Gardner v. Conway

• Decision Date: 06 July 1951
• Docket Number: No. 35317,35317
• Citation: 234 Minn. 468,48 N.W.2d 788
• Court: Minnesota Supreme Court
• Parties: GARDNER et al. v. CONWAY.

Page 788

48 N.W.2d 788

234 Minn. 468

GARDNER et al. v. CONWAY.

No. 35317.

Supreme Court of Minnesota.

July 6, 1951.

Syllabus by the Court.

1. A proceeding to adjudge a person in contempt of court for the unauthorized practice of law--whether such unauthorized practice occurred within or outside the presence of the court--is punitive and criminal in its nature and is primarily brought in the public interest to vindicate the authority of the court and to deter other like derelictions.

2. A conviction for a criminal contempt, as distinguished from a civil contempt, is not appealable, but must be reviewed by certiorari.

3. The district court has jurisdiction to enjoin the unauthorized practice of law, whether such practice takes place within or outside the presence of the court, and such jurisdiction is not destroyed by the criminality of the defendant's misconduct.

4. A justiciable issue may arise although the purported acts of unauthorized practice of law were intentionally performed by defendant upon the mistaken assumption that he was then advising a bona fide taxpayer and was preparing for him a tax return for use in reporting an actual taxpayer's income.

5. The purpose for which lawyers are licensed as the exclusive occupants of their field is to protect the public from the intolerable evils which are brought upon people by those who assume to practice law without having the proper qualifications.

6. The law practice franchise or privilege is based upon the threefold requirements of Ability, character, and Responsible supervision.

7. A layman's legal service activities are the practice of law unless they are incidental to his regular calling; but the mere fact that they are incidental is by no means decisive.

8. Generally speaking, whenever, as incidental to another transaction or calling, a layman, as part of his regular course of conduct, resolves legal questions for another--at the latter's request and for a consideration--by giving him advice or by taking action for and in his behalf, he is practicing law if difficult or doubtful legal questions are involved which, to safeguard the public, reasonably demand the application of a trained legal mind.

9. What is a difficult or doubtful question of law is not to be measured by the comprehension of a trained legal mind, but by the understanding thereof which is possessed by a reasonably intelligent layman who is reasonably familiar with similar transactions.

10. In restraining laymen from improper activity, The difficult question of law criterion is to be applied in a commonsense way which will protect primarily the interest of the public and not hamper or burden that interest with impractical and technical restrictions which have no reasonable justification.

11. When an accountant or other layman who is employed to prepare an income tax return is faced with difficult or doubtful questions of the interpretation or application of statutes, administrative regulations and rulings, court decisions, or general law, it is his duty to leave the determination of such questions to a lawyer.

12. The work of an accountant disassociated from the resolving of difficult or doubtful questions of law is not law practice.

13. Although the preparation of the income tax return was not of itself the practice of law, defendant herein, incidental to such preparation, resolved certain difficult legal questions which, taken as a whole, constituted the practice of law.

14. A layman, whether he is or is not an accountant, may not hold himself out to the public as a tax consultant or a tax expert, or describe himself by any similar phrase which implies that he has a knowledge of tax law.

Bundlie, Kelley, Finley & Maun, St. Paul, for appellant.

Clifford W. Gardner, C. Paul Smith, Calvin Hunt, Alric Anderson, Irving Gotlieb, Fred Kueppers, and Worth K. Rice, all of St. Paul, for respondents.

Fontaine C. Bradley, Washington, D.C. (American Institute of Accountants), Best, Flanagan, Rogers, Lewis & Simonet, Minneapolis (Minn. Assn. of Public Accountants and National Soc. of Public Accountants), Fowler, Youngquist, Furber, Taney & Johnson, G. Aaron Young-quist and John R. Goetz, all of Minneapolis (Minnesota Soc. of Certified Public Accountants), Robert J. Nowack, Minneapolis (Minnesota State Bar Assn., by its Standing Committee on Unauthorized Practice of Law), John D. Randall, Chairman, Cedar Rapids, Iowa, Cuthbert S. Baldwin, New Orleans, La., Thomas J. Boodell, Chicago, Ill., A. J. Casner, Cambridge, Mass., Edgar N. Eisenhower, Tacoma, Wash., Edwin M. Otterbourg, New York City and Warren H. Resh, Madison, Wis. (American Bar Assn., by its Standing Committee on Unauthorized Practice of Law), amici curiae.

