Title: In re Scallon
Citation: N/A
Docket Number: S43201
State: Oregon
Issuer: Oregon Supreme Court
Date: April 9, 1998

Filed:  April 9, 1998

IN THE SUPREME COURT OF THE STATE OF OREGON

In the Matter of the Application of:

PATRICK JOHN SCALLON,

For the Admission to the Practice of
Law in Oregon.

	Applicant.

(SC S43201)

	On review of the recommendation of the Board of Bar
Examiners.

	Submitted on the briefs and record June 27, 1997.

	Patrick John Scallon, pro se, filed the petition.

	Jeffrey D. Sapiro, Oregon State Bar Regulatory Counsel, Lake
Oswego, filed the response for the Board of Bar Examiners.

	Before Carson, Chief Justice, and Gillette, Van Hoomissen,
Durham, and Kulongoski, Justices.*

	PER CURIAM

	The applicant is admitted conditionally to the practice of
law.

	*Fadeley, J., retired January 31, 1998, and did not
participate in this decision; Graber, J., resigned March 31,
1998, and did not participate in this decision.

		PER CURIAM

		This is a contested admission proceeding in which the
Board of Bar Examiners (the BBX) finds itself in the unusual
position of being unable to make a majority recommendation with
respect to an application for admission to the Oregon State Bar
(the Bar).  The BBX consists of fourteen members.  Seven members
("the favoring plurality") believe that applicant Patrick John
Scallon (applicant) should be admitted to practice in Oregon,
albeit with conditions.  Seven members of the BBX ("the opposing
plurality") believe that admission should be denied.  Each
plurality has offered articulate and cogent reasons for their
respective views.  The matter is now before this court for
decision.  After a de novo review of the record made before the
BBX,(1) we admit applicant conditionally.

		This case has had a relatively long history.  Applicant
is 46 years of age, single, and a resident of Hood River, Oregon. 
He is a member of the Wisconsin Bar.  He passed the February 1995
Oregon bar examination.  In the course of the evaluation of
applicant's qualifications for admission, questions arose within
the BBX concerning applicant's good moral character and fitness
to practice law.  The BBX conducted an investigation and,
following that investigation, recommended to this court by
majority vote that applicant be admitted to the practice of law. 
Two members of the BBX filed a minority report recommending
further investigation.  On May 7, 1996, this court remanded the
matter to the BBX for a character review proceeding pursuant to
Rule 9.60(7) of the Rules for Admission of Attorneys (RFA).(2)

		A character review proceeding was held on January 2,
1997, before a three-member panel of the BBX.  That panel
unanimously recommended that applicant be denied admission to the
practice of law.  Thereafter, pursuant to RFA 9.55, the matter
was reviewed by the full BBX.  As noted, the opposing plurality
voted to adopt the opinion and recommendation of the panel and to
deny admission.  The favoring plurality voted to recommend to
this court that applicant be admitted conditionally.  

		A recommendation for admission to practice law requires
an affirmative vote of a majority of the non-recused members of
the BBX.  RFA 9.55(4).  Lacking that support, applicant has moved
this court to adopt the recommendation of conditional admission
that was made by the favoring plurality.(3) 

		The underlying facts are somewhat convoluted. 
Applicant graduated from law school in 1979.  He was married
during the time that he attended law school.  While in law
school, he incurred a number of student loans.  After law school,
applicant entered into private practice with a firm in Sturgeon
Bay, Wisconsin.  Within a year, applicant's marriage foundered
and his wife moved to Milwaukee, Wisconsin.  Although it cost him
his job, applicant followed his wife to Milwaukee in a futile
attempt to reconcile.

		With his first marriage at an end and without a job,
applicant took on work as a contract lawyer for the public
defender's office in Milwaukee.  In time, that work led to
applicant's being hired to a full-time staff position, in which
work applicant continued until 1990.

		By his own admission, applicant never had been a
sensible money manager.  He did not pay his bills on time.  When
his obligations on his various student loans became due,
applicant did not pay them consistently or completely.  Although
he was earning a good salary at the public defender's office,
applicant's debts continued to mount.  Applicant unsuccessfully
attempted to negotiate a payoff schedule for the loans.  He was
sued for some of the outstanding balances and threatened with
actions on others.  After consulting with other lawyers about the
propriety of doing so, applicant filed for bankruptcy.  The only
significant debt to be discharged by the bankruptcy was the 
$27,547.85 in student loans.

