In re Disbarment of Conrad

• Decision Date: 03 February 1937
• Docket Number: No. 35093.,35093.
• Citation: 105 S.W.2d 1
• Parties: IN RE DISBARMENT PROCEEDINGS against HENRY S. CONRAD.
• Court: Missouri Supreme Court

105 S.W.2d 1

IN RE DISBARMENT PROCEEDINGS against HENRY S. CONRAD.

No. 35093.

Supreme Court of Missouri.

Court en Banc, February 3, 1937.

RESPONDENT SUSPENDED FOR FOUR MONTHS.

Roy McKittrick, Attorney General, and Franklin E. Reagan, Assistant Attorney General, for informants; Boyle G. Clark, J.D. James, John C. Grover, Grover C. Sibley and James A. Parks members of the Advisory Committee.

Respondent is guilty of unethical conduct in accepting $5000 from others without the knowledge and consent of his clients after full disclosure. Sec. 38, Rule 35 Sup. Ct.; White v. McCoy Land Co., 87 S.W. (2d) 672; In re Burns, 40 Pac. (2d) 112. Unfaithful or fraudulent conduct by an attorney is ground for disciplinary action. In re Alexander, 184 Atl. 77. Failure to disclose true facts constitutes appropriation of clients" funds. Herrscher v. State Bar of California, 49 Pac. (2d) 832. Lack of frankness with Bar Committee is circumstance against respondent. In re Jakubowsky, 283 N.Y. Supp. 347. Burden rests upon respondent to explain unusual circumstances. In re Salus, 184 Atl. 70.

Cyrus Crane, W.T. Ragland, L.E. Durham and Hale Houts for respondent.

(1) Respondent rendered splendid services to the property owners and accomplished wonderful results. His advice and counsel in the matter of a money settlement and his services in negotiating for and consummating the settlement, were not covered by his original employment and the stipulated fee of $1000, and he was entitled to reasonable compensation therefor and beyond the original fee. $5000 is a most reasonable amount for such compensation. McCartney v. Trust Co., 274 Mo. 244; Bond v. Sanford. 134 Mo. App. 481; Laughlin v. Newman, 61 S.W. (2d) 219; Bishop v. Vaughan, 186 Mo. App. 483. (2) Respondent did not accept a fee "from others without the knowledge and consent of his clients after full disclosure." The fee from the McCoy Land Company out of the settlement was agreed upon with the knowledge and consent of the property owners, for their benefit, and after full disclosure. The amount was reasonable and there was no unethical conduct in not reporting the amount when the result was reported, and no other misconduct is charged by the information. Respondent acted in good faith in the interest of the property owners throughout. (a) False issues and charges. Roberts v. Goldman, 299 S.W. 55; Swails v. Caruthersville, 158 Mo. App. 604; Green v. Elbert, 137 U.S. 624; Royal Arcanum v. Green, 237 U.S. 546; Davidge v. Simmons, 266 Fed. 1020; Herrscher v. State Bar of California, 49 Pac. (2d) 844. (b) The fee was agreed upon with the "consent" of the property owners "after full disclosure." The Professional Ethics of the Lawyer, by Henry Wyman Jessup; O'Day v. Conn, 131 Mo. 327; In re Scott, 215 N.W. 175; Evans v. Wade, 278 S.W. 604; People v. Anderson, 40 Pac. 568; People v. Robinson, 75 Pac. 922; Gardner v. Crenshaw, 122 Mo. 78; 12 C.J. 276; Coffman v. Fleming, 301 Mo. 313; Robertson v. Tapley, 48 Mo. App. 239; Laredo Natl. Bank v. Gordon, 61 Fed. (2d) 906; 13 C.J., pp. 323, 369, 772; Walton Water Co. v. Village of Walton, 143 N.E. 788; Fenton v. Perkins, 3 Mo. 25; 5 C.J., pp. 1343, 1361; Roberts v. Goldman, 299 S.W. 55; McCartney v. Trust Co., 274 Mo. 224.

HAYS, J.

Original proceeding brought upon information filed on June 2, 1936, by the General Chairman of Bar Committees of Missouri and the acting members of the Advisory Committee of the Sixteenth Judicial Circuit, in accordance with Section 13 of this court's Rule 36, to suspend or disbar Henry S. Conrad, the respondent, a duly licensed and practicing attorney at law, now and for many years residing and maintaining a law office in Kansas City, Missouri.

