Opinion ID: 437553
Heading Depth: 2
Heading Rank: 1

Heading: Admissibility of the Ledger Entries For the Truth of the Matter Asserted

Text: 21 Ordonez and Hernandez-Garcia argue that a proper foundation was not presented for the admission of the ledger entries for the truth of the matter asserted under the co-conspirator exception to the hearsay rule. We agree. 22 When the ledgers were first offered into evidence, Ordonez's counsel interposed a foundational objection with respect to the admissibility of the ledgers. The court was further informed, I believe that the contents in these ledgers are hearsay. In response to this objection, the court stated: 23 It is coming up because it was found ... If he can't connect it up, I will vacate my previous ruling. 24 Thus, the court did not purport to rule on the hearsay objections at this time. 25 It would appear from the court's comments, that the ledgers were received into evidence at this point in the trial as physical objects found at the scene and not for the truth of the matters contained in the various entries. 26 Later in the trial, defense counsel objected to the use of the entries in the ledgers to prove the truth of the matters contained therein concerning the narcotics transactions referred to in Count 7 and Count 11 of the narcotics transactions indictment. After listening to argument from both sides, the court stated: Objection is overruled. I will take a good look at that during the Rule 29 motions. Subsequently, the court requested that counsel prepare points and authorities on the key issue of the so-called admission and the corpus delicti relationship. Pursuant to this order, the government submitted a supplemental trial memorandum in which it argued: 27 In this case, there is ample evidence connecting each defendant to the conspiracy. Accordingly, the admissions in the ledgers are fully admissible against defendants as co-conspirator admissions. Fed.R.Evid. 801(d)(2). 28 Before ruling on the Rule 29 motion, the trial court first observed: We do have testimony from an expert, Special Agent Larry Lyons indicating that the business records were extensive and absolutely required in this nature of business or type of business and there was exactness required in terms of the contraband transaction ... 29 Later, however, the trial court ruled that the ledgers were admissible as admissions to prove the corpus delicti of the narcotics transactions alleged in Count 7 and Count 11. The court found sufficient independent evidence to establish the trustworthiness of the admissions ... with respect to the substantive possession counts. 30 Before analyzing the issues presented by the admission of the entries in the ledgers for the truth of the matter asserted, we believe the following facts must be considered: 31 One. The court did not expressly rule that the ledgers were admissible for the truth of the matter asserted concerning the conspiracy or the continuing criminal enterprise charge. Instead, the court provisionally admitted the ledgers, because they were found. No issue has been raised before this court as to the admissibility of the ledgers, not for the truth of the matter asserted, but as circumstantial evidence to show the character and use of the place where the notebooks were found ... United States v. Wilson, 532 F.2d 641 at 645 (8th Cir.1976). 32 Two. No proof was offered by the government and no finding was made by the court concerning the identity of the persons who made the ledger entries which refer to the transactions described in Count 7 and Count 11 or whether the declarant was a co-conspirator. 33 Three. No objection was made concerning the admissibility of the ledger entries at trial on the ground that the government had failed to prevent sufficient foundational facts to satisfy the requirements of the Confrontation Clause. Nevertheless, we are required to review plain errors affecting substantial rights although they were not brought to the attention of the trial court. Fed.Rules of Evid.Rule 103(d). We are satisfied that a contention that the government failed to comply with the Confrontation Clause involves substantial rights which must be reviewed even in the absence of a timely objection. United States v. Traylor, 656 F.2d 1326, 1333 (9th Cir.1981). 34 Four. The court failed to give limiting instructions concerning the purpose for which the ledgers and the entries were received into evidence. The jury was not told that the jury could infer from the existence of the ledgers that the defendants were engaged in the distribution of narcotics. 35 The jury was not advised that the entries in the ledgers were not admissible for the truth of the matter asserted. 36 The jury was not told that it could consider the entries in the ledgers as proof of each of the elements of the crimes charged in Count 7 and Count 11 if they found that the entries were accurate and corroborated by other reliable evidence. 37 At oral argument, the court on its own motion asked the Government to comment on the admissibility of the ledger entries for the truth of the matter asserted. After filing the original opinion in this matter, this court ordered the filing of additional briefs and heard further argument on the admissibility of the ledger entries for the truth of the matter asserted. 38 Having considered the government's arguments concerning the admissibility of the ledger entries under the hearsay rule and the Confrontation Clause, we reaffirm our conclusion that the requisite foundational facts were not presented by the government to support the admissibility of the ledger entries as (1) admissions (2) statements of a co-conspirator (3) as trustworthy business records. The government also failed to present evidence to satisfy the reliability requirements of the Confrontation Clause. 39 We begin our discussion by analyzing each of the evidentiary theories advanced by the government at trial, in the original brief filed before this court, and on the points and authorities raised in connection with the petition for a rehearing.
