Michael W. Reed
Randi F. Elfenbaum
ATTORNEYS FOR APPELLEE
Attorney General of Indiana
Deputy Attorney General
Michael W. Reed
Randi F. Elfenbaum
Defendant Randy Stahl was convicted of defrauding a financial institution (a bank) and theft. Both crimes turned on unauthorized withdrawals from an account owned by
another. Stahl contends that the trial court erred in admitting a crucial piece of evidence, an
affidavit supplied to the bank by the account owner to prove Stahl was unauthorized, under
the exceptions to the hearsay rule for business records and for documents affecting an
interest in property. The Court of Appeals affirmed. Stahl v. State, 675 N.E.2d 1130 (Ind.
Ct. App. 1997). Stahl requests either acquittal or a new trial. We grant transfer and remand
because the document was inadmissible hearsay.
their withdrawal; or (3) benefit from their withdrawal. Johnson then viewed the tape and
identified the individual who withdrew the money as his friend Randy Stahl. The Bank
reimbursed Johnson $100 (the amount of withdrawals less $50) and refunded him $60 in
Stahl was charged with fraud on a financial institution and theft. Johnson did not testify at the trial, but the affidavit furnished to the bank was admitted to prove Stahl's lack of authorization to use the card. A jury found Stahl guilty on both counts and the trial judge sentenced him to concurrent prison terms of six years and one and a half years respectively. Stahl appealed and the Court of Appeals affirmed. Stahl, 675 N.E. 2d at 1130.
On appeal, Stahl asserts that it was reversible error to admit Johnson's affidavit.See footnote 1 Because the document was admitted to establish the truth of the matters recited, it is concededly hearsay. The State argues that the document falls within two exceptions to the hearsay rule: business records, Indiana Evidence Rule 803(6); and statements in documents affecting an interest in property, Rule 803(15). Our standard of review of a trial court's findings as to the essential elements of admissibility is sometimes described as an abuse of discretion. Mullins v. State, 646 N.E.2d 40, 51 (Ind. 1995); Daum v. State, 625 N.E.2d 1296, 1297 (Ind. Ct. App. 1993). Because the predicates or foundational requirements to admissibility often require factual determinations by the trial court, these findings are entitled
to the same deference on appeal as any other factual finding, whether that is described as a
"clearly erroneous" or abuse of discretion standard. However, the ultimate question in this
case is the interpretation of the language of a rule of evidence that presents a question of law
for this Court.
both the recorder and the person with personal knowledge be under a duty to observe and
report the facts.See footnote
The rule itself is less clear on this point as a matter of syntax. However,
the commentary to Federal Rule of Evidence 803(6), which is identical to the Indiana Rule,
notes the same requirement under various predecessors of the Federal Rules and
unequivocally states that "the Rule follows this lead by requiring an informant with
knowledge acting in the course of the regularly conducted activity." Fed. R. Evid. 803(6)
advisory committee's note. Indiana courts applying Indiana Rule 803(6) have held that the
person who records the information in the regular course of business must also have personal
knowledge of the information recorded in order to make it reliable. D.W.S. v. L.D.S., 654
N.E.2d 1170, 1173 (Ind. Ct. App. 1995) (the event recorded must have been within the
personal knowledge of someone acting in the course of regularly conducted business
activity). Federal courts reach the same result.See footnote
This requirement is fully consistent with the purpose of the exception. The hearsay
rule is designed to forbid unreliable out of court statements offered to prove the truth of the
matter asserted. The business records exception permits records of business activity to be
admitted in circumstances when the recorded information will be trustworthy. The reliability
of business records stems from the fact that the organization depends on them to operate,
from the sense that they are subject to review, audit, or internal checks, from the precision
engendered by the repetition, and from the fact that the person furnishing the information has
a duty to do it correctly. None of these is present in the case of a report that simply accepts
information from a source that is not itself acting in the course of a regular activity. This
case illustrates the point. The bank required Thomas to obtain the affidavit from Johnson
before it would reimburse him or allow him to watch the videotape. Thomas had the duty
to report information, but she had no personal knowledge, apart from what Johnson told her,
as to whether Johnson authorized or benefitted from the ATM transactions. She merely
reported what Johnson said in the affidavit, without any basis for evaluating the truth of the
matter asserted. The affidavit might be admissible to show, for example, the timing of
Johnson's report to Thomas, but it is hearsay as to the facts reported. In short, because
Thomas did not have personal knowledge of the information in the affidavit, and Johnson
was not acting in any regularly conducted business activity, the requirements of Rule 803(6)
were not met.
Statements in Documents Affecting an Interest in Property. A statement contained
in a document purporting to establish or affect an interest in property if the matter
stated was relevant to the purposes of the document, unless dealings with the property
since the document was made have been inconsistent with the truth of the statement
or the purport of the document.
