People ex rel. Chicago Bar Ass'n v. Ashton

• Decision Date: 06 April 1932
• Docket Number: No. 19493.,19493.
• Citation: 347 Ill. 570,180 N.E. 440
• Parties: PEOPLE ex rel. CHICAGO BAR ASS'N v. ASHTON.
• Court: Illinois Supreme Court

347 Ill. 570

180 N.E. 440

PEOPLE ex rel. CHICAGO BAR ASS'N

v.ASHTON.

No. 19493.

Supreme Court of Illinois.

Feb. 19, 1932.

Rehearing Denied April 6, 1932.

Proceeding by the People, on the relation of the Chicago Bar Association, against Henry M. Ashton. On relator's exceptions to commissioner's findings.

Respondent suspended.

John L. Fogle, of Chicago, for relator.

Edward M. Winston, Irvin N. Walker, and Stuart B. Krohn, all of Chicago, for respondent.

JONES, J.

The relator, the Chicago Bar Association, filed an information in this court for the disbarment of Henry M. Ashton, the respondent. The cause was referred to a commissioner to take the evidence and report his conclusions. After the evidence had been taken the commissioner died before making a report. The cause was referred to another commissioner, with directions to consider the evidence taken by the first commissioner and make a report thereon. The commissioner found that the respondent should not be disbarred, but also found that if his conduct merited some other form of discipline the matter should be submitted to this court for such action as it might deem proper. The relator filed exceptions to the findings.

The facts found by the commissioner are not in serious dispute and are substantially as follows: The respondent was licensed to practice law in 1899 and has practiced in Chicago ever since. During the year 1920 he shared an office with another attorney. Certain persons who had claims against the Industrial Loan & Guaranty Company on account of stock subscriptions consulted the latter attorney and were told by him that an investigation would entail considerable expense and that their claims were not large enough to justify his handling the litigation. He recommended the respondent as a competent attorney to handle it. These stockholders conferred with the respondent and he suggested that they procure four or five of their neighbors who had claims of similar kind to participate in the litigation. Such additional clients were obtained by the stockholders. Although the other attorney had at first declined employment, it appears he became interested in the litigation and with the respondent engaged Harry E. Austin, an acquaintance and friend of the respondent, to solicit stockholders to employ them in the enforcement of claims against said corporation. The exact terms of the employment are in dispute, but it is agreed that Austin was to receive compensation out of the money collected through the litigation. Pursuant to his employment Austin began the solicitation of stockholders to employ said attorneys. As an effective means of persuading stockholders, he engaged desk room in an office at 138 North La Salle street, Chicago, and with the assistance of the respondent prepared, and caused to be printed, letterheads with the following heading: ‘Investors Protective Bureau-Special Financial Reports on Unlisted Securities-Room 50-52, 138 North La Salle street, Chicago.’ Cards of similar import were also printed and distributed.

Austin and the respondent also prepared two form letters which were sent to the stockholders. The first letter was dated November 24, 1920, and stated that the stockholders'committee had made an investigation of the corporation and found its financial condition and methods of doing business were wholly unsatisfactory; that a plan had been devised to compel the return of the full amount paid in by each subscriber who would join this committee; and that if the stockholder desired further information and wished to protecthimself immediate action was necessary. The stockholder was requested to call at the office and bring full and complete information with reference to his dealings with this company. The second letter was dated January 5, 1921, and told the stockholders that a suit had been filed by fourteen stockholders to have a receiver appointed for the company and that the suit had been brought by attorneys employed by the bureau, acting for the claimants. The letter further stated that it was the claim of the stockholders that the stock was sold to them through false representations; that the company had never made any profits; that over $500,000 in money of the corporation was invested in the common stock of the Trustees' System Service Corporation; that this stock was worthless; that the companies operating under the name of the Trustees' System Service Corporation owed banks in Chicago and other cities over $300,000 for money borrowed; and that the whole business of the service corporation was conducted in a fraudulent way.

Austin and the respondent prepared an agreement to be signed by any stockholder who wished to join in the suit. It recited that the stockholder had employed the Investors' Protective Bureau to represent him in the claims which had been filed against the Industrial Loan & Guaranty Company for money paid for stock issued to the subscribers; that the stockholder had paid to said bureau $_____, being 5 per cent. of the amount of his claim against said corporation; that said sum was to cover all costs of investigation of the affairs of the company; that in case it is necessary to employ an attorney to collect the claims the bureau may contract in the name of the stockholder to pay a reasonable fee to such attorney for his services; that if the claim is...