Petition — Norfolk & Western R. Co. v. Liepelt

Supreme Court, U.S ~

EF I L ED 1

787 \ 323 | ht 26 1979

BS

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t. M HAT RONEK IR PERE

In THE

Supreme Court of the United States

OctroBer Term, 1978

No. 78-

Norfolk and Western Railway Company,

a Corporation,

Petitioner,

vs.

Kandythe J. Liepelt, Administratrix

of the Estate of Delroy Liepelt, Deceased,

” Respondent.

Petition for a Writ of Certiorari to the

Appellate Court of Illinois,

First District, First Division

Howarp J. TRIENENS

Siptey & Austin

Suite 4800

One First National Plaza

Chicago, Illinois 60603

(312) 329-5400

Rosert L. LANDESS

Tosin M. Ricutrer

Ross, Harpirs, O’KErErFE,

Bascock & Parsons

One IBM Plaza, Suite 3100

Chicago, Illinois 60611

(312) 467-9300

Aitorneys for the Petitioner

February, 1979

Table of Contents

Page

Introductory Statement 5» > >>> rrrrprrrrrrrrs | l

re eg cue bpppppepp) l

Se uae »

Questions Presented.......... La ee bet »

Statutes Involved .... o.oo eee NS iege te RE . 8

tbe Pate 4

How the Federal Questions Were Presented ......... 5

Reasons For Granting The Writ... 0... 0.66.6 0000005 5

1. Federal Law Determines the Treatment of Income

Taxation in FELA Damages Computations ....... )

2. There Is a Confliet Among Both the Federal

Courts of Appeals and the State Courts........... 10

3. The Decision Below Is Contrary to Applicable

Decisions of This Court and Is Erroneous ........ 12

4. The Questions Are Important ...... ©... cee 17

ne enccens 19

Appendices

Opinion Of The [linois Appellate Court .......... Acl

Order And Mandate Of The Illinois iid

Court . ‘a ey oo A?

Excerpts F From The Trial Record | »» ADB

ii

TABLE OF CITATIONS

Cases

Alyeska Pipeline Co. v. Wilderness Soerety, 421

I Ce a eed he

Bailey v. Central Vermont RR, 319 UB, 350

Boston & Maine RR. v. Talbert, 360 P 2d 286

eT ON a oe eae ile blnpin ce

British Transport Commission v. Gourley, [1956]

ES cited ovah Vhsady estes dcrterines

Burlington Northern Ine. v. Boaxberger, 529 F 2d

EY PODER ic checb esis bow baevisdet

Chesapeake & Ohio R. Co. v, Kelly, 241 U.S, 485

(Sth Cir, 1949) Spe eee edesonevnebeteenssss

Rediker v. Chicago, Roek Island & Paci fie R. Co,

| Kan. App.2d 581, 571 P.dd 70 (1977) cert.

granted, 435 U.S, 922 (1078) dismissed pur-

evant to 8. Cr. Rule 60... cece cere een

Cor v. Northwest Airlines, Ine, 379 P.Qd 898

CR ES ge he er tie rae or

Dee v. Akron, Canton, & Youngstown R. Co., 42

U.S. 350 (1082)....... gg ERS

Domeraeki v. Hamble nt & afring Co, 445

F.2d 1245 (Sed Cir. 1971). ee

Riston vw. Shell Oil Co, 481 PH 008 (ah Ci

1873) . eee

15

LL, 12, 14,

16

9, 10, 12, 14

8,11, ,

15, 19

ia

10

12, 16

i

Geris ¥. Burlington Northern Ine, 277 Ov, 381,

RS Ye RR es en ae

Johnson v. Penrod Drilling Ca, 510 P.Qd 234

tied, Cte: SOU ie ck Rig ce ae

Lehoy v. Sabena Belgian World Airlines, 3A4

F.9d 908 (Bd Cie. 20GB), npr rr rr prr errr

Metiee v. Burlington Northern Ine., Mont.

, 571 P.dd 784 (1977)....... Da Nae

MeWeeney v. New York, NH. & HLRLR. Co, 282

P 2d $4 (2d Cir, 1960)... ., Bt aN a orgie ak

Michigan Central RR. Co. v. Vreeland, 227 US.

