Zitny v. State Bar of Cal.

• Decision Date: 01 July 1966
• Citation: 415 P.2d 521,51 Cal.Rptr. 825,64 Cal.2d 787
• Court: California Supreme Court
• Parties: , 415 P.2d 521 John J. ZITNY, Petitioner, v. The STATE BAR OF CALIFORNIA, Respondent. L.A. 28859. In Bank

Page 825

51 Cal.Rptr. 825

64 Cal.2d 787, 415 P.2d 521

John J. ZITNY, Petitioner, v. The STATE BAR OF CALIFORNIA, Respondent.

L.A. 28859.

Supreme Court of California,

In Bank.

July 1, 1966.

Sam E. Collins, Fullerton, for petitioner.

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

PER CURIAM.

In this proceeding petitioner seeks a review of the recommendation of the Board of Governors of the State Bar that he be disbarred.

In October 1961, petitioner and one Job Denni, a councilman in the City of Cypress, were indicted on charges of conspiring to solicit bribes, soliciting bribes, and receiving bribes. The criminal acts were alleged to have occurred during three separate transactions. After a jury trial, petitioner and Denni were acquitted on all counts.

Subsequently on February 15, 1963, a local administrative committee of the State Bar charged that petitioner had solicited bribes to obtain zoning changes for certain parcels of real property and had thereby violated his oath and duties as an attorney and committed acts involving moral turpitude and dishonesty. (Bus. & Prof.Code, §§ 6067, 6068 subds. (a), (c), (d) and 6106.) These charges encompassed the same three transactions that had been at issue during the criminal case and were set forth in three counts. In a fourth count the committee charged that during one of the foregoing transactions, petitioner violated rule 9 of the Rules of Professional Conduct of the State Bar of California by commingling his client's money with his own and failing to deposit his client's funds in a separate trust account. After hearings at which most of the witnesses at the criminal trial testified and the record of that trial was introduced into evidence, the committee found petitioner guilty on two counts of soliciting bribes and on one count of failing to deposit a client's funds in a separate trust account and drawing on these funds to meet his personal expenses. It recommended that petitioner be disbarred. On September 18, 1965, the Board of Governors of the State Bar by a vote of thirteen to two made findings of fact approving the local committee's determination of guilt on three counts and its recommendation that petitioner be disbarred.

Petitioner contends that the evidence is insufficient to sustain the findings of the board. Findings of fact made by local administrative committees and the Board of Governors are not binding on this court, and we will weigh the evidence upon which the findings rest. (Schullman v. State Bar, 59 Cal.2d 590, 599, 30 Cal.Rptr. 834, 381 P.2d 658; Sturr v. State Bar, 52 Cal.2d 125, 127, 338 P.2d 897.) The burden is on the petitioner, however, to demonstrate that the findings are not supported by the evidence or that the recommendations are erroneous or unlawful. (Best v. State Bar, 57 Cal.2d 633, 635, 21 Cal.Rptr. 589, 371 P.2d 325; Rock v. State Bar, 55 Cal.2d 724, 726, 12 Cal.Rptr. 857, 361 P.2d 585.) In meeting this burden, the petitioner must demonstrate that the charges of unprofessional conduct are not 'sustained by convincing proof and to a reasonable certainty.' (Brawner v. State Bar, 48 Cal.2d 814, 818, 313 P.2d 1, 3.) In making our determination we resolve all reasonable doubts in favor of the accused. If two or more equally reasonable inferences may be drawn from a proved fact, the inference leading to a conclusion of innocence rather than the one leading to a conclusion of guilt will be accepted. (Bar Ass'n of San Francisco v. Sullivan, 185 Cal. 621, 623--624, 198 P. 7.) When the findings and recommendations rest primarily on testimonial evidence, we are reluctant to reverse the decision of the local administrative committee, which was in a better position to evaluate conflicting statements after observing the demeanor of the witnesses and the character of their testimony. (Werner v. State Bar, 13 Cal.2d 666, 676--677, 91 P.2d 881; Mauer v. State Bar, 219 Cal. 271, 276, 26 P.2d 14.) Necessarily, however, less reliance is placed on this rule when, as in the present case, a jury heard much the same evidence that the local administrative committee heard and acquitted petitioner of virtually the same charges involved in the disciplinary proceedings. ¹

Although petitioner was charged with three counts of soliciting bribes and one count of violating rule 9, one of the bribery counts was dismissed. The State Bar also now concedes that the rule 9 violation should be limited to petitioner's failure to deposit his client's funds in a separate trust account. We shall consider the rule 9 charge first.

