Court Opinion

ID: 9446172
Source: CourtListenerOpinion
Date Created: 2023-08-03 21:48:41.89635+00
Date Added: 2024-06-11T17:30:33.706394
License: Public Domain

LUMBARD, Circuit Judge
(dissenting).
I dissent and vote to reverse Tellier’s conviction as I cannot agree with Judge WATERMAN’S conclusion that Cahn’s “Ponzi scheme” warning to Tellier was properly admitted on the ground that Cahn’s advice to Tellier was not understood to be confidential.
On the contrary, from the tone and content of the letter which Cahn immediately afterwards wrote to Tellier, for the purpose of forwarding to Proctor and Jones, it seems to me that the parties understood that what would be disclosed to them would be couched in terms of what was inadvisable rather than what might be fraudulent and criminal. The occasion required plain speaking by Cahn and he spoke to Tellier in terms which would be clearly understood by one in the business of selling securities. When he said that further selling of bonds would “involve [Tellier] in a Ponzi scheme” he was in effect saying that if he did this he could go to jail as Ponzi did.
Such a blunt warning is precisely the kind of advice that an attorney should give to a client who hovers on the brink of questionable financial practices. But from the very nature of the occasion which requires such a warning, it is well understood that it is the kind of speaking which usually does not take place before third persons and which is not intended for other ears or eyes. The majority opinion means that an attorney by his very act of warning a client against imprudent and unlawful action is placing himself in the position of principal witness against the client he seeks to aid. 8 Wigmore on Evidence § 2291, p. 550 (3d Ed. 1940).
*452If in these circumstances the attorney can be made to disclose what he said, it follows an attorney will not dare to speak bluntly and forthrightly to his client and much good that may flow from the confidential nature of the relationship will be lost. Cf. 34 Neb.L.R. 538, 540 (1955).
Thus it seems to me that the reasoning of the majority sucks all the vitality and usefulness from the attorney-client privilege; it whittles the privilege to nothing and, worse still, it makes the attorney a witness against his client.
There is a great public interest in preserving this relationship and encouraging a frank exchange between attorney and client. In the overwhelming majority of cases the client follows the attorney’s advice. Obviously frank expression of opinion, including such simile, metaphor and emphasis as seems appropriate, increases the likelihood that the attorney’s advice will be heeded by the client. Any diminution of the protection which withdraws the veil of secrecy, where it is not crystal clear and explicit that both attorney and client understand that the very words of a private conversation are to be communicated to others, defeats the salutary purpose of the privilege.
Here it is abundantly clear that what was to be communicated to Proctor and Jones was to be a watered-down version couched in lawyer-like language. The letter did not say that issuing Series C debentures would be fraudulent and criminal; it merely pointed out that further issuance of similar debentures was highly inadvisable and unwarranted unless and until certain questions could be answered.
Cahn first related his telephone talk with Tellier on December 17 or 18, 1953. He advised Tellier not to become involved in the issue of a new series of bonds for the Alaska Telephone Corporation, since “ * * * Alaska * * * is selling bonds to stay alive, to keep going, as a substitute for earning money.” Cahn said he warned Tellier in these words a “On that basis, if you sell bonds, you are merely selling additional bonds instead of having the company make money. And this selling of bonds to pay back interest by the sale of new bonds will involve you in a Ponzi scheme.”
This forceful language is a far cry from the detailed lawyer-like letter which Cahn sent to Tellier, dated December 23, 1953, and which may be quoted in part as follows:
“Dear Walter:
“This will acknowledge receipt from you of the letter from Bert Proctor of Alaska Telephone Corporation dated December 7th requesting assistance in the current emergency confronting the company.
******
“In your accompanying note you indicate that you will be unable to sell any common stock and inquire whether the company can issue some more debentures, in the maximum principal amount of $150,000, to $200,000.

“I am strongly of the opinion that it is unsound, for this company to sell any more bonds.

