
    In the Matter of Arthur Mellen.
    
      (Supreme Court, General Term, First Department,
    
    
      Filed March 31, 1892.)
    
    1. Assignment for creditors—Grounds for removal of assignee.
    It is sufficient to authorize the removal of an assignee for creditors that he has sought to further the interests of the assignor; retained the counsel employed by the assignor’s wife, who had claims on the assigned estate .hostile to those of creditors; was guilty of prevarication in the interests of the wife of the assignor and made no examination of the assignor’s books after notice from creditors that certain assets had not been included in his inventory.
    
      2. Same—Reference.
    On application for the removal of an assignee the court may refer the matter to a referee to take proof thereon and report with his opinion for the purpose of aiding the conscience of the court.
    3. Reference—Removal of referee on ground of prejudice. '
    A referee cannot he removed on the ground of prejudice because he correctly charged an attorney for one of the parties with delaying and obstructing the proceedings before him.
    4. Attorneys—Privileged communications.
    An attorney cannot refuse to testify as to communications made to him on the ground that they were privileged when the person making them has-disclaimed the existence of the relation of attorney and client between the witness.and himself.
    "*r,
    5. Same—Third persons.
    The exemption does not extend to communications from third persons, to whom an attorney has been referred by his client.
    Appeal from order removing assignee. Appeal from order referring it to a referee to take proof of the facts stated in the petition and the answers, etc., and to report with his opinion. Appeal from order denying motion to remove referee. Appeal from order requiring a witness to attend and testify before the referee.
    
      Henry Daily, Jr., for app’lt; George Hill, for resp’ts.
   Yan Brunt, P. J.—It

is impossible to consider in detail the-lengthy record and argument of counsel upon the appeals from the various orders above mentioned. It will suffice in disposing of these appeals to deal with the merits of each in a general way without attempting to particularize the various circumstances-established by the record and which have led to the conclusions arrived at.

It seems to us that this record exemplifies to a striking degree-the impropriety of the appointment of an assignee for the benefit of creditors who is a non-resident of this state. Although it is claimed the assignee in question appointed an attorney to appear for him in all proceedings which might be brought against him,, it is apparent from the facts appearing upon this record that service of papers upon the assignee was impeded by such non-residence, and he was enabled to delay his appearance because thereof. Although this of itself would probably not have been sufficient to justify the removal of the assignee, there are other facts disclosed which show that no other conclusion could have been arrived at, not only in justice to the parties represented by the assignment in the case at bar, but also without setting a precedent which might be in other’cases productive of the greatest mischief.

It is apparent that the assignee sought by every means within, his power to further the interests of the assignor- and his wife-in the claims which were presented against the assigned estate; that he aided them in the procuring of testimony, and even went so far in his advocacy of their claims as to employ their attorney as his counsel in the administration of the assigned estate. An assignee should certainly be unbiased as between the various parties interested in the assigned estate; and it is the-grossest misconduct for an assignee to employ the known counsel of a person holding property alleged by other parties interested in the estate to belong to such estate, and who has been-retained to defend that possession.

The result of the retainer of such counsel has been a studied attempt to throw every impediment in the way of those seeking information in regard to this estate, even to the most outrageous prevarication; in one instance the counsel stating when called upon to produce certain books that he had none in his possession, that none such had come into the possession of the assignee, and none into the possession of the attorney, and that if they had come into the possession of the assignee, they had not been sent to the attorney, when the fact subsequently appeared that during all this time the attorney had the possession of these books and had wilfully suppressed the fact, making a false statement before the referee in order that the evidence might be reserved for certain other litigations in which his real client, the wife of the assignor, was a party. It further appears that the assignee himself in his eagerness to protect the wife of the assignor in the possession of the property which she had received from him, did not hesitate also to swear to what it is evident he knew to be untrue.

Certain charges were made in the moving papers against the assignee in respect to deeds of property made by the assignor for the benefit of his wife, and claims were made against the assignee because of his failure to act in reference to those deeds, and the charge was made that before the making of the general assignment he had knowledge of said deeds and of the commencement of a partition suit, and of the claims of the petitioners herein. In answer thereto the assignee swore that he had no knowledge of such deeds either before or at the time said general assignment was made and not until months afterwards.

