Farrar v. Brooklyn Union Gas Co.
| Decision Date | 30 April 1986 |
| Parties | Arthur M. FARRAR, as Administrator of the Goods, Chattels and Credits of Gladys Lowe Farrar, late of Richmond Co. deceased, Plaintiff, v. BROOKLYN UNION GAS CO., Defendant, and Another Action. |
| Court | New York Supreme Court |
John J. Brennan, Staten Island, for plaintiff.
Cullen & Dykman, Brooklyn, for defendant.
In this wrongful death action, defendant/third party plaintiff Brooklyn Union Gas Co. moves for summary judgment pursuant to CPLR § 3212 in its favor dismissing the complaint of plaintiff.
The issue is whether the amount paid or payable to the federal government representing the estate tax of the decedent is recoverable as an item of damages in a wrongful death action. An ancillary issue is whether or not movant is entitled to the relief of dismissal as a matter of law.
In a wrongful death action, the amount of recovery for damages is measured by the fair and just compensation for the pecuniary injuries resulting from decedent's death to the persons for whose benefit the action is brought (E.P.T.L. § 5-4.3).
Any recovery here would inure to the benefit of decedent's two brothers and two sisters (E.P.T.L. § 4-1.1(a)(7)). It is conceded that there is no claim for lost earnings of decedent. At the time of her death, on January 21, 1982, the decedent was retired, and was the recipient of Social Security benefits and two pensions. She subsisted on this and income from some investments. The only claim made by plaintiff, as an item of pecuniary loss, is the amount of estate tax paid to the federal government as a result of her premature death. The sum paid was $125,562.15 on or about October 9, 1982.
Movant argues that tax liabilities are not a pecuniary loss as defined in E.P.T.L. § 5-4.3, and consequently no action may be maintained therefor. While it is true that tax liabilities are not specifically included in that section, neither are they excluded. In fact, the statute mentions only "pecuniary injuries resulting from decedent's death" as a proper measure of recovery. When measuring this loss, the extent of damages "depends upon the value of the reasonable expectation of pecuniary benefits from the continuance in life by the decedent" to the next of kin. (Meekin v. Brooklyn Heights R. Co., 164 N.Y. 145, 149, 58 N.E. 50; 2d Carmody Wait 2d, Actions for Wrongful Death, § 130:84).
In applying this standard to this situation, we can determine that due to decedent's death in 1982, the federal tax liability of her estate was computed as follows:
Total Gross Estate ............ $728,038.86
Allowable Deductions ........... -99,062.64
-----------
Taxable Estate ................. 628,976.22
Gross Estimate Tax ............. 203,521.20
Allowable Unified Credit ....... -62,800.00
Adjusted Estate Tax ............ 140,721.20
Credit for State Death Taxes ... -15,159.05
-----------
Tax Due ....................... $125,562.15
The crux of plaintiff's argument is that had decedent lived through her natural life expectancy (which is of course a proper item for consideration; see Sider v. General Electric Co., 238 N.Y. 64, 69, 143 N.E. 792; Lyons v. DeVore, 48 A.D.2d 943, 368 N.Y.S.2d 887, aff'd 39 N.Y.2d 971, 387 N.Y.S.2d 108, 354 N.E.2d 848; 37 N.Y.Jur.2d, Death, § 336), she would have been entitled to a higher unified credit which was phased in as part of the Economic Recovery Tax Act of 1981 (26 U.S.C. § 2010(a), (b)). At the time of her death, decedent's life expectancy was 12.9 years. Thus, there is evidence that she might have lived through 1987 at a minimum when the unified credit becomes $192,800.00. In 1987, her estate tax liability would be computed thusly:
Total Gross Estate ............ $728,038.86
Allowable Deductions .......... -99,062.64
-----------
Taxable Estate ................ 628,976.22
Gross Estate Tax .............. 203,521.20
Allowable Unified Credit ...... -192,800.00
-----------
Adjusted Estate Tax ........... 10,721.20
Credit for State Death Taxes .. -10,159.05
-----------
Tax Due ....................... -0-
Of course, this computation is in simple terms, and does not accoutn for any possible increases or decreases in the value of the estate during decedent's projected lifetime, any changes in allowable deductions, any possible marriages, changes in the tax laws or wills. But these possibilities and the calculation of pecuniary loss, are for the trier of fact to determine, based on competent evidence. (see Parilis v. Feinstein, 49 N.Y.2d 984, 429 N.Y.S.2d 165, 406 N.E.2d 1059).
