Case Title: MATTER OF MORSE

Citation: 

Docket Number: 

State: montana

Court: Montana Supreme Court

Date: 1990-06-12T00:00:00Z

Document:
IN THE SUPREME COURT OF THE STATE OF MONTANA

No. 98-464

IN THE MATTER OF WILLIAM R. MORSE, ) oPrNroN

fan attorney and counselor at law, ) ana
Respondent. ) onDER

‘The Commission on Practice filed a complaint in this court
charging William R. Morse with various violations of the Rules of
Professional Responsibility. on September 1, 1988, a citation was
issued to lr. Morse. Mr. Morse filed his ansver to the complaint
fon october 27, 1988. Subsequently, an amended complaint and an
amended answer were filed. A hearing vas held before the
Commission on Practice on July 28, 1989, with Francis B. Gallagher,
Acting Chairman, presiding. Craig D. Martinson appeared as Special
Prosecutor. Mr. Morse was also present and represented by C.W.
Leaphart. Subsequently the Commission issued its findings,
conclusions, and recommendations dated December 21, 1989. The
commission recommended that Mr. Morse be publicly censured before
this Court; be suspended from the practice of law for an indefinite
period of time; and be assessed all costs of these proceedings.
‘The findings and recommendations of the Comission are detailed and
lengthy and may be examined by interested parties in the office of

the Clerk of the Supreme court.
on February 5, 1990, Mr. Morse filed his brief in this court
containing his objections to the Commission's findings and
conclusions. On March 9, 1990, the Special Prosecutor filed his
brief responding to Mr. Morse's objections. Mr. Morse filed a
reply brief on March 21, 1990. In accordance with the rules
governing the Commission on Practice, the matter was deened
submitted to the Supreme Court. This Court heard oral argunent at
Mr. Morse's request on May 15, 1990, and has reviewed the briefs,
transeripts and other matters in the file.

‘The Court has concluded that it is appropriate to disbar Mr.
Norse as recomended by the Special Prosecutor. We will review a
number of the significant findings and conclusions of the
conmission.

Nr, Morse is a duly Licensed attorney with a principal office
in Absarokee, Montana. All of the charges now against him arose
out of events occurring when he represented Robert Eaton (ltr.
Eaton), 4/b/a/ Eaton Construction, in a legal claim that Mr. Eaton

had against National steel Products (stran st

 

1). The suit was
filed in the early 1970's and settled in 1981, A written fee
agreenent was entered into between Mr. Morse and Mr. Eaton whereby
all funds collected in this case would be divided 50/50 after
payment of all costs incurred by either party in pursuit of that
claim. Neither Mr. Morse or Mr. Eaton produced the written 50/50
costs and fee agreenent. After trial in federal district court,
a verdict was entered in favor of Mr. Eaton and against stran

steel. Upon appeal, the case was ultimately remanded to federal
district court for retrial. Subsequent to the remand and prior to
a retrial, settlement negotiations resulted in an acceptance of an
offer of settlement of $225,000 by Robert Eaton and his wife,
Darleen. The acceptance of the settlement was in writing dated
april 17, 1981. A check for $225,000 payable to Willian Morse and
Robert T. Eaton, dated April 28, 1981, wae delivered to Mr. Morse.

Prior to receiving the settlement check, Mr. Eaton wrote to
Mr. Morse by letter dated April 24, 1981, which advised him that
a fair disbursement of the settlement proceeds would be for Mr.
Morse to get 25% and Mr. Eaton to get 75t, and with each party to
pay his costs. Mr. Morse did not reply to this letter.
Subsequently, several meetings and telephone conversations were
held between Mr. Morse and Mr. Eaton regarding their fee agreement.
on May 10, 1981, the settlement check was taken by Mr. Morse and
Mr. Baton, along with their wives, to New York city to cash the
check. The parties left Billings, Montana and drove to Denver,
Colorado. From Denver, they flew to New York where they cashed the
check at the issuing bank. When they left the bank, Mr. Morse had
$125,000 in cash in his briefcase and Mr. Eaton had $100,000 of
cash in his brief case.

