author: PER CURIAM:

text:
    In the Matter of George H. MILLER, Respondent.
    No. 60136.
    Supreme Court of Missouri, En Banc.
    March 13, 1978.

      Larry M. Woods, Columbia, for informant.
    Thomas D. Cochran, Joe F. Willerth, Piedimonte & Cochran, Independence, Robert L. Wesner, Sedaba, for respondent.
   PER CURIAM:

Harold W. Barrick, General Chairman of the Advisory Committee of the Missouri Bar Administration, filed an information in this Court charging George H. Miller, an attorney, with four counts of professional misconduct, and requested a hearing and a judgment of disbarment.

In response an answer was filed admitting the allegations of Counts I and II, pleading mitigating and extenuating circumstances, and denying the allegations of Counts III and IV.

Honorable Paul E. Carver, appointed Special Master, conducted a full hearing, and in due course filed a 27-page “Statement, Finding of Fact, Declaration of Law and Advisory Recommendation,” concluding with a recommendation that respondent be found not guilty on all four counts for failure to prove the charges by a preponderance of the evidence, and discharged from all disciplinary actions. Briefs were filed and the matter was argued before the full Court.

In a disciplinary proceeding the findings and conclusions of a special master are advisory only, and not binding. This Court has the obligation of reviewing the evidence, making its own determination of fact issues, declaring the law, and finally determining the matter. In re Weiner, 547 S.W.2d 459 (Mo. banc 1977). With all due respect for the honorable and experienced special master, we are obliged to disagree with his ultimate conclusions and recommendations.

Essential background facts: Respondent was admitted to the bar in 1936. He and William H. Morris, members of the same church, were friends of long standing. Respondent was the confidant of Mr. Morris, who had implicit confidence in respondent’s honesty, integrity and competence as lawyer and adviser. Mr. Morris accumulated some town property, a small farm, a $5,000 bond, mortgages and savings accounts. Early in life he and his wife took into their home and raised an orphan boy aged 3 or 4 years, who was given the name Jack Morris. Jack was never legally adopted by the Mor-rises. In 1966 William H. Morris suffered a stroke, after which he was physically incapacitated and bedfast until his death. On June 16, 1966, while still mentally competent, Mr. Morris executed a general power of attorney to respondent, who assumed management and control of his properties. Mr. Morris deteriorated mentally, and was not mentally competent from and after 1968 or 1969. He died intestate on December 10, 1974. Jack Morris was appointed administrator of his estate. In a separate proceeding in circuit court the equitable adoption of Jack Morris by William H. Morris was judicially decreed following Mr. Morris’ death. The attorney for the administrator called upon respondent to make an accounting of his stewardship. Respondent responded by producing all his records, checks, settlements year by year, and other data, from 1966 to 1974, and by writing comprehensive and detailed letters of explanation. All the data respecting the transactions and movement of funds which provided the basis for the charges made in these disciplinary proceedings was first disclosed in respondent’s correspondence and accounting, and not “dug out as a result of some investigation or some exploration of what transpired.” Several discrepancies discovered by the attorney for the administrator were explained to the latter’s satisfaction, or made good by respondent, who paid into the estate all sums due and as required by the administrator and his attorney, with interest, without contesting their demands or haggling over amounts, with one exception, of which more later. Jack Morris, the equitably adopted son and sole heir of William H. Morris, acknowledged on the stand that he had realized a full recovery of everything to which he was entitled, stating, “Yes, I got everything.” The attorney for the administrator testified that every item or asset due the estate was accounted for and paid by respondent.

COUNTS I AND II

Count I alleged that beginning in the year 1968 respondent, acting under a power of attorney executed by William H. Morris on June 16, 1966, did use the funds of William H. Morris as a source of credit for his personal farming operation, withdrawing sums for said purpose from 1968 through 1974 in various amounts totalling approximately $30,000, contrary to the provisions of Disciplinary Rule 1-102(A)(4), (5) and (6), and DR 5-104(A) of Rule 4, Supreme Court of Missouri.

Count II alleged that acting under the power of attorney respondent contracted with his wife for the sale of property on behalf of his client, contrary to these disciplinary rules.

At the outset of the hearing before the special master respondent’s counsel stated that the circumstances alleged had never been and were not then denied; that respondent was not of the opinion that his actions were proper or right; that respondent had “technically” admitted the charges in Counts I and II from the beginning, and made no attempt to cover up; that the first instance in which the circumstances giving rise to these charges came to light was a letter dated February 25, 1975, written by respondent to the attorney for the administrator, outlining the very facts upon which Counts I and II were based; that respondent’s borrowings from Mr. Morris’ assets were made without criminal intent or intent to do any moral wrong, and without subterfuge or involvement of third parties; that the borrowings were evidenced by promptly executed promissory notes, which respondent intended to and did repay in full to the estate; that the estate suffered no financial loss; that while there was a technical ethical violation, there was at most negligence or “something that might have approached malpractice.” Respondent conceded the principal facts upon which the charges in Counts I and II were founded; that he had made errors of judgment; that in handling this matter, if he had it to do over again there were many things he would not have done in the way they were done, or would not have done at all, but claimed his actions were not acts of dishonesty. Respondent’s brief, and his counsel in oral argument, admitted the basic facts alleged in Counts I and II and admitted errors of judgment but pleaded that respondent’s use of his client’s funds for his own uses and purposes was done with full disclosure either to William H. Morris or Jack Morris, and with a full accounting for all funds, with compound interest on amounts due, and that respondent’s conduct did not involve dishonesty, fraud, deceit or misrepresentation.

From the admissions, pleadings, the opening statement of respondent’s counsel, respondent’s admissions on the witness stand and in his brief, and the undisputed oral and documentary evidence, we find that respondent appropriated, treated as his own and availed himself of the personal use of a total of approximately $30,000 of William H. Morris’ funds entrusted to him for safekeeping, management and investment, and that respondent made arrangements for respondent’s wife to take title to real estate in which Mr. Morris had a security interest, in the course of which an unsecured promissory note was substituted for a note secured by a recorded deed of trust.

Respondent had no authority, actual or implied, to appropriate his client’s funds for his own personal purposes, and in so doing violated elementary rules of fiduciary obligation. The power of attorney to “transact [any] and all business in any way connected with any and all property or property rights [he possessed] whether real or personal property” gave him no such authority. The donee of such a power may not engage in self-aggrandizement. None of the borrowings — not even the first one, in 1968 — was made with the consent of William H. Morris. Subsequent borrowings could not have been made with his consent, for he was concededly mentally incapacitated after 1968 or 1969. It is no justification that Jack Morris consented to respondent’s borrowing these funds. Jack Morris’ consent did not constitute consent of the client after full disclosure, within the meaning of DR 5-104(A), Rule 4, because Jack Morris had no right to give or withhold consent for William H. Morris. Although William H. Morris’ account, from which some of these loans were taken, was in the joint names of William H. Morris and Jack Morris, the inclusion of Jack’s name was a mere formality, to enable Jack to obtain the funds at Mr. Morris’ death and not to give Jack a present interest (a fact conceded by Jack). The mechanics of the first appropriation, in 1968, were as follows: Desiring to borrow $5,000 from his client’s funds respondent wrote Jack Morris a check for $5,000, drawn on the joint account, and in return had Jack issue a check to respondent for $5,000, drawn on Jack’s private bank account. Questioned as to why he adopted this strange procedure respondent’s explanation was that this would show that Jack knew what respondent was doing with Mr. Morris’ money — knew that respondent was borrowing funds of William H. Morris. Unexplained is the fact that respondent did not follow this procedure thereafter. Subsequent borrowings were made by check made out and signed by “William H. Morris, by George H. Miller, Power of Attorney,” payable to respondent or respondent’s wife, who contemporaneously executed unsecured promissory notes payable to William H. Morris. Asked why he had his wife appear as the borrower in several transactions, when he showed on his settlements that they were loans to him, respondent answered “as a matter of convenience” (while at the same time agreeing that it would have been just as convenient to show that he was the borrower). For an attorney thus to impose upon the confidence reposed in him by his client is “dishonest by any standard, lay or professional,” and such acts “establish unprofessional conduct beyond all question.” In re Kohlmeyer, 327 S.W.2d 249, 251 (Mo. banc 1959). “An attorney who misappropriates the funds of his client * * by appropriating to his own use funds intrusted to his care, is guilty of conduct which cannot be tolerated.” In re Block, 136 S.W.2d 358, 362 (Mo.App.1940). Under no circumstances should he use such funds for his own purposes, without his client’s knowledge and consent, 7 C.J.S. Attorney and Client § 139, which, in view of Mr. Morris’ mental incapacity, could not have been obtained, thus foreclosing any such possibility. Where a client is mentally incapacitated the lawyer’s appropriation of the client’s funds becomes all the more reprehensible.

