Committee on Professional Ethics and Conduct of Iowa State Bar Ass'n v. West, 85-1804

• Decision Date: 21 May 1986
• Docket Number: No. 85-1804,85-1804
• Citation: 387 N.W.2d 338
• Parties: COMMITTEE ON PROFESSIONAL ETHICS AND CONDUCT OF the IOWA STATE BAR ASSOCIATION, Appellee, v. George G. WEST, Appellant.
• Court: Iowa Supreme Court

Page 338

387 N.W.2d 338

COMMITTEE ON PROFESSIONAL ETHICS AND CONDUCT OF the IOWA STATE BAR ASSOCIATION, Appellee, v. George G. WEST, Appellant.

No. 85-1804.

Supreme Court of Iowa.

May 21, 1986.

Rehearing Denied June 18, 1986.

William L. Kutmus of Kutmus & Pennington, P.C., Des Moines, for appellant.

James E. Gritzner and Kasey W. Kincaid of Nyemaster, Goode, McLaughlin, Emery & O'Brien, P.C., Des Moines, for appellee.

Considered by UHLENHOPP, P.J., and McGIVERIN, LARSON, SCHULTZ and CARTER, JJ.

SCHULTZ, Justice.

This disciplinary proceeding arises from attorney George West's involvement in the acquisition, resolution of proprietary rights, and sale of real estate housing an office building (property). In reviewing West's actions concerning this property, the Grievance Commission found he committed ethical violations and recommended he be disciplined. Attorney West appealed the decision of the commission. We agree with the commission's findings of misconduct and its recommendation that appellant's license to practice law be suspended for one year.

Although appellant has been in the general practice of law for thirty years, he has been heavily involved in real estate matters. He has been a real estate broker since 1956 and conducts ten to fifteen real estate seminars each year. Appellant has been personally involved in substantial real estate holdings and has served as a real estate advisor.

In 1969 appellant entered into a joint venture with an accountant, whom we shall refer to as his "associate." This venture was intended for the acquisition of real estate. In 1970 the associate signed an offer to purchase the property for $65,000 and tendered a $100 earnest money payment. Later, appellant advanced $6,400 additional earnest money and both signed a note that was used to pay part of the remaining balance. Title was conveyed to appellant and his associate as tenants in common. The financial instruments executed for the purchase of the property indicated that appellant and his associate each owned 50 percent of the property. However, partnership tax returns for the property indicated the associate's interest to be proportional to his initial investment of $100.

Thereafter, appellant became aware that his associate was having financial problems. The associate refused appellant's request for contributions to operating and remodeling expenses and further capital contributions. The associate did, however, assist appellant in obtaining a $315,000 loan to remodel the office building on the property. Both parties signed the 1972 note and mortgage.

Later, appellant was unable to meet the expenses of operating the building and contacted his brother, a physician in California, about becoming an investor in the property. Initially, a loan was made to appellant and his associate by Westco Enterprises, Inc. (Westco), a family corporation in which appellant and his brother are shareholders. In December 1972, when Dr. West was looking for a tax shelter, he personally contributed $26,000 in cash and a $26,000 promissory note. Appellant and his wife deeded the property to appellant and Dr. West as tenants in common without the involvement or consent of the associate. Dr. West relied upon appellant in entering into this transaction and had no knowledge of the associate's interest in the property.

In 1973 Westco filed an action against appellant and his associate for money due under the promissory note and obtained a judgment in the amount of $24,695. Appellant paid the judgment and obtained a right of action against his associate. In December 1973 a lease of part of the building to the city was subsequently assigned to the mortgagee in an effort to avoid the associate's judgment creditors.

Appellant and his associate did not have a written agreement concerning ownership of the property from the time of its purchase in 1970 forward. In 1973 appellant brought a declaratory judgment action against the associate to determine their respective interests in the property; however, the suit was ultimately dismissed under Iowa Rule of Civil Procedure 215.1. In December 1982 appellant retained an attorney to assist him in obtaining a release of the associate's interest in the property. The associate had a long list of judgment creditors and was known to be judgment proof. In January 1983, under authority of appellant, his attorney wrote to the associate's attorney and proposed that the associate allow a default judgment to be entered against him. The judgment would indicate that the associate only owned a minor interest in the property. In return, appellant would exchange a satisfaction and release of two joint judgments that appellant had paid and several rights of actions appellant had against the associate. The judgments had a total face value of over $132,000.

In March 1983 Westco commenced a quiet title action with appellant's attorney acting as attorney for Westco. The associate consented to a default judgment entered against him in which there was a finding that he had an interest in the property of no more than $350. Westco then levied on the associate's interest in the property and purchased it at a sheriff's sale on August 26, 1983. Later, some of the creditors learned of the transaction and commenced a civil suit against appellant which was later settled.

Between the time appellant retained an attorney to obtain a release of the associate's interest and the time of the sheriff's sale, the value of the property fluctuated dramatically. From January to March 1983 the city vacated two floors of the building, leaving two-thirds of the property unoccupied. Appellant negotiated with the mortgagee to avoid a foreclosure. On March 22, 1983, appellant learned from a newspaper story that a private company was initiating a redevelopment project which would involve acquisition of the property. This acquisition was commenced at a later time through condemnation proceedings brought by the city. Apparently, appellant and Dr. West enjoyed a substantial profit from the condemnation of the property after obtaining tax write-offs on depreciation of the property for several years.

Appellant's principal ethical violations arise from a series of events that preceded the city obtaining title to the property in which appellant attempted to place title to the property solely in his name. We agree with the Grievance Commission's findings that appellant acted unethically by his actions in the following activities:

1. On June 16, 1983, appellant falsely represented by letter to the City of Des Moines that he was the sole owner of the property.

2. On January 3, 1984, appellant signed the names of his brother and his brother's wife to a warranty deed conveying the property to himself and caused his office secretary to notarize the purported signatures. The deed was recorded in the Polk County recorder's office on January 20, 1984.

3. On February 4, 1984, appellant prepared a resolution of the board of directors of Westco and signed his brother's name to the resolution. This resolution authorized appellant to convey the corporation's interest in the property to himself. The deed was executed and filed for record along with the corporation's resolution on February 16, 1984.

4. In April 1984 an assistant city attorney learned of Dr. West's interest in the property during a title search. She advised appellant that the city would need a power of attorney document to demonstrate that appellant could act for his brother in the transaction. Appellant informed the assistant city attorney that Dr. West and his wife were to be in Des Moines the following weekend and an affidavit would then be obtained. Dr. West and his wife have not been in Des Moines since 1960 and it is apparent appellant lied to the assistant city attorney.

5. On April 23, 1984, appellant signed the names of his brother and his brother's wife to an affidavit stating that appellant had authority to act as their attorney in fact and had those signatures notarized. The affidavit and acknowledgement did not show that the document had not been executed by appellant's brother and si...