The assignment was made on the 24th of April,-1889, and it appears that on the 8th and the 20th of April, 1889, the assignee had written to A, C. Ellis, the then attorney for the assignor and his wife, letters in which he shows his solicitude that the assign- or’s wife should be able to maintain the integrity of the very conveyances which in his answering affidavit above referred to he had denied having any knowledge of.

The petition also contained statements that the then attorney for the assignor and his wife had consultations with the assignee in regard to the making of the conveyances, etc., and the assignee in his answer stated that he had not seen and conversed with said assignor and his wife for at least seven months before said deeds are alleged by the petitioners to have been made, the date of the deeds being the 5th of November, 1888, whereas it was established upon this hearing that in October, 1888, he had seen and talked with the assignor, and even admitted the same upon his examination.

It further appears that the assignee made no examination of the books of the estate for the purpose of ascertaining its condition nor for the purpose of learning whether there were assets other than those contained in the inventory filed by the assignor, and notwithstanding the fact that the assignee had notice soon after his appointment that the petitioners claimed that the assignor had assets not included in his inventory, the fact being that subsequent to the 24th of May, 1889, the assignee committed the whole business of the assigned estate to the attorney for the assignor and his wife, and used his position entirely for their benefit.

And there are other circumstances which go to show that the assignee was more solicitous for the protection of the claim of the wife of the assignor upon the property, which she had acquired from the assignor, than he was to protect the interests of the creditors upon the assignor’s estate.

But it is needless to go more at length into the voluminous testimony offered, because what has already been adverted to seems to be much more than sufficient to justify, but also to require the removal of such an assignee.

. It is urged that the referee was guilty of error in admitting certain testimony, namely, that of Mr. EÍlis and of Mr. Mellen, who was then deceased. Although the evidence given by Mellon in the partition suit may not have been strictly competent as against the assignee, he not being a party to that action, yet it is not of such a character as in any way to affect the conclusion arrived at upon other facts incontestably established.

As to the objections to the evidence of Mr. Ellis, they will be •considered in the discussion of the appeal from the order which was made requiring him to testify.

The order removing the assignee should be affirmed, with ten dollars costs and disbursements, to be charged against the assignee personally.

The next order appealed from is that referring it to a referee to take proof of the facts stated in the petition for the removal of the assignee and the answer thereto, the referee being-required to report with his opinion thereon.

We are not aware upon what ground this appeal is based.

The court undoubtedly had the power to refer any questions to the referee to take proof thereon and report with his opinion for the purpose of aiding the conscience of the court. Not that such report is binding upon the court, but it simply presents the evi- • deuce with the opinion of the referee as to its weight, he having-had the benefit of hearing the -witnesses orally testify.

This order should also be affirmed, with- ten dollar's costs a;;d disbursements, to be paid by the assignee personally.

There seems to be no basis whatever for the appeal from the •order denying the motion to remove the referee. The attorney for the assignee had been guilty of the greatest procrastination and had evidently been endeavoring by every means in his ¡tower to delay the proceedings in the reference: and that the patience of the referee had not long before been exhausted is the only matter for surprise presented by the record. That a court or referee is presumably prejudiced because it correctly characterizes the proceedings of the attorney before him, has not yet obtained in legal jurisprudence. But this seems to be the only ground upon which the motion to remove the referee was made and upon which this appeal is based.

The referee doubted, and subsequent events proved correctly ■doubted, the good faith of the conduct of the attorney; and that he should be required to appear to be so much without sense as to be seemingly imposed upon by the transparent tactics of the attorney seems to be the claim made upon the part of the appellant. We are not aware of any such rule, .and we see nothing upon the admitted state of .facts in reference to the 'proceedings before him which calls for criticism, except, perhaps, too much longsuffering.

This order should also be affirmed, with ten dollars costs and ■disbursements, to be paid by the assignee personally.

