Crawford v. State Bar of Cal.

• Decision Date: 20 September 1960
• Docket Number: S.F. 20290
• Citation: 355 P.2d 490,7 Cal.Rptr. 746,54 Cal.2d 659
• Court: California Supreme Court
• Parties: , 355 P.2d 490 Phillip Neal CRAWFORD, Petitioner, v. STATE BAR OF CALIFORNIA, Respondent.

Page 746

7 Cal.Rptr. 746

54 Cal.2d 659, 355 P.2d 490

Phillip Neal CRAWFORD, Petitioner, v. STATE BAR OF CALIFORNIA, Respondent.

S.F. 20290.

Supreme Court of California.

Sept. 20, 1960.

Wallace S. Myers, San Anselmo, for petitioner.

Garrett H. Elmore, San Francisco, for respondent.

PER CURIAM.

Petitioner seeks the annulment of a resolution adopted ny eight of the thirteen members of the Board of Governors of The State Bar present and voting that he be publicly reproved for violation of Rule 3, Rules of Professional Ethics (52 Cal.2d 896). The local committee had recommended that no disciplinary action be taken.

Petitioner, now 35 years old, was admitted to the bar in 1953, after which he practiced in Sacramento for approximately fourteen months. His father, Howard G. Crawford, was admitted in 1923 and practiced in Lakeport continually thereafter. In May 1954, after the Board of Governors had recommended Howard's disbarment, petitioner and his father formed a partnership, the profits from which were to be divided equally. Formal announcements of the partnership were sent out at that time. Howard was disbarred on September 16, 1954. After his disbarment he remained in the same office, kept his secretary, and continued his practice as a tax consultant. His name was no longer used as an attorney, and he did not appear in court, but he did confer directly with clients with respect to the preparation of deeds and birth certificates, probate matters, escrows and real estate deals, mining claims, and the dissolution of a partnership. He also referred his tax clients to petitioner for other legal advice. Petitioner and Howard continued to divide the profits from the entire business equally.

Before the formation of the partnership, the legend on the office window had real 'H. G. Crawford Attorney at Law Notary Public,' the stationery bore the letterhead 'Law offices of H. G. Crawford,' and the bank accounts were maintained in the name of H. G. Crawford. No change was made in any of these until after Howard was disbarred. The window sign was then changed to read 'Crawford & Crawford Attorney at Law Tax Consultant.' The new stationery bore the heading 'Offices of Crawford & Crawford' with 'Phil N. Crawford' designated as 'Attorney at Law' and 'H. G. Crawford' at 'Tax Consultant' in the top left margin. The letterhead had only a single phone number and address. Letters relating to all matters in the office were mailed to clients on this stationery, and many relation to the tax practice, to billing in regard to the legal practice, and to escrows, mining claims and the like were signed by H. G. Crawford without any title or identification other than that on the letterhead. Envelopes, checks, and statements bore only the firm name without any identification as to its members.

In October 1954 new bank accounts in the name of 'Crawford & Crawford' were opened by Phil and Howard acting jointly, and the old H. G. Crawford accounts were closed. The printed signature cards relative to the new accounts contained the following statement over the signature of both Crawfords: '(2) That it is mutually understood that the undersigned doing business under the trade or partnership name of Crawford & Crawford are owners as copartners and constitute all the members of the partnership. * * *' Although the form of the card provided for the alternative, Howard was not thereon designated merely as an authorized signer on the account of petitioner as sole owner.

All the receipts from petitioner's business and from Howard's tax consultations were deposited in these accounts. Firm costs were advanced and all operating expenses paid out of the Crawford & Crawford account. Each withdrew what he needed with the understanding that withdrawals would be kept as even as possible. Only one set of books was maintained.

On March 25, 1955, during the period of disbarment, Howard made a sworn statement before petitioner as notary public on a creditor's claim of 'Crawford and Crawford' that 'he is one of the members of the firm of Crawford and Crawford' (italics added). On February 2, 1955, petitioner, before Howard as notary public, had made an identical sworn statement on a similar creditor's claim.

