In re Matter of E.T., No. 02S03-0308-JV-367 (IN 5/20/2004)

• Decision Date: 20 May 2004
• Docket Number: No. 02S03-0308-JV-367,02S03-0308-JV-367
• Parties: In Re: The Matter Of The Termination Of The Parent-Child Relationship Of E.T. and B.T.
• Court: Indiana Supreme Court

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In Re: The Matter Of The Termination Of The Parent-Child Relationship Of E.T. and B.T.

No. 02S03-0308-JV-367

Supreme Court of Indiana.

May 20, 2004

Appeal from the Allen Superior Court, No. 02D07-0012-JT-149, 02D07-0012-JT-150, The Honorable Charles Pratt, Judge.

On Petition To Transfer from the Indiana Court of Appeals, No. 02A03-0209-JV-294.

RICHARD L. WILLIAMS, Fort Wayne, Indiana, Attorney for Mother, Caroline Taylor, ROBERT J. BISHOP, Fort Wayne, Indiana, Attorney for Father, Leroy Taylor, ATTORNEYS FOR APPELLANTS.

STEPHEN P. GRIEBEL, Van Gilder & Trzynka, P.C. Fort Wayne, Indiana, ATTORNEY FOR APPELLEE.

RUCKER, Justice.

We conclude that reports compiled by a social services agency describing home visits and supervised visitations do not qualify as business records and thus are not admissible as an exception to the hearsay rule.

Facts

The Allen County Office of Family and Children ("OFC") removed E.T. and B.T. from their parents' care in August 1999 after the children were found wandering from their home for the second time in a month. After unsuccessfully working with the parents toward reunification, OFC filed a petition for involuntary termination of parental rights in late 2000 or early 2001.

The trial court's original dispositional decree required parents to enroll in a program offered by SCAN, Inc. Although not included in the record before us, the public record shows that SCAN, Inc. is a non-profit corporation whose mission is to "prevent child abuse and neglect through direct service, education, coordination and advocacy." See http://www.scanfw.org/ whoweare.html. To accomplish its mission SCAN, Inc. offers a variety of services, which it identifies as: Prevention Through Education (PTE); Parenting Classes; Specialty Parenting Classes; Intensive Intervention Team (IIT); Parents and Partners; Supervised Visitation; and Healthy Families. See http://www.scanfw.org/page/historyprogramlisting.html.

The specific program to which parents were directed to enroll was SCAN, Inc.'s Parents and Partners program. Among other things the program included home visits and supervised visitation. At the termination hearing, over the parents' objection, reports from these supervised visits were introduced into evidence. The trial court ultimately term inated the parents' parental rights. On review a divided panel of the Court of Appeals affirmed, determining (1) the reports of SCAN, Inc. were admissible under the business records exception to the hearsay rule, (2) admission of the reports did not violate the parents' rights under the Confrontation Clause of the United States Constitution, and (3) any error in admitting the reports was harmless. In re E.T., 787 N.E.2d 483, 486-87 (Ind. Ct. App. 2003). In their Petition To Transfer the parents do not challenge the Court of Appeals' harmless error determination. Therefore on this issue we summarily affirm the Court of Appeals' opinion. However we grant transfer and hold that the reports at issue in this case do not qualify as business records within the meaning of the business records exception to the hearsay rule.

Historical Background

Every second-year law student and perhaps first-year law student as well, depending on the law school curriculum, can recite the general definition of hearsay: "an out of court assertion offered in court to prove the truth of the matter asserted." Also well known is the corollary that absent an exception to the rule, hearsay is inadmissible as evidence. Not so universally recited or well known are the numerous exceptions to the rule. Indeed precisely because of its numerous exceptions, some scholars have argued in favor of abolishing the rule altogether. See, e.g., Paul S. Milich, Hearsay Antinomies: The Case for Abolishing the Rule and Starting Over, 71 Or. L. Rev. 723 (1992); Eleanor Swift, Abolishing the Hearsay Rule, 75 Cal. L. Rev. 495 (1987). In any event, the exceptions to the rule have been generally based upon some combination of the unavailability of the declarant, the reliability of the declaration, or the presumed inefficiency of any possible cross-examination. See generally 5 John Henry Wigmore, Evidence §§ 1420-27 (Chadbourn rev. 1974); 2 John W. Strong, McCormick on Evidence § 253 (5th ed. 1999).