Plaintiff's theory of recovery is that but for defendant's acts, the beneficiaries of decedent's estate might have been reasonably expected to receive a distribution of $728,038.86 rather than $602,476.71, which directly resulted from her premature death. Loss of a possibility of inheritance is a proper element of pecuniary loss (21 Carmody Wait 2d Actions for Wrongful Death, § 130:85, 37 N.Y.Jur.2d, Death, § 322; Keenan v. Brooklyn City Railroad Co., 145 N.Y. 348, 40 N.E. 15; Pineo v. New York C & H R.R. Co., 34 Hun. 80, aff'd 99 N.Y. 644; Parilis v. Feinstein, supra; Amble v. Tewari, 128 Misc.2d 990, 491 N.Y.S.2d 964; Yowell v. Piper Aircraft Corp., 703 S.W.2d 630).
The reported cases on the issue of the effect of taxation are not helpful to the court in determining the matter at bar. All of the cases to be found address the issue of the propriety of deducting income taxes from the prospective future earnings of the decedent, when lost prospective earnings are used as a measure of damages. (see e.g. Zaninovich v. American Airlines Inc., 26 A.D.2d 155, 271 N.Y.S.2d 866). On this issue, the courts appear divided. In some instances, the courts have ruled either that prospective income taxes on earnings should not be deducted from any damage award, (Vasina v. Grumman Corp., 644 F.2d 112, 118 (2nd Cir.1981); Cunningham v. Rederiet Vindeggen A/S, 333 F.2d 308 (2nd Cir.1964); Montellier v. U.S., 315 F.2d 180 (2nd Cir.1963).) or that the jury should not be charged that any award to plaintiff would be free of income taxes (Coleman v. New York City Transit Authority, 37 N.Y.2d 137, 371 N.Y.S.2d 663, 332 N.E.2d 850; Sullivan v. Held, 81 A.D.2d 663, 438 N.Y.S.2d 359; Vasina v. Grumman Corp., supra). In other instances, the courts have held that prospective income tax liability on future earnings may be considered and deducted from awards in wrongful death cases. (Pellegrino v. State of New York, 128 Misc.2d 757, 490 N.Y.S.2d 719; Morgan Guaranty Trust Co. of New York v. Texas Gulf Aviation, 604 F.Supp. 699 (S.D.N.Y.1985); Le Roy v. Sabena Belgian World Airlines, 344 F.2d 266 (2nd Cir.1965), cert. den., 382 U.S. 878, 86 S.Ct. 161, 15 L.Ed.2d 119; Gilliard v. New York City Health and Hospitals Corp., 77 A.D.2d 532, 430 N.Y.S.2d 308).
None of these cases address the propriety of considering the impact of inheritance taxes upon the loss of inheritance to the persons for whose benefit the action is brought. All of them concerned the issue of the impact of income taxes on damages awards as measured by the loss of potential earnings, either in personal injury actions or wrongful death actions. To this extent the issue appears to be one of first impression. But first impression does not necessarily make the determination of the issue difficult. In both loss-of-prospective-earnings and loss-of-inheritance, as distinct elements of damage, the trier of fact seeks to ascertain an amount which compensate certain heirs and next-of-kin for their pecuniary losses resulting from decedent's premature death. Several factors may be considered by the trier of fact in computing this amount, such as age and health, (Rothman v. St. Barnabas Hosp., 20 A.D.2d 531, 244 N.Y.S.2d 791) habits, possible charitable contributions, expenditures for decedent's own support, (Zaninovich v. American Airlines, supra) earning potential, (Wolf v. State, 122 Misc. 381, 202 N.Y.S. 754, aff'd 210 A.D. 827, 206 N.Y.S. 974) life expectancy, (Lyons v. De Vore, supra) and past support (Spreen v. Erie R. Co., 219 N.Y. 533, 114 N.E. 1049).
The Court of Appeals in the Coleman case, supra, has determined that the effect of taxes is not one of these factors. This appears to be the majority position (16 ALR 4th 589, § 8). If this is the law on the...
To continue reading
Request your trial
- Farrar v. Brooklyn Union Gas Co.
-
Lindsay v. Allstate Ins. Co., 88-2416
... ... Appellants rely mainly on New York authority, Farrar v. Brooklyn Union Gas Co., 131 Misc.2d 936, 502 N.Y.S.2d 610 (Sup.Ct.1986), aff'd, 134 A.D.2d 31, ... ...
-
Pratt v. George Spalty Sons, Inc.
... ... benefit of a higher unified credit, and therefore constituted a recoverable pecuniary loss (Farrar v. Brooklyn Union Gas Co., 131 Misc.2d 936, 502 N.Y.S.2d 610) ... Defendant, ... ...
-
Calculating Net Pecuniary Loss Under Colorado Wrongful Death Law
...reduce decedent's earning capacity by the amount of his or her charitable 1263 1264 contributions. See Farrar v. Brooklyn Union Gas Co., 502 N.Y.S.2d 610, 612 (N.Y. Sup.Ct. 1986), rev'd on other grounds, 533 N.E.2d 1055 (1988). 34. This issue is distinct from the taxability of wrongful deat......