Title: Smiley v. Board of Com'rs of Alabama State Bar
Citation: 238 So. 2d 716
Docket Number: N/A
State: Alabama
Issuer: Alabama Supreme Court
Date: July 16, 1970

238 So. 2d 716 (1970)
In the Matter of Thomas L. SMILEY
v.
The BOARD OF COMMISSIONERS OF the ALABAMA STATE BAR.
3 Div. 369.

Supreme Court of Alabama.
July 16, 1970.
Rehearing Denied September 3, 1970.
*717 Warren S. Reese, Jr., Montgomery, for petitioner.
William H. Morrow, Jr., Gen. Counsel, Montgomery, for Alabama State Bar.
PER CURIAM.
The petitioner seeks reversal in proceedings wherein the Board of Commissioners of the Alabama State Bar found him guilty of 17 of 18 charges filed against him, and entered an order of disbarment.
On December 17, 1964, the Grievance Committee of the Birmingham Bar Association filed charges against Thomas L. Smiley, such charges consisting of five complaints.
Complaint One alleges:
Charge One of this complaint charges a violation of Rule 27, Section A:
Charge Two charges a violation of Rule 33, Section A:
*718 Charge Three charges a violation of Rule 34, Section A:
"`* * * any act, which, by the law of Alabama, constitutes a felony (other than manslaughter) or a misdemeanor involving moral turpitude.'"
Charge Four charges a violation of Rule 36, Section A:
Petitioner was adjudged guilty by the Board of Bar Commissioners of each of these charges.
Complaint Two alleged:
Charge One of this complaint charges a violation of Rule 27, Section A.
Charge Two charges a violation of Rule 33, Section A.
Charge Three charges a violation of Rule 34, Section A.
Charge Four charges a violation of Rule 36, Section A.
The Board of Bar Commissioners found the petitioner guilty on all four of these charges.
Complaint Three alleges:
Charge One of this complaint charges a violation of Rule 27, Section A.
Charge Two charges a violation of Rule 33, Section A.
Charge Three charges a violation of Rule 34, Section A.
Charge Four charges a violation of Rule 36, Section A.
The Board of Commissioners found the petitioner guilty on all four of these charges.
Complaint Four alleges:
This complaint includes Charge One, charging a violation of Rule 12, Section A, "Suppress or stifle any evidence or testimony"; *719 Charge Two charges a violation of Rule 36, Section A.
The Board of Bar Commissioners found the petitioner guilty on both of these charges.
Complaint Five alleges:
Based upon these allegations, Charge One charges a violation of Rule 27, Section A.
Charge Two charges a violation of Rule 33, Section A.
Charge Three charges a violation of Rule 34, Section A.
Charge Four charges a violation of Rule 36, Section A.
The Board of Bar Commissioners found the petitioner guilty of violations contained in Charge One, Charge Two and Charge Four.
The testimony in this case was not taken orally before the Board of Bar Commissioners. Rather, it was taken before a Commissioner and not orally heard by the members of the Board. Under such circumstances, it is the duty of this court to examine all of the evidence and to form our own judgment as to its probative force without any presumption in favor of the findings of the Board. Tanner v. Dobbins, 255 Ala. 671, 53 So. 2d 549; Adams v. Logan, 260 Ala. 346, 70 So. 2d 786; Carnegie v. Carnegie, 261 Ala. 146, 73 So. 2d 556; Loveman v. Lay, 271 Ala. 385, 124 So. 2d 93; Norden v. Capps, 272 Ala. 473, 131 So. 2d 679; also Acton v. Board of Commissioners of Alabama State Bar, 283 Ala. 121, 214 So. 2d 685.
This we have attempted to do. The evidence taken before the Commissioner together with the exhibits introduced there, comprise more than 1,200 pages. It includes a transcript of the proceedings had before the Probate Court in Jefferson County. The proceedings which culminated in the complaints made against Mr. Smiley with the Board of Bar Commissioners arose out of the following:
Mrs. Alta B. Smith died on December 27, 1960, survived by her husband, Clare B. Smith, and a daughter by a former marriage, Mrs. Marie B. Massey. Clare B. Smith died October 3, 1961.
The will of Alta B. Smith named Thomas L. Smiley as executor. It left a life estate to Clare B. Smith, with the entire remainder to Mrs. Marie B. Massey. The will of Clare B. Smith named Mrs. Marie B. Massey as executrix and left one-half of the estate to Marie B. Massey and the other half to certain other relatives of Clare B. Smith.
Both wills were admitted to probate at approximately the same time.
