Opinion ID: 1388055
Heading Depth: 1
Heading Rank: 6

Heading: The Sinclair matter (L.A. 30272).

Text: After she suffered personal injury and property damage in an automobile accident Bessie Sinclair, on January 14, 1970, retained petitioner to represent her. Thereafter, Mrs. Sinclair's insurance company offered to settle for $1,500, but she felt that the amount was inadequate. After the rejection of the proposed settlement, Mrs. Sinclair moved from Los Angeles to Phoenix, Arizona, and, according to petitioner, she authorized him to settle the case for $2,500. On November 6, 1970, however, petitioner, without Mrs. Sinclair's knowledge or consent, accepted a settlement from the insurance company for $2,177.75. Although the insurer would not normally have sent a draft for the amount of the settlement until the claimant signed a release from further liability, petitioner convinced the adjuster to remit the draft and the release to him at the same time. Petitioner explicitly promised the adjuster that the funds would not be disbursed until the release had been returned. Despite this promise, petitioner, upon receipt of the draft for $2,000, [5] endorsed it with Mrs. Sinclair's signature, as well as his own, and deposited it in his personal checking account. Petitioner's checking account was overdrawn by nearly $1,600 on November 18, 1970, the day before the draft was credited to the account; it was again overdrawn, in excess of $300, the day after the deposit. Petitioner did not notify Mrs. Sinclair that he had settled the claim until December 4, 1970, when he wrote her that she would receive her money when she executed the liability release which he enclosed. Petitioner did not advise her that he had previously received the money and had deposited it in his personal account. Mrs. Sinclair returned the release to petitioner; shortly thereafter he forwarded it to the insurance company. After the lapse of more than three weeks without receiving the money, and after approximately five unsuccessful attempts to reach petitioner by phone, Mrs. Sinclair contacted him by letter and telegram, demanding that her check be sent. Petitioner then accounted for the money which he withheld and remitted to Mrs. Sinclair a check for $1,233.34, drawn on his client trust account. Although the check was twice returned by the bank for lack of sufficient funds, Mrs. Sinclair eventually obtained her money. The record shows petitioner's consistent pattern of breach of breach of professional responsibility beginning with his agreement to settle Mrs. Sinclair's claim for an amount which was less than she expected. Since petitioner made the agreement without Mrs. Sinclair's knowledge or consent, his conduct constituted a breach of his duty to his client. ( Sampson v. State Bar (1974) 12 Cal.3d 70, 82 [115 Cal. Rptr. 43, 524 P.2d 139]; Bodisco v. State Bar (1962) 58 Cal.2d 495 [24 Cal. Rptr. 835, 374 P.2d 803].) Mrs. Sinclair testified that she at no time authorized petitioner to sign her name to any settlement check that he might have received on her behalf. Although petitioner claimed that she had assented to his endorsing the check, the local committee was in the best position to assess the credibility of the witnesses, and we accordingly give great weight to its finding that petitioner endorsed the draft without authorization of his client. ( Sampson v. State Bar, supra, 12 Cal.3d 70, 74; Fielding v. State Bar (1973) 9 Cal.3d 446, 451 [107 Cal. Rptr. 561, 509 P.2d 193].) (5) An attorney who endorses the name of a client on a settlement check without authorization engages in serious misconduct. ( Montalto v. State Bar (1974) 11 Cal.3d 231, 235 [113 Cal. Rptr. 97, 520 P.2d 721]; Himmel v. State Bar (1971) 4 Cal.3d 786, 798 [94 Cal. Rptr. 825, 484 P.2d 993].) By depositing the settlement draft in his personal account, petitioner not only broke his promise to the insurance company not to disburse the funds until his client signed and returned the release form but also violated the rule [6] against commingling money belonging to a client with personal funds. Rule 9, as we have previously stated, was adopted to provide against the probability in some cases, the possibility in many cases, and the danger in all cases that such commingling will result in the loss of clients' money. Moral turpitude is not necessarily involved in the commingling of a client's money with an attorney's own money if the client's money is not endangered by such procedure and is always available to him. However, inherently there is danger in such practice for frequently unforeseen circumstances arise jeopardizing the safety of a client's funds, and as far as the client is concerned the result is the same whether his money is deliberately misappropriated by an attorney or is unintentionally lost by circumstances beyond the control of the attorney. ( Bernstein v. State Bar (1972) 6 Cal.3d 909, 916-917 [101 Cal. Rptr. 369, 495 P.2d 1289]; Peck v. State Bar (1932) 217 Cal. 47, 51 [17 P.2d 112].) (6) Good faith, therefore, does not raise a defense to a charge that an attorney commingled funds in violation of rule 9. Similarly, we have previously rejected petitioner's contention that an attorney who does not know of the proscription of rule 9 cannot be disciplined for its violation. ( Zitny v. State Bar (1966) 64 Cal.2d 787, 793 [51 Cal. Rptr. 825, 415 P.2d 521].) Petitioner clearly failed to comply with the requirements of rule 9; he may be disciplined accordingly. The record also amply supports the board's finding that petitioner wilfully and knowingly converted Mrs. Sinclair's funds when he deposited the settlement draft in his personal account. Petitioner's defenses to the conversion count are unavailing. Petitioner urges as a defense that he deposited the draft from the insurance company in his personal account because his bank promptly credited drafts, whereas the bank in which the clients' account was maintained took about 10 days to credit similar instruments. Petitioner purportedly desired immediate credit on the draft to expedite prompt payment to Mrs. Sinclair. (7) (See fn. 7.) In support of his claim that he had no intent to misappropriate his client's money, petitioner testified that he had earmarked sufficient funds in the clients' account to pay Mrs. Sinclair her share of the settlement. [7] Petitioner's contention fails in light of the fact that even when he belatedly informed Mrs. Sinclair that he had negotiated a settlement, he did not inform her that he had received the money from the insurance company. The bank records, moreover, undercut petitioner's contention that he earmarked sufficient funds in the clients' account to pay Mrs. Sinclair; the account had a balance of only $23.40 a week before, and until several days after, petitioner deposited the draft in his personal account. Petitioner attempts to explain his failure to send the money to Mrs. Sinclair, as he had promised, after she signed the release for the insurance company. Petitioner testified that he had spent the intervening time trying to reduce Mrs. Sinclair's medical bills, pursuant to her request. Since the amount of money that he would be required to send to her depended on whether he would be able to settle with her creditors, he claimed that he withheld payment to her pending negotiations. Since petitioner testified that he spent no more than ten days attempting to compromise the bill, this explanation did not satisfactorily demonstrate why he failed to send the money for more than three weeks, after he received the release and not until after Mrs. Sinclair sent a letter and telegram demanding payment. Petitioner's attempt to show that he at no time intended to misappropriate his client's money convinced neither the local committee, nor the disciplinary board. (8) (See fn. 8.) Petitioner has not sustained his burden before this court of showing that the finding of misappropriation is unwarranted. (Bus. & Prof. Code, § 6083, subd. (c); Brody v. State Bar, supra, 11 Cal.3d 347, 350; Black v. State Bar, supra, 7 Cal.3d 676, 690.) [8]