Bennethum, In re
Decision Date | 26 May 1960 |
Citation | 161 A.2d 229,52 Del. 504 |
Parties | , 52 Del. 504 In the Matter of William H. BENNETHUM. |
Court | Supreme Court of Delaware |
David B. Coxe, Jr. of Coxe, Booker, Walls & Cobin, Wilmington, for William H. Bennethum.
S. Samuel Arsht of Morris, Nichols, Arsht & Tunnell, Wilmington, for Censor Committee.
This is a disciplinary proceeding against the respondent, William H. Bennethum, a member of the bar of this Court.
The Censor Committee of the Court, pursuant to our direction, held hearings upon several charges of unprofessional conduct. It has filed its report. The Committee finds the respondent guilty of misconduct in three matters and recommends disciplinary action. The respondent excepts to the Committee's findings and conclusions.
A preliminary question is raised by counsel for the Committee. He contends that Bennethum has waived his right to file with this Court exceptions to the report because he failed to file any exceptions with the Censor Committee. This objection we pass over. We do not wish to deal with serious charges against a member of the bar in such a summary fashion.
The three matters in respect of which respondent was adjudged guilty of misconduct are these:
1. Failure to file State income tax returns and pay the tax.
2. Failure to file Federal income tax returns and pay the tax.
3. Borrowing money from a client without security during the attorney-client relationship.
William H. Bennethum has been a member of this bar in active practice for twenty-nine years. For some years prior to 1951 he held the office of Deputy Attorney General for the State Tax Department.
For the years 1942 to 1949 inclusive all of his income tax returns were filed late. Three of them were filed more than two years late, and two of them more than one year late.
For the six years 1950-1955 Bennethum filed no returns. On January 18, 1956, the State Tax Department made an assessment of $3,233.16 for taxes in respect of the years 1950-1954. Thereafter, the Department discovered additional income and will make (or has made) a revised assessment.
At the time of his hearing before the Censor Committee on November 2, 1959 Bennethum had not paid any part of this amount. After the hearing he paid $2,000 on account.
In 1957 Bennethum was indicted for failure to file a State income tax return and for failure to pay tax in respect of the taxable year 1955, but the indictment was held to be defective. Bennethum v. Superior Court, Del., 153 A.2d 200.
During the years 1942 to 1954 inclusive Bennethum was in receipt of income sufficient to require him to file federal tax returns. Prior to 1947 he was an employed associate of a Wilmington law firm and also received a salary from the State during all of these years except one. In 1947 he became a partner. His income from the partnership from 1947 to 1954 ranged from $11,000 to $16,000 annually.
According to the records of the District Director of Internal Revenue, Bennethum filed no return and paid no tax for any of the years 1942 to 1954. A subsequent computation showed a tax liability for the years 1945-1954 of $22,831, exclusive of penalties.
Sometime in 1955 the Internal Revenue Service began an investigation of Bennethum's income tax liability. On October 13 the District Director wrote him about the matter. On November 9 an agent called Bennethum on the telephone and inquired whether he had filed a return for 1954, and Bennethum replied in the affirmative. According to the agent, Bennethum said that he had paid the tax by check. Bennethum later denied having made that statement. According to the agent Bennethum, at the agent's request, agreed to produce the check and said that he would call back. He did not call back.
In December, 1955, two agents called to see him and he showed them papers which he stated were copies of his returns for the years 1952, 1953, and 1954.
On June 15, 1956, the Intelligence Division formally advised Bennethum that its investigation indicated that he had failed to file returns for the five years 1950-1954, and that consideration was being given to possible criminal proceedings. An opportunity for a conference was afforded. The conference was held July 18. Bennethum was questioned under oath. He testified that he had filed an income tax return with the Wilmington office for each of the years 1942 to 1949.
On March 8, 1957, Bennethum was indicted in the United States District Court for failure to file returns for the years 1953 and 1954. His trial took place in December of that year before a judge without a jury. The Government witnesses testified that the files of the Internal Revenue Service at Wilmington contained no record of any return for any of the years 1942-1954, and no record of any payment of tax. Bennethum testified he had filed returns for 1953 and 1954 and that the copies given to the agents were correct copies of the filed returns. He also relied on the fact that for the years in question he had signed the partnership information returns, which disclosed that he had received income from the partnership.