40 The statement of a party opponent is admissible if it is his own statement either in his individual or representative capacity. Fed.R.Evid. 801(d)(2)(A). No evidence was presented that the entries upon which the entries for March 4, 1981 and June 15, 1981 were the statements of either appellant. 41 The government's sole proof of the crime of possession of cocaine for distribution as charged in Counts 7 and 11 was based on the ledger entries. The government's handwriting expert could not identify the author of the entries for these dates. At oral argument the government conceded that the persons who made these entries were not identified at trial. Thus, the ledgers and the testimony interpreting their meaning were not admissible as the admissions of a party. 42 In its petition for a rehearing, the government claims that it argued to the trial court that the entries were admissible as adoptive admissions. We are referred to pages 1670 and 1679 and 1680 of the reporter's transcript in support of this argument. We read the record differently. The government, in response to the court's request for comment concerning the substantive counts replied as follows: 43 Your Honor, the court, I think did sum up the issue which is, can the statement which is in the nature of an admission or confession be used to prove the corpus of the crime. And the government's position is that it can. 44 We will assume, for purposes of assisting the trial court in considering this issue in the event of a retrial, that the issue of the admissibility of the ledger entries for the truth of the matter asserted as adoptive admissions is properly before this court. Under Rule 801(d)(2)(B) of the Federal Rules of Evidence a statement is not hearsay if [t]he statement is offered against a party and ... is a statement of which he has manifested his adoption or belief in its truth. 45 The government argues that the possession of a document standing alone, is an adoption of its contents. The government refers us to United States v. Marino, 658 F.2d 1120 (6th Cir.1981) and United States v. Canieso, 470 F.2d 1224 (2d Cir.1972) in support of this bold proposition. The government has neglected to point to us, however, that in each of these cases no objection was made at trial to the admissibility of the documents found in the possession of the defendant. Marino, at 1124; Canieso, at 1232 n. 8. More importantly, in each case the evidence was not offered for the truth of the matter asserted. Marino at 1124; Canieso at 1232. The law of this circuit concerning the admissibility of a document, found in the possession of the defendant, for the truth of the matter asserted, is set forth in Poy Coon Tom v. United States, 7 F.2d 109 (9th Cir.1925). In Poy Coon Tom, the government offered an unsigned letter from a third person found in the defendant's possession which discussed a proposed narcotics transaction. The government offered the letter to show that the plaintiff in error was a known trafficker in narcotics, and that he had not only sold narcotics to the informer in question, but to others as well. We concluded in Poy Coon Tom that the admission of the letter was prejudicial error. 46 We do not understand upon what principle the letter was admitted or was competent. It was manifestly not admissible as the unsworn declaration or statement of the unknown writer, and it was equally inadmissible for the purpose of showing an admission or an implied admission on the part of the plaintiff in error, in the absence of proof tending to show that the letter was answered or otherwise acted upon. 47 The fact that an unanswered letter or other paper is found in the custody of a party, but not acknowledged by him, is not ground for the admission of the paper as evidence against him. Were it admitted, an innocent man might, by the artifice of others, be charged with a prima facie case of guilt, which he might find it difficult to repel. Wharton's Crim.Ev. (10th Ed.) p. 1411. 48 In the matter sub judice, the district court made no finding that appellants had manifested their adoption of the statements in the ledgers or that they had demonstrated their belief in their truth nor is there any evidence in this record that would support such an inference. The ledger entries were not admissible as adoptive admissions under the law of this circuit. 49