An outgrowth of the English common law "shop book" rule, the business records exception is one of the oldest exceptions to the rule against the admissibility of hearsay. In England, the custom emerged of courts receiving the shop books of businessmen as evidence of goods sold or services rendered. The purpose was to circumvent the prohibition against a party appearing as its own witness. By 1832, the "shop book" rule was firmly grounded in English common law, and its scope included all entries made in the ordinary course of business. McCormick on Evidence § 285.

Today, either by statute, court rule, or both, every American jurisdiction has adopted rules governing the admission of business records. See 5 Wigmore, Evidence § 1561a, at n.6 (Supp. 1991). Like Indiana, most state business records exceptions closely track Rule 803(6) of the Federal Rules of Evidence.¹ See David F. Binder, Hearsay Handbook § 16:2 (4th ed. 2001). Indiana's rule provides:

The following are not excluded by the hearsay rule, even though the declarant is available as a witness. . . . A memorandum, report, record, or data compilation, in any form, of acts, events, conditions, opinions, or diagnoses, made at or near the time by, or from information transmitted by, a person with knowledge, if kept in the course of a regularly conducted business activity, and if it was the regular practice of that business activity to make the memorandum, report, record, or data compilation, all as shown by the testimony or affidavit of the custodian or other qualified witness, unless the source of the information or the method or circumstances of preparation indicate a lack of trustworthiness. The term "business" as used in this Rule includes business, institution, association, profession, occupation, and calling of every kind, whether or not conducted for profit.

Ind. Evidence Rule 803(6). Prior to the 1994 codification of Rule 803(6), Indiana common law provided in general terms that in order to come within the business records exception to the hearsay rule the following requirements had to be met: (1) the records offered must have been the original entries; (2) the records must have been made in the regular course of business at or near the time of the event recorded; (3) the facts must have been within the first-hand knowledge of someone whose business duty it was to observe and report the facts; and (4) the witness who had knowledge of the facts must be unavailable. Smith v. State, 455 N.E.2d 606, 607 (Ind. 1983); Wells v. State, 254 Ind. 608, 261 N.E.2d 865, 870 (1970). With few exceptions, Evidence Rule 803(6) is generally consistent with longstanding Indiana precedent on the admissibility of business records.²

Like the common law "shop book" rule, the business records exception to the hearsay rule is "based on the fact that the circumstances of preparation assure the accuracy and reliability of the entries." Wells, 261 N.E.2d at 870. As we have observed more recently, the reliability of business records stems in part from the fact that "the organization depends on them to operate, from the sense that they are subject to review, audit, or internal checks, [and] from the precision engendered by the repetition . . . ." Stahl v. State, 686 N.E.2d 89, 92 (Ind. 1997); see also Advisory Committee's Note to Fed. R. of Evid. 803(6) (observing that business records are made reliable by "systematic checking, by regularity and continuity which produce habits of precision, by actual experience of business in relying upon them, or by a duty to make an accurate record as part of a continuing job or occupation").

In essence, the basis for the business records exception is that reliability is assured because the maker of the record relies on the record in the ordinary course of business activities. The "regular course" of business "must find its meaning in the inherent nature of the business in question and in the methods systematically employed for the conduct of the business as a business." Palmer v. Hoffman, 318 U.S. 109, 115 (1943). Thus where a company does not rely upon certain records for the performance of its functions those records are not business records within the meaning of the exception to the hearsay rule. See, e.g., id. at 114 (noting that accident reports prepared by railroad were not business records because they were not prepared "for the systematic conduct of the enterprise as a railroad business"; rather, "[t]heir primary utility is in litigating, not in railroading"). It is not enough to qualify under the business records exception to show that the records are made regularly; rather, the court must also look to "the character of the records and their earmarks of reliability acquired from their source and origin and the nature of their compilation." Id. (citation omitted).

Discussion and Decision

The State's exhibits 20 and 21 are reports of home visits and supervised visitations. The State offered them into evidence during the testimony of Karen Emery, the supervisor of SCAN, Inc.'s Parents and Partners Program. According to Emery, the reports were compiled by staff members based upon their first-hand observations and were made in the regular course of business.

We first observe that not all of the information contained in the reports was the result of first-hand observations. Rather, the reports also contain third-party statements concerning events not observed by the SCAN, Inc. staff members that compiled the reports. For instance, "The receptionist stated that [Father] was in the waiting area and stated he didn't have to sit in `these f___in chairs' and stated he was in prison. The receptionist stated [Father] was loud and angry...