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Hoffman v. Palmer

June 23, 1942; As Amended July 31, 1942.


Appeal from the District Court of the United States for the Eastern District of New York.

Author: Frank

Before SWAN, CLARK, and FRANK, Circuit Judges.

FRANK, Circuit Judge.

Appellants, as trustees in reorganization of the New York, New Haven and Hartford Railroad Company, appeal from a judgment, entered upon a jury verdict, awarding $25,077.35 to the plaintiff in his individual capacity and $9,000 to him as administrator of his wife's estate. The action grew out of an accident which occurred at a grade crossing of the appellant railroad in West Stockbridge, Mass. On December 25, 1940, at about 6:15 P.M., the plaintiff was driving a Ford coupe, with his wife as a passenger, at this crossing, when the car was struck by a locomotive engine, causing severe and permanent injuries to the plaintiff and the death of his wife. The complaint alleged that the railroad was negligent in failing to ring a bell or blow a whistle while approaching the crossing, and in failing to have a proper headlight; in view of the verdict, no issue is raised as to appellants' liability if the rulings on evidence and the charge to the jury were proper, and the alleged errors pertain exclusively to these matters. The alleged errors are four in number, and will be taken up seriatim.

1. Appellants urge that the judgment must be reversed because of the court's refusal to admit in evidence a statement signed by the locomotive engineer who was driving the engine when the accident occurred; the statement is in question-and-answer form and represents a stenographic record of an interview, two days after the accident, between the engineer and an assistant superintendent of the railroad. Present at the interview were two other employees of the railroad, and a Mr. Christie, of the Massachusetts Public Utilities Commission. The latter took only a minor part in the interview.*fn1 Appellants offered merely the engineer's statement, and offered to prove that "this statement was signed in the regular course of business and that it was the regular course of such business to make such statement." The engineer was dead at the time of the trial. The statement was excluded, upon appellee's objection. Since the statement purportedly represents the engineer's version of the accident, it is urged that its exclusion was prejudicial to the defense. Its exclusion was proper, says appellee, because it offends the hearsay rule.

The engineer's report would clearly be excluded under the common law rule. It does not come within the exceptions as to declarations by a deceased witness. Shepard v. United States, 290 U.S. 96, 54 S. Ct. 22, 78 L. Ed. 196; People v. Sarzano, 212 N.Y. 231, 106 N.E. 87. Nor is it the kind of record that falls within the common law exception as to memoranda made in the regular course of business. For the courts - as an inherent and integral part of the "regular course of business" exception to the hearsay rule - have always imposed this requirement, which the engineer's statement here clearly fails to meet: The person making the record, or supplying the information on which it is based, must have had no peculiarly powerful motive to misrepresent; such a motive, if it exists must be relatively minimal and marginal. Wigmore, speaking of records made in the regular course of business, says:*fn2 "It is often added that there must have been no motive to misrepresent. This does not mean that the offeror must show an absence of all such motives; but merely that if the existence of a fairly positive counter-motive to misrepresent is made to appear in a particular instance, the entry would be excluded."

This motive factor has often been stressed in the decisions. In Conner v. Seattle, R. & S.Ry.Co., 56 Wash. 310, 105 P. 634, 635, 25 L.R.A., N.S., 930, 134 Am.St.Rep. 110, the facts were substantially the same as those in the instant case. There a report of an accident was made in writing by the conductor of a street car, involved in the accident, immediately following the accident, and was soon thereafter given to the defendant Street Railway Company in compliance with its rules. It was urged that the report was admissible "as an original entry made in the due course of the business of the company and made contemporaneously with the transactions recorded." In sustaining the exclusion of this evidence, the court said: "For the sake of argument, we may admit that the report was made in due course and in compliance with a rule and custom universally followed. Yet we are quite unable to see how the statements made in such report can escape the objection of being self-serving, in so far as they were favorable to appellant's contentions (and, of course, it was because they were so favorable that they were offered to support its contentions), being made by appellant's agent and in its interest concerning facts which the agent at the time of making them knew would most likely become matters of dispute and drawn into litigation. Indeed, it is evident that the very making of the report upon the facts surrounding the accident was prompted by the possibility of the respondent claiming damages and suing the appellant therefor. * * * In this case the record of the facts, in the form of the conductor's report, was made for the very purpose of aiding appellant in possible future litigation with the respondent." The court distinguished an earlier case where the question of fact was whether or not a woman was a passenger upon a certain car during a certain trip, she having testified that she had paid her fare by transfer slip; the conductor's trip report was there held admissible as having been made in the regular course of business. Speaking of that case, the court, in the Conner case, said: "We think a careful reading of that decision will show that the court did not regard the report as self-serving, for the reason it was not made under circumstances when there were any inducements whatever to record the facts other than as they actually occurred at the time. It was nothing more or less than a simple matter of bookkeeping in the usual course of business, without any thought of future litigation drawing the facts so recorded in question. It was by reason of the absence of such considerations at the time of making the report that it was there admitted in evidence." In Bloom v. Union Railway Company, 165 App.Div. 257, 150 N.Y.S. 779, and North Hudson Ry.Co. v. May, 48 N.J.L. 401, 5 A. 276, the courts reached the same result on similar facts.

