Clark v. State Bar

• Decision Date: 30 June 1952
• Court: California Supreme Court
• Parties: CLARK v. STATE BAR. L. A. 22166.

Page 1

246 P.2d 1

39 Cal.2d 161

CLARK v. STATE BAR.

L. A. 22166.

Supreme Court of California.

June 30, 1952.

John W. Preston, Los Angeles, for petitioner.

Edward Hervey, Los Angeles, and Jerold E. Weil, San Francisco, for respondent.

PER CURIAM.

Petitioner Oliver O. Clark is charged in six counts with violation of his oath and duties as an attorney (Bus. & Prof. Code, §§ 6067, 6103), with violation of Rule 9 of the Rules of Professional Conduct of the State Bar of California (commingling of funds), and with commission of acts involving moral turpitude and dishonesty. (Bus. & Prof. Code, § 6106.) After a hearing, the local administrative committee found, except as to Counts One and Five, that the acts alleged to have been committed or omitted were in fact committed or omitted. The committee found, however, that there was no intentional commission or omission, that petitioner was simply guilty of 'oversight,' 'carelessness,' and 'neglect,' and recommended that the matter be dismissed. The Board of Governors of the State Bar held a hearing at which petitioner addressed the board and answered questions. The board admitted in evidence a letter submitted by petitioner, reviewed the record before the local administrative committee, and found petitioner guilty as charged on all six counts. The board recommended that petitioner be suspended from the practice of law for a period of one year. Three members dissented on the ground that the degree of discipline recommended was insufficient. In fixing the degree of discipline to be recommended, the board took into consideration petitioner's past record, which included a disciplinary proceeding entitled 'L.A. 1276 In the Matter of Oliver O. Clark, Attorney at Law (Dr. L. C. Burwell, complaining witness),' in which the board on August 5, 1949, publicly reproved petitioner.

Petitioner contends that there is no evidence to support the findings of the board. The findings of fact by the local administrative committee and the board are not binding upon this court, and upon review of a recommendation for suspension or disbarment we pass upon the sufficiency and weight of the evidence. Fleming v. State Bar, 38 Cal.2d 341, 239 P.2d 866; Fall v. State Bar, 25 Cal.2d 149, 159, 153 P.2d 1. The burden is on petitioner, however, to show that the recommendation of the board is erroneous or unlawful. Alkow v. State Bar, 38 Cal.2d 257, 239 P.2d 871.

The six counts in this proceeding all arise from petitioner's conduct as guardian of the estate of one George W. Bigelow, an incompetent. Petitioner was appointed guardian on August 30, 1943, and continued in that capacity until the death of his ward, December 21, 1948. Petitioner was subsequently appointed executor of Bigelow's estate.

Petitioner filed his first annual account on December 16, 1944, and the account was approved by the court. Thereafter no accounts were filed, and on April 13, 1948, the surety on petitioner's bonds petitioned the court for an accounting. Petitioner thereafter filed his second account on July 28 ,1948, which was not approved. An amended second account was filed on November 22, 1948, but was ordered off calendar following Bigelow's death. On March 1, 1949, petitioner filed a final account, approval of which was denied by the court with instructions to file a new account for the entire period of the guardianship. On May 23, 1949, a certified public accountant was appointed as a referee to examine petitioner's records. On August 29, 1949, the referee reported a cash shortage of $2,131.12 in the guardianship funds.

The court found that petitioner had overcompensated himself and the estate's attorney (petitioner's son-in-law), and had made other unauthorized expenditures, totalling $5,145. The court also ordered petitioner to bear the costs of appointing the referee, $1,100. Petitioner was thus surcharged for the cash shortage of $2,131.12, the unauthorized expenditures of $5,145, and the costs of appointing the referee, $1,100, or a total of $8,376.12. The final account was approved on that basis. The amount surcharged was repaid by petitioner and not by the bonding company.

It should be noted at the outset that the fact that petitioner and Bigelow occupied the relationship of guardian and ward, and not that of attorney and client, would not preclude disciplinary action. As guardian petitioner occupied a position demanding of him the highest degree of diligence and good faith. Probate Code § 1400; Guardianship of Carlon's Estate, 43 Cal.App.2d 204, 208, 110 P.2d 488. He was an officer of the court until discharged from his guardianship. Guardianship of Reynolds, 60 Cal.App.2d 669, 677, 141 P.2d 498. He took an oath that he would execute the duties of his trust. Probate Code § 1480. When an attorney assumes a fiduciary relationship and violates his duty in a manner that would justify disciplinary action if the relationship had been that of attorney and client, he may properly be disciplined for his misconduct. Bus. & Prof. Code § 6106; Petersen v. State Bar, 21 Cal.2d 866, 870, 136 P.2d 561; Flaherty v. State Bar, 16 Cal.2d 483, 489, 106 P.2d 617; Lyders v. State Bar, 12 Cal.2d 261, 265, 83 P.2d 500; Jacobs v. State Bar, 219 Cal. 59, 64, 25 P.2d 401; see 7 C.J.S., Attorney and Client § 19.

