Bullock v. Insurance Co. of North America , 39 N.C. App. 386 ( 1979 )

MITCHELL, Judge.

The plaintiff assigns as error the failure of the trial court to allow her to introduce into evidence portions of a deposition of Richard Austin, an employee of Air Service, and portions of the testimony of Austin given at the former trial of this action. Prior to the first trial of this action, a deposition of Austin was taken. Both the plaintiff and the defendant INA were represented by counsel at the taking of Austin’s deposition, but the defendants Murray M. White, Inc., and Murray M. White, Jr., were not. During the taking of his deposition, Austin was asked whether he had personal knowledge as to why N9280Q was removed from the premises of Air Service on 6 or 7 December 1971. Austin replied, “To my knowledge, it was the intention of the pilot to place the airplane in service.” When asked whether his answer was based upon personal knowledge, Austin explained, “Marshall Parker took the airplane and told me he was going to fly his schedule the next day in the airplane.”

Thereafter, during the first trial, Austin was asked on direct examination by the plaintiffs whether Parker had made any statement with respect to his intentions to use N9280Q. The defendants’ objection to this question was sustained. Austin was then allowed to answer the question for the record and out of the presence of the jury. He responded, “Mr. Parker told me when he left Greensboro on Tuesday afternoon he was going to fly his trip in the airplane the next morning.”

Austin apparently died at sometime between the first trial and the second trial which resulted in this appeal. Therefore, it was necessary for the plaintiff to read a transcript of Austin’s former testimony into evidence at the second trial in order to introduce evidence of certain facts known only to Austin. The trial court allowed the plaintiff to read most of the transcript of Austin’s former testimony but ruled that the portion of the transcript which dealt with Parker’s statement to Austin was inadmissible. The trial court also ruled that evidence to the same effect in Austin’s deposition was inadmissible. The plaintiff excepted to these rulings.

In order to determine the correctness of these rulings by the trial court, we must first determine whether the pilot Parker’s statement to Austin would have been admissible had Austin been present and testified at the second trial. The defendants contend that the hearsay rule prohibited Austin from giving testimony concerning Parker’s statement. We do not agree.

A statement is hearsay evidence if it was made out of court by someone other than the witness testifying and is used to prove the truth of the matter asserted within the statement. McCormick, Evidence § 246 at 584 (2d ed. 1972). Even though a statement is made out of court by someone other than the witness, however, it is not hearsay if used to prove anything other than the matter asserted in the statement. 1 Stansbury’s N.C. Evidence, §§ 138, 141 (Brandis Rev. 1973); 6 Wigmore, Evidence § 1766 (Chadbourn Rev. 1976); McCormick, Evidence, § 249 (2d ed. 1972). The hearsay rule does not apply to testimony of an out-of-court statement by one other than the witness testifying when the testimony is offered as proof that the statement was in fact made rather than as proof of the truth of the facts asserted in the statement. Wilson v. Indemnity Co., 272 N.C. 183, 158 S.E. 2d 1 (1967); In re Will of Duke, 241 N.C. 344, 85 S.E. 2d 332 (1955); State v. Dilliard, 223 N.C. 446, 27 S.E. 2d 85 (1943); State v. Griffis, 25 N.C. 504 (1843).

Here, Parker’s statement was not offered to prove the truth of the matter asserted therein. It was offered instead to prove that, when possession of N9280Q was transferred from Air Service to Parker, the transfer was not for the purpose of a test flight but a delivery of the airplane for normal use. That is to say, Parker’s statement was not being used to show whether he was going to fly the airplane or in fact made the flight. Rather, the statement that “he was going to fly his schedule” was offered as tending to show his manifest intent at the time he took possession of the airplane that he take that possession for his normal use as pilot for Knit-Away. His intent at that time was relevant in determining whether the manner in which he took possession was such as would work a transfer of ownership and of an insurable interest. If the airplane was delivered to Parker at the time he made the statement, his subsequent actions or statements concerning the airplane would not make testimony as to that statement inadmissible, as Parker could not later revoke a prior transfer of ownership by deciding not to make the flight. Therefore, Austin could have testified to Parker’s statement at the time Parker accepted the airplane without violating the hearsay rule.

Having determined that Austin’s testimony as to Parker’s statement would have been competent had Austin been available to testify, we must consider whether that testimony was competent when presented in the form of Austin’s testimony admitted at a former trial. One requirement for the admission of former testimony is that the party against whom the testimony is offered or a like party in interest must have had a reasonable opportunity to cross-examine the witness at the former trial. Bank v. Motor Co., 216 N.C. 432, 5 S.E. 2d 318 (1939). Although actual cross-examination is not unnecessary, the decision not to cross-examine must be meaningful in light of the circumstances which prevailed when the former testimony was offered. McCormick, Evidence, § 255 at 616 (2d ed. 1972). During the first trial the defendants objected to Austin’s testimony concerning Parker’s statement. After the objection was sustained, the plaintiffs asked that the answer of the witness be admitted for the record. When the answer was admitted for this purpose only, the defendants had no reason to cross-examine Austin. The defendants’ objection had already been sustained and the testimony was not admitted into evidence before the jury. Under these circumstances, the defendants did not refrain from cross-examining Austin for tactical purposes. Rather, the fact that the testimony had already been ruled inadmissible made cross-examination purposeless. Therefore, neither the defendant nor a like party in interest had a reasonable opportunity to meaningfully cross-examine the witness at the former trial, and the trial court correctly excluded the former testimony during the second trial.

