Conduct of Hockett, In re

• Decision Date: 31 March 1987
• Citation: 303 Or. 150,734 P.2d 877
• Parties: In re Complaint as to the CONDUCT OF Verden L. HOCKETT, Jr., Accused. 84-77; SC S32958.
• Court: Oregon Supreme Court

Page 877

734 P.2d 877

303 Or. 150

In re Complaint as to the CONDUCT OF Verden L. HOCKETT, Jr., Accused.

84-77; SC S32958.

Supreme Court of Oregon,

In Banc.

Argued and Submitted Oct. 7, 1986.

Decided March 31, 1987.

[303 Or. 151] James H. Spence, Roseburg, argued the cause and filed the brief for accused.

George A. Riemer, Portland, argued the cause and filed the brief for the Oregon State Bar.

[303 Or. 152] PER CURIAM.

In this lawyer discipline case the accused was charged and found to have violated, inter alia, former DR 1-102(A)(4), presently DR 1-102(A)(3), (lawyer shall not engage in conduct involving dishonesty, fraud, deceit or misrepresentation), DR 5-105(A) (conflict of interest) and DR 7-102(A)(7) (lawyer shall not assist client in conduct

known to be illegal or fraudulent). ¹ We, too, find that the accused violated those rules and order that he be suspended from the practice of law for 63 days

CONFLICT OF INTEREST

DR 5-105 provided:

"(A) A lawyer shall decline proffered employment if the exercise of his independent professional judgment in behalf of a client will be or is likely to be adversely affected by the acceptance of the proffered employment, except to the extent permitted under DR 5-105(C).

"(B) A lawyer shall not continue employment if the exercise of his independent professional judgment in behalf of a client will be or is likely to be adversely affected by the lawyer's representation of another client, except to the extent permitted under DR 5-105(C).

"(C) In the situations covered by DR 5-105(A) and (B), a lawyer may represent multiple clients if it is obvious that he can adequately represent the interest of each and if each consents to the representation after full disclosure of the possible effect of such representation on the exercise of his independent professional judgment on behalf of each."

The Trial Panel made these findings, which we adopt as our own:

" Accused was admitted to the practice of law in 1957 after a strong business background in business administration. Following brief employment with the Oregon State Tax Commission, and approximately five (5) years as a Deputy District Attorney, for Douglas County, Accused commenced private practice in 1963. Approximately 20 years ago Accused [303 Or. 153] became acquainted with Kenneth Neptune and Lyle Beecroft which developed into a social friendship, including the spouses. Accused commenced representing both Neptune and Beecroft in various matters through the years which included representation of their spouses. In 1980 Accused represented Neptune and Beecroft in the formation of a corporation known as BBN Enterprises. Included in the initial incorporation was Donald Beckley who left the corporation soon after formation, leaving as sole stockholders Neptune and Beecroft. In 1982 BBN Enterprises became indebted to Douglas National Bank of Roseburg in the sum of $147,000.00 and to Northwest Acceptance Corporation in the amount of $209,000.00. Both of said debts were personally guaranteed by Beecroft and Neptune but not their spouses.

" In June of 1983, Accused represented Neptune in an action brought against him by Dirksen. In July and August of 1983, Accused represented Beecroft and spouse in a foreclosure action brought by Davis. In July 1983 through December 1983, Accused represented BBN Enterprises in settling loggers' liens with Roseburg Lumber Company.

" On August 16, 1983, Accused accompanied Beecroft and Neptune to Salem, Oregon, to confer with an attorney about possible bankruptcy. On August 17, 1983, at 10 a.m. Accused conferred with Mrs. Beecroft concerning a divorce and at 12 noon, Accused conferred with Beecroft and Neptune on BBN matters. On August 18, 1983, Accused filed a petition for divorce on behalf of Mrs. Beecroft and on the same date secured the signature of Mr. Beecroft to a waiver and consent form which supported a motion filed by Accused on behalf of Mrs. Beecroft to waive the 90 day waiting period for obtaining a decree. On that same date, August 18, 1983, Accused met with Ken Neptune at 11 a.m. and 3 p.m. and a divorce information sheet was taken concerning the Neptunes. On August 21, 1983, a petition for divorce was filed by Accused on behalf of Mrs. Neptune, and on the same date a motion was filed by Accused on behalf of Mrs. Neptune to

