In Re Frankel

The opinion of the court was delivered by

Hehek, J.

The respondent attorney-at-law, in practice at Asbury Park, was ruled to show cause why he should not be disbarred or disciplined for violations of sections 28 and 34 of the Canons of Professional Ethics, as found by the Honorable Lester A. Drenk, Judge of the County of Burlington, in a report made to this court under date of September 6, 1955, pursuant to a reference made June 23, 1955.

Judge Drenk reported that the respondent Erankel and one Low had entered into and pursued an arrangement for the “procurement of automobile negligence cases by Low for Erankel, for which Erankel rewarded Low by paying him 25% of Erankel’s net fee less $40,” a sum paid at the outset “ostensibly for photographs,” of which more hereafter.

Canon 28 declares it to be “disreputable” for a lawyer to “breed litigation by seeking out those with claims for personal injuries or those having any other grounds of action in order to secure them as clients, or to employ agents or runners for like purposes, or to pay or reward, directly or indirectly, those who bring or influence the bringing of such cases to his office, or to remunerate policemen, court or prison officials, physicians, hospital attaches or others who may succeed, under the guise of giving disinterested friendly advice, in influencing the criminal, the sick and the injured, the ignorant or others, to seek his professional services.” A duty to inform, in the interest of the public and the profession, is laid upon every member of the bar having “knowledge of such practices” by any practitioner, “to the end that the offender may be disbarred.” And Canon 34 provides that no “division of fees for legal services is proper, except with another lawyer, based upon a division of service or responsibility.”

There can be no doubt that Low solicited negligence cases for the respondent Erankel, even where the injured person had retained counsel to act in his behalf. He made it a practice to photograph the area of the particular accident and the vehicles involved; and he then called upon the victim at the hospital or in his home, as the case might be, exhibited the photographs as important pieces of evidence, and sought a retainer for the respondent as a specialist in the field. He had at his bedside a radio tuned in to police broadcasts of automobile accidents, and not infrequently he was on the scene even before the arrival of the police or the ambulance. This early contact with the injured person possessed of photographic evidence of the locale served his primary purpose of arranging a retainer for the respondent.

Low called on Jeremiah P. Davis, a patient at the Monmouth Memorial Hospital undergoing treatment for injuries sustained in an automobile accident on January 10, 1953, and sought a retainer for respondent after Edward W. Wise, Jr., an attorney, had been engaged for the purpose by Davis’ son at his direction, and he, Low, had been so advised by Davis, who had been a client of the Wise firm. Davis testified that Low was told of the Wise retainer on an earlier visit; that Low returned two or three days later, asked Davis for permission to see Wise, which was not given, and after a telephone call out of Davis’ presence Low told Davis he was “making a mistake,” referred to Erankel as a good lawyer, and said that if Wise wanted the pictures he, Low, had taken, “he will pay darned good for them.” He displayed newspaper items and pictures of a group in attendance at a banquet and identified one of the group as Erankel, the lawyer he would have Davis retain. Low admitted he recommended Erankel. He said Davis asked for his opinion of Wise, and he replied he was a good attorney but “there were others that I personally preferred,” and he named Erankel as one. But Low did call on Wise and told him he had seen Davis at the hospital and he could get the case for him if he would purchase the photographs. Wise replied that he had already been retained; and he refused to buy the photographs.

Low paid a visit to John Schaible at his home in Keansburg, where he was confined following hospital treatment for injuries suffered in a highway accident, and told him, Schaible testified, “that he has come in contact with a lot of these cases and he has a friend of his that he works for and he would recommend him very highly; that the man is in a very good job — he is a Prosecutor — and that he could do the best for me as far as legal advice was concerned.” He wrote down Erankel’s name. He told Schaible of pictures he had taken and their evidential value, but he made no offer to sell them. Low admitted the call, but said: “I don’t recollect what went on.” He then agreed it was “quite' possible” he did recommend a lawyer to Schaible. He did not recall an offer to sell the photographs.

There were other instances of the same pattern, all indicating the use of the photographs as a means of obtaining a retainer for the respondent. His endeavors in this direction are not denied. Insisting that the photographs were for sale to any one who wanted them, he admitted that on occasion he refused to sell such photographs to lawyers other than Erankel.

