Attorney Grievance Com'n of Maryland v. Baldwin

• Decision Date: 01 September 1985
• Citation: 519 A.2d 1291,308 Md. 397
• Parties: ATTORNEY GRIEVANCE COMMISSION OF MARYLAND v. Maurice Whiteford BALDWIN. 28
• Court: Maryland Court of Appeals

Page 397

308 Md. 397

519 A.2d 1291

ATTORNEY GRIEVANCE COMMISSION OF MARYLAND v. Maurice Whiteford BALDWIN.

28 Sept. Term, 1985.

Court of Appeals of Maryland.

Jan. 28, 1987.

Melvin Hirshman, Bar Counsel and Glenn M. Grossman, Asst. Bar Counsel for the Attorney Grievance Comm'n of Maryland, for petitioner.

William Hahn, Jr., Baltimore, for respondent.

Argued before MURPHY, C.J., and ELDRIDGE, COLE, RODOWSKY, COUCH, McAULIFFE and ADKINS, JJ.

RODOWSKY, Judge.

This attorney disciplinary proceeding concerns the failure of an attorney to report and remit to the State income taxes withheld on his employees' wages.

Bar Counsel, on behalf of the Attorney Grievance Commission, petitioned this Court for disciplinary action against Maurice Whiteford Baldwin (Baldwin), a member of the Maryland Bar since November 13, 1952. We referred the charges to Judge John F. Fader, II of the Circuit Court for Baltimore County for findings of fact.

During the period with which we are concerned, from 1977 through 1983, Baldwin was a solo practitioner in Baltimore County who was engaged principally in real estate settlement work. He employed one or more persons as support staff during this period, with the exception of calendar year 1981 when Baldwin had no employees at all. At all relevant times the Maryland income tax law required "every employer utilizing the services of an employee [to] deduct, withhold and pay over to the Comptroller of the Treasury, for each such employee in his employ a tax as provided in" Maryland Code (1957, 1980 Repl.Vol., 1986 Cum.Supp.), Art. 81, § 312. Employers are required to file withholding returns with the Comptroller on forms prescribed by him and to pay over, in full, at the time the returns are due, the amount of tax withheld. § 312(h)(1). If the aggregate amount withheld by an employer for any quarter of a calendar year will be at least $300, the employer must file monthly. If the aggregate amount withheld is less than $300, the employer must file quarterly. § 312(h)(2).

Failure to withhold and remit is addressed in § 312(h)(4) which in part provides:

Any employer ... who negligently shall fail either to withhold the required tax or to pay it to the Comptroller as specified, or both, shall be held personally and individually liable for all moneys so involved.... Any sum or sums withheld in accordance with the provisions of this section shall be deemed to be held by the employer in trust for the State of Maryland and by such employer recorded in a ledger account so as clearly to indicate the amount of tax withheld and that such amount is the property of the State of Maryland. [Emphasis added.]

Criminal penalties for violating § 312(h)(4) are found in both § 312(h)(5) and in § 312A(b). ¹ Form 506 has been prescribed by the Comptroller for remitting withholding tax. It is a card on which the employer is to insert, over the employer's signature, the amount of tax withheld during the applicable accounting period. The Comptroller mails a supply of forms 506 to reporting employers in advance of each calendar year. Apparently based on the prior year's withholding by an employer, the Comptroller schedules an employer for quarterly or monthly reporting and sends an employer a set of four or twelve forms 506 with preprinted due dates.

For 1977 the Comptroller scheduled Baldwin for quarterly reporting. Baldwin filed returns for the first and second quarters at one time, in August of that year. Thereafter, Baldwin filed no returns for the third and fourth quarters of 1977 or for any quarter in 1978. On May 10, 1978, an agent of the Comptroller personally audited Baldwin's withholding records and obtained $500 from Baldwin which was applied in part payment of his obligation for the third quarter of 1977. Based on information obtained in that audit the Comptroller scheduled Baldwin for monthly reporting during 1979 but Baldwin filed no returns for that year.

Baldwin estimates that he was audited six times by the Comptroller during the period relevant to this case. Based on the audit in May 1978 the Comptroller filed a lien against Baldwin for amounts withheld during the last two quarters of 1977 and the first quarter of 1978. With interest and penalty through August 4, 1978, the lien totaled $1,665.53.

In August 1979 the Comptroller obtained a $2,000 payment from Baldwin which was applied to taxes withheld during January through May of 1979, and to the fourth, third, and second quarters of 1978. After that credit Baldwin still had an unpaid obligation for the first quarter of 1978 and for the fourth and third quarters of 1977.

