Cole Oil & Tire Co., Inc. v. Davis

• Court: Court of Appeal of Louisiana
• Writing for the Court: MARVIN
• Citation: Cole Oil & Tire Co., Inc. v. Davis, 567 So.2d 122 (La. App. 1990)
• Decision Date: 22 August 1990
• Docket Number: No. 21678-CA,21678-CA
• Parties: COLE OIL & TIRE CO., INC., Plaintiff-Appellee, v. Tommy L. DAVIS and Glenda Miller Davis, d/b/a D & D Construction Co., Defendants-Appellants. 567 So.2d 122

Page 122

567 So.2d 122

COLE OIL & TIRE CO., INC., Plaintiff-Appellee, v. Tommy L. DAVIS and Glenda Miller Davis, d/b/a D & D Construction Co., Defendants-Appellants.

No. 21678-CA.

567 So.2d 122

Court of Appeal of Louisiana Second Circuit.

Aug. 22, 1990.

Bobby L. Culpepper, Jonesboro, for defendants-appellants.

Chris L. Bowman, Jonesboro, for plaintiff-appellee.

Before MARVIN, FRED W. JONES and SEXTON, JJ.

MARVIN, Judge.

From a $3,021 judgment in an action on an open account plus attorney's fees, Davis appeals, contending that the judgment was founded on inadmissible hearsay records and testimony and that the correctness of the account was not proved.

For reasons assigned and applying the Code of Evidence, we reverse.

FACTS

In October 1986, plaintiff Cole Oil purchased the assets, including accounts receivable, of Boss Oil. One of the accounts was Davis's account which showed a balance due of $8,021.85.

Cole thereafter sold merchandise and fuel to Davis through 1988, at first on credit and later, at Davis's suggestion, for cash. Davis paid Cole for what he purchased from Cole and, according to Cole, paid a total of $5,000 on the Boss Oil balance.

When Cole's efforts to collect the $3,021.85 did not succeed, Cole demanded that amount in writing from Davis. Cole's letter demand was returned "unclaimed."

On December 29, 1988, Cole sued Davis and his wife on open account, alleging that Cole sold to them goods, merchandise and services "on the dates and for the prices" shown on an allegedly "attached" itemized statement of account, subject only to "payments" shown on the itemized statement. The itemized statement, however, was not attached to Cole's petition. Cole Oil's bookkeeper, Kim Jones, executed an affidavit generally swearing that $3,021.85 was past due on the account. This affidavit was the only attachment to the petition.

The defendants answered, specifically denying only the correctness of the amount demanded. Defendants did not deny that Boss Oil had delivered merchandise and services to them and did not plead an affirmative defense. Davis did not allege or attempt to show at trial that he made specific payments to Cole which were not properly credited.

Cole, plaintiff's president, the only witness to testify at the September 14, 1989, trial, testified about the 1986 purchase of Boss Oil, his continued business dealings and discussions with Davis thereafter about payment of the Boss Oil balance and about Davis's payments "toward" the Boss account to Cole.

Cole sought to introduce its "Exhibit P-1 in globo," to which Davis promptly objected. Exhibit P-1 is Cole's "monthly" statement, an adding machine tape, and 14 Boss Oil sales invoices to defendant, allegedly for purchases defendant made from Boss Oil between July 3 and September 10, 1986. Overruling Davis' prompt and repeated objections of hearsay and Cole's incompetence and lack of knowledge about the Boss Oil records, the trial court admitted P-1 and allowed the testimony from Cole.

The court rejected Cole's demands against Mrs. Davis because there was no proof of her being involved in her husband's business or personally responsible to Boss Oil or to Cole. Judgment was rendered only against Mr. Davis, who appeals devolutively.

EXHIBIT P-1 and OTHER EVIDENCE

As stated, Exhibit P-1 is Cole Oil's printed "MONTHLY STATEMENT" showing a balance due of $3,021.85, to which is stapled an adding machine tape that totals $3,182.31 and 14 Boss Oil printed invoices. Six of the invoices show that "Jerry" signed as "Received Payment." One shows that "Bobby Stuart" signed as "Received Payment." Six of the invoices are unsigned. With the Cole Oil "MONTHLY STATEMENT" and the adding machine tape, we reproduce the remaining invoice which is the only one that bears, beneath the printed name "JERRY," a signature, somewhat illegible, under "Goods Received":

NOTE: OPINION CONTAINS TABLE OR OTHER DATA THAT IS NOT VIEWABLE

As Davis argues, the invoices have facial discrepancies unexplained by Cole. Cole, the only witness, did not identify or relate to Davis any name that was printed or signed on any Boss Oil invoice. The total shown, and the six amounts listed, on the adding machine tape do not correspond to the amount Cole says is owed on the Boss Oil account by Davis.

