In re Donegan

Per Curiam. In 1935 the respondents were indicted by a Federal grand jury, together with State Title and Mortgage Company, a New York corporation, John A. Dilliard, its former president, and George B. Skiffington, a vice-president, for using the mails to defraud and also for conspiring to use the mails to defraud. After a trial, lasting many weeks, a jury in the United States District Court for the Southern District of New York acquitted all the defendants on each of the counts charging the use of the mails to defraud but found the president, Dilliard, and the respondents guilty on the single count which charged a conspiracy to commit the other offenses of which they were acquitted. Although we recognize, of course, that [776] a conspiracy may exist apart from the crime to which it relates, it is difficult to understand how, under the circumstances of the present case, such a view could consistently have been entertained by the jury, for if the defendants planned the commission of the unlawful acts which were established at the trial, they were necessarily guilty of using the mails to defraud. This strange result is, we think, explained by the testimony of two of the jurors to the effect that the verdict represented a concession to a small minority of the jury and was rendered upon the assurance that a verdict finding the respondents guilty only of conspiracy would have negligible consequences to the defendants. In saying this, we have no intention to impugn the settled rule that testimony of jurors may not be considered to disturb the effect of judgments where they are conclusive. In the present case the judgments of conviction have been held not to be conclusive in this proceeding. We are, therefore, justified in attributing to them only such force as the verdicts of the jury on which they depend seem, under all the circumstances, to require. The judgments of conviction were affirmed by the Circuit Court of Appeals, Second Circuit, in a carefully considered opinion (United States v. Dilliard, 101 F. 2d 829) holding, in effect, that the guilt of the defendants presented an issue of fact for the jury. Upon those judgments, orders were entered by this court on March 17, 1939, disbarring the respondents. (Matter of Donegan, 256 App. Div. 535.) These orders were reversed by the Court of Appeals (282 N. Y. 285, 282 N. Y. 646), which said (282 N". Y. 285, 293): “ The proceeding is remitted to the Appellate Division which may proceed under subdivision 2 of section 88 of the Judiciary Law, authorizing the Appellate Division to govern the conduct of attorneys. The judgment of conviction will constitute at least prima facie evidence of guilt of the crime charged. (Cf. State v. O’Leary, 207 Wis. 297; annotated, 81 A. L. R. p. 1193.) We do not need to go further.” Thereafter upon motion of the petitioner the matter was sent by this court to Hon. Bichard P. Lydoft, official referee, to take testimony and report to this court. Against the respondent Donegan there was charged misconduct arising out of acts, many of which, it is very clear, involved no element of wrongdoing on the part of anyone. Other acts were charged which, it is equally clear, were unlawful and would require expulsion from the Bar of an attorney who had participated therein. [777] Against the respondent Koven the only act of alleged misconduct consisted of a single appraisal of an annex to the Hotel Victoria. This appraisal, claimed to be excessive, was made after the structure was completed and increased a previous appraisal estimating the value of the land and structure. After an exhaustive inquiry into their conduct, the referee has reported that the respondents are innocent of the offenses of which they were convicted and that the proceeding should be dismissed. He said: “ On the evidence before me it is established that both respondents had nothing whatever to do with the handling of mortgages after appraisal, their placement in any particular series, or of their sale. * * * “ Here we have a large corporation with numerous departments, and if there were irregularities in departments with which the respondents had no connection and of which they had no knowledge, it is going too far afield to charge them with responsibility because they were officers and, therefore, were presumed to know.” v In conclusion the referee said: “ I am convinced that the respondents have completely answered the charges made against them and have overcome the presumption existing because of the concession that the judgment is prima facie evidence of guilt of the offense charged. Furthermore, even if the petitioner’s contention that the respondents had the burden of proof could be upheld, the evidence compels a finding that the charges have not been sustained.” We are now asked to say that the findings of the experienced referee must be overruled on account of the verdict of the jury to the contrary in the United States District Court. We are unwilling so to hold. The Court of Appeals which remitted the matter to this court for further proceedings must have intended that there should be, not mere formal inquiry necessarily productive of the same result as the proceedings in the United States District Court, but a comprehensive investigation of the fitness of the respondents to remain members of the Bar in which the judgment of conviction would be prima facie, but not conclusive, evidence. Reference is made in the dissenting opinion to testimony of the respondents, that use was made of obsolete appraisals in placing mortgages and that on some occasions after foreclosure a new mortgage, which included accumulations of interest and foreclosure costs, was used as collateral. These reprehensible practices of the title company to which the respondents testified from information subsequently acquired were not shown [778] to have been participated in or even known to the respondent Donegan at the time of the transactions nor is it contended that Koven was implicated therein. We do not pause, therefore, to denounce these and other practices in which, as the referee has found upon sufficient evidence, neither respondent was implicated. We also note a statement in the dissenting opinion, not sustained or suggested by any evidence in the record, that “ the opinion of the Circuit Court of Appeals discusses an attempt which was made to tamper with this jury while the trial was in progress.” It is perhaps unnecessary to say that it would be most unusual and also most unjust for this court to consider statements not sustained by any evidence and, therefore, not susceptible of refutation. Bearing in mind the admonition of the Court of Appeals to regard the judgments of conviction only as prima facie evidence of professional misconduct, we have carefully examined the testimony before the referee and have concluded that his report is fully sustained by the record, which in many important particulars differs from the record which was under consideration by the Circuit Court of Appeals. It is impossible within the scope of this opinion to refer to the many complicated transactions which furnish the basis of these charges. It is sufficient to say that those acts in which the respondents participated have not been shown to be discreditable and that in those acts which may be described as discreditable the respondents are not shown to have participated. We have reail the record with a realization that attorneys should be held to a high standard of integrity. They should not, however, be subjected to the punishment of disbarment except upon evidence, as distinguished from suspicion not sustained by proof. The proceeding against each of the respondents should be dismissed.