59 (1913) ...... okae + CORR Ene teens Makes

New York Central KR. Co. v. Deliek, 252 P 2d

SRS (Pik Cie: BOGED- . s vse v ness ceeds: |

Niehols v. Marshall, 486 P.2d 701 (LOth Cir,

SONG): '?. eke Rock UES eee ae

Norfolk & Western Ry. Co. v. illite 235 US,

| er ee

Petition af United States Steet Corp,, 436 Pd

2DBS (Gada Chev 2OUOD cous a eco ncservrcee:

Varlack v. SWC Caribbean, Ine, 550 F.2d 171

te.) PU a Ca slams

Sanchez v. Denver & Rie Grande W. ARK, SAS

F.2d 904 (10th Cir, 1976) 0,

SeVEU PE

SP UR Bee ik ves ka vavecksdeeals

SB USD Swi Ai kee ike pe. As,

BB BBG: Bee os biven 604 bhi ok

OB UE ooick nes na ar ia ade

SUSE. OR sci ekcss Rca bee Ot doe

Hh, b2

iv

Mince eh. aneous

Annot,, 63 A.L.R2d 1399 (1958) and later

eases in A.L.R.2d Supp. Serviee...........

Burns, A Compensation Award for Personal

Injury or Wrongful Death is Tax-Exempt:

Should We Tell The Jury’, 14 DePaul

Re ray ere ee eae

Feldman, Personal Injury Awards: Should

Tax Exempt Status Be Ignored’, 7 Aria.

ae ee A ee ee

FP. Harper & P. James, Law of Torts (1956) ..

Henderson, Some Reeent Decisions on Dam-

ages: With Special Reference to Questions

of Inflation and Income Taxes, 40 Ina.

Caunans 6. GD CHG vec) ve rccesecevesh:

Hill, Substance and Procedure in State PELA

Aetions—The Converse of the Erie Prob-

lem’, 17 Obie St. L. J. 384 (1056)... .......

C. MeCormack, Law of Damages (1995) .....

Morris, Should Juries in Personal Injury

Cases Be Instructed that Plaintiff's Reeov-

erles Are Not Income Within the Meaning

of the Pederal Tax Law’, 3 Defense LJ. 3

Morris & Nordstrom, Personal Injury Reeov-

eres and the Pederal Income Tax Law, 56

A. B.A. 274 (1060).

Nordstrom, Income Taxes and Personal In-

jury Awards, 19 Ohio St. L. J. 212 (1958)

Page

11, 12

15, 16

16

14, 15, 16

16

10

16

15

16

Vv

Page

Note, 26 Ford L.Rev. 98 (1957) ............. 17

Note, 42 Geo.L.J.' 140 (2053)... Se. 17

Noté, 50 Ky.L.J. 001 (1062)............0..8, 15,17

Note, 44 Ky.L.J. 384 (1956) .........0...... 17

Note, 56 Minn.L. Rev. 503 (1972)... , Pans We | 17

Note, 33 Ohio St.L.J. 972 (1973)............. 17

Note, 32 Tex.L.Rev. 108 (1953) ............. 17

Note, 8 Taba U.J. 262 (1972) 2. de .. 17

Note, 4 U.C.L.A. L.Rev. 636 (1957).......... 17

. Note, 25 U.Cin.L.Rev. 395 (1956) ........... 17

Note, 9 Vand.L.Rev. 543 (1956) Rate eer aes 17

Note, 11 Wash. & Lee L.Rev. 66 (1954)...... 17

Stripp & Rowland, Taking Account of the

Impact of Income Taxes in Personal Injury

and Wrongful Death Cases, Recent De-

velopments, 36 Ins. Council J. 231 (1969)... 15, 17

In THE

Supreme Court of the United States

OctToBeR TERM, 1978

No. 78-

Norfolk and Western Railway Company,

a Corporation,

Petitioner,

vs.

Kandythe J. Liepelt, Administratrix

of the Estate of Delroy Liepelt, Deceased,

Respondent.

Petition for a Writ of Certiorari to the

Appellate Court of Illinois,

First District, First Division

INTRODUCTORY STATEMENT

Norfolk and Western Railway Company petitions this

Court for a writ of certiorari to review the judgment and

opinion of the Appellate Court of Illinois, First District,

First Division.

