Sheedy v. Stall

• Decision Date: 27 May 1970
• Parties: Carl SHEEDY, dba John Day Valley Realty, Appellant, v. Herman V. STALL and Delta Stall, Respondents.
• Court: Oregon Supreme Court

Page 529

468 P.2d 529

255 Or. 594

Carl SHEEDY, dba John Day Valley Realty, Appellant, v. Herman V. STALL and Delta Stall, Respondents.

Supreme Court of Oregon.

Argued and Submitted at Pendleton Oct. 27, 1969.

Decided April 22, 1970.

Rehearing Denied May 27, 1970.

Claud A. Ingram, John Day, argued the cause and filed briefs for appellant.

Robert D. Dayton, John Day, argued the cause for respondents. With him on the brief was Roy Kilpatrick, John Day.

Before PERRY, C.J.,* and McALLISTER, SLOAN, O'CONNELL, GOODWIN,** and DENECKE, JJ.

DENECKE, Justice.

The issue is whether evidence was properly excluded because it was hearsay.

Plaintiff is a real estate broker and this action is to recover a commission. Pursuant to an oral agreement with the defendants he offered defendants' ranch for sale. ¹ Plaintiff secured the signatures of Mr. Matuna, as purchaser, and the defendants, as sellers, to an earnest money agreement dated and executed December 21, 1966. The agreement provided: 'This earnest money receipt is subject to the buyer's approval of the new road alignment through Sec. 7, and to the buyer's attorney approving this earnest money receipt by 1/3/67.' ²

The plaintiff was asked whether Mr. Matuna secured the approval of the agreement by his attorney. Defendants' objection to this question was sustained. Plaintiff's offer of proof was that in a telephone conversation not in the defendants' presence the buyer told plaintiff that his attorney had approved, and he was ready to go ahead with the 'deal.' The trial court sitting without a jury held that there was no proof that the buyer's attorney approved the receipt, that such approval was necessary and found for defendants.

The correct application of the rule that hearsay evidence is not admissible is one of the most difficult tasks in the law. An examination of the reasoning behind the rule is probably the best basis for determining whether the evidence is admissible.

Hearsay evidence is excluded because of its untrustworthiness. The declarant's accuracy and veracity cannot be tested by cross-examination. State v. Kendrick, 239 Or. 512, 515, 398 P.2d 471 (1965). It is not the untrustworthiness of the testimony of the witness on the stand who is asked to testify to what the declarant said that causes the exclusion of hearsay testimony. The credibility of the witness can be tested by cross-examination. The problem of the trustworthiness of the witness in the courtroom is the same whether the witness is testifying to another's conduct or to another's words. It is the untrustworthiness of the declarant's statement that causes hearsay testimony to be excluded.

For this reason, if a witness testifies to a statement made by a declarant and such evidence is not introduced to prove the truth of the content of the declarant's statement, such testimony is admissible because it is not hearsay.

For example, life insurance policies require a proof of death before benefits will be paid. In an action upon a life insurance policy the beneficiary may offer evidence of a statement by a physician that the decedent has died. This evidence is admissible for the purpose of proving that a proof of death has been made in compliance with the requirements of the insurance contract. The evidence is not admissible as proof that the decedent died. The evidence is not hearsay as to the question of whether the statement was made, but it is hearsay as to whether the decedent died. Cases cited in 6 Wigmore, Evidence (3d ed.), 189, § 1770, n 5.

Where the out-of-court statement has relevancy both as evidence that the statement was made and also as evidence of the fact asserted in the statement, the problem is even more difficult. This does not render the statement inadmissible, but limits the use to which the statement can be put.

Wigmore states the proposition as follows: 'Where the Utterance of specific words is itself A part of the details of the issue under the substantive law and the pleadings, their utterance may be proved without violation of the Hearsay rule, because they are not offered to evidence the truth of the matter that may be asserted therein.' 6 Wigmore, supra, § 1770, at 185.

McCormick writes: 'The hearsay rule forbids evidence of assertions to prove the facts asserted in them. Manifestly, proof of utterances and writings may be made with an almost infinite variety of other purposes, not resting for their value upon the veracity of the out-of-court declarant and hence falling outside the hearsay classification.' McCormick, Evidence, 463, § 228 (1954).

We have adopted the general principle that evidence of a third person's out-of-court statements is admissible 'when the extra-judicial statement of a third person is not offered to prove the truth of the utterance, but only to show that the statement was made.' Marr v. Putnam, 213 Or. 17, 25, 321 P.2d 1061, 1066 (1958).

Marr v. Putnam, supra, was a libel case in which plaintiffs were allowed to introduce evidence that shortly after the alleged libelous material was published third persons greeted them with 'Hi, slicker' or 'Hi, racketeer.' This evidence was deemed relevant to show that the third persons interpreted the material in question as referring to plaintiffs, independent of the truth or accuracy of the statements.

In Hutchison v. Semler, 227 Or. 437, 361 P.2d 803, 362 P.2d 704 (1961), whether the defendant had ordered the building managers to put in a window was in issue. Over the plaintiff's objections, the defendant was permitted to introduce into evidence a letter he wrote to the manager ordering installation of the window and two letters from the managers to defendant confirming the order. On appeal, it was held that the letters were admissible to show that at the pertinent time the installation of the window was ordered, regardless of the truthfulness of the matter recited in the letters.

In the instant case we conclude that the relevancy of the statement of the prospective buyer, Mr. Matuna, did not depend upon the truth of the matter stated. Regardless of whether the buyer's attorney actually approved the earnest money receipt, the buyer's statement to the plaintiff broker that his attorney had approved would fulfill or waive the condition.

This is predicated upon the plaintiff being the agent of the sellers, the defendants, and authorized to receive the prospective buyer's notification that the condition of the contract had been fulfilled. The evidence establishes this as the fact. The testimony was that all negotiations leading up to the execution of the money receipt and thereafter were through plaintiff. This included plaintiff's conveying to Mr. Matuna the defendants' decision not to go ahead with the sale. ³ The plaintiff being authorized to receive the notice from Matuna that his attorney approved, the legal effect is the same as if the declaration had been made to the defendants themselves.

In a suit by the seller or the realtor against Matuna to enforce the contract, Mutuna would be allowed to deny that he made the statement. However, Matuna would not be permitted to testify that he made the statement, but that his...