IN THE MATTER OF WENDELL R. WILSON, AN ATTORNEY AT LAW
D-5
Supreme Court of New Jersey
81 N.J. 451;
409 A.2d 1153;
1979 N.J. LEXIS 1281
September 11, 1979, Argued
December 19, 1979, Decided
PRIOR HISTORY:
[***1]
On an order to show cause why respondent should not be disbarred or otherwise
disciplined.
COUNSEL:
Ms. Colette A. Coolbaugh, Secretary, argued the cause for the Disciplinary Review Board.
No appearance was made on behalf of respondent.
JUDGES:
For disbarment -- Chief Justice Wilentz and Justices Sullivan, Pashman, Clifford, Schreiber,
Handler and Pollock.
Opposed -- None. The opinion of the court was delivered by Wilentz, C.J.
OPINIONBY: WILENTZ
OPINION:
[*453]
[**1154] In this case, respondent knowingly used his clients' money as if it were his
own. We hold that
disbarment is the only appropriate
discipline. We also use this occasion to state that generally all such cases shall result
in
disbarment. We foresee no significant exceptions to this rule and expect the result to be
almost invariable.
Of the eight complaints filed against respondent with District Ethics Committee
VIII (Middlesex County), two involved
misappropriation. In one, respondent failed for almost two years to turn over $ 23,000 -- the
proceeds from the sale of a house -- to the client. After the ethics complaint
was filed, respondent paid the client but never accounted for the location or
use
[***2] of the funds in the interim. In the other, respondent obtained money for a
client in the form of a $ 4,300 check to the client's order. Respondent then
forged the client's endorsement, deposited the proceeds in his own
trust account, and has yet to turn the funds over to the client.
[*454] Respondent's
professional misconduct extends beyond these instances of
misappropriation. In the other complaints, the
Disciplinary Review Board found that respondent lied to clients, wantonly disregarded their
interests, and advised them to commit fraud. Moreover, he was inexcusably
uncooperative in the ethics proceedings. The
Disciplinary Review Board recommended
disbarment.
It is clear from all of this that respondent is unfit to be a lawyer. We do
not, however, discuss any charges other than
misappropriation since
disbarment is mandated by that alone.
I.
MISAPPROPRIATION
Misappropriation of clients' funds is both a crime (
N.J.S.A. 2C:20-9 (superseding
N.J.S.A. 2A:102-5, which was repealed by
L. 1978,
c. 95, 2C:98-2)) and a direct violation of
Disciplinary Rule 9-102 of the Code of Professional Responsibility. Included in the
specific commands of this rule
[***3] is the requirement that
"a lawyer
shall * * * [p]romptly pay or deliver to the client the funds, securities, or
other properties in the possession of the lawyer which the client is entitled
to receive." DR 9-102(B)(4). Our former Canon of Professional Ethics told the lawyer not
only what he must do, but what he must
not do:
Money of the client or collected for the client or other trust property coming
into the possession of the lawyer should be reported and accounted for
promptly, and should not under any circumstances be commingled with his own or
be used by him. [Canon 11].
Like many rules governing the behavior of lawyers, this one has its roots in
the
confidence and trust which clients place in their attorneys. Having sought his advice
and relying on his expertise, the client entrusts the lawyer with the
transaction -- including the handling of the client's funds. Whether it be a
real estate closing, the establishment of a trust, the purchase of
[*455] a business, the investment of funds, the receipt of proceeds of litigation, or
any one of
a multitude of other situations, it is commonplace that the work of lawyers
involves possession of their clients'
[***4] funds. That possession is sometimes expedient, occasionally simply customary,
but usually essential. Whatever the need may be for the lawyer's handling of
clients' money, the client permits it because he trusts the lawyer.
It is a trust built on centuries of
honesty and faithfulness. Sometimes it is reinforced by personal knowledge of a
particular lawyer's integrity or a firm's reputation. The underlying faith,
however, is in the legal profession, the bar as an institution. No other
explanation can account for clients' customary willingness to entrust
[**1155] their funds to relative strangers simply because they are lawyers.
