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Buster v. Gale and Westerhof (1/14/94), 866 P 2d 837
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NOTICE: This opinion is subject to formal correction
before publication in the Pacific Reporter. Readers
are requested to bring typographical or other formal
errors to the attention of the Clerk of the Appellate
Courts, 303 K Street, Anchorage, Alaska 99501, in
order that corrections may be made prior to permanent
publication.
THE SUPREME COURT OF THE STATE OF ALASKA
JACK B. BUSTER, )
) Supreme Court No. S-5020
Appellant, )
) Superior Court No.
v. ) 3AN-90-00391 CI
)
JAMES R. GALE, THOMAS A. ) O P I N I O N
WESTERHOF and MARY E. )
WESTERHOF, ) [No. 4044 - January 14, 1994]
)
Appellees. )
______________________________)
Appeal from the Superior Court of the
State of Alaska, Third Judicial District,
Anchorage,
J. Justin Ripley, Judge.
Appearances: Hal P. Gazaway, P.C.,
Anchorage, for Appellant. Susan D. Mack,
James T. Stanley, P.C., Anchorage, for
Appellees.
Before: Moore, Chief Justice,
Rabinowitz, Burke, Matthews and Compton,
Justices.
RABINOWITZ, Justice.
I. FACTS AND LOWER COURT PROCEEDINGS
In June 1984 James Gale, Thomas Westerhof, and Mary
Westerhof (Gale and the Westerhofs) executed a deed of trust in
favor of Cameron Milliron and M. Jo Milliron (the Millirons), as
security for an obligation of $44,000. The signatures of Gale
and the Westerhofs were notarized, and the deed of trust was
recorded.
Jack Buster (Buster) argues that Gale and the
Westerhofs additionally signed a deed of trust note (the note),
in which they assumed the $44,000 debt to the Millirons. The
Millirons assigned the note to Robert Baines and Christine Baines
(the Baineses) in May 1985. The assignment was certified and
recorded.
In his deposition, Robert Baines stated that after Gale
and the Westerhofs had defaulted on their payments in September
1986, he "closed the escrow and took possession of the original
deed of trust note."1 Baines also stated in his deposition that
he gave the note to Buster in May 1988.
The location of the note after this time is unclear.
Buster testified that Robert Baines instituted an action to
collect on the note in 1988, and that at that time, Buster had
the original note.2 Buster further testified that he believed
that he later accidentally threw the note out "in a frenzy of
housecleaning." According to Buster, all three original
documents--the deed of trust, the note, and the assignment from
the Millirons to the Baineses--were lost.
In May 1988, before moving from Alaska to Paris,
France, the Baineses executed general powers of attorney in
Buster's favor. Buster further claims that under these general
powers of attorney, he assigned the note to himself "as Robert
Baines' attorney-in-fact"on January 16, 1990. Buster testified
that he wrote this assignment on the back of the original note.
Also on January 16, Buster filed a complaint against Gale and the
Westerhofs to recover on the note.3
In December 1990, Buster met with Gale and Thomas
Westerhof to discuss a settlement between the parties. Gale and
Westerhof offered Buster $8,000 to settle the dispute. According
to Thomas Westerhof's testimony, Buster reached into his
briefcase at this point to pull out the note, and discovered that
he did not have it. Buster then went home to look for the note,
but was unable to find it. No formal settlement was ever reached
between Buster, the Westerhofs, and Gale.
Buster states that he signed a second assignment of the
note "signed by me for Christine Baines as her power of attorney"
on January 23, 1991.4 During direct examination, Buster
testified that he wrote this assignment on the back of the
original note. However, during cross-examination, Buster
admitted that he had been unable to produce the note at the
December 1990 meeting between himself, Gale, and Thomas
Westerhof. Buster then stated that he must have written the
January 23 assignment on the back of a copy.
In March 1991, Buster listed Robert Baines on his
preliminary witness list. Buster then deposed Baines in
Anchorage in July 1991. At this deposition, Baines indicated
that he then resided in London, England. When questioned about
his availability for trial in Alaska in December 1991, Baines
responded that he did not anticipate being in Alaska but stated:
"[I]f it's necessary, well, we'll -- we'll make arrangements."
