State ex rel. Oklahoma Bar Ass'n v. Smith

• Decision Date: 26 August 1980
• Docket Number: No. 2808,2808
• Citation: 615 P.2d 1014
• Parties: STATE of Oklahoma ex rel. OKLAHOMA BAR ASSOCIATION, Complainant, v. Tom E. SMITH, Respondent. SCBD
• Court: Oklahoma Supreme Court

Page 1014

615 P.2d 1014

1980 OK 126

STATE of Oklahoma ex rel. OKLAHOMA BAR ASSOCIATION, Complainant, v. Tom E. SMITH, Respondent.

SCBD No. 2808.

Supreme Court of Oklahoma.

Aug. 26, 1980.

ORDER OF DISBARMENT.

Doyle W. Argo, Gen. Counsel, Oklahoma Bar Ass'n, Oklahoma City, for complainant.

Tom E. Smith, Poteau, for respondent.

SIMMS, Justice:

Formal Complaint alleging professional misconduct was made in this Court against Respondent Attorney by the Board of Directors of the Oklahoma Bar Association and the Complaint prayed Respondent be disciplined or disbarred from the practice of law in Oklahoma. A copy of the Complaint was transmitted to Respondent and thereafter, Duane A. Woodliff was appointed Trial Authority by the Chief Justice of this Court.

Following a lengthy evidentiary hearing, the Trial Authority submitted a written report to this Court containing detailed findings and recommended that Respondent be disbarred.

Complainant Bar Association timely filed its Brief in compliance with 5 O.S.1971, Ch. 1, App. 1, Art. 10, Sec. 16(a). Respondent obtained an extension of time to file his answer brief. No further extensions of time to file answer brief have been sought and Respondent defaulted on his brief. Thereafter, order was issued to Respondent directing him to show cause, if any he had, why this matter should not be submitted to the Court for consideration on the record made before the Trial Authority and the brief of Complainant Association. Tom E. Smith has not responded to the show cause order. We have reviewed the record of evidence made before the Trial Authority to ascertain if such evidence warrants disbarment. We conclude that it does.

Respondent represented R. B. Bell and his radio station in a law suit brought in LeFlore County where Bell was defendant. Bell had a substantial counter-claim predicated on the theory of manufacturers' products liability against the entity which had sued him. Smith, with Bell's consent, retained an Oklahoma City lawyer with expertise in the field of products liability to assist in the trial. The second attorney was retained on a contingent fee basis, but with the provision that he be reimbursed for his actual expenses associated with the case.

Bell prevailed on his counter-claim and plaintiff appealed. Co-counsel sent a bill to Respondent Smith for reimbursable expenses connected with the case which was to be submitted by Smith to Bell for payment by Bell. Respondent billed Bell for total litigation expenses of over $8,000.00 which figure included $2,207.96 reimbursable expenses of the Oklahoma City attorney. Bell paid Smith the $8,000.00 plus, but Smith repeatedly refused demands by his Oklahoma City co-counsel to pay the $2,207.96. Bell also demanded that Smith pay the associate counsel or return the money to Bell so that Bell could directly pay the expense items to associate counsel. Bell's demands were likewise refused. It was not until 16 months after Smith received the money from Bell, and 7 months following the filing of a complaint with the Bar Association, that Smith paid the $2,207.96 to the Oklahoma City lawyer. Documentary evidence introduced before the Trial Authority conclusively established that the expense monies belonging to another lawyer were co-mingled with Respondent's personal funds and converted by Smith for his personal benefit.

Additional evidence in support of disciplining Smith indicates that Smith and his associated co-counsel borrowed $25,000.00 from a bank in Oklahoma City for the specific purpose of lending the money to their client, Bell, to keep Bell's radio station operating during appeal, and further grant associated co-counsel and Smith an option to purchase an interest in the radio station. The promissory note was co-signed by Smith and associate counsel, and was guaranteed by the law partners of the associate counsel. After the loan arrangements were completed, the money was wired to the Poteau State Bank where it was deposited in Respondent's personal bank account. Smith and his associate counsel had agreed that Smith was to finalize this financial arrangement with Bell and then disburse funds from the $25,000.00 deposit, necessary to keep the radio station in business. It developed that the agreement was never completed with Bell in that Bell was able to arrange for funds elsewhere, and was unaware of the $25,000.00 deposit made for his benefit.

Undisputed evidence before the trial authority showed at the time the $25,000 was placed in the bank, Respondent was $6,719.00 overdrawn. The overdraft on Smith's personal account was immediately satisfied from the proceeds of the loan. The balance of the money was spent by Smith primarily for personal expenses. None of the money was used for the intended purpose of the proceeds of the loan.

The Oklahoma City lawyer demanded an accounting by Smith. At the hearing before the Trial Authority, Smith admitted that he repeatedly lied to his associate counsel about the status and whereabouts of the money, and that through deceit and misrepresentation, he hid from associate counsel the fact that he had converted the money to his own use. After a period of time, the Oklahoma City lawyer personally confronted Smith about the matter, and after consulting with independent counsel, Smith admitted in writing to "embezzling" $25,000.00 of "trust" funds. Sometime thereafter, Smith repaid the $25,000.00 to the lawyer from Oklahoma City who in turn paid the promissory note in full. However, Respondent failed to pay, and has never paid, $738.54 of accrued interest on the note.

Trial Authority found that the $25,000.00 was borrowed through the efforts of co-counsel to assist a client if needed by the client; that Smith held the funds in trust; that the funds were co-mingled by Respondent Smith with funds which were personal in nature; that the $25,000.00 was misappropriated and converted to Smith's personal use; that Smith breached a trust; and that Smith's conduct involved serious acts of "dishonesty, fraud, deceit, and misrepresentation."

The third subject of complaint involved the issuance of an "insufficient funds" check to a Texas court reporter. Smith submitted to the court reporter a check for $412.00 drawn on his trust account located at the Central National Bank, Poteau, Oklahoma, as payment for previous work and for additional work the court reporter was to do. The check was returned unpaid by the Bank marked "insufficient funds." Bank records introduced at trial show that at the time the check was issued, this trust account had a balance of $38.35. The check was presented to the Bank on two occasions and there was at no time sufficient funds in this particular account to pay the check. The court reporter notified Smith of the insufficient funds check by letter, demanded payment, and made a subsequent demand through an attorney. Later, Smith responded to an inquiry from the Oklahoma Bar Association regarding the matter, to the effect that he had mailed a cashier's check to the court reporter and further explaining that he had two trust accounts, one at the Central National Bank, and the other at the Poteau State Bank, and...