OPINION BELOW

The opinion of the Appellate Court of Illinois, First Dis-

trict, First Division is reported at 62 Ill. App.3d 653, and at

378 N.E.2d 1232 (1978), and is appended hereto at pages Al

to A26. The order and mandate of the Supreme Court of

Illinois denying Petitioner’s Petition for Leave to Appeal ap-

pears at pages A27-A28.

s

2

JURISDICTION

The judgment of the Appellate Court of Illinois, First Dis-

trict, First Division was entered on July 5, 1978. Petitioner’s

timely Petition for Leave te Appeal was denied by the Su-

preme Court of Illinois on November 30, 1978 and this Peti-

tion for Certiorari was filed within 90 days of that date. This

Court’s jurisdiction is invoked under 28 U.S.C. §1257(3).

QUESTIONS PRESENTED

It is settled that the measure of damages in state as well as

federal court actions under the Federal Employers’ Liability

Act (FELA) is the amount that the claimant could reason-

ably have expected to have been applied to his benefit if the

accident had not occurred. This case presents two closely

related questions concerning whether a court’s refusal to

allow the trier of fact to consider the effect of income taxa-

tion violated this basic principle of damages:

1. Whether, in a FELA case in which income taxation

would have substantially reduced the income available to a

claimant if the accident had not occurred, a court may, by

excluding all evidence of income taxes that the injured party

would have paid on his projected lost earnings, require that

damages calculations be based on the injured party’s es-

timated gross income?

2. Whether, despite the likelihood that a jury would errone-

- ously assume that a damages award is taxable, inflate its

verdict to assure full compensation after payment of an

imagined tax, and thus overcompensate the plaintiff, the trial

court in a FELA action may refuse to advise the jury that

under existing tax laws the damages award is not subject to

income taxation?

3

STATUTES INVOLVED

35 Stat. 65, as amended, 45 U.S.C. §51.

“Liability of common carriers by railroad, in interstate or for-

eign commerce, for injuries to employees from negligence; defini-

tion of employees.

“Every common carrier by railroad while engaging in com-

merce between any of the several States or Territories, or

between any of the States and Territories, or between the

District of Columbia and any of the States or Territories, or

between the District of Columbia or any of the States or

Territories and any foreign nation or nations, shall be liable

in damages to any person suffering injury while he is em-

ployed by such carrier in such commerce, or, in case of the

death of such employee, to his or her personal representative,

for the benefit of the surviving widow or husband and chil-

dren of such employee; and, if none, then of such employee’s

parents; and, if none, then of the next of kin dependent upon

such employee, for such injury or death resulting in whole or

in part from the negligence of any of the officers, agents, or

employees of such carrier, or by reason of any defect or in-

sufficiency, due to its negligence, in its cars, engines, appli-

ances, machinery, track, roadbed, works, boats, wharves, or

other equipment.”

26 U.S.C. §104(a)(2), Int. Rev. Code of 1954 §104(a)(2).

“Except in the case of amounts attributable to (and not in

excess of) deductions allowed under Section 213 (relating to

medical, etc., expense) for any prior taxable year, gross in-

come does not include — ... (2) the amount of any damage

received (whether by suit or agreement) on account of per-

sonal injuries or sickness ... .”

4

STATEMENT OF THE CASE

Respondent, who is administratrix of the estate, instituted

this action in an Illinois state court under the Federal Em-

ployers’ Liabil‘ty Act, 45 U.S.C. §51, to recover damages for

the death of her decedent, Delroy Liepelt, a resident of Ohio,

who had been killed in a collision at Wyatt, Indiana, in

November, 1973, while working as a fireman for petitioner

railway company.

At trial, respondent introduced evidence both of peti-

tioner’s negligence—which is no longer in issue—and of the

monetary value of the loss she and decedent’s children had

incurred as a result of his death. An economist, Dr. Bernard

Friedman, supplied the critical testimony on damages.

