Jack Gullage Bonner v. Disciplinary Board of the Alabama State Bar
No. 79-761
Supreme Court of Alabama
401 So. 2d 734;
1981 Ala. LEXIS 3568
June 12, 1981
SUBSEQUENT HISTORY:
[**1]
Rehearing Denied July 10, 1981.
PRIOR HISTORY:
On Appeal from Alabama State Bar.
DISPOSITION: AFFIRMED.
COUNSEL: Alvin T. Prestwood and Claude P. Rosser, Jr., Montgomery, for Appellant.
William H. Morrow, Jr., General Counsel, Montgomery, for Appellee.
JUDGES: Adams, Justice. Torbert, C.J., and Maddox, Faulkner, Jones, Almon, Shores,
Embry and Beatty, JJ., concur.
OPINIONBY: ADAMS
OPINION:
[*734] This is an appeal from a final order of a Disciplinary Board of the Alabama
State Bar Commission denying the petition of Jack Gullage Bonner for
reinstatement as an attorney under Rule 19 of the
Rules of Disciplinary Enforcement of the Alabama State Bar. Because the facts in this case are particularly
egregious, we shall recite only those facts necessary to shed light on this
appeal.
Jack Bonner is 48 years of age, married, and has one dependent daughter. He
was
[*735] licensed to practice law by the State of Alabama in 1965. In 1970, he moved
to Gadsden, Alabama, where he began processing loans for Old Southern Life
Insurance Company. On September 13, 1977, the petitioner, Jack Bonner, while a
licensed attorney, entered a
plea of guilty to the charge of violating Code 1975,
§ 27-27-26. This statute
[**2] provides:
Any officer, or director, or any member of any committee or any
employee of a domestic
insurer who is charged with the duty of investing or handling the
insurer's funds . . . shall not borrow the funds of such
insurer; shall not be pecuniarily interested in any loan, pledge or deposit, security,
investment, sale, purchase, exchange, reinsurance or other similar transaction
or property of such
insurer except as a stockholder or member. . . .
While employed as an attorney for Old Southern Life Insurance Company, Jack
Bonner, indeed, did become pecuniarily interested in many loans made by that
company, although he was prosecuted for only one loan. As part of his
agreement to plead guilty to violating Code 1975,
§ 27-27-26, Bonner agreed to
surrender his license to practice law in the State of Alabama, and he did
surrender said license, effective September 26, 1977. As a result of his
plea of guilty, he was sentenced to twelve months in the county
jail, but the sentence was suspended.
In 1972, Bonner
arranged a loan from Old Southern Life Insurance Company for a Howard McCullough in the
amount of $ 24,000.00. The loan was never consummated, but Old Southern
[**3] issued its check for $ 24,000.00 directly to Bonner and he used the money for
office expenses and his personal use. The money was received some time in
October or November 1972, and had been dissipated by July of the following
year.
Bonner admitted that he
arranged three
fictitious loans to raise the $ 24,000.00 which he had misappropriated. The borrowers on
the loans never received the proceeds of the loans and did not, in fact, own
the properties which the records of Old Southern Life Insurance Company
indicated were security for the loans. In addition to these
fictitious loans, Bonner negotiated at least seven other
fictitious loans, making a total of over $ 50,000.00 in
bogus loans from Old Southern. All of these loans were
arranged during a period commencing in 1970 and ending in 1973. In connection with
many of these loans, Bonner would secure appraisals and insurance on
non-existing property--placing false recording data on the
mortgage instruments, although the documents had not been recorded at all. He also
rendered false title opinions on some of the property and paid
"straw people" to execute documents and then cause title to be transferred to himself. Bonner
kept
[**4]
fictitious loans from lapsing into default by making periodic payments himself to Old
Southern.
He explained that he had been personally involved in approximately 40 to 50
kickback transactions with Old Southern. In his capacity as closing attorney
he would carefully explain to the borrowers that ten percent of the loan had to
be taken back as a fee. After the ten percent had been taken out, Bonner said,
he would keep between three and four percent and give the
rest to the president of the company, Roy Epperson, and other officials.
