Title: In Re Heider
Citation: 217 Or. 134
Docket Number: N/A
State: Oregon
Issuer: Oregon Supreme Court
Date: July 8, 1959

Disbarred July 8, 1959.
*136 Peter M. Gunnar and Richard D. Lee, Salem, argued the cause and filed a brief for the Oregon State Bar.
William E. Dougherty, Portland, argued the cause for Petitioner. With him on the brief was Jack H. Cairns, Portland.
Before ROSSMAN, Presiding Justice and LUSK, WARNER, SLOAN, O'CONNELL, CRAWFORD and MILLARD, Justices.
RECOMMENDATIONS OF BOARD OF GOVERNORS APPROVED. ACCUSED PERMANENTLY DISBARRED.
PER CURIAM.
This matter comes before the court on the petition of Otto W. Heider, a member of the Oregon Bar, for review of the findings and recommendations of the Board of Governors of the State Bar, pursuant to ORS Title 1, Chapter 9. The petitioner was found guilty of ten of fifteen charges of professional misconduct and the Board recommended permanent disbarment.
Mr. Heider was admitted to the Oregon Bar in 1915 and has practiced continuously in this state since his admission. He has also pursued an active and profitable financial and business career which he has conducted along with his law practice, and it is this combination of interests, at times conflicting, that to some extent explains this proceeding.
On February 8, 1957, the Oregon State Bar filed its complaint charging petitioner with conduct "which at the time thereof, was, and now is, unethical and in violation of the Rules of Professional Conduct made and promulgated by the Oregon State Bar, and constitutes such conduct that, if the accused now were applying for admission to the Oregon State Bar, his application ought to be denied." On March 2, 1957 issues joined on the complaint and amended answer *137 were heard before a Trial Committee, accused appearing in person and by counsel and the Oregon State Bar by its prosecutors. April 14, 1958, the Trial Committee found the accused guilty of five of the said charges and not guilty of ten, and recommended suspension from the practice of law in the State of Oregon for the period of one year. On June 5, 1958 the Board reviewed the record, considered the findings and recommendations of the Trial Committee and concluded "The conduct of the accused herein, Otto W. Heider, was and is in violation of the rules of professional conduct made and promulgated by the Oregon State Bar and was and is such conduct that, if the accused were now applying for admission to the Oregon State Bar, his application would be denied." The Board found the accused guilty of ten of the charges, not guilty of five. The Board disapproved and rejected the recommendation of the Trial Committee and recommended to this court that "the accused Otto W. Heider, be permanently disbarred from the practice of law in the State of Oregon." Hence this petition for review.
We find Trial Committee and Board in agreement that accused was guilty of five charges and not guilty as to five, and in disagreement as to the remaining five charges. In our review we shall consider only the ten charges on the basis of which the Board of Governors recommended the permanent disbarment of the accused and from which recommendation this review is prosecuted. In summarizing them we adopt the numbering of the complaint. There is little dispute as to the facts; motivations, intent and implications supplying the issues.
1, 2. Second. "Profiting from and failing to account to probate court and clients for profits made by him, upon funds of estate for which he was attorney." *138 (Emil Arndt estate.) The admitted facts are these: Petitioner, while acting as attorney for the executrix of the Arndt estate in its probate administration, sold to the executrix certain mortgages and contracts and also invested funds of the estate in like paper. He would guarantee the principal and interest, one to three per cent less than was called for. He would collect the indebtedness and pay the proceeds to the executrix less the interest differential. This was done with the knowledge and consent of the executrix who understood the difference retained by the petitioner was in payment for his personal guaranty. He claimed this discount was justified as consideration for his guaranty and expenses of collection. The Trial Committee found the accused not guilty, with an explanatory statement. For over thirty years Mr. Heider had been friend and adviser to the Arndt family and drifted into an equivocal combined business and professional relationship from which a conflict of interests might easily and in fact did, arise. This practice persisted for many years, the accused, in effect, employing the estate as a capital asset in the promotion of his own private business. He has produced no understandable and dependable records or accounting of funds so used. His long friendship with the Arndt family and confidence placed by reason thereof created a situation in which the maintenance of adequate records was both legally and ethically imperative. This was not done. It seems impossible to strike a satisfactory balance between the Arndt estate and the Heider business. As witness the Herculean efforts of the Bar prosecutors to bring coherence to his records. In this respect petitioner grievously erred. He admittedly profited from personal dealing with his client while maintaining the semblance of a professional relationship. He utilized his legal representation *139 of the estate to promote his personal interests. The attorney-client relationship was subordinated to the business and financial aspects of his livelihood. He has retained the profits so realized. And it seems impossible to make an accurate accounting. The fact that the executrix and heirs make no complaint is of little consequence in the evaluation of this practice in its aspects to legal ethics. The professional relationship does not and should not contemplate such a course of dealing with intermingling of funds. Implicit in the situation was susceptibility to influence and a perversion of the attorney-client relationship. The professional relationship does not contemplate and accept the practice of law as embracing and countenancing this course of conduct. So many transactions were involved it would be unrealistic to conclude the client did other than blindly rely upon the attorney who, while representing the estate, was acting in his own interests as well. We find accused guilty of this charge.
