Boivin, In re
Citation | 271 Or. 419,533 P.2d 171 |
Parties | In re Complaint as to the conduct of Harry D. BOIVIN, Accused. . * |
Decision Date | 13 March 1975 |
Court | Supreme Court of Oregon |
C. S. Emmons, Emmons, Kyle, Kropp & Kryger, Albany, filed the brief for petitioner.
No appearance contra.
This is a disciplinary proceeding by the Oregon State Bar. The complaint alleges that the accused was an attorney and the owner of a building in Klamath Falls with several lessees, one of whom, Keith Rice, operated a restaurant under lease from the accused; that the accused undertook to form a corporation for J. E. Chambers, who desired to purchase the restaurant business, and then undertook to prepare a contract of sale of the restaurant from Rice to Chambers and a sublease and new lease between himself and Chambers and his corporation. It is alleged that in doing so the accused undertook to represent not only Chambers and the corporation, but also Rice and himself, as the lessor, and that he 'failed to advise Chambers of the conflict of interest between himself and Chambers and failed to advise Chambers to obtain independent counsel.' 1
A trial committee of the Oregon State Bar, after a hearing at which testimony was offered, found that the accused was guilty of this charge and that the conduct of the accused was 'unethical and in violation of the standards of professional conduct established by law and by the Oregon State Bar.' It recommended that the accused be administered a private reprimand.
We have reviewed the testimony and find that it supports the findings by the trial committee. We cannot, however, accept its recommendation of a private reprimand. Upon the filing of such a complaint by the Oregon State Bar against an attorney the matter then becomes a public record, including the final disposition of the case by this court. It follows that the disposition of such a case cannot be a private reprimand.
Upon examination of the record in this proceeding it appears that Chambers, who had never before been engaged in such a business transaction, came to the accused to form a corporation to protect him and his brother from personal liability in his new business venture. That corporation was organized by the accused, who then continued to represent it for some time.
It also appears that Mr. Chambers and Mr. Rice agreed upon the price and terms for payment for the purchase of the restaurant by Chambers and came to the accused to prepare the necessary papers and also because it was necessary to secure approval of the sale from the accused as the landlord. Mr. Chambers testified that it was suggested by the accused that he could 'handle' the matter for both Mr. Rice and Mr. Chambers and that it would be cheaper for him to do so because he could then 'split the fee' between them. Mr. Chambers also testified that the accused did not suggest at that time that he go to another lawyer.
The accused, when asked whether he suggested to Chambers that he should consult another lawyer, answered:
The accused then prepared a contract of sale for signature by Mr. Chambers both on behalf of the corporation and as an individual. Mr. Rice testified that he told Mr. Chambers that he would not be satisfied with a contract signed on behalf of the new corporation alone. Mr. Chambers testified, however, that he did not realize that he was signing as an individual and was surprised when he found out later that he was personally liable. The sublease from Rice to Chambers and the new lease from Boivin to Chambers were also prepared for signature by him as an individual, as well as on behalf of the corporation.
Subsequently the restaurant venture failed, after which the accused filed an FED proceeding and Rich filed suit to foreclose the contract of sale.
It is clear, as testified by the accused, that Mr. Chambers was fully aware of the fact that when the accused prepared the contract of sale and the sublease he was doing so on behalf of both Chambers and Rice and that the accused was the lessor, as the owner of the building. That, however, does not exonerate the accused.
Indeed, two problems remain: (1) Whether it was proper, despite that knowledge, for the accused to undertake to represent both Chambers and Rice in the preparation of the contract of sale and sublease, and (2) Whether it was proper, despite that knowledge, for the accused, as the owner of the building and lessor of the restaurant premises, to undertake to represent Mr. Chambers at all.
One of the fundamental canons of professional ethics is that it is improper for a lawyer to represent conflicting interests, except by express consent of all concerned given after a full disclosure of all of the facts. 2
As stated in Drinker, Legal Ethics 104 (1953), with reference to Canon 6 of the Canons of Professional Ethics of the American Bar Association (and superseded by the Code of Professional Responsibility, Disciplinary Rule 5--105, ):
'In observing the admonition of Canon 6 to avoid the representation of conflicting interests, the lawyer must have in mind not only the avoidance of a relation which will obviously and presently involve the duty to contend for one client what his duty to the other presently requires him to oppose, but also the probability or possibility that such a situation will develop. * * *'
It was recently stated by this court, although in a different context, that in order for consent to exonerate conduct by one in a fiduciary capacity that would otherwise be a breach of his fiduciary duties, such consent must be an 'informed consent,' after full disclosure of all of the material facts. See Starr et al v. International Realty, Ltd., et al., Or., 533 P.2d 165 (decided this day).
To satisfy the requirement of full disclosure by a lawyer before undertaking to represent two conflicting interests, it is not sufficient that both parties be informed of the fact that the lawyer is undertaking to represent both of them, but he must explain to them the nature of the conflict of interest in such detail so that they can understand the reasons why it may be desirable for each to have independent counsel, with undivided loyalty to the interests of each of them. See Wise, Legal Ethics 77 (2d ed 1970); Patterson and Cheatham, The Profession of Law 232, 235 (1971); Drinker, Supra at 121; and Annot., 17 ALR3d 835, 838--39 (1968).
Indeed, it has been held that even such a full disclosure by a lawyer may not of itself afford complete exoneration. Thus, as stated in Kelly v. Greason, 23 N.Y.2d 368, 378, 296 N.Y.S.2d 937, 946, 244 N.E.2d 456, 462 (1968):
'* * * (T)he unsophisticated client, relying upon the confidential relationship with his lawyer, may not be regarded as able to understand the ramifications of the conflict, however, much explained to him * * *.'
As also stated by Wise, Supra at 258:
See also Drinker, Supra at 105, 120, and Annot., 17 ALR3d, Supra at 841.
The representation by a lawyer of both the buyer and the seller in a business transaction is one of the clearest cases of the improper representation of conflicting interests. See Annot., 17 ALR3d, Supra at 848. Numerous opinions by the Committee on Legal Ethics of the Oregon State Bar are to the same effect. See, among others, Opinions No. 102, 118, 135 and 162. As stated in another opinion by that...
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