Committee on Professional Ethics and Conduct of The Iowa State Bar Ass'n v. Davidson, 86-1429

• Decision Date: 14 January 1987
• Docket Number: No. 86-1429,86-1429
• Citation: 398 N.W.2d 856
• Parties: COMMITTEE ON PROFESSIONAL ETHICS AND CONDUCT OF THE IOWA STATE BAR ASSOCIATION, Complainant, v. Richard G. DAVIDSON, Respondent.
• Court: Iowa Supreme Court

Page 856

398 N.W.2d 856

COMMITTEE ON PROFESSIONAL ETHICS AND CONDUCT OF THE IOWA STATE BAR ASSOCIATION, Complainant, v. Richard G. DAVIDSON, Respondent.

No. 86-1429.

Supreme Court of Iowa.

Jan. 14, 1987.

As Corrected Jan. 28, 1987.

Richard G. Blane II, of Hansen, McClintock & Riley, and Norman G. Bastemeyer, Des Moines, for complainant.

Thomas J. Levis, of Scalise, Scism, Sandre & Uhl, Des Moines, for respondent.

Considered en banc.

NEUMAN, Justice.

The complaint filed in this attorney disciplinary action charged that the respondent, Richard G. Davidson, mishandled the Gladys B. Jones estate and in so doing, "knowingly and willfully made material misrepresentations," "caused false and fraudulent documents to become a part of public record," "commingled and misappropriated estate funds and property," and "knowingly and willfully neglected and failed to diligently carry out his duties as attorney and executor for the estate." After hearing, the Grievance Commission concluded that as a result of respondent's "sloppy handling" of the estate, he should be suspended from the practice of law "for a minimum period." The record before this court reveals a string of deficiencies, improprieties and unethical conduct which compels us to impose a more serious sanction, suspension of his license for not less than two years.

Our review of this case is de novo. Iowa Sup.Ct.R. 118.10; Committee on Professional Ethics & Conduct v. Bitter, 279 N.W.2d 521, 522 (Iowa 1979). We give respectful consideration to the commission's findings and recommendations but are not bound by them. Committee on Professional Ethics Conduct v. Zimmerman, 354 N.W.2d 235, 236 (Iowa 1984). The burden is upon the committee to prove by a convincing preponderance of the evidence that the respondent has violated the Code of Professional Responsibility as charged. Committee on Professional Ethics & Conduct v. Lawler, 342 N.W.2d 486, 487 (Iowa 1984).

We shall briefly recite the facts giving rise to this complaint, followed by a more detailed examination of the facts as they become pertinent to the twelve specific instances of ethical misconduct charged by the committee and addressed by the commission.

In 1974, respondent Davidson prepared the last will and testament of Gladys B Jones. When Mrs. Jones died in November 1979, the will was admitted to probate and, in accordance with the wishes of the testator, Davidson was appointed both executor and attorney. Letters of appointment were issued January 14, 1980.

By its terms, the will bequeathed the sum of $8000 in cash plus certain jewelry and other personal property to a number of individual beneficiaries. The balance of the estate (approximately $350,000) was to be placed in a trust for the building of a civic auditorium in Shenandoah, Iowa. Anticipating that additional funds would be necessary for the construction of this facility, the will gave the city of Shenandoah a period of two years after the testator's death to raise the necessary funds and thereafter, for a period of three years, planning and fund raising would become the responsibility of a tax exempt, non-profit corporation. If sufficient funds were not raised within five years, the trust funds would pass to a local hospital.

Three trustees were appointed and a committee of Shenandoah citizens was organized to coordinate fund raising and building plans. Robert Tyler was the only trustee actively involved in this process. The committee was assisted by Shenandoah city attorney Robert Norris. Within the initial two year period, the city determined that it could not assume financial responsibility for the project. Nevertheless, Norris continued to assist the citizens' committee. Attention then focused on the importance of establishing a non-profit corporation in accordance with the will.

Meanwhile, respondent Davidson proceeded with the probate of the estate, filing a preliminary inheritance tax return, obtaining court orders for compensation and sale of certain property, and making two minor distributions to the trustees for preliminary feasibility and architectural studies.

In late spring 1982, trustee Tyler requested that city attorney Norris inquire about the status of the probate proceedings. Much to his surprise, Norris discovered that the estate had been closed and the fiduciary discharged on February 4, 1982, all without notice to the beneficiaries or the filing of an accounting of any kind. He brought the matter to the attention of the court and subsequently, a hearing was held which resulted in the reopening of the estate, the removal of Davidson as executor and attorney, and the appointment of Sanford Turner as successor executor. As will be detailed later in this opinion, numerous procedural irregularities came to light before the estate was finally closed.

