Trench's Estate, In re

• Decision Date: 26 October 1973
• Docket Number: PA-VIN
• Citation: 349 N.Y.S.2d 265,76 Misc.2d 180
• Parties: In re ESTATE of Charles W. TRENCH. ISLANDCORPORATION, Plaintiff, v. Marie Dorothy KLINGER, as Executrix of the Estate of Charles W. Trench, Deceased, Defendant.
• Court: New York Supreme Court

Page 265

349 N.Y.S.2d 265

76 Misc.2d 180

In re ESTATE of Charles W. TRENCH ISLAND PA-VIN CORPORATION, Plaintiff, v. Marie Dorothy KLINGER, as Executrix of the Estate of Charles W. Trench, Deceased, Defendant.

Supreme Court, Trial Term, Suffolk County, Part V.

Oct. 26, 1973.

Rudden & Robert, by Leland Stuart Beck, Mineola, for plaintiff.

Joseph D. Stim, Farmingdale, for defendant.

LEON D. LAZER, Justice.

During the course of a non-jury trial and in the midst of cross-examination of plaintiff's principal witness by defendant's attorney, the court discovered that the cross-examiner was also the witness' lawyer. The propriety of the attorney's action and the obligations of the trial court are thus the subject of this opinion. The facts follow.

Plaintiff brought an action against the estate of Charles W. Trench (Trench) alleging that the deceased had entered into a joint venture with it to construct the Glen Oaks Country Club golf course in Old Westbury. During the course of the project, Trench died and the undertaking was completed at a claimed loss of $90,000.00. The complaint seeks the recovery of one half of the loss from the estate.

Plaintiff's theory of liability is based on the allegedly unauthorized act of Trench in signing the joint venture agreement as an officer of Landscaping by Country Gardens, Inc. (Landscaping). It is asserted that, unknown to the plaintiff, Trench had already sold his stock in Landscaping and was no longer an officer of director when he executed the agreement on its behalf and therefore it is he who became personally liable to plaintiff.

Proof of Trench's lack of authority rested entirely on the testimony of Robert Gettinger (Gettinger), the sole remaining stockholder of Landscaping and the individual who acquired the deceased's corporate interest.

Almost at the outset of Gettinger's direct examination by plaintiff, defendant's attorney (hereafter referred to as 'counsel') objected under the Dead Man Statute (CPLR 4519) to any testimony relating to the witness' transactions with the deceased. The objection was grounded on counsel's argument that Gettinger was interested in the event; if plaintiff prevailed in the law suit against the defendant, it would be collaterally estopped from suing Landscaping for the alleged loss; if the defendant prevailed, Landscaping would be liable to plaintiff for one-half of the joint venture loss since ratification or authorization of the joint venture agreement by Landscaping was implicit in such a result. The court overruled the objection on the ground that while an interest existed it did not fall within the ambit of CPLR 4519. The attorneys were instructed to submit post-trial briefs on the issue.

During the direct examination of Gettinger by plaintiff's attorney, counsel asserted that a letter from plaintiff's lawyer to Landscaping stating that plaintiff would not sue it did not constitute a release. Thereafter, on two occasions during the same examination, counsel suggested that the witness be advised of his privilege against self-incrimination. Although the court remarked upon the unusual source of the request for a warning, the privilege was not invoked.

The climactic cross-examination of Gettinger by counsel concerned the use of Landscaping's letterhead by Trench's successors during the Glen Oaks project. The following extract from the record brought on the issue now before the court:

'Q. Well, isn't it a fact that--and you tell me whether I'm right or wrong, because I may be wrong and I don't want to put words in your mouth--but isn't it a fact that these letters went out on your letterhead because you were the general contractor on the contract?

A. You know damn well that's not true.

Q. I don't know that at all.

A. You do.

Q. I take it your answer is no--'.

Gettinger's statement under oath that his cross-examiner had personal knowledge that Landscaping was not the general contractor on the Glen Oaks job evoked inquiry by the court as to his relationship with counsel. The witness replied that cross-examining counsel had been and still was his lawyer. The trial was promptly recessed and a brief Ad hoc hearing was held in chambers to ascertain whether counsel's disqualification was necessary. Counsel forcefully defended his position which was based on the consent of both the defendant and Gettinger to his current role in the litigation. Another lawyer, he averred, had represented Landscaping in connection with the Glen Oaks project. The case was then adjourned pending determination of the disqualification issue and counsel agreed to furnish the court with a brief supporting his position.