The Indiana Rule is identical to the Federal Rule. There are no reported Indiana cases dealing with this exception and federal case law is sparse. See, e.g., United States v. Weinstock, 863 F. Supp. 1529 (D. Utah 1994); Taylor v. United States, 1993 WL 597379 (D. Ariz. Sept. 27, 1993); Compton v. Davis Oil Co., 607 F. Supp. 1221 (D. Wyo. 1985). The Advisory Committee's Note to Federal Rule of Evidence 803(15) anticipated that the exception would typically apply to "ancient" and "dispositive" documents that contain recitals of fact. For example, "a deed may recite that the grantors are all the heirs of the last record owner." This was viewed as admissible under 803(15) because "[t]he circumstances under which dispositive documents are executed and the requirement that the recital be germane to the purpose of the document are believed to be adequate guarantees of trustworthiness . . . ." As with any exception to the hearsay rule, the ultimate issue is whether the evidence in question is reliable. Each specific exception to the rule contains requirements designed to ensure the trustworthiness of the evidence. A piece of evidence that may be argued to fit within the specific language of the rule may nonetheless be inadmissible hearsay because of its inherent unreliability. Idaho v. Wright, 497 U.S. 805, 814-15, 110 S. Ct. 3139, 111 L. Ed. 2d 638 (1990); Dutton v. Evans, 400 U.S. 74, 88-89, 91 S. Ct. 210, 27 L. Ed. 2d 213 (1970) (plurality opinion) (to satisfy the Confrontation Clause, when unavailability of declarant is not proved, hearsay statements are analyzed on a case-by-
case basis to see whether there are indicia of reliability); 5 Weinstein's Federal Evidence
§ 802.05[a] (2d ed. 1997). Reliability is an implicit requirement of Rule 803(15).
Weinstock, 863 F. Supp at 1535 (the circumstances of an affidavit's execution supported the
conclusion that the declarations therein were trustworthy); Botsford General Hosp. v.
Citizens Ins. Co., 489 N.W.2d 137 (Mich. Ct. App. 1992) (handwritten sales receipt was not
made under circumstances that promoted its reliability and was inadmissible under 803(15));
5 Weinstein's Federal Evidence § 803.20 (the 803(15) exception is available only if
several indicia of trustworthiness are shown).
Under Rule 803(15) some documents, usually dispositive ones (e.g., deeds, bills of sale, etc.), are regarded as inherently reliable. If a document actually constitutes the instrument of transfer, as in the case of a deed, the statements recited in the document are likely to be reliable because the instrument is carefully drawn and was not created for purposes of the current controversy. They typically have the added assurance that they are negotiated documents where at least one party, usually the purchaser, is strongly motivated to see that they are accurate and a misrepresentation may generate adverse consequences to the other.
This exception to the hearsay rule is in part based on necessity. 5 Weinstein's Federal Evidence § 803(15) (the rule is necessary because "litigation may arise so many years after a conveyance that declarants and witnesses to the transaction may be unavailable"). Just as business records must be admitted because people recording vast numbers of events cannot be expected to testify to personal recollection of this minutiae,
statements in dispositive documents are sometimes the only means of establishing facts that
are not genuinely controverted. By reason of passage of time and the importance of a well
planned transaction at the time it was done, these documents are presumptively reliable.
However, the Rule has been held to apply to other documents affecting or establishing an
interest in property, even if not dispositive in nature. See, e.g., Weinstock, 863 F. Supp at
1529 (an affidavit claiming ownership of 35,000 shares of stock, filed after the stock
certificate was "lost," was admitted under Federal Rule of Evidence 803(15) to show that the
defendant, who allegedly forged an endorsement on the certificate, never had an ownership
interest in the stock or the certificate).
The parameters of the phrase "establish or affect an interest in property" are not entirely clear. The phrase could certainly be confined to documents that directly "establish" (deeds) or "affect" (liens) interests in property. In some broader sense anything relating to a commercial transaction may be argued to "affect an interest in property." It is debatable whether the affidavit in issue in this case should be described as one affecting an interest in property. By asserting that the ATM withdrawals were unauthorized, Johnson in some sense affected an interest in money owed to him by the bank by causing the bank to reimburse most of this money. The affidavit in this respect is of the same qualitative character as the shareholder affidavit held admissible in Weinstock. However, any document to be admitted under this exception must still be executed in circumstances that generate confidence in its reliability. For non-dispositive documents, this burden is steeper. And the more recent its creation, the more carefully the document's reliability must be examined.
Because the circumstances under which this affidavit was given do not establish sufficient
indicia of truthfulness, it does not qualify under the 803(15) exception to the hearsay rule.
The affidavit in this case bears none of the indicia of reliability that Rule 803(15) assumes.
It is neither ancient nor dispositive. More importantly, the document was created in
conjunction with the very transaction giving rise to the lawsuit in which it is offered. And,
as explained below, there are a variety of circumstances under which there may be a motive
to supply an incorrect affidavit of this type.
cross-examine Johnson's version, is highlighted beyond question.
SHEPARD, C.J., and DICKSON, SULLIVAN, and SELBY, JJ., concur.
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