Abuse of this trust has always been recognized as particularly
reprehensible:
[T]here are few more egregious acts of
professional misconduct of which an attorney can be guilty than
misappropriation of a client's funds held in trust. [
In re Beckman, 79 N.J. 402, 404-05 (1979)].
See also
In re Miller, 65 N.J. 580, 581 (1974);
In re Spielman, 62 N.J. 432, 434 (1973);
In re Malanga, 45 N.J. 580, 583 (1965);
In re Gavel, 22 N.J. 248, 264 (1956). Recognition of the nature and gravity of the
[***5] offense suggests only one result --
disbarment.
"Such conduct is of so
reprehensible a nature as to permit of only one form of
discipline."
In re Ryan, 60 N.J. 378, 379 (1972).
Despite this strong condemnation, results in
misappropriation n1 cases have varied because of circumstances which the
[*456] Court has regarded as
mitigating: the economic and emotional pressures on the attorney which caused and
explained his misdeed; his subsequent compliance with client
trust account requirements; his candor and cooperation with the ethics committee; his
contrition; and, most of all,
restitution. The presence of a combination of these has occasionally
resulted in suspension, ranging from six months to three years, rather than
disbarment.
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n1 Unless the context indicates otherwise,
"misappropriation" as used in this opinion means any
unauthorized use by the lawyer of clients' funds entrusted to him, including not only stealing,
but also unauthorized temporary use for the lawyer's own purpose, whether or
not he derives any personal gain or benefit therefrom.
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[***6]
It is therefore important that we reemphasize that the principal reason for
discipline is to preserve the
confidence of the public in the integrity and trustworthiness of lawyers in general.
This reason for
discipline is mentioned in some
misappropriation cases and not in others. While it may only rarely have been stressed in the
past, we are now inclined to view it as controlling in these cases.
We have no doubt that the bar is as anxious as we are to preserve that trust.
Its preservation is essential to public acceptance of reforms that may be
proposed by the bench and
bar together. Mistrust may provoke destructive change. Public
confidence is the only foundation that will support constructive reform in the
public interest while preserving the finest traditions of the profession.
From that
point of view, anything less than
strict discipline in cases like this would be a disservice to the bar, the judiciary and the
public.
What are the merits in these cases? The attorney has stolen his clients'
money. No
clearer wrong suffered by a client at the hands of one he had every reason to trust
can be imagined. The public is entitled, not as a matter of satisfying
unjustifiable
[***7] expectations, but as a simple matter of maintaining
confidence, to know that never again will that person be a lawyer. That the moral quality
of other forms of misbehavior by lawyers may be no less
reprehensible than
misappropriation is beside the point. Those often occur in a complex factual setting where the
applicability or meaning of ethical standards is uncertain to the
[*457] bench and bar, and especially to the public, which may not even recognize the
wrong. There is nothing
clearer to the public, however, than stealing a client's money and nothing worse. Nor
is there anything that affects
public confidence more -- much more than the offense itself -- than this Court's treatment of
such offenses. Arguments for lenient
discipline overlook this effect as well as the overriding importance of maintaining that
confidence.
II.
MITIGATING CIRCUMSTANCES
No one need argue whether the moral reprehensibility of this kind of behavior
justifies
disbarment: all admit it. The only question is whether
mitigating circumstances
[**1156] might call for
lesser discipline in particular cases. We discuss
restitution first since it is relied upon most often.
In the context
[***8] of professional
discipline,
restitution suggests an
"honesty of compulsion," proving mostly that the lawyer is anxious to become a lawyer again and that he
is able somehow to raise the money.