Record (R) at 667-710. He stated that Liepelt, who had been

earning approximately $13,000 per year at the time of his

death, had had a life expectancy of a little over 34 years in

1973. Friedman further testified that, but for Liepelt’s death,

his annual earnings would have, under the collective bargain-

ing agreement in effect, increased to approximately $16,800

by 1977, which was the date of the trial, and Friedman

projected that Liepelt’s earnings would have continued to in-

crease at a rate of at least 5% per year for the remaining

twenty-four years of his working life (R 684), thus reaching

an annual salary of at least $36,000 by the time of decedent’s

projected retirement in the year 2000. To compute the pecu-

niary loss to decedent’s widow and four children, Friedman

aggregated these projected gross earnings, added the value of

decedent’s household services (which Friedman stated would

be 9% of his gross income), subtracted the amounts decedent

would have spent on himself (which was either 10% or 31% of

his gross earnings, depending on the period of Liepelt’s life),

and reduced that sum to present value, arriving at a figure of

$302,000. (R 684-94.)

5

At the close of the trial, the judge instructed the jury that

each survivor's damages would be the pecuniary benefits

“it might reasonably be expected each survivor would have

received from the decedent, if the decedent had not met his

death.” (R 1425.) In making this computation, the jury was

instructed to consider “what the decedent was earning and

what he would have been likely to earn in the future” and al-

so “the personal expenses of decedent and other deductions

from his earnings.” (R 1424.) The judge further instructed

that the jury could compensate decedent’s children for loss of

guidance but could not award any sum for “grief or loss of

society and companionship.” (R 1425.) The Court refused to

instruct the jury that any damages award would be nontax-

able. The jury returned a verdict of $775,000.

HOW THE FEDERAL QUESTIONS WERE PRESENTED

Petitioner asserted its interrelated federal claims at every

level of the Illinois court system.

At trial, prior to calling Dr. Friedman, respondent’s coun-

sel made an oral motion that petitioner be prohibited from

mentioning income taxes in its cross-examination. (R 664-65;

A28-A29.) When petitioner later stated its intention to cross-

examine Friedman concernirg the nontaxability of the

award, the judge prohibited the questioning, stating that the

subject of income taxation could not be referred to in the

presence of the jury. (R 710-713; A29-A31.) After Friedman

was excused, petitioner moved for mistrial, arguing that sub-

stantial amounts of decedent’s lost earnings would have been

paid in taxes and thus would have been unavailable to his

beneficiaries if he had lived and that it was entitled to place

before the jury evidence that an award would not be taxable.

The judge, however, reaffirmed the earlier ruling that any

reference to the impact of income taxation,was impermis-

6

sible. (R 738-758; A31-A35). In light of these rulings, peti-

tioner did not, during the presentation of its case in chief,

call any witnesses on these points, but rather made an offer

of proof that, but for the judge’s rulings, petitioner would

have called as a witness an actuary, Dr. Robert Barnes, who

would have testified that state and federal taxation would

have reduced petitioner’s projected earnings by some $57,000

and that the pecuniary loss to decedent’s survivors was

either $138,327 or $115,325, depending on the rate of dis-

counting. (R 1091-93; A35-A36.) Finally, at the close of the

evidence, petitioner requested an instruction concerning the

nontaxability of the award, which instruction was denied.

(R 1263, RC 200; A37.)'

In the Illinois Appellate Court, petitioner again presented

its federal claims. Petitioner’s appellate brief (pp. 6, 47-61)

argued that the trial court had erred by refusing to follow

federal law and permit the jury to consider the impact of in-

come taxation both on the decedent’s lost earnings and on

the damages award. The Illinois Appellate Court held

against petitioner on both questions, stating in its opinion:

“Defendant also claims as error the trial court’s re-

fusal to instruct the jury as to the nontaxability of a

damage award; to allow cross-examination of plaintiff’s

economist as to the nontaxability of an award; and, to

allow defendant to introduce evidence as to the effects of

income taxes on the decedent’s future earnings. Numer-

ous federal cases have been cited by defendant and

amicus American Trial Lawyers Association. From a

review of these cases it is apparent that the Courts of

Appeals differ on the question of whether it is proper to

instruct the jury as to the nontaxability of an award or

to allow evidence as to the effects of taxation on future

‘Petitioner also raised its two federal claims in a post-trial motion

submitted to the trial court. R C261H-C2611.