Three days prior to the commencement of the superior
court trial Buster filed a designation of deposition testimony,
indicating his intent to use the Robert Baines deposition.5 At
trial, Gale and the Westerhofs objected to the use of the
deposition of Robert Baines, claiming that there was no showing
that Baines was unavailable. Buster testified that Robert Baines
had told him, one month prior to trial, that he would be
travelling in North Africa for two or three weeks, and then would
be returning to London.
The superior court found that Robert Baines might be an
essential witness, and that the record did not adequately reflect
Baines' unavailability. The court held that Robert Baines'
deposition would not be admitted, but offered a continuance of
the trial: "Probably the best way to handle this would be to
close all the discovery except a beefed up deposition, maybe even
by phone, of Mr. Baines, although it sounds like somebody wants
him to be here. I'd be willing to search for a one-day spot on
the trial calendar." Both parties turned down the superior
court's suggested continuance.
At trial, Buster sought to admit into evidence a
document titled Plaintiff's Trial Exhibit #1 (Exhibit #1), which
consisted of a copy of what was purported to be the note
including the endorsements from the Millirons to the Baineses,
and from the Baineses to Buster. Buster testified that at some
point after he realized that the original was lost, he wrote
"certified to be a true and exact copy of the original" on the
copy, and signed his name.
Buster argued that under Alaska Rule of Evidence 1003,
he did not have to establish the admissibility of the purported
copy of the note and signature page by clear and convincing
evidence. Buster further argued that Gale and the Westerhofs had
not contested the contents of the note or its original execution
in their responses to his requests for admission. The superior
court refused to admit the copy.
Gale and Thomas Westerhof testified that they
recognized their signatures on the copy, but that they could not
remember if the contents of the copy were the same as what they
had signed. They testified that they had not retained any copies
of the note in their records.6 Gale and the Westerhofs argued
that Buster's claim on the lost note was governed by former AS
45.03.804, that the appropriate standard of proof for that
statute was clear and convincing evidence, and that Buster had
failed to meet this burden.7
Upon conclusion of the non-jury trial, the superior
court entered findings of fact and conclusions of law. The court
found that "Jack Buster's testimony is not unworthy of belief,
although his testimony lacks corroboration." In its conclusions
of law the superior court stated in part:8
1. AS 45.03.804 provides the procedure
by which the owner of a lost promissory note
is to maintain an action to recover on said
note.
2. Plaintiff has the burden of
establishing ownership of the lost note, and
the circumstances surrounding the loss of the
note, followed by proving the terms and
conditions of the note.
3. The applicable standard of proof to
be met by plaintiff pursuant to AS 45.03.804
is the clear and convincing standard.
. . . .
5. Plaintiff has not met his burden of
proof and is therefore not the prevailing
party in this action.
6. Defendants are entitled to judgment
in this action and plaintiff shall take
nothing by way of his complaint.
Thereafter a formal judgment was entered dismissing
Buster's claim for relief and awarding Gale and the Westerhofs
attorney's fees of $4,430.40 and costs of $1,423.78. This appeal
followed.
Three questions are presented in this appeal. First,
did the superior court err in excluding Buster's purported copy
of the note? Second, did the superior court err in precluding
Buster's introduction of Robert Baines' deposition into evidence?
Third, did the superior court err in holding that Buster had
failed to prove his right to recover on the note?9
II. DISCUSSION
A. Did the Superior Court Err in Excluding
Buster's Exhibit #1?
Buster argues that the superior court erred in
requiring that he establish the authenticity of Exhibit #1 by
clear and convincing evidence. Buster contends that he produced
the proper evidentiary foundation for the admission of the
document under Alaska Rules of Evidence 901, 1003, and 1004.
1. Did the Superior Court Err in
Holding that the Burden of Proof for
Admissibility of Buster's Exhibit #1 Was
Clear And Convincing Evidence?
