57 Conn. App. 1 | Conn. App. Ct. | 2000
Opinion
The defendants
The following facts and procedural history are relevant to this appeal. On April 24, 1990, the defendants
On February 6, 1996, the plaintiff filed suit against the defendants to enforce payment of the note.
I
The defendants first claim that the court improperly ruled that the plaintiff had standing to enforce the note. Resolution of this issue requires the consideration of certain other facts.
On May 30, 1996, the defendants filed a special defense alleging that the plaintiff lacked standing to enforce the note. On December 16, 1996, however, the defendants conceded their liability to the plaintiff and stipulated to the entry of summary judgment as to liability. Although the defendants had conceded liability on the note at the December 16, 1996 summary judgment hearing, they later attempted to deny any liability at the August 5,1997 hearing in damages. At that hearing, the defendants contested liability by claiming that the plaintiff was not a proper holder of the note and, therefore, lacked the legal standing to enforce it. Specifically, the defendants attempted to raise doubts about the chain of title to the note.
The defendants now appeal, claiming that the trial court improperly found that the plaintiff had standing to enforce the note. The substitute plaintiff, however, claims that the defendants should never have been allowed to raise the issue of standing at the hearing in damages and should not be allowed to raise any issues concerning liability on appeal. Specifically, the substitute plaintiff argues that because the defendants stipulated to liability on the note, they should not have been allowed to contest that liability during the hearing in damages. Of particular note, the substitute plaintiff points to the fact that the defendants initially raised the issue of standing as a special defense, then abandoned that defense by conceding liability on the note and later reintroduced the issue of standing without giving any notice to the plaintiff. As a result, the plaintiff justifiably believed that liability was conclusively established by the summary judgment stipulation and had no notice or opportunity to present more evidence to prove that the plaintiff was a valid holder of the note. Accordingly, the substitute plaintiff argues that the defendants should be precluded from raising any issues relating to liability on appeal.
We agree with the substitute plaintiff that once the defendants conceded liability on the note, it was
When the defendants argued at the hearing in damages that the plaintiff was not a proper holder of the note, their argument went to the merits of the case, that is, to whether the plaintiff should prevail. Although they called their claim a lack of subject matter jurisdiction, we do not view it as such. We view it, instead, as a claim that goes to the heart of the issues that would have had to be resolved if the case had gone to trial. See State v. Seravalli, 189 Conn. 201, 206, 455 A.2d 852, cert. dismissed, 461 U.S. 920, 103 S. Ct. 2076, 77 L. Ed. 2d 291 (1983) (mere characterization of issue as one of double jeopardy does not require court to grant interlocutory review); see also State v. Gooch, 186 Conn. 17, 18, 438 A.2d 867 (1982) (putting constitutional tag on
To prevail in an action to enforce a negotiable instrument, the plaintiff must be a holder of the instrument or a nonholder with the rights of a holder. See General Statutes § 42a-3-301; Donnelly v. Garvan, 111 Conn. 626, 629, 151 A. 168 (1930). This status is an element of an action on anote. See 12 Am. Jur. 2d, Bills and Notes § 650 (1997) (action brought on negotiable instrument, such as promissory note, must allege facts on which plaintiffs right to recover from defendant on instrument depends). The failure to plead this fact properly is challenged by a motion to strike. See Sheiman v. Lafayette Bank & Trust Co., 4 Conn. App. 39, 42, 492 A.2d 219 (1985). The failure to prove such element will result in a judgment for the defendants. See Barnes v. Upham, 93 Conn. 491, 495-96, 107 A. 300 (1919). In neither event is jurisdiction implicated.
The trial court, therefore, need not have addressed the defendants’ argument, which was, in essence, an effort to undo the stipulation by labeling as jurisdictional a challenge to the merits of the plaintiff’s right to recover. Although the issue decided was not a jurisdictional claim and need not have been considered by the court, we note that the court decided the issue correctly.
