In Re the Termination of the Parent-Child Relationship of E.T.




Attorneys for Appellants                           Attorney for Appellee
Richard L. Williams                                Stephen P. Griebel
Fort Wayne, Indiana                                Van Gilder & Trzynka,
P.C.
Attorney for Mother, Caroline Taylor                     Fort Wayne,
Indiana

Robert J. Bishop
Fort Wayne, Indiana
Attorney for Father, Leroy Taylor

____________________________________________________________________________
__

                                   In the
                            Indiana Supreme Court
                      _________________________________

                            No. 02S03-0308-JV-367


In Re: The Matter Of The Termination
Of The Parent-Child Relationship Of
E.T. and B.T.

                      _________________________________

                    Appeal from the Allen Superior Court,
                            No. 02D07-0012-JT-149
                                  02D07-0012-JT-150
                     The Honorable Charles Pratt, Judge
                      _________________________________

 On Petition To Transfer from the Indiana Court of Appeals, No.  02A03-0209-
                                   JV-294
                      _________________________________

                                May 20, 2004

Rucker, Justice.


      We  conclude  that  reports  compiled  by  a  social  services  agency
describing  home  visits  and  supervised  visitations  do  not  qualify  as
business records and thus are not admissible as an exception to the  hearsay
rule.

                                    Facts


      The Allen County Office of Family and Children  (“OFC”)  removed  E.T.
and B.T. from their parents’ care in August 1999  after  the  children  were
found wandering from their home for the  second  time  in  a  month.   After
unsuccessfully working with the parents toward reunification,  OFC  filed  a
petition for involuntary termination of parental  rights  in  late  2000  or
early 2001.

      The trial court’s original dispositional decree  required  parents  to
enroll in a program offered by SCAN, Inc.   Although  not  included  in  the
record before us, the public record shows that SCAN, Inc.  is  a  non-profit
corporation whose mission is to “prevent child  abuse  and  neglect  through
direct   service,    education,    coordination    and    advocacy.”     See
http://www.scanfw.org/ whoweare.html.  To accomplish its mission SCAN,  Inc.
offers a variety of services, which it  identifies  as:  Prevention  Through
Education (PTE); Parenting Classes; Specialty Parenting  Classes;  Intensive
Intervention Team (IIT); Parents and Partners;  Supervised  Visitation;  and
Healthy                            Families.                             See
http://www.scanfw.org/page/historyprogramlisting.html.


      The specific program to which parents  were  directed  to  enroll  was
SCAN, Inc.’s Parents and Partners program.  Among other things  the  program
included  home  visits  and  supervised  visitation.   At  the   termination
hearing, over the parents’ objection, reports from these  supervised  visits
were introduced into evidence.  The trial court  ultimately  terminated  the
parents’ parental rights.  On  review  a  divided  panel  of  the  Court  of
Appeals affirmed, determining (1) the reports of SCAN, Inc. were  admissible
under the business records exception to the hearsay rule, (2)  admission  of
the reports did not violate the  parents’  rights  under  the  Confrontation
Clause of the United States Constitution, and (3)  any  error  in  admitting
the reports was harmless.  In re E.T., 787  N.E.2d  483,  486-87  (Ind.  Ct.
App. 2003).  In their Petition To Transfer the parents do not challenge  the
Court of Appeals’ harmless error determination.  Therefore on this issue  we
summarily affirm the Court of Appeals’ opinion.  However we  grant  transfer
and hold that the reports at issue in this case do not qualify  as  business
records within the meaning of the business records exception to the  hearsay
rule.

