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Nassau County Bar Association

Mind your own business records exception

In People v. Kennedy, 68 N.Y.2d 569, 510 N.Y.S.2d 853 (1986) the Court of Appeals observed that “[t]he business records exception has been recognized as probably the most important hearsay exception,…” I have observed that “it may also be the most misunderstood and misused hearsay exception.” Rushmore Recoveries X, LLC v. Skolnick, 15 Misc.3d 1139(A), 841 N.Y.S.2d 823 (Dist. Ct. Nassau County 2007). In an effort to clear up some misconceptions concerning what are (and what are not) business records, as well as what is necessary to lay a proper foundation for the admission of such records into evidence, this article reviews the history and purpose of the exception, identifies which records qualify as business records and addresses a few anomalies. It bears repeating up front that the business record rule is a hearsay exception. If you are not offering records for the truth of the statements contained therein, by definition, they are not hearsay; and you do not need to worry about laying a proper business record foundation. However, in the great majority of cases, the very purpose for offering the records is to prove the truth of the statements contained therein. In such cases you must be concerned with laying the proper foundation.

At English common law, “tradesman’s books [were] not legal evidence in favor of the party making the entries [,]” Vosburgh v. Thayer, 12 Johns. 461 (S.C.N.Y. 1815). The “Shop Book Rule” permitted the admission of books of account where it was demonstrated “that the party had no clerk, that some of the articles charged have been delivered, that the books produced are the account books of the party, and that he keeps fair and honest accounts, and this by those who have dealt and settled with him.” Id. This rule had “no application to the case of books or entries relating to cash items or dealings between the parties[,]” Smith v. Rentz, 131 N.Y. 169 (1892); it did not apply to corporations, Congdon & Aylesworth Co. v. Sheehan, 11 A.D. 456, 42 N.Y.S. 255 (3d Dept. 1896); and all employees familiar with any part of the recorded transactions had to first testify concerning such knowledge. Shmargon v. Rosenstein, 192 A.D. 143, 182 N.Y.S. 343 (3d Dept. 1920). See generally Richardson on Evidence, 11th Edition § 8-302.

Of similar import at common law was the “regular entries rule,” which allowed for the admission of a business entry “… provided that it was made in the regular course of a business or profession, [] was made at or near the time that the event occurred … that the person who recorded the event now be deceased, that he had personal knowledge at the time of the entry, and that he had no motive to deceive (Leask v. Hoagland, 205 N.Y. 171, 98 N.E. 395 [1912]).” People v. Selassie, 140 Misc.2d 616, 532 N.Y.S.2d 326 (Sup. Ct. Bronx Co.1988).

Recognizing the need for “a more practical, workable and uniform rule, adapted to modern business conditions and practices[,]” Johnson v. Lutz, 253 N.Y. 124 (1930), in 1928 the legislature enacted Civil Practice Act § 374-a, which was designed “to permit a writing or record, made in the regular course of business, to be received in evidence without the necessity of calling as witnesses all of the persons who had any part in making it, provided the record was made as a part of the duty of the person making it, or on information imparted by persons who were under a duty to impart such information.” id. This new business records exception, now codified in CPLR § 4518, was based upon the recognition that “records systematically made for the conduct of a business as a business are inherently highly trustworthy because they are routine reflections of day-to-day operations and because the entrant’s obligation is to have them truthful and accurate for purposes of the conduct of the enterprise.” People v. Kennedy, supra.

CPLR § 4518(a), applicable to civil as well as criminal proceedings, by virtue of CPL § 60.10, provides for the admission of any writing or record demonstrated to the court to have been, (1) made in the regular course of business; (2) made as part of the regular course of such business; and, (3) made at the time of the act, transaction, occurrence or event, recorded or within a reasonable time thereafter. It bears emphasis that “[a]ll other circumstances of the making of the memorandum or record, including lack of personal knowledge by the maker, may be proved to affect its weight, but they shall not affect its admissibility.” It should also be noted that “[t]he term business includes a business, profession, occupation and calling of every kind.” The Court of Appeals, in People v. Kennedy, supra., has even recognized that a criminal enterprise may qualify as a “business” for business records purposes.

While the reasons for the exception are clear and the statutory requirements so seemingly simple, there are some pitfalls to be avoided when attempting to admit records as a business record.

The business records you are seeking to admit must be the records of the company which made such records. “The mere filing of documents received from another entity, even if they are filed and retained in the regular course of business, are not the records of the recipient, who is in no position to lay the proper foundation.” Lodato v. Greyhawk North America LLC, 39 A.D.3d 494, 834 N.Y.S.2d 239 (2nd Dept. 2007); See also: Standard Textile Co., Inc. v. National Equipment Rental, Ltd., 80 A.D.2d 911, 437 N.Y.S.2d 398 (2nd Dept. 1981) [third party letters placed in the recipient’s file do not become the business records of the recipient]; Lodato v. Greyhawk North America LLC, 39 A.D.3d 494, 834 N.Y.S.2d 239 (2nd Dept. 2007) [report prepared for recipient by independent adjuster and another party do not become business record of recipient].