Throughout the probate proceedings in district court and before the grievance commission, Davidson has maintained that his closing of the estate was entirely inadvertent and that the press of a busy law practice caused him to neglect the obvious need to rectify the mistake once it came to his attention. He argues that his neglect, though inexcusable, did not rise to the level of ethical misconduct for he never had any intention of benefiting personally from the many errors which have become apparent. He relies on our opinion in Committee on Professional Ethics & Conduct v. Bitter, 279 N.W.2d 521, 526 (Iowa 1979) for the proposition that mere negligence resulting from haste or oversight would not constitute a violation of DR1-102(A)(4). Were this a case of mere haste or neglect, the comparison might be appropriate. The following discussion, however, reveals a case more akin to Committee on Professional Ethics & Conduct v. Zimmerman, 354 N.W.2d 235, 237 (Iowa 1984) (want of disclosure constituted misrepresentation within the meaning of our disciplinary rules) and Committee on Professional Ethics & Conduct v. Steensland, 376 N.W.2d 615, 618 (Iowa 1985) (flagrant neglect of proper estate administration).

Furthermore, we cannot overlook the numerous ethical violations Davidson committed. See Committee on Professional Ethics & Conduct v. West, 387 N.W.2d 338, 342 (Iowa 1986). We turn now to the twelve specific allegations of misconduct.

1. Misrepresentation in claim for compensation filed October 21, 1980.

On May 2, 1980, Davidson applied for, and received, an order compensating him for services rendered the estate (including preparation of the federal estate tax return and Iowa inheritance tax return) from November 13, 1979 to May 19, 1980 totalling $5616. Five months later, on October 21, 1980, he filed a second claim for compensation which was allowed in the sum of $5209.18. This verified claim, which was undated but did not suggest a request for advance fees, recited that among the services performed was "preparation of preliminary final report, order, final report and order." In fact, Davidson readily admits that these reports were not prepared until January 1982.

Iowa Rule of Probate Procedure 2(d) provides that "[o]ne half of the fees for ordinary services may be paid when the federal estate tax return, if required, and Iowa inheritance tax return, if required, are prepared.... The remainder of the fees may be paid when the final report is prepared and the costs have been paid." It is apparent that the rule is silent as to when claims may be made for services not yet performed. It is undisputed in this record that Davidson did not receive the compensation allowed on this second claim. Although the committee argues that the format used by Davidson suggested completion of work not yet performed, a deliberate attempt to mislead the court, we concur with the commission's conclusion that Davidson's actions did not strictly violate either the probate or disciplinary rules.

2. Misrepresentation and misappropriation of funds re: claim for compensation filed November 13, 1981.

Davidson's third claim for compensation was presented to the court and allowed on May 11, 1981. This claim was for $2504 and represented fees and expenses to be paid in advance "to establish a non-profit corporation under Section 501(c)(3)" including a trip to the internal revenue service in St. Louis, Missouri. Davidson collected the payment but did not make the trip to St. Louis until June 1982. The testimony before the grievance commission and the findings of both Judge Keith Burgett and Judge J.C. Irvin point to the fact that Davidson had been neither hired nor authorized by the trustees to form the non-profit corporation and that prior to his departure he had been advised by both city attorney Norris and Judge Burgett to take no further action in regard to the matter. In view of the fact that this trip and these fees were incurred after the inexplainable closing of the estate and after the hearing on Davidson's removal as fiduciary, the inescapable conclusion to be drawn is that Davidson only took the trip to justify fees already collected.

This action by Davidson, seeking approval by the court for compensation for services never requested by the trustees nor authorized by the will of Gladys B. Jones, constitutes a blatant misrepresentation to the court in violation of EC1-5 and DR1-102(A)(1), (4), (5) and (6).

Not only did Davidson's actions in this regard constitute misrepresentation, they resulted in a misappropriation of estate funds. Beyond the obvious question of why the estate should bear expenses rightfully chargeable to the trust, the record revealed that Davidson never secured the tax exempt status, a task which Norris eventually accomplished through the I.R.S. office in Chicago, not St. Louis. Furthermore, the articles of incorporation filed by Davidson in July 1982, after his removal as fiduciary, had to be redone by Norris. All in all, Davidson's time and expense were of no benefit to the estate and served only his personal interest. The fact that Davidson has repaid these...