On July 26, 1963, Mrs. Marie B. Massey filed a petition in the Probate Court of Jefferson County to have Thomas L. Smiley removed as executor of the Alta B. Smith estate, the petition alleging wasting of the assets and failure to account.
At the date of the filing of the petition to remove Thomas L. Smiley as executor of *720 the estate of Alta B. Smith, Mrs. Massey as sole beneficiary of the estate, had admittedly received from Thomas L. Smiley the following sums of money and no more:
It was consistently agreed between Mrs. Massey and the petitioner that the amount which the petitioner had received as executor of the estate of Mrs. Alta B. Smith totaled some $92,000. Part of this amount was based upon the evaluation attributed to various stocks. Mrs. Massey ultimately received these stocks in kind, with the exception of stock in the Marathon Oil Company, which stock was sold by the executor and converted to cash. Nevertheless, at the time of the filing of her petition, Mrs. Massey alleged, and it was not disputed, that she had received from the executor $25,857.39. She alleged that amounts received by Thomas L. Smiley, as executor, to the extent of $40,000 belonging to the estate of Clare B. Smith had been comingled in the assets of Alta B. Smith by Thomas L. Smiley.
Following the filing of this petition, on October 3, 1963, Smiley filed a petition in the estate of Alta B. Smith for attorney's fees for extraordinary services in the amount of $21,462.03.
On January 16, 1964, Smiley filed a petition for final settlement which among other things asked the court to determine whether cash items should remain in the estate of Alta B. Smith or should be treated as assets of the Clare B. Smith estate, among such items being a savings account in the City Federal Savings &amp; Loan Association in the amount of $10,000 and a savings account in Home Federal Savings &amp; Loan Association in the amount of $10,000. It was not denied by Mrs. Massey nor disputed by Smiley that these were joint and survivorship accounts in the names of Alta B. Smith and Clare B. Smith, and it was never denied that Clare B. Smith was the survivor. It was further never denied by Smiley that he had possession of these funds totaling $20,000.
It is around this $20,000 that most of the proceedings in the Probate Court were had. The record in this case includes a recapitulation of all deposits and disbursements from November 9, 1961, when the executor's account in the Alta B. Smith estate was opened by Smiley in the Birmingham Trust National Bank, to March, 1964. During that period deposits to the account totaling $67,021.70 were made. These deposits were made in small denominations over a considerable period of time. The record does not indicate that deposits in lump sums of $10,000 each were ever made. Smiley acknowledged that this money passed through the estate bank account.
During the same period of time the records of the bank indicate that withdrawals were made by Thomas L. Smiley as executor by checks drawn to Thomas L. Smiley, as executor, totaling $14,453.05. Additional checks were drawn by Smiley as executor and payable to himself as attorney, totaling $3,240.00. Checks were drawn by Smiley as executor to himself individually totaling $1,018.75.
*721 On January 16, 1964, the Probate Court of Jefferson County entered a decree on final settlement determining, among other things, that there was a balance in the estate of Alta B. Smith to be distributed to Mrs. Massey in the amount of $3,876.60, and that certain items were found to belong to the estate of Clare B. Smith, and determined not to be a part of the estate of Alta B. Smith. These items included the $20,000, which had been in joint and survivorship accounts in two savings and loan associations. On February 6, 1964, Smiley filed his notice of appeal from that decree to the Supreme Court of Alabama.
Thereafter, Mrs. Massey learned from the Probate Judge that the appeal had been taken. The Probate Judge advised her that she needed a lawyer, whereupon she employed William H. Cole. On February 14, Mr. Cole filed a motion to require Smiley to post a bond and to produce certain records, the motion seeking to have the court order the executor to produce for the inspection by the court the deposit books, checking account records, statements, and any and all records of any banking institution, showing the amounts on deposit to the credit of the estate or in the name of the executor which belonged to this estate or over which he had custody or control.
In addition the motion sought to require the executor to produce deposit slips, bank records showing the disposition and whereabouts of the money formerly deposited in the two savings and loan associations referred to above. Mrs. Massey filed with the Probate Court an affidavit in which she listed all the items which she had received from Mr. Smiley and alleged that she had received only the sum of $25,857.39 in cash by a series of payments from November, 1961 to September, 1962.
A hearing was held on this motion.
