Court Opinion

ID: 5454751
Source: CourtListenerOpinion
Date Created: 2022-01-08 20:03:01.513497+00
Date Added: 2024-06-11T08:32:35.369879
License: Public Domain

SHARPSTEIN, J.
I dissent. The evidence in this case, as I construe it, shows that in the month of June, 1877, one Lewis applied to the respondent to bring an action against Schoenfeld, Cohn & Co., upon certain promissory notes, of which said Lewis represented himself to be the indorsee. Among said notes was one for $17,000, dated December 23, 1876, payable on demand. The respondent ascertained from the indorsee that this note had been due more than forty days. Thereupon respondent informed said indorsee that the fact that the makers of said note had suffered the same to remain unpaid for a period of forty days after it had matured would of itself constitute an act of bankruptcy, and that a complaint filed upon that note would necessarily disclose that the *394makers of said note had committed an act of bankruptcy. To avoid that, the respondent suggested the execution of a new note, for the same sum, and of the same date as the old one, payable six months after date. That suggestion was followed, and an action was commenced on the new note by filing a complaint verified by the plaintiff in the usual form, and an attachment was sued out by filing an affidavit in the usual form.
It is urged that the allegation in the complaint that the note was made on the day of its date was false, and that the respondent knew it to be false when the complaint was verified. The evidence upon this point is that the respondent did not prepare the complaint, or direct that it should be verified, or know that there was any intention to have it verified, or that it had been verified, until after it had been filed. I do not think that he can be held criminally- responsible for an act done by another without his advice or knowledge.
It is further urged that the affidavit upon which the attachment was obtained was false, because it was stated in said affidavit that the attachment was not sought and the action was not prosecuted to hinder, delay or defraud any creditor of the defendants.
I have always supposed that where an attachment -was sought and an action prosecuted by a person for the purpose of securing the payment of his own demand, that he might safely make that affidavit, although the result of suing out such attachment might not only be to hinder and delay other creditors, but to render their claims against the defendant worthless. The object of the attaching creditor in such a case being to secure the payment of his own demand, without reference to how others might be thereby affected. And.I do not understand that, in the absence of any bankrupt law, this would be disputed. And the bankrupt law did not forbid the security of a preference by one creditor over all others by attaching all the property of his debtor: Barbour v. Priest, 103 U. S. 295, 26 L. Ed. 480; Wilson v. City Bank, 17 Wall. 473, 21 L. Ed 723. The fact of the debtor’s property might be all absorbed, in the payment of the attaching creditor’s claim. It is therefore obvious that it was not the intention of the bankrupt act to deprive an attaching creditor of any advantage which he might secure over other creditors of a common debtor by being the first to attach the property of such debtor.
*395But it is said in reply that if this be so, the respondent, by advising the substitution of a note which would not show on its face that the makers had committed an act of bankruptcy for one that did show that they had, counseled the perpetration of a fraud. In other words, his client wished to obtain a preference over all other creditors of his debtors, and the respondent told him that -if said debtors chose to go into bankruptcy, or if any creditor or creditors could find any good ground for throwing them into bankruptcy, he could not obtain any preference by being the first to sue and attach. The respondent was assured that the debtors would not voluntarily go into bankruptcy, but on an inspection of the $17,000 note he discovered that it had been due more than forty days, and he then informed his client that if one-fourth in number of creditors of the makers discovered that fact, they might throw them into bankruptcy, as that of itself constituted an act of bankruptcy. And to obviate that, he advised the surrender of that note to the makers and the execution of a new note by them which would not on its face show that they had committed an act of bankruptcy. It cannot be denied that as between the makers and payee of the note this transaction was perfectly legitimate. They had a perfect right to make and he to take a new note in the place of the old one. And as between themselves they had a right to antedate if they chose. But the objection which is made to this transaction is, that the object of making and taking a new note was to conceal from the creditors of the makers the fact that they had committed an act of bankruptcy. Not to disclose was to conceal. Was it the duty of the respondent on discovering that his client’s debtors had committed an act of bankruptcy to advise that the fact be at once published 1 I presume that it will not be claimed that it was. On the other hand, I think that it will be admitted that it was his duty to conceal it. The" law would not permit him, without the consent of his client, to disclose it. “An attorney cannot, without the consent of his client, be examined as to any communication made by the client to him, or his advice given thereon in the course of professional employment.” (Code Civ. Proc., 1881.) His lips were sealed.