‘The parties flew back to Denver, Colorado on May 12, 1981.
While staying in a hotel in Denver, Mr. Morse gave Darleen Eaton
$12,500 in cash and took no receipt. This left each party with
$112,500, or one-half of the settlement. While in Denver, mr.
Morse and Mr. Eaton went to Empire Savings and Loan and purchased

30 day Certificates of Deposit (cD). The Eaton CD was in the sum

 
of $100,000 and placed in the names of Eaton's daughters. The
Morse CD in the sum of $100,000 was in the name of "Wn. R. Morse
office Trust Account" with Mr. Morse and his brother, stephen J.
Morse, being authorized to sign the CD. Mr. Morse's brother is
not a lawyer. Mr. Morse used his brother's North Dakota addrese
on the cp.

Sonetine in May or June, 1981, Mr. Morse presented to Mr.
Eaton two agreements, one designated "Receipt and Agreement" and
one designated "Agreement". Mr. Morse drafted both agreements
which are undated and in his handwriting. The "Receipt and
Agreenent" reduced the original fee agreement from a 50/50 fee
agreenent after costs to a 75/25 agreement in favor of Mr. Eaton,
including costs expended by each party. Neither party had kept a
detailed record of his costs. Both Mr. Morse and Mr. Eaton signed
this agreenent.

The "Agreement" indicated that Mr. Morse vas paid the sum of
$10,000 for all accounts which may be due and owing between the
parties other than that relating to the Stran steel case. ur.
Morse, Mr. Eaton and Mrs. Eaton signed this agreonent.

on June 11, 1981, Batons drove, and Morses flew to Denver to
redeon their CD's. On June 12, Mr. Morse redeemed his $100,000 cb
as follows: (1) a check in the sum of $56,250 payable to
WILLIAM MORSE TRUST ACCT" (This check was deposited in Mr. Morse's
Absarokee bank on June 15, 1981); (2) a check in the sum of
$10,000 payable to “WH MORSE TRUST ACCT", which he endorsed and

cashed immediately; and (3) the balance of the $100,000 cp
including interest in the sum of §1,376-71 earned, in cash
totalling $35,126.71. ‘The Morse and Eatons then drove back to
Billinge together.

Subsequently the Eatons made repeated demands upon Mr. Morse
for the paynent of the $56,250 retained by Mr. Morse. Such payment.
was not made. Eventually Eatons filed a civil suit alleging Mr.
Morse fraudulently appropriated $56,250 due to them. The case was
tried in the District Court of the Thirteenth Judicial District,
Stillwater county, Montana and resulted in a judgment for
$57,024.40 plus costs of $2,241.51 in favor of Mr. Eaton. On

appeal the judgment was affirmed by this Court. Eaton v. Morse

 

(1984), 212 Mont. 233, 687 P.24 1004.

Mr. Eaton filed a complaint with the Commission on Practice
alleging professional misconduct in Mr. Morse's mishandling of the
settlenent proceeds in the Stran Steel case. ‘The hearing was held
in Billings, Montana, in July 1989 before nine members of the
commission, consisting of six attorneys and three non-attorneys.
‘The Commission unanimously concluded that Mr. Morse co-mingled
funds, misappropriated funds and breached his fiduciary duty to his
client.

the Commission made findings of fact 1 through 42 in
connection with the charges brought against him. We will now
review the findings and conclusions of the Commission with regard
to each of the counts filed against Mr. Morse before the
commission.

COUNT I: Failure of Mr. Morse to pay to Mr. Raton $56,250.
‘The Commission found that Mr. Morse retained the sum of $56,250
plus interest which was the property of Mr. Eaton and to which he
was not entitled. ‘That finding is confirmed by the District court
judgment in the suit brought by Mr. Eaton against Mr. Morse, which
vas subsequently affirmed by this Court. ‘the Commission concluded
that such conduct constituted a violation of Rule 7(b) of the Rules
for Lawyer Disciplinary Enforcenent and is contrary to the highest
standards of justice and morality. There can be no significant
argument with regard to Count I because the essential elements were
established by the District court judgment and subsequent
affirmation on appeal by this Court. of itself, count I is clearly
sufficient to justify the conclusions and reconnendations of the
commission. We affirm the findings and conclusions of the
commission as to Count I.

: Failure to hold his clients funds separate from
his own failure to properly account for disbursement of the funds;
failure to make a full accounting of all of the settlement money;
false. testinony underoath before the trial court:
hisrepresentation and deceit of client; and breach of fiduciary
auty-

‘The Commission concluded that Mr. Morse failed to safeguard Mr.
Eaton's funds by failing to maintain a separate account and place
the proceeds in a properly negotiable instrument payable to the
client. It concluded that Mr. Morse never gave Mr. Eaton a
satisfactory written accounting of the $225,000 settlenent proceeds
despite numerous requests by Mr. Eaton. It concluded that Mr.