None of the following reasons suggested by respondent excuse his misconduct: that he always provided for a higher rate of interest in the promissory notes he signed than could be obtained by investing the funds in savings accounts of financial institutions; that he intended to repay the loans and was financially able to do so; that his motives and intent were good; that the transactions were made known to Jack Morris (although concededly Jack Morris was not kin to William H. Morris by blood, and had not at that time been adopted); that the transactions occurred without any attempt at concealment.

* * * * * *

Respondent improperly dealt with respondent’s wife in connection with her acquisition of a security interest of William H. Morris in certain real estate. The transaction, resulting in her obtaining title to real estate in which respondent’s mentally incapacitated client had a security interest, gives every appearance of impropriety. Respondent testified, “In retrospect, I shouldn’t have sold it to her at all.”

The property, owned by William H. Morris, was sold by him to a couple named Schlesselman, in 1964, before the onset of his infirmities. The Schlesselmans gave Mr. Morris a first deed of trust on the property. They were slow pay. They defaulted on their obligation, but Mr. Morris, during the time he was attending to his own affairs, and respondent, after the latter took over management of Mr. Morris’ affairs, indulged the Schlesselmans for years. Finally in 1972, after the Schlessel-mans had despoiled the property, rendered it unfit for human habitation, and finally ‘ abandoned it, the Schlesselmans, far in arrears on their payments, to avoid foreclosure, were prevailed upon by respondent to execute a deed to the property with the name of the grantee left blank, with a clause in the deed providing that grantee assumed and agreed to pay the balance due on the note and pay back taxes on the property. A real estate agent estimated that if the house were cleaned up, made habitable and the sewer unstopped, it could be sold for $2,500. The deed in blank, dated December 12, 1972, was acknowledged January 27, 1973. Respondent had one of his farm employees clean the house and haul away loads of debris, and paid him $130 from Mr. Morris’ account, in February, 1973. Respondent sold the property to his wife, who wanted to rehabilitate the property. Respondent had his wife’s name filled in as grantee in the deed, and promised his wife that the property would be cleaned up, the sewer unstopped, etc. at the expense of Mr. Morris. His wife paid for the property by executing an unsecured promissory note to William H. Morris for $2,500, dated March 1, 1973. The deed naming respondent’s wife as grantee was recorded in July, 1973, at which time the Schlesselman deed of trust was released of record. In June, 1973 respondent paid his farm employee $60 for lawn care, from Mr. Morris’ assets. Respondent’s wife did not make any interest or principal payments on the $2,500 note prior to Mr. Morris’ death. After the administrator began to liquidate cation of these transactions at the times mentioned.

Having provided in the deed that the grantee assumed and agreed to pay the back taxes, respondent acted improperly in spending Mr. Morris’ funds for that purpose. Having sold the property to his wife on March 1, 1973, respondent had no right to spend Mr. Morris’ funds for yard work on the property, which from and after March 1 was her responsibility. In both instances, respondent violated the disciplinary rule 4 proscribing business transactions involving a client when the attorney has conflicting interests.

COUNT IV

Count IV charged that acting under the power of attorney respondent “fail[ed] to keep the funds of his client properly identified as to record ownership, sometimes depositing funds owned by his client individually in accounts owned jointly with another, or withdrawing funds from accounts owned jointly with another for other uses,” contrary to DR 1-102(A)(4), (5) and (6), and DR 9-102(B)(2), Rule 4, supra.

There is no evidence that respondent commingled the funds of William H. Morris with those of respondent. They were kept in separate accounts in different banks.

Although respondent deposited funds belonging to William H. Morris in an account in the joint names of William H. Morris and Jack Morris, we find no fault with this. William H. Morris established this joint account while in charge of his own affairs, and he desired the bulk of his property to finally go to Jack Morris. Respondent did not handle the joint account in such a way as to enable Jack Morris to obtain any funds therefrom to the exclusion and prejudice of William H. Morris during the latter’s lifetime. To this extent respondent is vindicated on Count IV.

There are, however, facts upon the basis of which respondent must be held to have violated DR 9-102(B)(2), supra.

There is no evidence that respondent rented a safe deposit box for the safekeeping of the securities of William H. Morris, as contemplated by DR 9-102(B)(2). If he did, he did not keep the securities in the box.

Respondent negligently misplaced the $2,500 note dated March 1, 1973, executed by his wife. Strangely, when called upon by the attorney for the administrator to produce it, respondent prepared and had his wife sign another note for $2,500, dated back to December 12, 1974, which he delivered to the attorney for the administrator without telling him of the substitution. The later note named William H. Morris and Jack Morris as payees, although William H. Morris was dead at the time the note was dated. The note constituted a promise to pay $2,500 on or before December 1, 1973, but it was dated December 12, 1974 (neatly a year after due date). When this discrep ancy was called to his attention respondent admitted what he had done. Respondent characterized this as one of his “stupid mista kes.” The original note, later found, was eventually paid by respondent, with interest, as previously mentioned, and therefore the estate sustained no loss. That fact, however, does not excuse re¡. pondent’s improper and deceitful conduct, involving an unbecoming misrepresentation unbefit-ting a licensed 'lawyer.

Demonstrating respondent’s failure to comply with the spirit as wed as the letter of DR 9-102(B)(2), respondent lost a $5,000 American Telephone & Telegraph Company bond belonging to William H. idorris. Respondent claim;; credit for having paid the expense of procuring a duplicate' bond, which amounted to $150,.and argues that the estate did ne t suffer by reason of his losing the original bond, but these facts do not blot out his violation of the disciplinary rule.

Another failure to properly “identify” and keep safe the funds of respondent’s the estate respondent paid his wife’s note, with interest, in the sum of $2,948.

The deed from the Schlesselmans, naming respondent’s wife as grantee, is to be treated as if it had been a conveyance procured by respondent from William H. Morris to respondent. A conveyance from a client to an attorney is presumptively fraudulent, and the burden is on the attorney to prove by convincing evidence that the transaction and the conveyance itself was fair and equitable in every respect. Laspy v. Anderson, 361 S.W.2d 680 (Mo.1962). Full disclosure to the client of all pertinent information and advice (the same as if the client were dealing with a stranger) is essentiál. Of course no such disclosure or advice was possible in this case—no permission could Mae .obtained from the client—because 'of his mental incapacity . all the more reason to exercise care in guarding his client’s interests. Before the transaction William H, Morris had a recorded deed of trust on the property. After the transaction he had 'no deed of trust. By reason of respcnder/c’s taking an unsecured promissory note from his wife in payment for the property Mr. Morris’ security was impaired.

Both in connection with respondent’s appropriation of his client’s funds for his own personal use (Count I) and his arranging for his wife to acquire real estate in a transaction by which his incapacitated client was divested of a security interest (Count II) respondent was guilty of conduct involving an inherent conflict of his interests with those of his client, in violation of his trust, and contrary to DR 5-104(A), supra. Such conduct, inexcusably indiscreet and inherently dishonest, reflected adversely upon respondent’s fitness to practice law, and was prejudicial to the administration of justice, in violation of DR 1-102(A)(5) and (6) of Rule 4. Respondent’s payment of his wife’s notes, and his repayment of his personal borrowings, do not operate to relieve him of the charges. State Bar Committee v. Stumbaugh, 123 S.W.2d 51 (Mo.1938); In re Conner, 357 Mo. 270, 207 S.W.2d 492 (banc 1948).

COUNT III

Count III alleged that acting under the power of attorney respondent expended funds of his client to the benefit of his wife by paying taxes and cleanup costs on the property respondent sold to her, and by lending his client’s funds to his wife, contrary to the disciplinary rules previously mentioned.

That respondent loaned funds of William H. Morris to respondent’s wife is documented by originals or photostatic copies of five cancelled checks, drawn upon the bank account of William H. Morris, signed by respondent under his power of attorney, payable to Georgia Miller, totalling $12,000, dated from July, 1970 to August, 1974. Respondent had no authority to lend his client’s funds to respondent’s wife. The loans should be treated as borrowings by respondent from the client’s funds, making applicable the law pertaining to an unauthorized appropriation by an attorney of his client’s funds. Laspy v. Anderson, supra.