Practically every lawyer facing such charges
wants to remain a lawyer, but not every lawyer is able to raise the money. As early
as 1915, the Supreme Court sitting
en banc noted the irrelevance of this factor:
"We do not attach very much importance, as a rule, to the matter of
restitution, because that may depend more upon financial ability or other favoring
circumstances than repentance or
reformation. A
thoroughly bad man may make
restitution, if he is able, in order to rehabilitate himself and regain his position in the
community; and a
thoroughly good man may be unable to make any
restitution at all." [
In re Hawkins, 87 A. 243, 247 (Del.Super.Ct.1913)]. Without underestimating the importance of
restitution, a moment's reflection must convince one that of all the factors that enter
into the question of moral fitness, the mere circumstance of
restitution is the one most
likely to be fortuitous and to depend upon conditions and circumstances that
afford no
reliable
[***9] test of moral qualities. The money may have come from wealthy relatives, or
from a lucky speculation, or from engaging in some alien business venture, or
it may have been borrowed, in which case the old liability is apparently
extinguished by
[*458] the creation of a new one. Taken in connection with other circumstances,
restitution may be of the utmost significance, but this, oftener than not, is due to such
other circumstances rather than to the mere fact of non-restitution; as, for
instance, if the former attorney became possessed of sufficient money with
which to make
restitution but refused so to apply it. [
In re Harris, 88 N.J.L. 18, 22-23 (Sup.Ct.1915) (en banc)].
Restitution may compensate an individual complainant for the financial loss suffered;
conceivably, it may partially restore the shattered faith of a
particular client. It does not, however, significantly retard the subtle but
progressive erosion of
public confidence in the integrity of the bench and bar.
When
restitution is used to support the contention that the lawyer intended to
"borrow" rather than
steal, it simply cloaks the mistaken premise that the
unauthorized use of clients'
[***10] funds is excusable when accompanied by an intent to return them. The act is
no less a crime.
W. LaFave
& A. Scott,
Criminal Law,
§ 89 at 653-54 (1972);
see also
United States v. Titus, 64 F.Supp. 55, 56 (D.N.J.1946). n2 Lawyers who
"borrow" may, it is true, be less culpable than those who had no intent to repay, but
the difference is negligible in this connection. Banks do not rehire tellers
who
"borrow" depositors' funds. Our professional standards, if anything, should be higher.
Lawyers are more than fiduciaries: they are representatives of a profession
and officers of this Court.
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n2 Criminality is not determinative here, however, although it strongly
supports our conclusion; nor is our conclusion affected by the consideration
accorded
restitution in sentencing. Policies underlying
criminal law may not necessarily coincide with those governing
disciplinary matters. The policy described in this opinion, leading to
disbarment in these cases, would be ill served if
"borrowing" regularly resulted in
lesser discipline.
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[***11]
The overwhelming majority of
misappropriation cases involves lawyers who undoubtedly intended to return the funds. They
misappropriate initially with precisely such intent. Anticipated
[*459] money for repayment fails to materialize. Other clients' trust funds are then
used for
"restitution," and the initial embezzlement spawns many more. Wholesale exemption from
strict discipline for
misappropriation would result if such
"borrowing" were excused.
Judicial consideration of
restitution as a
mitigating factor in
disciplinary proceedings creates the impression that sanctions are proportioned in
accordance with
[**1157] ability to pay, rather than gauged against the seriousness of the misconduct.
Furthermore, according significance to
restitution leads to an obvious and substantial possibility of unjust discrimination.
At worst, refusal to consider
restitution in this class of cases removes an incentive for compensation of
injured parties. Encouraging
restitution in individual cases is a worthy purpose, but the lenient
discipline needed to achieve it conflicts with the paramount goal of preserving
public confidence in the entire bar. From this
point of view, compensation
[***12] of
injured parties should not be deemed an appropriate function of our
disciplinary process. n3
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n3 If the argument ever had any weight, the existence and effectiveness of the
Clients' Security Fund has greatly weakened it. In this case, for instance,
claims for the
misappropriations have been filed with the Fund and payment will presumably follow.