3. Third. "Commingling of funds." Both Trial Committee and Board found petitioner guilty of this charge. (The Trial Committee found "technical" guilt.) There was a clear violation of Rule 9 of the Rules of Professional Conduct. Again, this was a practice existing through the years with mutuality of understanding, lending support to the Trial Committee's description of the guilt it found as "technical." Such conduct, however, cannot be condoned, not only because it is in express violation of the rule, but due to the fact that it creates ready-made a situation not only making misappropriation and embezzlement easy, but actually suggesting and inviting it. This practice is so easily begun and so difficult (at times) to abandon that we are caused to make the observation that this rule is perhaps one of the most important of them all, in the rigid adherence *140 to which much worry, anxiety and embarrassment may be avoided. In its violation much trouble is conceived. In re Schmalz, 169 Or 518, 129 P2d 825. We find the accused guilty of this charge.
4. Fourth. "Gross negligence in conducting probate." (Arndt estate.) The Trial Committee found the accused guilty of misfeasance but did not find his conduct unethical. The Board found him guilty of professional misconduct in failing to file proper annual accountings and final account. That such conclusion is to be drawn from the record is crystal clear. While no act of moral probity is here involved, the fact remains the accused was guilty of procrastination and delay far exceeding any necessity. This estate remained open for 28 years. Records were so inadequate that death or illness might have seriously jeopardized the interests of the beneficiaries, with the resultant liability on the attorney. Accurate accounting was impossible under records kept. A proper sense of responsibility to the interests he served would have dictated decisive action within recognized time limitations. Such delay was fraught with possibilities of serious consequences unnecessarily invited. Such conduct must be regarded as professional misconduct. We find the accused guilty of this charge.
5. Seventh. "Tampering with evidence." It is alleged petitioner as a witness in a criminal case tampered with evidence in that he erased his pencil notation from the back of a documentary exhibit. The Trial Committee found the petitioner not guilty with an explanatory statement that he "acted impetuously and unthinkingly." He was a witness for the prosecution on the trial in which he had an indirect interest. During recess he started to erase a pencil mark he considered *141 irrelevant on the back of an instrument he had produced in evidence as a witness. He was stopped and the notation was restored. He was reprimanded by the court. He avers no purposeful intent to alter an exhibit but rather a thoughtless, impulsive act without due consideration. However, to accept such explanation as complete exoneration would be to condone and imply approval. His action evidenced an utter disregard of and unprofessional concern for established rules and practices. Guilty.
6. Eighth. Both Trial Committee and Board of Governors found the accused guilty of the eighth cause of complaint. This reads:
Frank L. Johnson testified before the Trial Committee, as follows:
On cross-examination the witness testified he thought Mr. Heider first learned the witness was selling insurance at the time of the selection of the jury; that during trials many persons congregate in the Elks Club for lunch; that he did not think anything in the conversation affected his judgment of the facts; that a substantial verdict was returned against Mr. Heider.
Otto W. Heider testified as follows with reference to this incident:
The juror Johnson, recalled, testified he telephoned accused from the office of the district attorney, Elliott B. Cummins, the day following the trial "to find out what his attitude was on this thing and whether or not he would incriminate himself further * * *." He testified that Mr. Cummins, Mr. Devlin or he himself may have suggested it. He asked Mr. Heider "about the insurance deal that he had talked to me about, * * *." Mr. Heider declared the verdict against him was a terrible miscarriage of justice but "nothing was said at all about life insurance."
The Trial Committee in its findings made the following observation:
*152 We find the accused guilty. The implication of such conduct must be clear.
Goodeve v. Thompson, 68 Or 411, 136 P 670, 137 P 744, involved a situation comparable to that before us. Misconduct of plaintiff and a juror in meeting and conversing was held to justify a motion for a new trial. The court spoke as follows:
7. Ninth. "Knowingly materially altering a negotiable instrument." This charge as laid in the complaint reads:
A letter accompanying the negotiable instrument referred to reads, in part:
Petitioner admits the incident but claims he altered the instrument without fraudulent intent but in assertion of his own side of the argument, over the amount due. We find the accused guilty.
