Brief for Respondent — In re Corey

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Opinion below ......... ce ceeeeceeeeereeesececeee veeees 1

ED cn nesbebsvetna andes per chendenesdeynsss shades 1

Questions presented .......... ee eeeeeeetereeeecees ences 1

Constitutional provisions involved ..............2eeeeeeeee 2

SE GC MED ncn cbchnseccecdanccedaveceeecucearen 3

DB Fee WI GRU ao vn vcccvscweciavnccsscecess 3

B. The disciplinary proceeding ..............eeeeeeees 5

APGUMEME 2. ccc ccccccccccccccccccccccceesccnceccccscese 7

A. Petitioner was afforded a full and fair notice of the

Charge antes BAM onc cc cccciccccecccecccccvecsces 7

B. Petitioner was afforded an opportunity to confront his

accusers and chose not to dO SO ........eeeceeeceees ll

C. Petitioner was not denied his right to an impartial

SN J iv cen inns edenedhiNeastkdeekhstekeeeeson 14

D. The case is unimportant and has little precedential

WEE GicAvsebe beees 608543),60545e be cn calenbekeesads 17

PED, oc icc aabivensucdewtekess Caunnsasssheenabaaes 18

Table of Authorities Cited

Cases Pages

California v. Green, 399 U.S. 149 (1970) ................ 12,13

Ex parte Wall, 107 U.S. 265 (1882) ...........ssceccees 9

Howard v. United States District Court for the District of

Colorado, 318 F.2d 521 (10th Cir. 1963) .............. 13

In re Cox, 164 Kan. 160, 188 P.2d 652 (1948) ........... 9

In re Lacy, 234 Mo. App. 71, 112 S.W.2d 594 (19387)...... 13

In re McBride, 164 Ohio St. 419, 182 N.E.2d 113 (1956),

ED ME 8.60 65s 48105 10 dK IN EK e AS OA OS 9

In re Ruffalo, 390 U.S. 544 (1968) ..........eeeeeeeeeees 7, 8,9

ii TasLe oF AUTHORITIES CITED

ages

In re Santosuosso, 318 Mass. 489, 62 N.E.2d 105 (1945) ... 13

In re Trask, 46 Haw. 404, 380 P.2d 751 (1963) .......... 9,16

Louisiana State Bar Ass’n v. Sackett, 231 La. 655, 92 So.

EE pn cup ae Rke ee aeee Kes Ned 6s RHC Kee ee 13

People v. Howard, 364 P.2d 380 (Colo. 1961), cert. den.

eee eee ee has pebwewn bike hee 18

Selling v. Radford, 243 U.S. 46 (1917) ..............000. 4

State Bar of Michigan v. Hartford, 282 Mich. 124, 275

ee ed dene neansanéeneesass 9

State Savings & Loan v. Corey, 53 Haw. 132, 488 P.2d 703

(1971), cert. den. 406 U.S. 920 (1972) ................

United States v. Bolden, 355 F.2d 453 (7th Cir. 1965) .... 14

United States v. Dichiarinte, 445 F.2d 126 (7th Cir. 1971) 14

United States v. Grinnell Corp., 384 U.S. 563 (1966) ..... 14

United States v. Valenti, 120 F.Supp. 76 (E.D. N.Y. 1954) 14

Constitutions

United States Constitution:

da du ciedghenei anes 2

cc cen dbkee ete sueaee eames 2

Rules

Commission of the Hawaii Bar Association:

eo kann ean’ 4, 16,17

ED nciecsssndeoveeses nhs etesteswinencneees 16,17

Texts

21 ALR 3d, Annotation, Disqualification of Judge For

Having Decided Different Case Against Litigant, p. 1369

SE atten eaminks xxdendew eae nesbaned acees 14

Iu the Supreme Court

OF THE

Rnited States

OcToBER TERM, 1973

No. 73-1450

In the Matter of Raupu E. Corey, Petitioner

BRIEF FOR RESPONDENT STATE OF HAWAII

OPINION BELOW

The opinion of the Supreme Court of Hawaii is re-

ported at 54 Haw ......., 515 P.2d 400 (1973).

JURISDICTION

The jurisdiction requisites are adequately set forth

in the petition.

QUESTIONS PRESENTED

A. Did the Petitioner receive a fair notice of the

charges against him when he was served with an order

2

to show cause why he should not be disciplined on the

basis of the record in a prior civil case in which a

jury found him guilty of fraud, and further was

served with a detailed specification of the portions of

that record which evidenced his fraudulent conduct}?

B. Was Petitioner’s constitutional right to con-

frontation violated by the admission in the discipli-

nary proceeding of portions of the prior civil record

evidencing his fraudulent conduct when (a) in the

prior proceeding he fully exercised his right to cross-

examine; and (b) in the disciplinary proceeding he

was afforded an opportunity to call the same or addi-

tional witnesses and elected not to do so?