As to back taxes and cleanup costs: On February 26, 1973 respondent paid back taxes to Pettis County in the sum of $265.88 and on August 30, 1974 paid back taxes on this property to the city collector in the sum of $265.91, out of Mr. Morris’ assets. When the attorney for the administrator made claim upon respondent for repayment of these amounts, respondent demurred on the ground that Mr. Morris would not have wanted the property to be offered for sale without payment of back taxes and having it in proper condition. It was not until after the attorney for the administrator informed respondent that he had prepared a petition ready to file in court to recover these items that respondent paid them, with interest.

The special master found respondent not guilty of the charges in Count III on the ground that William H. Morris knew of, approved and ratified these transactions. The difficulty with this finding is that everyone concedes that William H. Morris was not mentally competent after 1968 or 1969, and consequently he was incapable of ratifi-principal occurred in respect to a $5,000 payment due Mr. Morris by one Eva Wehr-man. Respondent sold her a residence property belonging to Mr. Morris for the agreed price of $10,500. She borrowed $5,500 from a local institution and paid it to respondent, leaving $5,000 due and unpaid. Years later, when called upon to account for the remaining $5,000, respondent could not remember what happened in this connection. His records did not show, and intensive investigation did not reveal, whether, when, or if the purchaser ever paid the balance of $5,000 to respondent. Respondent claims he did not know until Mr. Morris died that he had not collected the full $10,500 from Eva Wehrman. Admitting he “neglected” to collect the $5,000 from her, respondent assumed responsibility for and paid the $5,000 into the estate, with interest.

Another incident involved respondent’s failure to file a security agreement on time. Anderson, a tenant of respondent on one of respondent’s farms, wanted to borrow $6,500 with which to purchase a tractor. Respondent loaned him $6,500 from funds of William H. Morris, taking an unsecured note to evidence the debt. Later respondent had Anderson execute a new combination note and security agreement in favor of Mr. Morris. In the meantime, Anderson, without informing respondent of his intention to do so, secured another loan on the tractor from a third party and gave the third party a security instrument on the tractor, which was filed for record before respondent presented Mr. Morris’ security agreement for filing. Anderson then defaulted on the $6,500 note due Mr. Morris. Respondent assumed responsibility for the loss sustained by Anderson’s defalcation and reimbursed the estate for the loss with interest but, again, respondent’s repair of the damage done does not excuse his violation of the disciplinary rule.

Finally, respondent was unable to make an exact accounting of his stewardship of Mr. Morris’ affairs for the year 1966, because he either lost, misplaced or inadvertently destroyed his file for that year, including all check stubs and checks. For these reasons we find that respondent violated DR 9-102(B)(2) as charged in Count IV.

Conclusion

Rule 5.18 provides that if this Court finds that charges of disciplinary infractions are true, “the Court shall render a judgment finding Respondent guilty and shall reprimand the Respondent or suspend him from practice for an indefinite period or a time fixed in the discretion of the Court or disbar him, as shall to the Court seem proper.”

Respondent, now 70 years of age, has for years borne an excellent professional reputation among his colleagues, outstanding lawyers and respected judges, for honesty, integrity, good character and professional competence as a lawyer. From 1936 to 1948 respondent served the public as a state senator. Twice he received the nomination of his political party for statewide offices (Lieutenant-Governor and Attorney-General). While these facts constitute no defense in this type of proceeding the Court may consider them in determining what action should be .taken under the circumstances. In re Landon, 319 S.W.2d 553, 558[2] (Mo. banc 1959). In spite of his unimpeached public and professional life prior to 1966 respondent, who stood in the relationship and acted in the capacity of a fiduciary in handling the affairs, funds and property of William H. Morris, demonstrated a lamentable failure to properly appreciate the duties and responsibilities of a fiduciary and an insensitivity to the limitations and restrictions imposed upon him by virtue of that relationship. At the disciplinary hearing respondent disclaimed the existence of a fiduciary relationship, calling it instead doing the best thing he could for Mr. Morris as “a lay matter” in the handling of his money “from the standpoint of friendship.” Respondent took the position that at the time he honestly thought he was doing Mr. Morris a favor by borrowing his funds and agreeing to pay interest in excess of that obtainable by investing the funds in savings accounts in financial institutions. Although now respondent expresses regret for his actions and is contrite, he still maintains that he is guilty of no more than negligence or mere technical violation of ethics, since his motives and intentions were good; that the sale of the real estate to his wife was “in the best interests of William Morris”; that his handling of the funds was not prejudicial to Mr. Morris’ interests and “not in violation of the disciplinary rules.” He emphasizes that his use of the funds was fully disclosed, and contends that having paid all the notes he and his wife signed; having restored to the estate all monies lost by his mistakes, and having satisfied all claims arising out of discovered discrepancies in his accounting, he should be discharged without any disciplinary action, except perhaps a private reprimand.

This Court has uniformly held that misconduct of attorneys in appropriating to their own use funds entrusted to their care and held in a fiduciary capacity justifies disbarment. In re Conner, supra. In most cases where disbarment has been ordered on this ground there was a contumacious failure or refusal of the erring lawyer to properly account for or pay over the funds entrusted to him, In re Conner, supra, and in some instances the lawyer’s conduct amounted to embezzlement. State Bar Committee v. Stumbaugh, supra. Respondent’s conduct was not contumacious. With one minor exception, respondent freely and willingly cooperated in his accounting and restoration of all sums claimed by administrator and attorney to be due the estate, even to the point of agreeing to pay compound interest. His accountings and payments (with the exception of the claims for back taxes and yard work) were not made under threat of prosecution, litigation or complaint to the advisory committee of the bar. He borrowed from Mr. Morris’ accounts openly, with no effort at concealment. He apparently thought he was acting for Mr. Morris’ benefit. Respondent did not intend to permanently deprive Mr. Morris of the use of these funds. He fully intended to repay, and did repay them. He is not guilty of conduct involving moral turpitude or conscious wrongdoing. For these reasons permanent disbarment is not justified in order to attain the ultimate objectives of Rule 4, the Code of Professional Responsibility, the primary purpose of which is to protect the public and those charged with the administration of justice, In re Kirtz, 494 S.W.2d 324, 326[1] (Mo. banc 1973), and promote public confidence in the integrity and efficiency of the legal system and the legal profession.

Indefinite suspension from the practice of law, with leave to apply for reinstatement after a stated period, has been ordered in several cases, for example, In re Houtchens, 555 S.W.2d 24 (Mo. banc 1977), but that solution does not fit this case, in which no general unfitness to practice law is shown.

On the other hand, this Court would not properly discharge its obligation to the public, the profession and the courts by merely administering a private reprimand, in this case, with its serious implications.

Rule 5.25 provides that “Nothing in Rule 5 shall be construed as a limitation upon the powers of this Court to govern the conduct of its officers * * * [N]or shall this Rule constitute an exclusive method for regulating the practice of law.” These provisions implement the inherent power of this Court to tailor and shape its judgment to fit the nature, character, gravity and effect of professional misconduct, and bespeak the flexibility in rendering judgment necessary to attain the objectives of Rule 4. Pursuant thereto this Court has used the device of probation in connection with a public reprimand, with a reservation of jurisdiction for further consideration of the possibility of more severe disciplinary action, when that was deemed appropriate. In re Schiff, 542 S.W.2d 771 (Mo. banc 1976).

Respondent’s violations of the disciplinary rules relate solely to his derelictions as a fiduciary. The appropriate order in this case, in order to protect the public and the other interests involved, is to publicly reprimand respondent and issue the following directives:

1. That within 15 days after the filing of this opinion respondent file with the Chairman of the Advisory Committee of the Missouri Bar Administration a complete written list of all cases, proceedings, estates, guardianships, trusts, funds or matters in which as administrator, agent, executor, guardian, trustee, attorney, attorney-in-fact, or in other fiduciary capacity, respondent now has in his possession, dominion and control funds and/or property belonging to other persons, firms or corporations, and that he file a copy of said list with the clerk of this Court.
2. That respondent proceed with speed and dispatch to resign, withdraw from and relinquish every such office or responsibility as soon as may be done consistent with orderly procedure and safety to the beneficiaries, and make final settlements and accountings of his stewardship.
3. That for a period of 2 years after the filing of this opinion respondent not accept any office, appointment, employment or assignment of a fiduciary nature involving the continuing supervision and control over funds, accounts in financial institutions, securities, or real or personal property of others.
4. That the chairman of the said advisory committee be, and he is hereby, authorized to supervise the expeditious execution of these directives.
5. That at the end of the 2-year period respondent file a report of his doings with the clerk of this Court.

