Simmons v. State Bar of California

Decision Date18 February 1969
Citation74 Cal.Rptr. 915,70 Cal.2d 361,450 P.2d 291
CourtCalifornia Supreme Court
Parties, 450 P.2d 291 George A. P. SIMMONS, Petitioner, v. The STATE BAR OF CALIFORNIA, Respondent. L.A. 29105.

Richard W. Petherbridge, Santa Ana, for petitioner.

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


This is a proceeding to review a recommendation of the State Bar of California that petitioner be suspended from the practice of law for a period of four years on conditions of probation, including actual suspension for the first two years.

Facts: Petitioner was admitted to practice law in this state in December 1955. He conducts in Los Angeles a real estate business, as well as a law practice, maintaining separate offices for each.

Mr. Odell Gilbreath, the complaining witness in this proceeding, met petitioner in about 1954. At that time petitioner prepared Mr. Gilbreath's income tax returns.

Early in 1964, wishing to go into the business of operating a bar in San Bernardino, Mr. Gilbreath employed petitioner to represent him in a resale or refinancing of his home. Petitioner anticipated that he could thus obtain the funds needed for his share of the cost of the liquor license. During the latter part of March 1964, Mr. Gilbreath's wife started divorce proceedings against him, and he employed petitioner to represent him in that matter.

When the resale or refinancing was completed, Mr. Gilbreath found that he did not have sufficient funds to complete the purchase of the liquor license. Shortly thereafter petitioner asked him if he would be interested in investing in a second deed of trust on a particular piece of property in Los Angeles. Mr. Gilbreath agreed to do so, and on November 3, 1964, handed petitioner, in the latter's law office, a check for $1,000 and $200 in cash. As a receipt, petitioner gave Mr. Gilbreath one of his professional cards describing petitioner as an attorney, on the back of which he wrote, 'Received of Odell Gilbreath $1,200 in Trust for investment purposes.' Petitioner cashed the check the following day at a drug store.

Mr. Gilbreath had expected to receive a document showing that he was the beneficiary under a second deed of trust on the property petitioner had mentioned, but he received nothing. He tried many times to reach petitioner and left word for petitioner to call him, but petitioner made no attempt to respond. Mr. Gilbreath finally complained to the State Bar.

In the disciplinary proceedings thereafter commenced against petitioner, he contended that after cashing Mr. Gilbreath's check, he kept the money in an envelope in a safe in his office and used $900 of it in either December 1964 or January 1965 to acquire, in the name of a nominee, certain property on Casitas Avenue in Pasadena. In July 1965 he allegedly used the remaining $300 to pay for closing costs in an escrow relating thereto.

Although Mr. Gilbreath never received any documents indicating he had an interest of any kind in the property, petitioner maintained at his hearing before the local administrative committee that Mr. Gilbreath had a half interest with him in a second deed of trust on the Casitas Avenue property and that such interest would be worth about $1,700 when the deed or the property was sold. Petitioner admitted, however, that there was no document indicating in any way that Mr. Gilbreath had an interest in the property. 1

Questions: First. Does the evidence sustain the finding of culpability on the part of petitioner?

Yes. The burden is upon one seeking a review of a recommendation of a disciplinary board to show that its findings are not supported by the evidence or that its recommendation is erroneous or unlawful. (McKinney v. State Bar, 62 Cal.2d 194, 195(2), 41 Cal.Rptr. 665, 397 P.2d 425.) In the present case, the record discloses that petitioner has not sustained this burden.

The only direct attack made by petitioner on the findings and recommendation herein is a general averment that 'the record does not support the Findings of Fact * * * therefore the recommendation based upon the erroneous findings is in error.' This allegation is not otherwise amplified or supported by petitioner in his petition or brief. Not a single specific reference to the record is made. Instead, petitioner appears to argue his view of the transaction without any specific factual support.

Second. Did petitioner owe Mr. Gilbreath a duty to handle the latter's funds in accordance with the standards imposed by rule 9 of the Rules of Professional Conduct? 2

Yes. Petitioner contends that the transaction arose out of the resale or refinancing of Mr. Gilbreath's home, that he had handled that matter in his capacity of real estate broker, and that the strict rules applicable to an attorney-client relationship therefore do not apply.

Mr. and Mrs. Gilbreath became reconciled during the year 1964 after the divorce proceedings had been started, but petitioner testified that his representation of Mr. Gilbreath therein continued until some time in 1965. Mr. Gilbreath was therefore a client of petitioner at the time petitioner accepted the $1,200 in trust in November 1964, and the rules applicable to an attorney-client relationship apply.

Even though Mr. Gilbreath received the funds in a transaction in which petitioner conceivably was representing him as a real estate broker rather than an attorney, petitioner, having accepted the money in trust, would still be held to the same high standard.

Thus, this court said in Johnstone v. State Bar, 64 Cal.2d 153, 155--156(2), 49 Cal.Rptr. 97, 98, 410 P.2d 617, 618: 'When an attorney receives money on behalf of a third party who is not his client, he nevertheless is a fiduciary as to such third party. Thus the funds in his possession are impressed with a trust, and his conversion of such funds is a breach of the trust. In Clark v. State Bar, 39 Cal.2d 161, at page 166, 246 P.2d 1, at page 3, it is said: 'When an attorney assumes a fiduciary relationship and violates his duty in a manner that would justify disciplinary action if the relationship had been that of attorney and client, he may properly be disciplined for his misconduct."

Under the circumstances of this case, the record clearly supports the finding that petitioner misappropriated his client's funds.

Third. Is the degree of discipline recommended (suspension from the practice of law for a period of four years on conditions of probation, including actual suspension for the first two years) appropriate?

Yes. The local administrative committee after each hearing of this matter, as well as the disciplinary board after its first hearing, unanimously recommended that petitioner be disbarred. After a second hearing, the disciplinary board made the recommendation hereinabove set forth.

In making its recommendation, the disciplinary board properly gave consideration to the fact that in a prior proceeding, likewise involving the misappropriation of a client's funds, it had recommended that petitioner be suspended for two years (one year actual and one year on probation). The recommended penalty was subsequently imposed. (Simmons v. State Bar, 65 Cal.2d 281, 54 Cal.Rptr. 97, 419 P.2d 161.)

The misappropriation of a client's funds, in the absence of clearly extenuating circumstances, warrants disbarment. (In re Freiburghouse, 52 Cal.2d 514, 516(2), 342 P.2d 1.) In the present case, there are no clearly extenuating circumstances.

At the time of the local administrative committee hearing, petitioner did, upon request, pay Mr. Gilbreath $1,350 in cash, representing the amount the latter had turned over to petitioner, plus interest for the use of the money. Restitution is no defense in a disciplinary proceeding, but the conduct of the attorney in making the client whole, as well as the timeliness and manner of restitution, may have a bearing on discipline. However, restitution where made under the pressure of a disciplinary hearing, and where there has been no prior offer of repayment or accounting, is entitled to no weight. (Maggart v. State Bar, 7 Cal.2d 495, 502(3), 61 P.2d 451.)

Petitioner's wilful failure to observe rule 9 of the Rules of Professional Conduct regarding the handling of trust funds and his part in the filing of a materially altered affidavit with this court 3 are evidence of an unwillingness to abide by the responsibilities of his profession.

In his testimony before the local administrative committee, petitioner showed a complete lack of candor, and his own defense indicates his utter disregard of, and bad faith toward, the interests of his client. In addition, as indicated...

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