Schaefer v. American Family Mut. Ins. Co.

• Decision Date: 10 February 1994
• Docket Number: No. 92-2769,92-2769
• Citation: 514 N.W.2d 16,182 Wis.2d 380
• Parties: Greg SCHAEFER, Susie Smith, Colleen Mathison, Peggy Gundersen, Stuart Schaefer and Bridget Schaefer, as children of the deceased, Donald W. Schaefer, and Marilyn T. Schaefer, Plaintiffs-Appellants, d v. AMERICAN FAMILY MUTUAL INSURANCE COMPANY, Defendant-Respondent.
• Court: Wisconsin Court of Appeals

Page 16

514 N.W.2d 16

182 Wis.2d 380

Greg SCHAEFER, Susie Smith, Colleen Mathison, Peggy Gundersen, Stuart Schaefer and Bridget Schaefer, as children of the deceased, Donald W. Schaefer, and Marilyn T Schaefer, Plaintiffs-Appellants, ^d v. AMERICAN FAMILY MUTUAL INSURANCE COMPANY, Defendant-Respondent.

No. 92-2769.

Court of Appeals of Wisconsin.

Submitted on Briefs Aug. 18, 1993.

Released Feb. 10, 1994.

Filed Feb. 10, 1994.

Before EICH, C.J., and SUNDBY and NETTESHEIM, JJ.

EICH, Chief Judge.

Donald and Marilyn Schaefer were killed in an automobile accident in May 1990. Their six adult children, the plaintiffs in this case (the heirs), brought a wrongful death action against several defendants, including the other driver involved in the accident and the driver's insurer. The heirs also sued their parents' insurer, American Family Mutual Insurance Company, for "loss of inheritance," claiming that, as a result of their parents' untimely deaths, the size of their expected inheritances had been diminished.

Prior to the accident, Donald Schaefer had purchased a $500,000 life insurance policy listing his wife, Marilyn, as the sole beneficiary. When the Schaefers were killed in the accident, the policy proceeds became part of their estates and passed to the heirs.

Prior to the trial of their wrongful death action, the heirs filed a motion in limine to bar introduction of any evidence regarding the existence of the $500,000 life insurance policy. The trial court denied the motion, and the case was thereafter dismissed, with a reservation of rights on the part of the heirs to challenge the ruling on appeal.

The heirs raise a single issue: whether evidence of their receipt of the life insurance proceeds is admissible in determining their damages for loss of inheritance. We conclude that it is and affirm the trial court's order.

The heirs and the defendants retained expert witnesses to testify as to the extent of the heirs' loss-of-inheritance damages, if any, incurred as a result of their parents' premature deaths.

The heirs' expert utilized an "accumulated surplus" analysis to determine the loss to the senior Schaefers' total estates. Calculating the amount of inheritance that would have accumulated had the Schaefers lived out their statistically expected life-spans, he concluded that the heirs' resulting loss had a present value of $218,474. In arriving at that amount, he did not consider that the heirs inherited the life insurance proceeds.

American Family's expert adopted the general methodology used by the heirs' expert, with one major exception: while the heirs' expert excluded the $500,000 life insurance policy in calculating the loss of inheritance, American Family's expert considered the life insurance proceeds as an inherited asset and concluded that, due to the "early payoff" of the policy, the heirs inherited more than they would have received had the Schaefers lived out their life expectancies. ¹ Accordingly, he concluded that the heirs suffered no loss of inheritance.

The heirs' expert agreed that if the early receipt of the life insurance proceeds is to be considered in determining damages, the heirs have suffered no loss. The admissibility of the life insurance evidence is thus dispositive of the heirs' action and this appeal.

The heirs argued to the trial court that considerations of public policy should preclude American Family from arguing that the surviving children benefitted monetarily from the untimely deaths of their parents. The trial court rejected the argument and the heirs appealed.

American Family characterizes the issue as simply one of the admissibility of evidence and argues that, because the admissibility of evidence is within the trial court's discretion, we must uphold the ruling under the traditional deference we pay to discretionary rulings. ² The essence of the heirs' argument, however, is not that the evidence is irrelevant, but that it should be barred on public policy grounds, and that is a question we review de novo. See Sanem v. Home Ins. Co., 119 Wis.2d 530, 539, 350 N.W.2d 89, 93 (1984) (application of public policy considerations held to be "solely a court function").

Wrongful death actions are governed by § 895.04, STATS., which provides, in part "Judgment for damages for pecuniary injury from wrongful death may be awarded to any person entitled to bring a wrongful death action." Section 895.04(4). And although the statute entitles surviving children to recover damages for pecuniary loss resulting from a parent's wrongful death, it is well established that such damages are not automatically recoverable; the survivors must prove their losses. Keithley v. Keithley, 95 Wis.2d 136, 138, 289 N.W.2d 368, 370 (Ct.App.1980).