We reserve jurisdiction to reconsider suspension upon our own motion, or that of the Advisory Committee of the Missouri Bar Administration, at any time in the course of the execution of these directives.

In his report Hon. Paul E. Carver requested that he be allowed no compensation for his services, stating that he will refuse any award allowed. We therefore simply express our appreciation for his help and assistance in this matter. His claim for actual out-of-pocket expenses, however, and the fees of reporters, secretary, and sheriff, listed on page 27 of the special master’s report, are hereby allowed, and these items, together with all costs incurred in this Court, are ordered to be paid by respondent.

MORGAN, C. J., and BARDGETT, DON-NELLY, RENDLEN and SEILER, JJ., ALDEN A. STOCKARD and NORWIN D. HOUSER, Special Judges, concur.

HENLEY and FINCH, JJ., not sitting.

      . “A lawyer shall not * * * [e]ngage in conduct involving dishonesty, fraud, deceit, or misrepresentation.”

      . “A lawyer shall not * * * [e]ngage in conduct that is prejudicial to the administration of justice.”

      . “A lawyer shall not * * * [ejngage in any other conduct that adversely reflects on his fitness to practice law.”

      .“A lawyer shall not enter into a business transaction with a client if they have differing interests therein and if the client expects the lawyer to exercise his professional judgment therein for the protection of the client, unless the client has consented after full disclosure.”

      . “A lawyer shall: * * * Identify and label securities and properties of a client promptly upon receipt and place them in a safe deposit box or other place of safekeeping as soon as practicable.”


source: Caselaw Access Project

author: PER CURIAM.

license: Public Domain

text:
    In the Matter of the Honorable Louis M. KOHN, Judge, Respondent, Missouri Association of Probate and Probate and Ex Officio Magistrate Judges, Intervenor.
    No. 60559.
    Supreme Court of Missouri, En Banc.
    July 11, 1978.

      Rollin J. Moerschel, St. Charles, David O. Danis, James M. Smith, St. Louis, for the Commission.
    R. H. McRoberts, Bryan, Cave, McPheet-ers & McRoberts, Charles Alan Seigel, Stein & Seigel, Donald Gunn, Jr., St. Louis, for respondent.
    Richard M. Webster, Webb City, for in-tervenor.
   PER CURIAM.

In this disciplinary proceeding the Commission on Retirement, Removal and Discipline (Commission), under authority of Mo. Const. Art. V. § 27, and Rule 12, recommends that respondent be suspended without pay from the office of Judge of the Probate Court of St. Louis County for a period of ninety days, because of judicial misconduct. Following notice of the charges, a five day hearing was held under Rule 12.08 which resulted in the Commission’s findings and conclusions that respondent was guilty of certain of the acts of misconduct charged.

Mo.Const. Art. V, § 27, provides that the Commission, after hearing and by affirmative vote of at least four members, may recommend appropriate action and,

the supreme court en banc, upon concurring with such recommendation, shall remove, suspend, or discipline any judge . for the commission of a crime, or for misconduct, habitual drunkenness, willful neglect of duty, corruption in office, incompetency or any offense involving moral turpitude, or oppression in office. (Emphasis added.)

The Commission adopted as a standard for measuring respondent’s actions the “Canons of Judicial Ethics” set forth in former Rule 2, which governed such conduct prior to July, 1975, and present Supreme Court Rule 2, the “Code of Judicial Conduct”, as to acts occurring thereafter. Respondent and intervenor on the other hand argue for a narrow definition of the term “misconduct”, as used in Art. V, § 27, contending that neither “Code” was intended to serve as a means for defining the language of the Article and thus may not be employed as the Constitutional standard for the discipline of judges. The restricted definition of “misconduct” insisted by respondent and in-tervenor would encompass only such acts as would necessarily lead to impeachment and removal. We find this contention without merit.

Although the grounds for discipline under Art. V, § 27(3) parallel those enumerated for impeachment in Art. VII, § 1, the new disciplinary scheme provides a far broader range of remedial action than proceedings under Art. VII. The adoption of present Art. V, § 27 in 1970, was clearly intended to permit corrective or disciplinary measures for acts of a less serious nature than those requiring removal. Further, this Court in its decisions involving judicial discipline under Art. V, § 27, has interpreted its terms against the Canons of Judicial Ethics and the Code of Judicial Conduct and in each instance has considered violations of the Canons or Code as evidence of constitutional “misconduct” or other acts proscribed by the Article. See In re Fullwood, 518 S.W.2d 22 (Mo.1975); In re Corning, 538 S.W.2d 46 (Mo.1976) and In re Duncan, 541 S.W.2d 564 (Mo.1976).

Respondent and intervenor also argue the inapplicability of the “Code” or “Canons” for the reason that the Article makes no reference thereto. The fact that § 27(3) as adopted contains no such reference, is not inconsistent with our ruling that violations of the Code may be considered evidence of misconduct, though not necessarily misconduct per se. It cannot be seriously questioned that the Code of Judicial Conduct, as well as the Canons of Judicial Ethics, serve as measures for both Commission and Court in judicial disciplinary proceedings and that evidence of judicial conduct in violation of the Canons or Code may be considered in determining whether particular acts complained of rise to the level of misconduct contemplated by Art. V, § 27(3).

Turning now to the principal issues at bar, the Commission has recommended suspension of respondent for acts of judicial “misconduct” and for certain acts that might be characterized as “willful neglect of duty.” The charges which the Commission found were supported by the evidence include the following: (1) promulgation of overly rigid procedural rules and failing to allow sufficient staff discretion in their application; (2) failing to require courtesy on the part of court employees; (3) unreasonable delay in deciding cases under submission; (4) participating in ex parte communications affecting pending litigation; (5) adopting improper criteria when exercising the power of appointment, and (6) unnecessary insulation of the judge from practicing attorneys. For convenient reference these charges may be divided into two general categories: (1) administrative responsibilities and (2) judicial conduct.

I. ADMINISTRATIVE RESPONSIBILITIES

The Commission found that respondent adopted unnecessarily rigid procedural rules and failed to allow his staff sufficient discretion to deal with minor variances or technical non-compliance with such rules; that those practices caused unnecessary appearances before the court by attorneys and litigants, with attendant delays and additional expense. Incidents supporting the Commission’s findings extend through a period of time governed in part by former Rule 2.08 and later by Canon 3 B(l). Former Rule 2.08 provided that judges should

organize the court with a view to the . convenient dispatch of its business and he should not tolerate abuses and neglect by clerks, and other assistants .

Similarly, Canon 3 B(1) requires that a judge should

diligently discharge his administrative responsibilities . . . and facilitate the performance of the administrative responsibilities of other . . . court officials.

Respondent has promulgated many rules for the administration of affairs in the probate court of St. Louis County and among the exhibits here is a loose bound volume entitled “Practice in the Probate Court of St. Louis County” prepared by the School of Law and the University Extension Division, University of Missouri, Columbia, in cooperation with the probate court of St. Louis County. This volume contains eighty pages of procedural directives apparently distributed from time to time for the use and guidance of probate court functionaries. These include a number of orders spanning the period from June 27, 1967 through May 1, 1975. Also among the exhibits are the joint rules of practice adopted by the probate courts of St. Louis City and St. Louis County in 1973, consisting of one hundred thirteen pages.

The Commission determined that the number and rigid administration of these rules resulted in unreasonable “nit-picking” rising to the level of misconduct in the constitutional sense. It was testified that attorneys felt put upon by minutiae, wasteful of their time and costly to their clients. A number of incidents typifying these complaints are set out in the margin.

In addition to the matters discussed above, the Commission, in a separate count, found that respondent failed to exercise the administrative responsibilities of his office by not requiring his staff to extend courteous treatment to litigants, lawyers and others appearing before them. Canon 3 A(3) provides that a judge

should be patient, dignified and courteous to litigants, . . . lawyers, and others with whom he deals in his official capacity, and should require similar conduct of lawyers, and of his staff, court officials, and others subject to his direction and control.

Former Rule 2.10, by similar language, governed such conduct prior to July 1, 1975.