		After the bankruptcy, applicant was able, with the help
of his second wife, to manage his finances in a way that enabled
the couple to purchase a home.  Applicant timely made his
mortgage payments and even made advance payments.  He was
similarly able to handle a car purchase.  However, in 1989
applicant's personal and financial life went into a tailspin. 
His second marriage dissolved under particularly difficult
circumstances.  He nearly was killed in a windsurfing accident on
Lake Michigan.  The resulting damage to his physical health,
coupled with depression over his marriage, caused applicant to
see a psychiatrist as often as two or three times a week.

		In an effort to find the time to address his personal
problems and to ensure that he did not harm his clients,
applicant left his public defender job and went into private
practice, where he was able to limit the amount of work that he
undertook.  During his first year in private practice, applicant
was able, in spite of a limited income, to meet his financial
obligations, including his tax obligations.

		In 1991, applicant earned about $16,000 from his
practice.  In addition, he cashed in an individual retirement
account (IRA) valued at over $24,000.  Although he realized that
his early termination of the IRA would engender a significant tax
penalty, applicant made no provision for paying his taxes for
that year.  When the taxes became due, applicant could not pay
them.

 		Applicant used a large part of the IRA proceeds to buy
a truck, which he then drove to Mexico.  He stayed there about
four months.  Beyond the turmoil that he was experiencing in his
personal life, applicant offered no excuse for his failure to
plan ahead for his tax obligations: "It was a mistake.  It was a
very poor judgment on my part.  I was aware of my obligations and
I didn't do it."  Although he filed a tax return that
acknowledged that taxes were owed, applicant also failed to pay
his Wisconsin state taxes in 1991.

		Applicant paid his taxes in 1992 and 1993.  However, he
acknowledges that a small additional assessment on his federal
taxes for 1993 had not been paid as of the time of the hearing.

		Applicant earned approximately $18,800 in Wisconsin in
1994.  During that year, he left Wisconsin and relocated to Hood
River, Oregon.  Applicant apparently filed federal and state
income tax returns for 1994, but still owed the amounts listed on
those returns at the time of the hearing.

		The Internal Revenue Service (IRS) contacted applicant
in 1993 concerning his 1991 tax bill.  Applicant agreed to make
installment payments to the IRS to retire that tax debt.  At the
time of the agreement, he owed over $9,900.  The agreement called
for applicant to make payments of $300 per month until all taxes,
penalties, and interest were paid in full.  Applicant made
regular monthly installment payments pursuant to that agreement
until he moved to Oregon in 1994.  After moving to Oregon,
applicant stopped making the installment payments.  He entered
into a similar agreement with the State of Wisconsin to pay
delinquent 1991 state income taxes.  He agreed to pay $200 per
month until that amount was paid in full.  He made only one
payment under that agreement.

		Applicant applied for admission to the Oregon State Bar
in December 1994.  In August 1995, the IRS filed a notice of
federal tax lien in excess of $10,200 against applicant in Hood
River County for the years 1991, 1993, and 1994.  Also in August
1995, the State of Wisconsin sent applicant a notice of
delinquency for his 1994 state income taxes.

		Applicant has worked in Oregon as a self-employed sheet
metal worker, a laborer for a construction firm, and a
residential remodeler.  His work has taken him to job sites
throughout the northwest.  In 1995, applicant earned
approximately $4,500.  At the time of the hearing before the BBX
panel, applicant had been making $150 per month payments on his
back tax obligations to the State of Wisconsin.  He was not
making payments on his federal tax obligation.

		At the time of the hearing, applicant was hoping to be
able to meet all or most of his outstanding tax obligations when
he received his share of a fee for a personal injury case that
was being handled by another lawyer in Wisconsin.  A stipulation
between applicant and the Bar that was submitted to this court
after the BBX pluralities rendered their opinions establishes
that applicant now has received the anticipated payment and has
satisfied all his delinquent tax obligations.

		We pause after recitation of the foregoing facts to
note the standard to which applicant is being held in this
proceeding.  The right to practice law in this state is limited
to those who demonstrate that they have the requisite good moral
character and fitness to do so.  This court has summarized the
pertinent inquiry as follows:

		"An applicant for admission to the Bar must show
that he or she is a person of good moral character. 
ORS 9.220(2)(a).[(4)] An applicant must prove that he has
the requisite character by clear and convincing
evidence.  In re Rowell, 305 Or 584, 588, 754 P2d 905
(1988).  That means that an applicant must show that it
is 'highly probable' that he has good moral character. 
In re Monaco, 317 Or 366, 370 n 4, 856 P2d 311 (1993). 
Any significant doubts about an applicant's character
should be resolved in favor of protecting the public by
denying admission to applicant.  In re Easton, 298 Or
365, 367-68, 692 P2d 592 (1984) (citing In re Alpert,
269 Or 508, 518, 525 P2d 1042 (1974)), cert den 472 US
1012 (1985)."

