Clancy v. State Bar of Cal.

• Decision Date: 28 May 1969
• Docket Number: S.F. 22621
• Citation: 77 Cal.Rptr. 657,71 Cal.2d 140,454 P.2d 329
• Parties: , 454 P.2d 329 Thomas J. CLANCY, Petitioner, v. The STATE BAR OF CALIFORNIA, Respondent.
• Court: California Supreme Court

Page 657

77 Cal.Rptr. 657

71 Cal.2d 140, 454 P.2d 329

Thomas J. CLANCY, Petitioner, v. The STATE BAR OF CALIFORNIA, Respondent.

S.F. 22621.

Supreme Court of California,

In Bank.

May 28, 1969.

Daniel H. Dibert and Stubbs & Dibert, San Francisco, for petitioner.

F. LaMar Forshee and Herbert M. Rosenthal, San Francisco, for respondent.

PER CURIAM.

This is a proceeding to review a recommendation of a disciplinary board of the State Bar that petitioner by suspended from the practice of law for three years, on conditions of probation, including actual suspension for the first six months, and compliance with other terms of probation.

Facts: Petitioner, now 36 years of age, was admitted to practice in this state in 1961. He was charged in a notice to show cause with professional misconduct in violation of his oath and duties as an attorney at law (Bus. & Prof.Code, §§ 6103, 6067, 6068) and the commission of acts involving moral turpitude (Bus. & Prof.Code, § 6106) in requesting a client to deliver $1,000 to him on his representation that he would invest the funds and make a profit of $200 for her, knowing that the representation was made for the purpose of inducing the client to make available $1,000 for petitioner's own purposes.

Petitioner did not file an answer to the notice to show cause. However, he appeared in person and by counsel at the hearing before the local administrative committee and stipulated that all the material allegations of the notice would be deemed denied.

The committee found petitioner culpable and recommended suspension for one year, with the suspension stayed on conditions of probation providing that if within the first six months he repaid his client $1,200 the order suspending him would be revoked as of the date of payment and if he failed to make such payment within the first six months he would be suspended for the remaining months.

Petitioner conditionally accepted the report of the trial committee, pursuant to rule 38.5 of the Rules of Procedure of the State Bar. The disciplinary board rejected petitioner's conditional acceptance and ordered the proceeding calendared for review. After argument on the merits, the disciplinary board made findings of fact that differed in minor respects from those of the trial committee, and unanimously found petitioner culpable. The board, by a vote of 8 to 5, recommended that petitioner be suspended from practice for three years on conditions of probation, including actual suspension for the first six months, further suspension to terminate upon repayment of $1,200 to his client, and in no event to exceed three years. ¹ The five dissenting members of the board were of the opinion the discipline recommended was too severe.

At the time of the hearing before the local administrative committee, Mrs. Ragsdale, the complaining witness, was a widow, aged 59 years, who had lived in California since 1945. She testified that she had only a first grade education. She had been employed as a maid in a San Francisco hotel for about 17 years and ceased working due to illness. She first met petitioner in 1962 when someone recommended that she consult him in connection with a personal injury claim. Her husband died in 1963, and petitioner handled the probate of his estate, from which she received approximately $10,000 on final distribution. He assisted her in obtaining a widow's pension from the Veterans Administration and drafted an agreement between her and a songwriter in Arizona. He also drafted her will, and she thereafter consulted him regarding some desired changes. She and petitioner sometimes conversed about their families; petitioner was kind to her; and she 'thought of him as a brother, and he seemed like the best friend I had here.'

On or about August 18, 1966, petitioner telephoned Mrs. Ragsdale at home and said that in going over her will he noticed she had a little money in the bank and inquired whether she would like to make a good investment. She testified that he told her 'G.I. boys buy homes and the Government for it, they want (their equity) out of it, for it, they want Their equity out of it, and the place is put up and sold, and if they don't bring the price, the Government pays the difference. * * * he said (there) was a place down in Marin County and it was in excellent condition, and the people wanted a thousand dollars for that (equity.)' She asked petitioner whether she could lose her money, and he 'guaranteed' that she couldn't lose, as 'the Government stands back of it.' He told her she would receive no interest, but she would get back her $1,000 in 90 days and make anywhere from $50 to $500 profit when the house was sold. She told him she wanted to think it over and asked him to call her again. When petitioner telephoned her later that day she asked him how he wanted the money and he told her to have a check made out to him. She withdrew $1,000 from her savings account, delivered it to petitioner at his office, and he gave her a receipt for the money. The document she denominated as 'a receipt' was petitioner's unsecured, 90-day, non-interest bearing note.

