Before the Hearing Board panel, Mr. Lawson testified that in 1976 he gave the respondent $13,500 to be placed in an interest-bearing escrow account. At the time the account was established, the Lawsons were living in Chicago. Soon after that, they moved to Arkansas, where they resided at the time of the hearing. Mr. Lawson explained that he had assumed that the escrow money was originally deposited in an interest-bearing account and that he did not learn otherwise until 1979, when the respondent informed him that the money had been transferred to an interest-bearing account. Mr. Lawson wrote to the respondent in March 1984 to inquire about the interest in the escrow account, but his letter was returned unopened. Mr. Lawson later telephoned the respondent, but the respondent did not provide any information about the interest. Mr. Lawson then retained a different attorney to investigate the matter, and he subsequently learned that the respondent had withdrawn money from the escrow account on two separate occasions. Mr. Lawson also stated that he never received copies of the respondent's amendatory/supplemental instructions and that he never spoke with the respondent on the telephone about any fee arrangement. Mr. Lawson maintained that he never authorized the respondent to withdraw interest from the escrow account in payment of his fee. According to Mr. Lawson, the only bill he received from the respondent was one for about $875 in 1975, for a retainer and certain costs; the Lawsons paid the bill promptly. Mr. Lawson said that he would have paid any additional bill but that he never received a statement of an outstanding fee.
SUPREME COURT OF ILLINOIS
535 N.E.2d 792, 127 Ill. 2d 1, 129 Ill. Dec. 27 1989.IL.35
JUSTICE MILLER delivered the opinion of the court. JUSTICE CALVO took no part in the consideration or decision of this case.
DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE MILLER
On February 25, 1987, the Administrator of the Attorney Registration and Disciplinary Commission (the Administrator) filed a one-count complaint charging the respondent, Nicholas T. Kitsos, with commingling and conversion of client funds and with illegal conduct involving moral turpitude, dishonesty, fraud, deceit, and misrepresentation. The charges alleged that the respondent had taken as his fee, without authorization from his clients, interest earned in a client escrow account. A panel of the Hearing Board found that the respondent had engaged in the conduct as charged and recommended that the respondent be suspended from the practice of law for one year. Both the Administrator and the respondent filed exceptions to the Hearing Board's report and recommendation. A majority of the Review Board concurred in the findings of fact and Conclusions of law of the Hearing Board but recommended that the respondent be suspended for a period of six months; one member of the Review Board disagreed with a number of the findings of misconduct and recommended that the respondent be reprimanded. The respondent has filed exceptions to the recommendation of the Review Board. See 107 Ill. 2d R. 753(e)(5).
The sole controversy in this case is whether the respondent was authorized to retain the interest accrued upon an escrow account as his fee. The respondent contends that the allegations of misconduct were not proved by clear and convincing evidence. A brief recitation of the facts underlying this dispute is warranted in light of the respondent's challenge to the sufficiency of the evidence.
The respondent began representing the clients in question, William and Neta Lawson, in 1972, following the death of his brother, who was also an attorney. At that time the Lawsons were involved in a dispute concerning a real estate contract. In 1974 the respondent filed suit on behalf of the Lawsons, as purchasers, seeking specific performance of the contract. The suit remained pending for more than two years. In September 1976 the respondent entered into an agreement to settle the dispute. The settlement provided that the Lawsons would deposit $13,500 into an escrow account pending transfer of title.
On September 17, 1976, in accordance with the settlement agreement, the respondent established a deed and purchase money escrow account with the Chicago Title and Trust Company (Chicago Title) and deposited $13,500 in the account. More than two years later, on April 24, 1979, an escrow administrator at Chicago Title wrote to the respondent and to the sellers' attorney seeking information about the account. The letter writer noted that the account had been inactive since its inception in September 1976 and requested information on the status of the escrow. In response to the escrow administrator's letter, the respondent wrote to Chicago Title on May 17, 1979, directing that the escrow funds be deposited in an interest-bearing account and that the interest earned on the funds be retained in the same account. The same day, the respondent wrote to the Lawsons to advise them of his action, enclosing with his letter a copy of the escrow administrator's inquiry.
On December 31, 1981, the respondent sent a letter to Chicago Title notifying the company of a change in his office address and requesting a statement "showing to date the funds and the amount that are on hand subject to my direction" in the Lawsons' escrow account. The respondent subsequently learned that the account contained $17,225.30. That sum apparently represented the initial deposit of $13,500 and $3,725.30 in accrued interest. On January 15, 1982, the respondent submitted to Chicago Title a document entitled "Amendatory or Supplemental Instructions to Be Attached to Escrow Trust Agreement" pertaining to the Disposition of the interest in the account. The amendatory/supplemental instructions directed Chicago Title to deduct $1,055 from the funds and to pay that amount to itself as an investment fee, to retain $291.21, in addition to the principal sum, in the account, and to pay $2,379.09 to the respondent. A notation on the document represented that the Lawsons had approved the instructions. Soon after that the respondent received a check for $2,379.09, as he had requested, and he negotiated the check and retained the proceeds for his own benefit.
In February 1984 the respondent submitted to Chicago Title a second set of amendatory/supplemental instructions, which directed the company to pay to the respondent $1,774.15, less any unpaid investment fee. On February 20, 1984, the respondent received a check for $1,654.15, and he negotiated the check and retained the proceeds for his own benefit. In May 1984 the respondent directed Chicago Title to pay him any amount in the escrow account in excess of $13,500. The respondent did not receive any additional funds, however, for by this time the Lawsons had advised Chicago Title that the respondent was no longer their attorney and had specifically directed the company not to transmit any money to the respondent. The respondent received a total of $4,033.24 in the two disbursements from the clients' escrow account.
Mrs. Lawson also testified before the Hearing Board panel, corroborating her husband's testimony. She stated that she and her husband never received copies of any of the additional escrow instructions, never received any bills or statements of their account, and never authorized the respondent to withdraw funds from the escrow account.
The respondent testified that in 1975, when he filed suit on behalf of the Lawsons, he sent them a bill for about $875, which represented a retainer fee of $650 and an additional amount for certain advanced costs. The respondent admitted that the 1975 bill was the only bill he ever sent the Lawsons. The respondent further testified that sometime during 1979 he contacted the Lawsons by telephone. According to the respondent, during this Discussion it was agreed that he would withdraw the interest accumulated in the escrow account and retain it as his ...