                            Historical Background


      Every second-year law student and perhaps first-year  law  student  as
 well, depending on the  law  school  curriculum,  can  recite  the  general
 definition of hearsay: “an out of court assertion offered in court to prove
 the truth of the matter asserted.”  Also well known is the  corollary  that
 absent an exception to the rule, hearsay is inadmissible as evidence.   Not
 so universally recited or well known are the  numerous  exceptions  to  the
 rule.  Indeed precisely because of its numerous exceptions,  some  scholars
 have argued in favor of abolishing the rule altogether.  See, e.g., Paul S.
 Milich, Hearsay Antinomies: The Case for Abolishing the Rule  and  Starting
 Over, 71 Or. L. Rev. 723 (1992);  Eleanor  Swift,  Abolishing  the  Hearsay
 Rule, 75 Cal. L. Rev. 495 (1987).  In any event, the exceptions to the rule
 have been generally based upon some combination of  the  unavailability  of
 the  declarant,  the  reliability  of  the  declaration,  or  the  presumed
 inefficiency of any possible cross-examination.  See generally 5 John Henry
 Wigmore, Evidence §§ 1420-27 (Chadbourn  rev.  1974);  2  John  W.  Strong,
 McCormick on Evidence § 253 (5th ed. 1999).



      An outgrowth of the English common law “shop book” rule, the  business
records exception is one of the oldest exceptions to the  rule  against  the
admissibility  of  hearsay.   In  England,  the  custom  emerged  of  courts
receiving the shop books  of  businessmen  as  evidence  of  goods  sold  or
services rendered.  The purpose was to circumvent the prohibition against  a
party appearing as its own witness.  By  1832,  the  “shop  book”  rule  was
firmly grounded in English common law, and its scope  included  all  entries
made in the ordinary course of business.  McCormick on Evidence § 285.


      Today,  either  by  statute,  court  rule,  or  both,  every  American
jurisdiction has adopted rules governing the admission of business  records.
 See 5 Wigmore, Evidence § 1561a, at n.6 (Supp. 1991).  Like  Indiana,  most
state business records exceptions closely track Rule 803(6) of  the  Federal
Rules of Evidence.[1]  See David F. Binder, Hearsay  Handbook  §  16:2  (4th
ed. 2001).  Indiana’s rule provides:
      The following are not excluded by the hearsay rule,  even  though  the
      declarant is available as a witness.  .  .  .  A  memorandum,  report,
      record, or data compilation, in any form, of acts, events, conditions,
      opinions, or  diagnoses,  made  at  or  near  the  time  by,  or  from
      information transmitted by, a person with knowledge, if  kept  in  the
      course of a regularly conducted business activity, and if it  was  the
      regular practice of that business activity  to  make  the  memorandum,
      report, record, or data compilation, all as shown by the testimony  or
      affidavit of the custodian or  other  qualified  witness,  unless  the
      source  of  the  information  or  the  method  or   circumstances   of
      preparation indicate a lack of trustworthiness.  The  term  “business”
      as used in this  Rule  includes  business,  institution,  association,
      profession, occupation, and calling of  every  kind,  whether  or  not
      conducted for profit.


Ind. Evidence Rule 803(6).  Prior to the 1994 codification of  Rule  803(6),
Indiana common law provided in general terms that in order  to  come  within
the  business  records  exception  to  the  hearsay   rule   the   following
requirements had to be met: (1) the  records  offered  must  have  been  the
original entries; (2) the records must have been made in the regular  course
of business at or near the time of the event recorded; (3)  the  facts  must
have been within the first-hand knowledge of someone whose business duty  it
was to observe and report the facts; and (4) the witness who  had  knowledge
of the facts must be unavailable.  Smith  v.  State,  455  N.E.2d  606,  607
(Ind. 1983); Wells v. State, 254 Ind.  608,  261  N.E.2d  865,  870  (1970).
With few exceptions, Evidence  Rule  803(6)  is  generally  consistent  with
longstanding Indiana precedent on the admissibility of business  records.[2]



      Like the common law “shop book” rule, the business  records  exception
to the hearsay rule  is  “based  on  the  fact  that  the  circumstances  of
preparation assure the accuracy and reliability  of  the  entries.”   Wells,
261 N.E.2d at 870.  As we have observed more recently,  the  reliability  of
business records stems in part from the fact that “the organization  depends
on them to operate, from the sense that they are subject to  review,  audit,
or internal checks, [and] from the precision engendered by the repetition  .
. . .”  Stahl v. State, 686 N.E.2d 89, 92 (Ind.  1997);  see  also  Advisory
Committee’s Note to  Fed.  R.  of  Evid.  803(6)  (observing  that  business
records are  made  reliable  by  “systematic  checking,  by  regularity  and
continuity which produce  habits  of  precision,  by  actual  experience  of
business in relying upon them, or by a duty to make an  accurate  record  as
part of a continuing job or occupation”).


