Court Opinion

ID: 9574057
Source: CourtListenerOpinion
Date Created: 2023-08-21 21:01:59.095998+00
Date Added: 2024-06-11T12:44:00.410232
License: Public Domain

MOSK J.,
Concurring.—Although I agree in general with the court’s opinion, I have some doubts about the discussion of California Rules of Court, former rule 8-101(A) [hereafter rule 8-101(A)] [now rule 4-100(A)]. Rule 8-101(A) provided that funds held for the benefit of a client must be held in an identifiable trust account and that the attorney’s funds shall not be commingled with the funds in the trust account.
Petitioner’s clients, Harris and Crist, arranged for a friend, Knapton, to deliver a stock certificate to petitioner as security for payment of their attorney fees and the litigation expenses. Harris, Crist and Knapton executed a written agreement among themselves, reciting that the attorney fees would be deducted from the total award to Harris and Crist “so as to preclude the necessity of ever cashing in the stock certificate and requiring Knapton to pay.” Petitioner was not a party to the agreement, but did sign it as a witness.
At some point within the following year, however, petitioner sold the stock for $8,400 without notice to Harris, Crist, or Knapton. The hearing panel found the sale did not result in any undue gain to petitioner because Harris and Crist owed him over $10,000 in accrued attorney fees, that petitioner did not intend to defraud his clients or Knapton, and that petitioner ultimately entered into an agreement to return the stock to Knapton. The Review Department of the State Bar Court adopted the findings of the hearing panel and concluded that petitioner violated rule 8-101(A).
*1157Petitioner disputes the finding of violation of rule 8-101(A), contending that the rule refers to the holding of a client’s “funds,” not “property,” in trust, and is applicable to a “client,” not a nonclient such as Knapton.
The opinion of the court holds the stock certificate was not “funds” that could be deposited in a bank trust account, even though it was held “for the benefit” of Harris and Crist. Accordingly, it is concluded, the finding of a violation of rule 8-101(A) cannot be sustained by the evidence, as the rule has no applicability to petitioner’s holding of the stock certificate.
While the opinion may be technically correct, I believe that under rule 8-101(A), whether an attorney has a client’s money or property in trust, the client should be notified before his property is sold and he should be given an opportunity to substitute payment if he desires to retain the property. While the court’s discussion of rule 8-101 (A) does not satisfy this concern, it does hold petitioner violated his oath and duties as an attorney by selling the stock without authority or notice.
For that reason I concur in the opinion.