Exhibit #1 was alleged to be a true and accurate copy
of a lost original. Generally, the original of a document is
required to be produced at trial under the so-called "best
evidence" rule. See 2 McCormick on Evidence 229 (John William
Strong ed., 4th ed. 1992).10 Nonetheless, the Alaska Rules of
Evidence establish liberal guidelines for admission of copies.
Evidence Rule 1003 states:
A duplicate is admissible to the
same extent as an original unless (1) a
genuine question is raised as to the
authenticity of the original or (2) in the
circumstances it would be unfair to admit the
duplicate in lieu of the original.
Evidence Rule 1004 states in relevant part:
The original is not required, and
other evidence of the contents of a writing
. . . is admissible if
(a) . . . All originals are lost or
have been destroyed, unless the proponents in
bad faith lost or destroyed them . . . .
Evidence Rule 901 states the general rule for
authenticating documents:
The requirement of authentication or
identification as a condition precedent to
admissibility is satisfied by evidence
sufficient to support a finding that the
matter in question is what its proponent
claims . . . .
The basic requirement of authentication was defined as follows in
McQueeney v. Wilmington Trust Co., 779 F.2d 916 (3d Cir. 1985):
The burden of proof for authentication
[of documents] is slight. "All that is
required is a foundation from which the fact-
finder could legitimately infer that the
evidence is what the proponent claims it to
be."
Id. at 928 (quoting In re Japanese Elec. Prod. Antitrust Litig.,
723 F.2d 238, 285 (3d Cir. 1983), rev'd on other grounds sub nom.
Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S.
574 (1986)).
Implicit in the superior court's exclusion of Exhibit
#1 is the assumption that since the authenticity of the copy
could not be established by clear and convincing evidence, the
document was not admissible. We disagree.11 The appropriate
standard of proof for the initial determination of admissibility
of a copy is reached by combining the basic standard for
admissibility of original documents, as expressed in McQueeney,
with an additional requirement that when either of the two
conditions of Evidence Rule 1003 are met, the proponent must also
establish one of the four exceptions of Evidence Rule 1004.
2. Was Buster's Proof of the Copy's
Authenticity Sufficient to Warrant Its
Admission into Evidence?
This question can be expanded as follows: Did Buster
establish a foundation from which the factfinder could
legitimately infer that the copy of the note and endorsements was
authentic, and if so, given that an Evidence Rule 1003 objection
was raised, did Buster establish admissibility under Evidence
Rule 1004?
Buster sought to establish that the three-page exhibit,
including the endorsements, was identical to the lost original.
Thus, in the context of Evidence Rule 1003, "the original"refers
not only to the two-page note, but also to the third page of
signatures. As a result of the substantive law implicated by the
claim, namely former AS 45.03.202(b), and his own testimony,
Buster needed to prove that the signature page was in fact a copy
of the back of the note.12
We conclude that Buster met this burden. Buster's own
testimony provided the basis for a legitimate inference that the
first two pages of the note (its terms and conditions) were in
fact identical to the original note that Gale and the Westerhofs
signed. As observed earlier, both Gale and Thomas Westerhof
testified that they recognized their signatures, and neither
challenged the terms of the note. Particularly compelling is the
fact that in their cross-motion for partial summary judgment,
Gale and the Westerhofs attached an exhibit which consisted of a
copy of a deed of trust note identical in text to the copy Buster
sought to introduce. This same exhibit attached to the cross-
motion by Gale and the Westerhofs contained a copy of the
endorsement page, which included all of the endorsements at issue
except Christine Baines' assignment to Buster.
Thus we hold that the superior court erred in refusing
to admit into evidence Buster's Exhibit #1. The exhibit was
admissible to show that Gale and the Westerhofs executed the note
and its terms, and that the note was endorsed by the Millirons
and by Robert Baines through Buster, his attorney-in-fact.
B. Did the Superior Court Err in Finding that
Robert Baines Was Not "Unavailable"Under Alaska
Civil Rule 32(a)(3)(B)?
