New England Sav. Bank v. Bedford Realty Corp.

• Decision Date: 01 September 1998
• Docket Number: No. 15828,15828
• Citation: 717 A.2d 713,246 Conn. 594
• Parties: NEW ENGLAND SAVINGS BANK v. BEDFORD REALTY CORPORATION et al.
• Court: Connecticut Supreme Court

Page 713

717 A.2d 713

246 Conn. 594

NEW ENGLAND SAVINGS BANK v. BEDFORD REALTY CORPORATION et al.

No. 15828.

Supreme Court of Connecticut.

Argued May 1, 1998.

Decided Sept. 1, 1998.

David S. Hoopes, Wethersfield, for appellant (substitute plaintiff Alaska Seaboard Partners Limited Partnership).

J. Michael Sulzbach, New Haven, for appellee (named defendant).

Before CALLAHAN, C.J., and NORCOTT, KATZ, McDONALD and PETERS, JJ.

PETERS, Associate Justice.

The principal issue in this appeal is whether, pursuant to General Statutes § 52-180, ¹ business records are admissible to prove the amount of a debt, if the witness introducing the records lacks personal knowledge of their provenance. We conclude that such records are admissible, and, therefore, we reverse the judgment of the trial court.

This case arises out of a foreclosure action originally commenced by New England Savings Bank (New England) against the original mortgagor, Stelle M. Mahler. In 1986, Mahler executed a note to New England, secured by a mortgage on her home in Madison. Mahler subsequently conveyed the property to Bedford Realty Corporation (Bedford), the defendant in this action. ² New England filed this foreclosure action in 1992. Subsequently, New England became insolvent, and the Federal Deposit Insurance Corporation (FDIC) became the receiver of its assets. The FDIC assigned New England's interest in the mortgage to Citizens Savings Bank (Citizens), which, in turn, assigned the mortgage interest to GHR D.C., Inc. (GHR). Citizens and GHR were each substituted, in turn, as plaintiffs in this foreclosure action.

After a trial to the court, Silbert, J., a judgment of strict foreclosure was rendered. On appeal, this court reversed that judgment and remanded the case for a new trial. New England Savings Bank v. Bedford Realty Corp., 238 Conn. 745, 680 A.2d 301 (1996). GHR then assigned its interest in the mortgage to Alaska Seaboard Partners Limited Partnership (Alaska), the substituted plaintiff in this appeal (plaintiff).

On remand, the action was tried to the court, DiPentima, J. One of the principal issues at the hearing was the amount of the indebtedness. In order to establish the amount of the debt, the plaintiff submitted three documents through two witnesses. ³

The plaintiff first called John Smith, the former director of operations of New England, the original mortgagee. Through Smith, the plaintiff sought to introduce: (1) a payoff statement showing the amount of the debt on April 22, 1993 (exhibit 14A); ⁴ and (2) a copy of a 1991 annual loan statement sent to the borrower (exhibit 12). The trial court admitted these documents as full exhibits, subject to the condition that the plaintiff prove "where [it] got the document[s]" or "where [they] came from physically."

The plaintiff then introduced, through Russell Bartlett, an account officer at Security National Servicing Corporation, an entity that is managing the loan for the plaintiff, a document containing a set of written calculations that Bartlett had prepared from the plaintiff's business records. These calculations demonstrated that, as of the date of trial, the defendant owed $359,008.69 on the loan principal and $159,190.50 in interest. The court admitted the document, except for the negative escrow calculation, as a full exhibit, exhibit 16.

At the end of the plaintiff's case-in-chief, the defendant moved for dismissal pursuant to Practice Book § 15-8, formerly § 302, ⁵ on the grounds that the plaintiff had not made a prima facie showing regarding the amount of the debt. The trial court granted the defendant's motion. The court reasoned that the plaintiff had failed to qualify its exhibits 12 and 14a as business records under § 52-180, because, Smith, the witness introducing those records, lacked knowledge of how the records had gotten to the courthouse.

The plaintiff moved to open the judgment, and the trial court denied its motion. The plaintiff filed a motion to reargue and for reconsideration, which the trial court also denied. The plaintiff appealed from the judgment to the Appellate Court, and we transferred the case to this court pursuant to General Statutes § 51-199(c) ⁶ and Practice Book § 65-1, formerly § 4023.