Count One. The board found that petitioner 'commingled money belonging to George W. Bigelow, an incompetent person, with his own money or personal effects.' The money referred to, at least $1,400, was received by petitioner in May, 1946, after sale of a lot owned by the ward. After the referee completed his audit and reported a discrepancy in the guardianship accounts, petitioner produced the money. According to petitioner, the money, in fifty and hundred dollar bills, had been placed in a large envelope with the words 'Bigelow Estate' in pencil across the front. The envelope was placed in a locked metal box in petitioner's office, which also contained documents and money of clients in separately marked envelopes and petitioner's own money and documents. Petitioner did not have a personal bank account. The envelope remained in the box, and the money was not deposited in the guardianship account for Bigelow. Petitioner explains his failure to deposit the money on the ground that he forgot to leave his secretary a memorandum instructing her to deposit the funds and that the money remained in the box for over three years through his oversight. He states that he found the missing money 'after the report of the referee in this matter, approximately two weeks later when it became plain to me that the discrepancy was due to the accounting of the money received from the Maywood lot.'

Petitioner's explanation does not set at rest suspicions aroused by his conduct. He was requested to produce the envelope in which he stated that the money was placed, but did not do so. He did not call his secretary as a witness to corroborate his testimony. He could not account at the hearing for the amount of money that he allegedly found in the envelope, yet he knew when he found the money that he was under investigation, that a shortage had been discovered in his accounts, and that he would undoubtedly be called upon to show that he had not misappropriated the missing money.

These facts must be viewed in the light of petitioner's background. As a fiduciary, the law imposed upon him the strictest duty of prudent conduct. Petitioner has practiced law in California since 1907. Bucause he is a man of superior intellect and wide experience, ¹ his conduct is less excusable than might otherwise be the case. An attorney 'must perform his duties to the best of his individual ability'. Friday v. State Bar, 23 Cal.2d 501, 505, 144 P.2d 564, 567. Against petitioner's version of the facts, we must balance evidence definitely showing that petitioner sold his ward's property for cash, that he failed to deposit the money in the guardianship account, that over three years later a referee's report divulged a shortage in funds, that the court and surety demanded that petitioner make up the shortage, and that then, but only then, petitioner produced the missing money with an explanation that tests credulity.

The board contends that petitioner's testimony establishes commingling, on the theory that the offense was committed when petitioner placed the envelope containing his ward's money in the same safe with his own money. Rule 9 ² of the Rules of Professional Conduct, 33 Cal.2d 30, does not define commingling, but the decisions establish that commingling is committed when a client's money is intermingled with that of his attorney and its separate identity lost so that it may be used for the attorney's personal expenses or subjected to claims of his creditors. Bennett v. State Bar, 27 Cal.2d 31, 36, 162 P.2d 5; Griffith v. State Bar, 26 Cal.2d 273, 276-277, 158 P.2d 1; Narlian v. State Bar, 21 Cal.2d 876, 884-885, 136 P.2d 553; Peck v. State Bar, 217 Cal. 47, 51, 17 P.2d 112. When the client's money is kept apart from that of the attorney, Rule 9 is not violated. Townsend v. State Bar, 36 Cal.2d 631, 633, 226 P.2d 581. Accordingly, if petitioner at all times kept his ward's money in a separate envelope in his safe, with his ward's name plainly marked on the envelope, the money was not commingled with petitioner's own money, within the meaning of Rule 9.

Whether or not the charge of commingling can be sustained thus depends on whether or not we accept as true petitioner's testimony that he placed the money in his safe in a large envelope marked 'Bigelow Estate.' In view of the seriousness of the alleged offense and the lack of direct evidence of commingling, we have decided, as did the local committee, to give petitioner the benefit of doubts that might reasonably be entertained as to his credibility, and to accept his testimony as true. We therefore conclude that the charge of commingling has not been proved.

Even though the offense of commingling...