Buster argues that the superior court erred in its
ruling that the deposition of Robert Baines could not be used at
trial. Alaska Civil Rule 32 governs the use of non-party
witnesses' depositions at trial:
(a) At the trial . . . any part or all
of a deposition . . . may be used against any
party who was present or represented at the
taking of the deposition or had reasonable
notice thereof, in accordance with any of the
following provisions:
. . . .
(3) The deposition of a witness whether
or not a party, may be used by any party for
any purpose if the court finds . . . (B) that
the witness is at a greater distance than 100
miles from the place of trial or hearing, or
is out of the state, unless it appears that
the absence of the witness was procured by
the party offering the deposition. . . .
Gale and the Westerhofs were represented at the
deposition by their attorney. During the deposition, Robert
Baines had stated that he could come to Alaska for the trial if
it were necessary. At trial, Buster stated that for Baines to
come to Anchorage would involve a costly flight from London,
England. Buster argued that this expense might not be justified
based on Buster's belief that there was a good chance that Gale
and the Westerhofs would declare bankruptcy if he received an
affirmative judgment.
In ruling that use of the deposition would not be
allowed, the superior court stated that "the record does not
affirmatively reflect by affidavit or sworn testimony [Baines']
unavailability. . . ." At the conclusion of trial, the judge
noted:
Mr. Buster says that it's his belief
that about someplace in this time frame
Baines may be in North Africa . . . Mr.
Buster would not even contend that that is
the same as saying that he's not available to
be here.
Citing to In re Adoption of IJW, 565 P.2d 842 (Alaska
1977), Buster argues that the trial court failed to make a
factual determination as to whether the conditions of Civil Rule
32 were satisfied and instead "focused on a lack of showing of
the unavailability of Baines to testify at trial." Gale and the
Westerhofs argue that Baines should not be presumed to be
unavailable for three reasons: (1) Baines' initial presence in
Anchorage for the deposition mandates a higher requirement of
proof of subsequent unavailability; (2) Baines stated at the
deposition that he could be available in Anchorage for trial, if
necessary; and (3) the evidence of Baines' actual location at the
time of trial was inconclusive.
We hold that the superior court erred in its ruling
that Buster could not introduce into evidence Robert Baines'
deposition. Under the parallel federal rule it has been held
that deposition testimony of witnesses living more than 100 miles
from the place of trial is freely admissible at trial. Klepal v.
Pennsylvania R.R. Co., 229 F.2d 610, 612 (2d Cir. 1956). As to
the requisite showing necessary for admission of deposition
testimony, Professor Moore states: "Although the proximity of a
witness is to be measured at the time the deposition is offered,
a showing that the witness resided beyond the 100-mile distance
at some recent earlier time will usually be sufficient to admit
the deposition, in the absence of evidence to the contrary." See
4A James W. Moore & Jo Desha Lucas, Moore's Federal Practice
32.05, at 32-32 to 32-33 (2d ed. 1993) (footnote omitted); see
also IJW, 565 P.2d at 846.
The record discloses that Buster established that
Baines was not within 100 miles of the place of trial at the time
of trial.13 Thus we conclude that the superior court's ruling was
erroneous.
C. Did The Superior Court Err in Holding that
Buster Failed to Present Clear And Convincing
Evidence of His Right to Recover on the Note?
Our earlier holdings that the superior court erred in
its refusal to admit into evidence Exhibit #1 and Robert Baines'
deposition testimony would normally require a remand for new
trial. On the other hand, review of the record persuades us that
a new trial is unnecessary, since we conclude that on the basis
of the evidence admitted at trial the superior court erred in
holding that Buster failed to present clear and convincing
evidence of his right to recover on the note. On the contrary,
Buster proved all the elements of his right to recover on the
note under former AS 45.03.804.
Our starting point is the well established common law
doctrine that an unintentional loss of a written evidence of debt
does not extinguish the rights and obligations of the parties
thereto. Bottum v. Herr, 162 N.W.2d 880, 884 (S.D. 1968); 52 Am.