Although the earliest provision of law regulating the professional conduct of lawyers was enacted in England in 1275, it was not until 1887 in Alabama that the first American Code of Professional Ethics was adopted. This was followed in 1908 by the American Bar Association's Code of Ethics containing thirty-two canons (Drinker, Legal Ethics at 14, 23--25). The New York State Bar Association (NYSBA) adopted its Canons of Professional Ethics in 1909 but since 1970 the minimum standards of professional conduct expected of New York lawyers have been set forth in the Code of Professional Responsibility promulgated by the American Bar Association (ABA) in 1969 and adopted by the NYSBA effective January 1, 1970. While the Canons contained in the Code do not possess the force and effect of statutes, they have come to be recognized by Bench and Bar as establishing standards and rules of professional conduct (In re Duffy, 19 A.D.2d 177, 242 N.Y.S.2d 665; Erie County Water Authority v. Western N.Y. Water Co., 304 N.Y. 342, 107 N.E.2d 479, cert. den., 344 U.S. 892, 73 S.Ct. 211, 97 L.Ed.2d 690). They therefore constitute a safe guide in ascertaining whether professional misconduct exists and a lawyer may be disciplined for not observing them (In re Heirich, 10 Ill.2d 357, 140 N.E.2d 825). Unlike its predecessor, The Canons of Professional Ethics, the 1970 Code provides that its disciplinary rules are mandatory in the sense that they state the minimum level of conduct below which no lawyer can fall without being subject to disciplinary action (Wise, Legal Ethics, (2nd Ed.) 1970 at 342).

Entitled 'A Lawyer Should Exercise Independent Professional Judgment on Behalf of a Client,' Canon 5 of the Code is applicable to the instant issue. EC 5--14 provides as follows:

'Maintaining the independence of professional judgment required of a lawyer precludes his acceptance or continuation of employment that will adversely affect his judgment on behalf of or dilute his loyalty to a client. This problem arises whenever a lawyer is asked to represent two or more clients who may have differing interests, whether such interests be conflicting, inconsistent, diverse, or otherwise discordant.'

EC 5--15 of the Code states that all doubts should be resolved against the propriety of such representation and a lawyer should never represent in litigation multiple clients with differing interests. The disciplinary rules applicable to Canon 5 direct a lawyer to decline or discontinue proffered or existing multiple employment on behalf of a client unless 'it is obvious that he can adequately represent the interest of each and if each consents after full disclosure . . .' (DR 5--105, subd. (C)).

Conflicting interests are those which are hostile, antagonistic, or in conflict with each other (7 C.J.S. Attorney and Client § 47). A lawyer represents conflicting interests when in behalf of one client, it is his duty to contend for that which duty to another requires him to oppose (Canon 6, Canons of Professional Ethics). The conflict, then, is between the clients to each of whom the attorney is bound by the rules governing fiduciaries (Wise, Legal Ethics (2d ed.) at 257) and to each of whom he has the duties of a trustee (Cord v. Smith, 338 F.2d 516 (9th Cir. 1964)). It is the principle of 'undivided loyalty' which underlies the attorney-client relationship and that principle may not be undermined 'by the disintegrating erosion of particular exceptions' (In re Estate of La Grove, 31 A.D.2d 928, 929, 299 N.Y.S.2d 80, 81, aff'd, 30 N.Y.2d 624, 331 N.Y.S.2d 439, 282 N.E.2d 329; Kelly v. Greason, 23 N.Y.2d 368, 296 N.Y.S.2d 937, 244 N.E.2d 456; In re Bond and Mortgage Guarantee Co., 303 N.Y. 423, 103 N.E.2d 721; Meinhard v. Salmon, 249 N.Y. 458, 164 N.E. 545; People v. People's Trust Co., 180 App.Div. 494, 36 Cr.R. 203, 167 N.Y.S. 767; Laskey Bros. of W. Va. v. Warner Bros. Pictures, 130 F.Supp. 514 (S.D.N.Y.1955) aff'd, 224 F.2d 824, cert. den., 350 U.S. 932, 76 S.Ct. 300, 100 L.Ed. 814).

The application of the 'undivided loyalty' rule to lawyer-client relationships was described in a noteworthy opinion by Justice Lehman in Loew v. Gillespie, 90 Misc. 616, 619, 153 N.Y.S.2d 830, 832, aff'd, 173 App.Div. 889, 157 N.Y.S. 1133:

'The relation of attorney to client is a high trust. So long as that relation continues the attorney is required to give to his client his whole-hearted service. Not only way he do nothing adverse to his client, but he may accept no retainer to do anything which might be adverse to his client's interests. These principles must be regarded as the foundation of all the rules which the courts and the leaders of the legal profession have announced as fixing the proper relations of attorneys and clients. Public policy absolutely demands that these foundations be not weakened, and the courts will not permit an attorney to profit by a retainer which involves in any degree a disregard of these principles. In my opinion, it is entirely immaterial whether or not the party whom the attorney is seeking to hold has profited himself by the attorney's wrong, or whether or not the attorney's acts have in fact injured the original client; the essential question in each case is whether or not the attorney has accepted a retainer which is in any manner in conflict with his...