C. Was Petitioner denied his right to an impartial

tribunal because the Justices of the Supreme Court

of Hawaii were familiar with his difficulties as a re

sult of their review of the prior fraud litigation when

there was no showing of bias which was extrajudicial

or personal ?

CONSTITUTIONAL PROVISIONS INVOLVED

The Sixth Amendment provides in relevant part:

“‘Tijn all criminal prosecutions, the accused

shall enjoy the right to a... trial, by an im

partial jury ... and to be informed of the nature

and cause of the accusation; to be confronted with

the witnesses against him, .. .”

The Fourteenth Amendment provides in relevant

part:

3

‘|, . nor shall any State deprive any person

of life, liberty, or property, without due process

of law...”

STATEMENT OF THE CASE

A. The Petitioner’s Fraud

In November 1963, Petitioner, a Hawaii attorney

and an officer and principal shareholder of Kauaian

Development Co., Inc., approached State Savings and

Loan Association in order to secure a loan to enable

Kauaian Development to construct a hotel condo-

minium project. (R. 80-82)

In connection with the loan application, Petitioner

represented that the cost of constructing the improve-

ments was a contruction contract in the amount of

$761,000.00 plus $60,000.00 for certain extra items.

(Ibid.)

This figure was relied on by State Savings in mak-

ing a loan of $857,000.00 in accordance with a com-

mitment to lend an amount not exceeding 65% of fhe

appraised value of the completed project or 65% of

the appraised value of the land plus construction

costs, whichever was less. (Ibid.)

Although Petitioner represented through his direct

action that the construction cost was $761,000.00 plus,

in reality the actual construction contract was

$600,000.00 plus $60,000.00 worth of apartments. (R.

83-84)

The contract for $761,000.00 plus was not for the

purpose of actual construction but was executed ‘‘for

4

financing purposes only.” Petitioner, fully aware of

this, nonetheless made the fraudulent representation

in order to obtain a larger construction loan than

would have otherwise been possible. (R. 84-85)

Sometime after the loan was made, Kauaian De.

velopment defaulted and in 1966 State Savings insti-

tuted a mortgage foreclosure suit. (R. 94) During the

trial of that action State Savings learned for the

first time the true amount of the construction contract,

It accordingly instituted a civil fraud action against

Petitioner and two of his associates. (R. 99-100) Ata

trial of that action in 1969, a jury awarded State Sav-

ings $109,694.10 against Petitioner and one of his

associates on the fraud count. This amount repre-

sented the difference between the unpaid balance of

the loan and the amount paid by State Savings for the

property at a court-ordered auction. The trial court

ordered a new trial on the issue of damages under the

fraud count but, before the new trial, appeals and

cross-appeals were taken and the Supreme Court of

Hawaii reinstated the jury’s verdict, noting that Peti-

tioner’s conduct in the case raised serious questions of

impropriety.'

After discovery of Petitioner’s fraud, the Vice Pres-

ident of State Savings and its attorney filed com-

plaints with the Supreme Court of Hawaii which were

duly referred to the Rule 16 Commission of the Ha-

waii Bar Association. (R. 100-101; 104-106) When the

Commission for various reasons had failed to proceed

18tate Savings & Loan v. Corey, 53 Haw. 132, 488 P.2d 103

(1971), cert. denied. 406 U.S. 920 (1972).

5

by the time of the Court’s decision in the State Sav-

ings case, it recommended that under the circum-

stances the Court should proceed with appropriate

disciplinary proceedings on its own motion. (R. 113-

114)

B. The Disciplinary Proceeding

On August 29, 1972, the Supreme Court of Hawaii

issued and caused to be served on Petitioner an order

to show cause directing Petitioner to file a written

statement on or before October 2, 1972, showing cause

why he should not be censured, suspended, or dis-

barred on the basis of the record in the State Savings

case. The Attorney General of Hawaii was requested

to appear in the proceedings as amicus curiae. (R.

1-2)

Petitioner failed to file a response on October 2,

1972, and instead filed a “Suggestion of Disqualifica-

tion” and a request for a stay. (R. 6-8)

In response to Petitioner’s request for a stay, the

Court extended the time to file the written statement

until October 10, 1972. (R. 17-18) On that date Peti-

tioner filed a response which raised various legal

defenses and denied the allegation that he had de-

frauded State Savings. (R. 40-49)

A preliminary hearing was held by the Court on

November 15, 1972. (R. 71)

As a result of that hearing the Supreme Court of

Hawaii ordered that it would consider relevant por-

tions of the State Savings case and further ordered

as follows:

6

“6. The Attorney General, or his deputy ap.

pearing in this matter, shall, on or before Decem-

ber 15, 1972, serve upon the Respondent’s attorney

and file with the clerk of this court a specification

of such portions of the transcript and exhibits in

State Savings and Loan Association v. Corey and

Kimbrough, No. 5021, as, in his opinion, would

support action by this court in censuring, sus

pending or disbarring Respondent, together with

a Memorandum of Law in support of such opin-

ion.

