Appeal from Circuit Court, Multnomah County. John C. Beatty, Jr., Judge.
George M. Joseph, Portland, argued the cause for appellant. With him on the briefs were Bemis, Breathouwer & Joseph, Portland.
William H. Poole, Portland, argued the cause for respondent. With him on the brief were Lindsay, Nahstoll, Hart, Duncan, Dafoe & Krause, Portland.
Tongue, Justice. O'Connell, Chief Justice, and Howell, Justices. McAllister, Justice, specially concurring. Denecke, Justice, specially concurring. Bryson, Justice, concurring in part; dissenting in part.
This is an action for damages for personal injuries arising out of an automobile accident. Defendant appeals from a judgment based upon a jury verdict for $9,500 in general damages and $950 in special damages for medical expenses.
The two primary issues raised by this appeal are: (1) was evidence of the amount of earnings alleged by plaintiff to have been lost between the time of his injury and the time of trial admissible as evidence of impairment of plaintiff's earning capacity, in support of his claim for general damages and, if so, (2) was the testimony offered by plaintiff for that purpose, based upon average earnings by other employees
with similar contracts of employment, relevant and competent evidence to support such a claim of impairment of earning capacity?
The facts are important in considering these questions. Plaintiff was employed as a Division Manager by Prudential Insurance Co. His job involved recruitment, training and retention of life insurance agents. He was paid a minimal base salary, plus percentage "overrides" on those agents' commissions. These "overrides" were the major source of his income and depended upon the number of agents working under him and the amount of sales made by them.
For the purposes of this appeal defendant does not deny liability for the accident which caused plaintiff's injury. By the time of trial plaintiff had been discharged by his treating doctor and had made a normal recovery.
Plaintiff's original complaint made no claim for permanent injuries, but alleged special damages of $6,250 for lost income prior to trial, in addition to medical expenses. In addition to praying for judgment for these amounts as special damages, the complaint prayed for $25,000 in general damages.
The evidence in question on this appeal consisted of the testimony of the General Manager of Prudential's Portland agency to the effect that plaintiff was one of 15 or 16 Division Managers in the company's Pacific Northwest Region; that in 1969 (before plaintiff's injury), the average weekly income for this group was $219.33 and that plaintiff was rated third among this group, with income above that average, but that in 1970 (after plaintiff's injury), the average weekly income for that group increased to $343, while plaintiff's income was only $216.63, so that
he lost at least $125 per week in income during 1970 as a result of the accident. The General Manager also said that plaintiff had been highly regarded as having had "great potential" with the company and but for this injury would have "at least equalled" the weekly average income by other Division Managers; that before the accident he was known as "Mr. Hustle," but that he "slowed down" after the accident and at the time of trial was "right at the bottom" of the group.
When this witness started to testify to the average earnings of the 15 or 16 other Division Managers defendant objected to that testimony as irrelevant. After an offer of proof of this testimony in the absence of the jury defendant objected to comparing plaintiff's actual earning with the average earnings of other Division Managers upon the ground that such testimony was based on hearsay and speculation and that a claim of special damages for lost wages must be capable of accurate computation.
The trial court ruled that this testimony was "too speculative" to sustain plaintiff's claim of special damages, but that it had "substantive probative value" and was admissible in support of plaintiff's claim for general damages. Defendant then renewed her objections on the ground of relevancy, materiality and hearsay. She also objected that she did not have the "figures" used by the witness for use in cross-examination.
The trial court ruled, however, that although defendant could require the production of documents for use in cross-examination, plaintiff would be permitted to offer this testimony before the jury and that after defendant's counsel heard the testimony she could make her "formal objection."
That testimony was then repeated before the
jury. Defendant's attorney undertook to cross-examine the witness, who conceded that the income of the Division Managers depended upon the number and effectiveness of the agents under their supervision. Defendant's attorney then asked the witness to produce figures showing the number of agents working under each Division Manager in each office and the number of offices included in his computation of weekly average earnings, all for use in further cross-examination.
The trial then recessed over a week end. Upon resumption of the trial plaintiff's attorney reported that his witness had a list of the offices involved, but did not have the number of agents employed in each office. Defendant then moved to strike plaintiff's allegation of $6,250 for lost wages as special damages and also moved to strike the testimony as "too speculative" and as not supported by the information requested.
