
    Barry v. Coville et al.
    
    
      (Supreme Court, General Term, Fourth Department.
    
    July 20, 1889.)
    1. Assignment—Construction—Chattel Mortgage.
    Plaintiff, being indebted to defendants, assigned all his interest in certain patents to them, by an instrument in which defendants agreed to furnish funds and pay a certain debt. Defendants reserved the right to “terminate” the agreement, and it was provided that they should “retain their interest and claims herein till they shall be fully paid their said indebtedness up to such time as they shall terminate this agreement, but they shall, upon payment to them of their said indebtedness, reassign their said interest in said inventions ” to plaintiff. Held, that the assignment was intended as collateral security for plaintiff’s indebtedness.
    2. Trial—Findings.
    A finding that no fraud was practiced by defendants towards plaintiff in regard to such assignment, is not inconsistent with a finding that defendants held it as collateral security.
    8. Same—Accounting.
    On defendants’ electing to terminate the agreement, plaintiff is entitled to an accounting ; and upon paying or tendering the amount due to defendants, they should reassign to plaintiff.
    4. Witness—Attorney and Client.
    The testimony of an attorney that he drew a deed in controversy, and counseled plaintiff in regard to the subject-matter thereof, is inadmissible, except so far as it relates to the fact that he drew the deed.
    Appeal from special term, Onondaga county.
    Action by William Barry against Orson Coville and Gabriel A. Morris, impleaded with the Syracuse Bolt Company, for an accounting and reassignment'of certain patented inventions alleged to have been assigned by plaintiff to defendants Coville and Morris. By the instrument of October 2, 1884, referred to in the opinion, plaintiff assigned all his interest in certain patented inventions. From an interlocutory judgment directing a reconveyance of such inventions to plaintiff on payment of his indebtedness to defendants, the latter appeal.
    Argued before Hardin, P. J., and Martin and Merwtn, JJ.
    
      B. H. Bailey and 1.1). Garfield, for appellants. Baldwin, Lewis t& Kennedy, for respondent.
   Harden, P. J.

Before the Code allowing legal and equitable remedies to be had in the same action, it was held that paroi evidence was admissible, independent of proof of fraud or mistake, to show that a deed, although absolute on its face, was in fact intended by the parties as a mortgage. Strong v. Stewart, 4 Johns. Ch. 167; Whittick v. Kane, 1 Paige, 202; Van Buren v. Olmstead, 5 Paige, 9; Lansing v. Russel,3 Barb. Ch. 325. Since the adoption of the Code of Procedure, it has been repeatedly held that paroi evidence is admissible in all classes of actions, whether legal or equitable, to show that a deed absolute on its face was given as a security only. Despard v. Walbridge, 15 N. Y. 374; Horn v. Keteltas, 46 N. Y. 605. When the instrument of October 2, 1884, (Exhibit 1,) was executed by the parties to this action, the plaintiff was indebted to the defendants, and they also agreed to “furnish funds;” and it was stipulated in the agreement that the defendants “will pay the indebtedness for goods to September 16, 1884, to-wit, $168.16; thirty-five dollars in cash heretofore paid to procure patent, etc., on the willow stripping machine herein mentioned; for all goods had since September 16, ■afoiesaid, and all moneys hereafter paid or advanced, and goods and provisions had hereafter. ” In that agreement the defendants reserved “the right to terminate” the agreement, and following the reservation of that right were the words which were quite significant in determining the intention of the parties; they are as follows: “But shall retain their interest and claims herein till they shall be fully paid their said indebtedness, up to such time as they shall terminate this agreement; but they shall, upon payment to them of their said indebtedness, reassign their said interest in said inventions herein to said Barry.” The right to terminate the agreement was extended by a stipulation of the parties to July 1, 1885.

1. It is apparent that the parties executing the agreement of October 2, 1884, treated the assignment of the plaintiff’s interest in the several patents as collateral security for his indebtedness to the defendants.

2. It is obvious from reading the testimony found in the appeal book that such was the intention of the parties, and the finding of the learned trial judge to that effect must therefore be sustained.

3. The finding of the learned trial judge “that there is no evidence of any fraud or deceit attempted or practiced towards the plaintiff by defendants, either in regard to Exhibit No. 1 or Exhibit No. 4, ” and also his finding “that plaintiff knew the contents of both Exhibit No. 1 and Exhibit No. 4 when he signed them, ” are not inconsistent with or at war with his conclusion that the defendants held the several transfers which they received from the plaintiff as collateral security for any indebtedness or advances.

4. We are of the opinion that the evidence warranted the finding that the several assignments were held by the defendants as security for any indebtedness ; and when they elected to terminate their relations to the defendants, existing in virtue of said assignments, we think the plaintiff is entitled to an accounting; and upon that accounting, the amount found due to the defendants being paid or tendered, the defendants ought to assign to the plaintiff the several inventions which they took under the circumstances disclosed by the findings of the trial judge.

5. When Cornelius W. Smith was upon the stand as a witness, it appeared that he drew the deed known as “Exhibit No. 4,” and that he was an attorney at law, and that the plaintiff applied to him to draw the deed, and also for counsel in regard to matters relating to the subject-matter of the deed. While his testimony was being given, and subsequently, on a motion to strike the same out, the question of the admissibility of his evidence was raised, and the court intimated an opinion that his testimony was inadmissible because he was not at liberty to violate the privilege existing between attorney and client in respect to confidential communications. The court finally struck out his testimony, except so far as it related to the fact that he drew the deed. The defendants took an exception. We are inclined to the opinion that the learned trial judge kept within the rule laid down in Root v. Wright, 84 N. Y. 72, where it said the “rule prohibits him from testifying to such communications in an action between his client and a third person.” It is also said in that case that the rule “extends to communications in reference to all matters which are the proper subject of professional employment. Citing Williams v. Fitch, 18 N. Y. 550; Yates v. Olmsted, 56 N. Y. 632.”

6. As the trial judge .found that there was no evidence of fraud or deceit practiced, and that the plaintiff knew the contents of both Exhibits No. 1 and No. 4 when he signed them, the ruling was not prejudicial to the defendants, and we ought to disregard their criticism in respect to the same. Code Civil Proc. § 1003. We see no occasion to interfere with the interlocutory judgment. Judgment affirmed, with costs. All concur.  