Nothing is more frustrating to a creditor collecting on a promissory note than having the defendant object to the authenticity and/or admissibility of the note—particularly, in response to a creditor’s summary-judgment motion. Generally, such objections contend that the note is inadmissible as the original copy of the note was not proffered by the creditor and/or the “keeper of the records” designated by the creditor is not a witness with sufficient knowledge to authenticate the note. The creditor is suddenly faced with a potential delay in obtaining a judgment on the note or, even worse, preparing for an expensive trial on what would otherwise be a routine breach of promissory note (or guaranty) action. When lenders commonly assign notes to wholly-owned subsidiaries, servicing agents, trusts and/or loan pools, the process of locating the original note, let alone a witness with actual knowledge of its signing and contents, is a daunting, if not impossible, task because loans age, files are relocated or lost, and witnesses move on to other employment. Thus, a defendant can leverage significant delay, or even favorable settlements, by employing this tactic against an ill-prepared creditor. However, the Federal Rules of Evidence (FRE) and even the Uniform Commercial Code (UCC) provide creditors with a few tools to avoid this trap and win on the merits.
The Best Evidence Rule
FRE 1002 provides that “[t]o prove the content of a writing, recording or photograph, the original writing, recording or photograph is required, except as otherwise provided in these rules or by Act of Congress.”[1] The best evidence rule, then, is something of misnomer. The rule is more accurately coined the original document rule, for instead of requiring the “best” evidence in every case, the rule actually requires the production of an original document rather than a copy.[2] However, FRE 1003 provides an exception permitting “copies” or “duplicates” of the original document, so long as the authenticity and accuracy of the copies are not disputed.[3] What if the contents are disputed and the original cannot be found? FRE 1004 allows for the admission of a duplicate (or other evidence of the contents of a writing) when the original is lost or destroyed or otherwise not obtainable. Indeed, FRE 1004 only requires a reasonably diligent search to locate the missing document before relying on its provisions.[4] This exception comes in handy when the original note has been transferred and assigned a number of times and its exact location cannot be found.
Self-Authentication
Another potential defense to forestall summary judgment is arguing that the note should not be admitted into evidence because the creditor failed to present the testimony of a witness with knowledge “that a matter is what it is claimed to be.”[5] The usual argument is that the creditor’s proposed witness either was not present when the note was executed or is simply not a signatory to the note and could not possess knowledge as to its terms. FRE 902(9) provides creditors with the tool to eliminate this stalling defense. Under FRE 902(9), “commercial paper, signatures thereon, and documents relating thereto to the extent provided by general commercial law” do not require “evidence of authenticity as a condition precedent to its admissibility.” The Advisory Committee Note and the Report of the House Committee on the Judiciary indicate that “general commercial law” refers to the UCC.[6] Under § 3-308 of the UCC, mere production of a note is prima facieevidence of its validity and of the holder’s right to recover on it.
Hearsay Rules Not Applicable
In case a debtor makes one last attempt at keeping the note out of evidence by objecting on the basis of hearsay, the creditor can easily have the objection overruled. Hearsay is an out of court statement offered to prove the truth of the matter asserted.[7] “Facts of independent legal significance constituting a contract which is at issue are not hearsay.”[8] A promissory note is generally not offered to prove the truth of the matter asserted,[9] but is offered as evidence of a debt. Accordingly, a promissory note, like a contract, is not hearsay and is admissible.[10]
Conclusion
In today’s economy, a defendant may stop at nothing to delay the collection of a note and avoid the inevitable judgment. A creditor should be mindful to avoid getting trapped by these three common evidentiary objections by remembering these three evidentiary rules.
1. Fed. R. Evid. 1002.
2. See Seiler v. Lucasfilm Ltd., 808 F.2d 1316, 1318 (9th Cir. 1986).
3. Cavendish Traders Ltd., 117 F.Supp.2d 394, 399 n. 8 (S.D.N.Y. 2000).
4. See United States v. McGaughey, 977 F.2d 1067, 1071 (7th Cir. 1992).
5. Fed. R. Evid. 901(b)(1).
6. See Fed. R. Evid. 902, advisory committee’s note.
7. Fed.R.Evid. 801(c).
8. United States v. Rubier, 651 F.2d 628, 630 (9th Cir.1981), cert. denied, 454 U.S. 875 (1981).
9. See Fed. R. Evid. 801(c).
10. See Rubier, 651 F.2d at 630.