Jur. 2d Lost and Destroyed Instruments 2 (2d ed. 1970). In
recognition of this principle, and the historic common law
remedies afforded in law and equity to the owner of a lost
instrument, the drafters of the Uniform Commercial Code provided:
The owner of an instrument which is
lost, whether by destruction, theft or
otherwise, may maintain an action in his own
name and recover from any party liable
thereon upon due proof of his ownership, the
facts which prevent his production of the
instrument and its terms. The court may
require security indemnifying the defendant
against loss by reason of further claims on
the instrument.
Former U.C.C. 3-804 (superseded 1990).14 At the time of the
events leading to this litigation, this provision of the U.C.C.
was part of Alaska statutory law. See former AS 45.03.804.
In order to determine whether the superior court erred
in its ruling that Buster failed to prove his claim under former
AS 45.03.804, we must first determine if the superior court
correctly held that "clear and convincing evidence" is the
appropriate burden of proof for actions under former AS
45.03.804.
Courts that have addressed this burden of proof issue
under similar statutory provisions have required proof by "clear
and convincing"evidence. See, e.g., Castellano v. Bitkower, 346
N.W.2d 249, 252 (Neb. 1984) (stating that the appropriate
standard of evidence regarding lost notes is "clear and
convincing"evidence); Lutz v. Gatlin, 590 P.2d 359, 361 (Wash.
App. 1979) ("To establish a lost instrument, the evidence must be
clear, cogent and convincing.").
Clear and convincing evidence has been characterized as
evidence that is greater than a preponderance, but less than
proof beyond a reasonable doubt. Castellano provides a useful
statement of the standard, holding that "clear and convincing
evidence means and is that amount of evidence which produces in
the trier of fact a firm belief or conviction about the existence
of a fact to be proved." 346 N.W.2d at 253; see also Welton v.
Gallagher, 630 P.2d. 1077, 1081 (Haw. App. 1981), aff'd, 654 P.2d
1349 (Haw. 1982).
We believe that the clear and convincing evidence
standard adopted by the superior court is the appropriate
standard of proof under former AS 45.03.804, as it provides the
heightened scrutiny that is necessary to ensure that a party
claiming to have lost physical control over an instrument was in
fact the rightful owner of the instrument. This heightened
standard should reduce the instances where multiple parties come
forward to claim ownership of a missing note. While the statute
envisions such a problem and accordingly provides that a court
may require the posting of security to indemnify the defendant
against future claimants, the heightened burden of proof serves
as an additional safeguard.
We next address whether the superior court erred in its
conclusion that Buster failed to present clear and convincing
evidence of his right to recover on the note.
Under the provisions of former AS 45.03.804, Buster
must establish (a) the facts which prevent production of the
instrument, (b) the terms of the instrument, and (c) "due proof
of ownership." We address these issues seriatim.
Upon review of the record we believe that Buster's
uncontradicted evidence clearly and convincingly established that
the note in question was unintentionally lost.15 Similarly, study
of the evidence persuades us that Buster clearly and convincingly
established the terms of the note. We reach this conclusion for
essentially the same reasons identified in our earlier discussion
of the admissibility of Exhibit #1.16
Proof of Buster's ownership of the note involves the
following critical links: (1) the initial promise to pay
embodied in the note by Gale and the Westerhofs to the Millirons;
(2) the subsequent assignment of the note by the Millirons to the
Baineses; (3) proof that Buster was given general powers of
attorney by the Baineses; and (4) the conveyances, through the
general powers of attorney, of the Baineses' interest in the note
to Buster.
We conclude that Buster clearly and convincingly proved
that Gale and the Westerhofs executed a deed of trust note on
June 14, 1984, in the principal sum of $44,000 to the Millirons.
The unrefuted evidence also shows that the Millirons assigned
their interests in the note to the Baineses in May 1985. It is
also uncontradicted that the Baineses granted general powers of
attorney to Buster in May 1988. Lastly, we are persuaded that
the evidence in the record clearly and convincingly establishes
that under the unrevoked general powers of attorney given him by
the Baineses, Buster conveyed both of their interests in the note
to himself. In light of the above, we hold that Buster has
clearly and convincingly proved ownership of the note as well as
the remaining elements of a claim under former AS 45.03.804.
