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Garden State Bank v. Graef

June 19, 2001


On appeal from the Superior Court of New Jersey, Law Division, Monmouth County, L-1435-98.

Before Judges King,*fn1 Coburn and Axelrad.

The opinion of the court was delivered by: Axelrad, J.T.C. (temporarily assigned).


Argued: June 6, 2001

James H. Casey argued the cause for appellant.

W. Peter Ragan, Jr., argued the cause for respondent (Ragan & Ragan, attorneys; Mr. Ragan on the brief).

On March 30, 1993, defendants, as guarantors for Locklear Mechanical, executed a commercial demand note in the amount of $37,410.84 to Summit Bank's predecessor, Garden State Bank (GSB). In July 1996, Summit acquired GSB. The balance due on the note at the time of conversion was $11,074.09, after defendants were credited for the $3899.78 in payments made to GSB. After the transfer, defendants made three payments to Summit, leaving a balance due as of January 31, 1997 of $8574.53.

Defendants defaulted on the loan. Summit brought suit for the accelerated loan balance and was granted summary judgment on March 23, 1999. Summit filed a motion to enforce litigant's rights for failure to respond to an information subpoena, and on December 2, 1999, the court entered an order for arrest and attorney's fees unless defendants furnished answers to the information subpoena within ten days. Upon receipt of the order for arrest, defendants apparently notified Summit that the court had on November 5, 1999 entered an order vacating its March 23, 1999 grant of summary judgment. On January 6, 2000, the court vacated the order for arrest and attorney's fees.

In an order dated February 4, 2000, the court denied Summit's subsequent motion for summary judgment and noted that the "only issue is the amount actually due under the note. Plaintiff to supply back up data w/in 45 days. Defendant to supply proof of payments not credited w/in 30 days thereafter."

On March 13, 2000, Summit provided defendants with computer print-outs detailing the loan history from the "last renewal date" of December 15, 1995. Defendants provided no proof of payments. Defendant Edwin Graef asserted that it would be unreasonable to expect a construction worker such as himself to maintain a complete set of copies of canceled checks and claimed that since he and his wife had done their banking with GSB, its successor should be required to provide copies of their canceled checks.

The parties filed cross-motions for summary judgment. On April 28, 2000, Judge McGann granted Summit's motion and ordered defendants to pay a total of $12,907.65, comprised of the $8574.53 outstanding balance on the loan, $1286.17 in attorney's fees, and $3046.95 in interest from March 31, 1997 through April 28, 2000. Defendants appeal and assert that the best evidence rule is violated where a summary, rather than the actual accounting record is provided. They also contend that the judge erred in granting summary judgment to the bank, as Summit failed to maintain records from the outset of the loan obligation and thus could not prove a prima facie case.

During argument on the motion for summary judgment, defendants' counsel admitted that his client owed money on the note but refused to pay the balance because Summit had failed to keep good records. The computer printouts submitted by Summit appear to be routine records which are kept by a bank in the regular course of business. Judge McGann specifically made this finding:

I find that the records are not in disarray of some sort, that the records were not lost. These are . . . computer records. And once one bank is taken over by another I don't know what happens to what is stored on the computer at [GSB]. But there's nothing to indicate that in the switch over that there was a mistake of some sort. And there's every indication that it was regularly handled after the change and all of a sudden payments dropped off.

Based on a review of the record, we find that the documents provided by Summit qualify as business records under N.J.R.E. 803(c)(6). N.J.R.E. 803(c)(6) provides a business records exception to the hearsay rule for Records of regularly conducted activity. A statement contained in a writing or other record of acts, events, conditions, . . . made at or near the time of observation by a person with actual knowledge or from information supplied by such a person, if the writing or other record was made in the regular course of business and it was the regular practice of that ...

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