On appeal to this court, the plaintiff raises three issues. It argues that the trial court improperly: (1) excluded the plaintiff's exhibits 12 and 14a; (2) determined that the plaintiff's exhibit 16 was insufficient to establish a prima facie case regarding the amount of principal and interest presently due on the mortgage debt; and (3) declined to render judgment for the plaintiff based on the principal and interest amounts set out in the plaintiff's exhibit 16. The defendant counters this last claim by arguing that the plaintiff failed to make a prima facie case in other respects. We reverse the trial court's judgment and remand the case for a new trial.

I

We first address the evidentiary issue regarding the standard for admission of business records that was raised by the trial court's exclusion of exhibits 12 and 14a. The plaintiff argues that the trial court improperly excluded these exhibits. We agree. ⁷

The trial court concluded that the exhibits were inadmissible because the plaintiff had failed to: (1) establish the required foundation for admission of a business record under § 52-180; and (2) authenticate the documents. In its memorandum of decision, the trial court reasoned that because Smith, the New England director of operations, had no personal knowledge of when these documents had been created, he could not testify that they had been generated in the regular course of business within the meaning of § 52-180. The trial court also concluded: "Mr. Smith testified that [e]xhibits 12 and 14a are documents that appear to be those once kept by New England Savings Bank in the regular course of its business. Nevertheless, the plaintiff has not established how or whether its counsel came to possess the proffered exhibits from New England Savings Bank."

The trial court's conclusions raise two distinct doctrinal issues. We must determine whether the documents were: (1) admissible under the business records exception to the general prohibition on hearsay; and (2) authenticated sufficiently to demonstrate the minimal indicia of reliability necessary to render them admissible.

A

We consider first whether the plaintiff established a sufficient foundation to render exhibits 12 and 14a admissible under the hearsay exception contained in § 52-180. ⁸ To assess the applicability of this statute, we need to review briefly its common-law antecedents. The history of the business records exception starts from the recognition that this exception to the general prohibition on hearsay originated at common law and was thereafter incorporated into statute, first in England and later in this country. 5 J. Wigmore, Evidence (4th Ed.1974) § 1517, pp. 426-39. The initial rationale for the exception was that, although hearsay, business records were trustworthy because their creators had relied on the records for business purposes. Id., § 1522, pp. 442-43.

The need for the exception became more pressing as the American economy became industrialized and produced more complex litigation. In 1927, Judge Learned Hand wrote: "The routine of modern affairs, mercantile, financial and industrial, is conducted with so extreme a division of labor that the transactions cannot be proved at first hand without the concurrence of persons, each of whom can contribute no more than a slight part, and that part not dependent on his memory of the event. Records, and records alone, are their adequate repository, and are in practice accepted as accurate upon the faith of the routine itself, and of the self-consistency of their contents. Unless they can be used in court without the task of calling those who at all stages had a part in the transactions recorded, nobody need ever pay a debt, if only his creditor does a large enough business." Massachusetts Bonding & Ins. Co. v. Norwich Pharmacal Co., 18 F.2d 934, 937 (2d Cir.1927).

With these principles in mind, we turn to the requirements for the admission of business records under § 52-180. As a matter of statutory construction, "[t]here is no more elementary rule of statutory construction than that the intention which the legislature has expressed must govern.... [L]egislative intent is to be determined by reference to the language of the statute, its legislative history and surrounding circumstances, the policy the limitation was intended to implement, and the statute's relationship to existing legislation and common law principles governing the same general subject matter." (Citations omitted; internal quotation marks omitted.) Iovieno v. Commissioner of Correction, 242 Conn. 689, 695, 699 A.2d 1003 (1997).

We begin with the language of the statute. On its face, the statute expands the rules for admission of business records. Section 52-180(b) provides that a record "shall not be rendered inadmissible by (1) a party's failure to produce as witnesses the person or persons who made the writing or record, or who have personal knowledge of the act, transaction, occurrence or event recorded or (2) the party's failure to show that such persons are unavailable as witnesses. Either of such facts and all other circumstances of the making of the writing or record, including lack of personal knowledge by the entrant or maker, may be shown to affect the weight of the evidence, but not to affect its admissibility."

There is little legislative history, in large part because Connecticut adopted a statutory business records exception long before the advent of comprehensive published legislative history in 1953. As early as 1715, however, Connecticut enacted a statute making book entries admissible for actions for book debt. Predecessors of the modern § 52-180 were incorporated into the statutory revisions of 1902, 1918, 1930 and ...