                  IN THE COURT OF APPEALS OF TENNESSEE
                              AT KNOXVILLE
                           October 16, 2001 Session

      BEAL BANK, S.S.B., v. RBM COMPANY, d/b/a WEBSTER
  ENTERPRISES, ESTATE OF H.A. (“BAM”) WEBSTER, W. MICHAEL
            WEBSTER, AND RICHARD J. WEBSTER

               Direct Appeal from the Chancery Court for Hamilton County
                  No. 98-0175    Hon. W. Frank Brown, III., Chancellor

                                     FILED JANUARY 11, 2002

                                No. E2001-00520-COA-R3-CV




The Trial Court admitted into evidence the loan records from NationsBank through a witness who
was thoroughly familiar with the record-keeping process. On appeal, we affirm.


Tenn. R. App. P.3 Appeal as of Right; Judgment of the Circuit Court Affirmed.


HERSCHEL PICKENS FRANKS, J., delivered the opinion of the court, in which HOUSTON M. GODDARD ,
P.J., and D. MICHAEL SWINEY , J., joined.

Richard T. Klingler and Richard C. Kennedy, Chattanooga, Tennessee, for Defendant/Appellant.

James R. Kelley, Marc T. McNamee and Philip D. Irwin, Nashville, Tennessee, for
Plaintiff/Appellee.



                                           OPINION



                In this action, the issue on appeal is whether Margaret Diamond should have been
allowed to testify as to the amount of money owing to the plaintiffs.

               The defendant was a general partnership and executed a promissory note to Citizens
Bank for 6.3 million dollars for a loan on March 30, 1989. On November 1, 1991, defendant
defaulted on the note, and on January 1, 1992, NationsBank acquired Citizens Bank. Defendant
executed new promissory notes in favor of NationsBank on May 1, 1993, and the Bank sold these
notes to Beal Bank, plaintiff herein. Defendant made payments to Beal Bank until November 1,
1997, and this action was filed in February, 1998 on these notes.

                 The Trial Court made reference to the Master to determine the amounts owing on the
notes, and at a hearing before the Master Diamond testified that she was employed by NationsBank,
and had been there (and with its predecessor) for twenty-four years. She previously worked for
Maryland National Bank, which merged with NationsBank, and had worked in NationsBank’s
Baltimore office. She testified that she was the manager of the loan administration group for real
estate managed accounts, and that her duties included processing payments, tracking collateral,
providing research, and customer service. She further testified that she was responsible for keeping
the records and loan histories of assets sold by NationsBank, and that she was custodian of the
records in question.

                Diamond identified the promissory notes executed by RBM, and presented a history
of the loans from 1993 until they were sold on December 10, 1996. She explained that loan histories
are maintained on their system for one year, and are then placed on microfilm. She stated that the
loan history for these loans was taken from the microfilm. She testified that the loan histories were
regularly prepared and kept in the course of business at NationsBank, and the information contained
in the loan history was recorded by a NationsBank employee at or about the time it was received.
She further testified that the employees who supply and record the information are under a business
duty to do so, and that this system has proved to be reliable. Over the objection of the defendant,
she was allowed to testify to the balance owing on the notes.

                During cross examination, Diamond testified the loan histories were kept on
microfilm in one central location for the entire NationsBank system. It was further developed that
the loans in question were handled for a period of time by a separate company called AMRESCO
with whom NationsBank contracted. Diamond testified that more recently, prior to the sale, the
accounts were handled by a loan officer in their Baltimore office. She testified that AMRESCO used
the same loan system, such that their entries would also be reflected in the loan histories, and that
AMRESCO would receive payments, and then forward same to Atlanta or Charlotte where they
would be processed in the normal course of business. She testified she had personal knowledge
regarding how the information would be processed in Atlanta through her transactions with the
Atlanta office.

              The Chancellor overruled the objections to the Master’s Report, and entered judgment
based on the Master’s Report, and defendant appealed.

              The Trial Court ruled that the loan documents would be admitted under the business
records hearsay exception. We have held that in order to qualify as an hearsay exception under
Tennessee Rules of Evidence 803(6), the documents must meet five criteria:




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               1.      The document must be made at or near the time of the event recorded;

               2.      The person providing the information in the document must have firsthand
                       knowledge of the recorded events or facts;

               3.      The person providing the information in the document must be under a
                       business duty to record or transmit the information;

               4.      The business involved must have a regular practice of making such
                       documents; and

               5.      The manner in which the information was provided or the document was
                       prepared must not indicate that the document lacks trustworthiness.

Alexander v. Inman, 903 S.W.2d 686, 700 (Tenn. Ct. App. 1995). In addition, a person seeking to
introduce the records, must be a custodian or other qualified witness. Id.

                Diamond testified that she was the custodian of the records in question, although they
were not kept in her physical possession. The Rules do not define the term “custodian”, but our
cases are instructive as to its meaning. In State v. Key, 1995 WL 366096 (Tenn. Crim. App. June
21, 1995), the Court said that “in order for a witness to be qualified as a custodian of the records
under Tenn. R. Evid. 803(6), the witness must be able to testify as to the identity of the record, the
mode of preparation, and whether the record was made in the regular course of business.” Also see
Witter v. Nesbit, 878 S.W.2d 116 (Tenn. Ct. App. 1993); State v. Goldston, 29 S.W.3d 537 (Tenn.
Crim. App. 1999); and State v. Hawkins, 1998 WL 352095 (Tenn. Crim. App. July 2, 1998).

                In the alternative, Diamond was presented as a “qualified witness” pursuant to Tenn.
R. Evid. 803(6). The term “qualified witness” is to be given a broad interpretation, and has generally
been defined as a witness who has personal knowledge of the business’s record-keeping methods
and can explain same to the court. Alexander. The witness is not, however, required to have
personal knowledge of the facts recorded, nor to have been personally involved in preparing the
documents or even know who did. Id. Thus, we have held that a lawyer who had personal
knowledge of the firm’s billing practices and the manner in which the billing records were prepared
and kept, was qualified to testify about and introduce same pursuant to Tenn. R. Evid. 803(6). Id;
see also Patty v. State, 556 S.W.2d 776 (Tenn. Crim. App. 1977). Diamond is custodian of records
of this type, and was able to testify how the records were kept and the type of system used by
NationsBank and its reliability. Her evidence establishes there was no indicia of lack of
trustworthiness in the records sought to be introduced, such as lack of duty to record, or signs that
the documents were prepared for litigation. See Tenn. R. Evid. 803(6); State v. Kennedy, 7 S.W.3d
58 (Tenn. Crim. App. 1999). We hold that Diamond met the requirements as detailed, and the
records were properly admitted.

               Accordingly, we affirm the Judgment of the Trial Court and remand, with the cost


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of the appeal assessed to the appellants, the Estate of H.A. (“Bam”) Webster, W. Michael Webster,
and Richard J. Webster.



                                                     _________________________
                                                     HERSCHEL PICKENS FRANKS, J.




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