On April 19, 1961, petitioner told Theodore Bentley, a real estate developer and builder, that for $12,500 Con-Tech Building Company, a corporation in which Bentley held a one-third interest, could obtain a variance so that it might develop its property in Cypress City for residential purposes. Petitioner said that $500 would be a non-recoverable retainer but that the $12,000 would be returned if the use variance was not approved. About April 27 Con-Tech decided to accept this offer and Bentley brought $12,000 in small bills to petitioner's office. The money was placed in a manilla envelope that Bentley then marked with a 'T' and sealed with scotch tape. Bentley testified that no receipt was given. Petitioner testified that he did not give a receipt from an office receipt book, but drew a receipt on office stationery so that he could word it to describe accurately the transaction that had been agreed upon. No duplicate was kept by the office and no other notation concerning receipt of the funds was made on any other file in petitioner's office.

Petitioner left the money in his desk for approximately ten days. On May 8 he placed it in the firm's safe deposit box and, according to petitioner, wrote 'Ted Bentley (Con-Tech)' on the envelope. On May 29 the City Council of Cypress reversed a May 4 decision of the city planning commission and by a three to two vote granted the use variance subject to three conditions. On June 1 petitioner removed $400 from the previously sealed envelope and then transferred the balance of the $12,000 to a newly-acquired personal safe deposit box. He testified that on June 1 he told his wife that the money belonged to Con-Tech and clipped a note to the same effect to the envelope. During the next several months petitioner made several withdrawals from and deposits to this $12,000 fund. When he was arrested on October 10 only $3,880 remained in his safe deposit box but $7,960 was in his desk drawer. The first time that either of petitioner's partners were told of this $12,000 fee was on the day before petitioner's arrest.

Bentley testified that petitioner had earned his fee when the variance was granted, and the State Bar does not now contend that petitioner misappropriated his client's funds or commingled them with his own. It is undisputed, however, that before the variance was granted petitioner failed to sequester Con-Tech's funds as rule 9 requires. Section 6077 of the Business and Professions Code provides that an attorney may be disciplined only for a wilful breach of the Rules of Professional Conduct. To establish a wilful breach, it must be demonstrated that the person charged acted or omitted to act purposely, that is, that he knew what he was doing or not doing and that he intended either to commit the act or to abstain from committing it. (See Palmquist v. State Bar, 43 Cal.2d 428, 435--436, 274 P.2d 640; cf. In re Trombley, 31 Cal.2d 801, 807--808, 193 P.2d 734; Towle v. Matheus, 130 Cal. 574, 577, 62 P. 1064.) The wilfulness or intent may be proved by direct or by circumstantial evidence. (Cf. Kopasz v. Kopasz, 107 Cal.App.2d 308, 310, 237 P.2d 284; People v. Hall, 27 Cal.App.2d 440, 444--445, 81 P.2d 248; Witkin, California Evidence (1958) § 156.)

Although the charge and the findings of the local administrative committee and the Board of Governors are defective in failing to specify that petitioner's breach was wilful, prejudice is not presumed from such a procedural error. (See McGrath v. State Bar, 21 Cal.2d 737, 740, 135 P.2d 1.) A review of the evidence shows that petitioner's breach was wilful and that the defect in pleadings and findings was not prejudicial. Petitioner's firm maintained a clients' trust account in a local bank at the time of the transaction. Petitioner not only failed to deposit Con-Tech's money in the account but he did not use an office receipt or make any other notation in firm files to the effect that a potential fee had been collected. He did not even append a note to the envelope explaining that his firm held the enclosed money in trust for the Con-Tech corporation or inform his partners that a fee had been collected. Not until the day before his arrest, more than five months after he first received the money, did petitioner inform either of the other members of the firm about the fee. The evidence establishes that petitioner wilfully omitted to place the $12,000 contingent fee in a separate clients' trust account and that he had no bona fide and reasonable belief that facts existed that justified such omission. (Cf. Palmquist v. State Bar, 43 Cal.2d 428, 436, 274 P.2d 640. See also People v. Vogel, 46 Cal.2d 798, 801, 299 P.2d 850.)

Petitioner contends, however, that the purpose of the sequestration provision of rule 9 is to protect the funds of clients from the creditors of their attorneys. He asserts that under the circumstances of this case, any danger to the Con-Tech fee was negligible and the violation was therefore of little significance. The purpose of the rule is not so limited. 'The controlling question, * * * is not whether any harm or damage resulted to the particular clients from petitioner's handling of their affairs * * *.' The rules are designed to establish ethical standards for the Bar and to 'prohibit unprofessional conduct.' (Higgins v. State Bar, 46 Cal.2d 241, 246, 293 P.2d 455, 458; see McKinney v....