In the Conner case, the conductor's report was (1) made pursuant to a rule imposing a duty to make it and (2) was made in the "regular course of business" - using those words in their colloquial sense. But the court refused to give them such a colloquial meaning, since, if it did so, the foundation of the "regular course of business" exception would disappear. Those words had come to be a short-hand expression or symbol for a doctrine, the essence of which is the reliance on records where the circumstances in which they were made furnish sufficient checks against inducements to misstate to make them trustworthy, give them "some badge of truthfulness."

That basic concept is recurrently expressed in the cases. In Freedman v. Mutual Life Ins. Co., 1941, 342 Pa. 404, 21 A.2d 81, 85, 135 A.L.R. 1249 hospital records were held admissible where there were present "no contemplative motive for falsification." In Re Fennerstein's Champagne, 3 Wall. 145, 147, 18 L. Ed. 121, the court emphasized the ingredient that "there was no motive to falsify." In Poole v. Dicas, 1 Bing., N.C. 649, 131 Eng.Rep. 1267, Tindal, C. J., said: "The clerk had no interest to make a false entry: If he had any interest, it was rather to make a true entry; it is easier to state what is true than what is false; the process of invention implies trouble, in such a case unnecessarily incurred; and a false entry would be likely to bring him into disgrace with his employer. Again, the book in which the entry was made was open to all the clerks in the office, so that an entry if false would be exposed to speedy discovery." In other cases, the absence of a motive to misrepresent is said to be "condition" of admissibility. See Polina v. Gray, L.R. 12 Ch.Div. 411, 429-430; Lassone v. Boston & L.R.Co., 66 N.H. 345, 24 A. 902, 903-906, 17 L.R.A. 525, and cases there cited; Malone v. L'Estrange, 2 Ir.Eq.R. 16. In Lord v. Moore, 37 Me. 208, 220, the requirement was said to be that the entrant's situation "was such as to exclude all presumption of his having any interest to misrepresent the fact recorded." And Gray, J., in Kenedy v. Doyle, 1865, 10 Allen, Mass., 161, 167 says that not only must there be "no interest to misrepresent," but also that the entry must be made "before any controversy or question has arisen."

The statement of the engineer may be compared with the "protests" of mariners, which, although made by them as a matter of duty and in the regular course of their business, are inadmissible on behalf of their ships because the courts have always recognized that these reports will be biased and partisan disclaimers of responsibility for a disaster. See, e.g., Merriman v. The May Queen, Fed.Cas.No. 9,481. In Hand v. The Elvira, Fed.Cas.No. 6015, the court said that in such a document "the waves are almost always mountain high, the winds never less than a hurricane, and the peril of life generally impending."

This court has often emphasized the element of trustworthiness as the foundation of the "regular course of business" exception. For instance, in United States v. Cotter, 2 Cir., 1932, 60 F.2d 689, 693 where certain bank records were held admissible, we said that the accuracy of the records "is essential to the very life of [the bank's] business" and spoke of "the probable correctness of ordinary bank books," pointing out that "the danger of mistake is slight." In United States v. Becker, 2 Cir., 1933, 62 F.2d 1007, 1010, we said that "if challenged, the party offering the documents must prove that the system is such as prima facie to be reliable." These two cases, in turn, relied upon Massachusetts Bonding & Insurance Co. v. Norwich Pharmacal Co., 2 Cir., 1927, 18 F.2d 934, 937 in which we referred to records that "are in practice accepted as accurate upon the faith of the routine itself, and of the self-consistency of their contents."*fn3

