Lee v. State Bar

• Decision Date: 30 July 1970
• Citation: 2 Cal.3d 927,88 Cal.Rptr. 361,472 P.2d 449
• Court: California Supreme Court
• Parties: , 472 P.2d 449 Dale Einhorn LEE, Petitioner, v. The STATE BAR OF CALIFORNIA, Respondent. L.A. 29636.

Page 361

88 Cal.Rptr. 361

2 Cal.3d 927, 472 P.2d 449

Dale Einhorn LEE, Petitioner, v. The STATE BAR OF CALIFORNIA, Respondent.

L.A. 29636.

Supreme Court of California,

In Bank.

July 30, 1970.

As Modified Aug. 26, 1970.

Richards, Watson & Hemmerling, Clifford A. Hemmerling, and Joseph P. Myers, Los Angeles, for petitioner.

F. LaMar Forshee, and Herbert M. Rosenthal, San Francisco, for respondent.

PER CURIAM.

This is a proceeding to review a recommendation by the State Bar Disciplinary Board that petitioner be suspended from the practice of law for a period of three years on conditions of probation, including actual suspension during the first year.

Petitioner was admitted to practice in this state on January 9, 1962. In late 1964 he was engaged as an attorney by Brink's Inc., to collect a debt from Economic Services, dba Walker Oil Company. He was also engaged as an attorney and/or business adviser by William Walker, president of Economic Services and president or primary responsible party of one or more corporations or proprietary business enterprises owned or controlled by him.

Brink's contract with Economic Services required them to pick up cash at service stations and deliver it to designated persons. When they were told to cease performance they had in their possession as bailee many bags of money; they were owed.$4,476.48 in unpaid charges; and the authorized recipient of the money could not be found. They employed petitioner as their attorney in this matter. He negotiated with Walker, as president of Economic Services, for the retention by Brink's of $2,425.98 of the monies held in bailment and a confession of judgment for the balance of $2,809.50, which included $250 interest and $500 attorney's fees. Petitioner included a provision in the confession of judgment that it might be entered against Walker and Economic Services 'jointly and severally' but this phrase was deleted by Milton Musser, attorney for Walker. Petitioner claims that he did not know at that time that Walker was the sole stockholder and a director of Economic Services. Petitioner agreed not to file the confession of judgment for sixty days. On November 23, not having received any further payments he filed it as an action in the Los Angeles Municipal Court, and thereafter recorded it in various counties. In October he had received $250 from Brink's for his services to date. He agreed that his fee would be $200 for collecting the balance if court action was not required.

Sometime before November 19, 1964, petitioner met with Walker to discuss the Brink's debt. Walker stated that he owed a lot of money and was cash short, that he was involved in a multi-million dollar lawsuit, and that if petitioner could help him find someone to buy some of the gas stations or to lend him money he would pay off Brink's as soon as he got the money and that he would pay petitioner for his trouble. There was no specific agreement as to fees. Walker said 'I will take care of you.' Petitioner knew that Walker had cash or access to cash; that he was 'operating out of his pocket and under three or four different names'; that when dealing with Walker 'you don't know what entity he represents'; and that Walker used 'such phrases as 'we are going to' and you never know who the 'we' or 'I' is, whether Economic Services or someone else.' Petitioner insists that 'to this day I don't know who was which and on what deal.' Nevertheless he determined that the best way to get money for Brink's was not by direct pressure on Walker but by working along with him. He had already determined that it was going to be difficult to collect from the company. Walker had told him that it had no cash, was out of business, and the gas stations were shut down. The telephone was answered by an answering service. Petitioner did not know of any assets or any way of getting money out of the company.

On November 27 Brink's credit manager in chicago requested John W. Jones, Pacific Coast Manager for Brink's, to report on the status of the debt. Jones contacted petitioner and reported to Chicago that petitioner was working with the attorney for Walker Oil in an attempt to collect the amount owed without the expense of going to court. On January 20, 1965, petitioner advised Jones that he had collected $500 from Walker which he would remit when the check cleared; that he was pushing for more each week; and That the receipt of this money in no way slowed down his efforts to enforce the judgment. On February 2 he forwarded to Brink's his check for $1,000, indicating that he expected another payment soon. On March 31 he forwarded a photostat of a $500 check drawn by Aloha Oil Company in his favor and signed by Walker. It had been returned by the bank for insufficient signature and he advised Brink's that he would contact Walker regarding it. By implication the check was intended as a payment on the Brink's judgment. Petitioner testified, however, that Walker never intended it for Brink's, and that half of it was given to him for costs in connection with an action filed by him as assignor of Aloha Oil Company (in which Walker owned 81% Of the stock) at the request of Walker.