General Statutes § 42a-l-201 (20) provides in relevant part that a “ ‘[h] older’, with respect to a negotiable instrument, means the person in possession ... in the case of an instrument payable to an identified person, if the identified person is in possession. . . .’’When the FDIC took over as Landmark’s receiver, the defendants’ note was found in Landmark’s possession. Because the note was payable to Landmark and Landmark was in possession of the note, Landmark had clearly been the “holder” of the note at the time that the FDIC became
General Statutes § 42a-3-301 provides that a note may be enforced by a holder of the instrument or a nonholder in possession of the instruments who has the rights of a holder. Our review of the record shows that the plaintiff had acquired the rights of a holder and was therefore entitled to enforce the note. The trial court correctly determined that the plaintiff was entitled to bring this action against the defendants.
II
The next issue raised by the defendants concerns the interest rate that the court used to calculate the amount
It is well established that “[w]hen a variable interest rate is based on the rate of a failed institution, the trial court must determine whether the substitute rate is reasonable by examining the documents and testimony offered by the plaintiff.” Central Bank v. Colonial Romanelli Associates, 38 Conn. App. 575, 578, 662 A.2d 157 (1995). In determining reasonableness, the court need not determine the exact methodology used by the failed bank in calculating its internal interest rate; such a determination would be impossible in many circumstances. Rather, the court must determine whether the substitute rate was reasonable based on all the circumstances of the particular case.
In the present case, the court determined that the substitute rate assessed by the plaintiff and its predecessors was reasonable. In doing so, the court examined the actual rates used by Landmark prior to its failure and the substitute rates set by the FDIC. The court then compared those rates to the federal prime rate set by the Federal Reserve. After considering all the relevant evidence, the court properly determined that the substitute rate was fair and reasonable, and we find no error in the court’s determination that the substitute rate was reasonable.
Ill
The defendants next claim that the trial court improperly admitted two exhibits into evidence under the business record exception to the hearsay rule. Specifically,
A
Exhibit two is a computer printout containing information on the defendants’ loan that had been stored in Landmark’s computer system. When Landmark failed and the FDIC was appointed as its receiver, Landmark’s computers were used to print the document to provide the FDIC with a hard copy of the loan data stored on Landmark’s computers. Over the defendants’ objection, the court admitted exhibit two into the record under the business record exception to the hearsay rale. On appeal, the defendants claim that exhibit two does not satisfy the business record exception and that it was not properly authenticated. We disagree with the defendants.
“To admit evidence under the business record exception to the hearsay rule, a trial court judge must find that the record satisfies each of the three conditions set forth in General Statutes § 52-180. The court must determine, before concluding that it is admissible, that the record was made in the regular course of business, that it was in the regular course of such business to make such a record, and that it was made at the time of the act described in the report, or within a reasonable time thereafter.” (Internal quotation marks omitted.) River Dock & Pile, Inc. v. O & G Industries, Inc., 219 Conn. 787, 793-94, 595 A.2d 839 (1991). To qualify a document as a business record, the party offering the evidence must present a witness who testifies that these three requirements have been met. State v. Tillman,
The defendants claim that exhibit two does not fall within the scope of § 52-180 because the computer printout was produced upon the failure of Landmark. The defendants note that because it is not the “normal course of business” for banks to fail, the printout fails according to the first two requirements of § 52-180. In making this argument, however, the defendants fail to recognize that it is the computer information itself, and not the printout, that must qualify as a business record. The plaintiff presented evidence that it was within the normal course of business for Landmark to compile data on its outstanding loans; this information was processed and stored in Landmark’s computer system. While the printout itself may have been generated upon the failing of Landmark, the printout was merely a tangible manifestation of information stored on the computer system. The actual records themselves, which were stored in the computer system, were clearly created within the regular course of Landmark’s business and satisfy the requirements of § 52-180.