Several instances of rudeness on the part of the probate court staff appear in the record. One attorney, when requesting a particular file from the court’s records, was greeted with the question, “Why do you want to see it?” In another case, a mixup concerning the distribution of a decedent’s assets through a trust occurred when the co-executor received conflicting advice from a probate law clerk and from the court commissioner regarding the proper course to follow. When the final settlement was not approved, the co-executor was directed to a court attache who discourteously stated that he (the co-executor) had succeeded in mixing things up and that he “ought to know better.” In another instance, an attorney, when discussing a matter with respondent wished to examine the file involved, but the auditor, though requested, would not retrieve it. Finally, the court receptionist, when asked her name by the Commission investigator, told him it was her practice only to state her title or official position to those so inquiring and would not give the investigator her name.

Though the record demonstrates an often rigid and occasionally a discourteous attitude by court employees, it is not clear that complaints as to each of the incidents described were communicated to respondent. In several instances when such matters were brought to his attention, respondent sought to correct or ameliorate the problem. On the other hand, certain evidence indicates respondent was generally advised of his staff’s behavior. While we recognize how a plethora of rules and procedural directives may be a source of aggravation to the Bar and though we do not condone staff rudeness or an attitude of non-cooperation, we cannot find that respondent’s elaborate system of rules nor his staff’s often unyielding and sometimes arrogant application of those rules merit a finding of misconduct. It nevertheless behooves respondent, who is now fully apprised of such complaints, to correct these deficiencies and be as zealous in fostering a spirit of courteous staff cooperation with the Bar as he is in promulgating rules for the conduct of the court’s business.

II. JUDICIAL OBLIGATIONS

The remaining violations relate to respondent’s personal conduct as judge of the probate court. We examine (1) two examples of respondent’s undue delay in deciding cases taken under advisement, (2) allegations relating to ex parte communications, (3) improprieties in the appointment of an appraiser and (4) respondent’s inaccessibility to attorneys.

Former Supreme Court Rule 2.07 required that “A judge should be prompt in the performance of his judicial duties . .” Former Rule 2.02 complemented that requirement by stating, “Courts exist to promote justice . . . their administration should be speedy and careful. . . .” Against the framework of these rules we discuss two flagrant cases of delay; the first involved the Cole estates. Margaret Cole died in 1953 (approximately nineteen years before the hearing in these matters), survived by her daughter Cheryl and her sister, Adeline Wilke, who was appointed executrix of Margaret’s estate and guardian of Cheryl. Attaining her majority, Cheryl employed the firm of Campbell and Campbell to file exceptions to a number of settlements previously made by Adeline, both as executrix and guardian. The exceptions in these consolidated cases were tried in April of 1971. During the hearing of those cases Cheryl experienced mental distress and thereafter was adjudged incompetent. The Public Administrator, Patrick Fiandaca, was appointed her guardian and attorney Campbell continued to represent Cheryl as wéll as the guardian. Though Cheryl apparently experienced a mental breakdown during the trial, the hearing was completed in April, final briefs were filed and the case taken under advisement on May 28,1971. Attorney Paul Kop-sky, who represented one of the two bonding companies defending the case, was authorized after trial to represent both companies in settlement negotiations.

Sometime during the next six months, Mr. Campbell informed the court that settlement negotiations had failed. However, on October 7, 1971, Mr. Kopsky met alone with respondent and asked the matter be held up and that no ruling be entered because he, Kopsky, thought the case would be settled. Later that day respondent saw Mr. Fiandaca in the hallway of the courthouse and Fiandaca also suggested that the case could be settled.

On May 17, 1972, one year after the case was taken under advisement, Campbell’s firm forwarded to respondent a copy of a letter received from a Dr. Sandall, a staff psychiatrist of the St. Louis State Hospital, advising that he had been treating Cheryl Cole and that “it would be beneficial to the progress of her state if some decision is reached in the court case.” Respondent apparently did not reply to this letter.

Thereafter respondent received two letters from attorney Campbell requesting that the case be decided. The first, in December, 1973, pointed out that a full stenographic transcript of the hearing had been made, referred to the Sandall letter Campbell forwarded in May, 1972, and advised respondent that the losing party would certainly appeal to the circuit court. Respondent well knew that neither party could appeal until a ruling was made. The second letter requesting action was sent to respondent by Mr. Campbell on July 15, 1974, stating:

My records indicate the above cases were taken under submission on May 26, 1971. As you are no doubt aware, a full transcript of the proceedings were made, and has been filed with the Court together with extensive memorandums of law. The cases now have been under submission for over three years. In the meantime, the movant-exceptor, Cheryl Ann Cole, has been adjudicated an incompetent. On a previous occasion, approximately one and a half years ago, our office advised you that the physician for Miss Cole was of the opinion that the continued pendency of this action was a factor aggravating her mental health.

Asking then that the matter be concluded, the letter ends,

In the event that you feel for some reason that you should not make a decision in the cases, I would request that you disqualify yourself and certify the matters to the Circuit Court.

Again we find no record of an oral or written response having been made to these letters.

In April of 1973, respondent had been interviewed by Donald Wolff, representing the Commission, concerning a complaint by Campbell regarding respondent’s failure to decide the case. Respondent finally rendered his decision in the case in May, 1975, and an appeal was taken.

By way of explanation for this delay, respondent asserted that because he wished to avoid disrupting the relationship between Cheryl Cole and her aunt, he delayed his ruling in the hope that the case would be settled. While this may in part explain the delay in the early months the case was under submission, the delay of four years simply cannot be justified and must be characterized as misconduct under former Rules 2.02 and 2.07.

The second example of delay in deciding cases under submission involved the estate of Sommerlath. We do not recite the details except to note that respondent took twenty-one months to render his decision and we find respondent’s proffered justification insufficient to excuse the delay. In mitigation, we note that in the large volume of court business (though contested cases constitute a minor portion of the work of the court), only Cole and Sommerlath demonstrate unreasonable delay. Considering the circumstances of the cases discussed here and in light of the volume of court business, we censure respondent for his misconduct or willful neglect of duty in these matters but do not order the suspension urged by the Commission.

The next act of misconduct found by the Commission concerns respondent’s appointive powers. In this regard, former Rule 2.12 provided that appointees such as referees, guardians, etc., were to be selected “with a view solely to their character and fitness.” (Emphasis added.) The Rule further states that the power of making such appointments should not be exercised by him “for personal or partisan advantage.” Late in 1974, respondent directed that the name of an attorney be removed from the list of inheritance tax appraisers in the St. Louis County Probate Court, though he had served in that capacity from time to time for more than ten years, including periods before and after respondent assumed office. In March, 1975, the attorney inquired why his name was taken from the list. Respondent replied that he had learned the attorney had voted against him in a confidential poll conducted by the Missouri Bar. In the hearing, respondent testified he had been informed of the attorney’s Bar poll vote in late 1974, but that he had removed the attorney mainly because his work was not good and “he just wasn’t doing the job.” While the court should be given wide latitude in selecting such appointees, careful attention with the provisions of Rule 2.12 was required (after July, 1975, the Code of Judicial Conduct controls), but in this instance we do not believe that the Commission’s finding of misconduct was sustained by the record.

The final allegation of misconduct with which we deal centers on the personal conduct of respondent in his dealings with attorneys appearing before the court. Former Rule 2.10 stated in part, “A judge should be courteous to counsel and also to all others appearing . in the court.” This theme is repeated in Canon 3 A(3) as follows: “A judge should be patient, dignified, and courteous to litigants, jurors, witnesses, lawyers, and others with whom he deals in his official capacity

The Commission found Judge Kohn discourteous in that he was inaccessible and difficult to contact. Attorneys were required to work their way through an array of underlings, who insulated him from counsel, creating unnecessary delays in their work. The testimony of two witnesses support this finding. Numerous witnesses, including six presented by the Commission, testified they had no trouble arranging to see respondent, and seemed reconciled to the necessity for advance appointment. All witnesses testified that Judge Kohn’s demeanor to them in personal contacts and in the courtroom was courteous. We find that the burden of showing violation of the Canons as to this charge was not met.

The Commission has moved to strike respondent’s brief for failure to comply with the requirements of Rule 84.04. We overrule the motion.

Finally, the Commission report reflects that a number of the Commissioners considered removal appropriate in this case because of what they considered an intransigent attitude respondent demonstrated throughout the hearing as to any change in his behavior or the operation of the probate court. Accordingly we emphasize for the benefit of respondent that attorneys coming to the bar are officers of the court entitled to the courteous treatment expressed in the Canons from respondent and those in his employ. The bench must uniformly protect the dignity to which our brethren at the bar are justly entitled and it is unbecoming when jurists lose sight of the fact they have been practitioners of the law and remain active participants in this noble profession.

