Keogh v. Commissioner of Internal Revenue
713 F.2d 496 (1983)
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Rule of Law:
A personal record, such as a diary, kept regularly and systematically in the course of an individual's occupation or calling can qualify as an admissible 'business record' under the hearsay exception in Federal Rule of Evidence 803(6).
Facts:
- From 1969 to 1971, Mr. Keogh was employed as a blackjack dealer at the Dunes Hotel & Country Club in Las Vegas.
- In addition to their wages, dealers received tips, or 'tokes,' from players.
- All dealers at the casino participated in a mandatory arrangement where they pooled all tokes received during the day.
- The pooled tokes were divided equally among all dealers who had worked that day, regardless of shift.
- Keogh reported annual toke income ranging from approximately $632 to $1,022 for the years in question.
- A fellow dealer, John Whitlock, Jr., kept a personal diary in which he regularly recorded his daily wages and the amount of tokes he received.
- Keogh claimed that he also kept daily records of his toke income but destroyed them monthly after reporting the amounts to his employer.
Procedural Posture:
- The Commissioner of Internal Revenue asserted income tax deficiencies against the Keoghs for the years 1969, 1970, and 1971, alleging underreported tip income.
- The Keoghs challenged the Commissioner's determination in the United States Tax Court.
- During the trial, the Tax Court admitted into evidence a photocopy of a diary belonging to another dealer, John Whitlock, over the Keoghs' hearsay and best evidence objections.
- The Tax Court ruled in favor of the Commissioner, though it reduced the asserted tax deficiency by approximately 20%.
- The Keoghs, as appellants, appealed the Tax Court's decision to the United States Court of Appeals for the Ninth Circuit.
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Issue:
Does a personal diary, regularly kept to record income from one's occupation, qualify as an admissible 'business record' under the hearsay exception in Federal Rule of Evidence 803(6)?
Opinions:
Majority - Duniway, Circuit Judge
Yes. A personal diary that is systematically maintained for business reasons qualifies as a business record under Federal Rule of Evidence 803(6). The court reasoned that the term 'business' in the rule is defined broadly to include an individual's 'occupation, and calling of every kind,' not just commercial enterprises. Because Whitlock's diary was kept regularly and meticulously in the course of his occupation to track his own income, it possessed the necessary indicia of reliability. The court found that the reliability typically associated with commercial business records can be established in personal records if they are systematically checked and continually maintained. The court rejected the argument that only Whitlock could lay the foundation for the diary, finding his ex-wife's testimony about his regular process of making entries was sufficient.
Analysis:
This case significantly clarifies the scope of the 'business records' exception to the hearsay rule, Federal Rule of Evidence 803(6). It establishes that personal records, not just those of a formal business entity, can be admitted into evidence if they are kept with regularity and are incidental to the declarant's occupation. This broad interpretation of 'business' provides a pathway for admitting personal financial logs, diaries, and other systematically kept individual records in tax, criminal, and civil litigation. The decision emphasizes that the key to admissibility under this exception is the record's inherent reliability, derived from the systematic and routine nature of its creation, rather than its commercial origin.
