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In re Barrett

Decided: April 14, 1982.


On an Order to Show Cause why respondent should not be disbarred or otherwise disciplined.

For suspension -- Justices Pashman, Clifford, Schreiber, Handler, Pollock and O'Hern. Opposed -- None.

Per Curiam

[88 NJ Page 451] After considering five complaints against respondent, the District IX Ethics Committee for Monmouth County issued presentments on three of the matters and recommended private reprimands on two. The Disciplinary Review Board agreed that Barrett had engaged in unethical conduct. After a hearing, the Board recommended that respondent be disbarred and reimburse the Administrative Office of the Courts for appropriate administrative

costs, including preparation of transcripts and cost of mailing.

Our independent review of the entire record leads us to the conclusion that respondent has indeed been guilty of unethical conduct in the matters charged. However, while we attach considerable weight to the recommendation of the Disciplinary Review Board, it is our view that a suspension with conditions hereinafter stated appropriately reflects the seriousness of respondent's misconduct and will adequately protect the public.

I. Muller Matter

Respondent represented John J. Muller in 1975. In July of that year respondent borrowed $13,000 from the complainant which was to be secured by a second mortgage on respondent's property. The only evidence of a mortgage being delivered in 1975 was respondent's testimony that he delivered to complainant a mortgage executed by himself together with the mortgage note dated July 21, 1975. Complainant denied receiving either a signed mortgage or the mortgage note. No mortgage was recorded. In fact, respondent did not acquire title to the subject property until August 7, 1975, several weeks after he allegedly executed and delivered to his client a mortgage on that property.

Only after the complaint to the Ethics Committee was filed, did respondent cooperate with the complainant. Thereafter, the parties worked out an extension of the loan and a mortgage was executed by respondent and recorded as security for the prior balance plus interest to date.

The Committee concluded that respondent's conduct reflected adversely on the profession and violated DR 1-102(A)(6) and DR 5-104(A).

We agree. Even though there is a dispute in testimony as to whether respondent gave his client a mortgage to record himself, in either event, the conduct is unprofessional. All transactions of an attorney with his client are subject to close

scrutiny. As Justice Jacobs said, "[a]n attorney who enters into business ventures with his client does not, in the eyes of his client or the public, shed in chameleon fashion his professional standing and obligation and there is no just reason why he should be permitted to do so." In re Carlsen, 17 N.J. 338, 346 (1955). Accord In re Gallop, 85 N.J. 317 (1981). As a general rule, an attorney should refrain from engaging in transactions with a client or former client who has not obtained independent legal advice on the matter. In re Hurd, 69 N.J. 316 (1976). Here, although respondent had a personal interest in the transaction, he did not even suggest that Muller seek outside legal counsel. Respondent's argument that his client had many years experience in such matters does not exonerate him. See In re Honig, 10 N.J. 74, 79 (1952). A lawyer exercising ordinary care for a lender-client under these circumstances almost certainly would have insisted upon security for such a loan. Respondent does not deny it was offered. It was his duty to see that it was promptly delivered and recorded. That was not done.

II. Asay Matter

In March of 1974, the respondent represented Frederick K. Draper in connection with a dispute with Claude F. Asay, Jr. Asay was the principal in a corporation named Fidelity Alarm and Data Corporation (Fidelity), which was engaged in the business of providing investigative services and rendering private security services. Draper and Fidelity had entered into an agreement dated November 7, 1973, and Draper paid Fidelity $10,000 for the rights to what was a distributorship or franchise. Draper subsequently sought to dissolve that agreement.

By letter of March 15, 1974, the respondent wrote to Carl P. Gross, Esq., attorney for Asay and his company, Fidelity, stating that unless Asay returned the $10,000 he was ...

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