STATE BAR OF ARIZONA, a public corporation, and Ashby I. Lohse, Harry L. Buchanan, William C. Frey, Jerry H. Glenn, Henry R. Merchant, Jr., Robert H. Renaud and Sidney Weissberger, individually and as Members of the Committee on Unauthorized Practice of the said State Bar of Arizona, Appellants and Cross-Appellees,
ARIZONA LAND TITLE AND TRUST COMPANY, an Arizona corporation; Arizona Title Guarantee and Trust Company, an Arizona corporation; Lane Title and Trust Company, an Arizona corporation; Phoenix Title and Trust Company, an Arizona corporation, and Tucson Title Insurance Company, an Arizona corporation, Appellees and Cross-appellants. Ashby I. LOHSE, Appellant,
Ford HOFFMAN and C. L. Hoffman, doing business as Ford Hoffman Fealty, Appellee.
[90 Ariz. 79] Darrell R. Parker (deceased), Leslie C. Hardy and John E. Madden, Phoenix, for appellants.
Boyle, Bilby, Thompson & Shoenhair, Tucson, for appellee and cross-appellant Arizona Land Title & Trust Co.
Perry & Perry, Phoenix, for appellee and cross-appellant Arizona Title Guarantee & Trust Co.
Cunningham, Carson & Messinger, Phoenix, for appellee and cross-appellant Phoenix Title & Trust Co.
Darnell, Holesapple, McFall & Spaid, Tucson, for appellee and cross-appellant Tucson Title Insurance Co.
Jennings, Strouss, Salmon & Trask and William T. Birmingham, Phoenix, for appellee Lane Title & Trust Co.
Stephen B. Rayburn, Phoenix, for appellee Ford Hoffman and C. L. Hoffman, dba Ford Hoffman Realty.
F. Trowbridge vom Baur, Washinton, D. C., E. N. Eisenhower, Tacoma, Wash., Terrell Marshall, Little Rock, Ark., Raymond Reisler, Brooklyn, N.Y., Thomas J. Boodell, Chicago, Ill., Jonathan F. Ells, Winsted, Conn., H. H. Perry, Jr., Albany, Ga., and Melvin F. Adler, Fort Worth, Tex., for American Bar Ass'n, as amicus curiae.
The plaintiffs, the integrated State Bar of Arizona and certain attoneys individually and as members of the State Bar Committee on Unauthorized practice, filed [90 Ariz. 80] two complaints for a declaratory judgment. One was against the defendants Ford Hoffman and C. L. Hoffman, dba Ford Hoffman Realty, hereafter referred to as Hoffmans, the other against the Arizona Land Title & Trust Company, Arizona Title
Guarantee & Trust Company, Lane Title & Trust Company, Phoenix Title & Trust Co., and Tucson Title Insurance Co., hereafter referred to collectively as the title companies, all Arizona corporations engaged in the land title insurance business, and in many instances also acting in other fiduciary or representative capacities, such as executor, administrator, trustee, broker, receiver, underwriter, depository and agent, general or escrow.
The essence of the complaint against the title companies is that they, acting by and through attorneys and other persons employed by them, in connection with the conduct of their businesses and transactions have been and are regularly and continuously preparing, drafting and formulating documents affecting title to real property for their numerous 'clients, patrons, and customers', and giving legal advice regarding such transactions and instruments so drafted, constituting the unauthorized practice of law.
The complaint against Hoffmans alleges that as real estate brokers and salesmen they procured the sale of an equity in certain real property, which was in escrow with a title company in Phoenix, Arizona, and thereafter prevailed upon the sellers to permit Hoffmans to handle the escrow by advising that they were competent and qualified to handle it and that the parties to the transaction would be as fully protected from a legal standpoint as if the escrow were handled by the title company. The complaint further alleges that Hoffmans advised that they were competent and qualified to draft and prepare all the necessary contracts, deeds, bills of sale and other instruments necessary to the transaction; that the sellers permitted the Hoffmans to handle the transaction, including drafting of certain instruments affecting the title to the real property, and that the Hoffmans charged $8.00 for drafting of the legal documents. Plaintiffs claimed that Hoffmans were illegally engaged in the practice of law, and prayed for a declaratory judgment to that effect, together with an adjudication holding them in contempt of court for unauthorized practice of law, together with an injunction restraining and enjoining them from doing any further acts of the same kind or character, except preparation of the customary preliminary purchase agreement executed on printed forms prepared for such purpose.