In re Jaffee, 319 Or 172, 176-77, 874 P2d 1299 (1994) (footnote
omitted).

		After reciting the facts (other than those supplied by
the supplemental stipulation) and recognizing the applicable
legal standard, the opposing plurality took up the two related
considerations that formed the basis of their recommendation. 
Those considerations were applicant's bankruptcy and his failure
to keep up his tax payments.  We follow a like format.

Applicant's bankruptcy

		An applicant's handling of his or her financial affairs
is an appropriate consideration in determining the applicant's
fitness to practice law.  See, e.g., In re Taylor, 293 Or 285,
293, 647 P2d 462 (1982) (so stating).  Applicants and lawyers are
expected to honor scrupulously all financial obligations.  Id. at
295.  From the foregoing principles, the opposing plurality
concluded that the circumstances surrounding applicant's filing
for bankruptcy showed that he lacked the requisite character to
practice law.

		The bankruptcy proceeding discharged applicant's
outstanding student loans.  The opposing plurality reasoned that
applicant's failure to work out ways to pay off his outstanding
student loans, when he was making an adequate income, was
unreasonable.  It followed, they concluded, that applicant was
not justified in seeking relief from those debts through
bankruptcy.

		There is no question that applicant's handling of his
personal financial affairs at that time was inadequate.  Neither
is there any reason to doubt that, had applicant been a more
responsible money manager, he would have been able to pay off his
student loans in due course.  But when applicant could not manage
his affairs successfully, and when his failure led to several
legal actions being filed or threatened against him, he was as
entitled as any other debtor to seek protection from his
creditors in bankruptcy.  The opposing plurality does not suggest
that applicant was ineligible for bankruptcy under pertinent law
or that he did anything improper in connection with those
proceedings.  We decline to hold that a bankruptcy in the history
of an applicant for admission to the Bar per se is disqualifying,
even if it appears that the financial difficulties that led to
the bankruptcy were the fault of the applicant.

		In taking a contrary view, the opposing plurality
relies on a number of cases -- all, with the exception of In re
Taylor, supra -- from other jurisdictions.  Those cases do not
support the opposing plurality's position.  The applicant in
Taylor was not denied admission on the basis of bankruptcy alone;
he was guilty of other disqualifying misconduct.  The other cases
are less in point than Taylor and do not merit discussion here. 
We are not persuaded that applicant should be denied admission to
the Bar on this ground.

Applicant's taxes

		The opposing plurality finds the circumstances
surrounding applicant's failure to pay his taxes, especially
after cashing in his IRA, to demonstrate a lack of good moral
character and fitness to practice law.  The opposing plurality
acknowledges that applicant's life was in chaos during the period
in which he failed to meet his tax obligations, but then sums up
as follows:

	"The panel finds that there was no natural catastrophe,
medical emergency, or any other unexpected event
justifying this failure.  Applicant decided to leave
his practice, move to Oregon, and windsurf.  Such a
move may have been, in the long run, good for
Applicant's mental, physical, and spiritual health, but
it does not explain why he did not pay his taxes.

		"* * * * *

		"Applicant states that he is aware of these
obligations and intends to pay them.  Applicant claims
that the nature of his work is sporadic and that he
earns so little money that he does not have enough
money to live and still have something left to pay his
tax debts.  The panel is not convinced. * * *

		"Applicant continues to live in Hood River working
as a residential remodeler earning about $1,000 a
month.  If Applicant were serious about retiring his
debts and scrupulously honoring his financial
obligations, he could move to a metropolitan area, such
as Portland, where he could reasonably be expected to
earn more money.  Applicant could also return to
Wisconsin where he remains a licensed attorney. * * *

		"The panel is left with the impression that
Applicant continues to live in Hood River because he
can windsurf.  There is nothing wrong with windsurfing. 
But choosing to live a lifestyle which allows one to
windsurf, while ignoring one's financial obligations,
does not comport with the high ethical standards
required of an attorney of this state."

		We disagree with the opposing plurality.  Applicant
always has filed income tax returns and acknowledged the taxes
that he owed.  For the most part, he has paid them.  He himself
has acknowledged that, when he failed to pay his taxes, his
failures were his own doing and responsibility.  Applicant has
made at least small inroads on his tax obligations during even
financially limiting circumstances and has held out the hope that
he could satisfy all the obligations in full when he received his
share of the attorney fee for the case in which he had been
involved in Wisconsin.  As we have noted, supplemental
information shows that he has fulfilled that hope.  

