Oregon State Bar v. Security Escrows, Inc.

• Decision Date: 19 December 1962
• Citation: 377 P.2d 334,233 Or. 80
• Parties: OREGON STATE BAR, Respondent, v. SECURITY ESCROWS, INC., a corporation, and Ralph Perry, Appellants. OREGON STATE BAR, Respondent, v. AMERICAN ESCROW, INC., a corporation and Hazel M. Altig, Appellants.
• Court: Oregon Supreme Court

Page 334

377 P.2d 334

233 Or. 80

OREGON STATE BAR, Respondent, v. SECURITY ESCROWS, INC., a corporation, and Ralph Perry, Appellants.

OREGON STATE BAR, Respondent, v. AMERICAN ESCROW, INC., a corporation and Hazel M. Altig, Appellants.

Supreme Court of Oregon, In Banc.

Argued and Submitted Sept. 6, 1962.

Decided Dec. 19, 1962.

Thomas H. Ryan and Victor C. Hefferin, Portland, for appellants.

Malcolm Montague, Portland, for respondent. With him on the brief were William F. Thomas and James H. Clarke, Portland.

Before McALLISTER, C. J., and ROSSMAN, PERRY, SLOAN, O'CONNELL, GOODWIN and LUSK, JJ.

GOODWIN, Justice.

The Oregon State Bar brought suit against two private corporations and certain of their officers to enjoin them from preparing conveyances and other specified instruments. From a decree granting a part of the relief prayed for, the defendants appeal.

The issue is whether these particular defendants lawfully may draft such instruments as contracts, deeds, mortgages, satisfactions, leases, options, certificates of assumed business name, bulk-sales affidavits, and the like, as an accommodation for customers who come to them for escrow service.

The defendants perform closing services in connection with real-estate transactions. They are not real estate brokers. They offer to brokers, lawyers, and others their services as depositaries for money and documents in the closing of a wide variety of transactions. The closing fee in each case is based upon the value of the property involved in the transaction, not upon the number or complexity of instruments prepared. The fee may be the same in two cases even though no instruments are prepared in one and many are prepared in another. It is stipulated that no fee is charged for the preparation of instruments. The escrow companies have no interest in the ordinary transactions, but presumably are selected as depositaries because of their disinterest. They have no obligation to any party to any transaction except to carry out the terms of the escrow. They owe no duty to advise the parties on their legal rights, nor do they owe any duty to prepare instruments. They have no reason to protect the rights of any one party as against another. Neutrality is their stock in trade. If the instruments needed by a party to a given transaction were not to be drawn by the defendants, such instruments would have to be drawn elsewhere and brought to the defendants for deposit in the regular course of the escrow business.

The defendants say they will be at a competitive disadvantage if they are enjoined from drawing conveyances. They say they draw the instruments involved in this litigation only because their customers want them to do so, and because satisfied customers are good for business. They perform the service for the same reason other merchants give other kinds of premiums. It stimulates trade.

The defendants deny that in the performance of the services described they are holding themselves out as qualified to practice law even when the documents drawn by them are custom made for a particular transaction. By far the greater number of documents prepared by the defendants are prepared upon printed forms. (This last observation no doubt could apply as well to most lawyers.) Whether there is a significant difference in principle between the selection of the proper printed form and the selection of the proper words to put on a clean sheet of paper in order to accomplish a particular conveyancing purpose is one of the peripheral questions in this case. First, however, there are other questions that must be noticed.

The defendants contend that it is exclusively a legislative function to define the practice of the law, and that the Oregon legislature has, by its silence, defined the practice of law in such a manner as to exclude from any prosecription the activities complained of in this case. The present statutes contain no definition of the practice of law. From 1919 to 1937 there was a statutory definition. See § 32-505, Oregon Code 1930, repealed by Oregon Laws 1937, ch. 343.

When the assertion made by the defendants is separated into its component parts, it will be seen that it tenders two issues which are of different kinds. The question whether either the court or the legislature has the exclusive power to define the practice of law is a question of constitutional importance, involving, as it does, the frontier between the separated powers of government under our state constitution. It is not a question upon which dictum should be lightly scattered. We decline to express an opinion upon this question in this case for two good reasons: (1) The question has not been briefed and argued with the thoroughness it deserves when and if it needs to be decided. (2) It is not necessary to decide the question because the legislature has not, since 1937, undertaken to define the practice of law.

