Southern Stone Co. v. Singer
665 F.2d 698 (1982)
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Rule of Law:
The mere failure to respond to a letter containing assertions does not constitute an adoptive admission under Federal Rule of Evidence 801(d)(2)(B) unless the circumstances would make it reasonable for the sender to expect the recipient to reply and correct any inaccuracies.
Facts:
- In 1974, Sam Singer, his daughter Susan Singer, and her fiancé Thomas Moore organized S&M Materials Company (S&M), which purchased agricultural lime from Southern Stone Company.
- Sam Singer was S&M's president and made major decisions, while Moore managed daily operations.
- S&M was consistently unprofitable, and Sam Singer's other business, The Singer Company, continually loaned it money.
- In June 1976, after being advised by a bank to eliminate his losing businesses, Sam Singer had S&M pledge all its assets, including future accounts receivable, to The Singer Company.
- During November and December 1976, S&M continued to purchase lime on account from Southern Stone.
- S&M ceased all operations on December 31, 1976.
- After S&M closed, Moore formed a new corporation, TM, Inc., which also incurred a debt with Southern Stone.
- On August 31, 1978, in settlement of the debt owed by TM, Inc., Southern Stone issued a release to Moore that discharged him from 'all claims ... whatsoever, known or unknown.'
Procedural Posture:
- Southern Stone obtained a judgment against S&M Materials Company on an unpaid account.
- Unable to collect from S&M, Southern Stone filed a diversity action against the company's officers, directors, and shareholders (Thomas D. Moore, Sam S. Singer, et al.) to pierce the corporate veil.
- The case was tried before a jury in the United States District Court.
- The jury returned a verdict against appellants Sam Singer and Moore.
- Sam Singer and Moore appealed the judgment to the United States Court of Appeals for the Fifth Circuit.
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Issue:
Is a letter from a plaintiff's counsel to a defendant, which recounts alleged admissions by the defendant, admissible as an adoptive admission under Federal Rule of Evidence 801(d)(2)(B) based solely on the defendant's failure to reply?
Opinions:
Majority - R. Lanier Anderson, III
No. The mere failure to respond to a letter does not constitute an adoptive admission unless it was reasonable under the circumstances for the sender to expect the recipient to respond and correct erroneous assertions. The letter from Southern Stone's counsel was inadmissible hearsay because the circumstances did not support a reasonable expectation of a reply. Moore visited the attorney's office to discuss a debt related to his new company, TM, Inc., not the defunct S&M, which had ceased operations nearly a year earlier. Moore testified he didn't care about S&M's affairs anymore. Since Southern Stone failed to lay a proper foundation beyond Moore's mere silence, the letter did not qualify as an adoptive admission under FRE 801(d)(2)(B). Its admission was highly prejudicial because it contained damaging allegations about the timeline for closing S&M, which was a critical issue in proving fraud, directly contradicting the defendants' testimony.
Dissenting - Roney
No, the letter should not have been admitted, but the error was harmless and does not warrant reversal. Any hearsay issue could have been resolved because the letter's author, Southern Stone's counsel, was present in the courtroom and could have been called for cross-examination by the defendants' counsel. The failure to call him should not justify a retrial. Furthermore, the letter's substance was already presented to the jury when it was read aloud during Moore's cross-examination, and other testimony corroborated parts of it, making its formal admission non-prejudicial. A new trial would likely involve the same evidence being admitted through the counsel's direct testimony, making the reversal inefficient.
Analysis:
This case provides a crucial clarification of the 'adoptive admission by silence' doctrine under the Federal Rules of Evidence. The court establishes that silence is not acquiescence in a vacuum; the context must create a situation where a reasonable person would feel compelled to deny the assertions. This decision protects litigants from having self-serving documents drafted by opposing counsel used against them simply because they were not answered. It reinforces that the burden of laying a foundation for an exception to the hearsay rule remains squarely on the proponent of the evidence and cannot be shifted to the opponent by arguing they could have called the declarant to testify.
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