In his formal answer to the charges the respondent averred that he had paid to Low, “on various dates between December 23, 1952 and December 14, 1953, compensation for Iona fide, substantial and valuable investigation services rendered by the said Low, at a rate approximating 25% of the net fee received by the respondent for legal services in each case in which the said Low rendered such investigation services,” a “method and rate” of compensation for “investigation services in legitimate aid of the respondent’s legal services to his respective clients” that “is a common and accepted practice in Monmouth County among lawyers and investigators,” and “is not a division of legal fees with a layman such as is condemned by Canon 34”; and he maintained that the payments were not made “with any purpose or understanding that they were to encourage or induce the said Low to bring and to influence the bringing of negligence cases arising from and out of automobile cases to the respondent, and were not in violation of Canon 28.” The allegation of a common practice was abandoned at the hearing.

We are clear, as was Judge Drenk, that the payments thus made by Erankel to Low were not for “investigation services,” but rather as “pay or reward” for the successful solicitation of negligence cases for respondent, pursuant to an arrangement to that end in disregard of the cited canons of professional ethics.

In 1953 Erankel paid Low $6,303.53. Low conceded that his gross yearly income never exceeded $8,000; his yearly average would be about $5,000. His first check from Erankel came July 3, 1951, for $100. Prior to 1951 Low’s gross annual income ran between $2,500 and $2,700, and in 1951 or 1952 he began to “hit $5,000,” indicating that Erankel was the major source of his income. The contention is that it was “entirely legal and ethical” for the respondent to “hire Low’s services as an investigator, and to pay him, after recovery, a maximum compensation approximating 25 %” of respondent’s “net fee.”

But Low was certainly a solicitor of negligence cases for Erankel, and the evidence is equally clear and convincing, beyond any doubt founded in reason, that Low rendered no investigatory services which would account for the payments made by Erankel. Counsel directs attention to the testimony of Erankel and Low that the latter “performed an actual, bona 'fide investigation in each case in which a check was issued to him for such services”; and it is insisted that “Express testimony cannot be rejected on the sole ground of its improbability,” citing Rains v. Rains, 127 N. J. Eq. 328 (E. & A. 1940), and “Its impossibility alone can discredit the witness,” citing Berckmans v. Berckmans, 16 N. J. Eq. 122 (Ch. 1863), affirmed 17 N. J. Eq. 453 (E. & A. 1864). It is said in argument that the burden of proof rests upon the prosecutor of the charges, and disbelief of the testimony of Prankel and Low in this regard “will not support an affirmative finding that the reverse of that testimony is true,” and “Disbelief in testimony concerning particular facts does not convert that testimony into affirmative proof of contrary facts,” citing Eckenrode v. Pennsylvania R. Co., 164 F. 2d 996 (3 Cir. 1947), affirmed 335 U. S. 329, 69 S. Ct. 91, 93 L. Ed. 41 (1948); State v. Poplowski, 104 Conn. 493, 133 A. 671 (Sup. Ct. Err. 1936).

The principle is not apposite here. The charges may be proved by direct or circumstantial evidence; and the question is whether the evidence satisfies the standard of persuasion. Does it have the quality of belief or conviction constituting the legal measure of persuasion? As Judge Drenk found, “other than Erankel’s and Low’s testimony not one bit of evidence was adduced on behalf of the respondent to corroborate the alleged fact that Low performed investigating services; not one statement of a witness taken by Low, no memorandum of any report made by Low, no police or other agency report secured by Low, no name of a witness or fact discovered by Low was ever offered; not one client or witness was produced to testify that Low had interviewed him ox her.” There is no tangible evidence of the investigation of a single case by Low — a singular deficiency of proof that goes far to negative the tendered hypothesis. But conclusive in itself, when viewed in the context of the circumstances, is the payment to Low of 35% of the net fee received by Erankel for legal services in the given case, less the initial payment of $40, ostensibly for photographs taken, irrespective of the quantum of the service given or the expense incurred, and no compensation at all in cases in which no recovery was had. This standard of remuneration does not comport with the hypothesis of investigational service, varying as it would in time and effort according to the exigencies of the particular case, but rather betokens a sharing of the earned net legal fee on a fixed percentage basis for bringing the case to Erankel. This is clear beyond peradventure. The method of compensation is a distinctive symbol of the latter; it is in its very nature repugnant to the theory of recompense for purely investigational endeavors.