“The company has demonstrated no ability whatsoever to earn anything, and in fact has sustained a startingly consistent record of losses since its inception. Under the circumstances, I think there are very serious legal problems as well as practical financial problems involved in selling any more debentures.
* * * * *

“In any event, I feel very strongly that neither of us should participate in any further debenture financing for the company, at least under present circumstances.

******
“In the event that you should write to Proctor and Jones, there are some questions which I think must be cleared up before we can even consider going ahead. As an example, I suggest that some of the following questions must be answered:” (The letter then listed five matters which required explanation or reconciliation.)
******
*453“Nothing that I say is intended as a reflection in any way on Jones, Proctor or the other officers. I know they have done all they can. This is a tough situation. However, there is not enough in the picture to justify any further debenture sales. As I stated above, I think this is the time for the company to raise private capital to take it over its current difficulties. Public capital should await a demonstration of the company’s earning power. When I was in Seattle last March, I told Proctor and Jones that, in my opinion, no further public financing was possible under any circumstances unless and until the company demonstrated earning power. I still feel the same way.
“Best regards, sincerely.” (Emphasis added.)
While it may seem to be merely a matter of degree, the difference between the talk and the letter is of the essence. It is the difference between a warning against felonious conduct and measures which would raise “very serious legal problems,” i. e. responsibility measured by a jail term rather than by dollars.
Cahn’s letter was to take Tellier “off the hook,” i. e. to give lawyer’s reasons why the debentures should not be issued; it was not intended to be and it was not a warning to desist because of possible criminal prosecution. But in any event it was not intended to convey and it did not convey, the blunt prophetic language of the Cahn-Tellier telephone talk. Obviously it would serve no purpose, either of Tellier or Cahn, to pass along Cahn’s colorful characterization of a further issue as a “Ponzi scheme.” That he did not put “Ponzi scheme” or any intimation of possible criminal consequences in the lei ter seems to me to be conclusive proof of that.
The mere fact that some conclusions of the attorney-client exchange are to be conveyed to others is not an excuse or a reason for saying that the parties did not intend any part of the exchange to be confidential. Such reasoning is contrary to the facts of life and to the implicit nature of man-to-man speaking; it eats the heart out of the attorney-client relationship. The privilege of the attorney-client relationship attaches to the particular words used or it is no privilege at all.
The majority opinion makes the further argument that even if Cahn’s “Ponzi scheme” warning had not been intended, to be communicated further, nevertheless it was not privileged because what Cahn said to Tellier “was too closely connected with the information which was intended to be communicated to Proctor and! Jones” to be severed from that concerning which they were to be informed.
Few talks between attorney and client could ever survive such a test. How could it ever be said that the connection was not a close one ? It makes no difference how close the connection might be, what is said privately should be protected unless the client clearly consents to further communication. See Connecticut Mutual Life Insurance Co. v. Shields, D.C.S.D.N.Y.1955, 18 F.R.D. 448, 451; New York Civil Practice Act, § 354; People v. Patrick, 1905, 182 N.Y. 131, 175, 74 N.E. 843; Richardson on Evidence § 436 (8 Ed., Prince, 1955). Here, where a letter in writing followed the talk, that seems to me, absent further proof, to be confirmation that the client never intended or consented to further communication of the talk, other than as contained in the letter, and that the at-, torney so understood it.
If the admission of the evidence was error, I think it follows that it was so harmful to Tellier’s defense that his conviction should be reversed. Whatever doubts the jury may have entertained (the first trial had resulted in a hung jury), may well have been resolved by the “Ponzi scheme” talk. The fact that Tel-lier’s own lawyer gave so unequivocal and memorable a warning of what Tellier would be doing if he persisted with more such financing on the basis of such representations as were made in view of the facts known to him can hardly be said to be merely cumulative even in so lengthy a trial with its abundant evidence to support the verdict. I would reverse Tel-lier’s conviction.