
18 F.2d 934 (1927)
MASSACHUSETTS BONDING & INS. CO.
v.
NORWICH PHARMACAL CO.
No. 249.
Circuit Court of Appeals, Second Circuit.
April 4, 1927.
*935 *936 Gannon, Spencer, Michell & Reiley and Charles E. Spencer, all of Syracuse, N. Y., for plaintiff in error.
Gilbert & Gilbert, of New York City (Abraham S. Gilbert, of New York City, of counsel), for defendant in error.
Before MANTON, HAND, and SWAN, Circuit Judges.
HAND, Circuit Judge (after stating the facts as above).
The defendant's first point is that the plaintiff could with reasonable diligence have discovered the defalcations of Kenyon earlier than it did, and that for this reason it had not fulfilled the condition of the policy requiring it to give notice within ten days after discovery. It argues that all the documents which it eventually used to make up the tabulation and prove the loss, were in its possession for more than two years before June, 1924, and it was always under a duty to watch its employees. Further that, if it failed in exercising such diligence, the time for notice ran from that at which it should have discovered the thefts. Finally, that the District Judge was therefore wrong in deciding that question himself; he should have let the jury say whether the plaintiff should not have discovered at some earlier time all that it discovered in the end.
The language of the policy, if nothing more, is an answer. It reads, "Loss shall be discovered during the continuation of this suretyship, or within thirty-six months thereafter; and notice thereof shall be delivered *937 * * * within ten days." The parties by this themselves agreed upon a period within which the insured was obliged at his peril to discover the loss. Discovery was contrasted with the duty to make it, and it would pervert the meaning of the agreement to require more. It was only on actually learning of the thefts that the duty to give notice arose. "Discovery" may not indeed be an exact word; we need not try here to define it. It is enough that nobody can give it a content which includes the mere possibility of informing one's self from the materials at the plaintiff's disposal.
The form of the claim when rendered is also challenged; it is said to have no "items and dates of the losses," as required in the policy. There is no force in this objection either. Ignoring the fact that the defendant retained the claim without objection, it conformed with the condition in any event. Globe & Rutgers Ins. Co. v. Prairie Oil & Gas Co., 248 F. 452 (C. C. A. 2). The objection presupposes that each several peculation must be separately given both in time and in amount. Perhaps so, when these were ascertainable, but here that was impossible, and to require it would destroy the protection of the policy. It seems unnecessary to discuss so unreasonable a pretension; if the words could be twisted so far, the result would be a fraud upon the plaintiff.
The difficult question in the case, and the only other one which seems to us worth notice, is of the competency of the tabulation offered by the plaintiff. Error in its admission was not cured by the remittitur. Assuming that the vague testimony of Kerr that Kenyon stole on the average, one hundred dollars a week, would have been enough to support the verdict, the admission of the exhibit was a grave error, if it was not competent. Indeed, we are not left in this to inference, because the verdict shows that the jury accepted it to the dollar. We have no warrant for supposing that without it they would have thought Kerr's testimony enough on which to fix the amount of the thefts. Therefore, if the judgment is to stand we must say that the document was competent.
In the end the only parts which did not depend upon Kerr's own knowledge were the notations put upon the back of the orders, and the fact that the orders on file were complete records of all the stamps that were used in the shipping department. These furnished the credit items of the account; the charges were made by Kerr from moneys which she dispensed to the shipping clerk who bought the stamps, and from the entries with which in collusion with Kenyon she padded the stamp account, both of which were within her own knowledge.
The situation is the familiar one of voluminous records, made at the time in the daily routine of a large mercantile business, by entrants not produced. The question is in what cases it is necessary to supplement proof of the way in which the business is carried on and the entries are made, by the testimony of the entrants themselves. It is a matter in which the sluggishness of the law is especially disastrous, and where the intervention of the Legislature, which must be by general rules, cannot be as satisfactory as a step by step progress of the courts, if they are willing to progress at all. The routine of modern affairs, mercantile, financial and industrial, is conducted with so extreme a division of labor that the transactions cannot be proved at first hand without the concurrence of persons, each of whom can contribute no more than a slight part, and that part not dependent on his memory of the event. Records, and records alone, are their adequate repository, and are in practice accepted as accurate upon the faith of the routine itself, and of the self-consistency of their contents. Unless they can be used in court without the task of calling those who at all stages had a part in the transactions recorded, nobody need ever pay a debt, if only his creditor does a large enough business. That there should not be checks and assurances of veracity we do not suggest; it is indeed possible to expose adversaries to genuine danger, but to continue a system of rules, originally designed to relieve small shopkeepers from their incompetence as witnesses, into present day transactions is to cook the egg by burning down the house.