The information involves respondent's representation of the owners of property in the city block which is the site of the Jackson County courthouse recently constructed in Kansas City. The county selected the site and took options to purchase the property for sums totaling $1,010,000. Shortly thereafter the McCoy Land Company, a corporation, owning a block of ground across the street from the old courthouse, and represented by the law firm of Scarritt, Jones & North, brought a taxpayer's suit against the members of the county court to enjoin the issuance and negotiation of bonds for the site. The county's counsel resisted the suit, succeeded in having a demurrer sustained to the original petition and a motion sustained to strike out parts of an amended petition. The suit remained pending in the circuit court, however, with the prospect of appeal in the event of a final judgment for the county in the circuit court.

The McCoy Land Company suit thus threatened the property owners with the loss of the prospective sale of the property for $1,010,000, and caused an exodus of tenants and consequent loss of rents from some of the properties.

Early in 1932 the property owners organized for the purpose of taking steps to get the taxpayer's suit out of the way and in February, 1932, acting collectively, employed respondent to represent them.

Respondent's original employment was for the purpose of investigating authorities and presenting them and arguments to the firm of Scarritt, Jones & North, as attorneys for the McCoy Land Company and W.C. Scarritt, the head of the firm, for the purpose of persuading them that if their taxpayer's suit was not well founded, the company, and possibly the attorneys also, would be liable for damages to the property owners for maintaining the suit; to threaten to bring a suit for damages, and if such persuasion and threats failed, to actually bring a premature suit for damages and take depositions to develop facts in respect to the basis of the taxpayer's suit and the motive back of it. For such service the property owners collectively agreed to pay respondent a fee of $1000 and to advance the sum of $250 for expenses of such a suit.

Respondent proceeded to carry out his agreement. He held numerous conferences with Mr. Scarritt and his firm, submitted authorities, made arguments and threatened suit, but became convinced that Mr. Scarritt and his firm could not be so induced to voluntarily dismiss the taxpayer's suit, and that the only hope of disposing of it and of saving the sale of the property of the taxpayers and avoiding other dire results to them, was to effect some monetary settlement with the McCoy Land Company.

He suggested some such settlement to Mr. Scarritt, who shortly after made an offer to settle and dismiss the suit for $100,000, one-half to be paid to the McCoy Land Company and one-half to the county. Upon respondent's refusal to consider or report that offer after several subsequent conferences, Mr. Scarritt reduced his offer to $50,000 to be paid the McCoy Company, which offer respondent reported to the property owners and which they refused. Thereupon they authorized respondent to make a counter offer of $25,000, which he did, and to negotiate with Mr. Scarritt for a money settlement. Respondent by further negotiations and conferences succeeded in obtaining from the counsel an ultimate offer to settle for $35,350, being three and one-half per cent of the total purchase price of the courthouse site under the county's options. The respondent so reported to the property owners immediately and they authorized him to make a settlement for that sum, if necessary. Respondent negotiated a settlement on that basis which was later consummated by the payment of that amount to the McCoy Land Company out of the proceeds of the sale of the property, charged pro rata against the various property owners. The charge contained in the information is founded upon this settlement.

The information charges that at the time the respondent submitted to the property owners the proposition of the McCoy Land Company to dismiss the injunction suit for that sum he asked the property owners present if it would be all right if he could get the McCoy Land Company, W.C. Scarritt and the Scarritt firm to pay him something additional on his fee; that all the property owners did not hear this statement; and that at said time neither the property owners nor the respondent had any idea that the land company, or its counsel, would pay the sum of $5000 or any sum, and the suggestion of the respondent was not taken seriously by them. Some of the property owners expressed approval of the suggestion of the respondent, and some said nothing, because they considered the remarks of the respondent as of no consequence, and others did not know of the suggestion made by him. No one offered any objections.

In response to the averments above, respondent pleaded that at the time he submitted to the property owners, and they authorized him to accept, the said proposed settlement he proposed and asked authority to obtain from the land company an agreement to pay him an additional fee for his services rendered the property owners out of the settlement authorized, if possible, and averred that in so making said proposal he pointed out to the property owners that the initial fee did not cover his services in making the monetary settlement and that the property owners would be relieved to the extent of payment of his fee from the McCoy Land Company. The answer denied, upon information and belief, the remainder of said averments, and pleaded that by reason of what transpired respondent believed at the time and still believes that he was authorized in making the settlement with the land company for $35,350 to obtain an agreement from it to pay him a reasonable fee; that by reason of what transpired he was in fact so authorized, and that the sum of $5000 was a reasonable fee for his services for negotiating and consummating the monetary settlement.

Respondent's testimony was definitely to the effect that his initial employment was arranged and agreed upon by Howard Huselton and Col. Rubey — not together, but separately — on behalf of the property owners and not at a property...