No member of the bench should long be permitted to conduct himself in a manner contrary to the Code. However, we trust respondent will reexamine the St. Louis County Probate Court Procedures and encourage the reasonable exercise of discretion of those in charge of their administration. We hardly need add that courteous and respectful treatment should henceforth be extended to all appearing in respondent’s court, including those who testified on behalf of the Commission and cooperated in its investigation. Confident that conduct of the sort here censured will not recur, we direct that the disqualification imposed by Rule 12.07 during pendency of the Commission’s recommendations to this Court be terminated.

MORGAN, C. J., and BARDGETT, FINCH, DONNELLY, RENDLEN and SEILER, JJ., concur.

SIMEONE, J., not participating because not a member of the Court when cause was submitted.

      . All references to rules are to Supreme Court Rules unless otherwise indicated.

      . Canons cited herein are from the present Code of Judicial Conduct, adopted as Supreme Court Rule 2, effective July 1, 1975. The former Canons of Judicial Ethics, effective March 1, 1967 — June 30, 1975, will be cited as “former Rule 2_”

      . In respondent’s and intervenor’s brief, appendices have been attached containing affidavits asserting as fact that the legislative committees which fashioned Art. V, § 27, struck from the language of subsection (3) any reference to the then Canons and Judicial Ethics. This matter was not developed in the testimony nor does it otherwise appear of record. The proffered affidavits were not brought here under stipulation nor ordered as a supplement to the transcript and no opportunity has been afforded the Commission to cross-examine the affiants, accordingly the affidavits may not be considered evidence in the cause. See State ex rel. Highway Commission v. Parker, 388 S.W.2d 830, 832 (Mo.1965); State v. Galeener, 402 S.W.2d 336, 342 (Mo.1966); State ex rel. Freeze v. The City of Cape Girardeau, 523 S.W.2d 123, 127 (Mo.App.1975).

      . A number of other charges were found unsupported by the evidence and an examination of the record convinces us that the Commission was justified in that determination. We need not burden this opinion with a discussion of those allegations.

      . It has been held that the probate courts have such inherent powers “as may be necessary to the proper exercise of their express powers.” In re Schield’s Estate, 250 S.W.2d 151, 156 (Mo.1952). While we need not decide the question, it may be argued that such courts have authority to adopt rules reasonably necessary for the administration of the business coming before them. The Commission raises no question as to the rulemaking power of the probate court.

      . A probate auditor, examining the semi-annual settlement in a decedent’s estate, refused to accept as evidence of the payment of a municipal tax fill, the photocopy of both sides of a $14.00 check thereby delaying the settlement. However, this action was consistent with joint probate Rule 12.040 requiring that proof of payment of such claims ($500 or less) made without order of court be in the form of receipted itemized statements, not photocopies of canceled checks.
      In another case, a Kirkwood attorney with offices twelve miles distant from the courthouse, requested by telephone that a probate clerk as an accommodation to him, deliver a summons, issued by the probate court, across the hall to the sheriffs office. He was told that the staff of the probate court was not permitted so to do and he must make other arrangements for delivery of the summons to the sheriff. This matter was brought to respondent’s attention, and after consultation with the sheriff’s office this uncooperative practice was discontinued.
      Another attorney ran afoul an unwritten rule of the court that an order of refusal of letters would issue without production of a death certificate if the application for the order was prepared by the attorney in his office, but if the same petition was prepared in the probate court a death certificate would be required.

        Procedural difficulties encountered by one attorney involved his petition in a decedent’s estate for the continued employment of a housekeeper to protect valuables and to maintain the decedent’s residence in presentable condition for showing to prospective purchasers. The petition was disapproved. Thereafter a new petition describing the same employee of the decedent’s estate as a guard received the court’s approval.
      A complaint illustrating the strictness of the court auditors concerned a $7,000,000 estate, the settlement of which was delayed because of a $300 utility bill. It was insisted the bill be allocated between the portion relating to service received before and that received after the death.
      An attorney handling a minor’s guardianship estate in which the sole assets were the funds from the settlement of a personal injury claim petitioned for an order of no further process to eliminate the need for filing annual settlements and for payment of annual guardian bond premiums. Before the order would be approved, the court required that detailed and precise restrictions be placed on payments from the account. Although the attorney expressed his view that the court’s auditors “were adversaries of lawyers practicing before the court,” respondent offered a satisfactory, albeit somewhat technical explanation for these requirements.
      In the estate of Grotpeter, complaint was made by an attorney who testified concerning the auditing and legal departments’ refusal to approve the petition for certain repairs and termite inspection as to property sold pursuant to the directions of the will.
      Another instance involved the complaints of an attorney for a decedent’s estate who was required to make at least three trips to the courthouse to resolve a problem concerning an heir’s refusal to receipt the bequest or cash a check of $1.00 constituting his distributive share of the estate. The problem was finally concluded by the attorney’s filing a copy of his letter of transmittal, a copy of the receipt for registered mail and a copy of the check.
      One practice of the court which the Commission did not explicitly recite in support of its findings was known to the Bar as the “four o’clock rule.” Members of the court’s staff generally refused to transact business or meet with attorneys after four in the afternoon. This conduct by the staff made absolute what is listed only as a suggestion in the joint probate court rules that attorneys bring in probate matters before that time of day. Respondent disputed how strictly the “four o’clock rule” was applied, but approved of it in principle as a means of providing a period of uninterrupted work time for his staff, especially the auditors.

      . In December, 1972, the Commission Chairman advised respondent by letter of complaints the Commission had received concerning his court, including (1) unnecessary delays in conferring with clerks and auditors, (2) the “four o’clock rule”, (3) disrespectful treatment of attorneys by the staff, and (4) the difficulty in arranging conferences with respondent. In the spring of 1973, an attorney appointed by the Commission to conduct an informal investigation of attorneys’ complaints spoke with respondent of these and similar matters. This informal investigation terminated in 1973 without a finding of probable cause (required by Rule 12.08(a)) to initiate formal disciplinary proceedings. A second investigation in 1977 resulted in these proceedings.

      . Respondent’s failure to advise Campbell of this ex parte conversation is in part explained by the fact that Fiandaca, as an attorney, would be expected to communicate these matters to Campbell and requires no disciplinary action.


author: FINCH, Judge.

text:
    Rina L. PIZZURRO, Plaintiff-Appellant, v. ESTATE of John O. HICHEW, Deceased, Marion H. Hichew, Executrix, Defendant-Respondent.
    No. 60371.
    Supreme Court of Missouri, En Banc.
    July 24, 1978.
    Thomas M. Gioia, St. Louis, for appellant.
    Stephen D. Hoyne, James J. Amelung, Amelung, Wulff & Willenbrock, St. Louis, for respondent.
   FINCH, Judge.

During the course of litigation involving plaintiff, Rina Pizzurro, her former husband, Vito Pizzurro, Oasis Car Wash, Inc. (hereinafter Oasis), Oasis Oil Co., Inc., (two corporations owned entirely by the Pizzur-ros) and several other parties, John 0. Hi-chew was appointed as receiver pendente lite of each of the corporations. While that case was pending, but after the death of Hichew, plaintiff filed the petition herein against the estate of Hichew seeking damages claimed to have resulted from an alleged conflict of interest and breach of a fiduciary duty by Hichew when in his capacity as receiver he negotiated a lease agreement between Oasis and Shell Oil Company, Inc. The trial court dismissed the petition without prejudice and plaintiff appealed. The Missouri Court of Appeals affirmed. We ordered the case transferred and we now decide the case as though here on direct appeal. We affirm.

The petition was in two counts. Count I alleged that plaintiff owned 50 per cent of the stock of Oasis Car Wash, Inc., “[t]hat Plaintiff brings this action in the right of said corporation as a stockholder thereof in behalf of herself and all other stockholders similarly situated . . . [t]hat Plaintiff has made no effort to secure action from the directors or all other shareholders of said corporation relating to the bringing of this action for the reason that said attempt or effort would have been futile”; that plaintiff is and was a joint owner of real estate which plaintiff leased to Oasis for $3,000.00 per month and Oasis in turn subleased to Shell Oil Co., Inc., for $3,000.00 per month at the same time; that at the termination of said sublease Hichew, as receiver for Oasis, negotiated a new sublease between Oasis and Shell which obligated Shell to pay only $2,000.00 a month which was considerably less than the prior lease; that Hichew and the law firm of which he was a partner represented Shell Oil Co., Inc., in an attorney-client relationship; that plaintiff negotiated a sale of the realty with Shell but the sale was never consummated because the other joint owner was unavailable; that with full knowledge of the prior offer by Shell to purchase the realty in question Hichew refused to enter into any kind of sale agreement among Shell, plaintiff and Oasis; and that as a result of the conflict of interest Oasis was damaged in the sum of $250,000.

