See also: CASH
CHECKS–As Hearsay; LEDGERS
OPINIONS–Lay Opinions: Financial Condition.

§ 1.  Generally

Evidence of a party’s financial condition is generally irrelevant{footnote}See 9 ALR2d 205 (financial condition of debtor); 14 ALR2d 485 (financial condition of wrongful death beneficiaries).{/footnote} and is often considered unfairly prejudicial.{footnote}United States v. Delvecchio, 816 F.2d 859 (2d Cir. 1987) (evidence of lavish dinners hosted by defendant irrelevant and unfairly prejudicial); Arleth v. Freeport-McMoran Oil & Gas Co., 2 F.3d 630 (5th Cir. 1993) (financial condition of one plaintiff in shareholder class action); Pagel v. Yates, 471 N.E.2d 946 (Ill. App. Ct. 1984); Annotation, 59 A.L.R.2d 371 (plaintiff’s financial condition in personal injury case).

{/footnote}  A defendant may be held to have opened the door to unfavorable evidence of its financial condition, however, by introducing evidence on the subject.{footnote}Whitely v. OKC Corp., 719 F.2d 1051 (10th Cir. 1983).{/footnote}  

§ 2.  Financial Condition as Motive

Evidence of financial distress is sometimes introduced to show motive for a financial crime or fraud.{footnote}E.g., United States v. Contenti, 735 F.2d 628 (1st Cir. 1984) (evidence of indebtedness properly used to show motive in arson prosecution).
Shatz v. American Surety Co. of America, 295 S.W.2d 809, 814 (Ky. 1955) (defendant’s string of gambling losses admissible to show motive for alleged embezzlement).{/footnote}  Admission of such evidence was criticized in a recent Sixth Circuit case as often being more prejudicial than probative.{footnote}United States v.Zipkin, 729 F.2d 384 (6th Cir. 1984) [S&R]{/footnote}  Such evidence is also offered sometimes to establish  a proper motive for allegedly discriminatory layoffs.  In such cases, the plaintiff may rebut the defense with evidence of the defendant’s financial strength.{footnote}Denison v. Swaco Geolograph Co., 941 F.2d 1416 (10th Cir. 1991) (age discrimination).{/footnote}

§ 3.  Large Sums of Money

Evidence of sudden acquisition of large amounts of money is admissible to show guilt where the crime charged involves pecuniary gain as a motive.{footnote}United States v. Traumunti, 513 F.2d 1087, 1105 (2d Cir. 1975).

Check 91 ALR2d 1046.{/footnote}  Proof of the defendant’s net worth before the time period in question is not required.{footnote}United States v. Falley, 489 F.2d 33, 39 (2d Cir. 1973).{/footnote}  See also CASH.

§ 4.  Punitive Damages

A defendant’s financial condition is admissible evidence where punitive damages may be awarded.  The plaintiff may not introduce evidence of a defendant’s financial condition, however, before establishing a prima facie case that punitive damages are warranted.{footnote}Wolf v. Proctor & Gamble Co., 555 F.Supp. 613 (D.N.J. 1982). {/footnote}  A defendant may introduce evidence of lack of wealth, but only where the plaintiff has first introduced evidence of wealth.{footnote}Warren v. LeMay, 491 N.E.2d 464, 484.{/footnote}

Where punitive damages are sought against more than one defendant, evidence of a defendant’s wealth has been held inadmissible due to the risk of prejudice to the less-wealthy defendant.{footnote}Colmar v. Greater Niles Township Publishing Corp., 141 N.E.2d 652, 656 (Ill. App. Ct. 1957); Spelina v. Sporry, 279 Ill. App. 376 (1935); Annotation, 9 A.L.R.3d 692.{/footnote}