      In essence, the basis for  the  business  records  exception  is  that
reliability is assured because the maker of the record relies on the  record
in the ordinary course of business  activities.   The  “regular  course”  of
business “must find its meaning in the inherent nature of  the  business  in
question and in the methods systematically employed for the conduct  of  the
business as a business.”  Palmer v.  Hoffman,  318  U.S.  109,  115  (1943).
Thus where a company does not rely upon certain records for the  performance
of its functions those records are not business records within  the  meaning
of the exception to the hearsay rule.  See, e.g., id. at  114  (noting  that
accident reports prepared by railroad  were  not  business  records  because
they were not prepared “for the systematic conduct of the  enterprise  as  a
railroad business”; rather, “[t]heir primary utility is in  litigating,  not
in railroading”).  It is not enough to qualify under  the  business  records
exception to show that the records are made  regularly;  rather,  the  court
must also look to “the character  of  the  records  and  their  earmarks  of
reliability acquired from their source and origin and the  nature  of  their
compilation.”  Id. (citation omitted).


                           Discussion and Decision


      The State’s exhibits  20  and  21  are  reports  of  home  visits  and
supervised visitations.  The State offered them into  evidence  during  the
testimony of Karen Emery,  the  supervisor  of  SCAN,  Inc.’s  Parents  and
Partners Program.  According to Emery, the reports were compiled  by  staff
members based upon their first-hand  observations  and  were  made  in  the
regular course of business.


      We first observe that not all of  the  information  contained  in  the
reports was the result of  first-hand  observations.   Rather,  the  reports
also contain third-party statements concerning events not  observed  by  the
SCAN, Inc. staff members that compiled  the  reports.   For  instance,  “The
receptionist stated that [Father] was in the waiting   area  and  stated  he
didn’t have to sit in ‘these f---in chairs’ and stated  he  was  in  prison.
The receptionist stated [Father]  was  loud  and  angry  while  mumbling  to
himself.”  Ex. 21. 3/7/02.  “The foster parent reported .  .  .  that  since
[E.T.] heard his father state on a previous  visit  that  he  did  not  wipe
himself after [going to the bathroom] that they  are  having  problems  with
[E.T] wiping himself.”  Ex. 21. 10/11/01.  “It was reported  from  the  aunt
that she offered the client 2 love seats and [Father]  refused  them.”   Ex.
21. 10/4/01.  We have no doubt that the SCAN, Inc. staff  members  compiling
the reports had a duty to do so and did so  on  a  regular  basis.   However
that does not automatically transform  the  reports  into  business  records
within the meaning of the exception to  the  hearsay  rule.   As  one  court
explained:

           [T]he mere fact that the recording of third-party statements  by
           the caseworker might be routine, imports  no  guarantee  of  the
           truth, or even reliability, of those  statements.   To  construe
           these statements as admissible simply because the caseworker  is
           under a business duty to record would be to open the  floodgates
           for the introduction of random,  irresponsible  material  beyond
           the reach of the usual tests for accuracy—cross-examination  and
           impeachment of the declarant.


Matter of Leon  R.R.,  48  N.Y.2d  117,  123  (N.Y.  1979)  (termination  of
parental rights proceeding in which court  held  portions  of  child’s  case
file inadmissible because  of  third-party  statements);  accord  Matter  of
Huitt, 571 P.2d 571, 573 (Or. Ct. App. 1977)  (holding  Children’s  Services
Division case file inadmissible under  business  records  exception  “except
those portions the official making the entry had personal knowledge of”).


