Title: In Re Corey
Citation: 515 P.2d 400
Docket Number: 5344
State: Hawaii
Issuer: Hawaii Supreme Court
Date: October 19, 1973

515 P.2d 400 (1973) In the Matter of Ralph E. COREY, Attorney at Law. No. 5344. Supreme Court of Hawaii. October 19, 1973. Rehearing Denied November 5, 1973. Helen B. Ryan, Honolulu (Ryan &amp; Ryan, Honolulu, of counsel), for respondent. E. John McConnell, Jr., Deputy Atty. Gen., Honolulu (George Pai, Atty. Gen., of counsel), for State of Hawaii, amicus curiae. Before RICHARDSON, C.J., ABE, LEVINSON and KOBAYASHI, JJ., and VITOUSEK, Circuit Judge, in place of MARUMOTO, J., recused. PER CURIAM. This is an original proceeding initiated by this court on an order to show cause issued by this court ordering respondent Ralph E. Corey, Esq., to file a written statement showing cause why he should not be censured, suspended, or disbarred from all the courts of the State of Hawaii based on the record of the case entitled State Savings and Loan Association v. Corey and Kimbrough and Young, 53 Haw. 132, 488 P.2d 703. The attorney general of the State of Hawaii was requested, personally or through a deputy, to appear in the proceeding as amicus curiae. *401 By order of this court filed November 16, 1972, this court ordered, inter alia, as follows: The specifications and memoranda of law were filed by the attorney general and the respondent. However, though given the opportunity, the respondent failed to file any offer of proof which would additionally support respondent's position herein. This court has jurisdiction over matters concerning disciplinary action of members of the bar. HRS § 605-1, as amended by Act 184, sec. 1(a), S.L.H. 1972. After a thorough and complete review of the record of said case we are of the opinion that respondent is guilty of misrepresentation amounting to fraud and thus as an attorney is guilty of professional misconduct. The record of said case shows that respondent, who was a substantial shareholder, a corporate officer (vice president) and corporate attorney of Kauaian Development Company, a corporation, committed said misrepresentation in his effort to obtain for said corporation a mortgage loan from State Savings and Loan Association for the construction of a hotel-condominium. A brief summary of the facts herein is as follows: Respondent, as attorney and corporate officer, was fully aware of the fact that there were two construction contracts: 1. Construction contract dated October 28, 1963, stating in pertinent parts as follows: *402 2. Construction Contract dated November 8, 1963, executed by and between Better Built Hawaii, Ltd., as contractor, and Kauaian Development Company, Inc., as owner, stating as follows: The construction contract dated October 28, 1963, was not for the purpose of actual construction but was executed only for the purpose of obtaining construction financing from State Savings and Loan Association. However, State Savings and Loan Association was not informed that said construction contract was for financing purpose only and not for actual construction purposes and was led to believe that the said contract was the actual construction contract. The actual contract for construction purposes was the contract dated November 8, 1963. Notwithstanding the existence of the actual construction contract, respondent as said corporate attorney and corporate officer represented to State Savings and Loan Association that the cost of construction of the improvements was determined on the construction contract referring to a maximum amount of $761,000.00, and respondent failed to inform and/or cause to have the said mortgagee informed that the actual construction contract cost was $600,000.00 plus rather than premised on the contract referring to the sum of $761,000.00. Said representation by respondent was by direct actions and also by way of acquiescence through silence on the part of respondent during various meetings held with the mortgagee in their discussions, negotiations and consummation of the mortgage loan. The record of the present proceeding substantiates the fact to be that the purpose of respondent in failing to inform the mortgagee of the actual cost of construction in the sum of $600,000.00 plus was to acquire a larger mortgage loan than would have been possible if the actual construction contract had been used for the financing purposes. Mortgagee, not knowing of the actual construction contract and relying on respondent's representation that the cost of construction was determined on the contract referring to the sum of $761,000.00 did on January 17, 1964, grant the mortgage loan in question to respondent's corporation. The conduct of the respondent was in violation of the following canons of ethics which were in effect when said misrepresentation occurred:[1] In a case involving the participation of an attorney in the fraudulent sale of a bakery, the New York Supreme Court, Appellate Division, found the attorney "... guilty of professional misconduct by reason of his active participation in the fraud, his silence when he knew the buyer was being defrauded and his violation of a fiduciary relationship as escrow holder of the moneys paid by the buyer", and disbarred him. In re Sherman, 271 A.D. 462, 65 N.Y.S.2d 802, 803 (1946). The above stated principles regarding the conduct of an attorney either in his professional capacity or as a businessman are those for which we find Mr. Corey has shown a complete disregard. The respondent has failed to show cause why he should not be censured, suspended or disbarred. Issues raised in this proceeding by respondent are without merit. We therefore, based on the record herein, suspend his license to practice law before all the courts of the State of Hawaii for a period of six months effective thirty days after entry of judgment in this case by this court. The petition for rehearing is denied without argument. The motion for stay pending petition for a writ of certiorari to the Supreme Court of the United States is granted on the following terms: a) that respondent, without delay, initiate his contemplated petition for writ of certiorari or appeal to the Supreme Court of the United States and expeditiously complete his requirements for said petition or appeal; b) that the stay granted herein shall remain in effect until the conclusion of the review of the judgment of this court by the Supreme Court of the United States; c) that, in the event the Supreme Court of the United States denies respondent's petition for a writ of certiorari or appeal or sustains the judgment of this court in suspending respondent's license to practice law, the said suspension shall become effective thirty days from the date of said denial or order of the Supreme Court of the United States. [1] Under Rule 16(a) of the Rules of the Supreme Court of Hawaii which were applicable at the time the misrepresentation occurred in November-December, 1963, the canons of professional ethics as adopted by the American Bar Association were in effect and are applied here.