Rehnquist Relative Says Justice Kept Trust Fund Secret

A disgruntled relative says that Supreme Court Justice William H. Rehnquist joined other family members in concealing from him for two decades the existence of a trust fund from which the justice stood to gain financially if the bedridden brother-in-law did not collect its proceeds.

Experts in legal ethics say that Rehnquist’s role in the family financial matter placed him in a murky area of professional responsibility and constituted at least a technical conflict of interest, although they disagreed about the seriousness of the ethical dilemma. Some experts said that Rehnquist was obliged as a lawyer to have disclosed the existence of the trust.

The relative, Harold Dickerson (Dick) Cornell, 73, a former San Diego prosecutor who is disabled by multiple sclerosis, said he was telling his story about Rehnquist’s involvement with the $25,000 trust because he does not want the conservative Rehnquist to become chief justice. Cornell says he is a liberal.

Refuses to Comment

Rehnquist refused to comment on the allegations. “It would be inappropriate for Justice Rehnquist to comment on the matter in the midst of his confirmation hearings,” a spokesman said.

However, other family members said that they and Rehnquist simply were following the wishes of Cornell’s late father in concealing the trust fund from Cornell, who they feared would not spend the money wisely. One of Cornell’s sisters discounted his claims of ethical wrongdoing, saying that the disabled former lawyer nursed a long-standing grudge against Rehnquist and others in the family.

But the trust document itself, drawn up by Rehnquist in 1961 for his dying father-in-law, states explicitly that funds were to be paid to Cornell whenever his standard of living fell below the level he maintained when the trust was written--a time when Cornell had a successful private legal practice. The document says nothing about keeping the trust a secret from him.

In an interview at his small home in the Ocean Beach section of San Diego, Cornell said: “I’m not looking for sympathy or condolence at all. But I think Bill (Rehnquist) is a threat. He’s a threat to our nation. I know how reactionary he is.”

Cranston Investigating

The office of Sen. Alan Cranston (D-Calif.) is investigating the allegations, according to Harold Gross, an aide to the senator.

Rehnquist has been married for nearly 33 years to Cornell’s sister Natalie. In 1961 when Rehnquist was in private practice in Phoenix, his father-in-law, Dr. Harold Davis Cornell, asked him to draw up a trust benefiting his disabled son, according to Cornell.

Probate documents filed in San Diego County Superior Court state that the income from the $25,000 trust was to be paid to Dick Cornell if he was “unable to provide for himself in the manner to which he (was) accustomed.”

The trustee, Cornell’s brother George, was authorized by the document to begin liquidating the $25,000 principal of the trust if the income alone was not enough to meet the disabled man’s needs.

Cornell’s debilitating illness forced him to retire in 1962. And though family members knew, he says, that he was living much of the time on a meager income from disability insurance and Social Security payments, he was not made aware of the existence of the trust until January, 1982, shortly after the death of his brother George. When his sister Ruth Sawday was to succeed her brother as trustee, her lawyer advised her to inform Cornell of the trust’s existence, according to another of the sisters, Mary Cornell.

Gives Most Money Away

Cornell ultimately received $35,000, the amount that had accumulated in the trust, in March, 1982. He purchased a hospital bed and motorized scooter for use at home, Cornell said, and gave most of the money away to his children and other people.

His brother George, the longtime trustee, was responsible for distributing the money, Dick Cornell said. But Rehnquist discussed Dick Cornell’s condition with other family members, according to Mary Cornell. He was the only attorney in the family who knew about the trust.

Dick Cornell contends that Rehnquist had a special ethical duty as a lawyer to alert him to the existence of the trust. He also contends that Rehnquist had a conflict of interest in connection with the trust.

If Cornell had died, the trust directed that the money be divided among his children, his brother and his five sisters, including Rehnquist’s wife. Cornell therefore contends that Rehnquist and his wife had a financial interest in concealing the existence of the trust.

Experts See Dilemmas

Experts in legal ethics agreed that the circumstances pose ethical dilemmas, but they disagree about whether Rehnquist had breached any of the legal profession’s standards of professional conduct. The experts were asked to react to the facts of the case initially without knowing that Rehnquist was involved in the transactions.

Geoffrey Hazard, a professor at Yale Law School, said precedents in California law have established a duty for attorneys to heed the interests of the intended beneficiary of a will.

Those rulings set up a standard for the handling of trusts such as the one drafted by Rehnquist for Cornell’s benefit, according to Hazard, who compiled the current edition of the American Bar Assn.’s model rules of professional conduct.

“There would be a pretty good case in saying the lawyer in question had an obligation, if he knew the person was destitute . . . to do something other than just keep quiet,” Hazard said. “There would be a real problem about his duty if he knew about this trust condition and knew about the state of that brother. It’s not a very pleasant matter.”

Cites Rehnquist Obligation

A legal ethics expert and professor at a California law school who asked not to be named said that an attorney in Rehnquist’s position would be obligated either to tell Cornell about the existence of the trust or to tell his brother George, the trustee, that he might have been flouting the trust’s intentions by withholding payments.

Other ethics experts said that the obligation to expose the existence of the trust falls to the trustee, not the lawyer who drew up the document. Frank Sander, a professor at Harvard Law School, said a lawyer who contradicts his client’s wishes for secrecy by disclosing the existence of a trust could be held to have breached the attorney-client relationship. This would be the case even if the request was not included in the document.

The law professors all said that there is a clear conflict of interest for a lawyer in drawing up a trust from which he could benefit, indirectly, through his wife. But they disagreed about whether the conflict constituted any sort of ethical shortfall.

Stephen Gillers, a professor at New York University Law School, said there is always a conflict when an attorney has a self-interest in a document he is drafting. But the conflict could be overcome if the lawyer fully disclosed to his client--in this case Rehnquist’s dying father-in-law--that there was a potential conflict and that it might be advisable to contact a disinterested attorney, said Gillers, co-author of a text on legal ethics.

Recommends Avoiding Conflicts

Thomas D. Morgan, former dean of the Emory University Law School in Atlanta, noted that lawyers often draw up legal documents for family members and that the only way to avoid the attendant conflicts is not to draft family legal papers in the first place.

Other experts, though, dismissed the conflict for a lawyer in Rehnquist’s position as a niggling concern. Charles Wolfram, a professor at Cornell University Law School, said: “Technically, it’s a conflict of interest. Whether it’s an impermissible one--I find that highly unlikely, because it’s so obvious to everyone.”

Other family members rejected Cornell’s contentions of wrongdoing, saying he was emotionally unstable because of his long illness and motivated to lash out at Rehnquist by anger.

Notes Father’s Wishes

Mary Cornell, of San Diego, said Rehnquist and other family members were following her father’s wishes by concealing the existence of the trust from her brother. “Dick has been unable to hold money all his life,” she said Wednesday. “Father felt if Dick knew about it, he’d just spend it and it was intended for his terminal illness.”

Rehnquist’s contact with her brother had been minimal during the years the trust was hidden. “I don’t imagine he thought much about it,” she said.

But family members knew Dick Cornell “was in bad straits,” she added. “I would go over to have dinner at his house,” she recalled. “He’d tell me how thrifty he was, how he’d make a stew and it would last a whole week. I thought that was fine. I was recently divorced and I couldn’t help him much.”

Staff writers Ronald J. Ostrow and Robert L. Jackson in Washington contributed to this report.