G.M. McKelvey Co. v. General Casualty Co. of America

OPINION BY: MATTHIAS.
The issue raised by this appeal is whether, in a civil action against an insurer by an insured employer upon a policy of fidelity insurance protecting such employer from defalcations by his employees, written and signed confessions by certain employees admitting misappropriations of their employer's funds and stating the amounts of such misappropriations are admissible in evidence to prove both the fact and the amount of the loss.

Defendant relies heavily on the case of Stetson v. City Bank of New Orleans, 2 Ohio St., 167, to support its contention that such confessions are hearsay and thus inadmissible.

Plaintiff, on the other hand, urges that such statements are admissible as exceptions to the hearsay rule, being either declarations against interest or a part of the res gestae.

The Stetson case, supra, was a suit against a surety for the alleged defalcation of one Hyde, a former employee of the City Bank of New Orleans, and one of the questions raised therein was whether the testimony by deposition of two of the officers of the bank regarding the admission of Hyde to them, "made shortly before and after his dismissal from office, as to the extent of his defalcation; and also a written statement signed by him [Hyde] and delivered to the other officers of the bank to the same effect," were admissible under the res gestae exception to the hearsay rule. . . .

Early in the history of the law of evidence the courts recognized that, although in most instances hearsay evidence should not be admitted, due to the inability to test the trustworthiness of such evidence, there are conditions and circumstances in which hearsay evidence as a matter of necessity must and can be relied upon as being trustworthy.

One of the exceptions to the hearsay rule, which has been found to be based on trustworthiness or a probability of truthfulness and veracity, and which has arisen due to necessity, is a declaration against interest by a third party.

The courts, where confronted with a situation where death, absence from the jurisdiction or insanity makes a witness unavailable, and where such witness is the only source from which his evidence can be obtained, have held that as a matter of necessity a declaration by such witness against his interest should be admitted in evidence. The courts have reasoned that a person does not make statements against his own pecuniary interest unless they are true and have thus considered such statements trustworthy, even though there is no opportunity to confront the witness or to cross-examine him. . . .

Thus, the rule has arisen that a declaration against interest by one not a party or in privity with a party to an action is admissible in evidence, where (1) the person making such declaration is either dead or unavailable as a witness due to sickness, insanity or absence from the jurisdiction, (2) the declarant had peculiar means of knowing the facts which he stated, (3) the declaration was against his pecuniary or proprietary interest and (4) he had no probable motive to falsity the facts stated. . . .

We realize that element (1) of the rule above is somewhat broader than the dicta spoken by the court in the Stetson case, i. e., "we are clear in the opinion that it could not properly be received while he was a living and competent witness," but we are compelled by logic and reason to the conclusion that there may be circumstances other than death which render a witness as unavailable to testify as if he were in fact dead, and that under such circumstances a declaration, if it meets the other requirements of the rule, loses none of its trustworthiness or probability of truthfulness and veracity. Thus, anything in the dicta of the court in the Stetson case, hereinbefore set out, which is contrary to this conclusion cannot be said to be the law of Ohio on the subject.

At least as applied to written and signed confessions, we are in accord with the rule as stated above, and we will consider the confessions of the employees in the instant case in relation to this rule. First, it is apparent from the record that the employees making them were unavailable as witnesses, having been summoned and not found in the jurisdiction by the sheriff. Second, certainly a person who commits an embezzelment has a peculiar means of knowing whether he embezzled and how much he took, and, from the record in the instant case, plaintiff's employees are the only persons who can accurately indicate both the fact and the amount of the embezzlements. Third, it was clearly not to their interest to state such facts, since such declarations render them civilly liable for the amounts of their defalcations. Fourth, there would certainly be no probable motive for plaintiff's employees to falsify the facts stated unless it would be to minimize the amount of their defalcations, and that question is not raised herein.

In the present case, one of plaintiff's employees was called as a witness and denied the facts stated in her prior confession, claiming it was obtained under duress. Under such circumstances her confession was admissible for only the purpose of impeachment of her testimony. . . .

It is our conclusion that, in a civil action by an insured against his fidelity insurer to recover for defalcations by employees of the former, where such employees are unavailable as witnesses, they having been summoned and not found in the jurisdiction by the sheriff, written and signed confessions of such employees are admissible in evidence as declarations against interest as to both the fact and the amount of the loss.

For the reasons herein set out, the judgment of the Court of Appeals is affirmed.

Judgment affirmed.