Herman v. Schlesinger

Maeshall, J.

Fifty-three assignments of error are pre*-■sented for consideration. The appeal does not seem to call •for a discussion of them in detail. ISTone of them has been overlooked. Such will receive special attention in this •opinion as are deemed of sufficient importance to merit it.

1. Assignments of error 1 to 6, inclusive, relate to rulings •upon the trial sustaining claims of privilege made by Mr. •James G. Flanders, from testifying to matters in respect to wliicli lie was interrogated, upon the ground tliat whatever knowledge lie had on the subjects was acquired in his professional employment by the parties to the transactions. The exceptions to such rulings present for consideration several propositions:

(a) Can the successor of a person acting in a representative capacity, such as an assignee, waive the privilege of his predecessor as to- secrecy in regard to communications made by the latter to his attorney while he was in office? The attorney for an assignee, administrator, or other person similarly situated, is his private employee. At law the attorney must look to such person for his pay, and the latter must rely for reimbursement for his outlay in that regard upon the allowance of his account by the court having judicial charge of the matter. The attorney does not, as counsel for appellant seem to ■ think, stand for the beneficiaries of the trust. He stands for the trustee. He is the latter’s personal representative. The trust estate is not directly chargeable with the attorney’s claim for compensation. The professional relation existing between him and the trustee is substantially the same as it would be if the representative character of the latter were absent. Miller v. Tracy, 86 Wis. 330, 333, 56 N. W. 866; Thomas v. Moore, 52 Ohio St. 200, 39 N. E. 803; Platt v. Platt, 105 N. Y. 488, 501, 12 N. E. 22. Upon the trustee going out of office and being succeeded by another, there is no devolution of the liability of the former upon the latter for the expenses of the former’s attorney. The outgoing trustee must account to his successor, or as the court may direct. His attorney and his successor do not, by reason of the succession, enter into the relation of attorney and client as to past transactions or any other. It follows as a matter of course that the new trustee has no better right than a stranger to represent his predecessor as to waiving the latter’s right to have bis former professional employee remain silent as to matters communicated to bim under tbe veil of privilege.

(b) Does a person, by procuring bis attorney to sign, as a subscribing witness, an instrument evidencing an agreement or transaction between sueb person and a third party, in tbe making of wbicb and reduction thereof to writing such attorney served such person in bis professional capacity, waive tbe common-law privilege declared by sec. 4076, Stats. 1898, in respect to the transaction ? Counsel point with much confidence to several authorities to support tbe affirmative of that proposition, .but we are unable to discover any good ground for sueb confidence. Doheny v. Lacy, 168 N. Y. 213, 61 N. E. 255, is one of counsel’s supposed supports. There tbe ruling that tbe privilege of secrecy was waived was not put on tbe ground, merely, that the attorney signed tbe instrument as a subscribing witness, but on tbe ground that tbe communications between attorney and client were not of a confidential character, as shown by tbe circumstance that they were made openly in tbe presence of third persons. No intimation appears in the opinion of tbe court that a mere witnessing of an instrument, of itself, will raise tbe veil of secrecy between attorney and client in respect to legal advice of attorney to client or communications by tbe latter to tbe former to secure such advice. It is suggested that if an attorney acts as sueb in tbe preparation of an instrument for both parties thereto, no other person having knowledge of tbe transaction, each of tbe parties is entitled to enforce tbe privilege of secrecy as to disclosures for the benefit of third persons, but not as relates to matters between themselves. Further, that tbe mere calling of an attorney to witness tbe execution of an instrument does not close his mouth as to what be sees and bears in regard to tbe matter to wbicb be thereby becomes, in a sense, a party. Coveney v. Tannahill, 1 Hill, 33, 40. That is upon tbe ground that tbe relation of attorney and client is not involved in sucb a transaction. Counsel cite 1 Greenl. Ev. § 244. Tbat is only to tbe effect tbat if an attorney, employed to prepare an instrument, when bis labor in tbat regard is concluded, assumes tbe character of a subscribing witness to tbe paper at- tbe request of bis client, sucb circumstance will waive tbe privilege of secrecy as to wbat a subscribing witness may be called to prove as sucb, but not as to confidential communications made during tbe preparation of tbe instrument. Tbe text is supported by In re Will of Coleman, 111 N. Y. 220, 226, 19 N. E. 71, where it was held tbat if a testator procures tbe attorney who prepares bis will to witness tbe execution thereof, be impliedly waives tbe privilege of secrecy between attorney and client as to those matters which sucb a witness is expected to testify to after tbe death of tbe testator in order tbat the will may be effective. But it was said tbat tbe veil of secrecy is not thereby lifted so as to permit tbe attorney to disclose communications made to him in tbe course of tbe preparation of tbe will in order to enable him to reduce tbe wishes of tbe testator to- writing. Tbat is elementary. Authority to tbe same effect may be found in tbe reported decisions of this court. McMaster v. Scriven, 85 Wis. 162, 168, 55 N. W. 149.