7

_ earnings. Compare Burlington Northern Inc. v. Boxberger

(9th Cir. 1975), 529 F.2d 284, with Johnson v. Penrod

Drilling Co. (5th Cir. 1975), 510 F.2d 234, cert. denied, 423

US. 839.

“The Supreme Court of the United States has not

spoken on this issue. Absent an authoritative pronounce-

ment by that Court we will follow the decisions of our

own supreme court in Raines v. New York Central R.R.

Co. (1972), 51 Dll.2d 428, 430, 283 N.E.2d 230, cert. de-

nied 409 U.S. 983, and Hall v. Chicago & North Western

Ry. Co. (1955), 5 Ill.2d 135, 149-52, 125 N.E.2d 77, cited

in Saunders v. Norfolk & Western Ry. Co. (1977), 54

Ill. App.3d 307, 316, 369 N.E.2d 518. These decisions hold

that it is not error to refuse to instruct a jury as to the

nontaxability of an award. Based on these decisions we

also conclude that it is not error to exclude evidence of ,

the effect of income taxes on future earnings of the

decedent. These contentions are therefore rejected.”

(A22-A23.)

The tax questions were again raised before the Appellate

Court in the Application for a Certificate of Importance filed

by the petitioner with that court on August 9, 1978. When

the latter was denied, petitioner filed a Petition for Leave to

Appeal with the Illinois Supreme Court which stated (p. 3):

“4..The Appellate Court erroneously refused to follow

controlling decisions by federal courts which require in-

troduction of evidence of the impact of taxation on the

future earnings of a decedent, where, as was the case

here, the amount of taxation would have a significant

impact on net earnings.

“5. The Appellate Court erroneously refused to in-

struct the jury that the award of damages to plaintiff is

not subject to taxation.”

That Petition was denied by the Illinois Supreme Court on

November 30, 1978 (A27). Thus, the Illinois Court of Appeals,

First Department, First Division, is the “highest court in

[the] state in which decision could be had.” 28 U.S.C. §1257.

Ss

8

REASONS FOR GRANTING THE WRIT

There are few federal questions that have so divided state

and federal appellate courts as has that of the treatment of

income taxation . damages computations under the Federal

Employers’ Liability Act. Two distinct, but related, problems

have arisen.

The first pertains to the measure of lost earnings. Should

these be based on estimated future net earnings, after deduct-

ing income taxes, or on probable future gross earnings? Or

should the answer vary depending on the extent to which

earnings were likely to have been taxed? The position of the

Illinois courts is that no matter how greatly income taxation

would have reduced a claimant’s disposable income if there

had been no accident, lost earnings are to be based on es-

timated gross earnings. The second problem, which arises

because personal injury damages awards are not taxed, see 26

U.S.C. §104(a)(2), is whether juries should be given a cau-

tionary instruction that the judgments are tax free. Again,

the Illinois courts have held that regardless of the likelihood

that a jury might erroneously assume its verdict is taxable

end seek to compensate the claimant for an imagined tax, no

such instruction need be given. While other courts agree with

Illinois on both points, there is very substantial authority to

the contrary.

Last term, this Court granted certiorari in a case which

presented both these questions, and in which the lower court

had agreed with the rulings of the Illinois Appellate Court,

Rediker v. Chicago, Rock Island and Pacific R. Co., 1 Kan.

App.2d 581, 571 P.2d 70 (1977), cert. granted, 435 U.S. 922

(No. 77-1000),’ but that case was settled by the parties and

‘included in the questions presented in that case (Petition for

Certiorari, p. 3) was:

(footnote continued on next page)

9

dismissed pursuant to Supreme Court Rule 60. The same

considerations that were before this Court when it granted

certiorari in Rediker are presented by this case.

1. Federal Law Determines the Treatment of Income Tax-

ation in FELA Damages Computations.

Over half a century ago, this Court prescribed that the

measure of damages in FELA wrongful death actions is the

amount the decedent’s beneficiaries could reasonably have

expected to have been applied to their benefit if the decedent

had lived. See Norfolk & Western Ry. Co. v. Holbrook, 235 US.

625, 629 (1915); Michigan Central R.R. Co. v. