On an Order to Show Cause why respondent should not be disbarred or otherwise disciplined.
For reprimand -- Chief Justice Wilentz and Justices Pashman, Clifford, Schreiber, Handler, Pollock and O'Hern. Opposed -- None.
The factual background of these disciplinary proceedings is adequately set forth in the Decision and Recommendation of the Disciplinary Review Board (DRB), as follows:
This matter arose out of a prospective real estate transaction in which Respondent represented the seller, Eugene R. Day, a principal of Marsan
Builders, which was to convey a parcel of land to and build a house for Robert and June Handwerker. Pursuant to a binder prepared by Respondent, the Handwerkers paid a deposit of $1,000 on or about November 9, 1978. The binder recited that the $1,000 would be returned in the event a fully executed contract was not consummated within 15 days of November 9, 1978.
No contract was ever executed in this matter despite extensive negotiations; and on June 13, 1979, Mrs. Handwerker [wrote to] * * * Respondent, who had been holding the $1,000 deposit in his trust account, and requested that the money be returned. Prior to this an architect had been consulted by Respondent's client and there was an outstanding bill in the amount of $955, the responsibility for which was in dispute between Respondent's client and the Handwerkers. Despite Mrs. Handwerker's request of June 13, Respondent, on June 19, 1979, without consulting the Handwerkers, disbursed $955 to his client for payment of the outstanding bill. Subsequently, Respondent obtained the money from his client and returned it to his trust account. Settlement of the underlying dispute concerning responsibility for the bill was attempted but failed. The dispute was unresolved at the time of the Committee's last hearing on June 1, 1981.
In its report to the DRB, the District IX Ethics Committee likewise perceived the "gist of the matter" as respondent's unauthorized disbursement of $955 of complainants' funds to respondent's client. In that connection the local Committee found that
at the time of the disbursement Respondent was on clear notice that there was a dispute as to payment of the architect's bill and the return of the $1,000 to Complainants. He received no authorization from Handwerkers to disburse their funds to his client and relied upon his client's representation that he had secured approval from the Handwerkers for his receipt of the $955.00.
Both the local Committee and the DRB concluded that respondent's disbursement to his client of complainants' funds without authorization and in the face of an express written prohibition was clearly violative of DR1-102(A)(6), proscribing lawyer conduct "that adversely reflects on * * * fitness to practice law."
We agree. Our independent examination of the entire record satisfies us that the stated ethical transgression has been established by clear and convincing proof. In reaching this conclusion we underscore the local Committee's finding recited above, with which we concur, that respondent "relied upon his client's representation that [the client] had secured approval" from complainants for the proposed disbursement. Had it been established by clear and convincing evidence, as it was not, that respondent did
not believe his client's representation or that despite that representation he nevertheless was aware that complainants still objected to the disbursement, then we would impose more severe discipline. But even accepting respondent's position that he released the funds only after firm assurances from his client that the dispute over the deposit monies had been resolved and that complainants had no objection to the proposed disbursement, nevertheless the ethical violation remains plain. Under the circumstances, respondent was not justified in relying solely on his client's representation, particularly in the face of the written demand from complainants, who were unrepresented by counsel, that their deposit be returned. A simple telephone call or short letter ...