ETHICS OPINION 475-1959 DUTY OF DISCLOSURE

NUMBER 475

QUESTION.

 

A few years ago a client placed in my hands certain money to loan to a friend of his. In accordance with instructions I took back a bond and mortgage in my name. Apparently my client did not want his name to appear in the transaction. I have been collecting the interest and principal and forwarding it to my client.

 

Now I find that my client has substantial judgment against him. He has been living out of the state and only rejoins his wife on Sundays when he cannot be served with process of our state courts. I know of my own knowledge that process servers have been trying to serve him with papers to examine him in regard to his assets.

 

As an attorney and officer of the court holding an asset of a judgment debtor what should I do. Am I obliged to report this asset to the judgment creditor. If I do not, I am liable to be served with a third party order. At this point I do not wish to be involved in his affairs.

 

ANSWER.

 

Whether or not an attorney-client relationship is involved in the acts described, a member of the Bar performed them. This fact alone is sufficient to impose a higher ethical standard upon him than it would upon others. He is now aware that the result achieved from the acts which he performed may defraud creditors of his principal. He cannot stand idly by without making himself a party to the deception. He must assign to his principal immediately the bond and mortgage which he took in his own name and make certain that such assignment is duly recorded. If the principal accepts the assignment, the lawyer need go no further. If his principal refuses to accept the assignment and record the same, the lawyer must report to the judgment creditor the assets which he holds on behalf of his principal (of Canon 41 of the Canons of Professional Ethics).

 

Dated: February 18, 1959.