The admissibility of a deposition is, however, governed by other rules. A deposition may be used against any party who was present or represented at the taking of the deposition if the court finds that the deponent is dead. G.S. 1A-1, Rule 26(d). Parker’s statement as related by Austin in his deposition would, therefore, have been admissible if the trial court had found that Austin was dead at the time of trial. However, as no such finding appears in the record on appeal, we cannot say that the trial court erred in excluding from evidence the portions of Austin’s deposition in question.

The plaintiff next assigns as error the failure of the trial court to admit into evidence one sentence of a memorandum prepared by Air Service which states: “We have sold Baron N9280Q to Mr. Dick Bruce of Knit-Away, Inc., Raeford, North Carolina.” During the first trial of this action, the plaintiff sought to introduce this evidence during the testimony of Austin. At the second trial, that portion of Austin’s former testimony which had been admitted into evidence at the first trial was read to the jury, but that portion of his testimony which was excluded at the first trial, including the quoted portion of the memorandum in question, was not admitted into evidence. Although a statement made by the plaintiff’s attorney at the first trial seeking to have the entire memorandum admitted into evidence was read into the record during the second trial, the plaintiff did not properly seek to have the quoted portion of the memorandum in question introduced during the second trial. Therefore, there was no adverse ruling upon the admissibility of this evidence at the second trial, and the plaintiff has no ground upon which to base this assignment of error. The assignment of error is overruled.

The plaintiff additionally assigns as error the trial court’s instruction to the jury that it could consider evidence that the crashed airplane N4877J was insured at the time of the crash for the purpose of determining whether Bruce, the president of Knit-Away, had an insurable interest in N9280Q. In this regard, the trial court instructed the jury that:

As I instructed you, Mr. Bruce and/or Knit-Away must have had an insurable interest in the airplane 9280Q for the policy of insurance under which the plaintiff seeks to recover to have been effective on the date of the crash. In addition to determining whether Mr. Bruce owned the airplane 9280Q on the date of the crash; that is, December the 13th, 1971, which would have given him an insurable interest in the aircraft, you may also consider the evidence that the aircraft number N4877J was insured with a policy of insurance at the time of the crash solely for the purpose of determining whether Mr. Bruce of Knit-Away had an insurable interest in the aircraft 9280Q.

In support of her assignment of error, the plaintiff contends that the charge was erroneous, as evidence of an insurance policy covering N4877J is not logically relevant to a determination of whether Bruce had an insurable interest in N9280Q. We agree.

During the second trial, Murray M. White, Jr., testified that Air Service had purchased an insurance policy covering N4877J which crashed. Although this evidence might have been relevant for other purposes, it did not tend to establish or negate the fact that Bruce had an insurable interest in N9280Q. Air Service’s right to insure N4877J which crashed was completely independent of Bruce’s right to insure the plane which he was purchasing. The fact that Air Service purchased insurance covering N4877J might tend to show that Air Service had a property interest in that airplane or that they wished to protect themselves from liability arising out of its operation or maintenance. However, such evidence did not tend to establish or negate the possibility that Bruce had an insurable interest in N9280Q, an entirely different piece of property. There simply is no logical nexus between evidence that N4877J was insured at the time of the crash and the possession vel non by Bruce of an insurable interest in N9280Q. Therefore, the quoted portion of the trial court’s instructions to the jury constituted error.

We cannot say that the error in the trial court’s instructions was harmless. As the trial court allowed the jury to consider evidence of one fact to determine the existence or nonexistence of another when no logical nexus existed between the two, the jury’s determination of the issues submitted to them may have been based upon the improper consideration of evidence of the existence of another policy of insurance on N4877J which crashed. In our view this could have had a substantial impact influencing the outcome of the case. As we find the challenged portion of the instructions to the jury both erroneous and prejudicial, a new trial will be required.

We note that the plaintiff did not except to the trial court’s judgment dismissing the action against Murray M. White, Jr., individually, and that judgment is not before us for review on appeal. The plaintiff has presented other assignments of error, however, which we find it unnecessary to discuss here as they are not likely to arise should this case be tried again.

For the reasons previously indicated, the judgment is vacated and the cause remanded for a

New trial.

Judges Clark and Webb concur.