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In re Flannery

Supreme Court of New York, Appellate Division

May 17, 1912

In the Matter of JOSEPH A. FLANNERY an Attorney, Respondent.

CHARGES of professional misconduct by the Association of the Bar of the City of New York against the respondent, an attorney at law.

COUNSEL

William D. Guthrie, for the petitioner.

Edward M. Hatch, for the respondent.

INGRAHAM, P. J.:

The respondent in this proceeding was admitted to practice in November, 1895. Since his admission he has made a specialty of what are called condemnation and assessment proceedings, appearing for the owners of property required by the city of New York for public purposes, and has acquired a very large and successful practice in relation to such proceedings. During the period covered by this investigation he stated that he represented thousands of clients, and at least ninety per cent of his business was contingent upon what he recovered for his clients from the condemnation of their property. In a large

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part of this business the expenses were to come out of the percentage that the respondent received so that the client was not to be liable for any fees of experts or other disbursements. The respondent to facilitate his dealings had organized six corporations in all of which he owned all the stock which either stood in his name or the names of his clerks, and he was the sole person beneficially interested in them. One of these corporations, called the Barretto Land Improvement Company, had a capital of $1,000, and was organized by respondent because, as he said, it was the most convenient form in which to hold title to the real estate that he had purchased. When the city requires the property of an individual for a public improvement it can only acquire such property by paying what the property owner demands or the fair value of the property as ascertained by a judicial proceeding. Where the value of the property is to be ascertained by such a proceeding it is necessary that the owner should be represented before the commissioners appointed to determine the value of the property in order to secure a proper price for the property that the public is about to condemn. It appeared that in substantially all these proceedings the property owner has some kind of a contingent agreement with the attorney who represents him by which the amount of his fee is regulated by the amount of the award that he secures for his client. When such agreements are voluntarily made, induced by no fraudulent misrepresentations or suppressions or concealment of the facts which should be disclosed on the part of the attorney, they have been recognized as proper and have been enforced by the courts. The very nature of the transaction, however, imposes upon the attorney the utmost good faith in his relations with his client and in obtaining contracts. Where the question is as to the value of the property about to be condemned, which in many cases depends upon the opinion of experts rather than upon actual values proved by sales or other direct evidence, there are many opportunities for an attorney who is unscrupulous or willing to take advantage of his client to obtain contracts which provide for fees that are out of all proportion to the value of the services rendered or to acquire the property himself from his client at a much less price than will probably be the award made for it. The only safeguard

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for the clients is that the attorneys are strictly held to an observance of the good faith that the law requires in all dealings between an attorney and his client, and we feel that it is only by the exercise of the disciplinary powers of this court that the rights of the public and the rights of the owners of property can be protected.

A law has just been enacted which expressly throws upon this court vastly increased responsibility in its disciplinary powers over the members of the profession, which is known as chapter 253 of the Laws of 1912, amending section 88 of the Judiciary Law (Consol. Laws, chap. 30; Laws of 1909, chap. 35). That act provides: 'The Supreme Court shall have power and control over attorneys and counsellors-at-law, and the Appellate Division of the Supreme Court in each department is authorized to censure, suspend from practice or remove from office any attorney and counsellor-at-law admitted to practice as such who is guilty of professional misconduct, malpractice, fraud, deceit, crime or misdemeanor, or any conduct pre-judicial to the administration of justice.' We are, therefore, charged with the duty of disciplining an attorney whose conduct has brought him within this provision. It is our duty to condemn conduct which tends to impair or defeat the administration of justice or degrade and impair the usefulness of the profession, and protect the State and the public from lawyers who prostitute the authority given to them for private gain by imposing on or defrauding their clients or the tribunals which are instituted to administer the law and protect those whose rights and interests are committed to their care. If this country is to be governed by law, it is essential that those charged with its administration should be honest in the discharge of the duties confided to and obligations imposed upon them. We do not, however, rely on the power given by this amendment in this proceeding.

There are involved in this proceeding six separate charges against this respondent. The case has been examined with great care by the referee and a large amount of testimony has been taken, but the main facts are not in substantial dispute. The referee has in a very careful report stated the facts as found by him, and as to each of these charges he has found

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the respondent guilty except as to the fourth charge, which the referee held was not proven and which was dismissed. It is quite impossible within the limit of an opinion to analyze all the evidence taken before the referee, and, in view of the full discussion of the question by the referee, such an analysis may be dispensed with. I will only attempt, therefore, to state the facts so far as necessary to make intelligible the conclusions at which we have arrived.

A corporation known as the East Bay Land and Improvement Company was the owner of certain real property located in the borough of the Bronx. Prior to December 12, 1904, the intention of the city to acquire this property became known, and on that day the corporation entered into a contract with the respondent by which it authorized him to represent it in the matter of the 'proposed acquirement' and to take such proceedings as he might deem advisable to obtain an award to the company for the full value of such of its property as may be taken. The respondent agreed to appear for the company and use his best efforts to obtain a full award for and no assessment against it and to hold the company harmless from any costs against it by reason of any proceedings taken by him. In consideration of these services to be rendered the company agreed to pay the respondent in full for his services and expenses ten per cent of the award received by it for damages by reason of the taking of the land, and it was further agreed that the charge of R. Clarence Dorsett of counsel for the said company were to be paid out of the fees received by the respondent. This agreement was executed by the president of the East Bay Land and Improvement Company and by the respondent. Proceedings were subsequently commenced by the city to acquire this property, commissioners were appointed on August 18, 1905, and on November 20, 1905, a claim on behalf of this company was filed by the respondent, acting as the attorney for the company, with the commissioners. Some time after this claim was filed and while the proceeding was pending the officers of the company expressed a desire to sell the property. Mr. Dorsett, who was to share the respondent's fee, was a director of this East Bay Company, and a Mr. Patrick was its president. According to

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the respondent's testimony the first suggestion about the sale of the property was that three or four weeks before the contract hereafter referred to was signed Mr. Dorsett and the respondent talked over the possible sale of the property and the respondent said that he might know somebody to go in with him and buy the property. Subsequently Dorsett told the respondent that the company would sell the property at $15,000 an acre, and the respondent said that day or the next day that he would take it. It appears, however, that on the 8th of January, 1906, the directors of this East Bay Company held a meeting at which a Mr. Annan, who lived in England and who represented English stockholders who controlled the company and who was also its vice-president, reported to the directors that 'he had entered into an agreement with Joseph A. Flannery for the sale of certain property at Hunt's Point, and that in accordance therewith the company had entered into a contract with Leon A. Rains for the sale of that property on December 22nd, 1905,' and the contract with Rains for the purchase of the property was set forth in the minutes of the meeting. Annan is dead. By this contract which was dated December 22, 1905, the East Bay Company agreed to sell the premises included in this condemnation proceeding to Leon A. Rains at the price of $15,000 an acre, on which $5,000 in cash was paid on the execution and delivery of the contract, the balance of the purchase price to be paid in cash on delivery of the deed on the 1st of February, 1906. There was a provision in the contract by which the quantity of land and amount of acreage of the property intended to be sold should be ascertained and one Hollerith, a city surveyor, was to make this survey. There was no suggestion in this contract that the respondent had any interest in the purchase. The $5,000 paid on the execution of ...


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