Case Name: In the Matter of Charles H. Herbst, Attorney
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1913-11-07
Citations: 158 A.D. 601
Docket Number: 
Parties: In the Matter of Charles H. Herbst, Attorney.
Judges: 
Reporter: Appellate Division Reports
Volume: 158
Pages: 601–603

Head Matter:
In the Matter of Charles H. Herbst, Attorney.
First Department,
November 7, 1913.
Attorney at law suspended — misappropriation of moneys of client — excuse of youth and inexperience.
Attorney at law suspended from practice for professional misconduct in appropriating and mingling with his own funds moneys intrusted to him by his clients.
Youth and inexperience will not be-received in the future as an excuse for misappropriation of moneys received by an attorney to be held by him for the use of his client.
Charges of professional misconduct against the respondent, Charles H. Herbst, an attorney, by the Association of the Bar of the City of New York.
Henry B. Barnes, for the petitioner.
A. S. Gilbert, for the respondent.

Opinion:
Ingraham, P. J.:
The Association of the Bar of the City of New York pre-' sented charges of professional misconduct against the respondent. These charges were referred to the official referee, who has filed his report sustaining the charges. The charges contained two specifications. The first related to the appropriation of $550 delivered to the respondent by the wives of the members of the firm of Grroveman & Kahn, to be held by him for the" purpose of effecting a settlement with the creditors of that firm which the respondent did not apply to that purpose and appropriated it to his own use, and the second that the respondent received as assignee of Grroveman & Kahn the sum of $3,000, a part of which he mingled with his own funds and converted to his owp. use. It appeared that the respondent had been for some time prior to September, 1911, attorney for the firm of Grroveman & Kahn; that on March 6, 1911, that firm made an assignment to the respondent for the benefit of their creditors; that under that assignment the respondent took possession of the premises occupied by the assignors and for some time seems to have continued the business carried on by them; that in the meantime the creditors of the firm agreed to accept fifteen per cent of their claim in discharge of the assignors and it was understood that the respondent should continue the business carried on by the assignors to the end that when the assignee should have realized out of the conduct of such business sufficient to pay the creditors fifteen per cent of their claim in cash such payment be made and the assignment proceedings terminated. After this proposition of compromise had been accepted and on or about the 27th day of September, 1911, the wives of the partners of G-roveman & Kahn paid to the respondent $600, $50 of which was invested in the purchase of merchandise necessary to complete the business carried on by the assignors, and $550 was to be held by the assignors to be applied in making this settlement. The referee found that the respondent did not keep the funds that he received as assignee separate, but deposited the amount to his own credit in the bank, a part of which he misappropriated and applied to his own individual use. When the respondent received this $600 from the wives of the assignors he gave a receipt which stated that the money was 'To be held in trust for the pun pose of settlement-in the Groveman-Kahn matter." It is quite clear that the respondent violated this trust; that he deposited this money to his own bank account in his bank and personally used a part of it, as he also did with a certain portion of money that he received as assignee in the conduct of the business which was carried on after the assignment. After these charges were made against him he succeeded in obtaining the money which he had misappropriated and opened a separate account as assignee in which the money was deposited. He subsequently filed his account as assignee in which he credited the amount received from the assignors' wives as money received by him as assignee, but this, itself, was a use of the money which, upon the evidence, he was not justified in making.
We have, therefore, a clear case of misappropriation of money held by an attorney for his client. The referee states the facts in his report, and it is not necessary to discuss them. It is sufficient to say that we approve and adopt the report. The respondent is a young man, inexperienced in matters of this kind. He was admitted to practice in June, 1906, and his only excuse that can be considered is that of youth and inex perience. It is hardly conceivable that one who has received the education and training which are required to justify his admission to the bar should claim ignorance of the fundamental principles of honesty and good faith which are required, not only of a lawyer, but of every one intrusted with money or property for a specific purpose. Here, a young man was intrusted with money of his clients to be used by him for the discharge of their obligations to others, and he proceeds to mix it with his money in his bank and to apply a portion of it to his own use; and when charged with this misappropriation he does not even attempt to justify it by becoming a witness on his own behalf before the referee. Charges of this kind are becoming so frequent that we feel that a breach of such an obligation must be considered serious professional misconduct requiring disbarment and that the excuse of youth and inexperience will not be received for a breach by an attorney of the obligation to treat the money of his clients that has come into his hands as a sacred trust, not to be applied or used for his own purposes. The referee reports that ' After long delay and under extreme pressure the respondent made a partial restitution to Mrs. Groveman and Mrs. Kahn which constitutes no defense; that the conduct of the respondent was reprehensible and tends to impair and defeat the administration of justice."
Under the circumstances of this case we have concluded that instead of the extreme penalty of disbarment, we will suspend the respondent from practice for two years with the distinct intimation, however, that the excuse of youth and inexperience will not be received in the future as an excuse for misappropriation of moneys received by an attorney to be held by hfm for the use of his client.
Respondent suspended from practice for two years, with leave to apply for reinstatement at the expiration thereof, upon proof that he has actually abstained from practice during that period, and has otherwise properly conducted himself.
McLaughlin, Laughlin, Clarke and Scott, JJ., concurred.
Respondent .suspended for two years, with leave to apply for reinstatement at the expiration thereof as stated in opinion. Order to be settled on notice.