With the defendants' assertion that the legislature has, by its silence, defined the practice of law so as to exclude therefrom the common forms of conveyancing, we are invited to divine legislative intent from an analysis of legislative silence. The defendants rely upon an opinion by the attorney general in saying that the silence is not inscrutable. An opinion on the practice of law was given in 1937 in response to an oral inquiry from the chairman of the House Judiciary Committee. The defendants say the opinion is some evidence that the assembly intended to enact the current form of the statute on unauthorized practice of law only if such statute (now ORS 9.160) would not be construed so as to prevent the drafting of deeds and mortgages by licensed real estate brokers. See 1936-1938 Ops.Atty.Gen. 190. The opinion speaks for itself. It does not speculate upon the legal effect of facts found in the case at bar. As a practical matter, however, it may be true that some one or more members of the assembly gave consideration to the effect they thought the integrated-bar act might have upon the business methods of various persons who are not lawyers. We have no reason to doubt that such was the case. Even so, we have found no authority for the proposition that legislative silence in this instance is the equivalent of a legislative definition of the practice of law. We must hold that the legislature has not attempted to define the practice of law, and, accordingly, there is no need to inquire whether it has the power to do so.

Before we may proceed with the case at bar, however, it is necessary to have before us enough of a definition so that we can decide whether the court below should have issued the injunction. We must mark out at least enough of the boundaries of the practice of law so that we can decide whether or not the activities complained of fall within them, leaving to future cases such other definitional problems as may remain unresolved.

There have been numerous attempts elsewhere to define the practice of law. ¹ None has been universally accepted. ² The Arizona Supreme Court has said that an exhaustive definition is impossible. Perhaps it is. See State Bar of Arizona v. Arizona Land Title & Trust Co., 90 Ariz. 76, 366 P.2d 1, 9 (1961), on petition for rehearing, 91 Ariz. 293, 371 P.2d 1020 (1962). Documents creating legal rights abound in the business community. The preparation of some of these documents is the principal occupation of some lawyers. The preparation of business documents also occupies part of the time of accountants, automobile salesmen, insurance agents, and many others. The practice of law manifestly includes the drafting of many documents which create legal rights. It does not follow, however, that the drafting of all such documents is always the practice of law. The problem, as is frequently the case, is largely one of drawing a recognizable line. Here the line must be drawn between those services which laymen ought not to undertake and those services which laymen can perform without harm to the public.

Whether or not the legislature is the exclusive custodian of the public interest, a matter which, as we have seen, is not now before us, the discipline and control of lawyers is interwoven with the public interest. The discipline of the bar is a matter of judicial concern. Ramstead v. Morgan, 219 Or. 383, 399, 347 P.2d 594, 77 A.L.R.2d 481. History tends to show that as the body of law has grown the community has needed, and continues to need, the services of men and women learned in the law. ³ Indeed, as the rule of law in our society becomes more firmly established, and as the laws become more complex, the need for persons learned in the law increases. Every civilized society recognizes certain human rights and also recognizes a need for lawyers to aid in securing those rights. Specialized duties in certain areas of activity thus fall upon the legal profession, not because lawyers need the business, but because the business needs lawyers. Laymen are excluded from law practice, whatever law practice may be, solely to protect the public. Since it is the duty of the courts to maintain the discipline of those who act as officers of the courts, it is also the responsibility of the courts, at least in the absence of action by another branch of government, to decide who are officers of the courts and what they may do in that capacity.

Turning, then, to the specific matter of decuments vesting property rights, the exercise of discretion concerning the property rights of another should be entrusted only to those learned in the law. There are, of course, matters in which persons who are not trained in the law can give perfectly sound business advice. However, when laymen select and prepare instruments creating rights in land for other members of the public there is always the danger that they may do the job badly. In the exceptional case the routine procedure may be grossly wrong. Every lawyer knows, for example, how easily a carefully constructed...