The trial court allowed defendant's motion to strike plaintiff's allegation of lost wages as special damages, but then inserted in the complaint as an allegation to support plaintiff's claim for general damages (after the allegations describing his injuries) the words " and diminished his capacity to earn income, all to his general damage in the sum of $25,000." The trial court also ruled that the cross-examination should continue, based on "what he's got."
1. Impairment of pre-trial earning capacity may be claimed.
Defendant's "summary" of argument on this issue is as follows:
"This Court has always recognized a distinction
between loss of earnings, which it has treated as a species of special damages suffered up to the time of trial, and impairment of earning capacity, which it has treated as an element of general damages relating to future ability to make a living. The trial court here obliterated the distinction entirely by admitting testimony on specific lost income and instructing the jury it could use that evidence to determine as part of general damages plaintiff's impaired earning capacity up to the time of trial. Maintenance of the distinction was particularly important here, because the plaintiff made no claim that his earning capacity for the future was in any way impaired by his injuries."
This court has held, in effect, that when in such a case a plaintiff was not employed at the time of his injury, so as to entitle him to make a claim for pre-trial lost wages as an item of special damages, he may not make a claim for pre-trial impairment of earning capacity as an item of special damages, so as to entitle him to an instruction on such an item as special damages. Martin v. Hahn, 252 Or 585, 590, 451 P2d 465 (1969). That holding was reaffirmed by a divided court in Baxter v. Baker, 253 Or 376, 379, 451 P2d 456, 454 P2d 855 (1969). See also Shaw v. Pacific Supply Coop., 166 Or 508, 510, 113 P2d 627 (1941), and Fields v. Fields, 213 Or 522, 537, 307 P2d 528, 326 P2d 451 (1958). The distinction between pretrial and post-trial earning losses was strongly criticized, however, by the dissenting opinions in Baxter v. Baker, supra at 380-94.
Because of our continuing concern over this problem we requested both parties to submit supplemental briefs upon whether this court should now reconsider its previous decisions on this subject.
We believe that this case well illustrates the
fallacy of the rule as previously adopted by this court and as perpetuated by the majority in Baxter v. Baker, supra, and that the time has now come to reconsider the contentions made in the dissenting opinion by O'Connell, J., in that case and its three-fold effect upon the pleading and trial of an action for personal injuries as follows:
(a) Pleading of loss of earnings and impairment of earning capacity.
The dissenting opinion in Baxter, in commenting (at 381-85) upon the rule of our previous decisions, pointed out that:
"* * * the loss before trial, described as 'loss of earnings,' is an item of special damages which is to be specially pleaded, whereas the loss after trial, described as 'impairment of earning capacity,' is an item of general damages and need not be specially pleaded. * * *" Baxter v. Baker, supra at 387 (O'Connell, J., dissenting).
It is significant, however, that the dissenting opinion recognized (at 391) that as a matter of giving fair notice to the defendant the complaint in an action in which impairment of earning capacity is claimed, either before trial or in the future, should include an allegation that plaintiff has or will suffer loss of earnings.
This does not mean that the amount of such a loss must be pleaded. Thus, as pointed out by the dissent in Baxter (at 390-92) we had previously held in Turney v. Southern Pac. Co., 44 Or 280, 299, 75 P 144, 76 P 1080 (1904), that when pleading items of special damages such as medical expenses it was not necessary to plead the amount of such a claim and
that the practice in Oregon of pleading the amount of plaintiff's loss of wages as an item of special damages cannot be attributed to any requirement found in Oregon law.
For these reasons, we hold that the complaint in such a case, whether claiming loss of wages prior to trial or impairment of earning capacity either before or after trial, should include an allegation giving notice of such a claim. If a plaintiff was employed at a fixed wage and claims to have suffered lost wages he may still plead the amount of the claimed wage loss, as under present practice. Similarly, a plaintiff who has incurred medical expenses may still plead the amount of such expenses. On the other hand, if plaintiff chooses not to do so, or if he was not employed at a fixed wage, he may plead in general terms that as a result of the injury his earning capacity has been impaired or that he has incurred medical expenses, in unstated amounts, and any such recovery would then necessarily be included in the damages claimed by him. This rule is consistent with what we believe to be the better authorities.*fn1 To the extent that our previous decisions are inconsistent, they are now overruled.*fn2
(b) Measure of damages and proof of loss of earnings and impairment ...