Conduct of Howard, In re

• Decision Date: 06 October 1987
• Citation: 743 P.2d 719,304 Or. 193
• Parties: In re Complaint as to the CONDUCT OF Martin J. HOWARD, Accused. OSB 84-146, 85-22; SC S32207.
• Court: Oregon Supreme Court

Page 719

743 P.2d 719

304 Or. 193

In re Complaint as to the CONDUCT OF Martin J. HOWARD, Accused.

OSB 84-146, 85-22; SC S32207.

Supreme Court of Oregon, In Banc.

Submitted onRecord and Briefs July 8, 1987.

Decided Oct. 6, 1987.

[304 Or. 194] Martin J. Howard, Portland, pro se.

Mark J. Fucile and Gregory R. Mowe, Portland, for Oregon State Bar.

PER CURIAM.

The principal issue is whether the accused should be suspended or disbarred for violations of various disciplinary rules in the Code of Professional Responsibility. Two members of the trial panel of the disciplinary board decided that the accused be "permanently disbarred," and the third member, concurring in the findings of violations of the disciplinary rules, would have decided that the accused be suspended for three years. ¹ The decision of the trial panel that the accused be disbarred requires review by this court. ORS 9.536(2), BR 10.1. In this court the accused argues that we should suspend him for a period of three years, but the Oregon State Bar (Bar) contends that we should disbar the accused. We hold that the accused should be disbarred.

In December 1985, the Bar filed a complaint against the accused charging him with violation of the disciplinary rules in six separate causes. The accused answered in January 1986. At the conclusion of presenting evidence in its case in chief, the Bar successfully moved to amend its complaint to conform to proof, and the accused was allowed to amend his answer to meet the new allegations. ²

FIRST CAUSE

The amended complaint charges the following. One O'Keefe died in February 1982, and the accused was appoitned as personal representative. The accused had a personal bank account at the United States National Bank of Oregon (USNB) and a commercial account in his name at First Interstate Bank of Oregon (FIB). After the accused was appointed personal representative, the Social Security Administration (SSA) issued 11 checks for monthly benefits payable to O'Keefe. The accused endorsed and deposited the proceeds of three of these checks in his USNB account and eight in his FIB account. When he made the deposits, the accused knew that the estate of O'Keefe had no claim of right to those funds. He made little or no effort to refund the money to SSA prior to demands by the government to repay. He The accused answered the first cause of complaint by alleging that he advised the SSA that O'Keefe had passed away, that he deposited the checks in a bank account separate from the estate account so that closing of the estate would not be delayed by "resolution of the social security matters," that he unsuccessfully attempted to return the checks, that he notified the SSA that the funds would be retained until further instructions and that at all times funds were available to be disbursed and were disbursed on receipt of instructions from the SSA.

used the funds for his own purposes without consent of the government. He maintained incomplete records concerning the funds that he received and disbursed on behalf of the estate. He did not report to the probate court the receipt of the SSA checks. The amended complaint alleges that this conduct violated former DR 1-102(A)(4), former DR 9-102(A) and former DR 9-102(B)(3). ³

We consider the matter de novo, ORS 9.536(3), and find that the following facts are within the amended complaint and are established by clear and convincing evidence.

1. O'Keefe died in February 1982, and the accused was appointed personal representative of the estate and employed as attorney of the personal representative. The estate was closed in November 1983. During the time the estate was in probate, the accused had a separate bank account for estate funds.

2. After O'Keefe's death, the SSA continued to send her monthly benefit checks in 1982-1983. The accused endorsed 11 of them and deposited the proceeds from eight of them, totaling $4,758.90, in the FIB account and from three of them, totaling $1,800, in his USNB account. Both accounts were the accused's personal accounts. The accused concealed from the probate court the existence of these funds.

3. During the time the estate was open and until June 30, 1984, the accused was a partner in the law firm of Gilley, Busey & Howard.

4. During the time the proceeds from the O'Keefe checks were in his personal accounts, the accused used the funds for numerous personal purposes and not for purposes of administering the estate.