‘“*7, Respondent shall, on or before February

1, 1973 serve upon the Attorney General and file

with the clerk of this court a specification of such

portions of the transcript and exhibits in State

Savings and Loan Association v. Corey and Kim-

brough, No. 5021, as, in his opinion, indicate that

this court should not censure, suspend or dishar

Respondent, together with such offer of proof as

Respondent may wish to make in additional sup-

port of Respondent’s position, together with a

memorandum of law in support of Respondent’s

opinion, it being understood that the Attorney

General or his deputy shall have the burden of

proof in justifying disciplinary action against Re

spondent.” (R. 77-78) (Emphasis added.)

In response to said order, on December 15, 1972,

the Attorney General filed a detailed specification of

those portions of the State Savings record which evi-

denced Petitioner’s fraud. (R. 79-89)

On April 16, 1973, four months after he was served

with a copy of the Attorney General’s specifications,

Petitioner filed his response thereto, (R. 158) He spe

7

cified portions of the State Savings record which he

asserted supported his position but made no offer of

proof whatsoever with respect to any additional evi-

dence which he believed supported his position. (R.

158-514)

The Petitioner having filed no offer of proof, the

matter was set for oral argument on October 4, 1973.

(R. 517) On October 19, 1973, the Supreme Court of

Hawaii issued its opinion finding Petitioner guilty of

fraud and suspending his license to practice law for

six months. (R. 525-534)

ARGUMENT

A. PETITIONER WAS AFFORDED A FULL AND FAIR

NOTICE OF THE CHARGE AGAINST HIM

Petitioner’s initial argument for granting the writ

is that the Supreme Court of Hawaii did not afford

him notice as to (a) what conduct was the focus of the

disciplinary proceeding; and (b) what standard his

conduct was to be measured by. This he contends is

contrary to In re Ruffalo, 390 U.S. 544 (1968).

Petitioner plainly was afforded the notice required

by Ruffalo.

He was served with an Order to Show Cause why

he should not be disciplined on the basis of the record

in State Savings & Loan Association v. Corey and

Kimbrough, No. 5021, a proceeding in which a jury

found him guilty of civil fraud.

8

The entire focus of that case, as far as Petitioner

was concerned was whether he had defrauded a

savings and loan institution by intentionally mis.

representing the cost of construction of a hotel-

condominium in order to obtain a larger construction

loan than would otherwise have been possible. The

precise conduct by which Petitioner perpetrated the

fraud is set forth in the State Savings record.

In addition, prior to his opportunity to offer evi-

dence before the Supreme Court of Hawaii, Petitioner

was served with a detailed specification of those por-

tions of the State Savings record which evidenced his

fraudulent conduct. (R. 79-86)

It is simply absurd to suggest as Petitioner does

that he was not apprised of what conduct on his

part was the subject of the inquiry. The reference

to the record and subsequent specifications by the At

torney General fully apprised Petitioner of the con-

duct in question and provided him the fair notice of

the charge required by Ruffalo.

Further, this case plainly does not involve the con-

stitutional infirmities which required reversal in Ruf-

falo. There the attorney had been charged with solicit-

ing Federal Employers’ Liability Act plaintiffs

through an agent, one Orlando, who was a railroad

employee. At the hearing the attorney and Orlando

testified that Orlando merely investigated rather than

solicited cases. Thereafter the charge was amended to

allege that the attorney hired Orlando to investigate

Orlando’s own employer. This Court held that the pro-

ceedings became a trap when after they were under

9

way the charges were amended based on the testimony

of the accused.

Here there was no amendment of the charges. Peti-

tioner knew from the outset that he was accused

of defrauding the savings and loan institution. And

this conduct was the basis for his suspension.

Ruffalo does not hold as Petitioner states that pro-

cedural due process requires that he be notified prior

to the proceeding of any specific cannon violated by

his fraudulent conduct. And Petitioner has cited no

other authority for that proposition. Indeed, it is the

rule in Hawaii as in many other jurisdictions that to

hold an attorney answerable for unprofessional con-

duct it is unnecessary that his offense be spelled out

in some particular provision of a code of ethics or

statute. In re Trask, 46 Haw. 404, 380 P.2d 751

(1963) ; In re McBride, 164 Ohio St. 419, 132 N.E.2d

113 (1956); cert. den. 351 U.S. 965; In re Cox, 164

Kan. 160, 188 P.2d 652 (1948) ; State Bar of Michigan

v. Hartford, 282 Mich. 124, 275 N.W. 791 (1937). This

Court has long held that any conduct on the part of an

attorney. which evidences his unfitness and character

as an attorney is grounds for discipline. Ex parte

Wall, 107 U.S. 265 (1882); Selling v. Radford, 243

U.S. 46 (1917).

