Merrick v. American Security & Trust Co., No. 7165.

• Court: United States Courts of Appeals. United States Court of Appeals (District of Columbia)
• Writing for the Court: Atwood, J., said
• Citation: 107 F.2d 271
• Decision Date: 09 October 1939
• Docket Number: No. 7165.
• Parties: MERRICK et al. v. AMERICAN SECURITY & TRUST CO.

107 F.2d 271 (1939)

MERRICK et al.
v.
AMERICAN SECURITY & TRUST CO.

No. 7165.

United States Court of Appeals for the District of Columbia.

On Rehearing. Decided October 9, 1939.

Writ of Certiorari Denied January 2, 1940.

107 F.2d 272

Richard L. Merrick, Leo A. Rover, and William J. Rowan, all of Washington, D. C., for appellants.

Frederic D. McKenney, John S. Flannery, G. Bowdoin Craighill, and John E. Larson, all of Washington, D. C., for appellee.

Before STEPHENS, EDGERTON, and VINSON, Associate Justices.

Writ of Certiorari Denied January 2, 1940. See 60 S.Ct. 380, 84 L.Ed. ___.

EDGERTON, Associate Justice.

Plaintiffs are the members of a Committee on Suppression of Unauthorized Practice of Law of the Bar Association of the District of Columbia. Defendant is an incorporated trust company. Plaintiffs sought an injunction to restrain defendant from practicing law and from holding itself out as authorized or able to furnish legal services or legal advice. In the District Court Justice Bailey, after a hearing on the merits, found that defendant is not engaged in the practice of law. 22 F.Supp. 177. Plaintiffs appeal from his decree dismissing their bill.

Although no statute here forbids corporations to "practice law," we assume that they may not do so and that a court may restrain them from doing so.¹ "Judges have nearly all been practitioners and they are naturally apt to retain the loyalties and prejudices of their old guild, and to give high value to the claims and qualities of their group. * * * It is, indeed, a difficult matter for the members of one group to resolve with complete fairness the conflict between their own group and other groups."² But there are no special tribunals for such conflicts, and courts must resolve them as best they can.

The underlying facts are not disputed. Defendant is authorized to, and does, carry on a fiduciary business as executor, administrator, trustee, guardian, agent, custodian, and manager. It solicits employment in some of these capacities. Its advertisements state that it "understands tax and investment problems" and "will be glad to discuss estate problems with you and your attorney. * * * Our intimate knowledge of tax laws and how to deal with them is constantly attracting new trust business to us. * * * Why not talk with one of our Trust Officers and learn how you may benefit from the operation of a Living Trust?" In a 32-page booklet entitled "Modern Methods of Administration and Conservation of Estates," defendant says: "You are invited to discuss your desires with our officers. They do not draw wills; that is a task for your attorney. But they can offer suggestions, based on long experience in the administration of hundreds of estates and trusts, that will help you to make your estate plan fully effective. * * * Have you planned your will to minimize the taxes your estate will be compelled to pay? * * * Have you left part or all of your estate in trust * * * to secure the maximum savings in death taxes? * * * If your wife is to receive the major portion of your estate for use during her life, your children to receive it after her death, you can arrange for her to have the income from it, even portions of the principal if necessary, through

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a trust under your will. At her death, the property could be given under the trust to the children, or the trust could be continued for them. By this plan, your estate will avoid possible probate publicity and avoid paying the heavy estate taxes twice. * * * Living trusts group themselves into two general classes, the revocable and irrevocable. * * * You may continue the protection of the trust for successive beneficiaries, subject to the limitations of the law. * * * Our officers will be glad to answer your questions about a living trust, and to give you a more detailed explanation of its advantages." To create a life insurance trust "you should consult with your attorney and our officers. * * *"

Twenty of defendant's officers and employees, including eleven members of its trust department, are members of the bar, Its officers and employees, on inquiries from customers and prospective customers, discuss investment and estate problems, give information about tax statutes and statutes of descent and distribution, and discuss the nature of trusts. No charge is made for these services. Defendant does not advise or attempt to influence or guide a customer as to which of several courses he should pursue. When a customer appears to be confronted with a legal problem, defendant insists that he consult his own attorney.

