Randy Intern., Ltd. v. Automatic Compactor Corp.

• Decision Date: 31 January 1979
• Citation: 97 Misc.2d 977,412 N.Y.S.2d 995
• Parties: RANDY INTERNATIONAL, LTD., Plaintiff, v. AUTOMATIC COMPACTOR CORP. and School Feeding Corp., Defendants.
• Court: New York City Court

Page 995

412 N.Y.S.2d 995

97 Misc.2d 977

RANDY INTERNATIONAL, LTD., Plaintiff, v. AUTOMATIC COMPACTOR CORP. and School Feeding Corp., Defendants.

Civil Court of the City of New York, Queens County.

Jan. 31, 1979.

Sigmund Fox, New York City, for plaintiff

Barry S. Schwartz, New York City, for defendants.

DECISION

CHARLES H. COHEN, Judge.

This is a motion "for an order pursuant to CPLR 5240 vacating and setting aside the restraining notice to garnishee and quashing the information subpoena" which had been served by the plaintiff-judgment creditor against Seavey, Fingerit & Vogel. While these attorneys identify themselves as "attorneys for the defendants herein", they also appear to be making this motion as the garnishee (CPLR 105(i)) with respect to the restraining notices (CPLR 5222) and as the person served with respect to the information subpoenas (CPLR 5224(a)3).

These attorneys apparently represented two corporate judgment debtors against which the plaintiff-judgment creditor has obtained a judgment. This motion is made upon the ground that the information sought is protected by the attorney-client privilege now embodied in CPLR 4503, which reads in part as follows:

"Unless the client waives the privilege, an attorney or his employee, or any person who obtains without the knowledge of the client evidence of a confidential communication made between the attorney or his employee and the client in the course of professional employment, shall not disclose, or be allowed to disclose such communication, nor shall the client be compelled to disclose such communication, in any action, disciplinary trial or hearing, or administrative action, proceeding . . . ."

This privilege is clearly inapplicable with respect to a restraining notice. Such a notice forbids the garnishee "to make or suffer any sale, assignment or transfer of, or any inference with, any such property, or pay over or otherwise dispose of any such debt . . . ." (CPLR 5222(b)). It does not seek the disclosure of "a confidential communication" (CPLR 4503) or of any other communication. It merely serves "the purpose of preventing the third person or garnishee from surrendering the debtor's assets pending obtaining of a turnover order." City of New York v. Panzirer, 23 A.D.2d 158, 162, 259 N.Y.S.2d 284, 288; see also, Matter of Sumitomo Shoji New York, Inc. v. Chemical Bank, 47 Misc.2d 741, 744, 263 N.Y.S.2d 354, 356; Plaza Hotel Associates v. Wellington Associates, Inc., 84 Misc.2d 777, 780, 378 N.Y.S.2d 859, 861.

With respect to an information subpoena, however, the privilege may apply. A judgment creditor may very well be seeking "evidence of a confidential communication" by means of an information subpoena. Since the use of an information subpoena arises out of the action which gave rise to the judgment (Sulil Realty Corp. v. Rye Motors, Inc., 45 Misc.2d 458, 460, 257 N.Y.S.2d 111, 112) affd. 47 Misc.2d 715, 262 N.Y.S.2d 989, it may be regarded, for purposes of the privilege, as an attempt to seek discovery in an "action" within the meaning of CPLR 4503.