50 A statement by a co-conspirator during the course of and in furtherance of a conspiracy is admissible into evidence under Fed.R.Evid. 801(d)(2)(E). The government, in its petition for a hearing, argues, for the first time, that the entries were made by appellants' co-conspirators in furtherance of the conspiracy. Ordonez and Hernandez-Garcia argue that the entries were not admissible as declarations of a co-conspirator because the declarant was never identified. 51 The government contends that the statement of an unidentified person is admissible under the co-conspirator exception to the hearsay rule. The only authority cited to support this suggestion is United States v. Whitten, 706 F.2d 1000 (9th Cir.1983). This reference is curious since in Whitten the co-conspirator (Loving) was fully identified at trial. The issue before this court in Whitten, was whether the statement was made in furtherance of the conspiracy and not the identity of the declarant. 706 F.2d at 1018. 52 In United States v. Snow, 521 F.2d 730 (9th Cir.1975) we held that otherwise inadmissible hearsay declarations of co-conspirators may be received into evidence when ... there is independent proof of the existence of the conspiracy and of the connection of the declarant and the defendant to it. Id. at 733. 53 At the time an objection was interposed concerning the admissibility of the entries as hearsay, the government did not suggest to the trial court that a proper foundation had been established under the co-conspirator exception. This theory was never advanced before the trial judge at any time during the trial. The trial court was not called upon to consider or to make any findings concerning the weight, sufficiency, and credibility of any foundational facts, independent of the expert's interpretation of the coded ledger entries, to prove the connection of the declarant to the conspiracy. Since this theory was not considered, we cannot now say that such evidence was not available. We decline to speculate on the state of this record that the trial court would have been satisfied that sufficient foundational facts were present to satisfy the co-conspirator exception, if the prosecutor had argued this theory in a timely manner. For us to sustain a theory of admissibility not presented below, would unfairly rob appellants of the opportunity to argue the weight, sufficiency and trustworthiness of the evidence to establish a proper foundation before the trial judge, or to offer proof to controvert the facts now relied upon by the government. See Giordenello v. United States, 357 U.S. 480, 488, 78 S.Ct. 1245, 1251, 2 L.Ed.2d 1503 (1957) (The government cannot support the admissibility of evidence on a theory raised for the first time on appeal because it would unfairly deprive the accused of an adequate opportunity to cross-examine the government's witnesses or adduce rebuttal evidence). See also Sims v. United States, 405 F.2d 1381, 1383 (D.C.Cir.1968) (Consideration of alternative bases for the admissibility of evidence received at trial refused because the argument was not presented to the trial court). 54 We are unable to determine from this record whether appellants would have been able to persuade the trial court, through cross-examination or rebuttal evidence, that a proper foundation could not be presented for admissibility of the entries for the truth of the matter asserted under the co-conspirator exception. Under these circumstances, we cannot sustain the admission of the entries under this theory. Even if we assume arguendo that the entries are admissible under the co-conspirator exception, from the record now before us, the admission of the declarations of unidentified persons for the truth of the matter asserted violated the Confrontation Clause of the Sixth Amendment because the government failed to present evidence that the declarants were unavailable. 55 In response to the government's petition for a rehearing, Ordonez and Hernandez-Garcia now argue that admission of the ledger entries for the truth of the matter asserted violated the Confrontation Clause of the Sixth Amendment. Where an accused claims that an out-of-court statement was received into evidence in violation of the Confrontation Clause, the record must show that the government produced the declarant or presented facts showing that such person was unavailable. Ohio v. Roberts, 448 U.S. 56, 65, 100 S.Ct. 2531, 2538, 65 L.Ed.2d 597 (1980). As noted above, the court admitted the ledger entries although the government was not able to identify the person who made the entries for March 4 and June 15. No evidence was offered in support of the admission of the ledger entries that these unidentified persons were not available to testify at trial or that a good faith effort had been made to obtain their testimony. 56 Thus, Ordonez and Hernandez-Garcia were convicted of substantive counts of possession of cocaine for distribution based on the out-of-court assertions of unidentified persons who were never subjected to confrontation or cross-examination and whose unavailability was never demonstrated. The use of this evidence clearly violated the first prong of the test set forth in Ohio v. Roberts. [W]hen a hearsay declarant is not present for cross-examination at trial, the Confrontation Clause normally requires a showing that he is unavailable. 448 U.S. at 66, 100 S.Ct. at 2539. 