Public Finance Co. v. Van Blaricome, 67104

• Citation: 324 N.W.2d 716
• Decision Date: 29 September 1982
• Docket Number: No. 67104,67104
• Parties: PUBLIC FINANCE COMPANY, Appellee, v. John E. VAN BLARICOME and Debbie Van Blaricome, Appellants.
• Court: United States State Supreme Court of Iowa

Page 716

324 N.W.2d 716

PUBLIC FINANCE COMPANY, Appellee, v. John E. VAN BLARICOME and Debbie Van Blaricome, Appellants.

No. 67104.

Supreme Court of Iowa.

Sept. 29, 1982.

Edwin F. Kelly and Barry D. Farmer, of Kelly & Morrissey, Fairfield, for appellants.

Michael R. Brown, Fairfield, for appellee.

Considered by REYNOLDSON, C.J., and LeGRAND, UHLENHOPP, McGIVERIN and CARTER, JJ.

UHLENHOPP, Justice.

The main question before us in this appeal of a law action tried to the court is whether proof of mailing must be established by testimony of the person who deposited the item in a United States post office box or may be established by testimony as to office custom.

In May 1978 plaintiff Public Finance Company extended credit of $4200 to defendant John and Debbie Van Blaricome under the terms of an installment note and security agreement, with a 1973 automobile as collateral. The Van Blaricomes were to make twenty-four monthly payments of $175 each on the loan, and evidently did make some payments in 1978 and 1979. The monthly payments to Public Finance had stopped, however, by August of 1979. In December 1979, Public Finance filed suit against the Van Blaricomes claiming that they had defaulted on their obligation. The Van Blaricomes filed an answer admitting that they executed the note and security agreement but denying the service of a notice of default and right to cure.

At trial, copies of default notices, alleged by Public Finance to have been mailed to the Van Blaricomes, were introduced into evidence by Public Finance over the Van Blaricomes' objection. The Van Blaricomes claimed no proper foundation for the admission or proof of mailing had been made. Steve Kvale, credit manager of Public Finance testified that he personally prepared the notices of default and placed them in the company's outgoing mailbox, and he explained the office custom of mailing items from the mailbox. He could not personally testify, however, that someone actually placed that outgoing mail in a United States post office. The trial court found the Van Blaricomes liable on the installment note. The Van Blaricomes ask us to hold the trial court erred in admitting the copies of default notices into evidence and in granting judgment against them on the petition.

The Van Blaricomes also appeal the trial court's dismissal of their counterclaim alleging Public Finance violated provisions of the Iowa Debt Collection Practices Act, Iowa Code §§ 537.7101-.7103 (1979). Relatives of both John and Debbie Van Blaricome testified that Steve Kvale had telephoned them in order to locate the Van Blaricomes, and referred to their debt. The trial court held, however, that the Van Blaricomes failed to prove by a preponderance of the evidence that Public Finance, through its agent Kvale, intentionally violated the Iowa Debt Collection Practices Act.

Our review is on error. The trial court's fact findings have the effect of a special verdict; if supported by substantial evidence they are binding on us. State v. Hall, 287 N.W.2d 564, 565 (Iowa 1980); Herman Ford-Mercury v. Betts, 251 N.W.2d 492, 493 (Iowa 1977). We can interfere with the trial court's determination of evidentiary insufficiency against the party having the burden of proof only if the evidence is so overwhelming that the party carried the burden as a matter of law. First National Bank of Lennox v. Claiser, 308 N.W.2d 1, 3 (Iowa 1981).

I. Custom as sufficient proof of mailing. The Van Blaricomes objected at trial to the admission of copies of default notices. Public Finance claims to have sent notices to the Van Blaricomes; the Van Blaricomes, however, deny receipt.

The importance of giving notice is found in section 537.5110 of the Iowa Code, which provides:

1. Notwithstanding any term or agreement to the contrary, the obligation of a consumer in a consumer credit transaction is enforceable by a creditor only after compliance with this section.

2. A creditor who believes in good faith that a consumer is in default may give the consumer written notice of the alleged default, and, if the consumer has a right to cure the default, shall give the consumer the notice of right to cure provided in Section 537.5111 before exercising any right he may have to enforce.

Notice of default and right to cure must be given before a creditor is entitled to bring suit on the obligation. Farmers Trust & Savings Bank v. Manning, 311 N.W.2d 285, 290 (Iowa 1981); First Northwestern National Bank v. Crouch, 287 N.W.2d 151, 154 (Iowa 1980).

The creditor has the burden of proving that notice was given. Farmers Trust and Savings Bank, 311 N.W.2d at 290. A creditor gives notice to the consumer "when he delivers the notice to the consumer or mails the notice to him at his residence...." Iowa Code § 537.1201(4) (1979). The Van Blaricome's complaint is that Public Finance failed to meet its burden of proof in establishing that a notice of default and right to cure was in fact mailed.

