Title: Matter of Lennan
Citation: 102 N.J. 518, 509 A.2d 179
Docket Number: N/A
State: new-jersey
Issuer: new-jersey Supreme Court
Date: May 22, 1986

102 N.J. 518 (1986) 509 A.2d 179 IN THE MATTER OF JOHN R. LENNAN, AN ATTORNEY-AT-LAW. The Supreme Court of New Jersey. Argued March 4, 1986. Decided May 22, 1986. *519 David E. Johnson, Jr., Director, argued the cause on behalf of the Office of Attorney Ethics. Louis Pashman argued the cause on behalf of the respondent (Cummins, Dunn &amp; Pashman, attorneys; Louis Pashman and Steven A. Beckelmann, on the briefs). PER CURIAM. This disciplinary proceeding results from a random compliance audit of the trust funds of respondent, John R. Lennan, by the Office of Attorney Ethics (OAE) pursuant to Rule 1:21-6(c). Upon receipt of the auditor's report, the OAE filed a Petition for Emergent Relief, which we granted on September 21, 1984, temporarily suspending respondent from the practice of law. Thereafter, the OAE filed a complaint charging that respondent misappropriated his clients' funds in violation of DR 9-102 and DR 1-102(A)(3), (4) and (6). Respondent filed an answer admitting the factual allegations of the complaint and setting forth mitigating circumstances. After a hearing, the Bergen County District Ethics Committee (DEC) recommended that respondent's suspension from the practice of law be continued until such time as he shall petition for reinstatement and prove to the Court's satisfaction that he can be relied upon properly to manage his trust account. Upon its review of the full record, the Disciplinary Review Board (DRB) found that the DEC's finding of unethical conduct was fully supported by clear and convincing evidence. The DRB concluded that respondent had knowingly misappropriated his clients' funds for his personal use in violation of DR 9-102 *520 and DR 1-102(A)(3), (4) and (6).[1] A majority of the DRB members recommended that respondent be disbarred. Our independent appraisal of the records leads us to accept the majority's recommendation. The DRB in its Decision and Recommendation (Decision) stated that the audit revealed the following: *521 The following auditor's schedule sets forth the number of days that respondent used his clients' funds: By examining respondent's trust account, the auditor concluded that there was a pattern of taking trust funds held as deposits on real estate closings and replacing them before the closing occurred. From December 25, 1982, through September 4, 1984, respondent misappropriated a total of $13,000 of clients' funds. From May 1, 1984, to August 6, 1984, his trust account was short $9,843.35. He reduced that shortage to $4,843.35 on August 6, by depositing $5,000, and on September 4, 1984, he eliminated it entirely by depositing another $5,000. The facts in this case are not in dispute. Respondent admits that he misappropriated a total of $13,000 in funds from four clients. He admitted this misappropriation to the auditor, to the OAE, and before the DEC and DRB. Respondent, a sole practitioner, has practiced law as his only profession since 1959. A long-time resident of Tenafly, New Jersey, he was in private practice there from 1963 to 1970 and from 1972 to 1984. His income has always been modest. In 1983, his gross income was $25,000; in 1984, at the time of his suspension, it was $15,000. Respondent was the sole support of *522 his wife and the primary support of his two daughters. At the time of these incidents, his two daughters were in private colleges, and the combined cost of the tuitions was $18,000 a year. In the spring of 1983, his wife was diagnosed as having diabetes, which led to substantial medical expenses. Other major expenses included a monthly mortgage payment of $548 for respondent's home that was valued at $130,000. At the DEC hearing, respondent stated that there was a small first mortgage on his home of approximately $6,000. Respondent did not attempt to secure a second mortgage on the house, but he did borrow up to $10,000.00 from banks during this period. He was forced to discontinue this alternative, however, because he could no longer afford the high interest rates. Respondent's wife and daughter had a joint savings account that contained about $9,000. Respondent did not ask to borrow these funds because he did not want to upset his family. Although candidly admitting his misappropriations, respondent urges that In re Wilson, 81 N.J. 451 (1979), the controlling case on knowing misappropriations, does