## Facts

- G.M. McKelvey Co., a retail employer, purchased an insurance policy covering losses from employee larceny, theft, embezzlement, and other dishonest or fraudulent acts.
- Several employees misappropriated store funds.
- The employees signed written confessions admitting the misconduct and describing the amounts taken.
- After signing, the employees fled and could not be located despite being summoned, leaving them unavailable to testify.
- In McKelvey’s action against the insurer for coverage, McKelvey offered the written confessions to prove both the occurrence of covered dishonesty and the amount of loss.
- The trial court treated the confessions as hearsay, admitting them only for a limited purpose and excluding them as substantive proof of the fact and amount of loss.
- The court of appeals reversed, holding the confessions admissible for all purposes as declarations against interest.

## Issues

1. Whether nonparty employees’ signed written confessions are admissible under the declaration-against-interest exception when the employees are unavailable.
2. Whether such confessions, if admissible, may be used as substantive evidence to prove the amount of the insured’s loss under an employee-dishonesty policy.

## Decision

- The Supreme Court of Ohio affirmed the court of appeals.
- The employees’ written confessions qualified as declarations against interest because the employees were unavailable and the statements were against their penal and pecuniary interests.
- The confessions were admissible for all purposes, including as substantive proof of the amount of loss.
- The case proceeded consistent with the ruling that the confessions could be considered to establish the insured’s claimed loss.

## Legal Principles

- A nonparty declarant’s statement may be admitted as a declaration against interest when:
  - the declarant is unavailable to testify;
  - the declarant had a special means of knowing the matters stated;
  - the declarant lacked a motive to falsify; and
  - the statement was against the declarant’s interest (including penal or pecuniary interest).

- Unavailability is satisfied where the declarants flee the jurisdiction and cannot be found despite efforts to secure their testimony.
- Declarations against interest, when the foundational requirements are met, are admissible as substantive evidence and are not limited to explaining a party’s conduct or other restricted uses.

## Conclusion

The Ohio Supreme Court held that unavailable employees’ signed confessions of embezzlement were admissible as declarations against interest and could be used as substantive evidence to establish both the occurrence of covered dishonesty and the amount of the insured’s loss.


G.M. McKelvey Co. v. Gen. Cas. Co. of Am., 166 Ohio St. 401 (1957)