8. Tenth. "Knowingly communicating with adverse party whom he knew to be represented by counsel." It is alleged accused was guilty of unprofessional conduct in that as a private creditor he communicated directly with his debtor, knowing the latter was represented by counsel. The Trial Committee found accused guilty. Again, the dual relationship of private business man and attorney is drawn upon to justify this disregard of professional practices, and again, we cannot but conclude accused is guilty of misconduct. If accused chooses so to intermingle his professional and his personal financial and business interests, he cannot escape the responsibility attaching thereto. Guilty.
9. Eleventh. "Misleading court in pleading." Rule 16, Rules of Professional Conduct. It is alleged petitioner was guilty of unprofessional conduct in that he misstated in a complaint prepared by him in a suit for annulment of marriage, in effect, that the waiting period following a divorce was the same under the law of Missouri as under the law of Oregon, and later so *156 stated to the trial judge. The Trial Committee found accused guilty, with an explanation:
The explanatory note to the Trial Committee's findings of guilty sets forth our own conclusions. Accused either intentionally sought to mislead the court or made the statement in pleading and to the court with reckless indifference as to its truth or falsity and without effort to inform himself. And only did he seek the fact after the court advised him it would take the matter under advisement. The circumstances surrounding petitioner's conduct relative to this charge clearly indicate a fraudulent motive and purpose, either actively or in such wanton disregard of the truth as to be fraudulent in the eyes of the law. Guilty.
10. Twelfth. "Misleading court upon trial." Guilty for same reasons.
11-13. Fifteenth. "Exhibiting in causes second, third, fourth, seventh, eighth, ninth, tenth, eleventh, and twelfth above such course of conduct as to warrant disbarment." Guilty.
*157 We proceed to a consideration of penalty. ORS 9.480 reads, in part:
And from ORS 9.460:
We have found the accused guilty of violations of Rules of Professional Conduct, as follows:
We have found the accused guilty of the following misconduct:
1. Profiting from and failing to account to probate court and clients for profits made by him upon funds of the estate for which he was attorney.
2. Altering a negotiable instrument by adding the word "part" to this notation on a check, "* * * installment on Hougham-Raines contract."
3. Erasing a penciled notation from the back of a documentary exhibit.
4. With respect to delay in his handling of the Arndt estate.
Otto W. Heider has subordinated the concept of his profession as one of service to its consideration and employment as an aid in the promotion and furtherance of his business and financial interests. And in so doing, the law has assumed increasingly less importance, and money-making has become his paramount concern. He has become indifferent to the high concept of his profession and its precepts as established by ethical codes and as generally observed by its members. He has used the law as an agency for advancement of his own personal interests, regardless of conformity to established and recognized ethical ideals.
*159 We may say we are not impressed with petitioner's assertion suggestive of a dual personality; the one a man of business and finance, the other, and apparently a secondary concept, a lawyer. How it may be argued that in the capacity of business man he may indulge in practices generally condemned with reference to attorney and client relationships, when the circumstances show such intimate relationship as to make the two practically inseparable, we do not know.
When an attorney so intermingles these two aspects of his livelihood, promoting each by reliance upon the other, he cannot escape responsibility for conduct by averring he was acting in his business capacity and that his actions are to be evaluated and judged by the standards of the competition of the market place, rather than by those of his profession. Law is not a business. It is a learned profession. Under the facts of this case there is no cleavage or separation of responsibility for petitioner's acts as a business man and as a lawyer. He may not employ and accept the benefits of such intermingling of activity involving both law and business without assuming responsibility for both. Further, the fact that no one was injured by his conduct is fortuitous only and of no significance so far as this hearing is concerned. Embarrassment, injury and discredit were implicit therein.
On the basis of our conclusions of guilt as above stated and our evaluation of the entire record in this case, we find petitioner guilty under this count and approve the recommendation of the Board of Bar Governors. It appears to the court that his conduct has been such that if he were applying for admission to the Bar his application should be denied. It is ordered that Otto W. Heider be permanently disbarred from the practice of law in the State of Oregon. ORS 9.470.
*160 We take occasion to express appreciation for the assumption of a most arduous, exacting, difficult and uncompensated assignment by the Bar prosecutors. They have discharged this responsibility in accord with the best traditions of our profession.
Mr. Justice ROSSMAN sat at the argument, but took no part in the decision of this case.