And these circumstances are also cited by Judge Drenk as plainly out of keeping with the assertion that the splitting of Erankel’s net fee was merely to compensate for investigative service: The testimony of Erankel and Low that Low ■was not informed of the percentage formula of payment used by Erankel; in 1953, 75% of Low’s gross income came from Erankel, while the remaining 25% represented Low’s normal income before the arrangement with Erankel; Low rendered only a “verbal” bill for “investigations,” but always a typed bill for photographs; Erankel paid Low from the outset one-quarter of his net fee for “investigations,” even though Low had no previous experience as an investigator and, notwithstanding his inexperience, Low was not required to make written reports of his findings.

We are not concerned here with a claimed adverse inference from Erankel’s omission to produce evidence peculiarly within his knowledge and control. See Interstate Circuit, Inc. v. United States, 306 U. S. 208, 59 S. Ct. 467, 83 L. Ed. 610 (1939); Commercial Molasses Corp. v. New York Tank Barge Corp., 314 U. S. 104, 62 S. Ct. 156, 86 L. Ed. 89 (1941); also, 135 A. L. R. 1378; Fritzler v. Keithley, 143 Neb. 459, 9 N. W. 2d 794, 154 A. L. R. 573. Frankel acknowledges there is no record evidence to corroborate his own testimony that Low actually made case investigations for which he was recompensed by the payments at issue. And this is an important circumstance bearing on the nature of Erankel’s relations wnth Low and the service for which Low was paid, a major factor in the assessment of the testimony of Erankel, an interested party, and of Low, an interested witness. There being no record proof of the claimed service, it is fairly inferable there was no such service, but rather that imported by the division of Erankel’s net fee in the context of the particular circumstances. As Judge Wells said in Rains v. Rains, supra, the rule invoked by the respondent applies only where the uncontradicted testimony “is not contrary to circumstances in evidence, and contains no inherent improbabilites or contradictions which alone or in connection with other circumstances in evidence excite suspicion as to the truth of the testimony. * * *” See Schmidt v. Marconi Wireless Telegraph Company of America, 86 N. J. L. 183 (E. & A. 1914); Second National Bank of Hoboken, New Jersey v. Smith, 91 N. J. L. 531 (E. & A. 1918). Erankel’s appraisal of his relations with Low is not conclusive of the basic issue; his testimony is to be weighed in relation to all the circumstances and his own interest. There is in what he says the suggestion of rationalization obscuring the primary purpose of sharing the legal fee for Low’s successful solicitation of the retainer.

The report made by Judge Drenk is confirmed.

We come now to the matter of discipline. The object of discipline, it was declared by the old Supreme Court, is not in essence punitive; the primary purpose is to determine whether the delinquent practitioner is unworthy of the trust and confidence basic to the relation of attorney and client. Has his conduct been such, in moral quality, as to make it evident that he cannot be entrusted with the duties and high responsibilities of the office of attorney? If there be moral unfitness, then no disciplinary measure short of disbarment will suffice; he should be ousted for the protection of the public and the honor of the profession. To warrant disbarment, the misconduct must be gross, and, short of a crime, it is requisite that it reveal moral turpitude. In re Ries, 131 N. J. L. 559 (Sup. Ct. 1944). See In re P., 111 N. J. L. 569 (Sup. Ct. 1938).

Under the early rule in England, disbarment was deemed justifiable where the attorney had been fraudulently admitted, or convicted (after his admission) of felony, or other offense which rendered him “unfit to be continued an attorney,” or knowingly suffered his name to be made use of by an unqualified person, or acted as agent of such person, or signed a fictitious name to a demurrer, as and for the signature of a barrister, or “otherwise grossly misbehaved himself.” Tidd’s Pr. 89. In l^TR, Lord Mansfield said that the essential question is not one of punishment, but whether the offender “is an unfit person to practice as an attorney”; and for conviction of felony disbarment was ordered. Ex parte Brounshall, Cowper, 829 (1778).

