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In Re Kramer

OPINION FILED OCTOBER 22, 1982.

IN RE ARNOLD IRWIN KRAMER, ATTORNEY, RESPONDENT.


Disciplinary proceeding.

JUSTICE GOLDENHERSH DELIVERED THE OPINION OF THE COURT:

On May 5, 1980, the Administrator of the Attorney Registration and Disciplinary Commission filed a one-count complaint against respondent, Arnold Irwin Kramer, who was licensed to practice law in Illinois on November 28, 1961, charging commingling and conversion of a client's funds. A panel of the Hearing Board recommended that respondent receive the oral and written reprimand of the Commission. The Administrator filed exceptions to the recommendation of the Hearing Board, and the Review Board recommended that respondent be suspended for one year.

The evidence consists of the testimony of respondent and a number of exhibits. Philip Bradbury, the complaint, could not be located and was believed to be living in Mexico.

Respondent testified that he had met Bradbury 30 years earlier when he (respondent), at age 15, was working for his father's bookbinding business. Bradbury and respondent's father were business acquaintances and were both engaged in the bookbinding business. When respondent started his law practice, Bradbury became one of his first clients.

Bradbury became indebted to respondent as a result of a number of transactions. When respondent's father died, respondent inherited his father's bookbinding equipment. Respondent asked Bradbury to sell the equipment for him. Bradbury apparently sold the equipment, but did not account to respondent for the proceeds of the sale. Respondent had loaned money to Bradbury which had not been fully repaid, and he had not been paid for various legal services.

In March or April of 1978 Bradbury came to respondent's office. He was the contract purchaser of land in Lake County and was having problems paying the installments as they became due. He asked respondent to assist him in selling the property and negotiating an offer or a contract. Initially respondent refused because Bradbury was already heavily indebted to him. Bradbury told respondent that the only way he could pay respondent was if he sold the land, saying, "You'll take the money out of the sale once you get it closed."

Bradbury told respondent that Charles Corder had made several offers to purchase the property. Respondent contacted Corder and negotiated a contract for the sale of the land. Corder delivered to respondent a cashier's check in the amount of $40,000 payable to "Arnold Kramer, Escrowee for Philip Bradbury," as earnest money.

Respondent testified that the land was sold for $300,000, and customarily the amount of earnest money to be placed in escrow would be 10%, or $30,000. Respondent, however, insisted on a $40,000 escrow deposit, because the deposit was to cover the debt Bradbury owed him plus respondent's fees for negotiating the contract and acting as Bradbury's attorney in the sale. Respondent testified that the escrow deposit was his money, subject to some accounting. The parties stipulated that the check was deposited into an account which was used by respondent "for his own purposes." Shortly after the check was deposited the balance in this account fell below $40,000, and several times before the land transaction was closed, the account was overdrawn.

Respondent structured the transaction so that the contract seller, Howerton, conveyed the land to three land trusts. At the first closing, Bradbury assigned his beneficial interest in the land trusts to Corder upon payment of the first installment of approximately $160,000. As Corder paid the specified sums of money, he was assigned the beneficial interests in the other land trusts.

At the time of the first closing, respondent asked Bradbury to "have an accounting." Bradbury declined, however, and no accounting was made until six months later. Respondent "settled" with Bradbury and issued him a check for $14,160.53, the difference between the $40,000 escrow deposit and the amount Bradbury owed respondent for past debts plus the fees owed for the sale of the property. Bradbury did not at any time negotiate the check. He filed suit against respondent in the United States district court. That action was settled for $26,000.

The hearing panel found:

"What stands out is this: When a lawyer closes a real estate deal for a client, no matter how many hats the lawyer wears, his duty as a lawyer is to put those funds in a trust account and never to disburse them without the prior certain approval of a client. Respondent violated this essential rule. He cannot escape his obligations as a lawyer by ...


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