Several weeks later, on or about September 30, 1966, petitioner telephoned her saying that he had 'good news' for her, 'we sold the place and you made $200.' At the same time he told her that she could pick up her new will at any time, but that it would be four or five weeks before he could 'fix the deeds and things' and have a check for her.

Mrs. Ragsdale executed her will at petitioner's office on September 30, 1966. Hearing nothing further from petitioner for several weeks, she telephoned his office and received a recorded message that the telephone number was no longer in service. She went to his office, where she learned that petitioner had moved out. She was unable to locate him and did not see him again until the hearing. In the meantime she had not heard from him, nor had she received either the return of her $1,000 or the promised profit.

Petitioner denied having represented to his client that he would invest her money in a G.I. mortgage, and said he obtained $1,000 from her, intending to repay that amount plus a bonus in a then undetermined amount upon receipt of an anticipated fee from another client. Petitioner testified that he had earned, but had not received, a fee of about $2,500 for representing a mortgage broker in an action to recover a commission for negotiating a loan to refinance an office building. A number of other lawsuits, including a foreclosure, were pending against the owner of the building. Funds from the new lender were held in escrow, from which the various claims were to be paid. Petitioner attached part of the funds for the broker's commission. After a settlement had been reached among the various claimants, the Franchise Tax Board placed a withholding order with the escrow holder for a claim against the former owner of the building, further delaying the escrow closing. The tax lien was eventually removed, and in an interpleader action the court ordered the funds paid to the county clerk to be disbursed pursuant to a stipulation. While the funds were in the hands of the county clerk, an attachment was filed by another party, and at the time of the hearing before the local administrative committee petitioner had not received his fee.

It was during the period that petitioner awaited the release of the tax lien that he telephoned Mrs. Ragsdale and asked for, and obtained, a thousand dollars. He was in an extremely difficult financial position, partly due to his wife's pending divorce action, and was unable to borrow from anyone else, although he did not so inform Mrs. Ragsdale. He gave her a 90-day note because he would need that amount of time to repay the thousand dol lars in the event he did not receive his expected fee. He was quites sure he did not describe the note to her as 'a receipt.' When questioned whether he represented to his client that he was going to make an investment for her, he answered: 'I did not represent that I would invest that money for her, no. But insofar as her viewing this as an investment, clearly yes. The whole connotation of it was an investment which she would be repaid more than interest. Q. In other words, an investment in you, not in some other mortgage or in any other venture? A. Well, in me and in the funds that were to come to me.'

When questioned by one of the committee members as to what he said to Mrs. Ragsdale, he replied: 'I said to her that I was anticipating receiving a substantial fee when this property was closed, that if she would advance or put up (and I don't know my words) a thousand dollars, that in a vary short period of time, I would return that to her, plus a profit. She could look at it as an investment. That, in essence, is it.' When asked whether the fee he was expecting would have been sufficient to pay all of his creditors, he replied that it would not have been sufficient to pay them all in full but it was his intention to repay Mrs. Ragsdale.

Petitioner used the funds obtained from Mrs. Ragsdale for his personal expenses and to discharge some of his debts. He gave up his office about November 1, 1966, and sold his furnishings to pay back rent. He was unable to find employment until September 1967, and made no attempt to contact Mrs. Ragsdale after she executed her will at his office. He notified the post office of a change of address and received mail forwarded from the office. He stated that the attorneys at his former office knew where to locate him; he surmised that one of the girls at the office, knowing his problems with creditors, may have felt she was doing him a favor in not disclosing his forwarding address to Mrs. Ragsdale.

The day before the hearing petitioner delivered $200 to his counsel in trust for Mrs. Ragsdale, but this sum was not turned over to her on advice of his counsel.

In summary, the board found (I) that by reason of petitioner's prior...