Title: Matter of Kuzman

State: indiana

Issuer: Indiana Supreme Court

Document:

335 N.E.2d 210 (1975)
In the matter of Daniel C. Kuzman.
No. 1173S230.

Supreme Court of Indiana.
October 16, 1975.
*211 Myron J. Hack, South Bend, Richard L. Gilliom, Stewart, Irwin, Gilliom, Fuller & Meyer, Indianapolis, John Kappos, Marlatt, Kappos & Gavit, Merrillville, for respondent.
Richard H. Grabham, Executive Secretary, Indianapolis, for Indiana Supreme Court Disciplinary Commission.
HUNTER, Justice.
This disciplinary action was commenced by the Disciplinary Commission in November, 1973. A hearing was held in October, 1974. Upon consideration of the hearing officer's findings and recommendations, respondent's petition for review and memorandum in support, the Disciplinary Commission's reply, and the record in this matter, we believe further proceedings are unnecessary.
Respondent was admitted to the Indiana bar in 1959, and has established a reputation as a competent and ethical attorney. Nevertheless, certain aspects of respondent's professional relationship with his client, Nellie Speece, fell below the minimum standards of professional conduct.
Soon after respondent was employed by Mrs. Speece, she asked him to become a joint tenant with her in a savings account with rights of survivorship. Respondent consented to these arrangements as an accommodation to his client who, because of her disability, was not always able to do her own banking. Respondent further stated that she did not trust her household help and suspected them of informing her former husband about her business affairs and that the respondent was the only person she felt she could trust. The hearing officer found that respondent never deposited any monies in the account, never made any withdrawals from it and never saw or had possession of the passbook. In addition, respondent testified that it was a common practice for him and other Lake County, Indiana, lawyers to become joint tenants in bank accounts of clients as an accommodation, at the client's request, so that, for example, emergency funds could be transmitted to a client traveling in Europe.
While respondent's accommodation of his client was for valid business purposes, nevertheless, the method of accommodation selected was one which placed respondent in a position to inherit ownership of the account. As stated in State v. Horan (1963), 21 Wis.2d 66, 72-75, 123 N.W.2d 488, 491:
It is not unusual for a client untrained in the laws to come into an attorney's office and state that he wants the attorney to form a corporation for him. If the attorney accedes and completes the forms without first exploring the sole proprietorship and partnership forms of business with the client, and the tax aspects of each, the attorney has failed to give the client the full and disinterested advice to which he was entitled, and which the bar demands be given.
State v. Horan, supra, 21 Wis.2d 66, 70, 123 N.W.2d 488, 489-90. Similarly, when Mrs. Speece informed respondent of her reasons for creating the joint tenancy, it was incumbent upon him to explain to her the other legal arrangements for achieving her goals  arrangements which would not have at the same time given respondent a personal stake in the funds.
In reaching this conclusion, we reject respondent's contention that "any surface impropriety one might read into respondent's conduct was fully justified by his client's extreme circumstances." The rationale that the ends justify the means has no place in the legal profession.
It was charged that respondent's conduct in this matter breached Canons 11, 29, and 32 of the Canons of Professional Ethics of the American Bar Association.[1] While the Canons do not have the authority of Indiana statutes or case law, they evidence proper standards of conduct for the legal profession, Tokash v. State (1953), 232 Ind. 668, 115 N.E.2d 745. Canon 11 provides:
Canon 29 provides:
Canon 32 provides:
Since there is involved here no misdealing in client's funds, we find no violation by respondent of Canon 11. Nor do we find that respondent's conduct violates Canon 29. However, we believe respondent's conduct transgressed the boundaries of Canon 32. An attorney should consent to the arrangement here entered, if at all, only after fully advising his client of effect thereof and of the alternative means of achieving the desired business flexibility.
State v. Horan, supra, 21 Wis.2d 66, 75, 123 N.W.2d 488, 492.
When respondent undertook the representation of Nellie Speece, she was an apoplectic, sexagenarian divorcee with numerous legal problems, little cash and a lot of land. For a cash retainer of $1,000 and a 20% interest in her real estate, respondent promised to do all her legal work and to "stick by her." The real estate, worth approximately $250,000 to $1,000,000 was subject to claims of her ex-husband. To generate a cash flow for Mrs. Speece, respondent set up a corporation. Mrs. Speece conveyed her interest in the real estate to the corporation and received back shares of stock. The stock was then pledged as collateral for cash loans.