Judge Grimm in delivering his verdict said that he had a reasonable doubt of guilt. The grounds for his decision will be hereafter considered. The criminal trial dealt only with wilful failure to file returns for the two years 1953-1954. There is before us, however, the question whether he failed to file for the 13 years 1942-1954, and the far more serious questions whether Bennethum's testimony in the case, his sworn statements to the agents, and his testimony before the Censor Committee were false, and whether the purported copies of tax returns for those two years were fabricated.
This episode involved an unsecured loan of $5,000 made to Bennethum by a client on March 1, 1951, during the existence of the attorney-client relationship. There is also involved the sale of two automobiles by the same client and the giving of credit for repairs. Neither the loan nor the other items were ever paid.
We agree with the Censor Committee's findings and conclusions to the effect that the transactions were unethical. But in the light of our conclusions with respect to the far more serious offenses, it is unnecessary to consider the matter further, except to say that the transactions are additional proof that Bennethum was in the early 1950's in financial straits.
The gravest question before us concerns Bennethum's conduct with respect to charges of failure to file federal income tax returns.
He testified under oath on three occasions that he filed such returns--before the investigating agents, before the District Court, and before the Censor Committee. The inquiry in the District Court was almost wholly limited to the two years 1953-1954, but he told the investigators and he told the Censor Committee that he filed returns for each year of the period 1942-1954.
Bennethum further testified that during the period 1942-1947 he paid his federal taxes by check, and that from 1947-1952 he paid them in cash.
With the exception of the years 1952-1954 Bennethum produced no written evidence of any sort to substantiate his story-- --no copies of any returns, no cancelled checks, and no receipts for the payment of cash.
As above stated, according to the records of the District Director of Internal Revenue, Bennethum at the time of his trial had not filed any return or paid any tax for the years 1942-1954. An effort was made to show that the returns might have been lost. The facts show that such an explanation is so wildly improbable that it must be instantly rejected. Upon receipt of a tax return a file card is written in quintuplicate. One copy is placed in an index file. This file is the principal file that is examined in order thereafter to locate the return. There is one file for each year. Hence to credit Bennethum's testimony, we must believe that all of his index cards were removed, or misfiled, or lost from thirteen separate index files. The District Director testified that in 35 years of experience he knew of only two lost returns, and in those cases the index cards had not been lost.
But this is not all. In cases in which the tax is not paid with the return and hence is owing (as was true in respect of several years, according to Bennethum), another copy of the index card, showing the tax due, is filed in an account file and a copy is sent to the taxpayer. Employees of the District Director testified that a search disclosed no record of tax accounts with Bennethum, and no record of any tax payments. Hence, if Bennethum's testimony is to be believed, another series of index cards was lost.
Bennethum's attempts to explain his lack of any written evidence in support of his story are wholly unconvincing. He said that in response to a call from a federal agent in the summer of 1955 he got out his tax files and placed them on a window sill and forgot about them. At about that time, he said, the firm was destroying 'dead files' in a storage room. He threw out the suggestion that his tax files may have got into the storage room and been destroyed.
His failure to produce any cancelled checks showing payment of federal tax is unexplained.
His statement to the agents in the 1956 conference respecting payments of tax in cash is likewise unconvincing. He said that after he became a partner he started accumulating cash in a desk drawer, later depositing it in a safe. From this, he said, he made periodic payments on his tax liability. It is to be noted that during the years since he became a partner his tax liability was substantial. Why he chose this unusual method of paying the tax he did not explain. And it seems highly unlikely that any practicing lawyer would accumulate substantial amounts of cash in a desk drawer.
From the facts above set forth the Censor...
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Lassen, Matter of
... ... Though the Court may consider the deterrent effect of the various proposed sanctions, Agostini, 632 A.2d at 81, and ABA Standard 1.2 cmt, the lawyer disciplinary system is not penal or punitive in nature, see, e.g., In re Rich, Del.Supr., 559 A.2d 1251, 1257 (1989); In re Bennethum, Del.Supr., 161 A.2d 229, 236 (1960). Of significant weight in determining the appropriate sanction, however, is the impact the chosen sanction will have on the preservation of the integrity of the Bar and the public's perception of the Bar ... The general framework for ... ...
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