MATSON, Justice.

Defendant appeals from an order denying his motion for a new trial.

This action, to have the defendant perpetually Enjoined from further engaging in the unauthorized practice of law and to have him Adjudged in contempt of court therefor, was brought by the plaintiffs ¹ in their own behalf as licensed lawyers and in a representative capacity in behalf of every other licensed lawyer in Minnesota, as well as in behalf of the courts and the public. ²

Defendant, who is possessed of only a grade-school education, has never been admitted to the practice of law in Minnesota or elsewhere. During a two-year period immediately prior to the time of trial, he followed the occupation of a public accountant. Prior thereto, he served for three years as a United States deputy collector of internal revenue. Before that, he had worked for six years as the credit manager of a hardware company, about five years as the operator of a collection agency, and for four years as an insurance solicitor and risk inspector.

At and prior to the time with which we are concerned, defendant held himself out to the public by newspaper advertisements and by other advertising media as an 'Income Tax Expert,' duly qualified to give advice, aid, and assistance to the public generally in the discharge of a taxpayer's duty to make accurate returns of income to the federal government. Defendant alleges that he is thoroughly familiar with income tax rules and regulations. He has used a business card on which he describes himself as a 'Tax Consultant' and prominently calls attention thereon to the fact that he was a former deputy collector of internal revenue.

On or about March 4, 1948, Cecil G. Germain, a private investigator employed by plaintiffs to obtain information as to whether defendant was engaged in the practice of law, went to the office of defendant under the assumed name and identity of an alleged taxpayer, George Heinl. Germain, as George Heinl, informed defendant that he operated a truck farm, that he had come to have his income tax return prepared, and that he needed help with certain questions. For a cash consideration, defendant prepared the income tax return and gave Germain professional advice for the determination of the following questions:

(a) Whether the taxpayer, who himself had exclusive control of the operation of the truck farm, was in partnership with his wife, who had contributed one-half of the purchase price, who helped with the work, and who received one-half the profits.

(b) Whether the taxpayer was entitled to claim his wife as an exemption, since he had never been ceremonially married, though maintaining a common-law marriage status.

(c) Whether the taxpayer should file his separate return and advise his so-called common-law wife to file a separate return.

(d) Whether certain money expended on improvements of buildings on the truck farm was deductible from his earnings.

(e) Whether a certain produce loss sustained by frost and subsequent flood was a deductible item.

Aside from the fundamental issue of whether defendant's activities constituted the unauthorized practice of law, we are concerned with these procedural issues:

(1) Does the District court have the power to adjudge defendant in contempt of court and to punish him for the unauthorized practice of law?

(2) Does the district court have jurisdiction to enjoin the unauthorized practice of law where defendant's acts of purported law practice did not involve any act or appearance before said court?

(3) Is a justiciable issue presented when the evidentiary base of an action to enjoin the unauthorized practice of law consists primarily of professional acts of advice and service which were furnished for a consideration to a person who was not a bona fide taxpayer, upon a fabricated and hypothetical state of facts, and in connection with the preparation of an income tax return which was never intended to be filed?

1--2. We shall dispose of the procedural matters first. A proceeding to adjudge a person in contempt of court for the unauthorized practice of law--whether such unauthorized practice occurred within or outside the presence of the court--is punitive and criminal in its nature and is primarily brought in the public interest to vindicate the authority of the court and to deter other like derelictions. In re Frederick Bugasch, Inc., 175 A. 110, 12 N.J.Misc. 788, State ex rel. Indianapolis Bar Ass'n v. Fletcher Trust Co., 211 Ind. 27, 5 N.E.2d 538; Dangel, Contempt, National Lawyers' Manual (1939), §§ 353, 436; 7 C.J.S., Attorney and Client, § 16c. Although a prosecution for the unauthorized practice of law, as an offense against society, inures incidentally to the individual benefit of properly licensed lawyers, the criminal nature of the proceeding is unaffected. In re Frederick Bugasch, Inc., supra; see, Root v. MacDonald, 260 Mass. 344, 367, 157 N.E. 684, 692, 54 A.L.R. 1422. ³ Defendant, contending that the supreme court of Minnesota has the sole and exclusive jurisdiction to adjudge a person in contempt for the unauthorized practice of law, asks us upon this appeal to determine whether the district court had the power to adjudge him in contempt. This we cannot do. We have...