Monarch Federal Sav. and Loan Ass'n v. Genser

Decision Date19 December 1977
PartiesMONARCH FEDERAL SAVINGS AND LOAN ASSOCIATION, a Federal Association duly chartered by the Federal Home Loan Bank Board, Plaintiff, v. Lena GENSER, widow and Sidney Genser, Defendants.
CourtNew Jersey Superior Court

Robert J. Reilly, III, Glen Ridge, for plaintiff (Robert F. Colquhoun, Bloomfield, attorney).

Seymour Margulies, Jersey City, for defendants (Brigadier & Margulies, Jersey City, attorneys).


During the trial of the issues in this mortgage foreclosure action, plaintiff Monarch Federal Savings and Loan Association (Monarch) requested that certain computer records be admitted into evidence under the business records exception to the hearsay rule, Evid.R. 63(13). Defendants Lena Genser and Sidney Genser 1 (Gensers) objected to their admission on the ground that plaintiff failed to lay the necessary foundation. Plaintiff produced three foundation witnesses and their testimony may be summarized as follows.

The first witness, Richard De Russo, assistant vice-president of the Wood-Ridge National Bank (Wood-Ridge), testified that Monarch maintains a lock-box deposit account with Wood-Ridge for processing of their mortgage accounts. The mortgagors forward their payment together with an IBM card to the bank. After the monies are received, processed and checked, the computer cards are forwarded to Financial Services, Inc. (Financial Services) and the checks are forwarded to Monarch. Any problems or questions with the account are handled by Monarch. This witness also indicated that the account was maintained in the regular course of the bank's business and that Wood-Ridge provides similar services for other banks.

The next witness, Otto Kieffer, is the office manager of the mortgage department of Financial Services, a computer corporation located in Glen Rock, New Jersey. He testified that Financial Services, pursuant to an agreement with Monarch, has computerized the mortgage accounts of Monarch. When an account is initially opened, Monarch forwards all the relevant information to Financial Services which is transferred into the computer. Thereafter, all transactions between Monarch and the mortgagor are processed through the individual account. Monarch receives a daily read-out for each transaction and a monthly read-out for each individual account. Every mortgagor receives monthly and yearly statements.

The records of the Gensers' account were marked for identification and identified by Kieffer. He testified that this account, as well as the other accounts, are processed and maintained in the regular course of Financial Services' business.

The last witness, Victor Urbanovich, has been an employee of Monarch for the past 21/2 years and presently is an assistant vice-president. He testified that he is familiar with the operation of Monarch's mortgage department. This witness identified and reviewed the monthly and yearly computer printouts produced by Financial Services and supplied to and maintained by Monarch for the Genser account. He further testified that this account was maintained in the regular course of business since March 1968. Every transaction on the Genser account from March 1968 to the present was recorded with and reflected in the records processed by Financial Services and maintained by Monarch. He also testified that after reviewing the records the Gensers failed to make the payment for April 1976 and that this account remains in default as of that date.

Based on this evidence, defendants maintained that a proper foundation had not been established for the admission of these records.

The issue before this court is one of first impression in this State: What is the proper foundation to support the authenticity of a computer printout? 2 The leading case in New Jersey on the admissibility of computer printouts is Sears, Roebuck & Co. v. Merla, 142 N.J.Super. 205, 361 A.2d 68 (App.Div.1976). 3 In that case the Appellate Division reviewed the trial judge's refusal to admit a computer printout as evidence of the defendant's indebtedness to Sears. Id. at 206-207, 361 A.2d 68. In reversing the trial judge's decision the court held "that as long as a proper foundation is laid, a computer printout is admissible on the same basis as any other business record." Id. at 207, 361 A.2d at 69. The Merla court, however, did not specify what type of foundation would be required to establish admissibility.

In New Jersey the admissibility of business records is governed by Evid.R. 63(13), which provides as follows:

A writing offered as a memorandum or record of acts, conditions or events is admissible to prove the facts stated therein if the writing or the record upon which it is based was made in the regular course of a business, at or about the time of the act, condition or event recorded, and if the sources of information from which it was made and the method and circumstances of its preparation were such as to justify its admission.

