Back in 1997, when Beal Bank sued Richard R. Eurich to collect a 10-year-old debt, it brought a computer printout to court showing that Mr. Eurich owed $205,000.
Beal, of Dallas, did not prepare the record. It got it from a now defunct bank in California when it bought the loan, and the question of whether a creditor can use third-party records to collect a debt triggered a legal debate that lasted eight years.
But Aug. 3 the Massachusetts' Supreme Judicial Court, the state's highest, ruled that companies buying debt on the secondary market may use the records of previous creditors if they end up suing the borrower to collect.
The court's decision in Beal Bank v. Richard R. Eurich reversed a September 2004 ruling by the Massachusetts Court of Appeals. That ruling said creditors may not present other lenders' records as evidence, since they did not prepare them and could not vouch for the internal business practices of the companies that did.
John Keough, the general counsel of Nepco Inc., a Boston company that buys commercial loans from banks, said courts have traditionally exempted business records from their rules barring hearsay testimony.
The Court of Appeals ruling worried lenders, he said, because a company that purchased a debt would have had to subpoena the record keepers at all the previous creditors in order to introduce their records into evidence.
"It would have been quite onerous to prove a commercial debt had been assigned." Mr. Keough said. "I remember seeing ... [the Court of Appeals] decision cross my desk and thinking, 'Oh boy, that is not good.' "
Christopher P. Litterio, who argued the case for Beal, said the Appeals Court's standard would have made it virtually impossible to collect older loans that had changed hands a few times.
Beal buys an above-average amount of loans on the secondary market. In addition to mortgages such as Mr. Eurich's, it has also purchased distressed Small Business Administration loans. A spokesman for the $5 billion-asset company, which was founded in 1988, did not return a reporter's call.
Though the Beal decision is binding only in Massachusetts, Mr. Litterio said it would have influence around the country. He said Mr. Eurich's argument challenging the legitimacy of Beal's evidence is used frequently in similar cases.
"Every debtor raises it, and it strikes a chord with juries," said Mr. Litterio, who heads the litigation department at the Boston firm of Ruberto, Israel & Weiner PC.
Now, attorneys for lenders have an unambiguous precedent they can use to counter it.
In his decision, Justice Roderick L. Ireland wrote: "We conclude that it is normal business practice to maintain accurate business records regarding such loans and to provide them to those acquiring the loan."
The origin of the case dates back to 1987, when Mr. Eurich obtained a $151,000 mortgage loan from the now-defunct Home Owners Federal Savings and Loan Association of Boston. Beal acquired the note in 1996, after it had already been sold once.
According to court documents, Mr. Eurich made his last payment - $733.63 - in November 1996. The following September, Beal foreclosed on the loan and bought the property Mr. Eurich had put up as collateral for $18,000 at the foreclosure sale. It then sued him to recoup the rest of the money he owed.
The trial court sided with Beal and entered a judgment against Mr. Eurich, but he appealed to the Massachusetts Court of Appeals, which sided with him in September.