In Estate of Holt v. State Farm Fire & Casualty Co., 151 Wis.2d 455, 460, 444 N.W.2d 453, 455 (Ct.App.1989), we held that a pecuniary injury is "a loss of any benefit which the beneficiary would have received from the decedent if the decedent had lived." Similarly, the Wisconsin Supreme Court has held that pecuniary injury can be measured as "such sum as will equal the value of such support and protection of the [surviving family member] as the [deceased] would have furnished during the time [the deceased] probably would have lived." Maloney v. Wisconsin Power, Light & Heat Co., 180 Wis. 546, 547, 193 N.W. 399, 399 (1923). Generally, claims for pecuniary injury are referred to as "loss of support and contribution" claims. See 1 THE LAW OF DAMAGES IN WISCONSIN §§ 16.28-.38 (Russell M. Ware et al. eds., 1993). In Wisconsin, however, the concept of pecuniary injury also includes loss of inheritance: the "amount the deceased might reasonably have saved and left to the surviving ... beneficiaries." Id. at § 16.39. In the heirs' situation, the measure of loss-of-inheritance damages is the difference between the size of their expected inheritance and what they actually received.

Loss-of-inheritance claims have been long recognized in Wisconsin. In Rudiger v. Chicago, St. P., M. & O. Ry., 101 Wis. 292, 302-03, 77 N.W. 169, 173 (1898), the supreme court held that, in fixing damages in a wrongful death action, juries should consider "the addition that the earnings of [the] deceased would probably have made to his [or her] property, had he [or she] continued to live, and the reasonable expectation which plaintiff had of pecuniary advantage by ultimately receiving a share of such earnings, as one of [the deceased's] heirs."

In support of their argument that considerations of public policy should bar evidence of the life insurance policy at trial, the heirs point to the standard Wisconsin jury instruction on pecuniary loss for the death of a parent, which provides in part as follows:

The term "pecuniary loss" means the same as financial loss, and in ... assessing damages to the plaintiff children, you are to restrict it to that meaning. You are not to include anything in your answer ... on account of any grief or injury ... on the part of the plaintiff children, nor should the fact that the [deceased's] death may have hastened the period when the children came into possession of the [deceased's] estate be considered by you in arriving at your answer [with regard to pecuniary damages].

WISCONSIN J I--CIVIL 1880 (emphasis added).

The comments accompanying the instruction note that the "hastening" language is based on two cases which the heirs cite in their brief: Keasler v. Milwaukee Elec. Ry. & Light Co., 195 Wis. 108, 217 N.W. 687 (1928), and Stahler v. Philadelphia & R. Ry., 199 Pa. 383, 49 A. 273 (1901).

In the first case, Keasler, an adult child whose mother was killed in an accident, brought a wrongful death action to recover for his pecuniary injury. Pursuant to divorce judgments, Keasler was to pay a total of $7,000 to his son and former spouse upon the death of his mother. Because of his mother's accidental death, he became obligated to pay the money at least eight years earlier than he had expected, and he sought to recover the interest he owed on money he borrowed to pay his divorce-related obligations. Keasler, 195 Wis. at 110, 217 N.W. at 688.

The Wisconsin Supreme Court rejected Keasler's claim, holding that there was no pecuniary injury resulting from his mother's death: "no pecuniary contributions which the mother had been making to the son or would have made in the future were cut off by her death." Keasler, 195 Wis. at 113, 217 N.W. at 689. The court concluded that the mother's death "merely fixed the time when [Keasler's divorce-related] obligations ... were to take immediate effect." Id. Based on its determination that Keasler had not shown any pecuniary injury, the court held that the fact that his mother's death "hastened the period when the plaintiff came into possession of the mother's estate" was "immaterial." Id. Keasler does not advance the heirs' argument.

The plaintiffs in Stahler were three adult sons who had been receiving yearly allowances from their father. Following the father's death, they brought a wrongful death action claiming pecuniary injury based on the termination of their allowances. The defendant argued that, because the sons inherited their father's estate, they actually benefitted monetarily from his death. Stahler, 49 A. at 273. The Pennsylvania Supreme Court concluded that the sons' inheritance was irrelevant to the loss of their yearly allowance: "The true question is, what had these plaintiffs the right to expect to receive from the parent during his life? [A]nd for the loss of this they are to be compensated. What they got after his death does not enter into the case." Id. at 274 (emphasis added).

While the heirs' argument is facially supported by Stahler and similar cases, all those cases involved claims for loss of support, rather than loss of inheritance, ³ and we agree with the trial court that the two types of damages are conceptually and legally different. As the Stahler court...