Mr. Smiley was evasive, he refused to discuss the whereabouts of the money, he took several inconsistent positions when asked where the $3,876.66 was, which he had previously admitted having. His response was that he had rather not answer that. He was directed by the court to answer about any assets belonging to the estate. His answer was that those assets did not belong to this estate. He was reminded that he had said in his petition for final settlement that he had in his possession this $3,876.66. His response was that he understood that but then he said that he had been mistaken about the $10,000 theretofore in the savings and loan institution, and then asserted that the estate was insolvent. He was asked the following question: "At the time of the petition in October showing $3,800 balance, was there any balance at all in any institution in this estate?" and his reply was, "Yes, sir."
Later on he was asked "Who has got the money right today, where that money is, I don't care what was done with it, I just want you to tell me where the money went, the $10,000?" and he answered, "I don't know."
Later on at this initial hearing the following transpired:
Subsequently in this hearing the court noted:
Thereafter a subpoena was issued. The record does not disclose that at any time did Mr. Smiley produce any of the records which he was ordered to produce by the court. The records that were obtained came on a subpoena duces tecum issued to the bank.
The proceeding was continued until the 19th day of March, 1964.
At that time a discussion was had concerning the shares of Marathon Oil Co. stock, which Mr. Smiley sold in August of 1963. He received for the stock $2,941.94. In connection with that amount of money Mr. Cole asked the following:
Mr. Smiley testified that he cashed the check issued by the stock broker on the same day that he received it from the broker (August 30, 1963) and that he had kept the cash since that time. He testified that he had retained the cash money in his possession from August until the time of the hearing.
At another point during the hearing, Mr. Smiley was shown a check for $1,378.68, signed by him as executor and made payable to cash. He was asked whether he in fact cashed that check. His answer was that he did not know whether he did or not.
At another point, when shown a check dated February 23, 1962, for $1,500.00, which had been converted to cash, Mr. Smiley was asked if he put that money in any account. His answer was, "I don't know, sir."
Also, he was shown a check for $2,000.00, dated February 21, 1961, endorsed by Mr. Smiley. He was asked whether or not he deposited that amount. His answer was that he did not know.
At no point during these proceedings did Mr. Smiley ever produce all of the cancelled checks that had been written on the executor's account. His testimony was that he did not know where they were.
The record also shows this exchange:
At other points, when asked where the money was located Mr. Smiley answered, "I don't remember, I don't know; I can't explain it, I don't know".
As to checks which had been cashed, written on the executor's account and where cash was obtained, Mr. Smiley's only explanation was that most likely he had given it to Mrs. Massey.
In a space of three days checks were drawn out of the accounts payable to Mr. Smiley in various capacities which totaled $3,000. When asked where the $3,000 went his answer was, "I don't know".
At one point Mr. Smiley testified that it was possible that he had run some of his own funds through the estate account.
When asked whether or not the total amount drawn by him as executor to himself individually, in checks payable to cash, and checks payable to himself, as executor, and as attorney, came to $22,261.80, Mr. Smiley's response was that the total was $22,261.79.
*724 During the course of the hearing Mr. Smiley, when again reminded that all of the money in his possession, whether it belonged to the Alta B. Smith estate or to the Clare B. Smith estate, should be turned over to Mrs. Massey either in her capacity as sole beneficiary under the Alta B. Smith estate or in her capacity as executrix of the Clare B. Smith estate, Mr. Smiley responded that what he was appealing to the Supreme Court about was for a greater executor's fee.
At a later hearing in the matter the case having been again continued, Mrs. Margaret Powell was called as a witness. Mrs. Powell testified that she was employed by Thomas L. Smiley in December of 1962, in his capacity as an officer in the Alabama Law Enforcement Officers Association. She was shown a check signed by Thomas Smiley as executor, payable to herself in the amount of $500.00. Mrs. Powell testified that she had endorsed the check and had received cash. When asked what she had used the $500.00 for, her testimony was for the payroll of the Alabama Law Enforcement organization; it was her testimony that the money was put to this use upon the instruction of Mr. Smiley. At no point in the proceedings did Mr. Smiley offer any explanation about this check.
Subsequently a copy of a check was introduced showing the purchase of a cashier's check by Mr. Smiley as executor, the check being made payable to Mrs. Hubert Arrowood for $1,000.00. The cashier's check bore a notation "Death Benefit, Alabama Law Enforcement Officers Association, Inc."
No explanation was ever offered by Mr. Smiley as to why proceeds of the estate were put to this purpose.
Mrs. Massey testified that at one time Mr. Smiley delivered a check payable to her in the amount of $7,949.50. That check was returned because of insufficient funds.
As the hearings continued, another was held on April 8, 1964. Again the subject of discussion was the $20,000, $10,000 of which had been withdrawn from the City Federal Savings and Loan, and $10,000 which had been withdrawn from the Home Federal Savings and Loan Association. Mr. Smiley stated, "We will stipulate two $10,000 each was the City Federal and Home Federal."
