Featherly v. Continental Ins. Co.

• Decision Date: 30 June 1976
• Docket Number: No. 704,704
• Citation: Featherly v. Continental Ins. Co., 73 Wis.2d 273, 243 N.W.2d 806 (Wis. 1976)
• Parties: Clyde T. FEATHERLY and Alice Featherly, his wife, Plaintiffs-Respondents, v. The CONTINENTAL INSURANCE COMPANY, Defendant. HARDWARE DEALERS MUTUAL FLRE INS. CO., a/k/a Sentry Insurance Company, a Wisconsin Corporation, and Jane Nelson as Executrix of the Estate of May L. Chadwick, Deceased, Defendants and Third-Party Plaintiffs-Appellants, v. MUTUAL SERVICE CASUALTY INS. CO., a Foreign Corporation, Third-Party Defendant-Respondent. (1974).
• Court: Wisconsin Supreme Court

Page 806

243 N.W.2d 806

73 Wis.2d 273

Clyde T. FEATHERLY and Alice Featherly, his wife, Plaintiffs-Respondents, v. The CONTINENTAL INSURANCE COMPANY, Defendant.

HARDWARE DEALERS MUTUAL FLRE INS. CO., a/k/a Sentry

Insurance Company, a Wisconsin Corporation, and Jane Nelson

as Executrix of the Estate of May L. Chadwick, Deceased,

Defendants and Third-Party Plaintiffs-Appellants,

v.

MUTUAL SERVICE CASUALTY INS. CO., a Foreign Corporation,

Third-Party Defendant-Respondent.

No. 704 (1974).

Supreme Court of Wisconsin.

Submitted May 5, 1976.

Decided June 30, 1976.

Richard S. Gibbs, Clay R. Williams, John W. Hein and Gibbs, Roper & Fifield, Milwaukee, on briefs for appellant.

Hanlin J. Hayes, Peter J. Stange and Hayes & Hayes, Milwaukee, on brief for Mutual Service Cas. Ins. Co.

Daniel F. Aschenbrener and Aschenbrener & Koenig, S.C., Shawano, on brief for plaintiffs-respondents.

HEFFERNAN, Justice.

Clyde Featherly was injured in an automobile accident on January 29, 1970. His injury was sustained when the vehicle ahead of him had a head-on collision with an oncoming automobile. That oncoming vehicle apparently then went into Featherly's path of travel, and Featherly sustained severe injuries. The two other drivers were killed. The vehicle he was following at a distance of 100 to 175 feet was driven by Lee Ann Ward.

The trial resulted in an apportionment of 85 percent of the negligence to May L. Chadwick, the driver of the oncoming vehicle, 5 percent to the defendant Ward, and 10 percent to Featherly.

Featherly was awarded $55,000 for pain, suffering, and disability; $100,000 for the loss of earnings and earning capacity; and $3,500 for medical expense. Featherly's wife was awarded $25,000 for loss of society.

On motions after verdict, the award to Featherly's wife was reduced to $10,000, and the award for medical expenses was reduced to $2,815.80. The balance of the verdict was approved by the trial judge, judgment was entered, and defendants appeal.

We conclude that, in its negligence aspects, the trial was free of prejudicial error. We are also satisfied from the record that the award for personal injuries in the amount of $55,000 was supported by the evidence. We conclude, however, that the jury was permitted to speculate in respect to the award made for loss of earnings. We affirm the judgment, except as it relates to the loss of earning capacity. We reverse the judgment in that respect and remand the cause for a new trial on that issue only.

As we view the case, the facts of the accident are unimportant on the principal issue of whether the jury, under the evidence, could properly make the finding it did for loss of earning capacity.

There is no doubt from the entire record that the plaintiff sustained severe, permanent, and disabling injuries, which affected his past and future earning capacity. The question is, however, whether the evidence submitted was sufficiently probative and free from prejudicial error to permit the jury to make a finding on this element of the damages.

Exhibit 165 was submitted by the plaintiff to prove the earning capacity before and after the accident. That exhibit was a summary of information contained in the partnership returns of a logging partnership operated by Featherly and his wife. The compilation covers the period from 1969 to 1973. It shows that the net profits of the business dropped from almost $12,000 in 1969 to an estimated loss of almost $4,000 in 1973. A net profit of approximately $4,000 was shown in 1972, but losses of $12,000 and more than $18,000 per annum are shown for the years 1970 and 1971, respectively.

Defendants objected to the admission of this document at trial and argue that it was inadmissible.

We conclude that the document was not inadmissible per se, for it was, to some degree, probative on the only question before the jury--the loss of the earning capacity of Featherly--but it was not sufficiently probative for the jury to use as the basis for the award.