Respondent's ownership of an interest in Mrs. Speece's real estate was evidenced initially by Article VI of the corporate charter which provided:
The extent of respondent's interest in this real estate was subsequently stated to be 200 shares (20%) of the corporation, such statement being contained in the Subchapter S election form. Additional representations of respondent's ownership of these shares appeared in his personal income tax return, the corporate tax return, and in a letter written by respondent to a bank seeking a loan for Mrs. Speece.
In September, 1970, Mrs. Speece's ex-husband commenced a guardianship proceeding in her behalf, and, thereafter, respondent disclaimed any ownership of the shares of stock. Amended tax returns were filed, listing Mrs. Speece as the sole shareholder. Respondent retracted his earlier *214 representation of ownership which had been made to the bank.
It was charged that respondent's receipt of 200 shares of Mrs. Speece's corporation, such shares being valued at approximately $150,000 to $200,000, in lieu of payment of attorney fees, was an agreement for excessive fees and violative of Canons 29 and 32, supra. Respondent was also charged with breaching the same Canons by virtue of the inconsistent statements he made regarding his ownership of the 200 shares, some of the statements being under oath.
In Draper v. Zebec (1941), 219 Ind. 362, 376, 37 N.E.2d 952, 957-58, we find the following statement quoted with approval from Whinery v. Brown (1905), 36 Ind. App. 276, 75 N.E. 605:
It is undoubtedly the case that Mrs. Speece was a person with certain legal rights to pursue, and, except for her real estate holdings, without means to pursue them. Obviously, respondent's compensation for his services could only come from the real estate. While respondent has characterized his fee arrangement as contingent, it must be observed that the only contingency was in the amount of services he would be required to render before his client's demise, and not in the amount of the fee which was fixed. Considering all the legal services rendered to Mrs. Speece during a three-year period prior to the appointment of a guardian over her estate, it is clear that respondent had performed services in excess of the $1,000 he received as a retainer. At the same time, if respondent had received $200,000 for those same services, we are convinced that such fee would have been clearly excessive, in violation of Canons 29 and 32. On the basis of Mrs. Speece's age and physical condition, we hold that respondent's fee agreement with Mrs. Speece, without provision for monthly billing or other periodic accounting for services rendered, was clearly excessive and in violation of Canons 29 and 32. We believe respondent's awareness of the impropriety of such an agreement is evidenced by his disavowal of ownership of the shares of stock (representing his 20% interest) at approximately the same time the guardianship proceeding was instituted by Mrs. Speece's former husband. With regard to his previous statements of ownership of such shares, made under oath, which were subsequently nullified by the filing of amended returns, we believe such conduct is also violative of Canons 29 and 32.
It must be emphasized that while the foregoing conduct of respondent was violative of certain of the Canons of Ethics, such conduct was not fraudulent or otherwise unlawful. Mrs. Speece was entirely satisfied with respondent's representation, and she was not harmed financially by a *215 transfer of shares which never in fact occurred. In censuring respondent's breach of the above Canons, we remind the bar of the arrangements here condemned.
For all the foregoing reasons, respondent is now censured by this Court and ordered to appear before this Court on the 27th day of October, 1975, at 1:00 p.m. for public reprimand.
It is further ordered that respondent shall pay the costs of this proceeding on or before the date of said reprimand.
It is further ordered that a copy of this opinion be transmitted by the clerk of this Court to each of the Lake County Bar Associations, so their membership may be informed of the matters contained herein.
GIVAN, C.J., and ARTERBURN, DE BRULER and PRENTICE, JJ., concur.
[1]  Respondent's conduct was also charged to be in violation of corresponding Disciplinary Rules of the Code of Professional Responsibility. The Code of Professional Responsibility superseded the Canons, but was not adopted by this Court until March 8, 1971. Since the actions of respondent occurred before that date, we review all charges in terms of the Canons only.