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We find it similarly unpersuasive that the attorney in such a case has finally
put
together
reliable records and brought his
trust account into balance. It is the least that one would expect. Its only significance
is that it would be doubly unthinkable to permit resumption of practice by an
offending attorney who remained unwilling or unable to set up proper books and
records.
The inexperience or, conversely, the prior outstanding career, of the lawyer,
often considered a
mitigating factor in
[*460]
disciplinary matters, seems less important to us where
misappropriation is involved. This offense against common
honesty should be clear even to the youngest;
[***13] and to distinguished practitioners, its grievousness should be even
clearer. n4
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n4 We deem the unlikelihood of subsequent
misappropriation irrelevant in these cases. In
practically all of them, even where there are no
mitigating factors, recurrence of the misbehavior is highly unlikely. No one suggests
that, alone, it is sufficient to warrant
lesser discipline. To state that we might nevertheless consider it
"but only in conjunction with other factors" falsely attributes importance to
a factor almost universally present in these matters.
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The considerations that must deeply trouble any court which decrees
disbarment are the pressures on the attorney that forced him to
steal, and the very real possibility of
reformation, which would result in the creation of a new person of true integrity, an
outstanding member of the bar.
See, e.g.,
In re Harris, supra, 88 N.J.L. at 24-26. There can be no satisfactory answer to this problem. An attorney, beset by
financial problems, may
steal to save his family,
[***14] his children, his wife or his home. After the fact, he may conduct so
exemplary a life as to prove beyond doubt that he is as well equipped to serve
the public as any judge sitting in any court. To disbar despite the
circumstances that led to the
misappropriation, and despite the possibility that such
reformation may occur n5 is so terribly harsh as to require the most compelling reasons to
justify it. As far as we are concerned, the only reason that
disbarment might be necessary is that any other result risks something even more
important, the continued
confidence of the public in the integrity of the bar and the judiciary. n6
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n5 Almost without practical remedy, for our research reveals only three orders
of reinstatement following
disbarment over the past hundred years.
In re Mink, 60 N.J. 609 (1973);
In re Isserman, 35 N.J. 198 (1961);
In re Wendel, 3 N.J.Misc. 312 (Sup.Ct.1925);
see
In re Greenberg, 21 N.J. 213, 225 (1956);
see generally
In re Meyer, 3 N.J.Misc. 168 (Sup.Ct.1925);
In re Harris, supra, 88 N.J.L. at 23.
n6 The potential
misery that might be inflicted on the client seems to receive little consideration in
the
cases perhaps because those which impose
discipline less than
disbarment seem invariably to involve complete
restitution. Obviously the weakened deterrent effect caused by this
lesser discipline may result in
inflicting that
misery on other clients for whom there will be no
restitution. Looked at differently, the sympathy engendered by the impossible plight of the
attorney which caused him to
steal is offset by the fact that he did so, most often, without regard for the
possibility that he might be
inflicting the same
misery, or worse, on his innocent client.
See, e.g.,
In re McDermit, 63 N.J.L. 476, 482-88 (Sup.Ct.1899).
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[***15]
[*461] In summary: maintenance of
public confidence in this Court and in the bar as a whole requires the strictest
discipline in
[**1158]
misappropriation cases. That
confidence is so important that
mitigating factors will rarely override the requirement of
disbarment. If
public confidence is destroyed, the bench and
bar will be crippled institutions. Functioning properly, however, in the best
traditions of each and with full
public confidence, they are the very institutions most likely to develop required reform in the
public interest.
For the reasons stated, we conclude that
disbarment is mandated. Respondent's name will be stricken from the rolls.
ORDER
It is ORDERED that WENDELL R. WILSON of Carteret be disbarred and that his name
be stricken from the roll of attorneys of this State, effective immediately;
and it is further
ORDERED that WENDELL R. WILSON be and hereby is permanently restrained and
enjoined from practicing law; and it is further
ORDERED that respondent comply with all the regulations of the
Disciplinary Review Board governing suspended, disbarred or resigned attorneys.
