Conduct of Smith, In re
| Decision Date | 02 December 1981 |
| Citation | 636 P.2d 923,292 Or. 84 |
| Parties | In re Complaint as to the CONDUCT OF Hector E. SMITH, Accused. OSB 79-24; SC 27739. |
| Court | Oregon Supreme Court |
Hector E. Smith, Eugene, pro se.
Larry O. Gildea, and Jack A. Billings, Eugene, for Oregon State Bar.
The Oregon State Bar filed a complaint against Hector E. Smith, a member thereof, accusing him of unethical conduct in four separate causes:
(1) Improper use of a notary commission in violation of the standards of professional conduct. DR 1-102.
(2) Conflict of interest and not zealously representing a client. DR 5-105 and DR 7-101(A)(3).
(3) Conversion of an automobile and failure to follow client's instructions. DR 1-102 and DR 7-101(A)(3).
(4) That the conduct and course of conduct alleged in the first three causes, taken in the aggregate, were prejudicial to the honor and integrity of the practice of law in this state.
The trial board found Smith guilty of the first and second causes and not guilty of the third and fourth causes. It recommended that Smith receive a public reprimand.
The seven member Disciplinary Review Board found Smith guilty of the first three causes and not guilty of the fourth cause. It recommended that Smith be suspended from the practice of law for sixty days.
All four of the causes are the direct result of Smith's representation of Rufus Frederick van Deinse, II, and a person originally known to Smith as Bruce W. Ericksen.
Smith and van Deinse first became acquainted in about 1954 when van Deinse was 14 years of age. At that time Smith enrolled van Deinse in the Hyland Bagpipe Band and taught him to play the drums. In the years that followed van Deinse's parents died and he inherited a substantial sum of money. Smith became his personal, financial and legal advisor. Van Deinse described Smith as a "father figure."
Smith first became acquainted with Ericksen in 1976 when he represented him in a claim resulting from an automobile collision. Ericksen was described as being 6 feet 5 inches tall and weighing 280 pounds with a domineering personality. Ericksen needed money to finance his used car business in Junction City. Smith arranged a meeting between Ericksen and van Deinse who had money to loan. Ericksen borrowed the sum of $6,000 from van Deinse and Smith "hand wrote" the promissory note for the transaction. Smith received a finders fee in the sum of $450 in the form of an additional promissory note from Ericksen. The $6,000 was repaid by Ericksen from proceeds of the settlement of the personal injury action.
In 1977 Ericksen became interested in starting a bingo operation and employed Smith to do some legal research on the subject. 1 Smith represented Ericksen and drafted an employment contract between Ericksen and Center for Educational Reform, Inc., an Oregon nonprofit corporation. The employment contract was executed on August 31, 1977, and provided that the corporation employed Ericksen as the "director" to take "active charge and complete, full control of the administration, management and operation of bingo games * * *." The bingo operation was located in Springfield under the name of "Bingo Center."
Ericksen needed to borrow money to buy equipment for the bingo operation. On September 19, 1977, van Deinse, through Smith's trustee account, loaned Ericksen the sum of $5,000. On the same date Smith prepared for delivery to van Deinse and his wife a promissory note and Uniform Commercial Code financing statement. Ericksen signed the promissory note only as an individual, but signed the financing statement only as "Director 2" of "Center for Educational Reform, Inc." The financing statement was not filed because Ericksen failed to furnish Smith with a supplemental list of the equipment purchased with the loan proceeds.
By March 1, 1978, Ericksen needed more money to buy additional equipment for the bingo operation. By this time van Deinse had become friendly with Ericksen and was working at the Bingo Center as a trainee or assistant manager. No part of the $5,000 promissory note had been paid. Ericksen borrowed an additional $7,000 from van Deinse and Smith consolidated the two debts into a new promissory note for $12,000. 3 The new note was executed by Ericksen only as "Director" for "Center for Educational Reform, Inc." Smith later testified that there was no collateral or security for the promissory note because van Deinse did not want any.
