Germundson, In re
| Decision Date | 03 September 1986 |
| Parties | In re Complaint as to the Conduct of Roger C. GERMUNDSON, Accused. OSB 83-123, SC S32175. |
| Court | Oregon Supreme Court |
Larry Dawson, Portland, argued the cause and filed the brief for the accused.
George A. Riemer, Portland, argued the cause for Oregon State Bar. With him on the brief were Helen T. Smith, Portland.
The Oregon State Bar charges Roger C. Germundson, a member of the bar, with violations of several disciplinary rules relating to a client and later to the client's estate. The charges concern conflicts of interest in borrowing money from the client and conduct involving misrepresentation in executing notes for those debts in the name of certain businesses without authority to do so. The accused pleads alcoholism in mitigation.
We summarize the course of events, which is largely undisputed, from the findings of the trial panel appointed by the Disciplinary Board.
The accused represented Cleveland Leis, an aged and disabled patient at a nursing home, from 1972 to Leis's death in 1983. The accused became Leis's friend and confidant and looked after Leis's financial affairs under a power of attorney. During the years from 1974 to 1980, the accused obtained numerous loans from Leis to himself or to businesses in which the accused had an interest, totaling approximately $44,000. The loans were made at prevailing interest rates, but no promissory notes or other written evidence of the loans were prepared other than the canceled checks drawn by the accused on Leis's bank account. Not more than one interest payment and no repayments of principal were made before Leis's death.
On June 10, 1983, after Leis's death, the accused filed a petition for probate of Leis's will, stating that the assets of the estate consisted of $2,000 in money and $55,000 in receivables, and for appointment of the accused as personal representative of the estate. An order to this effect was signed on June 13, 1983. After a conversation with his own lawyer, the accused realized that he had a conflict of interest as a debtor of the estate and resigned as personal representative, arranging to have another lawyer, Garth Ledwidge, appointed as his successor in September 1983.
In an inventory of the estate filed in January 1984, Ledwidge referred to three promissory notes payable, respectively, by the accused, Roger Germundson, and by two businesses in which Germundson had an interest. Germundson signed three demand notes for himself, for Master Muffler, Inc., and for 3-Spot Enterprises (a partnership) to St. Timothy Lutheran Church and Good Shepherd Lutheran Home of the West, devisees of Cleveland Leis, on June 1, 1984. Because of a dispute between the owners of Master Muffler, Inc., the accused was only a shareholder and not authorized to act as an officer of the corporation when he signed the notes. The accused later told an attorney for St. Timothy and Good Shepherd that some of the checks he wrote for supposed loans from Leis to 3-Spot Enterprises in fact were for his personal use, and he so testified to the trial panel. The accused eventually settled the claims of the two devisees for approximately $55,000.
The Bar's complaint charged, and the trial panel found, violations of DR 5-101(A), DR 5-104(A), and DR 1-102(A)(3) (former DR 1-102(A)(4)). As we often have occasion to remind counsel in oral argument, and not uniquely in disciplinary cases, the briefs do not comply with ORAP 7.24, which requires statutes and other regulatory texts to be set out verbatim. 1 Earlier opinions have noted this repeated failing, see, e.g., State v. Langan, 301 Or. 1, 3 n 1, 718 P.2d 719 (1986); Davis v. Tyee Industries, Inc., 58 Or.App. 292, 300, 648 P.2d 388 (1982). Quotation of statutory words relevant to an issue is not only a convenience for the court. Rule 7.24 is intended to cause counsel to examine the current text of a statute or other provision, including possible recent amendments, before arguing from judicial decisions under the statute or from some general paraphrase of it. Compliance with the rule is not optional.
DR 5-101(A) provides:
DR 5-104(A) provides:
These disciplinary rules differ in that DR 5-101(A) assumes a preexisting interest and precludes the lawyer from accepting professional employment "[e]xcept with the consent of the lawyer's client after full disclosure," including "the recommendation that the client seek independent legal advice," while DR 5-104(A) assumes an existing professional relationship between the lawyer and the client and precludes the lawyer from entering a business transaction with a client "if they have differing interests therein and if the client expects the lawyer to exercise the lawyer's professional judgment therein for the protection of the client," again subject to the client's consent after full disclosure by the lawyer, including a recommendation that the client obtain independent legal advice. The lawyer's duty to disclose fully and to recommend independent legal advice is common to both situations, acceptance of employment when the lawyer's professional judgment for the client is threatened by self-interest, DR 5-101(A), and entering a business transaction with a client if they have differing interests therein, DR 5-104(A).
