Southern Pac. Co. v. Guthrie

Decision Date09 April 1951
Docket NumberNo. 12164.,12164.
CourtU.S. Court of Appeals — Ninth Circuit

A. B. Dunne and Dunne & Dunne, all of San Francisco, Cal., for appellant.

Thomas C. Ryan, Daniel V. Ryan and Ryan & Ryan, all of San Francisco, Cal., for appellee.

Before the Court sitting in bank.

POPE, Circuit Judge.

After our decision in Southern Pacific Company v. Guthrie, 9 Cir., 180 F.2d 295, we granted a rehearing limited to the questions "whether the damages are excessive, and if so, what the action of the court should be." The argument upon rehearing was before the court sitting in bank.

The facts relating to the character and extent of Guthrie's injuries, and his loss of prospective earnings, are stated in the former opinion. There the court attempted to arrive at a conclusion as to the limit of permissible award for the loss of expected earnings. It is apparent that this item of pecuniary loss is much more susceptible of calculation than those items of damages coming within the description of pain, suffering, inconvenience and disfigurement. In order properly to appraise the verdict, the court, in the earlier opinion, undertook to discover the maximum possible allowance for the loss of earnings, assuming that the balance of the total verdict must be charged to the non-pecuniary losses, pain, suffering, etc.

In attempting to evaluate the evidence as to the damage resulting from lost earnings we found ourselves compelled to deal with a record devoid of evidence as to the probable present worth of the lost earnings. Thus, there was no evidence such as the cost of an annuity which would be a substantial equivalent of the lost earnings. Hence the court was obliged, as we are now, to refer to matters which we may notice judicially, such as the probable rate of interest available from safe investments. It should be understood that none of the factors which are thus considered are absolute. The previous conclusions as to present worth of the prospective earnings, were necessarily arrived at by a consideration not only of Guthrie's life expectancy but also of the earning power of money. There is of course no rule of law which determines the probable rate of interest obtainable upon investments in safe securities.

Both parties have pressed us with considerations which, they say, should alter these conclusions. Such are, whether expected gross earnings must be calculated without regard to probable tax deductions; whether we should assume an expectation of earning beyond the age of compulsory retirement enforced by this employer; and, whether we should assume that Guthrie is not totally disabled to earn money in the future. In the former opinion the court expressed the view that due regard for the principle of compensation required recognition that a plaintiff should not be in a better position financially than he would have been if he had continued to work and that, hence some consideration of tax deductions is proper; that the earning power of money should be calculated at not less than 3 per cent;1 that there is no justification for speculating either that Guthrie would be able to earn money, or that his employment would have continued beyond age 70 had his injuries not occurred. It was thought that the evidence did not disclose a pecuniary loss in excess of the present worth, calculated at 3%, of $6000 a year for eleven years. Calculated exactly, this was $55,515.74. The members of the court agreed that the balance of the verdict amount, some $45,000, as an award for such items of damage as pain and suffering, inconvenience and disfigurement, was "too high". They differed as to whether this court should direct a remittitur.

We are now persuaded that the figure $55,515.74 should be enlarged, somewhat, and in two respects. We previously assumed Guthrie a man "past 59". Actually, he was two months less than 59, and therefore "past 58". Our calculation of eleven years' earnings was somewhat less than it should have been, although the difference would extend to no more than two months' earnings. We also considered that calculation should be based on no more than $6000 a year, because of necessary tax deductions. We think the court's view that the net take home pay, after taxes, would represent the actual loss, is correct; but we are now convinced that we cannot tell how much this would be. Under the tax law then in force, he could look forward to an additional exemption after age 65, and because he was married, the split income features of the law would give two additional exemptions when his wife reached 65, something about which we cannot tell. All we do know is that in 1946, his income tax on $5,165.92 was $724 less a "rebate" of "around $200".