57 The submission of the ledger entries to the jury under these circumstances also failed to comply with the second aspect of the Supreme Court's test for the admissibility of extrajudicial statements set forth in Ohio v. Roberts. Once the declarant is shown to be unavailable, the government must prove that the declarant's assertions are trustworthy. 448 U.S. at 65, 100 S.Ct. at 2538. Reliability can be inferred without more in a case where the evidence falls within a firmly rooted hearsay exception. 448 U.S. at 66, 100 S.Ct. at 2539. In Dutton v. Evans, 400 U.S. 74, 91 S.Ct. 210, 27 L.Ed.2d 213 (1970), the Supreme Court [did] not question the validity of the co-conspirator exception applied in the federal courts. 400 U.S. at 80, 91 S.Ct. at 215. The Court found no violation of the Confrontation Clause in the use of a co-conspirator's statement under Georgia's rule, which admits assertions that evidence an attempt to conceal the offense. In determining whether the Confrontation Clause has been violated where a co-conspirator's statement is offered, a trial court must find that the circumstances under which the statements were made present a sufficient indicia of reliability so that the trier of fact [has] a satisfactory basis for evaluating the truth of the prior statement. California v. Green, 399 U.S. 149, 161, 90 S.Ct. 1930, 1936, 26 L.Ed.2d 489 (1970). 58 In Dutton v. Evans, the Court tested the reliability of a co-conspirator's statement under four indicia: 59 1. Did the statement contain assertion of past fact?2. Did the declarant have personal knowledge of the facts he related? 60 3. Did the government's evidence exclude the possibility that declarant acted upon a faulty recollection? 61 4. Did the circumstances under which the assertion was made provide any reason to believe that the declarant misrepresented the truth? 400 U.S. at 88-89, 91 S.Ct. at 218-219. 62 In the instant matter, the government failed to present any evidence to demonstrate the reliability of the entries in the ledger under the criteria set forth in Dutton. 63 First. We cannot determine from the ledger entry whether the declarant recorded past fact or present fact. 64 Second. The government failed to present any evidence from which it can be determined whether the declarant had personal knowledge of the facts he recorded. 65 Three. Because the declarant was not identified, the trier of fact could not determine whether the entries reflected clear or faulty recollection. 66 Four. No evidence was offered by the government to show that the declarant's statements were truthful. 67 The government correctly notes that in other circuits [o]nce a statement falls within a well-known accepted exception to the hearsay rule, such as the co-conspirator's exception, it is per se admissible without violating the Confrontation Clause. Among the cases cited for this principle is Ottomano v. United States, 468 F.2d 269, 273 (1st Cir.1972), cert. denied, 409 U.S. 1128, 93 S.Ct. 948, 35 L.Ed.2d 260, reh. denied, 410 U.S. 948, 93 S.Ct. 1383, 35 L.Ed.2d 616 (1973). This court expressly refused to adopt the Ottomano rule in United States v. Snow, 521 F.2d 730, 734 n. 2 (9th Cir.1975) and in United States v. Perez, 658 F.2d 654, 660 n. 5 (9th Cir.1981). 68 The rule followed in this circuit was first expressed in United States v. Adams, 446 F.2d 681 (9th Cir.1971). In Adams we stated: 69 While the Sixth Amendment's Confrontation Clause and the evidentiary hearsay rule stem from the same source, the Supreme Court has never equated the two. It follows that application of a recognized hearsay exception does not necessarily evidence compliance with the Confrontation Clause. 70 Id. at 683. 71 Recently, we summarized the reliability inquiry which must be undertaken by the trial court prior to determining admissibility as follows: 72 The factors considered include (1) whether the statements or assertions of past fail, (2) whether the declarant had personal knowledge concerning the crime, (3) the possibility of faulty recollection, and (4) whether the circumstances suggest that the declarant misrepresented the defendant's role. 73 United States v. Tille, 729 F.2d 615 at 621 (9th Cir.1984). 1 74 We noted in Perez that [a]ll four [Dutton ] elements need not be present in order to satisfy the confrontation clause. In some circumstances, a statement may be admitted over confrontation clause objections even if it does not pass scrutiny under each prong of the Dutton test. See Snow, 521 F.2d at 734-35. Perez at 661. 75 In Snow we concluded that the co-conspirator's statements were trustworthy because two of the four Dutton factors were applicable. In the matter before us, because of the absence of a proper objection, no evidence was presented to the trial court to show that any of the Dutton factors were applicable or that other indicia of reliability were present. 