Stahl v. State

• Citation: 686 N.E.2d 89
• Decision Date: 24 September 1997
• Docket Number: No. 43S03-9709-CR-511,43S03-9709-CR-511
• Parties: Randy G. STAHL, Appellant (Defendant below), v. STATE of Indiana, Appellee (Plaintiff below).
• Court: Supreme Court of Indiana

Page 89

686 N.E.2d 89

Randy G. STAHL, Appellant (Defendant below), v. STATE of Indiana, Appellee (Plaintiff below).

No. 43S03-9709-CR-511.

Supreme Court of Indiana.

Sept. 24, 1997.

Michael W. Reed, Warsaw, for Appellant.

Pamela Carter, Attorney General, Randi F. Elfenbaum, Deputy Attorney General, Indianapolis, for Appellee.

ON PETITION TO TRANSFER

BOEHM, Justice.

Defendant Randy Stahl was convicted of defrauding a financial institution (a bank) and theft. Both crimes turned on unauthorized withdrawals from an account owned by another. Stahl contends that the trial court erred in admitting a crucial piece of evidence, an affidavit supplied to the bank by the account owner to prove Stahl was unauthorized, under the exceptions to the hearsay rule for business records and for documents affecting an interest in property. The Court of Appeals affirmed. Stahl v. State, 675 N.E.2d 1130 (Ind.Ct.App.1997). Stahl requests either acquittal or a new trial. We grant transfer and remand because the document was inadmissible hearsay.

Factual and Procedural Background

In June of 1995, a friend of Stahl's, Vince Johnson, had a checking account with Mutual Federal Savings Bank. The account could be accessed through an automatic teller machine ("ATM") with a card and a four digit personal identification number ("PIN"). After receiving notification of several overdrafts, on June 14 Johnson called Glenda Thomas, the bank's branch manager to "inquire as to the nature of the overdraft." After meeting with Johnson, Thomas investigated his account and discovered that on June 10 Johnson had reported his card as missing and the bank had placed a hold on his account. She also found two ATM withdrawals of $100 and $50 and three attempted ATM withdrawals of $50, $20, and $10, all made on June 9 one after the other. Johnson had told her he did not make these withdrawals. Later, Thomas viewed the bank's videotape of ATM transactions and verified that Johnson was not the person at the ATM at the time of the withdrawals. At a June 15 meeting, Thomas told Johnson of the videotape and said that before he could view the tape, or be reimbursed, the bank required him to complete an "affidavit of forgery." Johnson completed the affidavit which asserted that he did not (1) withdraw the funds; (2) authorize their withdrawal; or (3) benefit from their withdrawal. Johnson then viewed the tape and identified the individual who withdrew the money as his friend Randy Stahl. The Bank reimbursed Johnson $100 (the amount of withdrawals less $50) and refunded him $60 in overdraft charges.

Stahl was charged with fraud on a financial institution and theft. Johnson did not testify at the trial, but the affidavit furnished to the bank was admitted to prove Stahl's lack of authorization to use the card. A jury found Stahl guilty on both counts and the trial judge sentenced him to concurrent prison terms of six years and one and a half years respectively. Stahl appealed and the Court of Appeals affirmed. Stahl, 675 N.E.2d at 1130.

On appeal, Stahl asserts that it was reversible error to admit Johnson's affidavit. ¹ Because the document was admitted to establish the truth of the matters recited, it is concededly hearsay. The State argues that the document falls within two exceptions to the hearsay rule: business records, Indiana Evidence Rule 803(6); and statements in documents affecting an interest in property, Rule 803(15). Our standard of review of a trial court's findings as to the essential elements of admissibility is sometimes described as an abuse of discretion. Mullins v. State, 646 N.E.2d 40, 51 (Ind.1995); Daum v. State, 625 N.E.2d 1296, 1297 (Ind.Ct.App.1993). Because the predicates or foundational requirements to admissibility often require factual determinations by the trial court, these findings are entitled to the same deference on appeal as any other factual finding, whether that is described as a "clearly erroneous" or abuse of discretion standard. However, the ultimate question in this case is the interpretation of the language of a rule of evidence that presents a question of law for this Court.