This rule, fashioned after the Uniform Rule of Evidence 63(13), 4 see Phillips v. Erie Lackawanna R. Co., 107 N.J.Super. 590, 595, 259 A.2d 719 (App.Div.1969); State v. Hudes, 128 N.J.Super. 589, 599-600, 321 A.2d 275 (Cty.Ct.1974), was promulgated by order of the Supreme Court of New Jersey, June 6, 1967, to be effective September 11, 1967, and superseded New Jersey's Uniform Business Records as Evidence Act, N.J.S.A. 2A:82-34 et seq. 5 See Phillips v. Erie Lackawanna R Co., supra 107 N.J.Super. at 593-594, 599, 259 A.2d 719; Brown v. Mortimer, 100 N.J.Super. 395, 403, 242 A.2d 36 (App.Div.1968). Although Evid.R. 63(13) differs from the Uniform Business Records as Evidence Act (UBREA) 6 in that "the custodian need not be called as a witness to attest to its authenticity," Samuel Sheitelman, Inc. v. Hoffman, 106 N.J.Super. 353, 356-357, 255 A.2d 807, 809 (App.Div.1969); compare Evid.R. 63(13) with N.J.S.A. 2A:82-35, the purpose of the new rule is substantially the same as its former counterpart. Sas v. Strelecki, 110 N.J.Super. 14, 20, 264 A.2d 247 (App.Div.1970); Brown v. Mortimer, supra 100 N.J.Super. at 403, 242 A.2d 36. The court in Mahoney v. Minsky, 39 N.J. 208, 188 A.2d 161 (1963) noted the rationale underlying the uniform evidence laws:

The basic theory of the uniform law is that records which are properly shown to have been kept as required normally possess a circumstantial probability of trustworthiness, and therefore ought to be received in evidence unless the trial court, after examining them and hearing the manner of their preparation explained, entertains serious doubt as to whether they are dependable or worthy of confidence. (at 218, 188 A.2d at 166.)

Accord, Brown v. Mortimer, supra 100 N.J.Super. at 403, 242 A.2d 36; Falcone v. N.J. Bell Tel. Co., 98 N.J.Super. 138, 147, 236 A.2d 394 (App.Div.1967); Carroll v. Houtz, 93 N.J.Super. 215, 219-220, 225 A.2d 584 (App.Div. 1966); see Samuel Sheitelman, Inc. v. Hoffman, supra 106 N.J.Super. at 356, 255 A.2d 807; Webber v. McCormick, 63 N.J.Super. 409, 416, 164 A.2d 813 (App.Div.1960); State v. Hudes, supra 128 N.J.Super. at 599, 321 A.2d 275.

Both the UBREA and Uniform Rule of Evidence 63(13) liberalized and modernized the common law prerequisites for admission of business records. See Smith v. First Nat'l Stores, Inc., 94 N.J.Super. 462, 467, 228 A.2d 874 (App.Div.1967); State v. Scelfo, 58 N.J.Super. 472, 481, 156 A.2d 714 (App.Div.1959); State v. Hudes, supra 128 N.J.Super. at 599-600, 321 A.2d 275; McCormick, Evidence (2d ed. 1972) § 307 at 720; 5 Wigmore, op. cit., § 1561b at 499. Under the common law four elements were needed to be proven:

(1) the entries must have been original entries made in the routine of business, (2) must have been made upon personal knowledge of the recorder or of someone reporting to him, (3) must have been made at or near the time of the transaction recorded, and (4) the recorder and his informant had to be shown to be unavailable. (State v. Hudes, supra at 600, 321 A.2d at 281.)

Accord McCormick, op. cit., § 306 at 720. The modern New Jersey approach has eliminated the common law requirement of unavailability of the recorder, State v. Hudes, supra at 600, 321 A.2d 275, and the requirement of personal knowledge of the recorder, State v. Martorelli, 136 N.J.Super. 449, 453, 346 A.2d 618 (App.Div.1975). In Martorelli the Appellate Division set forth the three requirements for admissibility under Evid.R. 63(13):

First, the record must be made in the regular course of business. Second, it must be prepared within a short time of the act, condition or event being described. Third, the source of information and the method of preparation must justify allowing it into evidence. (136 N.J.Super. at 453, 346 A.2d 618.)

Accord, State v. Hudes, supra 128 N.J.Super. at 600, 321 A.2d 275; see Adams v. N.J. State Fair, 71 N.J.Super. 528, 531, 177 A.2d 486, 488 (App.Div.1962) (UBREA decision finding "1955 balance" entry not to have been made " 'at or near the time of the act * * * or event' "). In addition to the three elements of foundation set forth in Martorelli, the courts of New Jersey have mandated that the informant be "under a 'business duty' to supply honest information to the entrant." Sas v. Strelecki, supra 110 N.J.Super. at 20, 22, 264 A.2d at 250 (statements by third parties in police officer's report held inadmissible); see State v. Taylor, 46 N.J. 316, 330-331, 217 A.2d 1, cert. den. 385 U.S. 885, 87 S.Ct. 103, 17 L.Ed.2d 83 (1966) (third-party statements in doctor's record held inadmissible).

Although "the business entry exception to the hearsay rule * * * is generally limited to business records," our courts have applied this exception to "(r) ecords other than commercial payment records." State v. Conners, 125 N.J.Super. 500, 506, 311 A.2d 764, 768 (Cty.Ct.1973) aff'd in part, rev'd in part, 129 N.J.Super. 476, 324 A.2d 85 (App.Div.1974) (emphasis supplied); see, e....

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