V. CONCLUSION
The matter is REVERSED and REMANDED to the superior
court with directions to vacate its judgment and award of
attorney's fees and costs, and to enter an appropriate judgment
for Buster under the deed of trust note. In fashioning its
judgment on remand the superior court shall determine whether it
will require security to indemnify Gale and the Westerhofs
against loss by reason of further claims on the deed of trust
note.17
_______________________________
1 The deposition was ruled inadmissible at trial, and
this evidentiary ruling is one of the issues in this appeal.
2 Buster testified that this action was dismissed for
lack of prosecution.
3 Buster attached a copy of the note to the complaint,
but he did not attach a copy of the back of the note, where the
endorsement and assignment signatures allegedly were located.
4 Buster testified: "I executed this to correct an
oversight in the previous assignment of 1990 where I'd failed to
note that Christine Baines was also the holder of this note . . .
so I executed an assignment of whatever interest she may have
also to myself."
5 Buster also deposed Christine Baines at the same time
he deposed Robert Baines, and excerpts from the "Christine M.
Baines deposition taken July 18, 1991"were included in Buster's
designation of deposition testimony.
6 An attachment to the April 1991 cross-motion for
partial summary judgment filed by Gale and the Westerhofs
consisted of an identical copy of the note and an endorsement
page including all of the endorsements at issue except the
assignment of the interest of Christine Baines.
7 Additionally, Gale and the Westerhofs claimed as an
affirmative defense that "[Buster] contracted with defendants to
accept $8,000.00 in exchange for the original deed of trust note
and dismissal of this action." This point was not argued with
much enthusiasm at trial, and is not relevant to the appeal.
8 In its oral opinion the superior court informed counsel
for the Westerhofs and Gale that
I've rejected your ownership argument
and I've rejected your accord and
satisfaction argument, decided simply on the
narrow issue that [Buster] fails to meet his
clear and convincing burden and therefore
obtain the admission of [Exhibit #1], without
which his case fails.
9 This case involves the review of both questions of
law and evidentiary proceedings. The appropriate standard of
review for questions of law is substitution of judgment. Langdon
v. Champion, 745 P.2d 1371, 1372 n.2 (Alaska 1987); Guin v. Ha,
591 P.2d 1281, 1284 n.6 (Alaska 1979). The appropriate standard
of review for evidentiary decisions is abuse of discretion. Dura
Corp. v. Harned, 703 P.2d 396, 409 (Alaska 1985). This court has
stated that "[w]e will find that a trial court abused its
discretion only 'when we are left with a definite and firm
conviction, after reviewing the whole record, that the trial
court erred in its ruling.'" Id. at 409 (quoting Peter Pan
Seafoods, Inc. v. Stepanoff, 650 P.2d 375, 378-79 (Alaska 1982)).
10 Two primary justifications have been advanced for this
rule: first, the principle that the original words of a document
are the most certain proof of its terms; and second, the idea
that production of the original of a document is a safeguard
against fraud. Id. 231. In actions on an instrument such as a
promissory note, the production of the original is important for
both of these reasons.
11 A distinction between the initial admissibility of
evidence and its ultimate weight has been drawn by treatises
discussing Federal Rule of Evidence 901, which is comparable in
its main body to Alaska Rule of Evidence 901:
In reaching its determination [regarding
admissibility], the court must view all the
evidence introduced as to authentication or
identification, including issues of
credibility, most favorably to the proponent.
The ultimate decision as to whether a person,
document, or item of real or demonstrative
evidence is as purported is for the trier of
fact. . . . [U]pon consideration of the
evidence as a whole, if a sufficient
foundation has been laid in support of
introduction, contradictory evidence goes to
the weight to be assigned by the trier of
fact and not to admissibility.
Michael H. Graham, Federal Practice and Procedure 6821, at 850
(interim ed. 1992).