This should not be confused with reports prepared by a non-employee in a manner which was familiar to the business entity receiving the report. In People v. Cratsley, 86 N.Y.2d 81, 629 N.Y.S.2d 992 (1995) the Court of Appeals affirmed the receipt in evidence of an IQ test report prepared for the Steuben Association of Retarded Citizens (“ARC”) by a doctor employed by the New York State Office of Vocational Rehabilitation. The court reasoned that the report met all of the criteria of a business record because the doctor was acting on behalf of ARC, pursuant to their requirements, as well as statutory and regulatory requirements with which the witness from ARC was familiar.

As the name of the exception implies, the record in question must be a business record, not a personal record. Nevertheless, “[t]he fact that business records are those of a sole proprietor, or that their intended purpose may be for internal use rather than display to third parties or filing with government agencies, is not disqualifying.” People v. Kennedy, supra. In contrast, private memoranda kept in the personal diary of a real estate broker concerning his schedule and properties shown were found not to be a business record. Paretta v. Yuhas, 273 A.D. 977, 78 N.Y.S.2d 235 (2nd Dept. 1948) aff’d 298 N.Y. 756 (1948). The personal memo book of a police officer may qualify as a business record. People v. Nunez, 194 A.D.2d 696, 599 N.Y.S.2d 119 (2nd Dept. 1993); Bracco v. Mabstoa, 117 A.D.2d 273, 502 N.Y.S.2d 158 (1st Dept. 1986).

The business records exception may be used to admit computer printouts, if the data was stored in the normal course of business. Ed Guth Realty, Inc. v. Gingold, 34 N.Y.2d 440, 358 N.Y.S.2d 367 (1974); Matter of Thomma, 232 A.D.2d 422, 648 N.Y.S.2d 453 (2nd Dept.1996). The Appellate Division, Second Department has held that photographs may be admitted as business records, if a proper foundation has been laid, although the photographs were not otherwise authenticated. Corsi v. Town of Bedford, 58 A.D.3d 225, 868 N.Y.S.2d 258 (2nd Dept. 2008). The business records exception may also be used as a type of “negative hearsay” to establish the absence of a record or entry so as to demonstrate the non-existence or non-occurrence of a fact or entry not recorded. See CPLR § 4521 [addressing public records only]; Whitfield v. City of New York, 16 Misc.3d 1115, 847 N.Y.S.2d 899 (S.C. Kings Co. 2007) aff’d 48 A.D.3d 798, 853 N.Y.S.2d 117 (2nd Dept. 2008); Weinberg v. Johns-Manville Products Corp., 67 A.D.2d 640, 412 N.Y.S.2d 370 (1st Dept. 1979); Chiu-Caranese v. DeMeo, 2 A.D.3d 766, 769 N.Y.S.2d 729 (2nd Dept. 2003).

The witness you call to lay the statutory foundation must have personal knowledge, at the time the records were created, of the record keeping practices of the entity whose records you are seeking to admit. See Dayanim v. Unis, 171 A.D.2d 579, 567 N.Y.S.2d 673 (1st Dept. 1991); Hefte v. Bellin, 137 A.D.2d 406, 424 N.Y.S.2d 42 (1st Dept. 1988); PDG Psychological, P.C. v. Travelers Ins. Co., 22 Misc.3d 141, 881 N.Y.S.2d 366 (App. Term 2nd & 11th Jud. Dists. 2009). To be clear, a secretary who began to work for the entity in 2010 cannot be personally familiar with the entity’s record keeping practices in 1995, and could not be expected to lay a proper foundation. An expert, unfamiliar with the entity’s record keeping practice cannot lay the appropriate foundation. People v. Kennedy, supra.; but, do not forget about People v. Cratsley, supra., where the court allowed records to be admitted, although the witness was not familiar with the doctor’s personal record keeping practices, because the report was prepared in accordance with statutory and regulatory requirements with which she was familiar. It is also important to note that your foundation witness does not need to have been the person who created the record. As indicated, he or she need only be personally familiar with how the record was created. See Briar Hill Apartments Co. v. Teperman, 165 A.D.2d 519, 568 N.Y.S.2d 50 (1st Dept. 1991).

