Opinion
96 Civ. 8892 (JSM).
April 18, 2000.
Jeffrey Silverstein, Pro Se.
Norman I. Klein, Carlet, Garrison Klein, William Hohauser, Salomon Smith Barney, for Defendants.
MEMORANDUM OPINION AND ORDER
Plaintiff Jeffrey Silverstein, the executor of his father Marvin Silverstein's estate, brought this action seeking the partitioning of a brokerage account containing securities once owned by Marvin Silverstein and his sister and brother, Rita Chase and Edward Silverstein, as tenants in common.
Defendants Rita Chase and Jack Chase, her husband, have counterclaimed alleging that Marvin Silverstein agreed to pay $33,333 to Rita Chase to reimburse her for sums expended on their father's behalf and was also indebted to her in the amount of $5800 for monies loaned to Marvin Silverstein.
The case was tried to the Court and the following constitute the Court's Findings of Fact and Conclusions of Law.
Morris Silverstein was the father of Marvin and Edward Silverstein and Rita Silverstein Chase. Prior to Morris Silverstein's death, Rita S. Chase and her husband spent large sums of money on his behalf. Morris Silverstein died in 1989 and devised an amount of common stock to his children, which was deposited in a Smith Barney account listing the three children as tenants in common. Edward Silverstein assigned his one-third interest in the account to Rita S. Chase to reimburse her for the costs that she incurred for their father. Although Marvin Silverstein's name is included in the assignment document, Marvin Silverstein never signed it.
Unrelated to their father's illness, in 1986 and at times thereafter, Marvin Silverstein borrowed approximately $10,000 from Rita and Jack Chase. Marvin Silverstein repaid a portion of this debt before his death in 1993.
The principal factual issue is whether Marvin Silverstein agreed to relinquish his interest in the securities at issue as a means of reimbursing Rita Chase for the sums that she had expended on their father's behalf. There is no question that Edward Silverstein, Rita and Marvin's brother, did release his interest in the account for that reason.
While Jack Chase testified that Marvin did agree to relinquish his interest, the Executor contends that Jack Chase's testimony is barred by New York's Dead Man's Statute because Jack Chase will ultimately benefit from a judgment favorable to his wife. The Court need not resolve that issue, however, because there is documentary proof that Marvin did relinquish his interest in the securities.
At trial Jack Chase identified Edward Silverstein's signature on a document entitled "Cancellation of Indebtedness," which states:
We, Edward and Marvin Silverstein for ourselves, our heirs, and assigns do transfer all of our rights, title and interest, to our sister Rita Silverstein Chase, in the brokerage account number 359-07795-12-215, maintained as Tenancy in Common with or at Shearson Lehman Brothers at 2 Greenwich Plaza, Greenwich, CT. 06830.
We authorize our Financial Consultant Timothy F. Nuland to make such transfer on the books of Shearson Lehman Brothers, either to an account solely in the name of Rita Silverstein Chase or by deleting our names from the above said account or by any other method.
This transfer is made in recognition of the expenditures for labor and services made by Rita Silverstein Chase since October 1981, for our mutual interest, in the estate of our father Morris Silverstein.
We, Edward and Marvin Silverstein had agreed to reimburse Rita Silverstein Chase at the time of the settlement of the Morris Silverstein estate matter with Marion Silverstein.
This transfer is in consideration of the cancellation of all prior indebtedness and interest thereon owed by either of us to our sister Rita Silverstein Chase.
Had Edward Silverstein been available to testify to the facts set forth in the above document, that testimony would establish that Marvin, like Edward, had relinquished all interest in the securities at issue "in consideration of the cancellation of all prior indebtedness and interest thereon owed by [him] to . . . Rita Silverstein Chase." However, Edward Silverstein was too ill to attend the trial. Since Edward was unavailable at trial, the statement that he signed is admissible under Rule 804(b)(3) of the Federal Rules of Evidence as a statement against pecuniary interest.
Plaintiff acknowledges that the statement is admissible to establish that Edward relinquished his interest in the securities but contends that those portions of the document that refer to Marvin are not admissible since they were not statements against Edward's pecuniary interest. However, the leading authorities on evidence support the view that if a statement against pecuniary interest of the declarant contains "collateral statements," i.e., statements that are not directly against the declarant's interest, these statements may also be admitted for their truth in circumstances such as those presented here.
According to McCormick on Evidence, the admission of a collateral statement in a civil case may be allowed, even though not itself against interest, if it may be deemed "closely connected to the statement against interest." McCormick on Evidence § 319, at 324 (John W. Strong ed., 5th ed. 1999).
