For affirmance -- Chief Justice Weintraub and Justices Francis, Proctor, Hall and Schettino. For reversal -- None.
[47 NJ Page 2] Plaintiffs brought these actions against Harold A. Markowitz, an attorney, for damages they sustained through the default in repayment of collateral loans made by plaintiffs to Bert Lee, Jr. individually and to Lee Enterprises, Inc., owned and controlled wholly by Bert Lee, Jr. and his wife. Shortly prior to trial, but after discovery procedures had been instituted by plaintiffs and the deposition of the
defendant had been taken, defendant died. His estate, represented by his wife as Executrix, was substituted.
It appears from plaintiffs' several complaints and from the pretrial order filed for the consolidated actions that plaintiffs seek to establish that the attorney defendant represented both the plaintiffs and the borrowers in the loan transactions, that the said defendant breached his duty of trust and confidence by failing to inform plaintiffs of the attorney-client relationship he maintained with the Lee interests, and that even if said defendant did not represent plaintiffs in the loan transaction, he engaged in actionable conduct by misrepresenting facts bearing upon the transactions in question and by failing to disclose certain facts concerning the financial plight of Lee and Lee Enterprises, Inc. which he was under a duty to disclose to plaintiffs.
After trial in Superior Court, Chancery Division, judgment was rendered in favor of defendant and plaintiffs appealed. We certified the cause on our own motion prior to argument in the Appellate Division, R.R. 1:10-1(a).
Plaintiffs dispute the applicability of N.J.S. 2A:81-2 which provides in relevant part as follows:
"When [one] party to any civil action * * * is sued in a representative capacity, any other party who asserts a claim against such * * * representative, supported by oral testimony of a promise, statement or act * * * of the decedent, shall be required to establish the same by clear and convincing proof."
At common law, a party to a civil action was not competent to testify in his own behalf on the grounds of general disqualification for interest. In 1859, the Legislature avoided this harsh rule by L. 1859, c. 166, p. 489, which rendered parties competent to testify except a party who is sued by or is suing a party who is prohibited by some legal disability from being sworn as a witness or if either of the parties in the cause was
suing or was sued in a representative capacity. See Smith v. Burnett, 35 N.J. Eq. 314 (E. & A. 1882), 2 Wigmore on Evidence (3 d ed.), sec. 578. Cf. State v. Abbott, 36 N.J. 63, 79 (1961). This exception was initially narrowed by L. 1900, c. 150, p. 362, which permitted such testimony of the survivor where the representative of the legally disabled party offered himself as a witness. By L. 1931, c. 189, p. 474, testimony of a defendant survivor was permitted in any action brought by a representative upon a claim of fraud, breach of trust, willful default or undue influence.
In Hollister v. Fiedler, supra, 17 N.J., at p. 249, we stated that this statute created exceptions to the survivor's disqualification rule "designed to secure equality between the adverse parties and thus to avert the danger of injustice and oppression by means of testimony of a surviving party under the influence of self-interest put beyond refutation or explanation by the death of the other party."
As amended in 1960, N.J.S. 2A:81-2, this statutory purpose is accomplished, not by the arbitrary device of a particular type of action or of requiring the witnesses who so testify to the statements to be of a particular class, but by requiring the trier of the facts to be watchful against falsehoods which cannot be denied because the maker is dead and to arrive at a firm belief or conviction as ...