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Palomo v. State Bar, 36 Cal.3d 785, 685 P.2d 1185, 205 Cal.Rptr. 834

Facts

Raul Palomo, an attorney admitted to practice in 1974, was found to have committed several violations of professional conduct. He endorsed a check payable to his client, Jose Antonio Torres, without consent and deposited it into his payroll account instead of a trust account. Palomo failed to promptly notify Torres of the check's receipt and misappropriated the funds. This incident occurred after Palomo had a prior instance of discipline in 1980 for unethical business dealings.

Petitioner was admitted to practice law in 1974. He has one instance of prior discipline; in 1980, he stipulated to public reproval for wilful violation of rules 2–111 (delivery of client files) and 5–101 (unethical business dealings with client) of the Rules of Professional Conduct. Here, the hearing panel sustained allegations that petitioner “wilfully” violated his oath and duties as an attorney (Bus. & Prof.Code, § 6067) and committed acts of dishonesty and moral turpitude when he (1) endorsed, without consent, his client's name on a check payable to the client, (2) deposited the proceeds in his payroll account rather than his trust account, (3) failed promptly to notify the client he had received the check and to pay over the funds due, and (4) misappropriated and commingled the deposited funds.

Issue

Did Raul Palomo engage in misconduct warranting suspension from the practice of law for endorsing a client's check without consent and misappropriating funds?

Did Raul Palomo engage in misconduct warranting suspension from the practice of law for endorsing a client's check without consent and misappropriating funds?

Rule

An attorney's general authority to pursue and collect a claim does not include the implied authority to endorse the client's signature on negotiable instruments payable to the client without express consent.

An attorney's general authority to pursue and collect a claim does not include the implied authority to endorse the client's signature on negotiable instruments payable to the client without express consent.

Analysis

The court found that Palomo's actions constituted serious misconduct as he endorsed the check without Torres' knowledge or consent, which violated his duties as an attorney. The court emphasized that the endorsement authority must be expressly granted and that Palomo's failure to supervise his office procedures led to the misappropriation of client funds. The court concluded that the findings of 'wilful' commingling and misappropriation were well-supported by the evidence.

The court found that Palomo's actions constituted serious misconduct as he endorsed the check without Torres' knowledge or consent, which violated his duties as an attorney. The court emphasized that the endorsement authority must be expressly granted and that Palomo's failure to supervise his office procedures led to the misappropriation of client funds. The court concluded that the findings of 'wilful' commingling and misappropriation were well-supported by the evidence.

Conclusion

The court ordered that Palomo be suspended from the practice of law for one year, with execution of the order stayed on the condition that he pass the Professional Responsibility Examination and maintain detailed trust account records.

The court ordered that Palomo be suspended from the practice of law for one year, with execution of the order stayed on the condition that he pass the Professional Responsibility Examination and maintain detailed trust account records.

Who won?

The State Bar prevailed in the disciplinary proceedings, as the court upheld the findings of misconduct and the recommended discipline.

The Review Department of the State Bar Court recommends that Raul Palomo be suspended from the practice of law for one year, with the suspension stayed on condition of probation.

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