The Van Blaricomes point to Iowa cases setting out the requirements for proof of mailing. The court set out a six-pronged test for meeting the burden of proof in Central Trust Co. v. City of Des Moines, 205 Iowa 742, 218 N.W. 580 (1928). Evidence must be introduced:

1) Of the contents and execution of the paper;

2) That it was enclosed in a wrapper or otherwise prepared for transmission through the mail;

3) Of the correct address of the person to receive it;

4) That the wrapper was properly addressed;

5) That postage was prepaid, and

6) That the article was deposited in the mail.

Id. at 746, 218 N.W. at 582. See also Reserve Insurance Co., 260 Iowa at 744, 150 N.W. at 635; Forrest v. Sovereign Camp Woodmen of the World, 220 Iowa 478, 480-81, 261 N.W. 802, 804 (1935).

In their brief, the Van Blaricomes challenge the sufficiency of proof as to the fourth (address), fifth (postage), and sixth (mailing) prongs of the test. At trial, their attorney unsuccessfully objected to the admission of the notices of default on the basis that "no proper foundation has been laid for their admission, nor testimony as to their actual physical mailing...." At the close of their case, defense counsel moved for dismissal stating "again our objection is to the notice of the right to cure."

When a party seeks to exclude evidence, the specific grounds of objection must be indicated to the trial court. This is to alert the court to the question raised and to enable opposing counsel to take proper corrective measures to remedy the alleged defect. State v. Pardock, 215 N.W.2d 344, 348 (Iowa 1974). This court has held that where the objection to evidence is based on a claim of "no proper foundation" but does not state in what respect the foundation is lacking, the objection is insufficient to provide a basis for review on appeal. Thompson v. Bohlken, 312 N.W.2d 501, 509 (Iowa 1981); Shinrone, Inc. v. Tasco, Inc., 283 N.W.2d 280, 288 (Iowa 1979).

In the case before us, the Van Blaricomes waived their right to challenge the sufficiency of evidence as to proper postage and addresses; those objections were not specifically raised at trial. They did, however, preserve error as to the question of actual mailing.

The real point of contention is whether notices to the Van Blaricomes were actually deposited in the United States mail. This court has found the proof insufficient where the only evidence was that a supervisor had signed the letter in question, but was without personal knowledge of whether the letter had ever been deposited in the mail. Forrest v. Sovereign Camp Woodmen of the World, 220 Iowa 478, 261 N.W. 802 (1935). Testimony as to a secretary's regular office routine after letters were signed, which included depositing them in the mail, was held insufficient to prove mailing. Id. at 481, 261 N.W. at 804. The Eighth Circuit Court of Appeals also refused to admit evidence in a situation somewhat similar to Forrest. Leasing Associates, Inc. v. Slaughter & Sons, Inc., 450 F.2d 174 (8th Cir. 1971). In Leasing a supervisor testified that after signing a letter he had dictated to his secretary, he put it in his out box for the mail clerk to pick up and mail. Absent testimony from the mail clerk to verify either that he mailed the particular letter or that it was his custom to do so, the court refused to indulge in a presumption of mailing. Id. at 179.

Some state courts adhere to this view--allowing mailing to be proved by evidence of an office custom, only if corroborated by evidence showing the custom was followed in the particular instance. Employers National Insurance Co. v. Parker, 286 Ala. 42, 236 So.2d 699 (1970); Commonwealth Edison Co. v. Property Tax Appeal Bd., 67 Ill.App.3d 428, 23 Ill.Dec. 710, 384 N.E.2d 504 (1979); Harris v. Georgia-Pacific Corp., 395 So.2d 856 (La.App.1981); Nafstad v. Merchant, 303 Minn. 569, 228 N.W.2d 548 (1975); Matsko v. Dally, 49 Wash.2d 370, 301 P.2d 1074 (1956).

McCormick notes that some courts, possibly a majority, require the employee who did the actual mailing to testify the item in question was mailed. McCormick on Evidence (2d Ed.) § 195 at 464 n.18. He states however:

It is usually held that when a letter has been written and signed in the course of business and placed in the regular place for mailing, evidence of the custom of the establishment as to the mailing of such letters is receivable as evidence that it was duly mailed.

Id.

Several federal and state courts apply the latter view. In a federal case a bank officer testified he dictated a letter and signed it after his secretary had typed it. He also testified that his secretary's practice was to send out all dictated letters by mail. Further testimony showed the letter had been placed in an envelope and put it in an outbox for mailing and that mail boys customarily picked up mail in the office outbox, ran it through a postage meter, bagged it, and placed it in the neighborhood post office. The court held mailing could properly be...