Munchak Corp. v. Caldwell

• Decision Date: 06 January 1981
• Docket Number: No. 107,107
• Parties: The MUNCHAK CORPORATION (Delaware) and RDG Corporation et al. v. Joe L. CALDWELL.
• Court: North Carolina Supreme Court

Page 281

273 S.E.2d 281

301 N.C. 689

The MUNCHAK CORPORATION (Delaware) and RDG Corporation et al. v. Joe L. CALDWELL.

No. 107.

Supreme Court of North Carolina.

Jan. 6, 1981.

Brooks, Pierce, McLendon, Humphrey & Leonard by Hubert Humphrey and Edward C. Winslow, III, Greensboro, and Powell Goldstein, Frazer & Murphy by Frank Love, Atlanta, Ga., for plaintiff-appellant Munchak Corp. (Delaware).

Younce, Wall & Chastain, Greensboro, for plaintiff-appellant Munchak Corp. (Georgia).

Smith Moore Smith Schell & Hunter by Bynum M. Hunter, James L. Gale and Alan

W. Duncan, Greensboro, for defendant-appellee.

BRANCH, Chief Justice.

The sole question presented for review is whether the trial court erred in permitting defendant to offer into evidence the transcript of the prior proceeding without first laying the proper foundation.

A transcript of testimony given at a prior trial or proceeding, if offered to prove the truth of the matters stated therein, is hearsay. State v. Smith, 291 N.C. 505, 231 S.E.2d 663 (1977); Smith v. Moore, 149 N.C. 185, 62 S.E. 892 (1908). See generally 1 Stansbury's North Carolina Evidence § 145 (Brandis Rev. 1973). Nevertheless, the necessity and reliability of such evidence often override the principles underlying the hearsay rule, and the transcript becomes admissible upon a proper showing of three requisites: (1) The witness whose testimony is sought is unavailable; (2) the testimony sought was given at an earlier trial or proceeding of the same cause; (3) the party against whom the evidence is offered was present at the earlier trial and able to cross-examine the witness. Id.

At the proceeding on defendant's counterclaim for specific performance, the following exchange took place:

MR. HUNTER: In view of the position of the plaintiffs, I would propose to introduce the entire transcript and they can read whatever part of it they want to subject to the same objections that were made by the parties in the trial of the case. This is all part of the same case. I don't understand Mr. Humphrey's position. He seems to be thinking this is something else.

MR. HUMPHREY: This is a different case. This is the reformation case, and this is an entirely different case. This is a different trial, and as I say, I don't know I don't want to introduce the whole record because if the thing goes up on appeal, I think it is sufficient to introduce such portions as you deem relevant.

MR. HUNTER: I will let Mr. Humphrey do it like he wants to. I thought we wouldn't have to introduce any evidence. I thought it was pretty clear-cut but in view of what took place in the conference room and the position taken by the plaintiffs, which I have difficulty understanding, and if that is the position they are taking, I am not sure what their position is, based on what it was back there in chambers.

I suppose, to be on the safe side, I will have to introduce the same thing. They are contending that there was something inequitable about this matter. All of that was gone through in the case before. I think we should let the record show that we have already gone through all of this and that their position is totally unfounded because it has already been litigated.

At the outset, we note that it is not at all clear that the transcript was offered to prove the truth of the matters stated therein. To the contrary, it appears that the transcript was offered to prove the existence of the prior judgment and the fact that certain issues had already been litigated. If this is the case, the transcript was not hearsay.

Nevertheless, for purposes of this decision, we will assume that the transcript constituted hearsay. Plaintiffs contend that it was error to admit the transcript without requiring defendant to lay a foundation as required in Smith v. Moore, supra. Defendant argues on the other hand, and the Court of Appeals agreed, that the two proceedings here were but two parts of the same case, and therefore the Smith rule should be inapplicable. In holding the transcript admissible, the Court of Appeals reasoned that, "(i)f the claim had been heard on the same day, the parties and the judge would have been cognizant of and able to rely on evidence presented on the claim for reformation.... To hold otherwise would be to destroy the ability of trial judges to exercise discretion by severing complicated cases into more understandable issues." 46 N.C.App. at 417, 265 S.E.2d at 657. We disagree.

We recognize that there may well be a situation where a strict adherence to the Smith rule would impede or even thwart the ends of justice, or present an unnecessary obstacle to the expedient disposition of cases. However, the facts of the instant case do not compel a...