Count II realleged “each and every allegation contained in Count I” and further alleged that Oasis was under a contractual obligation to pay plaintiff and the other joint owner of the realty $3,000.00 per month for rent under the lease between plaintiff and Oasis but “by virtue of Defendant’s aforementioned conflict of interest and resultant damage no sums were paid to Plaintiff subsequent to January 1971, . . ..” It alleged damages to plaintiff of $144,000.

Defendant filed a motion to dismiss plaintiff’s petition alleging failure to state a claim upon which relief could be granted or in the alternative asking that plaintiff make her petition more definite and certain. Subsequently, new counsel were employed by defendant and they filed another motion to dismiss which set out four separate grounds for dismissal. These were (1) that the plaintiff’s petition attempted to state a stockholder’s derivative action but failed to comply with the requirements of Rule 52.09, V.A.M.R., (2) that a successor receiver was appointed and plaintiff was not the real party in interest, (3) that the lease with Shell Oil Company about which the petition complained had been presented as a proposal in the receivership case to which plaintiff was a party and that the lease had been approved by the court at that time, as a result of which the matter of the propriety of the lease was res judicata, and (4) that the case in which a receiver had been appointed was then pending and it concerned the same subject matter as in plaintiff’s petition so that said petition ought to be dismissed. The latter ground was asserted pursuant to Rule 55.27(a)(10).

The transcript on appeal shows that on September 24, 1976, “motion of defendant to dismiss was called, heard and submitted” and that on September 27 it was sustained without prejudice. The order did not state the grounds for the decision or whether the court was acting on the first or second motion to dismiss. However, we treat the second motion to dismiss as an amendment of or supplement to the earlier motion to dismiss so that it is considered to include all of the grounds asserted in both motions. If any of said grounds are valid, the trial court’s order dismissing the petition must be affirmed. McClellan v. Highland Sales & Investment Co., 514 S.W.2d 371, 374 (Mo.App.1974).

It is clear that Count I of the petition was an attempt by plaintiff to assert a stockholder’s derivative action on behalf of the corporation. Said count failed to meet the requirements of Rule 52.09 because it did not “allege with particularity the efforts, if any, made by the plaintiff to obtain the action [she] desires from the directors or comparable authority and, if necessary, from the shareholders or members, and the reasons for [her] failure to obtain the action or for not making the effort.” It merely alleged that such demand would be “futile.” A similar petition which alleged that a demand would be “fruitless” was held deficient in O’Maley v. ISC Industries, Inc., 519 S.W.2d 346, 349 (Mo.App.1975).

While the trial court did not specify the ground on which it was dismissing Count I without prejudice, it is apparent that it was justified on the basis of the assertion in the second motion that it did not comply with the requirements of Rule 52.09 for a stockholder’s derivative action. We hold that Count I was not sufficient under Rule 52.09 and the court properly dismissed that count without prejudice. Thus, we need not address the other grounds asserted to justify dismissal of Count I.

Count II realleged all of Count I which would seem to indicate that it, too, was a stockholder’s derivative action. However, Count II also alleged that Oasis was under a contractual obligation to pay plaintiff and the other joint owner of the realty (plaintiff’s ex-husband) the sum of $3,000 per month as rental, that said rentals had not been paid, that this was the result of defendant’s alleged conflict of interest and that plaintiff, as a result, had been damaged in the amount of $144,000. These allegations indicate an attempt to state a cause of action on behalf of plaintiff individually and we so treat it. Therefore, Rule 52.09 was not applicable to Count II. The issue we must resolve is whether for any of the other reasons asserted in defendant’s motion, the court correctly dismissed Count II.

In considering this question, we note that in reaching its decision on defendant’s motion to dismiss, the trial court was asked to and did take judicial notice of the contents of the circuit court’s file in cause number 319,687, then pending in the Circuit Court of St. Louis County. Accordingly, in order to assist the court on appeal to review the trial court’s action, the parties have stipulated that the record on appeal in this case shall include the transcript filed in cause numbers 36763 and 38524 in the Missouri Court of Appeals, St. Louis District (558 S.W.2d 683) and a certified copy of the order of the Circuit Court of St. Louis County appointing Vincent Flynn as successor receiver of Oasis. Pursuant to said stipulation, said transcripts and documents were ordered filed and made a part of the record on appeal in this case.

By Count II plaintiff sought to relitigate and have determined anew various questions previously heard and determined by the Circuit Court of St. Louis County in the receivership proceeding. In the first place, as previously noted, plaintiff’s petition alleged as a basis for her action a conflict of interest on the part of Hichew in that he acted as receiver of Oasis and at the same time was a partner in a law firm which represented Shell Oil Company, Inc., which had a lease arrangement with Oasis. That issue, as shown by the record on appeal, was raised and passed upon by the court in the receivership. Plaintiff, a party in that action, asked that a receiver for Oasis be appointed. The court granted that request and appointed Hichew. Plaintiff objected to him and sought his removal, asserting a conflict of interest by reason of his firm’s representation of Shell and the fact that Shell’s lease was terminating shortly. The court heard those objections but overruled them declining to remove Hichew.

Next, plaintiff alleged as a basis of recovery that as a result of Hichew’s conflict of interest he negotiated an inadequate renewal sublease with Shell which called for rentals of $2,000 per month instead of $3,000 as under the prior lease. In that connection she alleged that she had negotiated a sale of the property (owned individually by her and her ex-husband) to Shell for $136,000 plus $18,000 a year for ten years but that it was not consummated because the other joint owner did not join therein. She further alleged that Hichew did not join therein and in her brief complains that Hichew did not take that proposed sale and the value it indicated into consideration in negotiating the new lease with Shell and did not advise the court thereof when submitting the Shell lease for approval. .

Again, these allegations pertain to matters which have been litigated previously in the receivership proceeding. The record on appeal discloses that Hichew as receiver filed in cause number 319,687 a petition for authority to enter into a new sublease with Shell for $2,000 per month. It alleged that under the existing lease between plaintiff and her ex-husband as owners and Oasis, it was the obligation of the owners to supply all equipment for the operation of the car wash and filling station. It alleged that the car wash equipment, and particularly the conveyor system, was outmoded and worn out and required repair or replacement which would cost approximately $20,-000 and that money for that purpose was not available from the owners or from receivership funds. The petition alleged that in the proposed sublease to Shell it agreed, in addition to the monthly rentals to be paid, to modernize the car wash equipment and the service station equipment and buildings at a cost not to exceed $40,000. A copy of the foregoing petition and proposed sublease was served on plaintiff’s attorney and he and plaintiff were present in court when the petition was under consideration. The record discloses discussion concerning the sublease in which plaintiff’s attorney participated. He made no objection to the sublease or to the rental therein provided and did not claim the rental was inadequate. Neither plaintiff nor her attorney mentioned the sale negotiated by plaintiff with Shell although plaintiff obviously had knowledge thereof. When the court indicated it might not approve the sublease, plaintiff’s attorney stressed the deterioration of the equipment and the urgency of doing something and stated that the sublease would help. Later, when a final account of Hichew’s receivership was filed, plaintiff filed objections thereto which raised this same issue. Those objections were overruled. Plaintiff now seeks to litigate again in this suit the advisability and propriety of the sublease to Shell.

Finally, plaintiff seeks recovery on the basis that Hichew, as receiver of Oasis, was obligated to pay monthly rental of $3,000 to plaintiff and her ex-husband but did not do so and that plaintiff has been damaged as a result. Reference to the record on appeal discloses that in the receivership proceeding plaintiff sought an order from the court for payment by Hichew of this monthly rental of $3,000 and that Hichew sought instructions from the court with reference to payment of such rentals. The court recognized that amounts were due under the lease between the Pizzurros and Oasis but did not order or authorize Hichew to make the payments and he did not make them. Following Hichew’s death a final accounting covering his receivership was filed. Plaintiff filed objections thereto which asserted that she was entitled to rentals of $1,500 per month but that Hichew had not paid them but instead preferred other creditors. These objections were overruled.