In the nature of such a case there is bound to be some uncertainty, even as to such pecuniary matters as future earnings. What Guthrie's ultimate earnings, net or gross, would be, cannot be foretold. While it may be prophesied that during his lifetime income taxes will continue, there is not equal certainty as to their impact on him. In Chicago & N. W. Ry. Co. v. Curl, 8 Cir., 178 F.2d 497, 502, the court held it not prejudicial error to refuse evidence of the amount of income tax and other deductions, because of the inherent uncertainty in such matters, saying, "We may assume that the jury were aware of * * * the fact that the average earnings, net or gross, of the appellee for the future could not be definitely known".

As was said in the former opinion, if no account were taken of an income tax deduction, the present worth of Guthrie's lost earnings for eleven years would amount, under the method of calculation employed by the court, to $63,778.33. Because of the uncertainties mentioned, it can be said that the maximum present worth shown was somewhere between that figure and the $55,515.74 previously mentioned. Under the circumstances, we cannot assume that the trial court was wrong in stating that the figure exceeded $60,000.

It thus appears that the jury must be held to have awarded some $40,000 for the non-pecuniary damages. With respect to that award the members of this court as now constituted are in agreement, as was the court on the former hearing, on two preliminary conclusions.

The first of these is that the verdict was too high.

The second is that there is no basis for any claim that the verdict was given under the influence of passion or prejudice. The record contains no proof of any appeals to passion and prejudice, which, under some authorities, would be essential before such a conclusion could be reached. Larsen v. Chicago & N. W. R. Co., 7 Cir., 171 F.2d 841, 845. And even if an imputation of passion and prejudice could arise from the mere size of a verdict, this one does not fall into any such category.

We are now confronted with two arguments with respect to our power and duty in these circumstances. On behalf of Guthrie it is argued that since showing of passion or prejudice is absent, even although we consider the verdict too high, regardless of what may be the rule in the state courts, we, as a federal appellate court, are without power to require a new trial even if we find the verdict excessive; and since we cannot direct a new trial, we cannot condition a denial of a new trial upon a remittitur. And, notwithstanding this court did just that in Cobb v. Lepisto, 9 Cir., 6 F.2d 128, an impressive list of cases is cited by appellee in support of his position. Among these cases is Scott v. Baltimore & O. R. Co., 3 Cir., 151 F.2d 61, at page 64, where the court said: "The members of the Court think the verdict is too high. But they also feel very clear that there is nothing the Court can do about it. * * * A long list of cases in the federal courts demonstrates clearly that the federal appellate courts, including the Supreme Court, will not review a judgment for excessiveness of damages even in cases where the amount of damage is capable of much more precise ascertainment than it is in a personal injury case."2

On the other hand this court cannot ignore its own decision in Cobb v. Lepisto, supra. Of the rule in that case, this court said in Department of Water and Power of City of Los Angeles v. Anderson, 9 Cir., 95 F.2d 577, 586: "Although it was held in Southern Ry. Co. v. Montgomery, 5 Cir., 46 F.2d 990, 991, that a Circuit Court of Appeals has `no jurisdiction to correct a verdict because it is excessive,' the rule in this court is that the refusal to grant a new trial is `such an abuse of discretion as is reviewable by this court' where the verdict is `grossly excessive'".3

More recently the Court of Appeals for the Fourth Circuit, in Virginian Ry. Co. v. Armentrout, 166 F.2d 400, 408, 4 A.L.R.2d 1064, expressly approved and followed Cobb v. Lepisto. There the trial judge had denied a motion for new trial made on the ground that the verdict was excessive. The judgment was reversed and a new trial ordered because of the appellate court's determination that the verdict was so excessive that the court's failure to set it aside constituted an abuse of discretion. The court said: "To the federal trial judge, the law gives ample power to see that justice is done in causes pending before him; and the responsibility attendant upon such power is his in full measure. While according due respect to the findings of the jury, he should not hesitate to set aside their verdict and grant a new trial in any case where the ends of justice so require. * * * The power of this court to reverse the trial court for failure to exercise the power, where such failure, as here, amounts to an abuse of discretion, is likewise clear. * * *"

The rule there stated cannot be reconciled with that of Scott v. Baltimore & O. R. Co., supra, and the cases cited therein, and in note 2 supra.

We are urged to repudiate the rule of Cobb v. Lepisto, and to adopt that followed in the group of case...

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