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In re Russell

Supreme Court of Arizona

June 16, 1941

In the Matter of JOHN E. RUSSELL, a Member of the State Bar

Original proceeding in disbarment under "State Bar Act" and upon record filed in Supreme Court by Board of Governors of State Bar of Arizona. Respondent disbarred.

(No appearance for State Bar.)

Mr. John E. Russell, Respondent, in propria persona.

OPINION

[57 Ariz. 396] McALISTER, J.

Two complaints against John E. Russell, of Prescott, Arizona, accusing him of unprofessional conduct as a member of the bar of this state, were filed with administrative committee No. 2 of the state bar, the first one in July, 1939, by the Islay Investment, Incorporated, a Michigan corporation, through its president, Donald J. Campbell, of that state, and the second in February, 1940, by the Yavapai Gold and Silver Mining Company, an Arizona corporation, through its president, Thomas Turner, Jr., of Los Angeles, California.

These complaints were heard by the administrative committee and respondent was present and testified; the proceedings were reported by a stenographer and a transcript of his notes is a part of the files. A majority of the committee held respondent guilty of reprehensible and unethical conduct on four of the six charges contained in the two complaints and recommended suspension. A complete record of these proceedings, together with the committee's recommendations, [57 Ariz. 397] were lodged with the board of governors of the state bar, as required by section 32-335, Arizona Code of 1939, and that body, without taking additional evidence and following respondent's failure to reply to the charges or appear before the board, either in person or by attorney, after being notified of the hearing, sent to this court the complete record with a recommendation of disbarment.

The complaint of the Islay Investment, Incorporated, is in three counts and the substance of the first is that on March 18, 1938, respondent, after having represented to its president, Donald J. Campbell, that he had an interest in twelve mining claims situated in the Hassayampa mining district of Yavapai county, Arizona, and also that he had power of attorney from their owner, George T. Scholey, executed a contract for their sale to the Islay Investment, Incorporated, for $15,000 and accepted a check for $2,500 from the purchaser, $1,113 of which was in payment of the first installment of this contract, when he was not the attorney in fact for Scholey, had no interest in the claims and no authority from Scholey to agree to sell them; that only six of the claims were owned by George T. Scholey, the others being

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the property of Ed Scholey, of Jerome, Arizona, from whom respondent had no authority whatever to sell; that the execution of the contract of sale was not confirmed or approved by either of the Scholeys and, as a consequence, the Islay Investment, Incorporated, acquired no right to purchase the claims and was defrauded by respondent of $1,113 which he received and still retains.

The allegations of the second count of this complaint are identical with those of the first, except that they refer to the execution by respondent on the same day of a contract for the sale by him to the same purchaser for $19,000 of four claims located also in the Hassayampa [57 Ariz. 398] mining district but belonging to one William Giese and to the further fact that the first payment thereon was $1,387. However, no evidence was introduced in support of this count and the administrative committee recommended its dismissal. It is mentioned only in explanation of the check for $2,500 which was given respondent in payment of the first installment under both contracts, that portion of it intended to satisfy the first payment on the Scholey claims being, according to the averments, retained by him.

The first count is based on these facts: On March 18, 1938, George T. Scholey was the owner of twelve mining claims situated in the Hassayampa mining district of Yavapai county, Arizona, known as the Spruce Mountain group, though six of these had been deeded by him to his son Ed to secure exemption from annual labor but were at the same time conveyed back to the father, the deed being placed in the hands of respondent who had seen Scholey's attorney for a number of years. Some time in 1935 or 1936 probably the latter, Scholey verbally authorized respondent to handle these claims for him and this authority continued to January 8, 1937, when Scholey made his daughter, Mrs. John R. Franks, of Prescott, his attorney in fact while he was out of the United States, and he left for the Philippine Islands on January 9, 1937, and returned in September, 1939. He was not sure whether he advised respondent of his daughter's appointment but thought he knew it. But whether he did have this knowledge respondent, acting upon his verbal authority to sell the claims for $1,000 each, executed the contract for their sale for $15,000 and accepted the first payment thereon of $1,113. He wrote Scholey on April 8, 1938, that a deal was pending but did not advise him that it had been made, though he testified that he later furnished definite information regarding [57 Ariz. 399] it. However, Scholey testified that he knew nothing of the contract with the Islay Investment, Incorporated, until he returned to the United States in September, 1939, and that he received no part of the $1,113. Respondent furnished him a statement of the account between them after this payment had been made, though it does not appear just when, and it showed him still indebted to respondent. The account was not satisfactory to Scholey in that it contained costs of surveying and attorney's fees, for he had not authorized the former and had no knowledge of any attorney's fees being due. According to respondent, the account did not contain attorney's fees only but expenses incurred. He stated that he had carried through the proceedings for Scholey as administrator of the Charley Behm estate from which he later acquired the Spruce Mountain claims, collected money for him and did a lot of things of this kind for him. He was "hard up" and respondent took nothing at the time. Scholey testified that he would have ratified the contract if the $1,113 had been paid to him.

Respondent admits that he had no written authority to execute the contract of sale and that he knew this was necessary before he could give a deed, but states that he acted upon the theory that Scholey would make the deed direct to the purchaser or give him power of attorney to do so, and his reason for assuming this was that he had made four deals on this property prior to that time for Sholey without any writing whatever and in one of these $8,000 of a larger consideration had been paid before the purchaser decided to discontinue payments. The Spruce Mountain claims were part of a larger group and it appears from a letter written by Donald J. Campbell to W. W. Linesba about a month after the contract for their sale was executed, the Islay Investment, Incorporated, decided to repudiate [57 Ariz. 400] a deal that had been theretofore made by it on the Midnight Test group, and respondent thought its failure to make any movement towards doing the assessment work on the Spruce Mountain group meant that it had decided to repudiate the deal as to it also. In fact the local committee found that the contract for the sale of these twelve claims would have been abandoned regardless of respondent's

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actions because the principal deal, due to complainant's dissatisfaction with matters concerning it, failed, and that while the contract was terminated because the sellers were ...


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