Defendant draws no wills, either by its attorney-officers (a term used herein to mean officers or employees who are members of the bar) or by outside counsel (lawyers who maintain separate offices). It draws no trust agreements except that (a) simple, stereotyped, revocable and non-testamentary agreements to which defendant is a party are sometimes prepared by attorney-officers, and (b) defendant sometimes has its counsel prepare trust agreements to which it is a party, without making a charge then or later against the customer or the trust estate. Defendant's attorney-officers prepare, usually on stereotyped forms, custodian and management agreements to which defendant is a party. Defendant sometimes prepares a release of a deed of trust on a printed form, but usually it has deeds, mortgages and deeds of trust prepared by title companies; and it receives no compensation for such services. Defendant prepares income tax returns for about 50 customers, without charge. It prepares, largely by a lay employee, necessary tax returns in cases where it is a fiduciary. No charge is made for preparation of tax returns and the like; except as employees sometimes do overtime work for which they, and not defendant, are paid by customers.

Defendant's employees appear before tax officials on behalf of estates of which it is fiduciary, but in contested tax matters it is always represented by outside counsel. In uncontested probate matters it is represented before the Register of Wills and the Probate Court by its attorney-officers. No charge is made for their services, apart from the regular commission of an executor or administrator. No part of their salaries is charged to any particular estate. In contested probate matters defendant is represented by outside counsel, who are paid out of the funds of the estate involved. "Neither defendant, nor any of its officers or employees, ever receive or share in any attorney's fee paid by any estate, of which defendant is fiduciary."

Appellants contend, and cite authorities to show, that the practice of law is not limited to the conduct of cases in court but includes the giving of legal advice and the preparation of wills, contracts, and other legal instruments. We have no doubt that one who does those things, and holds himself out to the public as doing them, as a business or profession, practices law. The New York Court of Appeals has held that "Counsel and advice, the drawing of agreements, the organization of corporations and preparing papers connected therewith, the drafting of legal documents of all kinds, including wills" amounts to law practice. "`To practice as an attorney at law' means to do the work, as a business, which is commonly and usually done by lawyers here in this country." People v. Alfani, 227 N.Y. 334, 338, 339, 125 N.E. 671, 673. There the defendant "had an office in which he carried on a real estate and insurance business. Distinct from such work he also drew legal papers, contracts for real estate, deeds, mortgages, bills of sale, and wills. A large sign placed over his * * * window bore the words in big letters `Notary Public — Redaction of All Legal Papers.'" (227 N.Y. at page 336, 125 N.E. at page 672.) His conviction of practicing law without a license, in violation of statute, was affirmed. That case should be compared with People v. Title Guarantee & Trust Co., 227 N.Y. 366, 125 N.E. 666, which the same court decided on the same day. There the defendant was charged with violating a statute which

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forbade corporations to practice law or hold themselves out as doing so. The corporation circulated a booklet which it called "Fees for the Examination of Titles." This booklet listed also "fees for drawing and recording papers," "fees for surveys," and "Average Charges for Drawing Papers." (227 N.Y. at page 369, 125 N.E. at page 667.) The court interpreted the booklet as referring only to papers which the defendant might be called upon to draw incidentally to its authorized business, and not as indicating that it solicited or engaged in the drawing of legal papers unconnected with that business. The court distinguished the Alfani case and reversed the defendant's conviction. In the opinion of Chief Judge Hiscock and the concurring opinions of Judge Pound and Judge Crane a distinction was drawn between drafting legal papers as a business and drafting legal papers pertinent to other business which the corporation was authorized to carry on. Of drafting as a business Judge Pound said: "If such services * * * are customarily rendered, I think that they should be characterized as legal services. This does not imply that a real estate broker may not prepare leases, mortgages and deeds, or that an installment house may not prepare conditional bills of sale, in connection with the business and as a part thereof. The preparation of the legal papers may be ancillary to the daily business of the actor or it may be the business itself. The emphasis may be upon the services of the broker or the business of the trader or it may be upon the practice of law. In the case before us, I think that the defendant may not make it a business to prepare even simple legal papers for all who apply, independently of its chartered powers. * * * On the evidence, it does not hold itself out as preparing legal instruments generally but only in...