Morse falsely testified, under oath at the civil trial, that all

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funds had been properly accounted for. It further concluded that
‘the money was never accounted for by Mr. Morse nor shown to have
been given to Mr. Eaton in any form. ‘The Commission concluded that
such conduct constitutes a violation of the Rules of Professional
conduct, Rule 1.15, Rule 3.3 and Rule 8.4.

Mr. Morse argues that the Commission erred in concluding he
had violated Rule 2.2, It is true that Rule 3.3 primarily is
@irectea to actions of a lawyer acting in nis capacity as an
advocate in court. Mr. Morse argues that he was speaking as a
witness rather than as an advocate, so that Rule 2.3 is not
applicable. That is a technical argument which overlooks the

nature of the grievous conduct on the part of Mr. Morse. ‘The key

 

conclusions on the part of the Commission with regard to the false
testimony are:
15. That at the civil trial neld on December 14-20,
1982, Morse testified, under oath, that all funds had
been’ properly accounted for, which statements vere, in
fact, false.

21, That the Testimony of Morse at the civil trial
before the Honorable Nat Allen in regards to the
accounting of the settlement was in fact false, and was
a violation of Rule 3.3(a)(1) of the Rules of
Professional conduct. (Emphasis supplied.)

So far as the technical argument is concerned, the violation of

Rule 3.3 is not essential to the opinion for the reason that the

conduct clearly violated Rule 7(b) of the Rules Governing the

commission on Practice which provides that discipline may be

imposed for “any act committed by an attorney contrary to the

 
highest standards of honesty, justice or morality." (Emphasis
supplied.) Making false statements under oath in the course of
trial clearly violates the highest standards of honesty and
morality required on the part of any attorney. We conclude that
the giving of false testimony by Mr. Morse on the central issue of
Litigation, that is whether or not he had made payment to Mr.
Eaton, is sufficiently reprehensible in nature to warrant
indefinite suspension or disbarment in and of itself.

In oral argunent Mr. Morse argued that this court's decision
rested on which of two men's version of the facts it chose to
believe - Mr. Eaton's or Mr. Morse's. He argued that there is not
clear and convincing evidence to support the Commission's findings
and conclusions. He further argued that Mr. Eaton is a "peychopath
and a liar” and thus his testimony is not worthy of belief.
However, as the Special Prosecutor pointed out, Mr. Eaton is not
before this court for violations of the Rules of Professional
Responsibility. Mr. Morse is. We have carefully reviewed the
transcript of the hearing before the Commission to determine
whether the facts warrant discipline of Mr. Morse. We have
concluded that there is clear, convincing, and overvhelming
evidence to support both the findings and the conclusions of the
connission.

Mr. Morse contended that one receipt stating the agreenent of
the parties as to the distribution of the proceeds of the
settlement check is a sufficient "accounting". He argued that a

“paper trail" is necessary for day to day operation of a law office
when property moves fron one ownership or status to another through
the medium of the lawyers accounts, but that a paper trail is not
necessary when the parties know how the money is agreed to be
divided. We disagree. As Mr. Morse admits, the purpose of an
accounting is to protect the client. Had a proper accounting been
nade in the present case, both the client and the lawyer would have
been protected. mr. More's testimony was replete vith his
acknowledgement that the Eatons were hostile tovards him. A proper
accounting vould have protected all parties. Clearly an
appropriate accounting was not made in the present case. Mr. Morse
gave contradictory explanations with regard to the transfer and
delivery of the money. The testimony of Mr. Eaton was largely
consistent and vas supported by the testimony of other witnesses.
As previously stated, there is clear, convincing and overvhelming
evidence to support the findings and conclusions as to Count IT.
We affirm the findings and conclusions of the Commission as to
count Ir.

The Special Prosecutor has suggested that Mr. Morse should be
disbarred rather than indefinitely suspended, as recommended by the
commission. Montana law does not provide any legal difference
between the two. Under either punishment, the attorney may
petition for reinstatement. However, we conclude there is a
aistinction to be made.

