Title: Munchak Corp. v. Caldwell
Citation: 273 S.E.2d 281
Docket Number: 107
State: north-carolina
Issuer: north-carolina Supreme Court
Date: January 6, 1981

273 S.E.2d 281 (1981) The MUNCHAK CORPORATION (Delaware) and RDG Corporation et al. v. Joe L. CALDWELL. No. 107. Supreme Court of North Carolina. January 6, 1981. *283 Brooks, Pierce, McLendon, Humphrey &amp; Leonard by Hubert Humphrey and Edward C. Winslow, III, Greensboro, and Powell Goldstein, Frazer &amp; Murphy by Frank Love, Atlanta, Ga., for plaintiff-appellant Munchak Corp. (Delaware). Younce, Wall &amp; Chastain, Greensboro, for plaintiff-appellant Munchak Corp. (Georgia). Smith Moore Smith Schell &amp; Hunter by Bynum M. Hunter, James L. Gale and Alan *284 W. Duncan, Greensboro, for defendant-appellee. BRANCH, Chief Justice. The sole question presented for review is whether the trial court erred in permitting defendant to offer into evidence the transcript of the prior proceeding without first laying the proper foundation. A transcript of testimony given at a prior trial or proceeding, if offered to prove the truth of the matters stated therein, is hearsay. State v. Smith, 291 N.C. 505, 231 S.E.2d 663 (1977); Smith v. Moore, 149 N.C. 185, 62 S.E. 892 (1908). See generally 1 Stansbury's North Carolina Evidence § 145 (Brandis Rev. 1973). Nevertheless, the necessity and reliability of such evidence often override the principles underlying the hearsay rule, and the transcript becomes admissible upon a proper showing of three requisites: (1) The witness whose testimony is sought is unavailable; (2) the testimony sought was given at an earlier trial or proceeding of the same cause; (3) the party against whom the evidence is offered was present at the earlier trial and able to cross-examine the witness. Id. At the proceeding on defendant's counterclaim for specific performance, the following exchange took place: At the outset, we note that it is not at all clear that the transcript was offered to prove the truth of the matters stated therein. To the contrary, it appears that the transcript was offered to prove the existence of the prior judgment and the fact that certain issues had already been litigated. If this is the case, the transcript was not hearsay. Nevertheless, for purposes of this decision, we will assume that the transcript constituted hearsay. Plaintiffs contend that it was error to admit the transcript without requiring defendant to lay a foundation as required in Smith v. Moore, supra. Defendant argues on the other hand, and the Court of Appeals agreed, that the two proceedings here were but two parts of the same case, and therefore the Smith rule should be inapplicable. In holding the transcript admissible, the Court of Appeals reasoned that, "[i]f the claim had been heard on the same day, the parties and the judge would have been cognizant of and able to rely on evidence presented on the claim for reformation.... To hold otherwise would be to destroy the ability of trial judges to exercise discretion by severing complicated cases into more understandable issues." 46 N.C.App. at 417, 265 S.E.2d at 657. We disagree. We recognize that there may well be a situation where a strict adherence to the *285 Smith rule would impede or even thwart the ends of justice, or present an unnecessary obstacle to the expedient disposition of cases. However, the facts of the instant case do not compel a divergence from the well-entrenched Smith rule. We are not presented here with a situation in which a case is separated into issues to be heard at different times by the same judge or jury. In this case, the evidence was heard by a jury in the action on the complaint. That prior proceeding was presided over by Judge Kivett. Some two years later, the matter of defendant's counterclaim came on for trial before Judge Mills. The transcript constituted out-of-court statements, and, assuming that it was offered to prove the truth of the matters contained therein and was therefore hearsay, we hold that under the rule of Smith v. Moore, supra, it was inadmissible absent the laying of a proper foundation. Since defendant failed to lay the requisite foundation, the admission of the transcript was error. Nevertheless, we find that the error was harmless. The proceeding at which the transcript was admitted was before a judge sitting without a jury. In such a case, "the ordinary rules as to the competency of evidence applied in a trial before a jury are to some extent relaxed, for the reason that the judge with knowledge of the law is able to eliminate from the testimony he hears that which is immaterial and incompetent, and consider only that which tends properly to prove the facts to be found." Cameron v. Cameron, 232 N.C. 686, 690, 61 S.E.2d 913, 915 (1950). It is therefore presumed that the court disregards the incompetent evidence, and if the court's findings are supported by competent evidence, they will be sustained. Wood-Hopkins Contracting Co. v. Ports Authority, 284 N.C. 732, 202 S.E.2d 473 (1974); Cotton v. Cotton, 269 N.C. 759, 153 S.E.2d 489 (1967). The remedy of specific performance is available to "compel a party to do precisely what he ought to have done without being coerced by the court." McLean v. Keith, 236 N.C. 59, 71, 72 S.E.2d 44, 53 (1952). The party claiming the right to specific performance must show the existence of a valid contract, its terms, and either full performance on his part or that he is ready, willing and able to perform. 71 Am.Jur.2d "Specific Performance," § 207 (1973). Disregarding the incompetent evidence in the case at bar, there was sufficient evidence of the three requisites to support the court's findings necessary in turn to support his award of specific performance. The existence of the contract was not in dispute, and neither was the fact of defendant's performance under its terms. The dispute over the terms of the contract had been laid to rest by the prior judgment incorporating the jury determination that the parties intended the contract to be enforceable as written. The transcript of the prior proceeding was not necessary to reach a determination of the propriety of specific performance and, nothing else appearing, we presume the trial court disregarded it. See Wood-Hopkins Contracting Co. v. Ports Authority, supra. We therefore hold that while it was error to admit the prior transcript, under the facts of this case, the error was harmless. The decision of the Court of Appeals affirming the judgment of the trial court is MODIFIED and AFFIRMED.