These consolidated cases went to trial, extensive evidence both oral and documentary was adduced, and the trial court entered numerous findings of facts and conclusions of law, and a judgment based thereon. It denied injunctive relief or [90 Ariz. 81] any adjudication of contempt, as being unnecessary. It concluded that the inherent power to supervise all lawyers and all phases of the practice of law, is in the Supreme Court of this state; that he State Legislature may specify minimum qualifications for lawyers and grounds for discipline and disbarment, but may not curtail or limit the power of the court to control and supervise both court and office practice as well as certain aspects of the personal lives of the lawyers admitted to practice before the courts. It further found that the Canons of professional Ethics (undoubtedly referring to those adopted by the American Bar Association) apply to all phases of the practice of law both by statute and by rule of the Supreme Court. The balance of the conclusions of law are chiefly devoted to an attempt to define 'the practice of law' in a general sense, and to an enumeration of exceptions to certain 'activities which are properly within the sphere and scope of the office practice of law' which the court determined might be engaged in by one other than a duly licensed attorney at law. The trial court based such conclusions on the proposition that such activities are necessary or proper incidents to the conduct of lawful business, (1) established by virtue of long-standing custom, or (2) under certain circumstances by legislation or court decision. In such enumeration of exceptions, the court approved some of the conduct and activities of the several defendants, and disapproved others, entering its declaratory judgment in accordance therewith.
Plaintiffs appealed, assigning as error in the Hoffman case the court's holdings (1) that by statute there was a legislative intent that a real estate broker may engage in the basic aspects of conveyancing in relation to lands 'sold' by him for his patrons, (2) that certain acts and conduct of the Hoffmans were 'long-standing customary activities carried on by real estate brokers and salesmen in Arizona in connection with transactions in which they are brokers and salesmen, and incidental and customary activities of persons engaged in the real estate business', and (3) that Hoffmans as such licensed real estate brokers could properly, without being guilty of engaging in the unauthorized practice of law, continue to engage in such activities and conduct. With regard to the title companies, plaintiffs' assignments of error, addressed to certain findings of fact and conclusions of law, fall into two categories, viz., that the court thereby (1) approved the practice of law by a corporation, when consisting of acts and conduct incidental to the general business of the corporation, and (2) found that it is in the public interest and consistent with the established and long existing business and economic customs that the title companies be permitted to conduct their respective businesses [90 Ariz. 82] as they have in the past, subject to some specific limitations.
Each of the title companies, except Lane Title & Trust Co., filed a cross appeal. Hoffmans filed no answering briefs, and were not represented on the appeal. Each of the title companies filed a separate brief, and several distinguished counsel from other jurisdictions joined in briefs amicus curiae on behalf of the American Bar Association. There are numerous assignments of error upon each cross appeal. However, the principal contention of each of the title companies also falls into classifications: (1) that their conduct in the drafting and preparation of documents affecting title to real estate, and explanation of the effect of such documents, does not constitute the practice of law in Arizona, (2) that such conduct by reason of long established customs and practice of the title companies is incidental to their lawful business, and in the absence of a specific showing that it is not in the public interest, does not constitute the unauthorized practice of law. We will therefore discuss these issues under general categories.
These propositions involving similar circumstances have been advanced in many jurisdictions in our country, resulting in conflicts of opinion. Since this is a matter of first impression in this jurisdiction, and one of considerable importance to the public in general, as well as to the litigants involved, we deem it pertinent and proper to examine not only the cases but also the sources from which our regulation of the practice of law in the United States has developed, and from which present-day conceptions of the legal profession have sprung.
The Rule of Law.
From the inception of our national form of government, we have recognized and attempted to proceed under a system which is commonly referred to as 'the rule of law'. 'The rule of law', signifies equality in the determination of the rights, responsibilities and relationships of individuals under established law, instead of by edict or the shifting whims of dictatorial authority. To give force and effect to such established law, lawyers have been found necessary. The general public has had difficulty in understanding the role and responsibilities of lawyers when general and local conditions have created dissatisfaction because of failures in the administration of justice. This engenders a transference of resentment against lawyers for real or fancied inadequacies in the law. For a better understanding of the role of lawyers under the 'rule of law', we briefly examine the genesis and development of the legal profession to its status in our country today.
The Legal Profession.