		We think that the following statement -- also by the
opposing plurality -- better sums up this case and the factors
that we find most pertinent:

		"This is a close case and a difficult decision. 
Several practitioners and judges have attested to
Applicant's good moral character, and have lauded
Applicant's skill and integrity in the practice of law. 
There is no evidence that Applicant has committed
fraud, deceit, or any crimes of moral turpitude.  There
is no evidence that Applicant has ever cheated a client
nor that Applicant's handling of his financial affairs
has ever left a client shortchanged."

		We agree with that description of the record.  We
understand it to mean that the opposing plurality accepts as a
general proposition that applicant is a person of good moral
character, subject only to a lingering doubt as to whether he was
wholly committed to satisfying his tax obligation.  As noted,
applicant's actions now have laid that issue to rest.  The
opposing plurality's surviving concern consists of doubts that
applicant has demonstrated his fitness to practice law.  

		For our part, we are satisfied on that score, as well.
Applicant appears always to have had his clients' best interests
in mind, so much so that he stopped practicing law at a time when
he no longer felt fit to represent those clients adequately.  No
issues have been raised concerning his competence.  That
demonstrates to us that applicant has had, and continues to have,
the fitness to appreciate and to engage in the practice of law.  

		It also appears to us that applicant understands and
appreciates the reasons that led to his past financial
difficulties, is determined to avoid their repetition, and is
capable of carrying out that determination.  In that regard,
applicant is willing to accept the recommendation of the favoring
plurality that he be admitted conditionally.(5)  The conditions
that are recommended by the favoring plurality are appended to
their "Recommendation of Conditional Admission."  Although some
of those conditions have been met during the hiatus between the
hearing and this decision, the balance of them appear to be well
considered.  We adopt those latter conditions, with the
alteration of the expiration date of one of them (to allow for
the passage of time).  Those conditions are:  

		1.  The term of conditional admission may be extended
upon a showing of good cause set forth in a petition to the
Oregon Supreme Court filed by Oregon State Bar Disciplinary
Counsel.

		2.  In the event that applicant enters into a solo law
practice during the term of conditional admission, applicant
agrees to use the loss-prevention services of the Professional
Liability Fund for help in setting up a law practice, including
instruction in lawyer trust accounts and trust accounting
practices.

		3.  In the event that applicant complies with all
conditions established by this agreement, the term of his
conditional admission shall expire on January 1, 2001, and he
shall be admitted to practice law unconditionally thereafter
without further order of the Oregon Supreme Court.

		With the foregoing conditions in place and monitored,
we are satisfied that applicant possesses the necessary good
moral character and fitness to be admitted to the practice of law
in Oregon.  When applicant executes an appropriate document
committing himself to the conditions that we have identified and
providing that the conditions will remain in place until 

January 1, 2001, he should be admitted to the practice of law.

		Applicant is admitted conditionally to the practice of
law.

1. 	Pursuant to Rule 9.60(5), Rules for Admission of
Attorneys (RFA), this court reviews the record made before the
BBX de novo.

2. 	RFA 9.60(7) provides:

		"If the Oregon Supreme Court is unwilling to
accept a Board of Bar Examiners recommendation to admit
an applicant to practice, and if the Board of Bar
Examiners recommendation to admit was made without a
character review proceeding having been held, then the
Oregon Supreme Court shall remand the matter back to
the Board for a character review proceeding to be
commenced.  The Supreme Court may limit or direct the
scope of the character review proceeding on remand."

3. 	After the matter was taken under advisement, applicant
moved for permission to present additional evidence.  That motion
was denied, but applicant and the Bar were asked to confer to see
if a mutually-agreeable stipulation could be entered into with
respect to the evidence in question.  As indicated by our
recitation of the facts, post, the parties did stipulate to
supplement the record.

4. 	ORS 9.220(2)(a) requires an applicant to show that he
or she "is a person of good moral character and fit to practice
law."  Subsection (2)(b) of the same statutory section provides:

	"[L]ack of 'good moral character' may be established by
reference to acts or conduct that reflect moral
turpitude or to acts or conduct which would cause a
reasonable person to have substantial doubts about the
individual's honesty, fairness and respect for the
rights of others and for the laws of the state and the
nation.  The conduct or acts in question should be
rationally connected to the applicant's fitness to
practice law."

5. 	Conditional admission is authorized by RFA 6.15(2) and
(3).