Undem v. State Bd. of Law Examiners, 79-196

• Citation: 587 S.W.2d 563,266 Ark. 683
• Decision Date: 15 October 1979
• Docket Number: No. 79-196,79-196
• Parties: Obert M. UNDEM, Appellant, v. STATE BOARD OF LAW EXAMINERS, Appellee.
• Court: Supreme Court of Arkansas

Page 563

587 S.W.2d 563

266 Ark. 683

Obert M. UNDEM, Appellant, v. STATE BOARD OF LAW EXAMINERS, Appellee.

No. 79-196.

Supreme Court of Arkansas, In Banc.

Oct. 15, 1979.

Niblock & Odom, Fayetteville, for appellant.

Ernest G. Lawrence, Bentonville, for appellee.

FOGLEMAN, Justice.

Appellant Obert M. Undem applied to the State Board of Law Examiners for admission to the bar of Arkansas by reciprocity under Rule XI of the Rules Governing Admission to the Bar. Undem was admitted to the practice of law in the State of Minnesota on October 7, 1963. There is no evidence that he ever engaged in the active practice of law in that state, except for counseling one family and handling the disposition of an estate for them, all prior to 1972. He came to Arkansas in 1974. He first applied for admission to practice law in Arkansas on September 25, 1978. The Chairman of the State Board of Law Examiners ruled that Undem was ineligible for admission because he had not engaged in the active practice of law for at least three years immediately preceding his application as required by Rule XI. In response to a request by Undem, a hearing was held before a panel of three members of the Board of Law Examiners as provided by Rule XIII A. Upon the record made, the board made the following findings:

A. That the Appellant has been admitted for at least four (4) years to the Bar of the highest Appellate Court of Minnesota, which has requirements for admission substantially equivalent to the requirements of this State, is of good moral Character, has removed himself to Arkansas, and intends to practice law in Arkansas; and,

B. That Appellant has been employed as President and Chief Executive Officer of McIlroy Bank, Fayetteville, Arkansas from 1974 to the date of his application; and,

C. That said employment did not constitute the "active practice of law" as set forth by Rule XI of the Rules of the Arkansas Supreme Court; and,

D. That since Appellant has not been engaged in the "active practice of law" for at least three (3) years preceding application for admission, as required by Rule XI of the Rules of the Supreme Court, he was found to be inelegible for admission by reciprocity.

On review de novo, we agree with the board's findings and affirm.

The only issue is whether Undem's service as president and chief executive officer of McIlroy Bank & Trust constituted "active practice of the law." Undem has never appeared in court or in any administrative forum in Arkansas on behalf of a client. He has never received a fee for any legal services rendered in this state. He states that, in the course of his work in various areas of the bank and particularly the trust department, he had occasion to work with the bank's customers, who were in the process of considering different alternatives in the fields of estate planning, tax planning, etc., (which are not necessarily in the exclusive domain of the legal practitioner).

The record, other than Undem's testimony, consists of letters from prominent judges, lawyers and businessmen in Fayetteville and its vicinity. Were Undem applying for permission to take the bar examination, these letters would undoubtedly foreclose any further investigation into his background and eligibility for admission, if he passed the bar examination.

One prominent lawyer stated that he did not believe that Undem was in the active practice of law in Fayetteville, but that he maintained working experience with a great many legal matters in his position at the bank. Another stated that, while the matters for which Undem was responsible did, on occasion, involve questions of law, he did not think it would be correct to conclude that he was actively engaged in the practice of law but that it would be correct to conclude that Undem was actively engaged in bank management and his involvement with the law was incidental thereto. A Little Rock lawyer attested to Undem's skill and awareness of the current state of the law as it related to banks, banking and trust and estate matters, but stated that Undem had not, to his knowledge, been actively engaged in the practice of law during the period of his acquaintance with Undem. Another prominent Fayetteville lawyer stated that, to the best of his knowledge, Undem did not actively participate in the practice of law in Northwest Arkansas, but was undoubtedly involved, on a day-to-day basis, in the study and application of rules, regulations and law promulgated by various administrative and regulatory agencies with which McIlroy Bank dealt. A prominent professor of law at the University of Arkansas stated that, even though Undem had not been engaged in the practice of law during the time he served as bank president, he had had much contact with legal problems and, if admitted, would be well prepared to deal with the type of legal problems that might expectedly be presented to him.

