Jacobs v. the State Bar

THE COURT.

Petition to review the recommendation of the respondent, The State Bar of California, that the petitioner be suspended from the practice of law for a period of three years.

The petitioner was cited to appear before the local administrative committee in Los Angeles upon charges of conversion and misappropriation of funds; for knowingly making a false return on a garnishment, and upon two other charges, including one of unethical conduct in revealing to a third party information prejudicial to his client. The accusations were made by two complainants, Julius Fried and Miss Wilmetta Crawford. The petitioner is about fifty years of age and has practiced law in Los Angeles since his admission in 1907 without any charge heretofore having been brought against him.

In 1931 Julius Fried and W. James Hamlin were the two-thirds and one-third owners, respectively, of the stock in a chain corporation known as Orange Julius, Ltd., and its corporate subsidiaries. Fried was the president and collected the money taken in by the stores in Los Angeles. The petitioner herein had been the attorney for the company. In June, 1931, Hamlin suspected Fried of peculations and he requested the petitioner to call Fried into his office. Upon his arrival Fried faced Hamlin’s accusation of misappropriating cash register receipts to the extent of upwards of $100,000. Fried assigned to Hamlin all of his stock in the corporations and resigned as president, although he was still retained by Hamlin as an employee to help the company, if possible, out of its then difficult financial condition.

In the latter part of 1931 Fried approached the petitioner, Jacobs, to open negotiations with Hamlin for the repurchase by Fried of the stock turned over to Hamlin, or a controlling portion thereof, but without disclosing the real purchaser. At this time Hamlin and the company were represented by another attorney, Victor Ford Collins, and the petitioner continued to act for the company only for the

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purpose of completing some tax work. The petitioner represented Fried in the negotiations which followed.

Negotiations between Jacobs and Hamlin for the purchase of the stock went forward. Fried put up $500 in cash as earnest-money, for which Jacobs receipted. Hamlin, however, held out for '$15,000 as a cash payment upon $25,000 as the full purchase price of the stock. On January 21, 1932, Fried put into Jacobs’ hands $14,500, consisting of a $10,000 bill, four $1,000 bills and five $100 bills. Fried accompanied Jacobs part way to the bank, but when Jacobs arrived at the bank alone he changed his mind about depositing the money and placed it in his safe. Within an hour an attachment, issued in an action brought by the company against Fried, was served on Jacobs. The next day, “over-persuaded,” as he admits by Fried’s conduct and demands, the petitioner changed the $10,000 bill and returned to Fried $7,500 of the money.