Dix v. Harris Machinery Co.

Thomas Gallagher, Justice

(dissenting).

I am of the opinion that the audits relating to plaintiff’s business operations for the years 1948,1949, and 1950 were inadmissible. They were received over defendants’ objection that there was no foundation therefor and that they were not the best evidence. They indicated that plaintiff’s business operations and his profits had been substantially curtailed following the accident. The court overruled the objections, taking the position that since the 1947 audit had been received without pbjection it would be unfair to reject the subsequent ones.

On cross-examination preliminary to defendants’ objection, plaintiff admitted that his firm employed a bookkeeper who kept books and records from which it was possible to determine his net profits; that such books were at his place of business at Hill City; and that the challenged audits had been made up in part from memoranda *232kept by Mm or kept by Ms bookkeeper under Ms direction. It was then disclosed that the 1947 audit was prepared by Corwin A. Jones of Grand Rapids, and that the 1948 and 1950 audits were prepared by Roy Zacharias of Hibbing. Neither of them nor the bookkeeper was present in court. The 1949 audit was received without proof of the identity of the auditor compiling it. The books and records upon which the audits were based were not submitted, although available to plaintiff at the time of trial. With reference to the 1947 audit, plaintiff was asked: “Do you understand these things ?” To which he answered, “No.” He testified further that his testimony relative to the condition of the business was based upon the audit, although he did not claim to be an auditor.

I am of the opinion that the foundation for the reception of these audits, as set forth above, was insufficient. M. S. A. 600.02 (Uniform Business Records as Evidence Act) requires that before a record of an act or condition be competent as evidence, the custodian thereof or other qualified witness must testify as to its identity and as to the mode of its preparation. It must appear to have been made in the regular course of business at or near the time of the act or condition it records. It is then left to the court to determine whether the sources from which it is derived and the method and time of its preparation justify its admission. Here it is obvious that the audits in question met with few, if any, of the above requisites. They do not purport to have been made at the time of the transactions which they record, and they were not made in the regular course of business. Their identity and the mode of their preparation was not established by the auditors preparing them. The original books and records upon which they were based, although available to plaintiff, were not submitted in evidence.

The general rule applicable in situations of this kind is set forth in 20 Am. Jur., Evidence, § 409, as follows:

“* * * An audit made by * * * a private auditor is inadmissible in evidence as proof of the original records, books of account, reports, etc., since such proof is not the best evidence available * * * »

*233Minnesota is in accord with this principle. As this court stated in Schleiff v. County of Freeborn, 231 Minn. 389, 399, 43 N. W. (2d) 265, 271, in construing § 600.02:

“* * * the original books and records, rather than the tax returns, were the best evidence of the facts sought to be proved. They would have been admissible under the uniform business records as evidence act, M. S. A. 600.02 to 600.04, had they been offered in conjunction with * * * testimony * * * as to their authenticity, identity, and mode of preparation, and as to the fact that entries therein were made in the regular course of business at or near the time of the act or condition recorded, * *

See, also, Flemming v. Thorson, 231 Minn. 343, 43 N. W. (2d) 225; Wilson v. Moline, 229 Minn. 164, 38 N. W. (2d) 201; Linnell v. London & Lancashire Ind. Co. 74 N. D. 379, 22 N. W. (2d) 203; Rose v. Kahler, 151 Neb. 532, 38 N. W. (2d) 391; American Surety Co. v. Trenton State Bank, 323 Mich. 276, 35 N. W. (2d) 260.

The failure of defendants’ counsel to object to the 1947 audit would not, in my opinion, constitute a waiver of the right to object, on valid grounds, to the later audits when they were subsequently offered. These documents went directly to the issue of damages, and it would seem to me that a new trial limited to this issue should be ordered.