The liability of the defendant for the deficiency arising on the sale of the mortgaged premises turned upon the question, whether the deed from Foster was intended as an absolute conveyance, or simply as a mortgage. If it was intended as a security merely, the covenant thereon to assume and pay the plaintiff's mortgage was in effect an agreement between Foster and the defendant that the latter should advance the amount of the prior lien upon the security of the land, and gave no right of action to the plaintiff, who was neither a *Page 75 party to the contract nor the person for whose benefit it was made. (Garnsey v. Rogers, 47 N.Y. 241; Pardee v. Treat, 82 id. 385.) The referee found that the deed was intended as an absolute conveyance, and to establish this view of the transaction, the plaintiff on the trial, called as a witness, the attorney who drew the deed, who was permitted, against the objection of the defendant, to testify to the conversation between Crosby, Foster and the defendant Wright, at his office, when the deed was drawn. The evidence of the attorney (who is also the attorney for the plaintiff in this action) was material upon the point in controversy. The general facts are, that on the morning of the day when the deed was drawn, and before the conversation at the attorney's office, Crosby, Foster and Wright had an interview. Foster was the owner of the land embraced in the plaintiff's mortgage, and the mortgagor. Crosby held a junior mortgage on the same premises, which was due. Wright was liable as second indorser of a note upon which Foster was primarily liable, and Foster was also indebted to him for money advanced. Crosby was urging the payment of his mortgage, and at the interview between Crosby, Foster and Wright, it was proposed by Crosby, that Wright should take an assignment of his mortgage, and that Foster should execute to Wright a deed of the land as security for the payment of the sum he should advance to Crosby, and for his liability as indorser. This proposition was finally assented to by Wright and Foster, and the three persons, by mutual agreement, then went to the office of the attorney to consummate the proposed arrangement. The arrangement, as the attorney testifies, was there changed, and his evidence tends to show that it was agreed that Foster should convey to Wright by an absolute and indefeasible deed, and that Crosby, instead of assigning, should satisfy his mortgage upon payment thereof by Wright. The attorney was contradicted on material points by other witnesses, and the question is, whether the evidence of the attorney in respect to the transaction at his office was admissible.
The referee found that Wright, Foster and Crosby, after making the verbal agreement, went to the law office of the *Page 76 attorney, for the purpose of employing him professionally to draw the necessary papers to carry out that agreement, and that on the agreement being stated to him, it was changed by his advice. The rule that an attorney cannot disclose communications made to him by his clients is not, as now understood, confined to communications made in contemplation of, or in the progress of an action or judicial proceeding, but extends to communications in reference to all matters which are the proper subject of professional employment. (Williams v. Fitch, 18 N.Y. 550;Yates v. Olmsted, 56 id. 632.) The rule prohibiting such disclosure still exists, notwithstanding the change in the law permitting a party to an action to be examined as a witness on his own behalf, or at the instance of the adverse party, and is made a part of the statute law by section 835 of the Code of Civil Procedure. It is not necessary, in this case, to consider the question, whether an attorney, employed as the common attorney of two or more parties to give advice in a matter in which they are mutually interested, can, on a litigation subsequently arising between them, be examined at the instance of one of the parties, as to communications made when he was acting as the attorney for both. (See Whiting v. Barney, 30 N.Y. 330. ) However this may be, we are of opinion that he cannot disclose such communication in a controversy between such parties and a third person. Where parties, having diverse or hostile interests or claims which are the subject of controversy, unite in submitting the matter to a common attorney for his advice, they exhibit, in the strongest manner, their confidence in the attorney consulted. The law should encourage, and not discourage, such efforts for an amicable arrangement of differences, and public policy and the interests of justice are subserved by placing such communications under the seal of professional confidence to the extent at least of protecting them against disclosure by the attorney at the instance of third parties. This position, if not directly adjudicated, is supported by the opinions of judges in several cases. (Rice v. Rice, 14 B. Monr. 417; Robson v. Kemp, 4 Esp. 233; Same v. Same, 5 id. 52; Strode v. Seaton, 2 Ad. *Page 77 El. 171; see, also, opinions of GROVER, J., in Britton v.Lorenz, 45 N.Y. 57; INGRAHAM, J., in Whiting v. Barney, 30 id. 342; SMITH, J., 38 Barb. 397.)
For the error in admitting the evidence referred to, the judgment should be reversed and a new trial granted.
All concur.
Judgment reversed.