Your foundation witness must be able to testify, however, concerning the business duty of the person who entered the information in the entity’s record, as well as the business duty of every person in the chain who provided the information recorded. See Matter of Leon RR, 48 N.Y.2d 117, 421 N.Y.S.2d 863 (1979). Note that it must be a “business duty;” a contractual duty will not suffice. Hochhauser v. Electric Ins. Co., 46 A.D.3d 174, 844 N.Y.S.2d 374 (2nd Dept. 2007). The business record exception “was not intended to permit the receipt in evidence of entries based upon voluntary hearsay statements made by third parties not engaged in the business or under any duty in relation thereto.” Johnson v. Lutz, supra. As a general rule, police reports of an accident which are not witnessed by the reporting officer, containing third party descriptions of the accident, will not be admissible, unless the third party statement is not being offered for the truth, Kelly v. Wasserman, 5 N.Y.2d 425, 185 N.Y.S.2d 538 (1959) or qualifies as some other hearsay exception. Toll v. State, 32 A.D.2d 47, 299 N.Y.S.2d 589 (1969); Kemenyash v. McGoey, 306 A.D.2d 516, 762 N.Y.S.2d 629 (2nd Dept. 2003). If there is no other hearsay exception, but there are parts of the record which you wish to have admitted and qualified as a business record, do not throw the baby out with the bath water; you can have the hearsay third party statements redacted. People v. Kohlmeyer, 284 N.Y. 366 N.Y. 366 (1940); Hatton v. Gassler, 219 A.D.2d 697, 631 N.Y.S.2d 757 (2nd Dept. 1995).

Your witness must also be able to establish that the entries in the record were made at the time of, or within a reasonable time after the act, transaction, occurrence or event recorded. People v. Mertz, 68 N.Y.2d 136, 506 N.Y.S.2d 290 (1986). Of course, a “reasonable time” is a relative term. Fifteen days after the event is contemporaneous, Toll v. State, supra.; almost one year later is not. Lichtenstein v. Montefiore Hospital and Medical Center, 56 A.D.2d 281, 392 N.Y.S.2d 18 (1st Dept. 1977).

If you would like to avoid calling a foundational witness, or are having difficulty getting the witness to appear, you may avoid the personal appearance of a foundational witness altogether if you strictly follow the requirements of CPLR § 3122-a. The statute allows you to serve a subpoena duce tecum, accompanied by a certification in the form of an affidavit to be subscribed by the person responsible for maintaining the records setting forth: (1) the individual is the person responsible for maintaining the records; (2) the records are an accurate version of the records described in the subpoena and in the possession, custody or control of the person receiving the subpoena; (3) the records or copies produced are all of the documents described in the subpoena or, if not, an explanation of what is missing and why; (4) the records were made by the personnel or staff of the business, or by persons acting under their control, in the regular course of business, and were contemporaneously made. Note that if more than one person has knowledge of these above facts, more than one certification may be made. If you intend to seek admission of the records via this method you must give your adversary notice of such intent and specify where the records may be inspected at least thirty days before trial. Your adversary may then object to admission on this basis, no later than ten days before trial, without penalty.

Do not lose sight of the fact that the need to lay a proper business records exception exists when moving for summary judgment to the same extent as at trial. Remember the proof submitted on a motion for summary judgment must be in evidentiary form. Friends of Animals, Inc. v. Associate Fur Manufacturers, Inc., 46 N.Y.2d 1065, 416 N.Y.S.2d 790 (1979). Simply annexing documents to your moving papers, without an affidavit laying a proper evidentiary foundation, is inadequate. See Higen Associates v. Serge Elevator Co., Inc., 190 A.D.2d 712, 593 N.Y.S.2d 319 (2nd Dept. 1993); Palisades Collection, LLC v. Gonzalez, 10 Misc.3d 1058(A), 809 N.Y.S.2d 482 (Civ. Ct. N.Y. Co. 2005).

All of the above notwithstanding, you should be familiar with two recent cases out of the Appellate Division, Second Department. In People v. Ramos, 60 A.D.3d 1091, 876 N.Y.S.2d 127 (2nd Dept. 2009) the court upheld the admission of bank statements into evidence, in the absence of a proper business records foundation, holding that “judicial notice may provide a basis for admitting business records that are ‘so patently trustworthy as to be self-authenticating[.]” The court did so despite the fact, as pointed out by the dissent of Justice Carni, that there was no testimony from any bank employee regarding these records, that the complaining witness testified the bank records shown to her were not the bank statements she received at home, that they did not look like the bank statements she customarily received and that she did not know how or when the records were made. The court followed this decision with Thomas v. Rogers Auto Collision, Inc., 69 A.D.3d 608, 896 N.Y.S.2d 73 (2nd Dept. 2010) holding “the trial court did not err in allowing the admission of [a] bank statement into evidence inasmuch as it was a self-authenticating document,” despite the fact that no witness was called to lay a business record foundation.

Finally, if none of the above is of any use to you in laying a business record foundation at the time of trial, the following simple practice tip may be of some assistance: make an enlarged photocopy of CPLR § 4518(a), laminate it and keep it in your brief case. Then, after marking your record for identification, take out your copy of the statute and ask the witness (1) was it “made in the regular course of business;” (2) was it “the regular course of such business to make it[;]” and, (3) was it made “at the time of the act, transaction, occurrence or event, or within a reasonable time thereafter.” Employing this method, more times than not, the record will be received in evidence, without objection.

After 25 years in private practice, Judge Andrew M. Engel served as Principal Law Secretary to Hon. Elaine Jackson Stack, before being elected to the Nassau County District Court in 2006.