Galton, In re
| Decision Date | 24 July 1980 |
| Citation | 289 Or. 565,615 P.2d 317 |
| Parties | In re Complaint as to the Conduct of Herbert B. GALTON, Accused. OSB 1332; SC 26691. |
| Court | Oregon Supreme Court |
Carrell F. Bradley, of Schwenn, Bradley, Batchelor & Brisbee, Hillsboro, argued the cause and filed the briefs for accused.
Eugene E. Feltz, of Casey, Palmer, Feltz & Sherry, Portland, argued the cause and filed the brief for the Oregon State Bar.
Before DENECKE, C. J., and TONGUE, HOWELL, LENT, LINDE and TANZER, JJ.
This is a disciplinary proceeding originating from an anonymous letter to the Oregon State Bar. The letter was as follows:
Following its investigation the Bar instituted this disciplinary proceeding in which the accused was originally charged with unethical conduct in seven specifics and with an eighth charge that accused's course of conduct, in the aggregate, was such as to render him unfit to practice law. Upon motion of the Bar, the fifth and seventh charges were dismissed at the Trial Board level.
The Trial Board found the accused not guilty on the remaining charges. In its statement in partial opposition to the report of the Trial Board, 1 the Bar affirmatively stated that it did not oppose the Trial Board's finding of not guilty on the sixth charge.
Pursuant to Section 46.2, Rules of Procedure Relative to: Admission, Discipline, Resignation and Reinstatement (hereinafter "Rules"), the matter was transmitted to the Review Board, which rendered and filed its written decision. ORS 9.535(2) 2 and Section 46.6, Rules. The Review Board agreed with the Trial Board on the disposition of all charges except the third and found the accused guilty of that charge. The Review Board recommended that the accused be reprimanded. ORS 9.535(1) and (2) and Section 46.6, Rules.
The matter is now before this court pursuant to ORS 9.535(3) and Sections 47 and 48, Rules, for disposal pursuant to ORS 9.535(4). In this court the Bar urges that the accused be found guilty of the first, second, third and fourth specific charges and of the eighth charge (the aggregate conduct charge). Our disposition of the specific charges establishes that the accused is not guilty of the eighth charge.
The remaining four charges are based upon a contention that the accused from May, 1969, to November, 1974, had an attorney-client relationship with Great Western Mortgage Company (hereinafter "GWM") 3 and that he was guilty of misconduct with respect to his representation of four other separate clients, whose interests were adverse to those of GWM.
In early 1969 GWM formulated a program whereby unions and health and welfare and pension trusts, which were jointly managed by employer and labor trustees and established pursuant to collective bargaining agreements, would invest trust funds with GWM. GWM was to use the monies to purchase from banks interests in mortgages. The banks would loan the monies for various construction projects, 4 taking mortgages as security. The bank would then sell a participating interest in the loans and security to GWM, and out of the return upon the investment GWM was to pay principal and interest (at attractive rates) to the trusts. The banks were to guarantee payment to GWM.
The record discloses that GWM failed to perform according to the formulated program and was eventually placed in some sort of receivership. The failure to perform left Carpenters' Local Union No. 226, the Floor Covering Union and Industry Welfare Fund, the Office and Professional Employees Union, Local 11, Health and Welfare and Dental Trust Fund, and the Oregon and Southwest Washington Painters Pension Trust with several hundred thousand dollars of unsecured claims for monies invested with GWM.
The first charge is that the accused, while having an attorney-client relationship with GWM and thereby being privy to the confidences of that client, also represented Carpenters' Local Union No. 226 and gave that Local advice as to the legality and safety of investing with GWM under the program described above.
The Bar concedes that the accused did not represent the Local, as such. The accused admits that he represented the Northwestern Oregon District Council of Carpenters (hereinafter "Council"), of which Local 226 was a member along with 10 or 11 other local unions. There was evidence from which it could be found that the Local felt accused's relationship with the Council was such that he would have the Local's interests in mind with respect to investments with GWM. Witness Wickstrand, who was involved with decisions as to the investment of the Local's funds, testified in part:
The losing investments were not made by the District Council but by the Local. There is nothing to indicate that the accused was aware that because he represented both the Council and GWM, the Local, as a member of the Council, would consider his attorney-client relationship with GWM as a representation to the Local that an investment with GWM would be prudent. The services performed by the Accused for the Council had nothing to do with such investments.
We agree with the Review Board:
"However, even if we assume that representation of the District Council includes representation of Local 226, the services rendered to the respective parties were unrelated and involved no conflicts of interest."
Accordingly, we find the accused not guilty of the first charge.
The second charge is that the accused, while having an attorney-client relationship with GWM and thereby being privy to the confidences of that client, also represented the Floor Covering Union and Industry Welfare Fund and gave the trustees of that Fund advice as to the legality and safety of investing with GWM without disclosing to those trustees his relationship with GWM. This charge concerns an investment with GWM made by the trustees for the Fund sometime between two meetings of the trustees held, respectively, on May 11, 1970, and October 13, 1970.
One of the labor trustees testified that the accused was present at the meeting of May 11, that he was specifically asked for advice about the contemplated investment with GWM, that he opined it to be "wise and prudent," that he did not disclose his relationship with GWM, and that the trustees relied upon his advice in making the investment. The witness also testified that the accused was at the October 13 meeting where the investment was ratified. The witness purported to have some vague recollection of an intervening meeting of the trustees concerning this investment, at which the accused was present.
Opposed to this evidence was the testimony of an employer trustee of the Fund that the accused was at neither the May 11 nor the October 13 meeting. This witness could recall no intervening meeting. Neither the minutes of May 11 nor October 13 show the accused as being present, although other persons than the trustees who were present were identified by name. The minutes of October 13 disclose approval of the minutes of May 11 and make no mention of any intervening meeting. The accused testified that he was not present at either meeting.
We find this charge has not been proven and find the accused not guilty thereof.
The amended 5 fourth charge is that the accused, in connection with the liquidation of GWM, participated in the preparation and filing of a claim against GWM's receiver on behalf of accused's other client, the Oregon and Southwest Washington Painters Pension Trust. It is charged that this constituted accepting employment in which there existed a likelihood of the use of confidential information gleaned from GWM for the benefit of the Trust. It is further alleged that this placed the accused in a position which could result in the appearance of impropriety.
The claim was filed in June, 1975. We find that the accused did not represent GWM after November, 1974. We agree with the Trial Board that it is difficult to see how any information the accused might have gained as attorney for GWM could have any effect upon the filing of the claim with the receiver. Insofar as the preparation of the claim is concerned, the uncontradicted evidence is that Paul Hybertsen, the lawyer retained as co-counsel for the Trust by the employer members, prepared the form of claim and submitted it to the accused for approval more as a matter of courtesy than anything else. The accused's participation in the preparation of this claim was scant indeed.
We agree with the Review Board:
"It is difficult to believe that the public would view this conduct with any suspicion or opprobrium."
We find the accused not guilty of this charge.
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