As before stated, the antedating of the note was not an illegal act. But it is claimed that the antedating of it for *396the purpose of concealing the fact that the makers of it were bankrupt was a gross wrong upon their creditors. In Glad-win v. Gladwin, 13 Cal. 330, the counsel for the intervener contended that “the antedating of the note sued on—the manufacture of a present cause of action out of debts not due —the agreement that plaintiff sue out attachment by way of securing the debt; these facts, appearing without explanation, were a fraud in law upon the other creditors. ’ ’ But the court held in effect that the note having been executed upon a sufficient consideration, its validity was not affected by the circumstances above stated. The court in that case cited Dana v. Stanfords, 10 Cal. 269, Little v. Little, 13 Pick. (Mass.) 426, Cushing v. Gore, 15 Mass. 73, Haseltine v. Guild, 11 N. H. 390, which seem to me to hold that a creditor of an insolvent debtor may secure a preference over other creditors quite 'as questionable as those which the respondent advised should be resorted to for the purpose of giving his client a preference over other creditors. And as the act which he counseled was not legal, it does not seem to me that the existence or nonexistence of a bankrupt law at the time is a material circumstance. The act was neither malum prohibitum or malum in se, and would therefore be quite as reprehensible when there was not as when there was a bankrupt law in force. Other creditors would be prejudiced just the same in either ease. If, in the absence of a bankrupt law, an attorney would be justified in advising parties to do what was done in the cases above cited, for the purpose of giving one creditor a preference over all other creditors, I am unable to perceive why the respondent might not advise what he did without incurring the penalty of disbarment or suspension. It is not illegal for one creditor to obtain a preference over other creditors. Nor is it illegal to antedate a note. How, then, can it be a misdemeanor to advise the doing of two legal acts? Or the doing of a legal act for the purpose of accomplishing a strictly legal object?
Assuming, however, that the views which I have above expressed are erroneous, it seems to me that there is a total absence of proof to support the charge based upon the antedating of the $17,000 note. I have examined the evidence very carefully, without discovering anything in it which proves or tends to prove that any creditor of the makers of that note were prejudiced by the antedating of .it. It is *397claimed that the object of antedating it was to defraud eastern and European creditors. But I am unable to find from the evidence before us that there are, or ever were, any such creditors. They are alluded to as if they did exist. The respondent, in his testimony, says he knew nothing of their existence until long after the suit was brought and attachment levied. But it is not stated who they were, how many there were, the amount or nature of their claims, or whether those claims were paid or not. For anything that appears to the contrary, they may have been satisfied with the course pursued by the parties here.
It appears by a decree which was offered in evidence that the firm which made the note has been adjudged bankrupt, not at the instance of any creditor of the firm, but upon the petition of a member of it. The respondent’s responsibility is for the advice which he gave upon the facts which he knew or which had been communicated to him at or before the time when he gave it.
As I read the testimony, there is no evidence tending to prove that the respondent did, but there is evidence tending to prove that he did not, know before the commencement of the action upon said $17,000 note that the defendants in that action had any eastern or European creditors, or that there was a note in the Anglo-California Bank which had been given for the same loan that the note sued on was given for, or that there was an agreement between the plaintiff and defendants in that action that whatever surplus might remain of the amount realized on the sale of the property attached, after satisfying the plaintiff’s judgment and the California creditors, should be turned over to the defendants, or that the notes sued on did not represent a bona fide indebtedness of said firm.
As to the selling of the goods in bulk instead of parcels, the respondent testifies that he did not advise that they should be so sold, and no one testifies that he did.
The measures taken to protect Mrs. Alexander appears to me to have been eminently proper. One of the partners had been acting as her agent, and it was his duty in her absence to protect her interest: Barbour v. Priest, supra.
It is quite evident that an impression prevails that the respondent’s client and the firm of Sehoenfeld, Cohn & Co. entered into a conspiracy to defraud the creditors of said firm, *398and that for that purpose an action against the firm was commenced and an attachment sued out with the intention of transferring the goods belonging to said firm to respondent’s client, at a great sacrifice, so that he might resell the goods at private sale and realize a large profit thereon, to be divided between him and the members' of said firm. Whether there is any evidence before us to support that theory I shall not now stop to inquire. The respondent swears that he did not know of any such arrangement, and he is not contradicted. He pleaded not guilty to the charges preferred against him, and the evidence mainly relied upon to support them consists-of a communication written by him to the president of the Bar Association, supplemented by the testimony which he gave in open court on the hearing of this matter. The findings of this court upon the material issues arising upon the pleadings ought to be in accordance with the proof presented. The respondent should be held responsible for the advice which he gave upon the facts communicated to him or which were otherwise within his knowledge. For acts which he did not devise, and designs of which he was ignorant, he cannot justly be held responsible. The advice which a lawyer gives to his client must in nearly every case be based upon the statement of the client. “And it is not the saints of the world who chiefly give employment to our profession. It has essentially and habitually to do with all that is selfish and malicious, knavish and criminal, coarse and brutal, repulsive and obscene, in human life”: In the Matter of Goodell, 39 Wis. 245, 20 Am. Rep. 42.