Breneman Co. v. . Cunningham

BeogdeN, J. In actions for an accounting, are books of account admissible in evidence? The defendant Cunningham owned the capital stock of the Cunningham Springless Shade Corporation, a North Carolina corporation. He made a contract with the plaintiff Breneman Company, an Ohio corporation, to sell said stock for the sum of $10,000. Thereupon the Ohio corporation contracted to liquidate the Springless Shade Corporation. The parties agreed that the fixed value of the assets of the Shade Corporation at the close of business on 26 February, 1927, over and above all liabilities, was $9,059.03, and the defendant Cunningham agreed to pay to the plaintiff, Ohio corporation, the difference between the said fixed value of said assets and “the actual liquidated value,” in the event the latter was less than the former. The name of the Cunningham Springless Shade Company was then duly changed by law to “The Breneman Company.” Pursuant to the terms of the agreement, the referee finds: “That the Cunningham Springless Shade Company sold the greater part of the merchandise on hand at the date of the contract and collected the collectible notes and accounts due at the date aforesaid and paid or caused to be paid all the obligations it agreed to pay; that on or about 1 March, 1928, the Cunningham Springless Shade Company caused to be made to the defendant O. D. Cunningham a report of what had been done under the contract on its behalf; that the defendant C. D. Cunningham performed the contract on his part, except that he .failed to pay to the plaintiff Breneman Company the difference between the net amount realized from the liquidation provided by the contract and the fixed assets.” At the hearing before the referee the plaintiff offered W. A. Anderson as a witness. This witness had been manager of the Springless Shade Corporation prior to the date of the contract, and after said date “was in complete charge of the operation of the entire business from that time up until December, 1929.” The witness said: “I had charge of the books, records, documents, and the papers of the company. The book entries were made under my direction. ... A general record was kept in Cincinnati, but it was kept only from information and records that we sent them from Greensboro. I checked the general ledger with our Greensboro records and they reconciled exactly.” The defendants objected to the introduction of such books and records, but the referee overruled the objection, admitted the books in evidence, and considered them in making his report. In said report the referee, an eminent *81 lawyer, stated: “The plaintiffs, over the objection of defendants, offered in evidence the books of the Breneman Company, one of said plaintiffs, and a number of papers which were compiled from said books and other records of said plaintiffs. The referee had grave donbts of the competency of this evidence, and considered very carefully the decisions of our Supreme Court before admitting said evidence. There is a line of cases in North Carolina, beginning at a very early date and coming down to 1923, holding that a person’s books are self-serving declarations, and therefore inadmissible. See Branch v. Ayscue, 186 N. C., 219, 119 S. E., 201, and Bland v. Warren, 65 N. C., 372, and cases cited therein. In recent years our courts seem to have relaxed the rule somewhat and admitted this kind of evidence in some cases and for some purposes. See Railroad v. Hegwood, 198 N. C., 309, 151 S. E., 641, and cases cited therein. In the case at bar, the defendants examined their own witnesses and cross-examined the witnesses of the plaintiffs in regard to the documentary evidence aforesaid, and referee has admitted same and considered it carefully in making this report.” The common law would not permit a party to testify in his own behalf, and this philosophy, wrought out at a time when the individual counted for little or nothing and when business transactions consisted largely of barter and exchange, doubtless colored judicial thinking even after such disability was removed by statute; and this may explain the interpretation of the law found in Bland v. Warren, 65 N. C., 372, and Morgan v. Hubbard, 66 N. C., 394. The onset of modern interpretation first appeared in Insurance Company v. R. R., 138 N. C., 43, 50 S. E., 452. This opinion examined and sifted the various aspects of the question with great learning and accuracy of both thought and expression. Moreover, it has not only been cited frequently in this jurisdiction, but in many others. Indeed, Dean "Wigmore, in his work on Evidence, Volume 3, page 283, refers to the opinion as “one of the best modern opinions by Connor,. J.” The principle announced in the railroad case, supra, has been cited and extended by subsequent decisions. For instance, in Storey v. Stokes, 178 N. C., 409, 100 S. E., 689, this Court said: “The book of sales, the entries in which were made under his supervision, was competent to refresh the memory of the witness, and to corroborate him, . . . and, besides, he testified that he had an independent knowledge of the facts and items recorded in it.” Also, in Flowers v. Spears, 190 N. C., 747, 130 S. E., 710, it is said: “The fact that the cashier did not make the entries in the account shown on the sheet did not render his testimony incompetent. The entries were made by a bookkeeper, employed by the bank, who was under the supervision of the cashier. The fact that the cashier did not personally handle the check and that he had no *82 personal knowledge of the transactions recorded in the account, as shown by the sheet, did not render his testimony incompetent as based upon hearsay.” The same general idea was the basis of the competency of evidence of a bill of lading, record of unloading and of delivery to a drayman of certain material. These records were produced by a clerk of the railroad company “who had charge and control of its records as to matters of this kind.” See Supply Co. v. McCurry, 199 N. C., 799, 156 S. E., 91. See, also, R. R. v. Hegwood, 198 N. C., 309, 151 S. E., 641. The case of Branch v. Ayscue, 186 N. C., 219, is not contrary to the other decisions above mentioned. In the first place, there was no evidence of the nature of the book offered in evidence, or that the entries therein were made by the direction or under the supervision of the deceased. Indeed, the court treated the entries as “an unverified account.” In the case at bar the witness Anderson was in complete charge of the liquidation of the business. The books of account and all entries therein were made under his supervision and control. Moreover, he testified that he had personally verified these records. Furthermore, it appears that the books were kept in the ordinary course of business; that they came from a proper custody; that the entries were material and relevant, and there was no evidence of erasures, irregularities or omissions which tended to cast suspicion upon the accuracy of the records or to challenge their correctness. Under these circumstances the Court is of the opinion that the records were admissible for the purposes for widch they were used at the hearing before the referee. Affirmed. SciieNck, J., took no part in the consideration or decision of this case.