The second issue the defendants raise with respect to exhibit two is that the exhibit was not properly authenticated. We find no merit in the defendants’ claim. At the hearing in damages, the plaintiff presented testimony from two witnesses who were intimately familiar with Landmark’s procedures regarding commercial loans. In fact, one of the witnesses was actually present when the document was created. We find that there was sufficient evidence for the trial court to have determined that exhibit two was a properly authenti
B
Finally, the defendants claim that the court improperly admitted exhibit six, which is a printout of information from the FDIC’s computer system showing general account information on the defendants’ loan from 1991 through 1994, the period during which the FDIC held the note. The defendants claim that exhibit six does not satisfy the requirements of the business record exception because it was not made in the normal course of business and was generated only in anticipation of litigation. To support their claim, the defendants point to the fact that although the FDIC held the note between 1991 and 1994, the printout was not created until 1997, and only at the request of the plaintiff.
Once again, the defendants confuse the distinction between computer records and the physical printout of such records. It is undisputed that the FDIC generated the actual printout long after it was a holder of the note. Thus, the printout itself was not created within the FDIC’s normal course of business. Nevertheless, the exhibit was properly admitted as a business record because it reflected information compiled by the FDIC during the time it held the note. As holder of the note between 1991 and 1994, it was clearly within the ordinary course of the FDIC’s business to compile data on the outstanding balance of the defendants’ note. The printout admitted as exhibit six was merely a hard copy of data that had already been compiled by the FDIC in the ordinary course of its business. The fact that the information was printed in hard copy only after the FDIC had transferred the note does not change the fact that the actual information reflected in that printout was created by the FDIC in the normal course of business while it held the note.
The judgment is affirmed.
In this opinion the other judges concurred.
The defendants in this case are Barrett L. Krass, James Heneghan, James Sutton and Seventeen West Main Street Associates.
The defendants Barrett L. Krass, James Heneghan and James Sutton executed the note on April 24, 1990, and, on that same day, the defendant Seventeen West Main Street Associates guaranteed the repayment of all sums due under the note.
The note, by its terms, matured on April 24, 1991. The defendants failed to make payments and, therefore, were in default on the note.
When the defendant attempted to raise the issue of liability at the August 5, 1997 hearing in damages, the trial court noted: “If we can back up a bit, counsel. . . . Liability, the legal right to collect and the legal responsibility to make payment, has in fact been determined by the court .... And liability means that the maker of the note is liable to [the plaintiff] . . . .”
“ ‘Standing is not a technical rule intended to keep aggrieved parties out of court; nor is it a test of substantive rights. Rather it is a practical concept designed to ensure that courts and parties are not vexed by suits brought to vindicate nonjusticiable interests and that judicial decisions which may affect the rights of others are forged in hot controversy, with each view fairly and vigorously represented.’ ” Monroe v. Horwitch, 215 Conn. 469, 472-73, 576 A.2d 1280 (1990); see Baker v. Carr, 369 U.S. 186, 204, 82 S. Ct. 691, 7 L. Ed. 2d 663 (1962).
The defendants argue that Landmark was never actually a “holder” and, therefore, had no standing to enforce the note. The defendants’ argument rests on the fact that, when the note was found in Landmark’s possession, the note had been endorsed to the Federal Reserve Bank of Boston; the endorsement to the Federal Reserve Bank was subsequently canceled. The defendants should have presented this “chain of title” argument at trial, and it was properly deemed waived by the defendants’ concession of liability. As we discussed previously, the plaintiff satisfied the bare requirements of standing by being in possession of the note where the note was made payable to the plaintiff.
We additionally note that General Statutes § 42a-3-308 (b) provides in relevant part that “[i]f the validity of signatures is admitted . . . a plaintiff producing the instrument is entitled to payment . . . unless the defendant proves a defense . . . .” At the summary judgment hearing, the defendants admitted to signing the note. By stipulating to summary judgment, the defendants also waived the opportunity to establish a defense against the plaintiffs. The defendants may not later, under the guise of standing, attempt to litigate an issue that was properly concluded at the summary judgment stage.