Lawyers are members of the legal profession. Webster defines 'profession' as:
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'The occupation, if not purely commercial, mechanical, or agricultural, or the like, to which one devotes oneself; a calling in which one professes to have acquired some special knowledge used by way either of instructing or advising others or of serving them in some art; as, the profession of arms, of teaching, of chemist. The three professions or learned professions, is a name often used for the professions of theology, law and medicine.' Webster, New International Dictionary 1976 (2d Ed. 1961) (Emphasis supplied.)
Dean Roscoe Pound in referring to these three 'learned professions', makes this analysis:
'Historically there are three ideas involved in a profession: organization, learning, i. e., pursuit of a learned art, and a spirit of public service. These are essential. A further idea, that of gaining a livelihood, is involved in all callings. It is the main if not the only purpose in the purely money making callings. In a profession it is incidental.
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'The best service of the professional man is often rendered for no equivilent or for a trifling equivilent and it is his pride to do what he does in a way worthy of his profession even if done with no expectation of reward. This spirit of public service in which the profession of law is and ought to be exercised is a prerequisite of sound administration of justice according to law. The other two elements of a profession, namely, organization and pursuit of a learned art have their justification in that they secure and maintain that spirit.' Pound, The Lawyer from Antiquity to Modern Times 6, 10 (1953). (Emphasis supplied.)
The seeds of our legal profession are found in ancient Greece, where ethical customs, religious rites, law in general and social control as a whole were implicit in the meaning of 'law'. The patriarchal duties of the head of a household to interpret these 'laws' to those under his protection, gradually were assumed by 'interpreters' whose special learning in custom and tradition gave them the role of consultants on how to carry on litigation, how to predict a decision, or how to decide a controversy. Litigation was conducted before a tribunal consisting of large bodies of citizens in what amounted to popular assemblies, who were not bound by 'the rule of law' as we know it. This gave rise to professional speech writers, who for a fee, drew up a speech for a client who delivered it before the tribunal. The Roman orator who derived from these speech writers was the forerunner of the modern advocate. In the fifth and sixth centuries B.C., advocates ceased to be mere orators and were trained [90 Ariz. 84] by study in law schools which had gradually evolved. A fixed number was attached to each court, the law recognized fees and fixed the scale, and professional discipline was provided for. The three functions of (1) adviser regarding wills and conveyances, formal transactions, citizens' legal rights and duties, (2) agent for litigation, i. e. those who prepared a case for trial, (3) trial lawyer or advocate, developed in Rome.
In the dark days of the middle ages, when civilization was overrun by barbarians, the Germanic law was purely local. There was no written body of decisions or laws to establish precedent or uniformity, and thus no need for a legal profession. The Christian church preserved much of the fundamental forms of Roman laws and procedure in ecclesiastical courts, until, because of conflicting claims on the part of church and monarch in England, common law courts began to emerge. While there is evidence of some 'attorneys' appearing in court for litigants, the legal profession as we know it was not evident before the middle of the thirteenth century.
'Before the end of the thirteenth century there already exists a legal profession, a class of men who make
money by representing litigants before the courts and giving legal advice.
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'* * * In that year (1292) King Edward directed his Justices to provide for every county a sufficient number of attorneys and apprentices from among the best, the most lawful and the most teachable, so that King and people will be well served. * * * By this measure, which, however, may not have been the first of its kind, 'both branches of the profession' were placed under the control of the justices, and apparently a monopoly was secured for those who had been thus appointed.' Pollock & Maitland, The History of English Law 211, 216 (2d Ed. 1952). (Emphasis supplied.).
In the seventeenth century:
'Attorneys therefore did the bulk of the more straightforward conveyancing and drafting of pleadings, while the barristers acted as consulting experts. * * * In the meanwhile, many students of the Inns of Court specialized in pleading and conveyancing, and practiced as members of new subdivisions of the legal profession as 'pleaders', 'equity draftsmen' and 'conveyancers'.' Plucknett, A Concise History of the Common Law 226 (5th Ed. 1956). (Emphasis supplied.)
From these beginnings, and through a system unnecessary to detail here, the English legal system produced trained lawyers whose functions were and still are frequently specialized.
[90 Ariz. 85] The legal profession in this country had its inception in lawyers who had been trained in the common law of England. Dean Pound points out that because of Puritan hostility to English lawyers, lack of printed information as to English law, the supremacy of the clergy in the colonies, and interference by royal ...