Smith, Matter of

• Decision Date: 19 April 1988
• Docket Number: No. 67116,67116
• Parties: In the Matter of Bradshaw SMITH, Respondent.
• Court: Missouri Supreme Court

Page 408

749 S.W.2d 408

In the Matter of Bradshaw SMITH, Respondent.

No. 67116.

Supreme Court of Missouri En Banc.

April 19, 1988.

John W. Howald, Hillsboro, for informant.

James W. Jeans, Sr., Kansas City, for respondent.

RENDLEN, Judge.

This disciplinary proceeding commenced in 1985 under Rule 5, Supreme Court Rules, by the Advisory Committee of the Missouri Bar Administration (Committee) rests on separate complaints, one of Charles and Imogene Mungle in 1981 and the other of William and Jo Ann Sanders in 1984.

The Mungle complaint arose from a real estate transaction in April 1981 involving complainants, respondent and his business The Sanders's complaint, filed August, 1984, stemmed from a 1980 real estate transaction (an activity predating the Mungle matter) involving Sanders and his wife, Jo Ann, and Home Team Realty, a real estate brokerage owned by respondent and Gill and operated by Ed Mouser. The Committee found probable cause to believe respondent's conduct required disciplinary measures and revived the Mungle complaint though, as noted above, the Sanders transaction occurred prior to the "Mungle" admonition cautioning against future activities.

partner, Sam Gill ¹. Following an informal hearing, the Committee concluded the alleged misconduct failed to warrant further action and ended the matter with its written communication, dated October 28, 1982, offering respondent an admonition which he accepted in lieu of opting for a plenary hearing. The Committee advised its admonition would become a part of the record, and added, "should any of your activities in the future subject you to disciplinary action, this too will be given cognizance at that time...." (Emphasis added.)

The Committee's information filed May, 1985, charged respondent in Count I (Mungle) with conduct contrary to DR 1-102(A)(4), DR 5-101(A) and (B) and DR 7-101(A)(3) of Rule 4 ²; in Count II (Sanders) with violation of DR 1-102(A)(4) and (6) of Rule 4; and, in Count III (Sanders) with violation of DR 1-102(A)(4) and (6) and DR 9-102(A) and (B) of Rule 4 of the Supreme Court of Missouri Rules.

Much of the evidence adduced in the hearing on the information conducted by the Honorable William E. Seay, serving the Court as Special Master, appears in hopeless conflict. Witnesses testifying on behalf of respondent included Ed Mouser, John Oliver, Jr., Wanda Smith and respondent, while only the Mungles testified in support of their complaint and William Sanders' testimony, the sole evidence supportive of his position, came in by deposition.

In disciplinary proceedings the findings and conclusions of the Special Master are advisory and it remains the Court's duty to determine the credibility of witnesses, review the evidence and make its own determination of the facts. In re Schiff, 542 S.W.2d 771 (Mo. banc 1976); In the Matter of Pine, 576 S.W.2d 538 (Mo. banc 1979). Further, a lawyer will be disciplined only if such action is warranted by a preponderance of the evidence. In re Conaghan, 613 S.W.2d 626 (Mo. banc 1981).

To place the issue in context, it is well that we briefly review respondent's professional and business experience prior to the questioned transactions. Bradshaw Smith completed his work at the University of Missouri--Kansas City School of Law in 1968, was admitted to the bar and began private practice that year in Cape Girardeau. He is a second generation attorney whose father was an attorney and former judge, and his uncle was a member of the bar. During the decade that followed his admission to the bar Smith became active in community affairs, joining several civic organizations and participating in a number of public service programs. ³ He was a member of the Planning and Zoning Commission, the City Council (three terms), was appointed as Prosecuting Attorney of Cape Girardeau County and found time to work in a variety of expanding business endeavors. He was of good reputation in the community when the disputed transactions occurred.

In 1978, Smith withdrew from public office as well as the practice of law to devote full time to his business enterprises and published notice of this fact in the newspaper and other "media". By 1979, he, with

his business associate, Sam Gill, had become active in numerous corporate enterprises, employing approximately 100 persons, which involved mobile home parks, pharmacies, and commercial and residential real estate scattered through Oklahoma, Arkansas, Illinois and Missouri. However, due in part to the generally unfavorable business climate then prevailing, Gill and Smith's business interests foundered and in 1981 Smith declared bankruptcy and moved with his wife to Carter County. In March of the following year he resumed the practice of law, was elected Prosecuting Attorney of Carter County and serves in that office today. He is the only practicing attorney residing in the county.

