Another Indiana Court Of Appeals Opinion Regarding Admissibility Of Lender’s Loan and Business Records
Lesson. A lender’s proposed witness who was not present when the original loan documents were executed, or for that matter when any materials relevant to the loan were created, does not in and of itself preclude the witness from testifying or prevent related exhibits from being admitted into evidence.
Case cite. Wells Fargo v. Hallie, 142 N.E.3d 1033 (Ind. Ct. App. 2020)
Legal issue. Whether the lender’s trial witness was competent to testify as to the admissibility of certain loan documents and records.
Vital facts. The lender filed a straightforward mortgage foreclosure action against the borrower claiming a default under the subject loan. The original lender had transferred the loan to the plaintiff lender.
Procedural history. The trial court held a bench trial on the lender’s complaint. The lender called one witness, who worked for the original lender and later the plaintiff lender in the default arena. The lender proffered as exhibits various loan documents and a payoff statement. The borrower objected to the admissibility of the exhibits, asserting that the witness was incompetent to authenticate the exhibits. The trial court granted the borrower’s objection as to all the exhibits but for the payoff statement. The court then entered a “judgment on the evidence” in favor of the borrower that disposed of the case. The lender appealed.
Key rules. Indiana Evidence Rule 803(6) – the business records exception to the hearsay rule – was at issue. In Indiana, the party offering a business record exhibit “may authenticate it by calling a witness ‘who has a functional understanding of the record keeping process of the business with respect to the specific entry, transaction, or declaration contained in the document.’” That witness is only required to have “personal knowledge of the matters set forth in the document,” but the witness “need not have personally made or filed the record or have firsthand knowledge of the transaction represented by it in order to sponsor the exhibit.”
Evidence Rule 902 deals with the admissibility of so-called “self-authenticating” documents. Among the self-authenticating documents listed in Rule 902 are of official records or documents recorded or filed in a public office as authorized by law, if the copies are certified in compliance with law, and commercial paper, to the extent allowed by general commercial law. This rule does not guarantee admissibility but relieves the proponent from the need to provide foundational testimony.
Holding. The Indiana Court of Appeals reversed the trial court and remanded the case for a hearing to allow the lender to proffer exhibits consistent with Indiana’s rules “without a heightened personal knowledge requirement.”
Policy/rationale. The Court of Appeals surmised that the trial court concluded that the lender’s witness “could not testify concerning any document generated in her absence,” such as business records of the organization or original loan documents. The Court rejected the notion of the trial court’s “near-blanket exclusion of exhibits.” The Court reasoned that the lender “should not be precluded from eliciting foundational testimony from a witness on grounds that the witness was not present at the time a document was created.” Moreover, properly-certified documents such as the recorded mortgage should have been admitted at trial without a witness. The same goes for the original promissory note endorsed in blank.
- Lender’s Summary Judgment Affidavit Flawed - Business Records Inadmissible
- Credit Card's Summary Judgment Reversed Due To Flawed Affidavit
- Indiana Court of Appeals Mortgage Foreclosure Opinion, II of III: Liability – Evidence Teachings
- Indiana Court of Appeals Mortgage Foreclosure Opinion, III of III: Damages Evidence After Lenders Merge
- Promissory Notes “Endorsed In Blank” Are Perfectly Fine
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