On September 6, 1978, at approximately 10:30 p. m., suddenly and without any warning, agents of the Federal Bureau of Investigation and the local police blocked off the street near the Bingo Center in Springfield and arrested Ericksen. Van Deinse, who was "calling bingo" at the time of the arrest, telephoned Smith. Later that night Smith contacted Ericksen at the jail and found out for the first time that Ericksen was in fact Patrick Benjamin Paddock who was wanted for escaping nine years previously from a federal penitentiary in West Texas. Ericksen-Paddock had been on the FBI's most wanted list for the escape and an additional armed bank robbery charge. After seeing Ericksen in the jail, Smith spent the next three hours at Ericksen's residence taking care of the dog, personal effects and securing the house and parked vehicles.
During the days immediately following the arrest, Smith visited with Ericksen-Paddock in the jail several times. One of the subjects of these visits was the operation of the Bingo Center. Ericksen-Paddock wanted the business continued by van Deinse under the supervision of Smith. To further this objective Smith was instructed to prepare a general power of attorney from "Bruce W. Ericksen" to Smith with this additional provision:
"To act in my stead in regard to the operation of and management of the Bingo Center, and to endorse my name on checks related to the Bingo Center Account No. 011557 6, First National Bank of Oregon, Springfield Branch.
There was no notary public at the jail and Smith did not want to acknowledge "Ericksen's" signature because he was a party to the power of attorney. Therefore, Ericksen signed the document and Smith returned with it to his office where he asked his secretary to notarize the signature. Smith explained to the secretary that this was an emergency because he had just come from a hearing before the Federal magistrate where it was ordered that Ericksen-Paddock be removed from the state and that the payroll at the Bingo Center was due. The secretary, who had been employed by Smith for 17 years, was reluctant but notarized the signature as of September 7, 1978.
On the evening of September 8, 1978, to further the plan of Ericksen-Paddock for the continued operation of the bingo business, van Deinse and Smith met with the three women who were directors of Center for Educational Reform, Inc. The directors acknowledged that the corporation had received the original $5,000 loan from van Deinse to Ericksen, but were surprised and strongly denied that it had received the subsequent $7,000 loan. They also denied that there were any wages due van Deinse and refused to hire him as the manager of the Bingo Center.
On Saturday morning, September 9, 1978, Smith went to the Lane County jail and confronted Ericksen-Paddock with the fact that directors of Center for Educational Reform had denied any knowledge of the $7,000 loan. When pressed for information, Ericksen-Paddock replied that $7,000 went for "juice." He would not give any further explanation.
At the time of Ericksen-Paddock's arrest, he was the owner of six automobiles. 4 He instructed Smith and van Deinse to "round up" these vehicles and secure them against vandalism and theft. Smith obtained the titles and a part of the keys from Ericksen's residence. One of the vehicles, a 1969 Pontiac, was parked at the Bingo Center at the time of the arrest and one of its tires had been slashed. A 1968 Mustang was in a paint shop and a 1968 Firebird was in a body shop. A 1973 Gremlin was in the hands of Ericksen's ex-girlfriend and had to be repossessed by Smith with the aid of the Springfield police.
To obtain possession of all the automobiles van Deinse and Smith were required to pay the approximate sum of $740 from their own funds. Smith obtained the certificates of title to all of the automobiles from Ericksen's residence. Ericksen endorsed each of the certificates in blank and redelivered them to Smith. Five of the automobiles were then stored in a barn owned by van Deinse. Mechanics' tools and miscellaneous equipment and supplies were removed from the residence Ericksen had occupied to van Deinse's barn.
On Monday, September 11, 1978, Smith went to the jail and had Bruce W. Ericksen execute two separate sets of a Uniform Commercial Code financing statement, form UCC-1. Each set of forms was signed twice: (1) "Bruce W. Ericksen, Debtor, dba Ericksen Enterprises," and (2) "Center for Educational Reform, Inc. by Bruce W. Ericksen, Director." The debtors on each form were listed as Bruce W. Ericksen and Center for Educational Reform and the secured party was listed as Rufus F. van Deinse. One set of forms covered bingo equipment described in detail and located at the Bingo Center address in Springfield plus "miscellaneous mechanics, tools, equipment and supplies" located at van Deinse's address. The other set of forms covered five automobiles identified by serial number and Oregon license plate number.
Smith explained to Ericksen that the UCC-1 forms probably did not create a valid security interest in the bingo equipment and miscellaneous tools because there was no security agreement or possession. However, it was Smith's opinion that there was a valid security interest in the automobiles because they were in van Deinse's possession. Smith thought that this was the best course of action to secure some collateral for the balance due on the $12,000 promissory note of March 1, 1978, from the...
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