Tbe extent to which tbe authority goes is clearly indicated by tbe following language used by Mr. Justice PiNNEY in tbe last case cited, speaking of tbe circumstance of tbe attorney acting as a subscribing witness to’ tbe will prepared by him: “This must be held to be a waiver of objection to bis competency, so as to leave tbe witness free to perform tbe duties- of tbe position.” Tbe privilege of secrecy between attorney and client is grounded in tbe idea tbat communications made by tbe latter to tbe former are of a confidential nature and must necessarily be sucb in order to enable tbe attorney to properly serve bis client. Tbe rule does not extend further than tbe reason thereof. Keeping tbat in mind it is easy to see that none of the authorities cited by counsel is in their favor under the facts of this case. The attorney whose testimony was desired here was not merely called in to act as a subscribing witness to the instrument. The testimony had no relation to the mere execution of the paper. It did not relate to matters which occurred publicly, nor was the disclosure sought as between two persons for both of whom the attorney acted in the preparation of the paper. Britton v. Lorenz, 45 N. Y. 51; Hurlburt v. Hurlburt, 128 N. Y. 420, 28 N. E. 651. Here was the ordinary case of an attorney employed as a confidential adviser in the preparation of an instrument to which he became a subscribing witness, and subsequently, in an, action between other parties, he was called as a witness and requested to make disclosures in respect to the matter. He testified freely to the circumstance of his witnessing the execution of the paper, but insisted upon his client’s privilege of secrecy as to matters which came to his knowledge from his client in the preparation of the paper. From what has been said it seems 'clear that the court properly sustained the claim of privilege.

(c) If an attorney acts -in his professional capacity for two persons, does the circumstance that one of them waives the privilege of secrecy affect such privilege as to the other ? It seems that Mr. Flanders performed services for the defendant and his wife. He was asked, as a witness, to disclose matters in respect thereto which came to him under the veil of secrecy as between attorney and' client. The privilege was waived as to defendant, but the attorney, deeming himself in duty bound to assert that of Mrs. Schlesinger, acted accordingly, and he was sustained by the court. What has been said indicates that the ruling was right. .When an attorney’s services in a transaction are rendered to several persons, ' confidential communications to him . in regard thereto, in which all such persons are interested, cannot be properly disclosed unless all join in consenting thereto. The rule in that regard has been carried so far as to preclude an attorney from divulging matters confidentially communicated to him by a firm without the individual consent of every member thereof. People v. Barker, 56 Ill. 299. The reason for that is obvious. The privilege of secrecy is purely a personal right. When it affects several persons there is no way by which all can be protected in respect thereto other than by holding that all must join in lifting the veil of silence, or it must remain a secure cover for those things which it would obscure if they related to a single person only.