Moreover, here Petitioner was specifically informed,

prior to his opportunity to submit evidence, that con-

duet amounting to fraud necessarily reflected on his

professional character. Indeed, he was put on notice

that under the law of Hawaii no specific provision of

10

the canons or elsewhere need be pointed to. (R. 8

89)

Petitioner was not prejudiced when the Hawaii Su-

preme Court later noted in its opinion that fraudulent

conduct such as Petitioner’s violated a number of eth-

ical canons. He obviously had no legal defense which

notice of those canons would have enabled him to

make. Petitioner does not contend that fraud doesn't

constitute professional misconduct. The canons men-

tioned by the Court do not contain any different or

specific standards by which his conduct was measured.

This is not a criminal case where notice of the spe

cific statute is necessary in order for the defendant to

be apprised of each specific element of the crime and

of any defenses of it. The canons are intended asa

guide to professionals. They set forth standards of

conduct only in the most general terms. The pre

amble to the canons Petitioner violated provides:

“No code or set of rules can be framed, which

will particularize all the duties of the lawyer in

the varying phases of litigation or in all the rela-

tions of professional life. The following canons

of ethics are adopted by the American Bar Asso-

ciation as a general guide, yet the enumeration

of particular duties should not be construed as

a denial of others equally imperative, though not

specifically. mentioned.”

Here Petitioner was afforded a full and detailed no-

tice of the fraudulent conduct which constituted the

basis of the Court’s action. He was further informed

that such fraudulent conduct was grounds for dis¢i-

11

plinary action. This certainly satisfied the require-

ments of procedural due process.

B, PETITIONER WAS AFFORDED AN OPPORTUNITY TO

CONFRONT HIS ACCUSERS AND CHOSE NOT TO DO 80

Petitioner next complains that the Supreme Court

of Hawaii denied him any opportunity to examine

Brown (an officer of the savings and loan institution),

Campbell (the attorney for the savings and loan in-

stitution), and Young (his codefendant in the civil

fraud trial). This Petitioner says denied him his

right to procedural due process, including his rights

under the Confrontation Clause.

This simply mistates the record.

The Supreme Court of Hawaii, after preliminarily

ruling that portions of the State Savings record which

were relevant to the question of Petitioner’s fraud

could be admitted in the disciplinary proceeding, ap-

prised Petitioner that he could submit:

“, .. Such offer of proof as Respondent may

wish to make in additional support of Respond-

ent’s position, . . . it being understood that the

Attorney General or his deputy shall have the

burden of proof in justifying disciplinary action

against the Respondent.” (R. 77-78)

The Supreme Court of Hawaii made it clear that

the record in the State Savings case was admissible but

that Petitioner could offer such further proof which

he believed supported his position.

12

Petitioner never made any such offer. The case re

mained a paper case because Petitioner chose that it

remain so. The inference which can be drawn from

Petitioner’s choice is inescapable. He did not believe

he would benefit from further litigation of the facts

surrounding his fraud.

If Petitioner had such a burning desire to attack

Brown’s assurance that he relied on Petitioner’s mis-

representations or to challenge the testimony of his

former co-defendant Young, why didn’t he at least

make an offer of proof in this regard. He may not

now complain that he was denied a right which he

deliberately chose not to exercise.

Even if this were a criminal case, the admission

of the State Savings record by: the Supreme Court of

Hawaii would not violate Petitioner’s rights under the

Confrontation Clause under the standards announced

by this Court in California v. Green, 399 U.S. 149

(1970). There this Court held that (1) the Confronta-

tion Clause is not violated by the admission of a

declarant’s out-of-court statements as long as he is

subject to full cross-examination at the triai; and (2)

the Confrontation Clause is not violated, even in the

absence of an opportunity for cross-examination at

trial, if in the earlier proceeding the defendant had

the opportunity to cross-examine.

Here, of course, Petitioner had and extensively ex-

ercised his right to cross-examine the witnesses in the

State Savings case. In addition, he had the oppor-

tunity to examine them again in the disciplinary pro-

ceeding and elected not to do so, Either circumstance

13

would be sufficient to satisfy the requirements of

Green.

And, of course, the admission of the testimony ad-

duced in the civil fraud trial in the subsequent disci-

plinary: proceeding was in accord with the evidentiary

rule adopted by most jurisdictions which have consid-

ered the question. People v. Howard, 364 P.2d 380

(Colo. 1961), cert. den. 369 U.S. 819; Louisiana State

Bar Ass’n v. Sackett, 231 La. 655, 92 So.2d 571

(1957) ; In re Santosuosso, 318 Mass. 489, 62 N.E.2d

105 (1945) ; In re Lacy, 234 Mo. App. 71, 112 S.W.2d

594 (1937).

Subsequent to the Howard case, the Tenth Circuit

Court of Appeals, in affirming the District Court’s

disbarment of Howard based on the state proceedings,

said :

“Howard insists that the state proceedings de-

nied him due process and the right of confronta-

tion by the receipt of the records in the civil cases

against him. This point was presented to the

Colorado Supreme Court which upheld the use of

the records. Recognizing that the state decisions

are split on this issue, we find no denial of any

constitutional rights. Howard was a party to the

two civil cases and had full opportunity to exam-

ine and cross-examine the witnesses.” (Howard v.

