This was a contested mortgage foreclosure action. Defendants Lawn, among numerous contentions, argued that the terms of plaintiff's note and mortgage were modified by a separate written agreement. They offered parol evidence to explain its terms. Plaintiff denied any modification and, in any event, argued that testimony concerning the separate agreement was barred by the parol evidence rule. The court disagreed, holding that the various documents forming the separate agreement were unclear so that interpretation was necessary, requiring the admission of the offered evidence for that purpose.
The Lawns then called Peter M. Rosenblum, a member of the law firm of Foley, Hoag & Eliot of Boston, Massachusetts, as a witness. Rosenblum and his firm had represented Lawn and Park Mobile, Inc., of which Lawn was the executive director and principal shareholder. Plaintiff and others, including three foreign corporations, also owned substantial interests in Park Mobile. That corporation was not made a party to this action. Rosenblum, acting for both clients, had drafted the "modification" agreement and related documents, and had also participated in extensive negotiations with plaintiff, his attorneys (not trial counsel) and others, relating to the complex financial affairs of Park Mobile. He was offered as a witness with the understanding that his testimony would be limited to the identification of the documents and to statements made by other persons, including Aysseh and his attorneys during the negotiations.
When plaintiff deposed Rosenblum before trial, the attorney-client privilege was interposed, denying answers to numerous significant and relevant questions. Plaintiff then demanded to know whether Rosenblum would be called as a witness at the trial. He warned defendant that, if he was, the court would be requested to bar his testimony on the ground that (1) his production as a defense witness, as well as his anticipated testimony, would constitute a waiver of the attorney-client privilege; that (2) the waiver should have been made at the time of the deposition and that (3) the failure to do so denied the right to adequate discovery and necessary trial preparation. Plaintiff's demand was ignored. Rosenblum was then produced at trial, and plaintiff, as promised, moved to bar his testimony entirely. The motion was granted. This opinion, submitted after that ruling, is written by reason of the novel and important questions involved.
A. The Attorney-Client Privilege and Its Waiver
The attorney-client privilege is set forth in N.J.S.A. 2A:84A-20, Evid.R. 26;
(1) General rule. Subject to Rule 37 and except as otherwise provided by paragraph 2 of this rule communications between lawyer and his client in the course of that relationship and in professional confidence, are privileged, and a client has a privilege (a) to refuse to disclose any such communication, and (b) to prevent his lawyer from disclosing it, and (c) to prevent any other witness from disclosing such communication if it came to the knowledge of such witness (i) in the course of its transmittal between the client and the lawyer, or (ii) in a manner not reasonably to be anticipated, or (iii) as a result of a breach of the lawyer-client relationship, or (iv) in the course of a recognized confidential or privileged communication between the client and such witness. The privilege shall be claimed by the lawyer unless otherwise instructed by the client or his representative; the privilege may be claimed by the client in person, or if incompetent or deceased, by his guardian or personal representative. Where a corporation or association is the client having the privilege and it has been dissolved, the privilege may be claimed by its successors, assigns or trustees in dissolution.
(2) Exceptions. Such privilege shall not extend (a) to a communication in the course of legal service sought or obtained in aid of the commission of a crime or a fraud, or (b) to a communication relevant to an issue between parties all of whom claim through the client, regardless of whether the respective claims are
by testate or intestate succession or by inter vivos transaction, or (c) to a communication relevant to an issue of breach of duty by the lawyer to his client, or by the client to his lawyer. Where 2 or more persons have employed a lawyer to act for them in common, none of them can assert such privilege as against the others as to communications with respect to that matter.
(3) Definitions. As used in this rule (a) "client" means a person or corporation or other association that, directly or through an authorized representative, consults a lawyer or the lawyer's representative for the purpose of retaining the lawyer or securing legal service or advice from him in his professional capacity; and includes an incompetent whose guardian so consults the lawyer or the lawyer's representative in behalf of the incompetent, (b) "lawyer" means a person authorized, or reasonably believed by the client to be authorized to practice law in any State or nation the law of which recognizes a privilege against disclosure of confidential communications between client and lawyer. A communication made in the course of relationship between lawyer and client shall be presumed to have been made in professional confidence unless knowingly made within the hearing of some person whose presence nullified the privilege.
The privilege provides a necessary protection to the attorney-client relationship, preventing unauthorized disclosure of confidential communications. It is described in State v. Kociolek, 23 N.J. 400 (1957):
The attorney-client privilege is basic to a relation of trust and confidence that, though not given express constitutional security, is yet essentially interrelated with the specific constitutional guaranties of the individual's right to counsel and immunity from self-incrimination, the oldest of the privileges for confidential communications, going back to the reign of Elizabeth where it stood unquestioned, "as a natural exception to the then novel right of testimonial compulsion." Wigmore on Evidence (3d Ed. 1940) § 2190. [at 415]
As Evid.R. 26 indicates, the privilege does not extend to communications between client and attorney made in the presence of a third person. Roper v. State, 58 N.J.L. 420 (Sup.Ct.1896); Gulick v. Gulick, 39 N.J. Eq. 516 (E. & A. 1885); 8 Wigmore, Evidence (McNaughton rev. 1961), § 2311 at 599-603. The rule is explained in Carr v. Weld, 19 N.J. Eq. 319 (Ch. 1869):
An attorney would be obliged to disclose any agreement made between the parties in his presence. Such agreements are not communications made by him to his client, but facts that occur in his presence; they are not secret or to be concealed from the opposite party, and from that fact are necessarily within his knowledge. They are not within the terms or reason of the rule that prohibits counsel or attorneys from disclosing communications made to them by clients. [at 320]
The privilege may be waived, but only by the client; absent waiver, the attorney, when called as a witness, must assert the privilege. In re Selser, 15 N.J. 393, 404 (1954). Evid.R. 37 provides:
A person waives his right or privilege to refuse to disclose or prevent another from disclosing a specified matter if he or any other person while the holder thereof has (a) contracted with anyone not to claim the right or privilege or, (b) without coercion and with knowledge of his right or privilege, made disclosure of any part of the privileged matter or consented to such a disclosure made by anyone.
A disclosure which is itself privileged or otherwise protected by the common law, statutes or rules of court of this State, or by lawful contract, shall not constitute a waiver under this section. The failure of a witness to claim a right or privilege with respect to one question shall not operate as a waiver with respect to any other question.
It is clear from this rule that a party who uses his attorney as a witness thereby waives the privilege, at least as to confidential transactions covered by the testimony. See, also, Sicpa North America v. Donaldson, 179 N.J. Super. 56, 61-62 (Law Div.1981); 8 Wigmore, op. cit., § 2327; McCormick, Evidence (2 ed. 1972), § 94 at 195.
Plaintiff claimed that the mere presentation of an attorney as a witness for his client waived the privilege entirely. He relied upon the following from Wigmore, op. cit.:
The client's offer of the attorney's testimony in the cause at large is not a waiver so far as the attorney's knowledge has been acquired casually as an ordinary witness. But otherwise it is a waiver for, considering that the attorney ought in general not to be used as a witness, the client ought to be discouraged from utilizing his attorney in double and inconsistent capacities, and if he has seen fit to furnish him knowledge as a ...