5. The accused did not attempt to return the money until the Treasury Department began to make reclamation requests in the summer of 1984. ⁴

6. When the first reclamation request came to FIB, the bank debited the accused's bank account and sent him notice of the reclamation. The bank also "froze or put a warning on his account for the remainder of funds that were still owed on the reclamation." After receiving notice of the freeze, the accused made a deposit on July 24, 1984. This deposit was in the form of a check for $2,980.20 drawn on a Pennsylvania bank in favor of Lelia MacQuarrie and endorsed in that name by the accused as attorney in fact. ⁵

7. At some time during this course of events, the accused had closed the account at USNB in which he had deposited $1,800 of the O'Keefe checks from the SSA.

8. Eventually, the Department of Treasury's reclamation claim was satisfied by money supplied by the accused.

On essentially the same findings of fact, the trial panel concluded that the accused had violated former DR 1-102(A)(4), former DR 9-102(A) and former DR 9-102(B)(3).

We first consider former DR 9-102(A). That rule is concerned with the handling of "funds of clients." The relevant question is whether the funds derived from cashing the SSA post mortem checks were funds of a client of the accused. The accused's client in this matter was not O'Keefe, for she was dead. His client was the personal representative of O'Keefe's estate. The accused was the personal representative. These were neither the personal representative's funds nor funds belonging to O'Keefe's heirs. ORS 114.215. As personal representative, he was charged with managing and preserving O'Keefe's estate. ORS 114.265. The Bar's amended complaint alleges that the estate "had no claim of right to those funds" and further alleges that they were the "government's funds." The government was certainly not the accused's client. Quite simply, former DR 9-102(A) is not applicable. We conclude that the accused did not violate this rule.

Former DR 9-102(B)(3) is also concerned with "funds" and other properties "of a client" coming into the lawyer's possession. For the same reasons advanced above, this rule is not applicable and therefore was not violated. ⁶

Under the first cause, therefore, there remains the question whether the accused, by depositing the funds from these SSA checks and using them for his own purposes, engaged in conduct involving dishonesty, fraud, deceit or misrepresentation in violation of former DR 1-102(A)(4). The Bar relies on cases in which we have held that depositing a client's funds in a lawyer's personal bank account constitutes conversion and that converting money involves dishonesty. Those cases are factually inapposite because these funds were not those of a client.

What the Bar has proven is that the accused, without any authorization, endorsed the SSA checks and used the funds thus derived for his own purposes. This was a conversion of government funds as alleged in the amended complaint. We hold that this conversion was within the meaning of the term "dishonesty" as used in former DR 1-102(A)(4). Assuming, arguendo, that the accused was not acting in his capacity as lawyer, nevertheless, he violated the disciplinary rule, and it is not necessary for the purpose of disciplinary proceedings that he be acting in his capacity as lawyer. See, e.g., In re Holman, 297 Or. 36, 57, 682 P.2d 243 (1984), In re Kenneth W. Stodd, 279 Or. 565, 568 P.2d 665

(1977), and In re Warner W. Gregg, 252 Or. 174, 446 P.2d 123, 448 P.2d 547 (1968).

SECOND CAUSE

The amended complaint alleges the following. One Frederick died in May 1974. Her son, Petersen, was named personal representative of her estate, and the accused undertook to probate the estate. The accused agreed to act as collection agent for the sale of a piece of real property that the decedent had owned. The property was sold on contract, and the accused was to collect and disburse the funds received from the purchasers. One DeRoy eventually became the purchaser of the property and made payments to the accused. The accused received payments from DeRoy from November 1975 to December 1984. During that period of time, the accused did not maintain complete records of these funds, nor did he render to the heirs, the court or Petersen an accounting of the payments until Petersen demanded that he do so in December 1984. The accounting then rendered by the accused was incomplete and inaccurate. He deposited the funds received from DeRoy in his own commercial bank account and used funds received from DeRoy for his own purposes without authorization. Although he had undertaken to pay the real property taxes from the contract payments, he failed to do so as they became due for the tax years 1981-82 through 1984-85 and did not pay them until confronted by Petersen on December 26, 1984. The amended complaint alleges that this conduct violated former DR 1-102(A)(4), former DR 6-101(A)(3), former DR 9-102(A) and former DR 9-102(B)(3) and (4). ⁷

" * * *

The accused answered that he did undertake to probate the estate, that the property was sold on contract and that he agreed to act as collection agent and to disburse the funds that he received from the purchasers. He admits that DeRoy made payments to him. He affirmatively alleged that the heirs of Frederick could not agree among themselves that the funds were not to be disbursed to Petersen or anyone else until various claims and counterclaims...