Baldwin filed no returns for the applicable accounting periods in 1980, 1982, or 1983, although required to do so. Following his August 1979 payment Baldwin paid no withholding tax until September 22, 1983. An agent of the Comptroller who had been unable to get Baldwin's attention by a series of telephone calls and written notices had administratively subpoenaed Baldwin and obtained production of his records on September 14, 1983. The agent that day entered an assessment which brought Baldwin's total liability to the Comptroller for withholding tax, including penalty and interest, to $5,066.17.

The record in this case does not contain a running account between Baldwin and the Comptroller. Liens filed against Baldwin reflect that, exclusive of penalty and interest, and as of November 28, 1983, the principal amount of unpaid withholding tax for 1983 was $530.74 and for 1982 was $811.72. Similarly, as of February 10, 1982, the principal amount of unpaid withholding tax for 1980 was $465.15, for 1979, $750.20, for 1978, $403.49, and for 1977, $563.45.

Baldwin liquidated this obligation by the payment of $750 on September 22, 1983, by payments of $500 each on November 14 and December 17, 1984, and on February 8, March 25, and September 5 of 1985, together with a final payment on September 29, 1985, of $2,917.24. That final payment was made approximately a month and one-half before the hearing conducted by Judge Fader.

Judge Fader found that Baldwin experienced a number of financial and personal problems. The bank account from which Baldwin paid his office operating expenses, including payroll, was overdrawn on approximately twenty occasions between 1977 and 1983. ² Those overdrafts were usually covered within one to five days. In 1977 Baldwin's wife left him. Beginning the following winter, Baldwin supported his adult daughter for approximately six months when she was experiencing emotional and financial problems. Baldwin's loss of two major clients during 1980 necessitated the closing of his Towson law office. He did not reopen an office in Towson until the latter part of 1981. During the interim his office was in the basement of his mother's home. In November 1981 a fire destroyed a farmhouse which he owned. Because the premises were not occupied Baldwin had been unable to obtain insurance to the full value of the improvements and the insurance in force did not exceed the mortgage on the property.

Baldwin is an alcoholic. The disease in his case was at a moderately advanced stage when he was seen by a physician in August of 1985. Baldwin has not been drinking since the spring of 1985. He is currently active in an alcoholism control program. A certified alcoholism counselor testified that the disease caused Baldwin's overdraft problems in the operating account but that it did not prevent Baldwin from understanding his responsibility to pay taxes.

At all times Baldwin caused to be maintained records which clearly indicated the amount of tax withheld. At no time has the State proceeded criminally against Baldwin for failure to file withholding tax returns or for failure to pay the tax when due.

Bar Counsel charged Baldwin with violating each of the following subsections of Disciplinary Rule 1-102(A):

A lawyer shall not:

(1) Violate a Disciplinary Rule.

....

(3) Engage in illegal conduct involving moral turpitude.

(4) Engage in conduct involving dishonesty, fraud, deceit or misrepresentation.

(5) Engage in conduct that is prejudicial to the administration of justice.

(6) Engage in any other conduct that adversely reflects on his fitness to practice law.

Judge Fader found that Baldwin had violated subsection (5) and, consequently, (1). Baldwin does not except to those findings. Bar Counsel has excepted to Judge Fader's failure to find violations of subsections (3), (4), and (6). Consistent with that position, Bar Counsel recommends disbarment.

I

Bar Counsel's exceptions to the failure to find illegal conduct involving moral turpitude and conduct involving dishonesty, fraud, deceit, or misrepresentation may be treated together. The grounds of the exceptions are (A) factual and (B) legal.

Our concern in this case is whether Baldwin violated specific disciplinary rules, as charged. Because we conclude, as hereinafter explained, that Baldwin's conduct did not involve moral turpitude or fraud, it is not necessary for us to determine whether Baldwin's conduct otherwise amounted to a criminal offense. ³

A

To decide if Baldwin's conduct involved moral turpitude, dishonesty, fraud, deceit, or misrepresentation Judge Fader drew upon principles which this Court enunciated in cases involving an individual's failure to file federal or state individual income tax returns. The analogy is, in our view, appropriate.

In Attorney Grievance Commission v. Walman, 280 Md. 453, 374 A.2d 354 (1977), we rejected the proposition that a conviction under 26 U.S.C. § 7203 for the misdemeanor of willfully failing to file always involves moral turpitude. We observed that moral turpitude "has been defined generally as importing 'an act of baseness, vileness or depravity in the private and social duties which a man owes to his fellow men, or to society in general, contrary to the accepted and customary rule of right and duty between man and man.' " Id. at 459, 374 A.2d at 358 (quoting ...