waive the 90 day waiting period for obtaining a decree

" On August 25, 1983, Accused took a decree of dissolution on behalf of Mrs. Beecroft effectively awarding to her all of the real and personal property of the parties save and except the stock of BBN Enterprises and respondent's personal effects and belongings. The decree was to be effective September 24, 1983. On August 30, 1983, Accused took a decree of dissolution on behalf of Mrs. Neptune effectively awarding to Mrs. Neptune all of the parties' real and personal [303 Or. 154] property, except a 1982 GMC pickup, respondent's interest inBBN Enterprises, and respondent's personal effects and belongings. The Neptune decree was to be effective September 30, 1983. On September 1, 1983, Accused had a conference with Beecroft and Neptune and on September 2, 1983, Accused represented Beecroft and Neptune in a meeting with the representatives of Douglas National Bank of Roseburg concerning their indebtedness, at which time the parties were notified action was to be taken to collect the delinquent loans.

" Despite the testimony of Accused, the obvious inference and conclusion from all of the evidence is that Accused was fully advised of the financial difficulties of Beecroft and Neptune and BBN Enterprises, that he had an ongoing attorney/client relationship with them and the company from June of 1983 through December 1983, and that during the same period he represented Mrs. Beecroft and Mrs. Neptune in the dissolution proceedings against their husbands. * * *."

DR 5-105(A) commands undivided loyalty to a client. "It is never proper for a lawyer to represent clients with conflicting interests no matter how carefully and thoroughly the lawyer discloses the possible effect and obtains consent." In re Jans, 295 Or. 289, 295, 666 P.2d 830 (1983). Accord In re Johnson, 300 Or. 52, 58-59, 707 P.2d 573 (1985).

Here, during August and September 1983, the accused was concurrently representing (a) Mr. Beecroft and Mr. Neptune on BBN matters, and (b), Mrs. Beecroft and Mrs. Neptune in their dissolution complaints against Mr. Beecroft and Mr. Neptune.

As the lawyer for Mr. Beecroft and Mr. Neptune, the accused's obligation was to protect them from the claims of creditors, to the fullest permissible extent. As the lawyer for Mrs. Beecroft and Mrs. Neptune, his duty was to maximize their award in the dissolution proceedings, by way of property division, spousal support or both. The persons from whom such property or spousal support would be obtained were his other clients, Mr. Beecroft and Mr. Neptune.

There is no way that the accused could discharge his duty of unswerving loyalty to either spouse without violating that duty to the other spouse. The conflict was patent.

Although the accused and others testified that his [303 Or. 155] conflict of interest was discussed, no valid consent was obtained. No valid consent could be obtained in such a situation. In re Jans, supra, 295 Or. at 295, 666 P.2d 830. Compare Aronson, Conflict of Interest, 52 Wash.L.Rev. 807, 826-27 (1977).

This principle could not be better demonstrated than under the present facts. The property transfers likely were part of a collusive effort on the part of all four spouses and the accused to move assets out of the reach of creditors. Although the financial consequences of the accused's representation are not clear, in this case it may have been the wives who paid the bigger price for the lack of independent representation. They were conveyed property. The conveyances were subject to being voided as "fraudulent." See infra at 9. Spousal support was not discussed, as is evident from the testimony of Mrs. Beecroft:

"Q. Did you feel that the property you got in the divorce, being more than what he was getting, justified you in not asking for alimony from Mr. Beecroft?

"A. I was not aware that I could get alimony, I thought it was something movie stars got.

"Q. Was Mr. Beecroft bringing in a regular income at that time?

"A. I think we went over that regular income, he did not have a regular salary coming in every month, he was buying and selling equipment.

"Q. Did you feel that he was in a position to make monthly support payments to you after the divorce?

"A. I never thought about it because it was not discussed."

CONDUCT CALCULATED TO AVOID CREDITORS' CLAIMS

The accused also was charged with violating ORS 9.460(3) and (4) which provide, and DR 1-102(A)(4) and 7-102(A)(1) and (7), which provided:

ORS 9.460

"An attorney shall:

" * * *

"(3) Counsel or maintain such actions, suits, or proceedings or defenses only as may appear to the attorney legal and [303 Or. 156] just, except the defense of a person charged with a public offense;

"(4) Employ, for the purpose of maintaining the causes confided to the attorney, such means only as are consistent with truth, and never seek to mislead the court or jury by any artifice or false statements of law or fact;

" * * * * *." DR 1-102(A)(4)

"(A) A lawyer shall not:

"(4) Engage in conduct involving dishonesty, fraud...