Lake Shore Nat. Bank v. Bellanca Aircraft Corporation, Civil Action No. 1075.

• Decision Date: 04 April 1949
• Docket Number: Civil Action No. 1075.
• Citation: 83 F. Supp. 795
• Parties: LAKE SHORE NAT. BANK v. BELLANCA AIRCRAFT CORPORATION.
• Court: U.S. District Court — District of Delaware

83 F. Supp. 795

LAKE SHORE NAT. BANK v. BELLANCA AIRCRAFT CORPORATION.

Civil Action No. 1075.

United States District Court D. Delaware.

April 4, 1949.

James R. Morford (Marvel & Morford), of Wilmington, Del., for plaintiff.

S. Samuel Arsht (Morris, Steel, Nichols & Arsht), of Wilmington, Del., for defendant.

RODNEY, District Judge.

This is an action brought by Lake Shore National Bank, a national banking association established under the laws of the United States suing as the regularly qualified executor under the will of Ray V. Barber, a citizen of Illinois. The defendant is Bellanca Aircraft Corporation, a corporation of the State of Delaware. At the trial certain witnesses were called who were respectively the Treasurer and Secretary of the defendant. On behalf of the defendant they were asked certain questions involving conversations with the testator (Barber) in his lifetime and certain transactions with him. The plaintiff objected, contending that such witnesses were incompetent to testify under Section 4687, Revised Code of Delaware, 1935, as set out in the footnote.¹ The testimony was excluded. The present questions arise under a motion to reopen the case for the purpose of again offering the testimony, it being contended that while a party to the litigation may be incompetent to testify as to conversations or transactions with the deceased, such incompetency does not relate to officers of a corporate party.

In determining the competency of the proposed witnesses it must first be ascertained what law governs.

Rule 43(a) of the Federal Rules of Civil Procedure, 28 U.S.C.A., provides:

"* * * All evidence shall be admitted which is admissible under the statutes of the United States, or under the rules of evidence heretofore applied in the courts of the United States on the hearing of suits in equity, or under the rules of evidence applied in the courts of general jurisdiction of the state in which the United States court is held. In any case, the statute or rule which favors the reception of the evidence governs and the evidence shall be presented according to the most convenient method prescribed in any of the statutes or rules to which reference is herein made. The competency of a witness to testify shall be determined in like manner."

By the Rule the admissibility of evidence is determined by three standards. Evidence is to be admitted which is admissible under (1) statutes of the United States; (2) rules of evidence heretofore applied in federal equity proceedings; or (3) rules of evidence applied in state courts of general jurisdiction where the United States court is held — in this case Delaware. Because under the express language of the Rule the competency of a witness must be determined in the same manner as the admissibility of evidence, so we must see if any United States statute or rule in equity must be considered in connection with the rules of evidence in force in the state courts of Delaware.

It needs no citation of authority to show that, at common law, all witnesses having an interest in the subject matter of the litigation were totally incompetent to testify in the proceeding and that parties to the litigation were equally incompetent. Wigmore² has carefully traced the history and the reasoning of the disqualifications which continued until the middle of the 19th Century. Witnesses having an interest in the subject matter were incompetent to testify until the passage of Lord Denman's Act in 1843³ and parties were incompetent to testify until Lord Brougham's Act in 1846.⁴ Remedial legislation concerning the competency of witnesses followed quickly in the United States.

Federal legislation first concerned itself with the question of competency of witnesses by the Act of July 16, 1862.⁵ By this Act the competency of witnesses was to be determined by the law of the state in which the United States Court was being held. By the Act of July 2, 1864⁶ it was provided that no witness should be excluded because of color, interest in the controversy or because he was a party to the proceeding.

By the Act of March 3, 1865⁷ there was adopted the so-called "Dead Man's Statute" by which, in actions by or against executors, administrators or guardians in which judgment might be entered for or against them, neither party was allowed to testify against the other as to any transaction with or statement by the testator, intestate or ward unless called to testify thereto by the opposite party.

These two latter acts, it will be noted, did not depend upon any status of state procedure and were, in effect, amendments to the Act of 1862.