76 The government, in its petition for a rehearing and suggestion for rehearing en banc, states that [t]he recent decision of United States v. DeGudino, 722 F.2d 1351 (7th Cir.1983) supports the admissibility of drug ledgers under the reliability standard. This statement is quite misleading. The issue of reliability under the Confrontation Clause was not before the court in DeGudino. There is no discussion in DeGudino of the admissibility of the statements for the truth of the matter asserted under the Confrontation Clause. It should also be noted that the only case cited in DeGudino is United States v. Wilson, 532 F.2d 641 (8th Cir.), cert. denied, 429 U.S. 846, 97 S.Ct. 128, 50 L.Ed.2d 117 (1976). In Wilson, in holding that the authenticity of certain documents had been established, the court observed that the notebooks were not offered to prove the truth of the facts asserted therein. Id. at 645. 77 The government also failed to point out to this court that the Seventh Circuit follows the Ottomano per se rule i.e., the Dutton factors are inapplicable if the evidence consists of the declaration of a co-conspirator. United States v. Papia, 560 F.2d 827, 836 n. 3 (7th Cir.1977). As set forth above, this circuit has repeatedly rejected the Ottomano rule. Until Perez and Snow are overturned by this court, sitting en banc, we must apply the Dutton factors. The court in DeGudino was simply not required to consider reliability under the Confrontation Clause according to the law of the Seventh Circuit. The views expressed in DeGudino are of no value to us under these circumstances. 78 Based solely on the record before us, we conclude that, even if we assume that the statements were admissible as the declarations of a co-conspirator, they were inadmissible under the Confrontation Clause. 79
80 The government also argues that the ledger entries were business records which provide substantial evidence corroborating the admissions contained in the ledgers. The government appears to be arguing as follows: 81 1. The ledger entries are business records. 82 2. Business records are trustworthy. 83 3. The ledger entries contain admissions in addition to a record of daily business transactions. 84 4. Therefore, the ledger entries are admissible as business records to corroborate any admissions they contain. 85 The only authority cited for this novel proposition is United States v. Licavoli, 604 F.2d 613 (9th Cir.1979), cert. denied, 446 U.S. 935, 100 S.Ct. 2151, 64 L.Ed.2d 787 (1980). 86 Licavoli is inapposite. There, the Court affirmed the conviction of an art gallery owner for the theft of a valuable painting. One issue on appeal was whether an art appraisal was erroneously admitted into evidence under the business records exception. Fed.R.Evid. 803(6). The appellant did not argue that the government failed to establish the foundational requirements of this hearsay exception. Rather, he contended that the appraiser did not qualify as an expert witness pursuant to Fed.R.Evid. 702 and that the business records exception did not dispense with the expert witness requirements. The court disagreed. The Court reasoned that there was no need affirmatively to establish the appraisers expert qualifications because Rule 803(6) expressly provides for the exclusion of a business record if the source of information indicates a lack of trustworthiness. Id. at 622. Licavoli simply did not address the issues before us. 87 The government's argument in support of admissibility is based on the false premise that the ledger entries qualify as business records. A hearsay statement is admissible as a business record pursuant to Fed.R.Evid. 803(6) if the following foundational facts are proved: 88 1. The writing is made or transmitted by a person with knowledge at or near the time of the incident recorded. 89 2. The record is kept in the course of regularly conducted business activity. 90 These facts must be shown by the testimony of the custodian or other qualified witness. 91 The record will not be admissible, however, if the source of information or the method or circumstances of preparation indicate a lack of trustworthiness. 92 The government failed to comply with the requirement of the business records exception to the hearsay rule. 93 The government did not produce the custodian of the records as a witness. No evidence was offered by any person that the records were kept by persons having personal knowledge of the facts recorded or that the entries were made at or near the time of the transaction. No evidence was presented to demonstrate that the persons who made the entries were truthful and had a clear recollection of the facts. The entries were made by many persons, some of them unidentified. The expert's opinion that these entries were business records was not supported by the foundational evidence required by Fed.R.Evid. 803(6). 94 The government failed to show that evidence of the ledger entries falls within [the foundational requirements] of a firmly rooted hearsay exception. Ohio v. Roberts, 448 U.S. at 66, 100 S.Ct. at 2539. The ledger entries were inadmissible as proof of the matter asserted for all of the reasons discussed above. 95