Appeal from the United States District Court for the Southern District of Indiana, Indianapolis Division. No. IP 72-C-48-- William E. Steckler, Judge.
Before Sprecher, Circuit Judge, Gewin, Senior Circuit Judge,*fn* and Tone, Circuit Judge.
In the trial of this diversity action for wrongful death, the court excluded a statement of the plaintiff's decedent, made while he was hospitalized for treatment of the injuries from which he later died. We hold that unless the declarant was not mentally competent when he made the statement, it should have been admitted under the so-called residual exception to the hearsay rule established by Rules 803(24) and 804(b)(5) of the Federal Rules of Evidence. We remand for a determination by the district court of the preliminary question of competence and for a new trial if the declarant is found to have been competent. Because the direction of a new trial is conditional, we reach other issues and hold, Inter alia, that the district court did not abuse its discretion in refusing to set aside the verdict as excessive and correctly refused to allow punitive damages under the Indiana wrongful death statute, Ind.Code Ann. § 34-1-1-2 (Burns).
In a previous appeal in this case we held that under Indiana law a manufacturer has a duty to design a motor vehicle so that it will not be unreasonably dangerous if it is involved in a collision, and therefore we reversed a summary judgment for defendant based on a contrary view of Indiana law. Huff v. White Motor Corp., 565 F.2d 104 (7th Cir. 1977). In the opinion in that case the essential facts were summarized as follows:
On September 4, 1970 Jessee Huff was driving a truck-tractor manufactured by the defendant White Motor Corporation near Terre Haute, Indiana when it jackknifed on the highway, sideswiped a guardrail, and collided with an overpass support. Aside from the structural damage to the tractor, the fuel tank ruptured and caught fire. The flames engulfed the cab area occupied by Huff. The severe burns he received in the fire caused his death nine days later. Helen L. Huff filed this action seeking damages for wrongful death of her husband based on the theory that the defective design of the fuel system caused the fire that took Huff's life.
At the trial on remand, the jury returned a verdict awarding plaintiff $700,000 in compensatory damages. Defendant appeals from the judgment on the verdict, arguing trial error, and plaintiff cross-appeals, arguing that the court should have allowed the jury to consider awarding punitive damages.
Admissibility of Decedent's Statement
Defendant offered and the trial court excluded the testimony of Melvin Myles, who was the husband of Mrs. Huff's cousin and a friend and neighbor of the Huffs for many years. Myles' testimony, presented out of the presence of the jury, was that, when he and one Richard King visited Huff in his hospital room two or three days after the accident, Huff gave the following description of how the accident occurred:
(H)e told us first more or less what happened and this U.S. 41 there has a bad curve there and he told us as he was approaching the curve or starting into it his pant leg was on fire and he was trying to put his pant leg out and lost control and hit the bridge abutment and then the truck was on fire . . . .
The district court excluded this testimony as hearsay, rejecting defendant's argument that Huff's statement was an admission under Rule 801(d)(2) or admissible under the residual exception, Rules 803(24) and 804(b)(5). On appeal, defendant argues that the evidence was admissible on both theories the district court rejected and also as a statement against interest under Rule 804(b)(3).*fn1 We do not consider the latter argument, because Rule 804(b)(3) was not mentioned to the district court as a basis for admitting the evidence.*fn2
Defendant first argues that Huff's statement is admissible as an admission because privity exists between Huff and his widow, who brings this wrongful death action. At common law, privity-based admissions have been "generally accepted by the courts," according to McCormick, Handbook of the Law of Evidence 647 (2d ed. 1972). Plaintiff argues that privity is lacking here because under Indiana law, See Estate of Pickens v. Pickens, 255 Ind. 119, 127, 263 N.E.2d 151, 156 (1970), a wrongful death action is not derivative. We agree with McCormick that this should not be controlling, and that the exclusion by "some courts" of statements of the deceased in wrongful death cases because the action is not "derivative" is based on "a hypertechnical concept of privity." McCormick, Supra, at 648 n.51.
The admissibility of privity-based admissions in the federal courts is now controlled, of course, by the Federal Rules of Evidence. A reading of Article VIII of those rules, the article on hearsay, leads us to conclude that privity-based admissions are to be tested for admissibility under the residual exception provided for in Rules 803(24) and 804(b)(5) rather than under the admissions provision, Rule 801(d)(2). Although neither the rules themselves nor the Advisory Committee Notes refer to privity-based admissions, and Congress added nothing on the subject in its consideration of the rules, the language of Rule 801(d)(2) and the general scheme of the hearsay article support our conclusion. Privity-based admissions are within the definition of hearsay, Rule 801(c), an extra-judicial statement offered "to prove the truth of the matter asserted," and are not among the specifically defined kinds of admissions that despite Rule 801(c) are declared not to be hearsay in Rule 801(d)(2). Nor are they covered by any of the specific exceptions to the hearsay rule listed in Rules 803 and 804. Thus privity-based admissions are not admissible as such, if the rules are to be read literally. Moreover, the very explicitness of Rule 801(d)(2) suggests that the draftsmen did not intend to authorize the courts to add new categories of admissions to those stated in the rule. No standards for judicial improvisation or discretion are provided in Rule 801(d)(2), as they are in Rules 803(24) and 804(b)(5).*fn3
The admissibility of Huff's statement depends, therefore, upon the residual exception, which is stated in Rules 803(24) and 804(b)(5):*fn4
A statement not specifically covered by any of the foregoing exceptions but having equivalent circumstantial guarantees of trustworthiness, if the court determines that (A) the statement is offered as evidence of a material fact; (B) the statement is more probative on the point for which it is offered than any other evidence which the proponent can procure through reasonable efforts; and (C) the general purposes of these rules and the interests of justice will best be served by admission of the statement into evidence. However, a statement may not be admitted under this exception unless the proponent of it makes known to the adverse party sufficiently in advance of the trial or hearing to provide the adverse party with a fair opportunity to prepare to meet it, his intention to offer the statement and the particulars of it, including the name and address of the declarant.
We recognize at the outset that in applying this exception the district court has a considerable measure of discretion. United States v. Friedman, 593 F.2d 109, 118 (9th Cir. 1979). If, however, we arrive at "a definite and firm conviction that the court below committed a clear error of judgment in the conclusion it reached based upon a weighing of the relevant factors," In re Josephson, 218 F.2d 174, 182 (1st Cir. 1954), and that the error was prejudicial, we must reverse. We also recognize that Congress "intended that the residual hearsay exceptions will be used very rarely, and only in exceptional circumstances." Committee on the Judiciary, S.Rep.No.93-1277, Note to Paragraph (24), 28 U.S.C.A. Fed.R.Evid. p. 583 (1975); See also United States v. Kim, 193 U.S.App.D.C. 370, 379-380, 595 F.2d 755, 764-765 (D.C. Cir. 1979); United States v. Bailey, 581 F.2d 341, 346-347 (3d Cir. 1978). We think such circumstances are present here.
In reviewing a ruling made in the exercise of the trial court's discretion, we are greatly aided when the record contains a statement of the reasons for the ruling and any findings made under Rule 104(a) on preliminary questions of fact relevant to admissibility. Here nothing of this sort is available. Although the defendant relied on the residual exception, it was not mentioned in the court's explanation of its ruling excluding the evidence.*fn5 Under these circumstances, we have little choice except to attempt to replicate the exercise of discretion that would be made by a trial judge in making the ruling.
Hearsay evidence must fulfill five requirements to be admissible under the residual exception. See 4 Weinstein's Evidence, P 803(24)(01) at 803-242 to 803-243 (1978). ...