United States District Court for the District of

Colorado, 318 F.2d 521, 523 (10th Cir. 1963).

Hawaii did not adopt a “no testimony will be ad-

duced” rule as Petitioner alleges. (Op. Br., p. 24) He

had the opportunity to and in fact did cross-examine

at length in the prior civil trial. He further had

14

the opporunity to call the same or additional witnesses

in the disciplinary proceeding. His constitutional

right to confrontation was not abridged.

©. PETITIONER WAS NOT DENIED HIS RIGHT TO

AN IMPARTIAL TRIBUNAL

Petitioner’s final argument is the most strained. He

asserts that because the Justices of the Hawaii Su-

preme Court had previously reviewed the civil fraud

case and had stated that his conduct there raised seri-

ous questions of impropriety, due process required

that they excuse themselves in the disciplinary pro-

ceeding.

This misstates the law.

It is well established that even in a criminal action

a judge is not disqualified by virtue of a former deci-

sion or expression in an earlier civil or criminal

litigation involving related facts. United States v. Di-

chiarinte, 445 F.2d 126 (7th Cir. 1971) ; United States

v. Bolden, 355 F.2d 453 (7th Cir. 1965) ; see, Annota-

tion, Disqualification of Judge For Having Decided

Different Case Against Litigant, 21 ALR 3d 1369

(1968).

Alleged bias and prejudice to be disqualifying must

stem from an extrajudicial or personal source. United

States v. Grinnell Corp., 384 U.S. 563 (1966).

As the Court said in United States v. Valenti, 120

F.Supp. 76, 85 (E.D. N.Y. 1954):

“The interdiction of the law is not the mere pos-

session of definite views regarding the law, or the

15

conduct of a party, or even a ‘prejudgment’ of the

matters in controversy, but rather an attitude of

personal enmity towards the party affiant, or in

favor of the adverse party to the detriment of

the former.”

Here there is no indication whatever that any of

the Justices harbored personal or extrajudicial bias

toward the Petitioner. Their knowledge of his frau-

dulent conduct was extensive but it was acquired in

the regular exercise of their judicial functions when

they reviewed the State Savings record. Petitioner

was a party to and vigorously defended that action.

The Justices’ familiarity with his difficulties was not

extra-judicial.

Petitioner, however, makes much of an alleged ex

parte surreptitious campaign to influence the Court.

He indicates this campaign was successful because the

Court failed to refer the charges to the Bar Associa-

tion’s Rule 16 Commission.

Again Petitioner misstates the record.

The so-called surreptitious campaign, insofar as

Petitioner’s fraud was concerned, consisted of a letter

written to the Court by Mr. Brown, the victim of the

fraud, on March 17, 1967. This was immediately re-

ferred to the appropriate committee of the Bar As-

sociation. (R. 100-101) The charge as set forth in

Brown’s letter was amended in a letter to the Court by

Mr. Campbell, attorney for State Savings, written on

October 11, 1969. (R. 104) This and a subsequent

letter by Brown were also referred by the Court to

the Bar Association’s committee. (R. 104-106) Peti-

16

tioner was informed of the charges on October 22

1969, prior to any action by the committee. (R. 106)

Indeed, he Bar Association never took action. After

numerous delays due to an inability to obtain attor-

neys to serve on the committee of inquiry, and in view

of the fact that by that time the Court had reviewed

the State Savings case, the Commission, on October 21,

1971, formally recommended to the Court that it pro-

ceed without awaiting a report from the Commission,

(R. 113-114) The Court followed this recommends-

tion.”

In short, the alleged ‘‘surreptitious campaign” con-

sisted of nothing more than complaints to the Court

by the victims of Petitioner’s fraud. These were re-

ferred to the Rule 16 Commission in accordance with

the Court’s usual procedure. When the Rule 16 Con-

mission had been unable to proceed by the time of the

State Savings decision, it recommended that under the

circumstances the Court should proceed independently.

The Court thus had good reasons not to follow the

normal procedures. It elected to do so, and acted

solely on the basis of evidence, in the form of the

State Savings record, adduced in the disciplinary pro-

ceeding. That evidence overwhelmingly supports the

2Under the law of Hawaii, the Supreme Court is not bound to

the Rule 16 procedure and may proceed on its own initiative and

prescribe such procedure as it deems appropriate, subject only to

the requirements of due process. In re Trask, 46 Haw. 404

(1963). Moreover, Rule 16(d) of its Rules then provided :

“(d) Limitations. The jurisdiction of this court and the

other courts of the State of Hawaii to grant appropriate

lief in causes involving professional misconduct or unauthor-

ized practice of law shall not be deemed to be limited, Te

stricted or abrogated by anything contained in this rule.”