COUNT I

Count I of the information, relating to the sale of a commercial lot by Charles and Imogene Mungle to Gill and Smith in 1981, alleges that respondent expressly directed the preparation of the documents effecting the transaction including the note and deed of trust given to secure the purchase price from Gill and Smith; that Smith inserted in the deed of trust a clause subordinating the Mungles' lien to that of other future encumbrances without telling them of the clause or explaining its effect; that Gill and Smith conveyed to a subsequent buyer, who in turn pledged the property to secure payment of his note leaving the Mungles with inadequate security; and that Smith's actions violated DR 1-102(A)(4), DR 5-105(A) and (B), and DR 7-101(A)(3) of Rule 4.

The facts are these: Charles Mungle, 66, entered the embalming business in 1949 and for eleven years owned and operated a business selling funerary monuments but is now retired. While conceding involvement in a number of real estate transactions during his business career, Mungle asserted he relied on real estate agents and lawyers to handle the details of these activities. Notwithstanding this assertion, it is apparent from his testimony that Mungle was no novice but instead had considerable experience and possessed a good working knowledge of the documents utilized in such transactions.

The April 1981 real estate sale, which forms the basis of this Count, was not the first transaction between the Mungles and the Gill-Smith partnership. Two years earlier, the Mungles had sold a house and lot in Cape Girardeau, known as lot 7, Landgraf's Subdivision to Gill and Smith ⁴ for the agreed price of $60,000. Of this amount Gill and respondent paid $40,000, giving their promissory note secured by a second deed of trust for the balance. The Mungles admitted they were aware their lien was subordinate to a prior deed of trust securing amounts due by Gill and Smith to the Colonial Federal Savings and Loan Company.

In 1981, Mungles again solicited Gill and Smith hoping to sell an office building they owned, located on Lot 6 of Landgraf's subdivision, adjoining the lot they previously sold the partners. Imogene telephoned the Home Team Realty ⁵ office on April 14 and spoke with the secretary, Sharon Storm. She told Ms. Storm that she and her husband wished to sell their office building and learned that Gill was in the hospital and respondent out of town. Storm advised she would convey the message and later Gill returned Imogene's call. In the negotiations that followed, Imogene and Gill agreed upon the terms of the sale and for tax purposes she agreed to take the purchase price in monthly installments with no down payment. That afternoon Sharon Storm delivered a contract for sale to the Mungles which they signed, and by its terms the Mungles agreed to carry a $45,000, 15-year note bearing interest at the rate of 10% secured by a first deed of trust In all this, respondent's uncontradicted testimony explained that during 1980 and thereafter he officed separately in a different building from "Home Team Realty," that he did not take part in any of the real estate operations on a day-by-day basis and did not prepare contracts or other documents in those transactions. This testimony was corroborated by Ed Mouser, the office manager of the real estate office, who testified how the daily management of the real estate office was "totally" under his direction, and it was he who managed the office, and "handle[d] the sales force" and "all the transactions." Mouser confirmed that respondent officed separately from the real estate agency and in a separate building when the agency moved from downtown to north Kingshighway in February of 1980. Because respondent was officed "downtown," he rarely came to the real estate office and never to "conduct any business." It was Gill, not respondent, who was principally involved with the hiring of Mouser, and during the years Mouser served as manager at no time did he call respondent "in on a legal matter, whether drawing contracts or whatever," and it was he who drafted all documents whether on standard forms or otherwise without discussion or consultation with Smith. This testimony remains uncontradicted and as confirmed by the Mungles, respondent had no participation in the negotiations for the purchase of lot 6, and was not in Cape Girardeau at the time.

on the land conveyed. After purchasing lot 6, Gill and Smith gave a first deed of trust thereon to secure a loan of $35,000 from Colonial Federal Savings of Cape Girardeau, and then conveyed the property to their corporation, Cape Rock Limited, as they had previously done with lot 7. On July 18, 1981, Cape Rock, Ltd. conveyed both lots to Mid-South Tabulating Service, Inc., which subsequently encumbered the property for the benefit of Colonial Federal Savings and Loan to secure its note of $153,000. This security arrangement took precedence over the Gill and Smith deed of trust given the Mungles at the time of the sale.

Evidence concerning the events that...