LAYING THE FOUNDATION FOR A BUSINESS RECORD

March 3, 2011 § 1 Comment

Business records play a role in many chancery court matters.  Getting them into evidence can sometimes be crucial to your case.

MRE 803(6) allows introduction of business records, and states that they are “not excluded by the hearsay rule, even though the declarant is available as a witness.”  Before you can get the records into evidence, however, you must lay a foundation that the records come within the rule.  The four elements of foundation are:

  1. The record was made and kept in the course of regularly conducted business activity;
  2. The record is one that is routinely made and kept in the course of business, in the business’s usual practice;
  3. The record was made at or near the time of the event that it records; and
  4. The record was made by a person with knowledge, or from information transmitted by a person with knowledge, and who reported such knowledge in the regular course of business.

The witness who establishes the four elements will be either the record custodian or “other qualified witness,” who may be any person who can testify that the records satisfy the four elements.  The witness need not have personal knowledge of the contents, nor is it required that the witness was custodian at the time the record was made.  All that is required is that the witness have knowledge of the procedures under which the records were made and maintained.  In H & E Equipment v. Floyd, 959 So.2d 578, 581 (Miss. App. 2007), the trial court properly excluded the invoices upon which the plaintiff sought to sue on open account because the custodian failed to explain how the invoices, many of which were reprints, were created, or that the invoices relied on were created at the time the charges were incurred. 

Under the rule, the focus is on when the documents were created, their trustworthiness, and whether they were created in the course of regularly conducted business.  Ferguson v. Snell, 905 So.2d 516, 519-520 (Miss. 2004).  In Bower v. Bower, 758 So.2d 405, 414-415 (Miss. 2000), husband offered the monthly internet bills to prove wife’s internet usage, and the husband’s testimony was the only authenticating testimony offered.  The supreme court held that the trial court properly excluded them as not being proven to be business records; if you click through the criteria above, you can see that husband’s testimony did not meet them.

The fact that the records are maintained on a computer or in a data file does not require any additional foundation requirements. 

The person who generated the information in the record must have had personal knowledge, but the person who entered or recorded the information need not have personal knowledge.  For example, an employee of the business observes a chemical process and records the temperatures, reactions and times involved in hand-written notes, which she then tenders to a stenographer who turns the notes into a typed record that is maintained by a custodian.  The employee who observed must have had first-hand knowledge when the notes were made and if called as a witness, but neither the stenographer nor the custodian are under the same requirement simply to authenticate the documents as business records.  In Dillon v. Greenbriar Digging Service, 919 So.2d 172, 174 (Miss. App. 2005), it was held that the trial court properly let in an inspection report, even though the inspector/custodian who testified was not the inspector who performed the documented inspection, because he adequately authenticated it as a business record.    

If the record includes a statement by a person who is not a part of the business and is under no duty to make the report, and the statement is offered to prove the truth of the matter asserted, it will be treated as hearsay that is inadmissible, unless it can be shown to come within an exception to the hearsay rule.  An example:  The business’s employee reports the contents of a conversation he had with a customer.  If the statement is offered to prove the truth of the matter asserted by the customer, it is hearsay and will not be allowed in unless it comes within an exception, such as the customer’s own statement offered against him.  In Bingham v. State, 723 So.2d 1189, 1190 (Miss. App. 1998), the court of appeals held that a police officer’s report may be admitted only to prove matters observed by the officer, but not to prove inadmissible matter such as the hearsay statements of persons interviewed by the officer.  Copeland v. City of Jackson, 548 So.2d 970, 975 (Miss. 1989).  But see, Watson v. State, 521 So.2d 1290, 1294 (Miss. 1990), where the supreme court upheld admission of letters of complaint from customers maintained by a bank on the basis that the documents were made a part of the ban business records. 

It sometimes happens that records generated by third parties become part of a business’s records.  An expert’s report and recommendations, for instance, may be included in the records of a project.  The expert’s testimony would not be required for introduction of the report if:  (1) the custodian can establish that the expert’s report was incorporated into records kept in the normal course of business; (2) that the business keeping the record relies on its accuracy in the conduct of its business; and (3) “other circumstances” indicate the trustworthiness of the document.  Documents that are prepared for litigation or “litigation inspired” are generally found to lack trustworthiness.  Jones v. Hatchett, 504 So.2d 198, 201 (Miss. 1987); See, e.g., Gilbert v. Ireland, 758 So.2d 1050, 1053-1054 (Miss. App. 2000) 

When the source of the information is an outsider who is not a member of the business organization, the statement may be admissible if there is proof that there is a regular practice of verification by an employee so that the outsider’s statements are adopted by the business and become its own statements.  An example of an admissible outsider record would be an invoice submitted by an outside company that is verified by an employee, matched to a purchase order of the business, and attached to records in the business’s files.  An example of an inadmissible outsider statement would be a letter from someone not connected with the business that is merely placed in the files of the business.  

Objections that the records include ambiguous or inaccurate statements or that they are incomplete go to the probative weight and not to admissibility.

Proof of matters based on absence of entries in business records and admissibility of public records are subjects of other posts.

MRE 902 addresses self-authentication, which may apply to some business records.

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