I. Business Records

The business records exception to the hearsay rule permits admission of records of regularly conducted business activity provided that certain requirements are met. Prior to the adoption of the Indiana Rules of Evidence a business record in this state, as in most jurisdictions, was admissible if it was: (1) an original record; (2) made in the regular course of business at or near the time of the events recorded; (3) that reported facts within the first hand knowledge of someone who had a duty to observe and report the facts. Holmes v. State, 671 N.E.2d 841, 858 (Ind.1996), reh'g denied, petition for cert. filed (U.S. June 16, 1997) (No. 96-9438); Cobb v. State, 585 N.E.2d 40, 43 (Ind.Ct.App.1992). Rule 803(6) now formulates the business records exception as available for a "record ... of events ... made at or near the time ... by, or from information transmitted by, a person with knowledge, if kept in the course of a regularly conducted business ... and if it was the regular practice [to make the report]." Ind.Evidence Rule 803(6). Stahl argues that the affidavit was improperly admitted because Johnson did not have a duty to observe and report the facts. The State argues that the requirements were met because Thomas had a duty and the facts were within the personal knowledge of Johnson, who was her source.

Business records doctrine before the enactment of Rule 803(6) clearly demanded that both the recorder and the person with personal knowledge be under a duty to observe and report the facts. ² The rule itself is less clear on this point as a matter of syntax. However, the commentary to Federal Rule of Evidence 803(6), which is identical to the Indiana Rule, notes the same requirement under various predecessors of the Federal Rules and unequivocally states that "the Rule follows this lead by requiring an informant with knowledge acting in the course of the regularly conducted activity." FED.R.EVID. 803(6) advisory committee's note. Indiana courts applying Indiana Rule 803(6) have held that the person who records the information in the regular course of business must also have personal knowledge of the information recorded in order to make it reliable. D.W.S. v. L.D.S., 654 N.E.2d 1170, 1173 (Ind.Ct.App.1995) (the event recorded must have been within the personal knowledge of someone acting in the course of regularly conducted business activity). Federal courts reach the same result. ³

This requirement is fully consistent with the purpose of the exception. The hearsay rule is designed to forbid unreliable out of court statements offered to prove the truth of the matter asserted. The business records exception permits records of business activity to be admitted in circumstances when the recorded information will be trustworthy. The reliability of business records stems from the fact that the organization depends on them to operate, from the sense that they are subject to review, audit, or internal checks, from the precision engendered by the repetition, and from the fact that the person furnishing the information has a duty to do it correctly. None of these is present in the case of a report that simply accepts information from a source that is not itself acting in the course of a regular activity. This case illustrates the point. The bank required Thomas to obtain the affidavit from Johnson before it would reimburse him or allow him to watch the videotape. Thomas had the duty to report information, but she had no personal knowledge, apart from what Johnson told her, as to whether Johnson authorized or benefitted from the ATM transactions. She merely reported what Johnson said in the affidavit, without any basis for evaluating the truth of the matter asserted. The affidavit might be admissible to show, for example, the timing of Johnson's report to Thomas, but it is hearsay as to the facts reported. In short, because Thomas did not have personal knowledge of the information in the affidavit, and Johnson was not acting in any regularly conducted business activity, the requirements of Rule 803(6) were not met.

II. Documents Affecting an Interest in Property

The State contends the document was admissible under Indiana Evidence Rule 803(15):

Statements in Documents Affecting an Interest in Property. A statement contained in a document purporting to establish or affect an interest in property if the matter stated was relevant to the purposes of the document, unless dealings with the property since the document was made have been inconsistent with the truth of the statement or the purport of the document.

The Indiana Rule is identical to the Federal Rule. There are no reported Indiana cases dealing with this exception and federal case law is sparse. See, e.g., United States v. Weinstock, 863 F.Supp. 1529 (D.Utah 1994); Taylor v. United States, 1993 WL 597379 (D.Ariz. Sept.27, 1993); Compton v. Davis Oil Co., 607 F.Supp. 1221 (D.Wyo.1985). The Advisory Committee's Note to Federal Rule of Evidence 803(15) anticipated that the exception would typically apply to "ancient" and "dispositive" documents that contain recitals of fact. For example, "a deed may recite that the grantors are all the heirs of the last record owner." This was viewed as admissible under 803(15) because "[t]he circumstances under which dispositive documents are executed and the requirement that the recital be germane to the purpose of the document are believed to be adequate guarantees of trustworthiness...." As with any exception to the hearsay rule, the ultimate issue is whether the evidence in question is reliable. Each specific exception to the rule contains requirements designed to ensure the trustworthiness of the evidence. A piece of evidence that may be argued to fit within the specific language of the rule may nonetheless be inadmissible hearsay...