We have already dealt with the matter at length in The Spica (C. C. A.) 289 F. 436, and less in detail in Straus v. Victor Talking Machine Co. (C. C. A.) 297 F. 791, 802, 804. In the Spica, we said following Mr. Wigmore, §§ 1521, 1530, that the question was one of discretion for the trial judge, and the "mere inability by reasonable effort to find the man or men who could speak with personal knowledge" might be enough to excuse the failure to produce them. That was a case in the admiralty, a circumstance to which we referred, but we can see no reason why there should be any difference in an action at law, and we acted on that assumption in Straus v. Victor Talking Machine Co. The question, as we view it, like many other questions as to the competence of evidence, *938 is of degree, and is not susceptible of absolute regulation. The judge must be satisfied from the whole situation that the added credence to the document which the testimony of the entrants will bring does not justify the expense and difficulty of getting them to the trial. It ought to appear that the document was itself prepared under a routine which warrants its reliability; that the missing entrants, if called, would in the nature of things have no recollection of the events recorded and could do no more than corroborate the existing testimony as to the course of business in which they had a part; that either because of their number, their distance from the place of trial, the difficulty of finding them, or for other reasons, the burden of producing them would be unreasonably heavy upon the proponent. These considerations are not exhaustive, rather they illustrate the nature of the question, and the proper approach to its solution.
In five circuits the older rule has been much relaxed. It would serve no purpose to state the extent of the change in each decision; it is enough to say that the judges, largely under the influence of Mr. Wigmore, the recognized master of the whole subject, have slowly adapted their rulings more nearly to current methods accepted as reliable. Reyburn v. Queen City Savings Bank & Trust Co., 171 F. 609 (C. C. A. 3); Rutan v. Johnson & Johnson, 231 F. 369 (C. C. A. 3); Du Pont v. Tomlinson, 296 F. 634 (C. C. A. 4); Templar Motors Co. v. Bay State Pump Co., 289 F. 24 (C. C. A. 6); Wisconsin Steel Co. v. Maryland Steel Co., 203 F. 403 (C. C. A. 7); Mississippi River Logging Co. v. Robson, 69 F. 773 (C. C. A. 8). In the Ninth Circuit, Matson Nav. Co. v. United Eng. Works, 213 F. 293, the proponent of the document had made first hand proof throughout, so that it was not necessary to invoke the more liberal doctrine. Consolidated Gas Co. v. Newton, 258 U. S. 165, 42 S. Ct. 264, 66 L. Ed. 538, while somewhat remote from the facts at bar, is an example of a similar disposition.
In the case at bar we think the facts justified the judge in admitting the tabulation. The transactions recorded were already more than four years old, and the entrants, though only two or three in number, had then been some fifteen hundred miles away from the place of trial. The probability that if called they could have added anything to the credibility of the original entries was nil. It is quite true that the plaintiff did not show that two of them were not still in its employ; perhaps he could have brought them on and produced them, but the difficulty and expense of doing so was in our judgment entirely out of proportion to the value of their testimony. Nor was it necessary to call the shipping clerk to prove that he had not stolen the moneys given him to buy stamps; the plaintiff might rely upon the presumption that he discharged his duties. Neither he nor the other clerks were needed to prove that no advertisements were sent out without orders, for Kerr swore categorically to that, and she was in a position to know. On the strictest theory their testimony was necessary only to fill in the link that the notations represented postage actually used. As to these we think that they might have been dispensed with.
