Committee On Professional Ethics And Conduct v. Mershon,

316 N.W.2d 895 (1982)

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Nature of the Case

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Facts

D is an attorney. He did tax and property work for Miller, a farmer, in 1951. Miller owned 100 acres of land adjacent to a country club. In 1968, when he was 68, Miller was interested in developing the land for residential purposes. An engineer was hired to prepare a preliminary plat and market study. When it was completed, Miller brought the engineer to meet with D and discuss the project. Miller wanted to proceed but did not have the necessary funds. The engineer suggested that a corporation be formed and the three of them invest, with Miller giving the land, the engineer his services and D would contribute legal services. They all agreed the land was worth $400 per acre. The engineer estimated his costs at $400 per acre and D indicated his legal costs were half that much. The corporation was formed, and Miller got 400 shares for the land, the engineer gave a promissory note for $12,500 and got 400 shares and D gave a promissory note for $6,250 and got 200 shares. The notes were interest-free and due at the discretion of the corporation; they represented the services from the engineer and D. The corporation was unable to borrow money unless the individuals would guarantee the loans. They refused to do so. The project went into stalemate and remained that way when Miller died in 1978. D believed that the parties had an oral agreement that if the development did not occur, D and the engineer would relinquish their interests. Three days after the death, D transferred his shares to the corporation. D asked the engineer to do the same, and he refused. D was nominated as the executor but resigned when the daughters expressed dissatisfaction of his role in conveying the farmland. D showed that Miller owned all the stock in his preliminary probate inventory and the farmland was appraised at $4,000 per acre. D had expended $900 out of pocket and had performed services worth $6,000, but he did not intend to seek payment. The engineer maintained that he still owned part of the corporation.