This rule has had general acceptance in this country. Whether the delinquent attorney should be “disbarred or merely suspended for a period” calls for the exercise of a sound judicial discretion in relation to the particular circumstances; the “consequences of disbarment are so severe, both in degrading him in the eyes of the community and in depriving him of his means of livelihood that courts generally take that step only when the misconduct of the attorney may properly be characterized as gross, and in cases of lighter offenses or of a first delinquency, the minor punishment of suspension is usually inflicted.” 5 Am. Jur. 413. See Ex parte Wall, 107 U. S. 265, 2 S. Ct. 569, 27 L. Ed. 552 (1883); Ex parte Robinson, 19 Wall. 505, 22 L. Ed. 205 (1874).

The disciplinary discretion is to be reasonably exercised, “with moderation and caution,” controlled by the basic consideration that the object is not punishment of the offender, but rather the disqualification in the public interest of a practitioner of the law who has been guilty of “misconduct, indicative of moral unfitness for the profession, whether it be professional or nonprofessional,” such deficiency of character as would also sustain exclusion from the bar. Grievance Committee of Hartford County Bar v. Broder, 112 Conn. 263, 152 A. 292 (Sup. Ct. Err. 1930); Grievance Committee of Bar of New Haven County v. Sinn, 128 Conn. 419, 23 A. 2d 516 (Sup. Ct. Err. 1941). “The real question for determination in such proceedings is whether or not the attorney fis a fit person to be longer allowed the privilege of being an attorney/ ” In re Durant, 80 Conn. 140, 67 A. 497 (Sup. Ct. Err. 1907), citing Fairfield County Bar v. Taylor, 60 Conn. 11, 22 A. 441, 13 L. R. A. 767 (Sup. Ct. Err. 1891). See also In re Paddock, 114 Vt. 207, 42 A. 2d 342 (Sup. Ct. 1945); In re Donaghy, 402 Ill. 120, 83 N. E. 2d 560 (Sup. Ct. 1949). The fact that the disciplinary proceeding is the first of its kind under the Canons, and before, is an important circumstance to be considered in fixing the penalty. Smith v. State Bar of California, 211 Cal. 249, 294 P. 1057, 73 A. L. R. 393 (Sup. Ct. 1930). See also 7 C. J. S., Attorney and Client, § 38, p. 806.

Our Canons of Professional Ethics came from the American Bar Association; and so we may well have recourse to the philosophy and administrative experience of the chairman of the Association’s Standing Committee on Professional Ethics and Grievances, Mr. Henry S. Drinker, who has this to say in his recent work on Legal Ethics (1953), p. 46:

“Ordinarily the occasion for disbarment should be the demonstration, by a continued course of conduct, of an attitude wholly inconsistent with the recognition of proper professional standards. Unless it is clear that the lawyer will never be one who should be at the bar, suspension is preferable. For isolated acts, censure, private or public, is more appropriate. Only where a single offense is of so gross a nature as to be impossible to a respectable lawyer, such as deliberate embezzlement, bribery of a juror or court official, or the like, should suspension or disbarment be imposed. Even here the lawyer should be given the benefit of every doubt, particularly where he has a professional record and reputation free from offenses like that charged.”

Erankel’s offense is classed by the canon itself as one justifying disbarment. It is accounted a serious transgression of the ethical principle that is the sworn obligation of every practitioner of the law, the more reprehensible and vicious because the solicitation is had through agents and runners. See Chreste v. Commonwealth, 171 Ky. 77, 186 S. W. 919 (Ct. App. 1916); Drinker’s Legal Ethics, p. 28 et seq. Quite apart from its own inherent vice and its contaminating influence as a competitive factor, it is a practice that tends to corrupt the course of justice, and so the more abominable and evil in its incidence, although it is but fair to say there is no suggestion of that here.

Yet this is the first prosecution of its kind under the Canons, adopted by the original Bule 1:7-6, now B. B. 1:25; and we are not aware of a like proceeding in the years that had gone before. And the respondent has a professional reputation free from blemish otherwise. We think that in these circumstances the professional tradition and the public good alike will be served by the suspension of the respondent from the practice of law for a period of two years, and until the further order of the court; and such will be the order. But this is not to be deemed by the bar a standard of action measuring the gravity of the offense. Eor such infractions in the future more drastic measures may be expected.