By the Revised Statutes of 1874 the Acts of 1862, 1864 and 1865, as above mentioned, were combined and transposed emerging as Section 858 of the Revised Statutes as set out in the footnote.⁸ In Logan v. United States, 144 U.S. 263, 302, 12 S.Ct. 617, 629, 36 L.Ed. 429, it is said of this rearrangement, "It is not to be inferred that Congress, in revising and consolidating the statutes, intended to change their effect, unless an intention to do so is clearly expressed."

Section 858 was amended by the Act of June 29, 1906,⁹ 28 U.S.C.A. § 631, so as to read, "The competency of a witness to testify in any civil action, suit, or proceeding in the courts of the United States shall be determined by the laws of the State or Territory in which the court is held." The effect of this legislation was the practical repeal of the Acts of 1864 and 1865 leaving the matter substantially as originally enacted by the Act of 1862. Wright v. Wilson, 3 Cir., 154 F.2d 616, 170 A.L.R. 1237.

The provisions of the Act of 1906, 28 U.S.C.A. § 631, were somewhat modified by Rule 43(a), Federal Rules of Civil Procedure,¹⁰ and the Act of 1906 was totally repealed by the recently revised United States Judicial Code, effective September 1, 1948.

From the foregoing it appears that while by Rule 43(a) the competency of witnesses is to be determined by a consideration of United States statutes and rules of evidence applicable in equity proceedings, as well as by the rule of evidence applied by the state court where the United States court is held, yet it appears that there is no applicable and pertinent United States statute. That there is no "rule of evidence heretofore applied in the courts of the United States on the hearing of suits in equity" and relating to the competency of witnesses to which attention must be given seems quite clear. When the United States had its distinct statute regulating competency of witnesses such statute was applicable alike to courts of law and suits in equity. When it was determined by statute that competency of witnesses should be determined by state law alone this result applied to suits in equity as well as other proceedings and no distinctive rule of equity existed to which consideration need be given. The result is that the rule of evidence applied in the courts of general jurisdiction in Delaware is the sole guide to the competency in the present case.

While Section 858, Revised Statutes of the United States, remained in force, viz., up to June 29, 1906, certain decisions like Potter v. National Bank, 102 U.S. 163, 26 L.Ed. 111, and Huntington National Bank v. Huntington Distilling Co., 4 Cir., 152 F. 240,¹¹ were made. These decisions were, of course, authoritative constructions of the then Act. When all exclusive federal control over competency of witnesses was repealed and the matter relegated by the Act of 1906 to the laws of the states where the United States courts were held there was, of course, nothing but the state procedure to be recognized. When, as by Rule 43(a), federal statutes are again to be considered as well as state rules of evidence in connection with admissibility of evidence or competency of witnesses, federal decisions must be based solely on state rules of evidence or procedure until some federal legislation again comes into being.¹²

The Delaware statute¹³ was first adopted April 6, 1881.¹⁴ Prior to the adoption of this statute the courts of Delaware, like all other jurisdictions, had held that parties and others interested in the event of litigation were incompetent as witnesses because of such interest. Judge Woolley, in Di Nardi v. Standard Lime and Stone Co., 3 Boyce 369, 372, 26 Del. 369, 372, 84 A. 124, 126, says, "The statute in fact and effect is a qualifying statute, and it qualifies persons to testify who theretofore were disqualified because of interest."

It will be seen that the Delaware statute removed the former incompetency of interested persons as witnesses from two separate classes — from parties to the action who were necessarily interested and from all other persons interested in the event of the suit but who were not parties to the action. The proviso attached to this absolute removal of incompetency, which proviso applies to only one class of actions, refers only to parties to the action. Interest, as such, is not the basis of exclusion of testimony. It is fruitless to consider whether, under this provision, you term a party "incompetent" to testify as to any conversation or transaction with the decedent or whether the proviso simply operates as to the admissibility of evidence in the given situation. It is clear that a party to the action is a competent witness in the cause and that the only restriction on his testimony is as to conversations or transactions with the decedent. This limitation or restriction does not grow out of his interest in the event of the suit but from the supposed inequity of allowing him to testify when the other party to the conversation or transaction had died. This was the direct holding of the Di Nardi case, supra, where the party to the cause was admitted as a general witness but limited in the scope of his testimony.

Under statutes similar to that of Delaware disqualifying only parties to the action it must be conceded that outside of Delaware the great weight of authority,...