In February or March of 1974, Bonner went on the official payroll of Old
Southern Life Insurance Company as its
general counsel; he actually moved his family to Montgomery in July 1974, in order to be able
to protect himself on the
fictitious loans he had engineered. Bonner knew that the state examiners were moving on
Old Southern and he knew that it would not be long before they figured out what
was going on. The state examiners did figure out what was going on and Bonner
went to the president of Old Southern, Roy Epperson, and asked him where he
might borrow $ 50,000.00 to make good the
fictitious loans that he had processed. Epperson told Bonner
[**5] to speak with James Lane (the
general manager of Old Southern). Lane did provide Bonner with $ 50,000.00 and took a
mortgage on property ostensibly owned by Bonner. It later became necessary for him
[*736] to foreclose on this property. The
foreclosure proceeds were applied against the loan, leaving a balance of $
35,000.00, which was still due and owing by Bonner at the time of the last
hearing before the Disciplinary Board. Bonner has had two hearings before the
Disciplinary Board in less than three years from
surrender of his license.
At the second
disciplinary hearing, Bonner indicated in his petition that since the first hearing, James Lane had
loaned him $ 1,000.00 and had advanced him $ 5,000.00 on a
"finder's fee" to procure American Consumers Company for Old Southern. Bonner testified that
he has no
"qualms" about association in a legal way with Old Southern--he would represent them as
their lawyer under appropriate circumstances if he were
reinstated.
Bonner verified that the $ 50,000.00 check payable to him could have come from
the account of an agency owned by Lane called Old Southern Insurance Agency.
Although the payments under the $ 35,000.00 note secured
[**6] by a
mortgage to James Lane are $ 633.00 a month, Bonner has not made a single payment, nor
has James Lane pressured him concerning payments. To the contrary, he has made
available to him an additional $ 6,000.00. Petitioner admits that he is still
on good terms with the officials of Old Southern. Since his
disbarment, he has actively sought for Old Southern the acquisition of companies that were
in distress. While an attorney for Old Southern in 1974, he negotiated its
purchase of Georgia Life and Health Insurance Company for a $ 340,000.00 cash
outlay with the balance of the purchase price to be paid out of premiums
collected from Georgia Life and Health policies. However, he steadfastly
maintains that he has paid off and satisfied his obligation on the
fictitious
mortgages and he has no concrete information of where the $ 50,000.00 came from that
James Lane made available to him to pay off his debt.
Petitioner's first petition for
reinstatement was filed on July 17, 1978. At that
hearing, petitioner made it known to the Board that he had borrowed $ 50,000.00
from James Lane and paid back Old Southern for losses it had sustained as a
result of petitioner's mishandling of
[**7] the company's funds. On January 31, 1979, by unanimous decision, the Board
denied Bonner's first
reinstatement petition.
On February 11, 1980, he filed a second petition for
reinstatement and a hearing was had on this petition on May 30, 1980. The day before the
scheduled hearing for May 30, 1980, the Bar's assistant
general counsel, by telephone, requested the
chairman of the Disciplinary Board to continue the hearing from May 30, 1980 to June
27, 1980. The reason given by the assistant
general counsel was that he needed additional time to pursue the issue of whether
restitution had really and truly been made to Old Southern Life of Bonner's $ 50,000.00
indebtedness to it, or whether the funds made available to Bonner in
truth, were funds of Old Southern's wholly owned subsidiary, Georgia Life and
Health Insurance Company, funneled through its
general manager and agent, James Lane. Petitioner refused to agree to the
continuance and the
chairman of the Disciplinary Board indicated that the injection of this issue in the
case, even though not proved, might cloud the hearing and suggested that the
petitioner may be advised to agree to a
continuance. Petitioner, however, refused
[**8] to agree to a
continuance and the Disciplinary Board denied the request of the assistant
general counsel and proceeded with the hearing. After the hearing was completed, and on the
same day, the Board again unanimously denied Bonner's petition for
reinstatement.