(d) If a person employs an attorney to act in his professional capacity in a transaction between such person and another, is such attorney privileged from disclosing the communications which pass between him and such other in regard to such employment? Counsel for appellant do not discuss this branch of the case exactly as it appears in the record. One would suppose from what is said in regard thereto in counsel’s brief, that the attorney acted in the matter, in respect to which he was interrogated, as a mere agent. He testified to the contrary most distinctly, over and over again, saying that he was not an agent at the time of and in the transaction in question, in any sense whatever, but that he acted in the performance of his duty as a legal adviser to his clients. On that testimony, in part, the trial court acted in deciding the question of competency; so whether the ruling of the court was right is involved in á decision of the proposition we have stated. The privilege of secrecy, as to transactions between attorney and client, is limited by the statute to communications made by the latter to the former, and to the former’s advice thereon, in the course of his professional employment. We are unable to see how communications between an attorney and a person not his client, while conducting a business matter with such person for Ms client, wbet-lier he is acting professionally at the time or not, can be classed with those named in the statute. A communication made by a person to his attorney to be and in fact communicated by him to another, is not privileged, because, in the very nature of things, it is not 'confidential in character. The very purpose thereof is to have the communication repeated to one who is under no obligation not to divulge it. Henderson v. Terry, 62 Tex. 281. That being the case, manifestly a reply to such a communication must be governed by the same rule, and so must also other communications between the attorney and the third person in case of negotiations between the two.

It was claimed on the trial that the statutory privilege of secrecy includes all communications made to the attorney by reason of his professional employment, whether by his client or by third persons while he is in pursuit of his ■client’s business, and also to all knowledge obtained by him, whether from his client or otherwise, while in pursuit of the latter’s business; and the court so ruled, excluding evidence of negotiations conducted for the defendant and his wife with third persons in respect to a matter material to the issues of the case. Manifestly, the language of the statute ■does not justify such ruling. Communications made to an attorney by a person while the attorney is dealing with such person as agent, merely, or agent and attorney, or attorney and counselor, of another, are in no sense communications made by the latter to such attorney, of a confidential character or otherwise. Neither the letter nor the spirit of the ■statute, nor any decision made under it or any similar statute or the common law, of which the statute is merely declaratory, goes to that extent, so far as we are advised. In Koeber v. Somers, 108 Wis. 497, 84 N. W. 991, this court, speaking by Mr. Justice Dodge, held that the privilege of secrecy as between attorney and client, recognized by the statute, extends only to those communications made by the latter to the former which are of a confidential character and made for the purpose of enabling the attorney to serve his client, and the legal advice given to the client in response to such communications; that when the attorney goes forth to perform a service for his client, with a third person, communications between such third person and the attorney are not within the privilege of secrecy. However, we are unable to perceive that the erroneous ruling of the court was prejudicial to appellant. The transactions which the attorney was requested to disclose, and substantially all the details thereof, were, either directly or by reasonable inference, established on the trial.