The following comments were made concerning this $20,000:
Mr. Cole, who was representing Mrs. Massey at this time, and Mr. Walter W. Mims, who was representing the other heirs in the Clare B. Smith estate, and the court itself, pleaded with Mr. Smiley to account for the funds for which he had given no account. Mr. Smiley's response is typified by the following:
* * * I just ask the Court to ask him that question, which he refused to answer, where the $20,000 is. Now that is all I think the Court ought to ask him.
No purpose would be served by reciting any further evidence adduced at these hearings. The foregoing is typical of the questions put to Mr. Smiley and his responses thereto.
A petition for writ of mandamus was filed in the Supreme Court of Alabama and after hearings were conducted thereon the Supreme Court issued an order dated April 22, 1964, reciting that a rule nisi would issue to the Judge of Probate to vacate his order of April 9, 1964, provided Smiley either paid the $20,000 to the Judge of Probate or post a bond in the amount of $25,000. Pursuant to that order, Smiley paid $20,000 to the Judge of Probate on April 30, 1964. His appeal from the order entered on January 16, 1964, was dismissed for lack of prosecution, by the Supreme Court. His subsequent petition to have the appeal reinstated was denied.
The matter of the $20,000 was finally concluded by a consent settlement entered into on December 16, 1964.
Thereafter, the Grievance Committee of the Birmingham Bar Association received a complaint concerning Mr. Smiley in the form of a letter written by Walter L. Mims. The Chairman of the Grievance Committee testified that he investigated this complaint. He obtained transcripts of the testimony of Mr. Smiley of the proceedings had in the Probate Court. He also examined an affidavit furnished to the Committee executed by Mrs. Massey. The pending complaint against Mr. Smiley was considered at a meeting of the Grievance Committee which culminated in a decision by the Committee that the matter should be reported to the Executive Committee with the recommendation that disciplinary action be taken. The Grievance Committee voted to recommend to the Executive Committee that charges be filed against Mr. Smiley.
The charges so filed by the Executive Committee have heretofore been enumerated.
The only explanation which appears in more than 1,200 pages of testimony as to why the $20,000 involved in this case had been taken out of the fiduciary account and converted to cash and secreted by Mr. Smiley was to the effect that his personal income tax return was being audited by the Internal Revenue Service. He offered no explanation as to why this required secreting this cash money belonging to an estate in which he was acting as executor and attorney.
The petitioner contends in brief, and contended before the Commissioner, in the *728 disciplinary proceeding that the matters occurring in the Probate Court and all of the motions filed on behalf of Mrs. Massey by Mr. William Cole and the participation in the case by Mr. Walter Mims was prompted by the fact that the petitioner was at that time running for Circuit Judge in the 10th Judicial Circuit. Then he takes the position that the disciplinary proceedings were instituted because he won the case in the Probate Court.
It is always with a sense of dread and with an acute awareness of our responsibility that we look to these cases where we must sit in judgment upon our brothers at the bar. In most of the cases of this kind which come to us there is conflicting testimony. This case differs in that there is essentially no conflict at all. There is certainly no conflict in the evidence to the effect that the petitioner had for a long period of time in his possession some $20,000 which he had acquired in his capacity as executor of the estate of Mrs. Alta B. Smith. There is no conflict whatsoever to the effect that Mrs. Massey was entitled to possession of these funds either in her capacity as sole beneficiary in that estate or in her capacity as executrix of the estate of Judge Clare B. Smith. Before she obtained possession of those funds, however, it was necessary for her to obtain counsel pursuant to which several hearings over a long period of time were held in the Probate Court. During the course of those hearings the petitioner refused to answer questions about the whereabouts of the money. He refused to account for it in any manner. He refused to produce records reflecting bank transactions. It was necessary for Mrs. Massey to subpoena the records of the bank, in order to determine in what manner these funds had been disbursed from the fiduciary account.
