Wagner, 50, a man who worked for Monger and lived in his Chestnut Street apartment building, is charged with two counts of first-degree murder in the deaths of the Davises.
Newline said Monger talked about the deaths frequently and on one occasion said that Wagner would be the fall guy.
Wagner was charged with two counts of first-degree murder in 1994 in connection with the slayings. He was tried on the charges in 1996 in Garrett County, Md., but the jury failed to reach a verdict. He was re-indicted on the same charges in 2001.
During cross-examination, Washington County State's Attorney Kenneth Long noted that Newline didn't provide her address when she gave her name to the court clerk as she took the stand.
"Are you scared of Ted (Monger)?" Long asked.
"Yes, I am," she said.
She said she also was afraid of Monger's friend and business partner, the late Charles Harmon, when he was alive.
When asked whether Monger told her Harmon set up the slayings, Newline replied "Yes."
Newline said that before the Davises died, she heard Russell Wagner talking about the Davises with Charles Harmon.
She testified that she heard Harmon comment that two old people would not be around anymore, to which Wagner said, "Yes, we're taking care of that."
Wagner has a distinctive voice, so she knew it was him speaking even though she overheard the conversation from another room, Newline said.
During the many times Monger talked of the deaths of the Davises, he never cried or appeared upset, she testified.
Wagner was the only person ever charged in the deaths of the Davises.
On Friday, Monger denied from the stand any involvement in the Davises deaths.
"Did you ask Ted (Monger) if Russ (Wagner) killed the Davises?" asked Long.
Newline said she did but "he wouldn't answer the question."
Newline testified that on Feb. 15, Monger visited her at her grocery store where she worked as a cashier.
Monger told her "they haven't found the bodies yet," she testified. Newline was busy at the time and didn't understand what Monger meant, she testified. She later read about the slayings in the newspaper and realized he had been talking about his in-laws, she said.
Defense witness Robin Seal testified that he went to a local auction house with William Hasenbuhler prior to the murders and they bought a couple of coats and a knife.
"Billy wanted the knife," said Seal, who worked with Hasenbuhler.
Seal said he carried the knife out of the building for Hasenbuhler and warned him to conceal it.
"He had just gotten out of jail and wasn't supposed to have it," Seal said.
When shown the murder weapon by defense attorney Susan Puhala, Seal said it resembled the one Hasenbuhler bought at the auction.
Following Seal's testimony, the prosecution and the defense stipulated that testing showed that a bloody glove found in the street near the Davises' home did not have Wagner's blood on it.
During testimony Friday, Hagerstown City Police Lt. Richard Johnson said his first impression of the crime scene was that it looked like a staged burglary because some areas of the home were ransacked but not others. Johnson said since then his opinion has changed "somewhat," and that the investigation was continuing.
Johnson said police never determined if anything had been taken from the Davis home. Three hours of videotape of Johnson interviewing Wagner was entered into evidence by the defense but not played in the courtroom.
Lawrence Faight, a former neighbor of the Davises, said Friday he saw a person standing in the Davises doorway the morning of Feb. 15. He couldn't identify who it was.
Testimony is to continue today.