Wigmore asserts that a general narrative may be admissible "not merely as to the specific fact against interest, but also as toevery fact contained in the same statement." 5 John Henry Wigmore, Evidence § 1465, at 339 (J. Chadbourn rev. 1974) (emphasis in original). Wigmore explains that because "the statement is made under circumstances fairly indicating the declarant's sincerity and accuracy," it is therefore reliable and trustworthy and it may be admitted in its entirety. Id. The rationale for the admission stems from the notion that each statement was made "while the declarant was in the trustworthy condition of mind which permitted him to state what was against his interest." Id. at 341.
Similarly, Rule 509(2) of the Model Code of Evidence makes admissible "a declaration against interest and such additional parts thereof, including matter incorporated by reference, as the judge finds to be so closely connected with the declaration against interest as to be equally trustworthy." See Model Code of Evidence Rule 509(2) (1942).
In this case, the collateral statements contained in the "Cancellation of Indebtedness" are closely connected with the statement against Edward Silverstein's pecuniary interest whereby he assigned his interest in the securities to his sister, Rita Chase, e.g., "We, Edward and Marvin Silverstein had agreed to reimburse Rita Silverstein Chase at the time of the settlement of the Morris Silverstein estate matter with Marion Silverstein." The reasoning underlying the transfer is substantially connected to the act of the transfer itself. In these circumstances, the Court finds that Edward Silverstein's statements surrounding the acknowledgment of the debt are reliable and trustworthy and are admissible for their truth.
Subsequent to trial, Plaintiff submitted affidavits from Edward's son and his former wife to the effect that Edward told them that he transferred the stock to Rita Chase in order to preserve his relationship with her. However, Edward Silverstein submitted two affidavits in this case that attested to the truth of the statements contained in the "Cancellation of Indebtedness."
The Court recognizes that in Williamson v. United States, 512 U.S. 594, 600-01, 114 S.Ct. 2431, 2435 (1994), the Supreme Court refused to admit collateral statements contained in a statement against penal interest. Federal cases subsequent toWilliamson have applied its holding to statements against penal interest in a civil action. See De Jager Constr., Inc. v. Schleininger, 938 F. Supp. 446, 447 n. 3 (W.D. Mich. 1996);Kettenbach v. Demoulas, 901 F. Supp. 486, 500 n. 14 (D. Mass. 1995). In addition, one commentator has noted:
Even though this Court's jurisdiction is based on diversity, the Federal Rules of Evidence apply. See Fed.R.Evid. 1101(b); Rosenfeld v. Basquiat, 866 F. Supp. 790, 792-93 (S.D.N.Y. 1994), rev'd on other grounds, 78 F.3d 84 (2d Cir. 1996); see also 19 Charles A. Wright et al., Federal Practice and Procedure § 4512, at 405 (1982).
while much of the Court's analysis in Williamson is applicable to criminal cases, the holding applies equally to civil trials. One might argue that, because Williamson decided the rights of a criminal defendant, the case's holding should be limited to criminal cases, but the Court's focus on the definition of statement within Rule 804(b)(3) makes this a difficult argument at best. Nothing in the Court's opinion would lead one to so limit the case. Courts will apply and be required to apply the holding in both types of proceedings.
John J. Capowski, Statements Against Interest, Reliability, and the Confrontation Clause, 28 Seton Hall L. Rev. 471, 506 (1997) (footnote omitted).
There are also post-Williamson cases that make reference to the statements at issue being against pecuniary interest, applyWilliamson, and exclude collateral statements. See Schimpf v. Gerald. Inc., 52 F. Supp.2d 976, 985-86 (E.D. Wis. 1999);Ciccarelli v. Gichner Sys. Group. Inc., 862 F. Supp. 1293, 1298 n. 3 (M.D. Pa. 1994). However, in each of those cases the statements also were against penal interest because the declarant was admitting participating in a fraud, and, therefore, the rationale of Williamson was clearly applicable. Since almost all statements against penal interest will give rise to civil liability, there is no reason not to apply Williamson in those situations where the statement against pecuniary interest also exposes the declarant to liability for a serious crime.
However, no case has been found that considers whether the reasoning of Williamson should apply to exclude collateral statements contained in a statement solely against pecuniary interest that is offered in a civil trial.
There is nothing in any of the three opinions in Williamson to suggest that the Justices gave any thought to question whether the same rule should apply in the case of statements that are only against pecuniary interest. Indeed, passages in each of those opinions indicate that the Justices were focusing exclusively on statements against penal interest.