A vice-president of McIlroy Bank, who had daily contact with Undem as her direct supervisor, in which capacity he routinely and on an almost daily basis, reviewed for her such matters affecting her area of responsibility as personnel policies, questions regarding negotiable instruments, surety bonds, safe deposits, and interpretation of federal and state regulatory directives, said that he regularly handled "things" for her and her department that had been referred to outside counsel prior to his joining McIlroy Bank in 1974. She also said that Undem regularly assisted in the preparation and review of instruments relating to legal actions concerning the bank, preparatory to delivery of those matters into the hands of outside legal counsel for courtroom conclusion.

Other letters considered by the chairman had nothing to do with Undem's practice of law during the three years next preceding his application. On this record, the chairman could not have reached any conclusion other than the one he did, i. e., that Undem had not been engaged in the active practice of law for the preceding three years as required by our rules.

Undem attempted to present a better record for the board's consideration, after the chairman's ruling. The conclusion to be reached, however, was not altered. Undem added many activities that fit into the proper functions of the chief executive officer of a bank but that certainly do not constitute the practice of law, such as: preparation for and conduct of the annual stockholders' meetings; communicating irregularities in banking matters with the FBI; and review of loan files. He also enumerated the following: drafting of security forms for a $1,000,000 unsecured 10-year capital note issue; the transfer and reissuance of securities, debt and equity, with review of lost certificate bonds and probate documents, and observance of the requirements of the State Banking Department, the Arkansas Securities Commissioner, United States Securities and Exchange Commission and the Federal Reserve Board with reference to evidence of compliance or exemption in connection with the maturing of an issue of convertible debentures, part of which were converted to stock; participation in the preparation and review of the bank's lease of its building from its holding company; completion and reviewing of subleases; reviewing and approving amendments and alterations of leasing contracts; reviewing arrangements of lease financings for bank customers in the light of requirements of the Internal Revenue Service, the Federal Reserve Bank, the Arkansas Statutes and the regulations by the "Commissioner of Banks"; operation of the escrow department, which included review of deeds, notes, probate documents, etc.; creating and reviewing agreements with contractors and suppliers in connection with branch bank construction and remodeling, which involved contact with the problems of compliance with city ordinances; negotiating and effecting material equipment purchases and leases with purchase options; dealing with problems relating to claims for damage in installation, product warranties, etc.; coordination and direction of progress of matters referred to outside counsel; handling most of the questions relating to legal problems of the bank to the point of referral to outside counsel where formal court processing was involved; dealing with questions arising in the safe deposit department and questions from tellers and new account areas concerning negotiability of instruments; making liability determination on "stop payments," return items, forged endorsements, forged instruments, etc.; discussing claims against a bonding company before presentation; reviewing garnishments, levies and subpoenas for determination of appropriate action; reviewing portions of examination reports completed by bank personnel to determine appropriateness of answers in terms of requirements of regulatory agencies and the consequent liability of the bank, employees and directors relating thereto; reviewing title opinions, adequacy of documentation, collateral pledge forms, personal and corporate guarantees, adequacy of authorizing documents for corporation and partnership borrowing for compliance with United States and Arkansas statutes; dealing with questions regarding bankruptcies, election of remedies, etc.; handling foreclosures and other legal remedies pertaining to the pursuit of legal remedies in satisfaction of customer obligations to the bank; analyzing questions of fraud, forgery and sale of mortgaged chattels, prior to appropriate corrective action; and participating in a complete rewriting of personnel policies to assure compliance with standards of nondiscriminatory hiring and promotion. In the trust area, Undem listed the following activities: reviewing wills, trust agreements, escrow contracts, tax returns, and court orders (preparing some orders on occasion); reviewing documents pertaining to profit sharing, pension trusts, and employee stock ownership trusts; negotiating with the Internal Revenue Service...