2. Assignments of error 13 and 14 relate to a ruling excusing respondent from answering on cross-examination as to whether, in the preparation of the case for trial, he was not examined by his attorneys and his testimony to be given upon the stand reduced to questions and answers, upon the ground that he was privileged from answering under the rule allowing secrecy as between attorney and client. The circuit court seems to have supposed that such privilege extended to everything that occurred between respondent and his attorney respecting the subject of the business of the professional employment. That is wrong. On the other hand counsel for appellant seem to have the idea that, while respondent was privileged to have his attorney not mate disclosures respecting certain confidential communications between them, without his permission, the way was open to compel him, as a witness, to mahe such disclosures. That is wrong. Professional services of attorneys are essential to the orderly and efficient administration of justice, and, as a rule, to the safe conduct of legal business of any kind. Secrecy as to communications between attorney and client, to a certain extent, is required in order to properly effectuate the purpose of the relation between the two. The foundation principle of the rule in that regard suggests, on a moment’s reflection, that what the attorney ought not to disclose without his client’s permission, the latter ought not to he compelled to disclose. The law is in harmony therewith. It makes the client complete master of the situation, if his attorney properly performs his duty. Hemenway v. Smith, 28 Vt. 701; Barker v. Kuhn, 38 Iowa, 392; Duttenhofer v. State, 34 Ohio St. 91 ; 1 Whart. Ev. § 583; Steph. Dig. Ev. art. 115. However, the rule extends only to the communications mentioned in sec. 4076, Stats. 1898, not to a mere statement as to whether, in the preparation of a cause for trial, a party was interrogated as to his knowledge respecting the matters involved, and the questions and answers thereto reduced to writing,' enabling the attorney to know what his client might be expected to testify to. The evidence rejected should have been allowed. It'had some bearing on the credibility of respondent’s evidence. It was not admissible for any other purpose. But we are satisfied that the mere fact, if it be a fact, that respondent was carefully interrogated by his counsel before going upon the stand, the questions propounded and the witness’s answers being reduced to writing, would not have affected the result of the trial, if proof thereof had been permitted. The cause turned on facts, of the existence of which the court was evidently satisfied quite independently of any testimony by respondent.

3. Errors 20 to 23, inclusive, relate to refusals by the court to permit the use in evidence of a deposition taken and filed during the progress of the trial. That ruling was in strict accord with the statute, which allows the reading of a deposition in evidence only upon condition that it shall have been filed with the clerk of the court and the.other party notified thereof before the commencement of the trial. Sec. 4090, Stats. 1898.

4. A considerable number of assignments of error relate to the admission of evidence over objections by counsel for appellant, and to the rejection of evidence offered by them upon objections made by respondent/ and others to refusals by the court to compel the production of books and papers for use upon the trial or for inspection by appellant’s counsel in aid of the presentation of appellant’s case or of discrediting that of respondent. Much time might be spent in discussing such assignments of error in detail, but it seems neither necessary nor advisable to do so. Errors in the reception or rejection of evidence in an equity case are not deemed prejudicial in the absence of reasonable ground to believe that if the improper evidence had not been considered, and the proper evidence rejected had been admitted and given due weight, the result might probably have been different. Kirkland v. Telling, 49 Wis. 634, 6 N. W. 361. Under .that rule it is considered that the errors alleged, to which this paragraph is devoted, regardless of whether they are well assigned or not, were not prejudicial to the rights of appellant. If all the evidence admitted over objection had been rejected, and all the evidence offered by appellant’s counsel which was rejected had been received and had shown all that counsel for appellant suggest would or might have been shown thereby, the findings of the court on matters of fact, in all reasonable probability, would not have 'been different than those we find in the record. Still the situation would have remained unaffected — which the trial court undoubtedly believed was the real truth of the matter, — that all the property claimed by appellant to have belonged to respondent and claimed by him to have been the property of his wife, in the latter part of 1894 — consisting of the capital stock of a corporation located in Mexico called the Coneheno Company — long prior to the settlement challenged and when it was perfectly proper for respondent or his wife, whoever was the owner thereof, to sell it, was conveyed, one half to Corrigan, Ives & Co., and the other half to Henry Stern, the father of respondent’s wife, in payment of indebtedness owing to them by respondent; that subsequently Stern exchanged bis stock with Corrigan, McKinney & Co., for property wbieb he subsequently, and long before the settlement in question, gave to his daughter subject to a claim thereon for $23,000, and that the same became the original assets of the Dunn Iron Mining Company, the stock of which was the property of Mrs. Schlesinger by the same right as she took title to such assets from her father; that later the Dunn Iron Mining Company, without any change in the ownership of the stock and without the use of any capital other than that originally invested therein and the increase thereof, acquired other mining interests, the property, in the whole, constituting that regarded by appellant’s counsel as the property of respondent at the time of the settlement complained of, with Plankinton, assignee. .In that view, clearly, there was no admission or rejection of evidence which, by any reasonable stretch of the imagination, can be said to have probably prejudiced appellant. If Stern acquired, legitimately, ownership of one half of the' stock of the Con-cheno mine — and the trial court in effect so found — it is immaterial, so far as relates to ultimate facts, whether the stock of the initial corporation formed in Milwaukee, called the Standard Metal Company, the records of which appellant’s counsel sought to have produced in evidence and failed, of which complaint is made, or the stock of the Con-cheno mine, into which the property of the Standard Metal Company was merged, was property of respondent or that of his wife. In that view, also, it was entirely immaterial to the issues of this case, what the value of the property was, possessed by respondent’s wife at the time of the settlement. So, failure of opportunity to make proof thereof to the satisfaction of appellant, by reason of the adverse.rulings of the court of which complaint is made, was nonprej'udicial.