      Just as important, the reports also contain conclusory  lay  opinions.
Examples include: “[Father] appears to undermine all efforts of [Mother] to
gain control of the children.”  Ex.  20.  8/3/01.   “[The  Taylors]  remain
inconsistent in dealing with the children  and  appear  unwilling  to  take
suggestions from the FSC.”  Ex. 20. 1/4/02.  These supervised visit reports
include  a  section  for  “Observations”  and  another  for  “Impressions.”
Entries under the section for “Impressions” include:  “The  FSC  feels  the
clients love their children but is concerned that they may not be  able  to
care for them on a long term basis.”  Ex. 21. 3/14/01.  “FSC felt as though
the parents had a very difficult time redirecting the children and  keeping
them under control.”  Ex. 21. 11/15/01.


      Although Rule 803(6)  accommodates  the  inclusion  of  “opinions”  in
business records our courts have long recognized, at least  in  the  context
of medical or hospital records, that the  expertise  of  the  opinion  giver
must be established.  See Fendley v. Ford, 458 N.E.2d 1167, 1171  n.3  (Ind.
Ct. App. 1984) (“Expressions of opinion within medical or  hospital  records
historically have not been admissible under the business  records  exception
because their accuracy cannot be evaluated without the safeguard  of  cross-
examination  of  the  person  offering  the  opinion.”);  accord  Brooks  v.
Friedman, 769 N.E.2d 696, 701 (Ind. Ct. App. 2002), trans. denied;  Schaefer
v. State, 750 N.E.2d 787, 793 (Ind. Ct. App.  2001);  Schloot  v.  Guinevere
Real Estate Corp., 697 N.E.2d 1273, 1277 (Ind. Ct. App. 1998).   We  believe
no less is required when the decision of the trial court to  terminate  “one
of the most valued relationships in our culture,”   Neal  v.  Dekalb  County
Div. of Family & Children, 796 N.E.2d 280, 285 (Ind. 2003), could very  well
rest on the opinion of a person who has never been  placed  under  oath  and
whose expertise and opinion have never been subjected  to  the  crucible  of
cross-examination.[3]


      Further, it does not appear to us  that  SCAN,  Inc.  depends  on  the
reports to operate its business.  Rather, forwarded to OFC by SCAN, Inc. on
a monthly basis, the reports appear to be compiled for the sole benefit  of
OFC.  In fact the only clients of SCAN, Inc.’s Parents and Partners program
are those referred by OFC.  It may be the case that the  records  serve  to
advance SCAN, Inc.’s mission to “prevent child abuse and neglect.”  However
nothing in the record supports the view that these reports are prepared for
the systematic conduct of SCAN, Inc. as a non-profit corporation.  In fact,
a survey of Indiana cases reveals that nothing similar to  the  reports  of
SCAN, Inc. has ever been included by our courts within the business records
exception.[4]  Unlike financial statements,  inventory  records,  or  other
administrative or operational documents  traditionally  allowed  under  the
business records exception, the SCAN, Inc. reports appear to be substantive
end products of a service offered by SCAN,  Inc.  solely  for  an  external
government agency, to become the permanent property  of  that  agency.   In
sum,  the  reports  did  not  qualify  as  business  records.   They   were
inadmissible as hearsay and  should  not  have  been  introduced  over  the
parents’ timely objection.  The trial court  thus  erred  by  allowing  the
reports into evidence.


      However, not all trial court error is reversible.  See Ind. Trial Rule
61.  The improper admission of evidence is harmless error when the  judgment
is supported by substantial independent evidence to  satisfy  the  reviewing
court that there is no substantial likelihood that the  questioned  evidence
contributed to the judgment. D.W.S. v. L.D.S., 654 N.E.2d 1170,  1173  (Ind.
Ct. App. 1995).  The Court of Appeals  in  this  case  determined  that  the
evidence to support the termination of  the  parents’  parental  rights  was
sufficient even absent the questioned documents.  The parents make no  claim
to the contrary.  Therefore, on this point we summarily affirm the Court  of
Appeals.