not mandate disbarment for all misappropriations or preclude consideration of any mitigating circumstances. Respondent seeks support for his position from the following statement in In re Wilson, 81 N.J. at 461: Respondent claims that the major factor mitigating against his disbarment is that he misappropriated the funds as a result of the extreme financial pressure of providing for his family, specifically, the college education of his two daughters. In his brief, respondent cites the following as additional mitigating factors that make his case unique and thus not subject to Wilson's disbarment rule: Based on our independent review of the record, we conclude that because respondent knowingly misappropriated funds from his clients, In re Wilson mandates his disbarment. We realize the harshness and inflexibility of the Wilson rule.[2] Recently, in In re Noonan, 102 N.J. 157 (1986), we again considered the Wilson rule and affirmed our commitment to it. Specifically, we addressed the factors that will evoke the application of the rule. In Noonan, 102 N.J. at 158, we stated: Most of respondent's mitigating factors have previously been considered in other misappropriation cases. In In re Gavel, 22 N.J. 248, 265 (1956), we held that the fact that no client suffered a loss was fortuitous and therefore irrelevant. In Wilson, we explicitly noted that the fact that an attorney returned the funds to his clients is unpersuasive, as is evidence of his good character. 81 N.J. at 459, 460. More importantly, in Wilson we addressed the respondent's main point that he used his client's money only as a result of extreme financial pressure. There we said: See also In re Marks, 96 N.J. 30, 36 (1984) (severe financial pressure rejected as a mitigating factor). Moreover, we find respondent's reliance on In re Arthur D. Reiss, 101 N.J. 475 (1986), and In re Stein, 97 N.J. 550 (1984), to be misplaced. In each case, the attorney withheld his client's funds in order to pay his own fee. While both attorneys were charged with violating Rule 9-102, neither attorney was charged with misappropriation. Similarly, we find no merit in respondent's allegation that his actions were authorized by the clients. True, respondent secured affidavits from three of his clients stating that if they had known of his financial plight, they would have lent him the money that he appropriated. Nevertheless, at the time of the misappropriations no client knew of respondent's situation or consented to his use of his or her funds. While we sympathize with respondent's desire to provide for his family, respondent had funds available. There was only a $6,000 mortgage on his $130,000 house, and his wife and daughter had a joint savings account worth approximately $9,000. Respondent could have mortgaged his home or asked his family for the money, but chose not to because of personal pride. Instead, he misappropriated the funds of four clients. Accordingly, we hold that the respondent knowingly misappropriated funds in violation of DR 9-102 and must be disbarred. Wilson's vitality continues and this proceeding is governed by that decision. We further direct respondent to reimburse the Ethics Financial Committee for appropriate administrative costs. So ordered. For disbarment Chief Justice WILENTZ and Justices CLIFFORD, HANDLER, POLLOCK, O'HERN, GARIBALDI and STEIN 7. Opposed None. It is ORDERED that JOHN R. LENNAN of TENAFLY, who was admitted to the bar of this State in 1960, be disbarred from the practice of law, and it is further ORDERED that JOHN R. LENNAN reimburse the Ethics Financial Committee for appropriate administrative costs; and it is further ORDERED that JOHN R. LENNAN be permanently restrained and enjoined from practicing law; and it is further ORDERED that JOHN R. LENNAN comply with Administrative Guideline Number 23 of the Office of Attorney Ethics dealing with suspended, disbarred or resigned attorneys. [1] We refer to the Disciplinary Rules that governed the conduct of attorneys at the time of these occurrences. American Bar Association, Code of Professional Responsibility (1969). Effective September 10, 1984, the Rules of Professional Conduct of the American Bar Association, as modified by the Court, govern that conduct. R. 1:14. These new Rules contain provisions equivalent to the Disciplinary Rules involved here. [2] In In re Smock, 86 N.J. 426 (1981), we decided that because of the severity and inflexibility of the Wilson rule, it should not be applied retroactively.