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Metalsalts Corp. v. Weiss

Decided: November 10, 1961.

METALSALTS CORPORATION, A CORPORATION OF THE STATE OF DELAWARE, PLAINTIFF,
v.
ROBERT O. WEISS, DEFENDANT AND THIRD-PARTY PLAINTIFF, V. JOHN ELLIOTT, R. C. CHANDLER, EDWARD WALSH, ARTHUR L. GOESCHEL, NATHANIEL GRIER, PAUL E. DOHERTY AND ELLEN B. ELLIOTT, THIRD-PARTY DEFENDANTS. ROBERT O. WEISS, PLAINTIFF, V. METALSALTS CORPORATION, A CORPORATION IN THE STATE OF DELAWARE, DEFENDANT



Grimshaw, J.s.c.

Grimshaw

This matter involves two separate, but related, actions. In the action instituted by Robert O. Weiss (hereafter called Weiss) he asks that this court compel Metalsalts Corporation (hereafter called Metalsalts) to comply with the terms of a judgment rendered by the New York Supreme Court. Metalsalts contests Weiss' right to the relief sought on the ground that the decision of the New York Supreme Court has been appealed by Metalsalts and that any proceedings in aid of execution of said judgment are stayed pending the disposition of the matter by the Appellate Division of the New York Supreme Court.

Metalsalts, in a separate action, asks this court to restrain Weiss from transferring his right in a patented fungicidal and bacteriological compound allegedly the property of Metalsalts. Weiss contests Metalsalts' right to the relief sought and has counterclaimed in defamation against certain directors and stockholders of Metalsalts for statements contained in the minutes of the meetings of the board of directors and stockholders which relate to activities of Weiss during his tenure as president of the Metalsalts Corporation.

The third-party defendants, in their answer to Weiss' counterclaim, maintain that the alleged defamatory statements are truthful; that these statements were absolutely privileged since they were made in connection with an arbitration hearing; and if said statements were not absolutely privileged, they are qualifiedly privileged since they were made by parties who were under a duty to communicate the existence of such facts to the individuals charged with the responsibilities of corporate management of Metalsalts.

Weiss, in the suit wherein he is the defendant and counterclaimant, has sought certain information in interrogatories

propounded to defendant Paul E. Doherty, who is house counsel, a stockholder and a member of the board of directors of Metalsalts. Weiss seeks Doherty's source of information for a "report" made by Doherty to the board of directors of Metalsalts concerning certain improprieties allegedly prevalent during Weiss' presidency of Metalsalts. Doherty contests Weiss' right to the source of his information, claiming the privilege of attorney-client and that the subject matter of the interrogatories is privileged as the work product of a lawyer made in connection with a quasi-judicial proceeding. Doherty therefore argues that the interrogatories asked by Weiss are improper objects of discovery. Weiss questions the basis for the claimed privilege, arguing that when Doherty made the investigations for the board of directors he was not performing a function peculiar to an attorney, and that in any event, Metalsalts waived the attorney-client privilege when its officers testified to the existence of Doherty's investigation at the arbitrators' hearing concerning Weiss' discharge.

In speaking about the attorney-client privilege, Chief Justice Vanderbilt said in In re Selser , 15 N.J. 393 (1954), at pages 405-406:

"Since it results in the exclusion of evidence, the doctrine of privileged communication runs counter to the fundamental theory of our judicial system that the fullest disclosure of the facts will best lead to the truth and ultimately to the triumph of justice. * * *

In adjusting this conflict in policy our courts have uniformly recognized that the privilege is not absolute, but rather an exception to a more fundamental policy. It is therefore to be strictly limited to the purposes for which it exists. Since the recognition of the privileged communication between attorney and client rests in the suppression of the truth 'the privilege should be strictly construed in accordance with its object.' * * * 'The privilege is an anomaly and ought not to be extended.' * * * 'The rule of privilege, having a tendency to prevent the full disclosure of the truth, ought to be construed strictly.'"

In Hansen v. Janitschek , 57 N.J. Super. 418 (App. Div. 1959), Judge Conford stated, at page 433:

"The attorney-client privilege has a well-defined place in our jurisprudence, and where it is properly applicable, must be given as broad a scope as accords with its rationale -- safeguarding a client's freedom from apprehension in consulting his legal advisor, assured by removing the risk of disclosure by the attorney, even at the hand of the law. * * * Nevertheless, since the privilege results in the exclusion of evidence, the doctrine 'runs counter to the fundamental theory of our judicial system that the fullest disclosure of facts will best ...


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