 35 per cent of the stock with Ogston receiving the remaining 30 per cent. Thereafter, the accused represented the corporation on an almost monthly basis concerning routine legal matters. The corporation seemed, at first, to prosper. However, it was short of operating capital and, apparently, its ability to generate business was in excess of its ability to produce drapes.

In the spring of 1974, the accused represented Woods in the sale of his janitorial business. When it subsequently became apparent in the fall of 1974 that without more capital the drapery business could not survive, the accused put Woods in touch with a Mr. Whitcomb who was represented by the accused when Whitcomb needed legal advice and who was known by the accused to invest in small, highly speculative firms. After two or three months of investigation and negotiation, Woods, his father, and Whitcomb came to the accused in December of 1974 to draw the necessary legal documents to carry out their arrangements. This resulted in Whitcomb's loaning the corporation $15,000 for which he received a corporate note personally guaranteed by the Woodses, father and son, and their wives. By this time Ogston had resigned as a corporate officer and had dropped out of active participation in corporate affairs. In addition to the note, Whitcomb was issued stock in the corporation. At the time of the consummation of this arrangement, no discussion was held concerning whom the accused was representing nor was any mention made of a possible conflict of interest or of the advisability of the participants having independent counsel.

The affairs of the corporation did not prosper and after his termination as counsel for the corporation, the accused attempted upon behalf of Whitcomb to collect from Woods on his personal guaranty of the corporate note. The accused is charged with representing Woods in the transaction with Whitcomb and then representing Whitcomb in an attempt to enforce Whitcomb's rights arising out of that same transaction.

The accused contends he was representing the corporation, which undoubtedly he was. He billed the...

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17 cases
  • In Re Complaint As To The Conduct Of D. Rahn Hostetter, (OSB Nos. 07-37, 007-161; SC S056471).
    • United States
    • Supreme Court of Oregon
    • July 29, 2010
    ...... client in negotiating settlement of debt, and then represent subsequent client in suing former client to collect that same debt); In re Brownstein, 288 Or. 83, 87, 602 P.2d 655 (1979) (an attorney cannot represent a former client in a transaction and then subsequently represent another client ......
  • In re Allboro Waterproofing Corp., Bankruptcy No. 195-17372-353
    • United States
    • United States Bankruptcy Courts. Second Circuit. U.S. Bankruptcy Court — Eastern District of New York
    • August 17, 1998
    ......261, 263 (Bankr.Me.1984), vacated, 49 B.R. 996 (D.Me.), rev'd 776 F.2d 14 (1st Cir.1985) (quoting In re Brownstein, 288 Or. 83, 86-87, 602 P.2d 655, 656 (1979)); accord In re Francis, 165 B.R. 929, 932 (Bankr.E.D.Cal.1994) ("The corporation, as distinct from ......
  • O'Kain v. Landress
    • United States
    • Court of Appeals of Oregon
    • September 18, 2019
    ...... See In Re Brownstein , 288 Or. 83, 87, 602 P.2d 655 (1979) (When a small, closely held corporation is involved, and in the absence of a clear understanding with the ......
  • Conduct of Kinsey, In re, OSB
    • United States
    • Supreme Court of Oregon
    • March 8, 1983
    ...... 9 . Page 670 .         At this point we distinguish our holding in In Re Brownstein, 288 Or. 83, 87, 602 P.2d 655 (1979), which was not a derivative stockholder's suit, in which we said: .         [294 Or. 562] " * * * Where ......
  • Request a trial to view additional results
2 books & journal articles
  • Article Hold Me Close: Lawyers Beware, the Closely Held Company
    • United States
    • Utah State Bar Utah Bar Journal No. 30-1, February 2017
    • Invalid date
    ...the lawyer represents both the company and the founder/shareholder individually as a matter of law. See, e.g., In re Brownstein, 602 P.2d 655, 657 (Or. 1979) (“Where a small, closely held corporation is involved…the attorney in such a situation represents the corporate owners in their indiv......
  • Family Corporate Counsel's Representation of One Spouse in a Dissolution Proceeding
    • United States
    • Colorado Bar Association Colorado Lawyer No. 21-4, April 1992
    • Invalid date
    ...Brennan's, Inc. v. Brennan's Restaurants, Inc., 590 F.2d 168 (5th Cir. 1979); In re Nulle, 620 P.2d 214 (Ariz. 1980); In re Brownstein, 602 P.2d 655 (Or. 1979); In re Usow, 349 N.W.2d 480 (Wis. 1984). 3. 702 P.2d 1098 (Or. 1985). 4. Id. at 1106. 5. Id. 6. 197 Cal. Rptr. 185 (Cal.Ct.App. 198......

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