                                 Conclusion


      Except as otherwise provided, we vacate the opinion of  the  Court  of
Appeals and affirm the judgment of the trial court.


Shepard, C.J., and Dickson and Boehm, JJ., concur.
Sullivan, J., not participating.

-----------------------
  [1] The federal rule provides:

  The following are not excluded by  the  hearsay  rule,  even  though  the
  declarant is available as a witness:
      . . . .
      (6) Records of Regularly Conducted Activity.   A  memorandum,  report,
      record, or data compilation, in any form, of acts, events, conditions,
      opinions, or  diagnoses,  made  at  or  near  the  time  by,  or  from
      information transmitted by, a person with knowledge, if  kept  in  the
      course of a regularly conducted business activity, and if it  was  the
      regular practice of that business activity  to  make  the  memorandum,
      report, record or data compilation, all as shown by the  testimony  of
      the custodian or other qualified witness,  or  by  certification  that
      complies with Rule 902(11), Rule  902(12),  or  a  statute  permitting
      certification, unless the source  of  information  or  the  method  or
      circumstances of preparation indicate lack  of  trustworthiness.   The
      term  “business”  as  used  in  this  paragraph   includes   business,
      institution, association, profession, occupation, and calling of every
      kind, whether or not conducted for profit.


[2] For example, there is no longer an “original  record”  requirement;  nor
is there a requirement that the  witness  be  “unavailable.”   In  addition,
unlike the common law rule, Evidence Rule  803(6)  permits  the  use  of  an
affidavit in laying the foundation for business records.
[3] This view is also consistent with that  of  other  jurisdictions.   See,
e.g., Prater v. Cabinet for Human Res.,  954  S.W.2d  954,  958  (Ky.  1997)
(parental rights termination proceeding in which court held  that  “recorded
opinions and conclusions of social workers are not admissible,  because  the
persons offering those  opinions  are  insufficiently  qualified  to  render
expert opinions”); In re Child of Simon, 662  N.W.2d  155,  161  (Minn.  Ct.
App. 2003) (in parental rights termination proceeding, court  held  that  “a
business record containing an opinion on an  ultimate  issue  is  admissible
only  if  the  witness  offering  the  opinion  is  available  [for]  cross-
examination”);  In re Wildoner, 407 A.2d 1351, 1354 (Pa.  Super.  Ct.  1979)
(finding in  parental  rights  termination  proceeding  “nothing  inherently
reliable in reports on the condition of a person’s household prepared  by  a
social agency [because such] reports invariably contain  certain  subjective
evaluations of the person preparing the report and, as such, should  not  be
admitted into evidence [without] cross-examination”).