Black's taw Dictionary (Fourth Addition) defines "disbar" in

England as an act “analogous to striking an attorney off the

 

rolls," and in America as a rescission of an attorney's license to
practice at its bar. "suspension" is defined as a "temporary stop,
a temporary delay, interruption, or cessation.” Thus, while
suspension" implies only a temporary punishment, “disbarment”
implies a more permanent or severe punishment.

unfortunately, in the majority of jurisdictions there has been
an implied difference between the two but a total failure to define
what that difference may be. In either case, under Montana law,
an attorney may petition for reinstatement under Rule 20, Rules for
Lawyer Disciplinary Enforcement. Section 37-61-309, MCA, provides
that this court has the discretion to deprive an attorney of the
right to practice law permanently or for a limited period,
according to the gravity of the offense, with one exception. The
exception is where an attorney is convicted of a felony or
misdemeanor involving moral turpitude. Upon conviction, the
judgment must be that the attorney's nane be stricken fron the roll
of attorneys. Section 37-61-301 and 309, MCA.

There is confusion in this area of law in Montana. Disbarnent
and indefinite suspension are not statutorily or otherwise defined
under Montana law. our statutes cited above provide for one
situation where an attorney must be "stricken fron the roll of
attorneys," which is enumerated in a statute which refers to
"disbarnent™ and "indefinite suspension" interchangeably. At the
same time, the Rules for Lawyer Disciplinary Enforcenent, Rule 20,
provides for the reinstatement of both disbarred and suspended
attorneys.

Due to the nature and severity of the offenses in this case,

10
we conclude disbarment, as recommended by the Special Prosecutor,
is appropriate rather than indefinite suspension and public censure
‘as recommended by the Commission on Practice.

te Supreme court of the State of Montana unanimously
concludes as follows:

1, That Me. Morse shall be disbarred from the practice of
law.

2. ‘That Mr. Morse shall pay all costs of the proceedings

before the Commission on Practice.

IN ORDER TO CARRY OUT THE FOREGOING, THE COURT ORDERS:

1. That Mr. Morse's disbarment from the practice of law as
fan attorney and counselor in the State of Montana, including all
tribunals and other bodies of the state, shall commence at 5:00
p.m. on guly /, 1990.

2. ‘That Mr. Morse is required to give the notices, to

 

deliver papers or property, and otherwise comply with the
provisions of Rule 21, Supreme Court of the State of Montana, Rules
for Lawyer Disciplinary Enforcement, which states as follows:

NOTICE TO CLIENTS AND OTHERS

‘Re Recipients of Notice and contents of Notic
unless otherwise ordered by the Supreme Court, within ten
(10) days after the date of the order of the Court
{posing the discipline of disbarment or suspension, the
respondent shall notify or cause to be notified by
Tegistered or certified mail, return receipt requested,
(a) all clients being represented in pending matters; (2)
{hy Go-counsel in pending matters; and (3) any opposing
Counsel in pending matters or, in the absence of such
Counsel, the adverse parties, that the Court has ordered
the disbarnent or suspension of respondent and that
respondent is therefore disqualified to act as a lawyer
after the effective date of the order.

 

u

 

 
B.  Wotice to Clients of Respondents who Are
Disbarred or suspended. The respondent shall deliver to
aiivelients being represented in pending matters any
papers or other property to which they are entitled and
Ehall notify them and any counsel representing them of
aguitable time and place where the papers and other
Property may be obtained, calling attention to any
Urgency for obtaining the papers or other property.

‘Notification to court, In the event the Client
does not obtain another lawyer before the effective date
Gf the disbarment or suspension, it shall be the
Cesponsibility of the reepondent to notify in writing the
Judge of the court having jurisdiction of the pending
matter of the circumstances.

3. ‘The Secretary of the Commission on Practice shali furnish
to this court, to Mr. Morse and to his counsel an appropriate
statement of Commission costs. Costs shall be payable to the
commission on Practice of the State of Montana on July 26 , 1990,
unless otherwise ordered by this Court. In the event that Mr.

Morse shall fail to pay such costs by the designated date, this

 

court shall cause judgment to be entered against Mr. Morse and
appropriate collection steps to be taken.

4. copies of this opinion and order shall be mailed to Mr.
morse: Me. C.W. Leaphart; Mr. Craig D. Martinson as Special
Prosecutor; the chairman of the Commission on Practice: George L.
pousliman, Executive Director of the State Bar of Montana; to each
of the clerks of all of the District Courts of the State of
Montana; the Clerk of the Federal District Court for the District
of Montana; and the Clerk of the Circuit Court of Appeals of the
Minth circuit. aA

parep this /2 “day of June, 1990.

 
a3

Distfict Judge The
sitting for Justice
Sheehy