17

charges against Petitioner. The record simply contains

no basis for Petitioner’s assertion that the well had

been poisoned.

D. THE CASE IS UNIMPORTANT AND HAS LITTLE

PRECEDENTIAL VALUE

Petitioner fails to offer any reasons for granting

the writ other than his contention that the decision is

wrong.

There are no such reasons. The imposition of a

six-month suspension may be important to Petitioner,

but it does not amount to a permanent loss of liveli-

hood and is not so severe as to warrant the time and

attention of this Court.

More importantly, this case quite obviously turns

on its individual facts. The procedure followed by the

Supreme Court of Hawaii was necessitated by the

unique circumstances of this case. The Bar Associa-

tion’s Rule 16 Commission after a long delay had been

unable to act and had specifically recommended that

the Court proceed independently of Rule 16. Further,

the Court in exercising its judicial functions had al-

ready become familiar with Petitioner’s fraudulent

conduct. Accordingly, it acted under its inherent

power to regulate the conduct of attorneys. This was

in accord with Rule 16(d) of its rules then in effect

which provided that nothing in the rule limited the

inherent power to grant appropriate relief in cases

of professional misconduct. That rule has since been

amended, See Appendix E to the Petition. It is cer-

18

tainly unlikely that this procedure would be follc ed

in future cases.

CONCLUSION

For the reasons set forth above, it is respectfull

submitted that this petition for a writ of certioras

should be denied. 5

Dated, Honolulu, Hawaii,

April 23, 1974.

Respectfully submitted,

GEORGE Pat,

Attorney General, State of Hawaii,

E. JoHN McConneELL, JR,

Nosvuki Kamina,

Deputy Attorneys General,

Attorneys for Respondent ;

State of Hawaii, ,

(Appendices Follow)

Appendix A

7 In the Supreme Court of the State of Hawaii

: October Term 1973

In the Matter of Ralph E. Corey,

Attorney at Law

No. 5344

[Filed October 19, 1973]

a

I (CHARDSON, C.J., ABE, LEVINSON and KosayasHi, JJ.,

» and Cmourr Jupce Virousex in place of Marv-

oe moto, J., Recused

A ttorney and Client—jurisdiction of courts.

; % The supreme court has authority over matters

| concerning disciplinary action of members of the

|. bar.

‘San >—character and conduct.

© Active participation in fraud or even silence of

an attorney where he has knowledge of the cur-

» rent perpetration of a fraud by his client upon

» another is professional misconduct which merits

® disciplinary action by the court.

Sa same,

An attorney engaged in practice of law is held

to the same highest standards of ethical and moral

me

uprightness and fair dealing when acting as 4

businessman or when acting as a lawyer and is

subject to disciplinary action if he fails to main.

tain those standards in either capacity.

Same—same.

While commercial activities are not forbidden

a lawyer, he must see that his dealings as a busi-

nessman are as upright as should be his dealings

in his professional capacity.

Per Curiam. This is an original proceeding ini-

tiated by this court on an order to show cause issued

by this court ordering respondent Ralph E. Corey,

Esq., to file a written statement showing cause why he

should not be censured, suspended, or disbarred from

all the courts of the State of Hawaii based on the

record of the case entitled State Savings and Loan

Association v. Ralph E. Corey and Robert M. Kim-

brough and Wallace C. S. Young, No. 5021. The attor-

ney general of the State of Hawaii was requested,

personally or through a deputy, to appear in the pro-

ceeding as amicus curiae.

By order of this court filed November 16, 1972, this

court ordered, inter alia, as follows:

a. Respondent’s request for permission to in-

spect the records and files of the Supreme Court

Rule 16(c) Commission relating to this matter is

granted ;

b. The attorney general, or his deputy appear-

ing in this matter, shall serve upon the respond-

iii

ent’s attorney and file with the clerk of this court

a specification of such portions of the transcript

and exhibits in said State Savings case, No. 5021,

as, in his opinion, would support action by this

court in censuring, suspending or disbarring re-

spondent, together with a memorandum of law in

support of such opinion;

c. Respondent shall serve upon the attorney

general and file with the clerk of this court a

specification of such portions of the transcript and

exhibits in said State Savings case, No. 5021, as,

in his opinion, indicate that this court should not

censure, suspend or disbar respondent, together

with such offer of proof as respondent may wish

to make im additional support of respondent’s

position, together with a memorandum of law in

support of respondent’s opinion, tt being under-

stood that the attorney general or his deputy shall

have the burden of proof in justifying discipli-

nary action against the respondent. (Emphasis

added.)

The specifications and memoranda of law were

; filed by the attorney general and the respondent.

However, though given the opportunity, the respond-

. ent failed to file any offer of proof which would addi-

t tionally support respondent’s position herein.

This court has jurisdiction over matters concern-

ing disciplinary action of members of the bar. HRS

§ 605-1, as amended by Act 184, sec. 1(a), S.L.H.

