Before McLAUGHLIN, STALEY and HASTIE, Circuit Judges.
McLAUGHLIN, Circuit Judge.
This appeal is solely concerned with the third-party action of the defendants-appellants against the third-party defendant-appellee.
Clark, the original plaintiff, had been employed as an auditor by appellant, New Amsterdam Casualty Co. in Philadelphia, Pennsylvania for nine years prior to 1957. His supervisor in that position was appellant Geiger. In 1957 Clark moved to Florida and in September of that year made application for a similar situation with appellee Atwell, Vogel & Sterling, Inc. He dealt with T. W. Sadler, Atwell's Vice President in Atlanta, Georgia. Sadler considered Clark for a post centering in Jacksonville, Florida. He wrote Clark's former employer, the New Amsterdam, for information regarding Clark. He had a reply from a company executive and then wrote Geiger direct for more information. Geiger answered by a letter which Clark claimed defamed him and thereupon sued Geiger and the latter's employer. That suit was started in the Philadelphia Common Pleas Court and was removed to the United States District Court for the Eastern District of Pennsylvania because of diversity of citizenship. As the action was approaching trial, Geiger and New Amsterdam filed the third-party claim now before us against At-well, Vogel & Sterling, Inc. The basis of this was that the latter had disclosed admittedly confidential information to Clark in breach of its agreement with New Amsterdam and Geiger.
The third-party cause was severed from the Clark litigation because it would have unduly delayed the Clark trial. That matter was tried. Inter alia, Clark submitted proof of permanent mental illness as a result of the acts of Geiger and New Amsterdam. He was awarded a jury verdict of $21,000.
In this third-party action Clark was appellants' all important witness. He would not come to Philadelphia for the trial so his deposition was taken in Florida. Atwell was given the right to have a psychiatrist present to observe Clark with reference to his mental competency to testify. Such psychiatrist, a Dr. Schwartz, together with a psychiatrist on behalf of appellants, did attend the taking of the deposition. Prior to trial, the court held a preliminary hearing as to the competency of Clark to testify at the forthcoming trial. The court had before it Clark's deposition with particular reference to the psychiatric examination part of it. Dr. Schwartz testified on behalf of the third-party defendant. There were no other witnesses. At the conclusion of the hearing the court stated:
"* * * this is merely a preliminary hearing for me as the judge to determine whether the testimony of Mr. Clark is competent - in other words, whether it should go before the jury.
"I am satisfied in my mind, Mr. Devine, without any question - without any question - and I am reinforced by the doctor's testimony that it is competent to go before the jury.
"I think he was very lucid. I think he repeated a lot of things that I can't even recall.
"I looked at the notes of testimony. This has been two years ago and here he didn't know who was the doctor, he didn't know who was the lawyer. He didn't know even why he was there or why he was being interrogated.
"Any person ordinarily would have been frightened, would have been concerned, but I am satisfied as a matter of law that the evidence of Mr. Clark is competent in this case.
"Now, then, Mr. Devine, I have ruled that it will go before the jury.
"Now the weight or the effect will be for the jury.
"It will be very proper for you to recall Dr. Schwartz and ask the question that you just did and the doctor will say it might be or it might not be ...