[4] Cases from the Indiana Supreme Court and Court of  Appeals  reveal  that
evidence held as admissible include:  arrest  records  and  arrest  reports,
including fingerprint cards (Boarman v. State, 509 N.E.2d 177  (Ind.  1987);
Lyons v. State, 506 N.E.2d 813 (Ind. 1987); Prentice v.  State,  474  N.E.2d
496 (Ind. 1985); Landers v. State, 464 N.E.2d 912 (Ind.  1984);  McBrady  v.
State, 459 N.E.2d 719 (Ind. 1984); Belcher v. State, 453  N.E.2d  214  (Ind.
1983); Pitts v. State, 439 N.E.2d 1140 (Ind. 1982); Underhill v. State,  428
N.E.2d 759 (Ind. 1981); Jennings v. State, 723 N.E.2d  970  (Ind.  Ct.  App.
2000); Payne v. State, 658 N.E.2d 635 (Ind.  Ct.  App.  1995);  Knuckles  v.
State, 549 N.E.2d 85 (Ind. Ct. App. 1990));  ATM  photos  and  audit  sheets
(Stark v. State, 489 N.E.2d 43 (Ind. 1986)); autopsy  reports  (Thompson  v.
State, 270 Ind. 442, 386 N.E.2d 682  (1979));  blood  alcohol  test  results
(Reeves v. Boyd & Sons, 654 N.E.2d 864 (Ind. Ct. App. 1995)); blood and  DNA
test results (Fowler v. Napier,  663  N.E.2d  1197  (Ind.  Ct.  App.  1996);
Humbert v. Smith, 655 N.E.2d 602 (Ind. Ct. App. 1995); Burp  v.  State,  612
N.E.2d 169 (Ind. Ct. App. 1993));  certifications  of  mailing  (Collins  v.
State, 567 N.E.2d  798  (Ind.  1991));  check  vouchers  and  deposit  slips
(McDonough v. State, 242 Ind. 376, 175 N.E.2d 418  (1961);  Cobb  v.  State,
585 N.E.2d 40 (Ind. Ct. App. 1992)); commitment orders (Funk v.  State,  427
N.E.2d 1081 (Ind. 1981)); financial  statements  (Williams  v.  Hittle,  629
N.E.2d 944 (Ind. Ct. App. 1994)); insurance policies (Willoughby  v.  State,
660 N.E.2d 570 (Ind. 1996)); inventory  records  (Schneider  v.  State,  220
Ind. 28, 40  N.E.2d  322  (1942));  job  logs  tracking  performance  (Brant
Constr. Co. v. Lumen Constr., 515 N.E.2d 868  (Ind.  Ct.  App.  1987));  log
sheets of police evidence (Perry v.  State,  541  N.E.2d  913  (Ind.  1989);
Reynolds/Herr v. State, 582 N.E.2d  833  (Ind.  Ct.  App.  1991));  marriage
licenses (Smith v. State, 455  N.E.2d  346  (Ind.  1983));  medical  reports
(Brooks v. Friedman, 769 N.E.2d 696 (Ind. Ct. App.  2002);  Nash  v.  State,
754 N.E.2d 1021 (Ind. Ct. App. 2001); Schaefer  v.  State,  750  N.E.2d  787
(Ind. Ct. App. 2001); Schloot v. Guinevere Real  Estate  Corp.,  697  N.E.2d
1273 (Ind. Ct. App. 1998); Carmichael v. Kroger Co., 654 N.E.2d  1188  (Ind.
Ct. App. 1995)); motel reservation entries (Smith v. State, 455  N.E.2d  606
(Ind. 1983)); motor vehicle registrations  and  driving  records  (Allen  v.
State, 439 N.E.2d 615 (Ind. 1982); Dumes v. State,  718  N.E.2d  1171  (Ind.
Ct. App. 1999); Ruby  v.  State,  549  N.E.2d  379  (Ind.  Ct.  App.  1990);
Chambers v. State, 547 N.E.2d  301  (Ind.  Ct.  App.  1989));  pawn  tickets
(Darnell v. State, 435 N.E.2d 250 (Ind. 1982)); police technician’s  reports
on blood type (Clark v. State, 436 N.E.2d 779 (Ind. 1982));  prison  conduct
records (Games v. State, 743 N.E.2d 1132 (Ind. 2001)); records of  telephone
calls (Brandon v. State, 272 Ind. 92, 396 N.E.2d 365 (1979);  Floyd  v.  Jay
County Rural Elec. Membership Corp., 405 N.E.2d 630 (Ind. Ct.  App.  1980));
school attendance records (J.L. v. State, 789  N.E.2d  961  (Ind.  Ct.  App.
2003); L.H. v. State,  682  N.E.2d  795  (Ind.  Ct.  App.  1997));  security
agreements (Greco v. KMA Auto Exch., Inc., 765 N.E.2d  140  (Ind.  Ct.  App.
2002)); time cards (Wiseman v. State, 521 N.E.2d 942 (Ind.  1988));  working
papers of audits (Brane v. Roth, 590 N.E.2d 587 (Ind. Ct. App. 1992)).