Moreover, the defendant never expressly raised the only point which, as we view the law, was open to it. It did object to the admission of the tabulation on the ground that the entrants had not been called, as well as the clerk who bought the stamps. This raised only the question whether their presence was necessary; it did not suggest that their absence was not satisfactorily explained. If a party wishes to exclude such proof, we think it fair to insist that he raise the objection in such form that the proponent may supply the missing evidence. We cannot say that, had the point been taken, the plaintiff would not have been able to show that all the clerks were unavailable. The objection as made absolutely required their production, and the defendant invoked, and meant to invoke, only the rule which we do not recognize.
Therefore, unless we are authoritatively bound by the state law, we should not hesitate to accept the tabulation. It is argued that we are, and that by the decisions of the highest court of New York it was necessary to call the missing clerks. Mayor, etc., v. Second Avenue R. R., 102 N. Y. 572, 7 N. E. 905, 55 Am. Rep. 839. It is quite true that that case is the last in which the Court of Appeals of New York has spoken, but it was decided forty years ago, was itself a liberalization of the existing rule, and, whatever it implied, at least did not expressly lay down anything to the contrary of what we have said. Moreover, in a very recent decision (Litchfield Construction Co. v. City of New York, 244 N. Y. 251, 155 N. E. 116), the same court, while not finding it necessary under the facts then at bar to go beyond that ruling, gave a distinct intimation, at least in their apparent approval of our ruling in The Spica, that they were not indisposed to extend the exception further. We have no reason to suppose that, if the point were presented as *939 it is here, that court would differ from us in result. Until so advised, we feel free to adopt our own views.
Moreover, while we should on this as on other matters, defer to a court whose deserved authority and distinguished learning we so much respect, we do not accede to the proposition that because this is an action at common law, the state rules of evidence were authoritatively binding upon the District Court. The Supreme Court did indeed in Nashua Savings Bank v. Anglo-American Co., 189 U. S. 221, 23 S. Ct. 517, 47 L. Ed. 782, say as much, but the language was not necessary to the result, and all or nearly all the other cases in that court in which the point was involved, concerned a local statute, which is of course controlling. It must also be admitted that a majority of the circuits have at least declared, if they have not held, that we are so bound, Pooler v. U. S., 127 F. 519 (C. C. A. 1); American, etc., Co. v. Hogan, 213 F. 416 (C. C. A. 1); Western Union Tel. Co. v. Ammann, 296 F. 453 (C. C. A. 3); Du Pont v. White, 8 F. (2d) 5 (C. C. A. 3); Franklin Sugar Ref'g Co. v. Luray Supply Co., 6 F.(2d) 218 (C. C. A. 4); Myers v. Moore-Kile Co., 279 F. 233 (C. C. A. 5); Stewart v. Morris, 89 F. 290 (C. C. A. 7). But in the Sixth and Eighth Circuits the opposite view prevails. Hocking Valley R. R. Co. v. N. Y. Coal Co., 217 F. 727 (C. C. A. 6); West Tennessee Grain Co. v. Shaffer, 299 F. 197 (C. C. A. 6); Union Pac. Ry. v. Yates, 79 F. 584, 40 L. R. A. 553 (C. C. A. 8); Chicago & N. W. Ry. Co. v. Kendall, 167 F. 62, 16 Ann. Cas. 560 (C. C. A. 8). Judge Amidon's characteristically careful and satisfactory opinion in the case last cited seems to us to demonstrate that the situation is with section 914 (Rev. St. [Comp. St. § 1537]) and not section 721 of the Revised Statutes (Comp. St. § 1538). If so, it is well settled that the District Court is not rigidly bound by the common-law procedure of the state, when to follow it would not be "convenient for the administration of justice" (Shepard v. Adams, 168 U. S. 625, 18 S. Ct. 214, 42 L. Ed. 602), but on the contrary would "unwisely incumber the administration of the law" (Indianapolis R. R. Co. v. Horst, 93 U. S. 291, 23 L. Ed. 898). We should therefore feel free, if the occasion demanded, to adopt the common law as we understood it, even though we were at variance with that recognized by the courts of the state in which the cause was tried.
The other points raised require no discussion.
Judgment affirmed.
