Mushrush v. State Bar

Opinion

THE COURT. This is a proceeding to review a recommendation of the Disciplinary Board of the State Bar that petitioner Raymond L. Mushrush be suspended from the practice of law for one year. Petitioner was admitted to practice in 1959 and has not been involved in any other disciplinary proceeding.

In June 1968 petitioner was retained by DeWayne Titus to represent Transocean Terminals, Inc. (TOT) in an attempt to prevent foreclosure on corporate real property valued at several million dollars. He filed chapter XI proceedings under the Bankruptcy Act and obtained an order restraining a scheduled trustee’s sale.

The security holder produced a buyer for the TOT property whose identity was kept from petitioner. The agreement provided for the purchase by the same buyer of a second smaller parcel owned by another Titus controlled corporation. Titus and the security holder negotiated the transaction; petitioner did not participate.

[489]On January 14, 1969, petitioner obtained an order of the bankruptcy court confirming the sale of the TOT property. Petitioner advised the bankruptcy court of the concurrent sale of the smaller parcel and expressed his understanding that it was to occur at a loss. The order confirming sale did not mention the concurrent sale of the smaller parcel as it was not owned by the debtor corporation TOT.

Although Titus’ house counsel drafted the escrow instructions for the sale, petitioner alone attended the escrow closing on January 24 and 27, 1969. Until then he was unaware of the details of the sale of the smaller parcel.

At close of escrow petitioner, at the direction of Titus, initialed a change in the seller’s escrow instructions for the smaller parcel reducing the amount due to $638,694.69. Petitioner then receipted for a title company check in this amount, added a cover letter later, and personally delivered the check to Titus at the latter’s office.

During the October 1969 reopened bankruptcy proceedings and these disciplinary proceedings, petitioner stated that he never saw the check; that he was unaware of its significance; and that he was unaware Titus was to receive the entire proceeds of the sale of the smaller parcel.1

Concluding that petitioner learned facts in late January imposing upon him a duty to advise the bankruptcy court of the payment to Titus and that petitioner made false statements in the reopened bankruptcy proceedings and the present disciplinary proceedings, the local committee recommended petitioner be suspended for six months. This recommendation was increased to one-year suspension by the board.