Besides his own testimony before the Board, Bonner introduced the testimony of
two live witnesses and introduced 17 affidavits attesting to his present
good moral character and fitness to be
reinstated as an attorney in the State of Alabama. There was only one objection
made to his application. That objection was made by a person who said Bonner
owed him about $ 900.00. After the objection was made, Bonner amended his
petition to include this loan.
Having set forth the facts, we now compliment the parties' attorneys for the
excellent briefs furnished us seeking to apply the
[*737] law to the issues raised by the facts. As we see it, the issues framed by the
briefs of the parties are as follows:
I. a. Was the petitioner denied procedural due
process of law at his
disciplinary hearing when issues were raised for the first time at a hearing itself, of which he
had only one day's notice?
b. If the petitioner
[**9] was not denied procedural due process, did he nevertheless sustain his
burden of proof at the
reinstatement hearing, entitling him to
readmission to the Bar of the State of Alabama?
II. Was the petitioner denied substantive due
process of law at a
disciplinary hearing where the Disciplinary Board did not follow with exactitude its own
rules?
We answer in the negative to each issue and affirm.
I. (a) and (b)
The petitioner's arguments that he was denied procedural due process when the
Bar's assistant
general counsel, at virtually the last minute, raised the issue of whether he had actually
reimbursed Old Southern for its losses fall short of their mark because of an
inherent confusion of the
burden of proof in original
disbarment cases, as opposed to cases where the attorney seeks
readmission to the Bar. In original
disbarment cases, the
burden of proof is on the Bar's counsel to prove facts sufficient to justify the Disciplinary
Board in ordering
disbarment. The
burden of proof is on the other party in
reinstatement cases. In such cases, the
disbarred lawyer must prove by clear and convincing proof that he is entitled to
reinstatement. The governing principle is in Rule
[**10] 19(c) of the Code of Professional Responsibility of the Alabama State Bar (Rules of Disciplinary Enforcement), which reads as
follows:
At the hearing the petitioner shall have the burden of demonstrating by
clear and convincing evidence that he has the moral qualifications to practice law in this State and that
his resumption of the
practice of law within the State will not be detrimental to the integrity and standing of the
Bar or the administration of justice, or subversive of the public interest. . .
.
Our analysis of the rule leads us to the conclusion that the Bar's counsel was
under no obligation to offer any evidence in the
reinstatement proceedings. His calling attention to a weakness in petitioner's proof on
restitution can by no means be construed as denial of procedural due process, inasmuch as
it was the burden of the petitioner to negate any inference that
restitution had not been made.
Petitioner suggests that he had been led to believe that the issue of
restitution had been laid to rest in the first
reinstatement hearing. We have read and reread the record, in an attempt to find any
commitment, stipulation, or promise, but have been unable to
[**11] find any support for this belief.
It was observed in
In re Hiss, 368 Mass. 447, 333 N.E. 2d 429, 438 (1975):
The judgment of
disbarment
"continues to be evidence against . . . [the petitioner] with respect to lack of
moral character at later times in accordance with the principle that 'a state
of things once proved to exist may generally be found to continue.'
Galdston v. McCarthy, 302 Mass. 36, 37, 18 N.E.2d 331, 332 [1938]. Whatever the offense for which a judgment of
disbarment was entered, the person
disbarred has a heavy burden on a subsequent petition for admission to the bar to
overcome by evidence the weight of the facts adjudicated by such judgment and
to establish affirmatively that since his
disbarment he has become 'a person proper to be held out by the court to the public as
trustworthy.'"
Matter of Keenan, 313 Mass. 186, 219, 47 N.E.2d 12, 32 (1943). See
McArthur v. State Bar of Cal., 28 Cal. 2d 779, 788, 172 P.2d 55 (1946). [Footnotes omitted.]
Proof that an attorney has become a proper person to be held out to the court
as worthy of public trust includes
overwhelming proof that
restitution has been made, in fact, as well
[**12] as in form. Petitioner may have been well advised to have produced James Lane
at the hearing and all legal documents surrounding the loan transaction with
James Lane, including the disbursement
[*738] checks to prove, unequivocally that the
restitution was genuine and not a pretext.
We have set out facts in the beginning of our opinion which are rather bizarre.
