Opinion ID: 2325510
Heading Depth: 1
Heading Rank: 1

Heading: Muller Matter

Text: Respondent represented John J. Muller in 1975. In July of that year respondent borrowed $13,000 from the complainant which was to be secured by a second mortgage on respondent's property. The only evidence of a mortgage being delivered in 1975 was respondent's testimony that he delivered to complainant a mortgage executed by himself together with the mortgage note dated July 21, 1975. Complainant denied receiving either a signed mortgage or the mortgage note. No mortgage was recorded. In fact, respondent did not acquire title to the subject property until August 7, 1975, several weeks after he allegedly executed and delivered to his client a mortgage on that property. Only after the complaint to the Ethics Committee was filed, did respondent cooperate with the complainant. Thereafter, the parties worked out an extension of the loan and a mortgage was executed by respondent and recorded as security for the prior balance plus interest to date. The Committee concluded that respondent's conduct reflected adversely on the profession and violated DR 1-102(A)(6) and DR 5-104(A). We agree. Even though there is a dispute in testimony as to whether respondent gave his client a mortgage to record himself, in either event, the conduct is unprofessional. All transactions of an attorney with his client are subject to close scrutiny. As Justice Jacobs said, [a]n attorney who enters into business ventures with his client does not, in the eyes of his client or the public, shed in chameleon fashion his professional standing and obligation and there is no just reason why he should be permitted to do so. In re Carlsen, 17 N.J. 338, 346 (1955). Accord In re Gallop, 85 N.J. 317 (1981). As a general rule, an attorney should refrain from engaging in transactions with a client or former client who has not obtained independent legal advice on the matter. In re Hurd, 69 N.J. 316 (1976). Here, although respondent had a personal interest in the transaction, he did not even suggest that Muller seek outside legal counsel. Respondent's argument that his client had many years experience in such matters does not exonerate him. See In re Honig, 10 N.J. 74, 79 (1952). A lawyer exercising ordinary care for a lender-client under these circumstances almost certainly would have insisted upon security for such a loan. Respondent does not deny it was offered. It was his duty to see that it was promptly delivered and recorded. That was not done.