The Board of Bar Commissioners, in reviewing the record in this case as compiled by the Commissioner named to take testimony, unanimously voted guilty on six of the charges made against the petitioner. These charges have been set out above. Without a great deal of further elaboration, it is not disputed that for a long period of time the petitioner withheld monies entrusted to him in his capacity as executor and attorney for the estate of Alta B. Smith. He parted with those funds only after repeated proceedings had been had in the Probate Court. It was not disputed by the petitioner that at all times Mrs. Massey was entitled to these funds in one capacity or the other. This conduct constitutes a violation of Rule 27 and Rule 36 of the Rules of the Supreme Court of Alabama governing the conduct of attorneys in Alabama. In In re Stuart, 257 Ala. 184, 57 So. 2d 874, where the attorney involved withheld monies entrusted to him for a period of time until he yielded to pressure from the Grievance Committee to pay the same over to his client, the court said:
In this case the petitioner has offered no explanation for the fact that he used the estate's money for his own purposes. No explanation whatsoever was offered for the fact that $1,000 of this money was used to pay a death benefit to a member of the Alabama Law Enforcement Association. The only explanation which the petitioner ever offered for the manner in which he handled this estate was that it was a family matter. Mrs. Massey is his cousin. Mrs. Alta B. Smith was his aunt. This relationship does not override the duty a fiduciary owes his beneficiary. The petitioner at all times knew that the money in his possession did not belong to him. Nevertheless, he treated it as if it were his own. This constitutes a violation of our rules. See Paradiso v. Board of Commissioners of Alabama State Bar, 284 Ala. 450, 225 So. 2d 855.
Without undue elaboration, we think clearly the evidence supports the conclusion reached by the Board, that the petitioner has violated Rule 36, Section A of the Rules. We think further that the evidence clearly supports the conclusion reached that Rule 27, Section A of the Rules has been violated. In addition to that we think Rule 12 has clearly been violated.
The petitioner's propositions of law in brief raise the following:
Proposition One is to the effect that it is the duty of this court to sit in judgment on the evidence of the case since the testimony was not taken orally before the Board of Commissioners.
We agree and have done so.
Proposition Two is to the effect that there is no presumption favoring the finding of the Board of Commissioners where the testimony was taken before a Commissioner and was not ore tenus.
We agree with this proposition and have so noted.
Propositions Five, Six, Seven, Eight, Nine and Ten go to burden of proof. It is the petitioner's contention that what we said in Ex parte Acton, 283 Ala. 121, 214 So. 2d 685, casts the burden on the Board of proving by the evidence to the reasonable satisfaction of the triers of fact that the petitioner acted in bad faith or with fraudulent purpose to show a violation of Rule 27, which recites that no attorney should misappropriate the funds of his client by failing to pay over money collected by the attorney for the client "`provided the circumstances attending the transaction are such as to satisfy the Board that the attorney acted in bad faith or with fraudulent purpose.'"
We agree with what was said in Ex parte Acton on rehearing. In that case the question was whether or not the attorney had an agreement with his client, under which agreement he retained money collected for that client. On rehearing the court held that under the evidence the Board of Commissioners had not carried the burden of proof in connection with that agreement.
An entirely different case is presented here. The evidence establishes without a shadow of a doubt that the petitioner in this case has withheld monies belonging to Mrs. Massey. The petitioner concedes that the money was due to be paid to Mrs. Massey in one capacity or another. Unlike Acton, he has no explanation for his failure to turn it over to Mrs. Massey other than the fact that there was some question as to which estate it belonged in. That is an insufficient answer in that he also concedes that Mrs. Massey was entitled to have it regardless of what estate it *730 belonged in. The only other explanation he offers for having secreted the funds was to the effect that his own personal income tax return was being audited. This explanation too is no answer. Under these circumstances we think that the Board has discharged its burden of proving that the petitioner acted in bad faith or with fraudulent purpose.
As we have so often said, an attorney is under an absolute duty to give his client a full, detailed, and accurate account of all money and property which has been received and handled by the attorney as such, and must justify all transactions in dealings concerning the same. General statements will not suffice. And hence it is encumbent upon the attorney to keep complete and accurate books and records. See Ex parte Thompson, 228 Ala. 113, 152 So. 229, 107 A.L.R. 671; In re Messer, 228 Ala. 16, 152 So. 244; In re Fite, 228 Ala. 4, 152 So. 246; Ex parte Lamberth, 276 Ala. 543, 165 So. 2d 93. This duty is not weakened by the fact that the attorney also is acting in a fiduciary capacity, in this case executor.
We are mindful of the fact that finally Mrs. Massey concedes that she has received all of the money to which she is entitled under the will of her mother and as executrix under the will of her stepfather. However, the restitution of funds previously misappropriated does not mitigate the offense involved in the misappropriation particularly in a case where restitution has been made under pressure.
We can find nothing in the record to authorize us to alter in any way the decision of the Board. The action taken by the Board of Commissioners of the Alabama State Bar is hereby affirmed.
Affirmed.
All the Justices concur except McCALL, J., not sitting.