There are some who take the position that there are certain heinous offenses
against the judicial system which should
forever bar attorneys from
reinstatement. The rule would be that
"no matter what a
disbarred attorney's subsequent conduct may be; no matter how hard and
successfully he has tried to live down his past and atone for his offense; no
matter how complete his reformation--the door to restoration is
forever sealed against him."
In Re Stump, 272 Ky. 593, 597-598, 114 S.W.2d 1094, 1097 (1938). We do not subscribe to this position in Alabama. Alabama has subscribed to
the principle set forth in the case of
In Re Stevens, 59 Cal. App. 251 at 255, 210 P. 442 (1922):
One who has been guilty of the acts which he has committed should not be
reinstated in the ranks of the legal profession except
[**13] upon the most clear and convincing, nay, we will say upon
overwhelming, proof of reform--proof which we could with confidence lay before the world in
justification of a judgment again installing him in the profession which he has
so flagrantly disgraced. [Emphasis added.] [Cited in
In re Stephenson, 243 Ala. 342, 10 So. 2d 1 (1942)].
Under that holding, Bonner was due to offer proof to the Disciplinary Board
concerning the
restitution matter that would make him
"clean as a hound's tooth."
The petitioner has cited for our consideration several important United States
Supreme Court cases, as well as our decision in
Opinion of the Justices, 345 So. 2d 1354 (Ala. 1977). These cases are
Willner v. Committee on Character and Fitness, 373 U.S. 96, 10 L. Ed. 2d 224, 83 S. Ct. 1175 (1964);
In Re Ruffalo, 390 U.S. 544, 20 L. Ed. 2d 117, 88 S. Ct. 1222 (1968); and
In re Gault, 387 U.S. 1, 18 L. Ed. 2d 527, 87 S. Ct. 1428 (1967). These cases deal with the notice required to meet
procedural due process standards. They are important and probably would be
decisive if this were an original
disbarment case. The
Willner case is a petition by the plaintiff
[**14] to be allowed to be admitted to the
practice of law. The
Ruffalo case is a case concerning whether or not an attorney should be
disbarred in federal court, where he had been
disbarred by the Supreme Court of Ohio. The
Gault case involves the commitment of a 15-year-old boy to the state industrial
school as a juvenile delinquent. All of these cases are inapposite here. None
are bar
reinstatement cases. The United States Supreme Court case that comes closest to the factual
situation involved in the instant case is
Greenholtz v. Inmates of the Nebraska Penal and Correctional Complex, 442 U.S. 1, 60 L. Ed. 2d 668, 99 S. Ct. 2100 (1979). There, the court held that
inmates in a penal institution had a
liberty interest
under the 14th Amendment to the Constitution of the United States that was
protected by due process, but it was a different
liberty interest from that of persons who were already on
parole and against whom
parole revocation was being sought. The majority of the court explained the
difference between the rights of persons expecting release from
incarceration and the rights of persons who are already free on
parole but subject to procedures which might possibly
[**15] bring about
incarceration. The court held that the petitioners in the
Greenholtz case (inmates in Nebraska penal institutions) had received all the process that was due them
by the procedures set up by the Nebraska State Board of
Parole. We hold that the Disciplinary Board, in affording petitioner an opportunity to
rebut any confusion that may have been caused by the issue of
restitution, afforded all the process that was due and which petitioner's
liberty interest justified under the facts of this case.
We agree with the petitioner that an application for
reinstatement of an attorney, after
judgment of
disbarment, must be treated as an application for admission to practice, and not an
application to vacate the order of
disbarment.
In re Stephenson, 243 Ala. 342, 10 So. 2d 1 (1942);
In re Gaines, 251 Ala. 329, 37 So. 2d 273 (1948);
Ex parte Montgomery, 244 Ala. 91, 12 So. 2d 314
[*739] (1943);
Danford v. Superior Court, 49 Cal. App. 303, 193 P. 272 (1920). However, we have said that his burden is usually heavier because he must
dispel the cloud of distrust engendered by his
disbarment. Because application for
reinstatement is to be considered an application
[**16] for admission, petitioner argues that our recent decision in
Reese v. Board of Commissioners of the Alabama State Bar, 379 So. 2d 564 (Ala. 1980), mandates his
readmission to the Bar. The cases are clearly distinguishable. In
Reese, the petitioner was making his first
application for certification as a law student. His brushes with the law were
not nearly as severe as Bonner's.