Before Exhibit P-1 was offered into evidence, Cole identified the Cole Oil monthly statement and explained its content without objection. Contrary to the monthly statement showing "PAYMENT 5000.00," Cole testified that Davis had made several payments that totaled $5,000.

Cole then attempted to identify, authenticate and verify the 14 Boss Oil sales invoices. Davis promptly objected on the grounds that Cole lacked personal knowledge to identify the invoices, to verify "the amounts were actually delivered and received" by Davis, and to testify about the "prior owner['s]" business records.

Attempting to lay the proper foundation, Cole then explained that when he acquired the Cole Oil accounts receivable the sale documents showed that Davis then owed Boss Oil $8,021.85. The Boss Oil to Cole sale documents were not introduced into evidence.

Apparently assuming that the Boss Oil invoices were "records" of Cole Oil, the trial court overruled Davis's initial objections and allowed Cole's testimony. Cole testified, over objection, that the Boss Oil invoices reflected the amount Davis owed in 1986 and offered P-1, including the invoices, as evidence of the account. Davis's objections on the same grounds were again overruled and Exhibit P-1 was admitted.

On cross-examination, Cole stated he had not previously worked for and had no connection with Boss Oil, which was his competitor before he purchased the business and accounts receivables. He had no personal knowledge of and was unfamiliar with either Boss Oil's business records and sales invoices or Davis's alleged purchases from, and payments to, Boss Oil. Cole could not identify or testify regarding the individual's signature indicating "payment received" on the invoices. His only "personal knowledge" concerning Davis's account with Boss Oil was gained from the invoices and sale documents and verbal representations from Boss Oil.

Cole stated Cole Oil's payment records accurately reflected the total of amounts Davis paid on the Boss Oil account. Cole said Davis never questioned or disputed the Boss Oil balance during their discussions about the balance when Davis continued to do business with Cole Oil.

The Boss Oil-Cole "sale documents" and Cole Oil's "payment records" were not offered into evidence in the trial court.

HEARSAY AND THE BUSINESS RECORDS EXCEPTION

Before enactment of the Code of Evidence, hearsay was defined as an "out-of-court, unsworn, oral or written statement by a third party, which was offered for the truth of its content." See, e.g., State v. Gremillion, 542 So.2d 1074, 1077 (La.1989); and State v. Martin, 356 So.2d 1370 (La.1978). Then, as now, hearsay was deemed unreliable and inadmissible. See, e.g., Williams v. Exxon Corp., 541 So.2d 910 (La.App. 1st Cir.1989), writ denied; LaSalle Pump & Supply Co., Inc. v. Louisiana Midland RR Co., Inc., 433 So.2d 745 (La.App. 3d Cir.1982), writ denied.

The Code of Evidence [Act 515 of 1988, eff. January 1, 1989], defines hearsay as "a statement, other than one made by the declarant while testifying at the present trial or hearing, offered in evidence to prove the truth of the matter asserted." C.E. Art. 801 and Section C. Unless specifically excepted or otherwise provided by the Code of Evidence or other legislation, hearsay is inadmissible. C.E. Art. 802.

Various exceptions to the hearsay rule are recognized in the Code of Evidence. See, e.g., C.E. Arts. 803 and 804. Article 803 hearsay exceptions are generally based upon the policy that when the qualifying circumstances are met, there is ordinarily a sufficient basis for crediting the trustworthiness and reliability of the out-of-court statement to justify making an exception to the hearsay rule even though the declarant is available, but not called to testify, at trial. If the requirements for witness competency, authentication and exception are met, the hearsay "exclusionary rule" does not bar admission of some "business records."

Relevant here is C.E. Art. 803(6), the "business records" exception, which reads in pertinent part:

The following are not excluded by the hearsay rule, even though the declarant is available as a witness: * * *

(6) Records of a regularly conducted business activity. In a civil case, a memorandum, report, record, or other data compilation, in any form, of acts, events, conditions, ... made at or near the time by, or from information transmitted by, a person with knowledge, if made and kept in the course of a regularly conducted business activity, and if it was the regular practice of that business activity to make and to keep the memorandum, report, record, or data compilation, all as shown by the testimony of the custodian or other qualified witness, unless the source of information or the method or circumstances of preparation indicate a lack of trustworthiness. This exception is inapplicable unless the recorded information was furnished to the business either by a person who was routinely acting for the business in reporting the information or in circumstances under which the statement would not be excluded by the hearsay rule.... C.E. Art. 803(6) (1989). (Emphasis added.)

The "business records" exception to the hearsay rule in Louisiana is not new. Under prior statutes, the business records admissibility requirements in both civil and criminal cases were more restrictive, however. Often perceiving the business records exception as too strict and inappropriate for modern business practices, some trial courts often ignored the statutory provision and applied common law business records rules. See and compare former CC Arts. 2248 and 2249 with C.E. Art. 803(6); State v. Monroe, 345 So.2d...