The next appeal is from the order requiring the witness Ellis to testify. It appeared that he had been required to attend before the referee, and to produce certain papers which he had received from the assignee. The witness claimed that he had been the attorney for the assignee, and .that as such the communications between himself and his client were privileged.

Upon the reference, attention being called to the affidavit made by the assignee in answer to the allegations contained in the petition upon the motion for his removal, in which the assignee stated that he had never employed Ellis as his attorney or counsel, or authorized him to act for him in any capacity, or with respect to any business of any kind, the referee directed the witness to answer. ' He still refusing, and the referee holding that he had no power to compel him to answer, a motion was made before the ■court to compel the witness to answer. This motion was granted.

It is claimed upon the part of the appellant that it was error to refuse to the assignee or his attorney an opportunity to be heard in opposition upon the objections which had been made by the attorney for the assignee, and upon which objections Ellis had refused to answer the questions.

It might be sufficient to say that there is nothing in the record tending to show that the judge before whom the motion was made refused to allow the attorney to be heard. On the contrary, it does not appear that any such request was made, but it does appear that the attorney for the assignee appeared, and objected to the motion being heard upon the ground that the assignee had received no notice thereof. The proceeding before the court was simply to enforce the ruling of the referee, and the assignee had his exception to the ruling, and it was available to him ; the only point being whether the ruling was so manifestly erroneous that the court should refrain from disciplining the witness for contempt of court.

It is perfectly plain that the referee was entirely right in the ruling which he made. It is true that the witness claimed to have been the counsel of the assignee at the time of the writing of the letters which he was required to produce. But the assignee had in the most solemn manner under oath, and unqualifiedly and without reservation, denied that he had ever occupied that relation towards him either individually or as assignee, or in any capacity whatever or in respect to any business. In the face of this disclaimer under oath there was no interest whatever of the assignee which the court was bound to protect. There were no secrets of attorney and client which under the provisions of law should not be divulged. The client must know as to whether or not he made the communications in view of that relation, and if they were not made in view of that relation then the communcations were not made by the assignee to Mr. Ellis in the course of Mr. Ellis’ professional employment by the assignee.

But it is sought to show that it was erroneous to allow Ellis to be examined because he had been the attorney for the assignor and his wife and that these letters by the assignee were written to him while he occupied that relation. And we are referred to one English authority and one authority in a United States court to sustain this proposition.

It is undoubtedly held in those cases that the privilege of the-attorney extends to information received on behalf of the client in regard to his affairs from persons to whom the attorney has been referred by the client for the purpose of his obtaining such information as his counsel. But the question is not to be controlled by the decisions of English courts nor those of the United States. The authority of the Code under which this exemption must be claimed and established, if at all, is explicit.

It is as follows: “ An attorney or counsellor at law shall not be allowed to disclose a communication made by his client to him, or his advice given thereon, in the course of his professional 'employment”

It will thus be seen that the exemption embraces only communications between the client and his attorney, and does not extend to communications from third persons to the attorney; and judicial construction has never enlarged the rule, certainly in this state, to the extent claimed by the appellant.

In regard to the proof of the letters, they were amply established. They were shown to have been received under circumstances which carried the proof of their authenticity with them; and although the assignee was examined on his own behalf he had not the hardihood to deny his own handwriting.

The cases of Bacon v. Frisbie, 80 N. Y., 394, and Britton v. Lorenz, 45 id., 51-57, in no way conflict with this view. In those cases it was held that the relation of attorney and client existed; and in the case first cited the court held that it was manifest that the party went to the attorney and spoke to him of the matter upon the faith that he was his lawyer and of the relation existing between them as counsel and client.

In the case at bar the assignee has disclaimed in the most solemn .manner that atiy relation of that kind had ever existed in respect to any business between himself and Mr. Ellis.

There is no reason, therefore, for disturbing this order, and the-same should be affirmed, with ten dollars costs and disbursements, to be paid by the assignee personally.

The judgment, therefore, is that the four orders appealed from-. "be affirmed, with ten dollars costs and disbursements, in each case to be paid by the assignee personally.

O’Brien, J., concurs.  