At the outset, the court notes that the plaintiff-judgment creditor points out that each "client" in this case is a defunct corporation and seems to argue that as a consequence of that fact the privilege is inapplicable. Yet, the privilege applies to a corporation as well as to other persons. While the privilege seems to have arisen originally as one for the benefit of the attorney (Wigmore, Evidence § 2290), it is now regarded as being "designed to enable any and all persons who invoke the aid and advice of lawyers to present their cases freely and fully, and with the absolute assurance that the relation between them and their legal advisers shall be treated by the latter as strictly confidential, and that the relation thus established shall remain forever inviolable." Kitz v. Buckmaster, 45 App.Div. 283, 285, 61 N.Y.S. 64, 66, lv. den., 47 App.Div. 633, 62 N.Y.S. 1140; see also, Hurlburt v. Hurlburt, 128 N.Y. 420, 424, 28 N.E. 651, 653. In view of this rationale for the existence of the privilege, it must be deemed applicable to a corporate client as well as to others. See Ford Motor Company v. O. W. Burke Company, 59 Misc.2d 543, 299 N.Y.S.2d 946. Indeed, CPLR 4503 does not distinguish between corporations and other persons. It uses the broad term "client" without qualification. For a full discussion of this privilege with respect to corporations, see Radiant Burners, Inc. v. American Gas Association, 320 F.2d 314 cert. den. 375 U.S. 929, 84 S.Ct. 330, 11 L.Ed.2d 262, as well as Simon, Attorney-Client Privilege as Applied to Corporations, 65 Yale L.J. and A Critical Examination of Some Evidentiary Privileges: A Symposium 56 Northwestern Univ.L.Rev. 235, 241; see also, 98 A.L.R.2d 241.

That the judgment debtor corporations are "defunct and no longer functioning or operating" would not preclude the invocation of the privilege. Each apparently continues to exist as a legal entity. Yet, even if a defunct corporation were to be equated with a deceased individual, the privileged would continue to exist since it is clear that the privilege continues to exist after the death of an individual client. In Re Matheson's Will, 283 N.Y. 44, 27 N.E.2d 427; In Re Cunnion's Will, 201 N.Y. 123, 94 N.E. 648; Downey v. Owen, 98 App.Div. 411, 419, 90 N.Y.S.2d 280, 284; In Re Olson's Estate, 73 N.Y.S.2d 876, 878.

The argument made in opposition to this motion to the effect that the privilege "should be raised by the client, not by the attorney" and therefore the claim of privilege is improperly asserted, is without substance. The privilege belongs solely to the client and can be waived only by the client. People v. Shapiro, 308 N.Y. 453, 459, 126 N.E.2d 559, 562. "A communication which is privileged when made remains privileged forever, unless the privilege is waived by the client." Mileski v. Locker, 14 Misc.2d 252, 255, 178 N.Y.S.2d 911. However, the privilege may be raised by anyone Bacon v. Frisbie, 80 N.Y. 394; Renoux v. Geney, 33 Misc. 782, 67 N.Y.S. 928; Mileski v. Locker, 14 Misc.2d 252, 256, 178 N.Y.S.2d 911, 915; In Re Olson's Estate, 73 N.Y.S.2d 876, and certainly by the attorney, Kenny v. Cleary, 47 A.D.2d 531, 532, 363 N.Y.S.2d 606, 607; In the Matter of Walsh's Will, 154 N.Y.S.2d 987. Indeed, an attorney who in bad faith discloses a confidential communication protected by the privilege may even be subject to censure. In Re Metrik, 19 A.D.2d 34, 240 N.Y.S.2d 443.

Having decided that the question of privilege has been properly raised and is applicable to any confidential communications between the corporate judgment debtors and their attorneys, consideration must be given to the specific information sought by the information subpoenas in order to determine whether evidence of a "confidential communication" is actually being sought. The questions propounded in these subpoenas fall into three categories. The first, appearing in questions 1, 2 and 4, relates to whether the named attorneys hold any money in escrow on behalf of or in connection with each defendant. The second, appearing in questions 3 and 4, relates to whether anyone else holds any monies in escrow on behalf of each defendant. In each of these categories, a copy of any agreement setting forth the conditions of the escrow is requested. The third, appearing in question 5, relates to whether the attorneys "have any matters pending in their office" on behalf of a defendant; and if so, asks for the "name" of such matters, the courts in which they are pending and a description thereof.

The court notes that the burden of showing the existence of circumstances justifying the recognition of the privilege is upon the party asserting it. Bloodgood v. Lynch, 293 N.Y. 308, 314, 56 N.E.2d 718, 721. Further, the scope of the privilege has been narrowly construed to restrict its impact. Arnold Constable Corp. v. Chase Manhattan, 59 A.D.2d 666, 398 N.Y.S.2d 422; Finn v. Morgan, 46 A.D.2d 229, 234, 362 N.Y.S.2d 292, 295. Yet, in attempting to invoke the privilege, the attorneys, after referring to the information sought, merely state "that to divulge any or all of this...