89 N.J.L.J. 333
May 26, 1966
Foreclosure Against Former Client
During the past several years, Attorney A represented B in
about three legal matters, the last one being a few years ago.
However, since then and some time ago B appeared at A's office
inquiring whether A could obtain a mortgage loan for him, and A did
so from C, a client of A's. Nothing was expressly stated as to
whether A represented B as an attorney or as a broker. Nor was
anything mentioned about the possibility of conflict of interests.
C is not a lending institution but an individual who made the loan
With the consent of both B and C, A prepared all the mortgage papers and closed the loan. All legal expenses for the title search, etc. were paid to A by B pursuant to an agreement between B and C prepared by A. The bond and mortgage were prepared with standard printed forms. The agreement (in the form of a letter signed by C and addressed to B who also approved same in writing) contained the terms of the mortgage loan and provided that the title search and mortgage papers were to be prepared by "A, attorney, at your expense."
B has defaulted and C desires to retain A to foreclose B's mortgage. The question raised is the propriety of Attorney A's foreclosing C's mortgage against B.
The facts as stated do not reveal that attorney A informed his former client B that he was not acting for B in this transaction, but was acting solely as attorney for C, the prospective mortgagee. The inquirer calls to our attention the case of Hanson v. Janitschek, 57 N.J. Super. 418 (App. Div. 1959) in which Judge Conford's dissenting opinion was used as the grounds for reversal by our Supreme Court, 31 N.J. 545 (1960). The facts in the Hanson case differ from those stated in the inquiry. In Hanson, the opinion clearly states:
It does not appear that he had ever previously represented or acted as legal advisor to Mr. or Mrs. Hanson in any capacity whatever. Id. at 431.
The facts before us indicate that A had represented B "in about three legal matters." It is reasonable to assume, therefore, that B considered A as his lawyer in the mortgage transaction.
The applicable principle may be found in our Opinion 6, 86 N.J.L.J. 718 (1963), wherein we stated:
Such conduct would tend to impair the confidence which a client has the right to repose in his attorney and would thus tend to destroy one of the essentials of the professional relationship. ... To maintain public confidence in the bar, it is necessary not only to avoid actual wrongdoing, but even appearance of wrongdoing.
It is the Committee's opinion that it would be improper for A to foreclose C's mortgage against B.