Although we are not privy to the reasons for the Board's decision not to
reinstate Bonner, we can see reasonable bases for failure to
reinstate, based solely on the testimony of Bonner. Canon 9, Code of Professional
Responsibility of the Alabama State Bar, provides that lawyers should avoid
even the appearances of professional impropriety. In his sworn testimony,
Bonner indicated that he had no qualms about his legal association with Old
Southern, under appropriate conditions. This is the same company that he said
required him to give kickbacks on 40 or 50 occasions. Even since his
disbarment, he has performed business responsibilities for Old Southern, to the extent he
was loaned $ 1,000.00 by James Lane and given an advancement of $ 5,000.00 on
an assignment which is yet to be accomplished.
[**17] It is conceivable that the Disciplinary Board felt that if Bonner were
reinstated, he would go right
back to the same business that originally got him in trouble.
We agree that although courts are slow to disbar, they are slower to
reinstate.
In re Petition of Morrison, 45 S.D. 123, 126, 186 N.W. 556, 557 (1922). The petitioner here has been
disbarred for a little over three years. It is common knowledge that virtues do not
come about more quickly than vices. The Disciplinary Board could have had
these principles in mind when it refused to
reinstate the petitioner.
Under the circumstances, we cannot say that the Board was wrong in deciding
that Bonner had failed to prove by
clear and convincing evidence that he had reformed, was of
good moral character, and was worthy to be enrolled as an attorney in the State of Alabama.
II.
Petitioner complains that the Board of Bar Commissioners did not comply with
Rule 19(c), which provides as follows:
"Upon receipt of the petition by the Disciplinary Board the
Chairman shall promptly set the
petition for a hearing within 28 days." Here, the petition was set for a hearing 109 days after it was filed.
Petitioner quotes a statement
[**18] cited in
Frozen Food Express, Inc. v. United States, 535 F.2d 877, 880 (5th Cir. 1976), to the effect that
"There may not be a rule for Monday, and another for Tuesday, a rule for general
application, but denied outright in a specific case." This is essentially an equal protection argument and petitioner has not
demonstrated that other applicants' petitions have been set within the 28 days,
and his was arbitrarily set 109 days from filing. For aught that appears,
other petitions may have been set more than 109 days from the filing.
Finally, we hold that the 28-day rule is directory and not mandatory. Failure
to comply therewith, where reasonable and
absent substantial prejudice to the petitioner, may be tolerated.
Arden v. State Bar of California, 52 Cal. 2d 310, 341 P.2d 6 (1959);
Geibel v. State Bar of California, 11 Cal. 2d 412, 79 P.2d 1073 (1938),
cert. denied,
305 U.S. 653, 83 L. Ed. 423, 59 S. Ct. 248 (1938);
In re Posler, 393 Mich. 38, 222 N.W.2d 511 (1974);
Matter of Wireman, 270 Ind. 344, 367 N.E.2d 1368 (Ind. 1977),
cert. denied,
436 U.S. 904, 56 L. Ed. 2d 402, 98 S. Ct. 2234 (1978), 446 U.S. 908, 64 L. Ed. 2d 261, 100 S. Ct. 1835 (1980).
[**19]
Nothing in this
opinion is to be construed as precluding petitioner from reapplying for
admission to the Bar, consistent with rules set forth in the Code of
Professional Responsibility of the Alabama State Bar,
[*740] adopted May 6, 1974. The Board will consider his petition in the light of the
principles set forth in this opinion as well as the general law of
reinstatement of attorneys. Its decision of May 30, 1980, is due to be affirmed.
AFFIRMED.
Torbert, C.J., and Maddox, Faulkner, Jones, Almon, Shores, Embry and Beatty,
JJ., concur.
