People ex rel. Kent v. Denious

196 P.2d 257, 118 Colo. 342
CourtSupreme Court of Colorado
DecidedJune 28, 1948
DocketNo. 15,749
StatusPublished
Cited by7 cases

This text of 196 P.2d 257 (People ex rel. Kent v. Denious) is published on Counsel Stack Legal Research, covering Supreme Court of Colorado primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
People ex rel. Kent v. Denious, 196 P.2d 257, 118 Colo. 342 (Colo. 1948).

Opinions

Mr. Justice Stone

delivered the opinion of the court.

LoRaine Good Kent as petitioner filed in this court complaint charging unprofessional conduct on the part of respondent Denious in connection with his services as attorney and trustee, and prayed for his disbarment. The matter was referred for hearing to the Honorable H. E. Munson, district judge of the thirteenth judicial district, and upon his death, it was reassigned to the Honorable John M. Meikle, district judge of the fourth judicial district, with instructions to conduct a full hearing and make report of his findings to this court. Hearing of the issues required some seventeen days of testimony and consideration of voluminous records, and thereafter the referee made full and careful analysis of the evidence with report thereof to this court, finding all the issues in favor of respondent. Thereto petitioner filed objections, supported by briefs and oral argument, and these are now before us for consideration. No abstract of the testimony has been presented so it has been necessary to study the entire record without that assistance. A comprehensive review of the 1200 pages of testimony and many exhibits received in the proceeding would serve no purpose. Consequently, we shall make only brief summary.

This proceeding arose out of a long continued relationship of respondent as attorney and business adviser to petitioner and her predecessors. Upon the admission of respondent Denious to the bar in 1902, among the clients of the office where he was employed who camte to him for advice, was John Good, a successful brewer of Denver. Good subsequently united his business with that of one Burghardt under the name of the Tivoli-Union [345]*345Brewery and the operating, sales, and investment activities of the company were later handled through three corporations—the Tivoli Union Company, the Western Products Company, and the Fortuna Company, together herein referred to as the Tivoli companies. Good owned approximately seven-eighths interest in these companies and Burghardt the balance. Until Good’s death in 1918, he was in almost daily contact with respondent concerning legal or business matters. Thereafter Burghardt took control of the operation of the brewery, and Good’s son, John E. Good, became active trustee of his father’s estate and president of the Tivoli companies. Respondent continued as adviser, attorney, and close friend of John E. Good until the death of the latter in 1931, when respondent became successor trustee of his estate, and his elderly widow and petitioner, who had married John E. Good in 1927, became holders of the beneficial interest therein. Burghardt’s activities decreased because of age, until his retirement about 1935. Upon the death of the senior Mrs. Good in 1936, petitioner, who thereupon became the sole owner of both the John Good and John E. Good estates, took up her residence in Florida and New York, paid only brief and infrequent visits to Denver, and turned over to respondent the entire burden of management of the brewery, and the investment of the estates which she had inherited.

Title to properties belonging to the estates, other than those of the Tivoli companies, was placed in the name of the Erie Investment Company, a corporation of which petitioner owned and held the entire capital stock, except for shares which were assigned to respondent and his associates to permit their sole management of the properties, and this same procedure was followed as to her interest in the Tivoli companies.

The prohibition period in Colorado from 1916 to 1933 reduced the activities of the Tivoli brewery to the unprofitable making of near beer. Upon return of the brewing business in 1933, there was no surplus in the [346]*346treasury and the plant required modernizing and renewal, so there were no earnings to permit dividends from 1916 until late 1938. Due to the subsequent general business depression, handling of the other estate investments became difficult: ' leases were cancelled, loans were in default, mortgages required foreclosure, and income was uncertain. During the period from July 1, 1937, to November 15, 1945, petitioner took from the estate for personal expenditures over $463,000 and there was further paid out for her personal taxes, interest, etc., some $537,000, making a total paid out for her benefit of over $1,000,000, while, her total income for the period was approximately $637,000. During each of those years petitioner borrowed money in anticipation of income.

The record contains no charge nor inference that respondent failed in any respect to manage petitioner’s business interests and properties and investments with diligence and skill during the difficult years of his control, or that he failed to' use sound legal judgment either in directing her diversified business interests or in handling' the family litigation arising in connection with her inheritance.

As analyzed by the referee and accepted by counsel, the two “causes of complaint” set out in the petition encompass four specific claims of misconduct on the part of respondent, which, considered in chronological order, are'in substance as follows:

(1) That respondent failed and refused fully and correctly to advise petitioner as to the value of her properties and the income therefrom, and that the information furnished her was calculated to lead her to believe that her income was considerably less than it actually was;

(2) That in 1938 respondent advised petitioner that she should purchase the Burghardt interest in the Tivoli companies but that she did not have the money to pur-' chase it, and that respondent would buy the stock for her and let her pay for it when she had the money; that' [347]*347respondent did so purchase the stock, and held it until 1945 and received large dividends thereon, when, in fact, petitioner at all times had the necessary funds or credit to purchase said stock and had she been correctly informed as to its earnings and her ability to purchase it she would have purchased it directly from the Burghardt estate and received the dividends therefrom;

(3) That in- May, 1945, petitioner called respondent by telephone asking him forthwith to advance to her the sum of approximately $20,000 from her estate; that respondent advised her that funds were not available for such advancement; that she did not have the necessary credit at the bank; that the only way she could secure the funds in question was to sell him stock in the Tivoli companies at the same price for which the Burghardt stock had been purchased in 1938; that petitioner, relying on his advice, sold respondent said stock at far less than its value; that respondent received large dividends thereon and that petitioner would not have sold said stock had she been properly advised.

(4) That the Tivoli companies held title to two Broadway properties in Denver of a value of not less than $40,000, and that without petitioner’s knowledge said properties, were transferred by respondent to a corporation solely owned by him for a consideration of $25,-000 with the intent of realizing a' personal profit thereon to himself. ■

Concerning the first charge of misconduct as listed above, it is not necessary for us to consider whether or not the mere failure of an attorney to give full information, or the giving of misinformation, to his client is such conduct as to justify disciplinary action regardless of wrongful motive or resultant injury, as insisted by petitioner. In any event this charge becomes an important consideration in determining the subsequent charges of misconduct.

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Bluebook (online)
196 P.2d 257, 118 Colo. 342, Counsel Stack Legal Research, https://law.counselstack.com/opinion/people-ex-rel-kent-v-denious-colo-1948.