The same "principle of a circumstantial guarantee of trustworthiness" - involving the absence of any vigorous motive to misrepresent - is inherent in virtually all the exceptions to the hearsay rule, such as declarations about private boundaries, statements or records concerning family history, spontaneous declarations, and dying declarations. We refer to some of the authorities in a footnote. In them, frequent reference is made to the nonexistence of a controversy, likely to lead to litigation in which the declarant has a personal interest that would be likely to negate a fair degree of unprejudiced sincerity.*fn4

Wigmore has summarized, approvingly, the following reasons justifying the several exceptions to the hearsay rule: "(a) Where the circumstances are such that a sincere and accurate statement would naturally be uttered, and no plan of falsification be formed; (b) where, even though a desire to falsify might present itself, other considerations, such as the danger of easy detection or the fear of punishment, would probably counteract its force; (c) where the statement was made under such conditions of publicity that an error, if it had occurred, would probably have been detected and corrected."*fn5 And, with particular reference to those "regular course of business" memoranda which are, he says, justifiably admissible although hearsay, he writes:*fn6 "In the typical case of entries made systematically and habitually for the recording of a course of business dealings, experience of human nature indicates three distinct though related motives which operate to secure in the long run a sufficient degree of probable trustworthiness and make the statements fairly trustworthy: (1) The habit and system of making such a record with regularity calls for accuracy through the interest and purpose of the entrant; and the influence of habit may be relied on, by very inertia, to prevent casual inaccuracies and to counteract the possible temptation to misstatements * * * (2) Since the entries record a regular course of business transactions, an error or mis-statement is almost certain to be detected and the result by those dealing with the entrant; mis-statements cannot safely be made, if at all, except by a systematic and comprehensive plan of falsification * * * (3) If, in addition to this, the entrant makes the record under a duty to an employer or other superior, there is the additional risk of censure and disgrace from the superior, in case of inaccuracies - a motive on the whole the most powerful and most palpable of the three."

It is clear then, that the words "regular course of business," as used in the decisions, have always included the concept that the circumstances must be such as to safeguard against any crude bias on the part of persons making the records or supply the information and against any great likelihood that the records may have been fabricated by interested persons for the primary purpose of use in litigation which is in prospect at the time. The mere fact that such entries were made with a view to perpetuating evidence is not sufficient to show such bias as to exclude them. But it is beyond question that a requirement in a business that reports should regularly be made which, by their very nature, are highly likely to be biased, did not bring such reports within the meaning of the words of art, "regular course of business." That the defendant railroad here had a regulation requiring its employees, when they were the actors in accidents, regularly to make reports of such accidents for use in probable litigation, did not suffice to include such reports within the "regular course of business," as those words have always been understood by lawyers and judges. For the "regularity" which justifies the exception is the kind which tends to "counteract the possible temptation to mis-statements," as Wigmore has noted.*fn7 It follows that the phrase "regular course of business" never covered a regular practice of making records with the purpose of supplying evidence in a highly probable law suit, when those records are made by persons with every "possible temptation to mis-statements." We have found no case holding or even suggesting that, absent a statute changing the common law rule, such a statement as the engineer's is admissible, loaded as it is with motives to misrepresent the facts.

The question, then, is whether this evidence, so plainly barred at common law, was made admissible by federal legislation, i.e., U.S.C.A., Title 28, § 695, enacted in 1936.*fn8 This statute renders admissible "any writing or record, whether in the form of an entry in a book or otherwise, made as a memorandum or record of any act, transaction, occurrence, or event," if the trial judge shall find "that it was made in the regular course of any business, and that it was the regular course of such business to make such memorandum or record."

The words, "regular course of business," twice employed in the legislation, are not colloquial words but are words of art, with a long history, and, as we have observed, often theretofore judicially interpreted. Consequently, they should be given that settled meaning when incorporated in a statute, absent a contrary legislative intention clearly expressed in the statute or in its legislative history.