Delivering the opinion of the Court, Justice O'Connor began her analysis with a quotation of Rule 804(b)(3) that excluded the portions relating to statements against pecuniary interest:
[T]he Federal Rules of Evidence also recognize that some kinds of out-of-court statements are less subject to . . . hearsay dangers, and therefore except them from the general rule that hearsay is inadmissible. One such category covers statements that are against the declarant's interest:
"statement[s] which . . . at the time of [their] making . . . so far tended to subject the declarant to . . . criminal liability that a reasonable person in the declarant's position would not have made the statement[s] unless believing [them] to be true." Fed. Rule Evid. 804(b)(3).See 512 U.S. at 598-99, 114 S.Ct. at 2434; see also id. at 596, 114 S.Ct. at 2433 (noting that Court will "clarify the scope of the hearsay exception for statements against penal interest").
Similarly in his concurrence, Justice Scalia focused on "whether evidence can be admitted under the statement-against-penal-interest exception to the hearsay rules." 512 U.S. at 605, 114 S.Ct. at 2438 (Scalia, J., concurring). Justice Ginsburg also explained the Court's holding to be "the exception for statements against penal interest `does not allow admission of non-self-inculpatory statements, even if they are made within a broader narrative that is generally self-inculpatory.'" Id. at 607, 114 S.Ct. at 2438 (Ginsburg, J., concurring).
It is also clear from these same opinions that the reason for rejecting the collateral statements contained in statements against penal interest was a belief that the non-inculpatory parts of such statements are particularly unreliable. Thus, Justice O'Connor noted:
Rule 804(b)(3) is founded on the commonsense notion that reasonable people, even reasonable people who are not especially honest, tend not to make self-inculpatory statements unless they believe them to be true. This notion simply does not extend to the broader definition of "statement." The fact that a person is making a broadly self-inculpatory confession does not make more credible the confession's non-self-inculpatory parts. One of the most effective ways to lie is to mix falsehood with truth, especially truth that seems particularly persuasive because of its self-inculpatory nature.512 U.S. at 599-600, 114 S.Ct. at 2435.
Justice Ginsburg similarly observed:
Further, the Court recognizes the untrustworthiness of statements implicating another person . . . A person arrested in incriminating circumstances has a strong incentive to shift blame or downplay his own role in comparison with that of others, in hopes of receiving a shorter sentence and leniency in exchange for cooperation. For this reason, hearsay accounts of a suspect's statements implicating another person have been held inadmissible under the Confrontation Clause.512 U.S. at 607-08, 114 S.Ct. at 2439.
These concerns about the peculiar motives that criminal suspects may have to implicate others do not apply to statements against pecuniary interest such as that at issue here. There is no reason to suspect that a party would insert false statements into a contract in which he is surrendering valuable rights.
It is also important to note that the original common law exception to the hearsay rule for statements against interest did not include an exception for statements against penal interest.See Fed.R.Evid. 804(b)(3) advisory committee's note, exception (3); see also McCormick on Evidence § 318, at 320-23 (John W. Strong ed., 5th ed. 1999). There is, therefore, an historical basis for questioning the reliability of statements against penal interest.
However, with respect to statements against pecuniary interest: "From the very beginning of this exception, it has been held that a declaration against interest is admissible, not only to prove the disserving fact stated, but also to prove other facts contained in collateral statements connected with the disserving statement." Bernard S. Jefferson, Declarations Against Interest: An Exception to the Hearsay Rule, 58 Harv. L. Rev. 1, 57 (1994);see McCormick on Evidence § 319, at 324; 5 John Henry Wigmore, Evidence § 1465, at 339 (J. Chadbourn rev. 1974); see, e.g., Pinson v. Commissioner of Internal Revenue, 1990 WL 14043 (U.S. Tax Ct.), 58 T.C.M. (CCH) 1420, 1426-27; Horace Mann Ins. Co. v. Brown, 603 N.E.2d 760, 766 (Ill.App.Ct. 1992) (citing Buckley v. Cronkhite, 393 N.E.2d 60, 65 (Ill.App.Ct. 1979)); Meyer v. Mutual Serv. Cas. Ins. Co., 108 N.W.2d 278, 282 (Wis. 1961);Dillenberg v. Carroll, 49 N.W.2d 444, 446-47 (Wis.Ct.App. 1951).
Given the history of the law's reluctance to recognize a hearsay exception for statements against penal interest, while at the same time including collateral statements within the hearsay exception for statements against pecuniary interest, there is every reason to be confident that the Supreme Court's ruling inWilliamson was not intended to change the law with respect to statements against pecuniary interest.
Thus, all of the statements contained in the document entitled "Cancellation of Indebtedness" are admissible pursuant to Rule 804(b)(3). Since that document establishes that Marvin Silverstein did relinquish his interest in the securities at issue to his sister Rita Chase, the Executor's complaint is dismissed with prejudice in all respects, and the defendants' counterclaims are dismissed as moot.
SO ORDERED.
Dated: New York, New York April 17, 2000