Howard had had a large practice in Lakeport. Assets connected with his law office, including accounts receivable, totaled approximately $41,265.28. Petitioner's position is that in keeping with his father's wish not to abandon his clients and to stay in Lakeport to rehabilitate himself, petitioner employed his father to work for him as a law clerk, bookkeeper, and office manager, and to conduct a tax practice. Petitioner testified that his father was to receive about $400 per month for these services and that his father's withdrawals beyond that sum were to constitute a partial payment for his assets. There was no written agreement of sale, however, nor was any agreement reached as to the valuation of these assets. It was not until March 1957, after petitioner was informed of the present investigation, that he undertook an accounting of past operations, a valuation of assets, and a definite fixing of Howard's salary including withholding tax. At about the same time petitioner's law office, bank accounts, letterheads and so forth became clearly identified, and Howard moved to another location to conduct an independent tax practice.

The local committee found that although petitioner may have acted imprudently in allowing his father to continue working under circumstances that might have the appearance of a partnership for the practice of law, he did so in good faith and there was no actual partnership; that his father did not practice law; that petitioner was indebted to his father for the physical assets; and that the fact that all proceeds went into a common fund did not necessarily prove a partnership. Petitioner contends that these are the only supportable findings. He further contends that the use of the name 'Crawford & Crawford' was not improper.

Petitioner relies upon section 15007, subdivisions (3), (4)(a) and (4)(e) of the Corporations Code and Johnson v. Davidson 54 Cal.App. 251, 202 P. 159, to support his contention that no partnership existed and that the relationship was not improper and was undertaken in good faith.

Section 15007, subdivision (3) in part provides: 'The sharing of gross returns does not of itself establish a partnership * * *.' Section 15007, subdivision (4) provides:

'The receipt by a person of a share of the profits of a business is prima facie evidence that he is a partner in the business, but no such inference shall be drawn if such profits were received in payment:

'(a) As a debt by installments or otherwise.

'(e) As the consideration for the sale of good will of a business or other property by installments or otherwise.'

Johnson v. Davidson, supra, affirmed a judgment for plaintiff in an action to recover an interest in real property purchased by an attorney. Plaintiff had been employed by the attorney as a law clerk whose duties included the drawing of pleadings and the consultation with clients to ascertain facts for the preparation of the pleadings. Plaintiff had received one-half the net profits of the business for her services, and the property in question had been purchased pursuant to an agreement to invest the surplus savings of the office in real property in which each would have a one-half interest. In denying a hearing in this court the court stated: 'It is lawful for an attorney to employ and person to take charge of the management of the work to be done in his office to the extent of drawing pleadings and papers necessary to be drawn by such attorney in his practice, and to agree to pay such person for such services a fixed percentage of the receipts of the attorney from his clients. Such an agreement is not an agreement to become partners in the practice of law.' 54 Cal.App. 251, 257, 202 P. 159, 161.

We are of the opinion that the foregoing authorities do not justify the relationship between petitioner and his father in the present case and that petitioner has failed to sustain his burden of showing that there was no partnership within the meaning of Corporations Code, § 15006: '(1) A partnership is an association of two or more persons to carry on as co-owners a business for profit.' The use of a firm name, the declarations of co-ownership, the continuation of equal withdrawals of sums from the commercial account coupled with the complete failure to attempt an accounting or valuation until these proceedings were under way, and the sharing of profits from the tax business, even though petitioner was in no way responsible for the attraction of tax clients or the performance of that business, makes it apparent that petitioner and his father not only held themselves out as partners, but that actually considered themselves to be partners.

Petitioner does not contend that Johnson v. Davidson implies that an actual partnership between a member of the bar and a layman is not prohibited by the profit-sharing proscriptions of Rule 3, whether or not the layman is actually engaged in acts constituting the practice of law. Not only does the sharing of profits in such a situation tend to encourage solicitation and the practice of law by a layman (see, e. g., Ethics Opinion No. 269, American Bar Ass'n; Ethics Opinion No. 201, New York County Lawyer's Ass'n), it also tends to lessen the independence from the influence of a layman necessary for an attorney to carry out his responsibilities. See 10 Cal.L.Rev. 146.

Moreover, petitioner's reliance on Hohnson v. Davidson is misplaced. That case was decided before the adoption of Rule 3, and the court therein was principally concerned with the question whether the plaintiff had been a partner in a law firm and had practiced law. The question whether the fee splitting might otherwise be improper was not involved. In Cain v. Burns, 131 Cal.App.2d 439, ...