In Case v. Los Angeles Lumber Co., 308 U.S. 106, 115, 60 S. Ct. 1, 7, 84 L. Ed. 110, the Supreme Court said: "The words 'fair and equitable' as used in § 77B, sub. f [11 U.S.C.A. § 207(f)] are words of art which prior to the advent of § 77B had acquired a fixed meaning through judicial interpretations in the field of equity receivership reorganizations. Hence, as in case of other terms or phrases used in that section, Duparquet Huot & Moneuse Co. v. Evans, 297 U.S. 216, 56 S. Ct. 412, 80 L. Ed. 591, we adhere to the familiar rule that where words are employed in an act which had at the time a well known meaning in the law, they are used in that sense unless the context requires the contrary. Keck v. United States, 172 U.S. 434, 446, 19 S. Ct. 254, 258, 43 L. Ed. 505." In Keck v. United States, the court said: "These conclusions arising from a consideration of the text of the statute are rendered yet clearer by taking into view the definite legal meaning of the word 'smuggling.' That term had a well-understood import at common law, and in the absence of a particularized definition of its significance in the statute creating it, resort may be had to the common law for the purpose of arriving at the meaning of the word. Swearingen v. United States, 161 U.S. 446, 451, 16 S. Ct. 562 [40 L. Ed. 765]; United States v. Wong Kim Ark. 169 U.S. 649, 18 S. Ct. 456 [42 L. Ed. 890]."*fn9

In a given context, words often come to have a meaning which they do not have in other contexts. What "apostles" mean in an admiralty rule*fn10 would surprise a theologian. To a mathematician, pi is not a Greek letter, no more than F.O.B. to a railroad company is a chance selection from the English alphabet. "Unearned" in the insurance trade, as used in connection with premiums, does not indicate what it does mean to a man on the street.*fn11 The phrase "divided into watches" in a Seamen's Act, 46 U.S.C.A. § 673, "is," says the Supreme Court, "to be given the meaning which it had acquired in the language and usages of the trade to which the Act relates * * *" and not "the common or ordinary meaning of the words."*fn12 To the manufacturers of drinks, beer is not a carbonated beverage although it is to a chemist.*fn13 "Signed by the party to be charged or by his agent" is a phrase with a history it cannot easily shake off, when employed in a statute.*fn14 The words "equity receivership" do not go virginally into a corporate reorganization statute.*fn15 Each trade has its peculiar jargon and courts rely on that jargon when it finds its way into a statute dealing with that trade.

And so with "regular course of business" as applied to records or memoranda in an evidence statute. To a layman, the words might seem to mean any record or paper prepared by an employee in accordance with a rule established in that business by his employer. But according to the jargon of lawyers and judges those words, in discussions of evidence, have always meant writings made in such a way as to afford some safeguards against the existence of any exceptionally strong bias or powerful motive to misrepresent.

Those words came into the statute saturated with history. They connote - to recall Wigmore's comments*fn16 - (1) a regularity serving "to counteract the possible temptation to misstatements"; (2) a situation which would lead to detection of falsification, so that mis-statements "cannot safely be made"; (3) a relationship, when a writing is made by an employee under a duty to his employer, which includes the "risk of censure and disgrace" for mis-statements. It would, therefore, require unequivocal expressions in the statute or its legislative history to yield an interpretation of those words, defying their history, which would render admissible a memorandum made in circumstances that disclose the strongest likelihood of the existence of a motive to misrepresent and the least probability of censure from the employer who imposed the duty to make it, if the memorandum misdescribes the facts so as to favor him.

The statute was a so-called "Model Act," proposed for uniform adoption by the several states and the federal government. New York enacted it in 1928.*fn17 In the next year, long before Congress also enacted it, the New York statute was interpreted in New York in a case closely resembling the instant case and similar cases above cited; In Needle v. New York Railways Corp., 1929, 227 App.Div. 276, 237 N.Y.S. 547, 549, a policeman, in the course of his regular duties, made a report of a street railway accident. As he had not witnessed the accident, his report was based on the oral statements of others, including, as the court said, that "of the interested motorman, who, instead of being so placed as to be presumed to be without a motive to falsify in helping to make the record, had every reason to give a biased and false report." It was held that the policeman's report was not admissible under the Model Act.

The court in the Needle case gave as another ground for its rejection that the report was based upon the statements of others than the motorman who were under no duty to make them and that the policeman's hearsay statement was founded upon the hearsay of others and not upon his own knowledge. With that aspect of the decision we are not concerned, for it has no bearing here. When herein we refer to the Needle case, we mean, unless we state otherwise, that part of the decision rejecting the motorman's statement because of the presence of that ...

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