The record shows that the profit and loss picture of the partnership was affected to a considerable extent by the ability of Featherly to work. However, the loss of profits from a business are not, in the usual case, sufficient to provide a foundation for a jury conclusion in respect to the value of personal services or the value of the loss of earning capacity for one engaged in the business.

Unless a clear causal connection is shown between the loss of profits of a business and a loss of the ability to perform work by one employed in that business, the loss of profits is an insufficient basis for the jury to make an award of damages. We find the evidence insufficient here; and without a proper foundation, the jury should not have been permitted to make the award.

We summarized the Wisconsin law in respect to awards for loss of earning capacity in Ianni v. Grain Dealers Mutual Ins. Co. (1969), 42 Wis.2d 354, 364, 166 N.W.2d 148, 153. Therein this court said:

"One who is injured in his person may recover for any consequent . . . loss or diminution of his earning capacity . . ..

"The proper element of damages in such cases is loss of earning power; that is, the permanent impairment of the ability to earn money . . ..

"The burden is on the plaintiff to establish to a reasonable certainty the damages sustained.

"The jury is not allowed to speculate . . ..

". . . mere proof of a permanent injury is not conclusive evidence of impairment of future earning capacity . . ..

"There is no fixed rule for estimating the amount to be recovered for loss or diminution of future earning capacity . . ..

"The process of ascertaining the amount of compensation to be awarded requires (1) the determination of the extent to which such capacity has been diminished, and (2) the fixing of the amount of money which will compensate for the determined extent of impairment.

"The extent of the diminution or impairment of earning capacity is generally to be arrived at by comparing what the injured party was capable of earning at or before the time of the injury with what he was capable of earning after it occurred . . .."

While there may be an award for the loss of earning capacity measurable by loss of salary, if such salary is truly a measure of earning capacity, a more difficult problem is presented where one is self-employed and derives his income from the profits of a business. Where there is a personal injury, tort law in Wisconsin does not compensate for loss of profits per se. Loss of profits is appropriate only if there is a clear causal relationship to the value of the earning capacity. Loss of profits is not in itself, under the circumstances here, admissible as a separate element of damages or pro se as proof of the value of earning capacity. Muench v. Heinemann (1903), 119 Wis. 441, 96 N.W. 800; Lehman v. Amsterdam Coffee Co. (1911), 146 Wis. 213, 131 N.W. 362; Heer v. Warren-Scharf A.P. Co. (1903), 118 Wis. 57, 94 N.W. 789; 22 Am.Jur.2d, Damages, sec. 175, p. 248.

The general rule relating to damages for loss of earning capacity for one who is his own employer appears in Restatement, 4 Torts, sec. 924, p. 634:

'Where the injured person was not receiving a salary but owned and was operating a business which was deprived of his services by the injury, his damages are the value of his services in the business during such period. If his services, rather than the capital invested or the services of others, were the predominant factor in producing the profits, evidence of the diminution of profits from the business will be received as bearing on his loss of earning capacity . . .. If, however, the income of the business is chiefly the result of capital invested or the services of others, the damages are determined by the market value of the services which the plaintiff was prevented from giving, that is, the amount commonly paid for such services in businesses of like nature. In such cases, evidence as to the extent of the business and the nature of his services is admissible, but not evidence as to the amount of profits before and after the loss.'

This same general rule has long been accepted in this jurisdiction. In Muench, supra, 119 Wis. page 446, 96 N.W. page 802, this court adopted the rule which remains in effect:

'. . . where a man not working on a salary, but managing an established business, which is mainly dependent on his personal exertions, has been disabled, and sues to recover damages for the injury, it is competent to show the character and magnitude of the business, and to that end to show the capital and assistance employed in the business, also the quality and amount of the plaintiff's services in the business before the accident, and the amount of the profits of the business, not for the reason that such profits are in any respect elements of damage . . . but for the reason that all these elements, when known, are truly descriptive of the quality of the service of which the plaintiff was capable before his injury, and thus tend to throw light on his earning capacity. Of course, all of the elements above named are essential, and, in the orderly trial of a case, the proof of the amount of profits should not be made until the other necessary elements are shown.'

In Heer, supra, this court pointed out that the net profits of a business, involving significant amounts of capital or the labor of others or other items than the personal services of the owner, are not a safe or correct measure of the loss to the plaintiff because he is unable to render services in the business.

These principles of law make it clear that the summary of the profit and losses of the logging business were admissible only to the extent that a foundation is laid to show a clear, causal connection between the diminution of profits and the lost earning capacity.

Although the record is replete with evidence that Featherly's injury diminished the profits from the business, the record leaves to speculation...