1972,

iv

After a thorough and complete review of the re.

ord of said case we are of the opinion that respond.

ent is guilty of misrepresentation amounting to fraud

and thus as an attorney is guilty of professional mis.

conduct. The record of said case shows that responi-

ent, who was a substantial shareholder, a corporate

officer (vice president) and corporate attorney of

Kauaian Development Company, a corporation, com-

mitted said misrepresentation in his effort to obtain

for said corporation a mortgage loan from State Sav-

ings and Loan Association for the construction of a

hotel-condominium.

A brief summary of the facts herein is as follows:

Respondent, as attorney and corporate officer, was

fully aware of the fact that there were two construc-

tion contracts:

1. Construction contract dated October 28, 1963,

stating in pertinent parts as follows:

WirTNeEssETH, that the Contractor [Better Built

Hawaii, Ltd.] and the Owner [Kauaian Develop-

ment Company, Inc.] for the considerations here-

inafter named agree as follows:

The Contractor shall furnish all of the materials

and perform all of the work shown on the Draw-

ings and described in the Specifications entitled

“The Kauaian Hyatt House” prepared by ...,

acting as and in these Contract Documents en-

titled the Architect; and shall do everything re

quired by this Agreement, the General Conditions

of the Contract, the Specifications and the Draw-

ings.

eS oe eee

v

The Owner shall pay the Contractor for the per-

formance of the Contract, subject to additions

and deductions provided therein, in current funds

as follows: SEVEN HuNDRED Srxty-ONE THOUSAND

Five HUNDRED AND NO/100 Dotuars ($761,500.00).

THe OWNER SHALL HAVE THE OPTION TO Pay THE

CoNTRACTOR AN ALTERNATE CONTRACT AMOUNT OF:

Cost PLus 7%, Cost Betna DETERMINED BY

SranparD A.I.A. ACCOUNTING PROCEDURE.

2. Construction Contract dated November 8, 1963,

executed by and between Better Built Hawaii, Ltd.,

as contractor, and Kauaian Development Company,

Inc., as owner, stating as follows:

It is agreed between Better Built Hawaii, Inc.

and Kauaian Development Company, Ine. that a

new cost figure has been reached relative to the

Kauaian Hyatt House and subject price is now

$600,000 total cost for all contractual work, in-

cluding rock wall and fill and pier facilities. In

addition, an agreement is reached whereby any

savings under $600,000 will be divided equally

between Better Built Hawaii, Inc. and Kauaian

Development Company, Inc. In addition, Mr.

Emil A. Offer, and/or Better Built Hawaii, Inc.

will receive $60,000 worth of apartments in the

Kauaian Hyatt House upon completion of the

contract.

The construction contract dated October 28, 1963,

was not for the purpose of actual construction but was

executed only for the purpose of obtaining construc-

tion financing from State Savings and Loan Associa-

tion. However, State Savings and Loan Association

was not informed that said construction contract was

—

for financing purpose only and not for actual construc

tion purposes and was led to believe that the sai

contract was the actual construction contract, Th

actual contract for construction purposes was th

contract dated November 8, 1963. Notwithstandin,

the existence of the actual construction contract, re

spondent as said corporate attorney and corporat

officer represented to State Savings and Loan Asso

ciation that the cost of construction of the improve

ments was determined on the construction contrac

referring to a maximum amount of $761,000.00, an

respondent failed to inform and/or cause to have th

said mortgagee informed that the actual constructio

contract cost was $600,000.00 plus rather than prem

ised on the contract referring to the sum o

$761,000.00. Said representation by respondent wa

by direct actions and also by way of acquiescene

through silence on the part of respondent durin:

various meetings held with the mortgagee in thei

discussions, negotiations and consummation of th

mortgage loan.

The record of the present proceeding substantiate

the fact to be that the purpose of respondent in fail

ing to inform the mortgagee of the actual cost 0

construction in the sum of $600,000.00 plus was t

acquire a larger mortgage loan than would have hee

possible if the actual construction contract had bee

used for the financing purposes. Mortgagee, not knov

ing of the actual construction contract and relying ¢

respondent’s representation that the cost of constru

tion was determined on the contract referring to tl

——

vii

sum of $761,000.00, did on January 17, 1964, grant

the mortgage loan in question to respondent’s cor-

poration.

The conduct of the respondent was in violation of

the following canons of ethics which were in effect

when said misrepresentation occurred :'

Canon 15—How Far A Lawyer May Go IN

SupporTina A CLIENT’s Cause. ... The office of

attorney does not permit, much less does it de-

mand of him for any client, violation of law or

any manner of fraud or chicane. He must obey

his own conscience and not that of his client.

Canon 16—REsTRAINING CLIENTS FROM IMPRO-

prieties. A lawyer should use his best efforts to

restrain and to prevent his clients from doing

those things which the lawyer himself ought not

to do,.... If a client persists in such wrong-

doing the lawyer should terminate their relation.