12 Former AS 45.03.202(b) provided that to negotiate an
instrument, "[a]n endorsement must be written by or on behalf of
the holder and on the instrument or on a paper so firmly affixed
to the instrument thereto as to become a part of the instrument."
Buster testified that the endorsements had been written on the
back of the note.
13 Buster testified that three weeks prior to trial he
received a call from Robert Baines and that Baines told him that
"he was in London and he and his wife were on their way to North
Africa somewhere for two or three weeks, and then they'd be
returning to London."
14 The official comment to this section read:
Purposes:
This section is new. It is
intended to provide a method of recovery on
instruments which are lost, destroyed or
stolen. The plaintiff who claims to be the
owner of such an instrument is not a holder
as that term is defined in this Act, since he
is not in possession of the paper, and he
does not have the holder's prima facie right
to recover under the section on the burden of
establishing signatures. He must prove his
case. He must establish the terms of the
instrument and his ownership, and must
account for its absence.
If the claimant testifies falsely,
or if the instrument subsequently turns up in
the hands of a holder in due course, the
obligor may be subjected to double liability.
The court is therefore authorized to require
security indemnifying the obligor against
loss by reason of such possibilities. There
may be cases in which so much time has
elapsed, or there is so little possible doubt
as to the destruction of the instrument and
its ownership that there is no good reason to
require the security. The requirement is
therefore not an absolute one, and the matter
is left to the discretion of the court.
Article 3 of the U.C.C. was substantially revised in
1990. See 2 U.L.A. 5 (1991). As a result, significant changes
occurred in the language of 3-804. This section has been
renumbered 3-309, and it reads as follows:
(a) A person not in possession of
an instrument is entitled to enforce the
instrument if (i) the person was in
possession of the instrument and entitled to
enforce it when loss of possession occurred,
(ii) the loss of possession was not the
result of a transfer by the person or a
lawful seizure, and (iii) the person cannot
reasonably obtain possession of the
instrument because the instrument was
destroyed, its whereabouts cannot be
determined, or it is in the wrongful
possession of an unknown person or a person
that cannot be found or is not amenable to
service of process.
(b) A person seeking enforcement of
an instrument under subsection (a) must prove
the terms of the instrument and the person's
right to enforce the instrument. If that
proof is made, Section 3-308 applies to the
case as if the person seeking enforcement had
produced the instrument. The court may not
enter judgment in favor of the person seeking
enforcement unless it finds that the person
required to pay the instrument is adequately
protected against loss that might occur by
reason of a claim by another person to
enforce the instrument. Adequate protection
may be provided by any reasonable means.
The legislature recently amended AS 45.03, adopting language
which substantially conforms with the new changes in the U.C.C.
See AS 45.03.309.
15 In part, the record reveals the following testimony on
Buster's part:
Q What happened to the original
of the deed of trust note?
A I discarded the original note
by error.
Q How?
A I'd had a previous collection
matter with Mr. Westerhof and had
maintained that file just for -- in case
that there was some ancillary
information that might be of use to me
in there, and I married the two files,
that is, the old file and the new file,
the new file being the one that
contained this particular note. And in
a frenzy of housecleaning one day I
decided that there was no information in
the old file on Mr. Westerhof and I
threw it in the garbage along with a
number of other files. It wasn't until
some time later that I -- that I
reasoned that I must have included this
new file or this particular -- the
original to this note in that file and
discarded it, because it was nowhere to
be found and that's the only explanation
that I have.
Buster testified further that during settlement
negotiations with Gale and Thomas Westerhof
I went back because these gentlemen
were still waiting for me and I told `em I
couldn't find the note and that until I could
find the note or determine what happened to
it, there wasn't any point in proceeding
further. Then they went away, I went back
and made a more thorough and careful search
of all my files and records and -- an
exhaustive search, and couldn't find it.
16 In addition to the evidence previously referred to we
note that counsel for Gale and the Westerhofs stipulated that
they signed the note and that it had a principal amount of
$44,000.
17 Our resolution of this appeal makes it unnecessary to
address any other issues raised herein.
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