Corporate trial lawyer

Plaintiff borrower appealed a judgment from the Superior Court of Nevada County (California), which ruled that a promissory note for a mortgage loan made by defendant lender and arranged by defendant real estate broker was exempt under Civ. Code, § 1916.1, from the usury prohibition in Cal. Const., art. XV, § 1.

The lender was a corporation wholly owned by the arranging broker, whose only compensation was the corporation's profit from the interest on the loan. The borrower defaulted, and the lender foreclosed and purchased the property at a trustee's sale. In a suit corporate trial lawyer challenging the validity of the trustee's sale, the borrower contended that the loan was usurious. The court held that the broker satisfied the requirement in § 1916.1 that the loan be arranged for another, both because the borrower was another person for whom the broker performed services under Bus. & Prof. Code, §§ 10131, subd. (d), 10240, and because the corporation that made the loan was a legal entity distinct from its shareholder. Moreover, the broker acted for compensation within the meaning of § 1916.1 because his corporation expected to profit from the interest on the loan. Anticipated profits qualified as compensation for purposes of the usury exemption. It was immaterial whether the broker took his compensation for the deal by drawing a dividend from the corporation or by receiving a commission from the corporation. Thus, substantial evidence supported the trial court's finding that the transaction was exempt.

The court affirmed the judgment.

Petitioner accuser filed an accusation for disbarment in which accusation she alleged unprofessional conduct by respondents, four attorneys-at-law. The accuser sought to have the court exercise, without prior recommendation from the Board of Governors of the State Bar of California, the disciplinary powers set forth in Cal. Bus & Prof. Code §§ 6100-6118 and to disbar the attorneys.

The proceeding filed by the accuser was the first of its nature to be filed in any court since the adoption of the California State Bar Act, found at Cal. Bus. & Prof. Code § 6000 et seq. Before the Act, proceedings seeking disciplinary action against bar members could be instituted only in the courts. Under the new process, the court had the same powers that it had before to entertain disciplinary proceedings despite possible duplication with proceedings before the Bar. However, the court found that, as a matter of policy, it was not free to exercise those powers unless and until the accuser followed the normal procedure by first invoking the disciplinary powers of the Bar according to Cal. Bus. & Prof. Code §§ 6075-6087. The accuser had to set forth specific charges that, if proven, would constitute grounds for disciplinary action, and she had to submit the same to the Bar. If the Bar refused to grant a hearing, the accuser could take appropriate action. In the accuser's case, her allegations were wholly insufficient to show either that the charges had first been presented in written form to the Bar or that the Bar had refused to grant a hearing.

The court ordered that the accusation be dismissed without prejudice.

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