5. The other assignments of error touching matters within the issues made by the pleadings, meriting attention, relate to whether the findings of fact are supported by the evidence. That question turns, mainly, on whether the property derived from the transfer by Stern to his daughter, as before stated, belonged to her or to respondent at the time of the settlement in question. If it belonged to the latter, then he possessed, at the time of such settlement, a fortune out of which he might have paid a large proportion, if not all, of the indebtedness to Plankinton, assignee, and he perpetrated a fraud upon such assignee and thereby wrongfully secured the settlement complained of. If the transfer by Stern to Mrs. Schlesinger was a legitimate transaction, then the evidence does not show that the representations, by means of which the settlement with the assignee was secured, were untrue. The trial court, as before indicated, found in favor of respondent on that subject. It would not follow that such decision is wrong if we were to determine that the stock of the Standard Metal Company, through which it is claimed respondent commenced to do business after his failure in 1893, was his property, and that the stock of the Concheno mine belonged to him when the same was turned out in payment of his indebtedness to Corrigan, Ives & C'o. and to Stem. The precise manner in which the trial court reached the conclusions on matters of fact does not appear. We should hesitate on the record before us to disturb the judgment if the turning question were whether the stock of the Standard Metal Company, and that of the Concheno mine, belonged to respondent. Viewing the decision as resting solely on whether the property given by Stern to Mrs. Schlesinger was his to' bestow in that way, the creditors of respondent having at the time of such bestowal no right thereto, there is far too much evidence in the record to sustain it to warrant us in coming to the conclusion that it is against the clear preponderance of the evidence. It'would take much time to go through the record in detail in an attempt to thoroughly discuss the evidence and thereby justify the trial court’s findings. It is not customary to do that in a case like this ■where a conclusion is reached that the judgment must he .affirmed. Such a discussion really serves no purpose except to satisfy counsel for the losing party that the evidence has been carefully considered in all its bearings. The preserva-' tion of such discussions in the printed records is not helpful, and it is believed that, as a rule, the better course is to omit them. Ordinarily counsel for the losing party, who have sufficient confidence in their case to take the- chances of an appeal to this court on mere questions of fact, are no better satisfied that they are wrong, and not the trial court, or, at best, satisfied that from the standpoint of the reviewing court, having only the record before it, it cannot be said that the findings of the trial court are against the clear pre-’ ponderance of the evidence, after reading a laborious discussion upon appeal in justification of the conclusion there reached, than they were before. The appearance of a decision, particularly as to mere matters of fact, depends largely upon the standpoint from which the view is taken. Erom that of partisanship occupied by the interested attorney, it looks far different than from that of a court. He who looks from the former position is bent on securing a favorable result for his client. In that situation the faculties brought into use in searching for truth for the sake of truth are not necessarily active. He who views a decision from the nonpartisan, nonprejudiced standpoint of the court is moved only by a desire to discover the right, regardless of effects' and consequences which cannot be avoided and the right prevail. Erom the latter position we have carefully examined the evidence in this case. Counsel must take that assurance in lieu of an extended discussion of the evidence. The result of our labor is that we are unable to find justification for disturbing the findings of the court.