On April 20 petitioner advised Jones' secretary that Brink's was involved in a lawsuit not by name but by interest. He did not inform her or Jones that he had filed an action in his own name for an undisclosed principal against a Mr. A. E. Joseph or that he brought that action as the payee of a $2,000 promissory note and beneficiary of a deed of trust on Economic Services property securing same, executed in his favor by Walker as president of Economic Services on January 23, 1965 (hereinafter more fully discussed). Brink's never authorized him to become a payee of a note, to take a deed of trust, or to bring an action in which they were the undisclosed principal. In May petitioner reported that he was still working on the debt. Jones, therefore, on May 3 advised the Chicago office that petitioner did not feel that it was a lost cause.

On May 5 Brink's received a letter from Harold Rubins, attorney for Joseph, defendant in the civil action, inquiring whether they were the undisclosed principal represented therein by petitioner. Brink's sent the letter to petitioner for reply. What verbal explanation he made of it at that time is not clear. He gave none in writing. On June 3 the Chicago credit manager advised Jones to instruct petitioner not to receive minimum payments and that if he had not received a definite commitment legal proceedings should be instituted as soon as possible. Petitioner replied on June 28 that Walker was involved in three lawsuits, had one escrow opened, and that petitioner felt that all would be paid in 45 days.

Some time between June 28 and August 4, when petitioner obtained for $400 an assignment from Brink's to himself of their judgment, he made some communication to Brink's regarding the note, deed of trust and civil action. The Brink's file was in evidence at the disciplinary hearing. Jones testified that it contained no references to these matters and that he had no personal knowledge of them. Petitioner had advised him that if Brink's stayed with petitioner in his efforts to collect the money then due them (at that point $1809.50 including interest and attorney's fees), that Brink's would end up collecting somewhere in the neighborhood of $20,000, and Jones had replied that all they wanted was the money due and that they did not want any embarrassment whatsoever in connection with this case. Charles H. Reich, Los Angeles manager of Brink's, testified that petitioner had mentioned something to him 'but it was all Greek to me. I didn't know what he was getting at. All I know is he was trying * * * going through certain proceedings to collect our money.'

It is pertinent to note here evidence received by two affidavits, filed by petitioner for the first time on petition for review with the disciplinary board, and also filed with this court in this proceeding which relate to oral information given by petitioner to Francis D. Partlan, attorney for Brink's at the time in question. Partlan stated that he acquired knowledge in August 1965 that petitioner was engaged in litigation concerning a security interest in real property given to him by Economic Services, that Brink's had told him he was proceeding on behalf of Brink's and that Brink's might realize as much as $20,000 if the action was successful. He stated that he told petitioner that Brink's was only interested in the monies remaining due and would prefer to assign any and all interest they held rather than become involved as principal in the note and security interest or in the litigation. He did not state that Brink's ratified petitioner's actions nor that the assignment should include any interest of Brink's in such note, deed of trust or litigation. The affidavit of Eugene P. Taylor, counsel for petitioner in the Joseph litigation and petitioner's original counsel in these proceedings, confirmed that a telephone call took place betwenty petitioner and Partlan In July 1965 in which Brink's indicated that they wished to disassociate themselves from any further proceedings and had offered upon payment of a reasonable sum to assign their interest to petitioner. No explanation was made by petitioner or Taylor why this evidence was not produced before the disciplinary committee had concluded its hearings. Attorney Taylor was present at the hearings, had indicated that he had nothing more to offer and had rested, the case was under submission by the committee seven months before it was decided, and the affidavits were filed thereafter.

In July 1965 Jones recommended to Brink's that they sell their judgment to petitioner and that the assignment cover liability for costs or fees due him. The sum of $400 was agreed upon, some or all of which represented reimbursement for costs or fees. Petitioner testified at the hearings that his...