In the present case, Germundson's professional relationship with Leis preceded any reason to believe that his judgment would be affected by his personal business interests. It is unquestioned that after becoming Leis's lawyer, Germundson entered into business transactions with Leis in which they had differing interests when he borrowed substantial sums of money from Leis. It also is unquestioned that after he began to borrow money from Leis, Germundson continued to undertake new professional tasks for him, which included preparing a will and collecting and paying Leis's monthly checks. We agree with the Bar (the trial panel failed to make express findings on this point) that the accused's personal position as his client's debtor reasonably might be expected to affect his professional judgment in handling the client's financial affairs. Both under DR 5-101(A) and DR 5-104(A), therefore, the propriety of the accused's conduct depends on whether he obtained the client's consent after full disclosure, including the recommendation that the client seek independent legal advice.
Germundson testified that Leis urged him to accept Leis's offers to lend him money, and that Germundson repeatedly recommended that Leis consult independent counsel concerning these loans, but that Leis emphatically rejected this. No one else was present at the business discussions during Germundson's frequent visits to Leis's room in the nursing home, and nothing of what was discussed or agreed between them was committed to paper. We previously have said that a lawyer who wants to show compliance with the disclosure requirements of the disciplinary rules preferably should state the disclosures in writing. In re Drake, 292 Or. 704, 714, 642 P.2d 296 (1982). This applies not only to the existence of the lawyer's interest but the nature of the conflict, the risks to the client, and the reasons for consulting independent counsel. But the rules do not now mandate such written disclosures, and we cannot find by clear and convincing evidence that the accused did not urge Leis to seek independent legal advice.
Assuming he did so, however, Germundson's own testimony does not demonstrate adequate disclosure apart from recommending independent advice. He did not spell out the financial conditions of the businesses in which he was engaged or the extent of his own exposure to personal or business obligations besides the unsecured loans from Leis. Germundson and Leis were friends, and we recognize that one friend may prefer to show his trust in the other and may resist and resent the other's...
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Gortmaker, In re
... ... See In re Germundson, 301 Or. 656, 664, 724 P.2d 793 (1986); In re Bristow, 301 Or. 194, 206, 721 P.2d 437 (1986); see also ABA Standards For Imposing Lawyer Sanctions (1986) 1.1 ... An applicant for reinstatement to the practice of law has the burden of establishing by clear and convincing ... ...
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Conduct of Coe, In re
... ... The trial panel decided that a one-year suspension was the appropriate sanction, with certain conditions precedent to be met for reinstatement. The Bar urges a three-year suspension with the same conditions ... Page 1039 ... precedent. In In re Germundson, 301 Or. 656, 724 P.2d 793 (1986), In re Luebke, 301 Or. 321, 722 P.2d 1221 (1986), and In re Bristow, 301 Or. 194, 721 P.2d 437 (1986), we have suggested that the American Bar Association's "Standards for Imposing Lawyer Sanctions" (Standards) as approved February 1986 provide a good framework for ... ...
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Iowa Supreme Court Attorney Disciplinary Bd. v. Lynch
... ... Dettinger , 121 Ohio St.3d 400, 904 N.E.2d 890, 89192 (2009) (per curiam) (finding a conflict of interest when the attorney borrowed $25,000 from a client and then "continued to represent [the client] in various commercial and personal transactions"); In re Conduct of Germundson , 301 Or. 656, 724 P.2d 793, 795, 796 (1986) (en banc) (concluding that "the [attorney's] personal position as his client's debtor" for approximately $44,000 "reasonably might be expected to affect his professional judgment in handling the client's financial affairs"); In re Scott , 694 A.2d ... ...
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In re Carpenter
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