Alpert, Application of

• Decision Date: 06 September 1974
• Citation: 525 P.2d 1042,269 Or. 508
• Parties: Application of Spencer Ward ALPERT, Applicant.
• Court: Oregon Supreme Court

Page 1042

525 P.2d 1042

269 Or. 508

Application of Spencer Ward ALPERT, Applicant.

Supreme Court of Oregon.

Argued and Submitted March 13, 1974.

Decided Sept. 6, 1974.

J. W. Walton, Corvallis, and Donald Dole, Roseburg, argued the cause and filed a brief for the Oregon State Bar.

Joe B. Richards, Eugene, argued the cause for applicant. With him on the brief were Luvaas, Cobb, Richards & Fraser, Eugene.

Before O'CONNELL, C.J., and McALLISTER, HOLMAN, TONGUE, HOWELL, and BRYSON, JJ.

PER CURIAM.

Applicant requests admission to the Oregon State Bar. He successfully passed the Oregon Bar examination but because of his lack of good moral character, he was not recommended for admission by the Board of Bar Examiners. Thereafter a hearing was held before a trial committee pursuant to the Rules for Admission of Attorneys. The trial committee recommended applicant's admission and the Oregon State Bar requested review by this court.

In order to shorten this opinion, no mention will be made of the numerous grounds for objection to applicant's character which we consider not to be proved or of insufficient importance to be determinative.

Applicant was born January 30, 1945; at the time of the hearing he was 28 years of age. His first serious breach of social conduct was at the age of 16, when he and two other youths broke into a warehouse and stole alcoholic beverages. Had he been an adult, he would have been guilty of burglary.

At ages 18 and 19, while an undergraduate at college, he defrauded innkeepers at numerous times by what was called 'tennis shoeing,' or walking out without paying for meals or motel accommodations.

At age 21 he stopped his vehicle in the street and, going over to another vehicle, punched the 17- year-old driver of that vehicle in the fact because someone in that vehicle had 'flipped us the bird,' i.e., made an obscene gesture. Also, applicant claims the other vehicle cut in on him and crowded him. The driver of the other vehicle claims they were racing and applicant was defeated. In any event, there was insufficient provocation for such action.

At the same age he was charged with giving liquor to a minor. This charge probably arose out of his arrest in the matter previously set forth, but the record is not clear. Applicant claims the youth to whom the liquor was given was only a few months under 21 years of age.

During the ten-year period from 1962 to 1972 applicant had 13 moving violations on his driving record, three license suspensions because of his driving record, and was involved in three accidents. The last driver's license suspension was at age 23.

At age 25, when approximately half way through law school, he engaged in a course of dealing in stocks at the urging of a friend who worked for a stockbroker in San Francisco. Orders for stock were placed with the broker in San Francisco on a 'payment versus delivery' basis. Pursuant to an order, the broker would buy stock for applicant's account and mail to a bank in Eugene the stock certificates together with a sight draft drawn on applicant for the price of the stock. The bank was instructed to deliver the stock on payment of the draft. It is customary for banks, in the absence of contrary instructions, to retain such a draft for six days for payment before returning the stock and the draft to the broker. Stock certificates are usually not available until several weeks after purchase. As a result of this lapse of time, the six-day waiting period, and the time required for mail delivery a month could elapse between the time of placing the order and the time payment was required of applicant.

Applicant's plan was to purchase only stock which his friend told him, on the basis of inside information, would go up on the basis of inside information. Upon notification that the stocks were being mailed or had arrived at the bank, applicant planned to sell the stocks at the increased price through a broker in Oregon and use his sale proceeds to pay the sight draft and to obtain possession of the stock so delivery could be made to the new purchaser. He could thus get a 'free ride' without investment of his own funds. At the time he did not have adequate funds of his own to pay substantial losses.

During the period from January 2, 1970, to February 3, 1970, applicant purchased in this manner approximately $240,000 worth of stocks. The market was falling and he soon ran into difficulty. He used his own funds to make up the difference between his purchase price and the amount for which the falling stocks could be sold, but these funds were soon exhausted and he could not take delivery. In the hope the market would go up, he continued to buy in order to get even. Of the $240,000 worth of stock he ordered, approximately $133,000 was returned to the broker in San Francisco and was sold for his account at a reduced price; approximately $86,000 worth was taken over by a business acquaintance, Metzker, who assumed responsibility for payment.

Applicant contends that all the stock purchases subsequent to January 19, 1970, were made pursuant to the authority of Metzker, who had adequate funds to pay losses. However, we find it difficult to reconcile the evidence with this contention. Metzker initially testified that he became obligated to take only the stocks of his choosing from among those which applicant had ordered prior to February 3, 1970. He then recanted when he was shown his pleading in litigation presently existing between the broker in California and applicant and himself, which pleading indicated he became obligated for all stocks purchased subsequent to January 19. However, applicant's written authority to transfer certain stocks from his account to Metzker's, Metzker's acceptance, and the books of the broker all point to Metzker's initial testimony as being correct in that those exhibits disclosed only certain stocks as having been transferred to Metzker's account without regard to whether they were purchased before or after January 19 by applicant. In addition, a letter by applicant to the San Francisco broker indicates he was accepting sole responsibility for many stocks purchased after January 19 which were not transferred to Metzker. Applicant will have to bear the full responsibility for purchasing the entire $240,000 worth of stock without having adequate or any substantial means with which to pay losses if the price went down.

After securing the credit of Metzker, applicant and Metzker continued the described method of trading until they were told it was illegal; however, the figures relating to these stocks were not considered in arriving at the computations contained in this opinion.

In the action by the San Francisco broker against applicant and Metzker to recover the broker's losses on the transactions, applicant asserts that the transactions were illegal insofar as the broker is concerned and that the stock purchases are therefore voidable by applicant. He asserts that rather than being responsible for the broker's losses, he is entitled to recover his losses from the broker.

Applicant brought to the hearing an impressive parade of character witnesses. Most of these were business acquaintances who testified his word was as good as his bond and that he was completely honest and trustworthy. There was one witness who thought applicant had some difficulty with basic values. Persons connected with the University of Oregon testified that his services were extremely valuable as a student leader and as a member of the student senate in keeping violence at a minimum and in cooperating with the authorities during the Viet Nam disturbances at the University. At the time of trial applicant was working as a layman in the Lane County District Attorney's office where he was highly esteemed.

Applicant has been engaged in the used car business since his teens and has operated such a business on his own but without too much financial success, however. He had extensive credit at financial institutions and should have been cognizant of financial matters far beyond that which is usual for one of his age.

The evidence is that applicant made inquiries of his banker and his Oregon stockbrokers concerning the propriety of the manner in which he was dealing with the stocks. His banker and his principal Oregon broker, who told him it was all right, would not admit that they knew he was reselling the stock before he took delivery (which seems to be the principal act which makes the transaction illegal, if such is the case). However, in fairness to applicant, it must be said that his banker and his principal broker, with whose aid he took delivery and sold the stocks, must have known that such was the case, since the...