Discipline of Tidball, Matter of, 17955

• Decision Date: 21 July 1993
• Docket Number: No. 17955,17955
• Citation: 503 N.W.2d 850
• Parties: In the Matter of the DISCIPLINE OF Keith A. TIDBALL, as an Attorney of Law.
• Court: South Dakota Supreme Court

Page 850

503 N.W.2d 850

In the Matter of the DISCIPLINE OF Keith A. TIDBALL, as an

Attorney of Law.

No. 17955.

Supreme Court of South Dakota.

Argued April 19, 1993.

Decided July 21, 1993.

R. James Zieser, Tyndall, for Disciplinary Bd.

Robert B. Frieberg of Frieberg, Rudolph and Peterson, Beresford, for respondent.

GILBERTSON, Circuit Judge.

INTRODUCTION

This is a disciplinary proceeding against Respondent Tidball, a member of the State Bar of South Dakota. Respondent has admitted the factual allegations against him. As such, the facts will be set forth in an abbreviated manner. ¹ There remains for this Court, the issue of a determination of the appropriate manner of discipline. The Disciplinary Board of the State Bar of South Dakota (Board) has recommended disbarment.

FACTS

Respondent graduated from the University of South Dakota School of Law in 1966 and was admitted to the practice of law in South Dakota on July 28, 1966. He has spent his entire professional career in the Pierre/Ft. Pierre area. He has engaged in a general private practice as a sole practitioner and in a partnership setting. At all times pertinent herein, he was practicing alone.

1. Trust Account Violations.

An audit by the Board established that between November 30, 1989 and December 15, 1992, Respondent did on numerous occasions commingle funds belonging to clients with his own personal funds. During this period Respondent had fallen on financial hard times and was being pressed by creditors. To avoid their garnishment attempts, he placed his personal funds in his trust account. He claims to have also kept client funds commingled along with his funds in bank drafts in his office safe to avoid his creditors. Deposits and withdrawals were made with such randomness that it is impossible to tell with exactness which transactions were of a personal nature and which involved a specific client. He failed to keep contemporaneous ledgers or other records which would allow him to render appropriate accountings to his clients upon request.

Several times, the balance in his trust account fell below what appears to be the amount of funds he held in trust for clients. His defense is that the remainder of the client funds were commingled with his personal funds in the bank drafts which were in his safe. ²

2. The Glenda Hall Complaint.

In 1990 Respondent commenced representation of Hall in a divorce action. There never was a written fee agreement nor memorandum confirming any fee arrangement. The action was completed by settlement on May 16, 1991. Respondent drafted for his client's signature, an authorization to accept $10,000 as a settlement for her share of the marital assets. The authorization also stated that the legal fees were to be deducted from this amount. Hall signed it with the stipulation "legal fees not to exceed $1,000."

Upon receipt of the $10,000, Respondent withheld $2,500 for himself as fees for professional services. Hall complained that this was in excess of what she authorized to be deducted. Respondent claimed Hall owed him for past services and for representing her daughter and son at her request. It is clear that a dispute existed as to the amount of the fee.

3. The Patricia Marshall Complaint.

In September of 1989, Respondent agreed to represent Marshall on a wrongful death claim. They entered into a written contingent fee contract which entitled Respondent to a twenty-five percent fee of any recovery if there was no trial. The case was settled prior to trial.

In November of 1989, Respondent received $10,331.55 as a partial payment on medical bills and funeral expenses. In December of 1989, Respondent paid himself in lieu of fees $8,382.00 from the $10,331.55 received without the consent of the client or the court.

Additional funds were received in an amount of $62,372.91. Of this $40,000 never went into his trust account. Marshall made unsuccessful demands for all of her share of the settlement proceeds. Respondent admitted that he had commingled these funds with his own funds either in the trust account or through the use of the bank drafts in the safe. Marshall ultimately retained different counsel who also made repeated demands upon Respondent for payment. Finally after months of demands, the remaining amount due of $3,877.43 was delivered to Marshall.

Respondent now admits that he failed to promptly account for these funds and failed to keep proper records of trust account transactions concerning this matter.

4. Failure to Respond to the Disciplinary Board.

On June 18, 1991, the Board asked for a response to the Hall complaint within ten days. ³ No timely response was rendered. On July 9, 1992 the Board sent a second request for a response, citing In re Rude, 88 S.D. 416, 221 N.W.2d 43 (1974). A response was finally received on July 19, 1991.