Canon 29—UPHOLDING THE HONOR OF THE

PROFESSION. ... He should strive at all times to

uphold the honor and to maintain the dignity of

the profession and to improve not only the law

but the administration of justice.

Canon 32—THE Lawyer’s Duty 1n Its Last

Anatysis. No client, corporate or individual,

however powerful, nor any cause, civil or political,

however important, is entitled to receive, nor

should any lawyer render any service or advice

involving disloyalty to the law whose ministers

1Under Rule 16(a) of the Rules of the Supreme Court of

Hawaii which were applicable at the time the misrepresentation

occured in November-December, 1963, the canons of professional

ethies as adopted by the American Bar Association were in effect

and are applied here.

——

we are, or disrespect of the judicial office, wh

we are bound to uphold, or corruption of

person or persons exercising a public office

private trust, or deception or betrayal of |

public. When rendering any such improper se

ice or advice, the lawyer invites and merits st;

and just condemnation. ...

In a case involving the participation of an atton

in the fraudulent sale of a bakery, the New Y

Supreme Court, Appellate Division, found the att

ney ‘‘.. . guilty of professional misconduct by reas

of his active participation in the fraud, his sile

when he knew the buyer was being defrauded and

violation of a fiduciary relationship as escrow hok

of the moneys paid by the buyer”, and disbarred hi

In re Sherman, 65 N.Y.S.2d 802, 803, 271 A.D. 4

(1946).

It is well settled that an attorney engaged

practice of law is held to the same “high

standards of ethical and moral uprightness a

fair dealing” when acting as a businessman

when acting as a lawyer and is subject to d

ciplinary action if he fails to maintain th

standards in either capacity. Marco v. Dull

169 F.Supp. 622, 631 (S.D.N.Y. 1959).

While commercial activities are not forbidden

lawyer, he “must see that his dealings as a bu

ness man are as upright as should be his dealir

in his professional capacity” ... . Matter

Chartoff, 116 A.D.2d 277, 280, 227 N.Y.S.2d 5

581 (1962).

_ = ———

ix

The above stated principles regarding the conduct

of an attorney either in his professional capacity or

as a businessman are those for which we find Mr.

Corey has shown a complete disregard.

The respondent has failed to show cause why he

should not be censured, suspended or disbarred. Is-

sues raised in this proceeding by respondent are with-

out merit.

We therefore, based on the record herein, suspend

his license to practice law before all the courts of the

state of Hawaii for a period of six months effective

thirty days after entry of judgment in this case by

this court.

William S. Richardson

Kazuhisa Abe

Bernard H. Levinson

Bert T. Kobayashi

Betty M. Vitousek

Helen B. Ryan (Ryan and

Ryan of counsel) for

respondent.

E. John McConnell, Jr.,

Deputy Attorney General

(George Pai, Attorney

General, of counsel)

for State of Hawaii,

amicus curiae,

Appendix B

No. 5344

In the Supreme Court of the State of Hawaii

October Term 1973

In the Matter of

Ralph E. Corey,

Attorney at Law

[Filed Nov. 28, 1973]

JUDGMENT

George Pai 609,

Attorney General,

State of Hawaii,

E. John McConnell, Jr. 782,

Deputy Attorney General,

State of Hawaii,

Hawaii State Capitol,

415 South Beretania Street,

Honolulu, Hawaii 96813,

Tel. No. 548-4740,

Attorneys for State of Hawaii

No. 5344

In the Supreme Court of the State of Hawaii

October Term 1973

In the Matter of

Ralph E, Corey,

Attorney at Law

JUDGMENT

Pursuant to the opinions of the Supreme Court of

the State of Hawaii filed in this original proceeding

on October 19, 1973 and November 5, 1973;

It Is Hereby Ordered, Adjudged and Decreed, that

the license of respondent Ralph E. Corey, Esq., to

practice law before all the courts of the State of

Hawaii be suspended for a period of six months;

It Is Hereby Further Ordered, Adjudged and De-

creed, that such suspension shall be stayed on the

following terms:

a) that respondent, without delay, initiate his con-

_ templated petition for writ of certiorari or appeal to

_ the Supreme Court of the United States and expedi-

_ tiously complete his requirements for said petition

: or appeal ;

_ b) that the stay granted herein shall remain in

effect until the conclusion of the review of the judg-

ment of this court by the Supreme Court of

United States;

c) that, in the event the Supreme Court of.

United States denies respondent’s petition for a y

of certiorari or appeal or sustains the judgment

this Court in suspending respondent’s license to pr

tice law, the said suspension shall become effect

thirty days from the date of said denial or order

the Supreme Court of the United States.

Dated: Honolulu, Hawaii, Nov. 28, 1973.

By the Court:

Clement J. H. Chun

Clerk

Approved:

(Seal) Bert T. Kobayashi

Justice

Pes

San