If plaintiff was dissatisfied with what the court did or did not do with reference to the foregoing matters, her means of redress was by appeal in cause 319,687. She cannot forego such appeal and substitute therefor a new hearing and new determination in this case of those same questions previously presented and acted upon in the receivership. That is what plaintiff sought to do in Count II of her petition. The cases of Gardine v. Cottey, 360 Mo. 681, 230 S.W.2d 731 (Mo. banc 1950), McCarty v. McCarty, 300 S.W.2d 394 (Mo.1957), and Acorn Printing Co. v. Brown, 385 S.W.2d 12 (Mo.App.1964), all cited and relied on by plaintiff to support her right of action, have no relevancy to the right of plaintiff to relitigate and determine anew issues raised and decided in the receivership proceeding.

The trial court dismissed Count II without prejudice. That action was consistent with a finding that the issues on which plaintiff sought recovery were involved in and acted on in the receivership proceeding. The record on appeal clearly shows this to be true. By dismissing Count II without prejudice, the trial court, in effect, said to plaintiff that if she wanted to pursue those issues further and establish them as a basis of recovery, she must do so in the receivership proceeding (still pending) where they had been heard previously. Dismissal without prejudice permitted that.

We conclude and hold that the court’s action in dismissing Count II without prejudice was proper and should be affirmed.

Defendant’s motion for damages against plaintiff for frivolous appeal (Rule 84.19) is denied.

The judgment is affirmed.

MORGAN, C. J., BARDGETT, DONNELLY, RENDLEN and SEILER, JJ., and HOUSER, Special Judge, concur.

SIMEONE, J., not participating because not a member of the court when cause was submitted.

      . This case was the one wherein Hichew was appointed receiver of Oasis. Two consolidated appeals in that case are reported as Oasis Car Wash, Inc. v. First North County Bank, 558 S.W.2d 683 (Mo.App.1977). Those appeals were dismissed because not timely as to the order appointing the receiver and because the other matters appealed from were not final judgments and the appeal was premature.

      . Plaintiffs appeal from that order, taken three years later, was dismissed as untimely in Oasis Car Wash, Inc. v. First North County Bank, 558 S.W.2d 683 (Mo.App.1977), but the court noted in footnote 1 to said opinion that plaintiff would have the right to have that question reviewed on appeal from a final judgment in that case. Section 512.020, RSMo 1969.


author: STOCKARD, Special Judge. HOUSER, Special Judge,

text:
    KIRKWOOD-EASTON TIRE COMPANY, Appellant, v. ST. LOUIS COUNTY, Missouri, Respondent.
    No. 60374.
    Supreme Court of Missouri, En Banc.
    July 24, 1978.
    Alan G. Kimbrell, Rosecan, Popkin & Chervitz, St. Louis, for appellant.
    Marilyn Wallach, Thomas W. Wehrle, Christine C. Pernoud, Clayton, for respondent.
   STOCKARD, Special Judge.

In this action for breach of contract the trial court entered judgment dismissing plaintiff’s petition for failure to state a cause of action. An appeal was taken to the Missouri Court of Appeals; St. Louis District, which affirmed the judgment, but upon application of plaintiff the case was transferred here by order of this court. We now determine the cause “the same as on original appeal.” Mo.Const. Art. V, § 10.

Appellant is in the business of selling automobile and truck tires. In July 1975 the County invited bids for tires needed to equip its fleet of automobiles and trucks. All bids were to conform to specifications published by the County which were to be incorporated into a contract between the County and the successful bidder.

Appellant submitted a bid that was “accepted” by the County. The parties executed an instrument evidencing the agreement which incorporated as a part thereof the specifications and bid.

Appellant pleaded that during the contract period the County purchased tires and tubes from suppliers other than it, and that the County thereby breached and repudiated the contract to the damage of appellant in the amount of $16,000.00.

Appellant contends that the agreement entered into was a “requirements contract,” and that the County was legally obligated to purchase from appellant those tires and tubes described in the specifications during the period of the contract. Appellant relies on the following provisions in the contract:

“It is * * * agreed that * * * the SUPPLIER shall furnish and deliver to the COUNTY for ALL DEPARTMENTS & AGENCIES, Tires and Tubes in accordance with the attached Bid Form and Specifications. CONTRACT TERM: September 1, 1975 through August 31, 1976. * * * The following equipment shall be furnished complete and ready for operation and shall be delivered to St. Louis County Departments as required on a contractual basis * *. The estimated requirement to be in excess of $70,000.00.”

Respondent County did not file an answer, but by way of argument in its brief it asserts that it awarded more than one contract and was entitled to purchase tires and tubes from another supplier. It relies on the following provision in the bid form, which was made a part of the contract, as its authority to award more than one contract.

“H. Method of Award
A dual or multiple award may be issued if it is in the best interest of the County. Items may be awarded on an item per item basis.”

A “requirements contract” is one in which one party promises to supply all the specific goods or services which the other party may need during a certain period at an agreed price, and the other party promises that he will obtain his required goods or services from the first party exclusively. Shader Contractors, Inc. v. United States, 276 F.2d 1, 149 Ct.Cl. 535 (1960); Laclede Gas Company v. Amoco Oil Company, 522 F.2d 33 (8th Cir. 1975). Missouri has for some time recognized and enforced “requirements contracts.” Missouri Portland Cement Company v. Denny Concrete Company, Inc., 499 S.W.2d 432 (Mo.1973); Banner Creamery Co. v. Judy, 47 S.W.2d 129 (Mo.App.1932); Cantrell v. Knight, 72 S.W.2d 196 (Mo.App.1934). We think it clear, and the County does not contend otherwise, that the petition pleads the existence, and breach, of a “requirements contract,” see Great Eastern Oil Co. v. DeMert & Dougherty, Inc., 350 Mo. 535, 166 S.W.2d 490 (1942), unless the provisions of paragraph H, set out above, result in there being no obligation on the part of the County to purchase from appellant any of the items- described in the bid form and the specifications. However, the petition should not be dismissed on this basis unless it can be said as a matter of law that this is the result.

In considering the sufficiency of the petition on a motion to dismiss, the allegations are to be construed liberally and favorably to the plaintiff, giving it the benefit of all inferences fairly deducible from the facts stated. Hall v. Smith, 355 S.W.2d 52 (Mo.1962); Scheibel v. Hillis, 531 S.W.2d 285 (Mo. banc 1976).

We are of the opinion that when so considered the language of paragraph H results in the agreement being ambiguous. Paragraph H appears in the bid form, and it reasonably could be construed to constitute no more than notice to the prospective bidders that the items therein described might be split, and that an award for some of the items might be made to one bidder and an award for the remaining items might be made to other bidders. When the bid form was returned by appellant with the price set out at the side of each item described therein, an offer was made by appellant to sell the items at the stated prices. When the County accepted the bid and entered into a contract in which it incorporated as a part of that contract all items described on the bid form, it elected not to make a “dual or multiple award,” and once the contract was executed the force and effect of paragraph H ceased. We do not now say that this construction is compelled, but it is not inconsistent with the language of the agreement when considered in its entirety.

In view of the ambiguity resulting from the provisions of paragraph H, the full and complete intention of the parties cannot be ascertained from an examination alone of the written contract. In this circumstance extrinsic evidence is admissible to resolve the ambiguities, supplement the writing and determine the intention of the parties. Modine Manufacturing Company v. Cariock, 510 S.W.2d 462 (Mo.1974); Fisher v. Miceli, 291 S.W.2d 845 (Mo.1956).

The judgment is reversed and the cause remanded.

MORGAN, C. J., and BARDGETT, DON-NELLY, RENDLEN and SEILER, JJ. concur.

HOUSER, Special Judge, concurs in separate concurring opinion filed.

FINCH, J., not sitting.

SIMEONE, J., not participating because not a member of the court when cause was submitted.

HOUSER, Special Judge,

concurring.

I agree that the contract pleaded is ambiguous for the reason stated in the opinion of Stockard, Sp. J., and for the further reason that the words “as required” as used in the writing are susceptible of different interpretations. I concur in that part of the opinion reversing the judgment of dismissal and remanding the cause. On remand plaintiff will have an opportunity to amend its petition to allege any available extrinsic facts not inconsistent, contradictory of or repugnant to the terms of the contract, which may assist in resolving these ambiguities and which may properly supplement the writing and complete an entire and workable agreement, such as relevant oral agreements and understandings between the parties; past course of dealing between the parties, if any; customs and usages of the parties in previous dealings between the county and this supplier or other suppliers under this or other contracts containing this ambiguous terminology, etc.