On November 14, 1991 Respondent admitted service on a subpoena duces tecum which directed him to produce his trust account ledgers and bank records at the Board meeting on December 5th. Respondent appeared at that meeting but did not produce all the subpoenaed records. In large part this is because these client ledger sheets did not exist. Respondent agreed to make client ledgers and deliver them by December 12, 1992. This he failed to do. He was noticed to a second hearing before the Board on January 3, 1992 at which time he appeared and finally produced the subpoenaed records.

Respondent's conduct towards the Board in its attempt to investigate the Marshall complaint was largely the same. On August 14, 1992, the Board requested that he respond within ten days to the complaint. No response was received.

On October 29, 1992, the Board again requested a response citing sanctions for failure to do so pursuant to In re Rude. No timely response was forthcoming.

At the hearings Respondent attended, he blamed his lack of attention to his clients and the Board on health problems such as cancer treatment. However the real reason is that he had become a chronic abuser of alcohol. Respondent subsequently described his condition at that time as follows:

I was unresponsive to complaints directed to me by the Disciplinary Board and did not timely respond by way of explanation or by way of providing copies of my records. At the time I was only interested in continuing my drinking to avoid the reality and the hurt that was mine. I did not go to my office, refused new clients, did not pick up mail and generally failed to do anything except plan my life to provide opportunity for drinking.

His condition deteriorated to a point that concerned family, friends and attorneys convinced him to enter in-patient alcohol treatment in August of 1992. He successfully completed this program and has followed aftercare recommendations. It appears that he has not had a drink since being released from treatment.

On December 18, 1992 a hearing was held by the Board concerning the Marshall complaint. Counsel for Respondent appeared but Respondent did not and provided no specific explanation nor advance notice for his absence. His counsel reported having difficulty corresponding or dealing with him.

At oral argument before this Court on April 19, 1993, it was reported that Respondent has regained control of his life, and refrains from the use of alcohol. He wishes to retain his right to practice law only in the capacity of working for a corporation and does not intend again to engage in private practice.

LEGAL ANALYSIS

1. Trust Account Violations.

Rule of Professional Conduct 1.15(a) governs the matters of the use and misuse of the trust account. It states in part:

A lawyer shall hold property of clients or third persons that is in a lawyer's possession in connection with a representation separate from the lawyer's own property. Funds shall be kept in a separate account maintained in the state where the lawyer's office is situated.... Complete records of such account funds and other property shall be kept by the lawyer and shall be preserved for a period of five years after termination of the representation.

See also SDCL 16-18-20.1.

Using client funds without the client's permission displays an unfitness to practice law and in no way can be excused by an attorney's negative cash flow. Matter of Pier, 472 N.W.2d 916, 917 (S.D.1991); In re Rude, supra. ⁴ The mere fact that the balance in an attorney's trust account has fallen below the total of amounts held in trust for clients supports a conclusion of misappropriation. This is a serious violation of an attorney's professional ethics which is likely to undermine the public's confidence in the legal profession. Giovanazzi v. State Bar of California, 28 Cal.3d 465, 169 Cal.Rptr. 581, 585-86, 619 P.2d 1005, 1009 (1980).

Respondent's defense is that the balance of the client funds were contained in the $24,500 in bank drafts in his safe written from a Jerry Hirsch to Jerry Hirsch. Respondent also states that he did this not to injure clients, but to protect his personal assets from his garnishment attempts.

Respondent's partial justification for his conduct is that he used the bank drafts to avoid garnishment of his client's funds by his personal creditors. This fear has no legal basis. SDCL 21-18-12 authorizes garnishment only where the garnishee has money in his possession "belonging to the defendant, or in which he shall be interested...."

Property and funds owned by, or due to, defendant as a trustee are not subject to garnishment for his individual debts.... A bare legal title in defendant is insufficient where the equitable or beneficial interest is in another.

38 C.J.S. Garnishment, Sec. 81 (1943).

An attorney who collects money for his client holds the same as a trustee and the circumstances under which he is liable are much the same as any other type of trustee. Wangsness v. Berdahl, 69 S.D. 586, 13 N.W.2d 293 (1944). See also, SDCL 16-18-20. In other words, there must be a legal basis for a recovery against the client, rather...