6. The question is presented, somewhat outside the cause of action set forth in the complaint, of whether the settlement complained of is void for want of consideration. Counsel for respondent make no- objection to the proposition being considered, and we will not suggest any that might have been put forward if such exist. It is elementary that the mere acceptance, by a single creditor, of a part of an undisputed claim in settlement of the whole, does not preclude a stibsequent, legitimate demand for the balance thereof. Continental Nat. Bank v. McGeoch, 92 Wis. 286, 310, 66 N. W. 606; Otto v. Klauber, 23 Wis. 471; Lathrop v. Knapp, 21 Wis. 214, 225; Davenport v. First Cong. Society, 33 Wis. 387, 391; Lerdall v. Charter Oak L. Ins. Co. 51 Wis. 426, 429, 8 N. W. 280. It is also elementary that where a creditor obtains some advantage, or promise thereof, that may possibly be realized in addition to the part payment by the debtor, for a release of the latter’s indebtedness, there is a good accord and satisfaction, effectually extinguishing the same, regardless of how small the amount actually paid upon it may be. Continental Nat. Bank v. McGeoch, supra. Applying that to this case, the settlement in controversy cannot be impeached for want of consideration. The contract of settlement was obviously drawn with care, having in mind the legal essentials thereof in order to preclude any subsequent claim against respondent for any further sum upon the indebtedness. Absolute title to property held by the assignee as security only, was conveyed to him, and the'right of respondent to the benefit of the federal bankruptcy laws was waived in the former’s favor. There was some advantage involved in those concessions. Absolute ownership of the collateral in place of a holding thereof as security was of itself an advantage. Admit that it was of slight, almost trifling character, yet it must be held to have been sufficient to make a good accord and satisfaction. Independently of authority, it would seem that the giving up of the valuable right of respondent to the benefit of the federal bankruptcy laws was a substantial consideration and sufficient to support the settlement. Counsel for respondent cite us to Hinckley v. Arey, 27 Me. 362, where it was so decided. The rigorous rule of the common law, permitting a person to receive part of an undisputed, presently due indebtedness, pretending to accept the same in satisfaction of the whole indebtedness, the debtor parting with the amount paid with that understanding, and then change front and sue for the balance of such indebtedness on the ground that the release thereof was void for want of consideration, is so little.favored by courts that it is commonly held not to apply where anything, whether of advantage to the creditor or disadvantage to the debtor, can be reasonably said to stand for that part of the indebtedness not measured by an equivalent in money actually paid to the creditor. The common-law rule has been abolished by statute in Alabama, Georgia, Maine, North Carolina, Tennessee and Virginia, and perhaps some other states. In Connecticut it has not been recognized by the courts. Ford v. Hubinger, 64 Conn. 129, 29 Atl. 129. In the other states where no statute exists to the contrary, it is believed the rule is adhered to in form, but there is apparently a progressive disposition to disregard it in spirit. It is said that there is sufficient consideration moving with the part payment to release an indebtedness to take the transaction out of the common-law rule, if the debtor does anything which he is not bound by law to do, or omits to do anything which he has a right to do, to the advantage, in any appreciable degree, of the creditor, or the disadvantage of himself; that the consideration, in addition to money paid, “may consist of anything which might be a burden* to the one party or benefit to the other.” Watson v. Elliott, 57 N. H. 511; Jaffray v. Davis, 124 N. Y. 164, 26 N. E. 351; Maddux v. Bevan, 39 Md. 485.

Nothing further, it seems, need be said in disposing of this case.

By the Court. — The judgment appealed from is affirmed.

Case Details

Case Name: Herman v. Schlesinger

Court Name: Wisconsin Supreme Court

Date Published: May 13, 1902

Citation: 90 N.W. 460

Court Abbreviation: Wis.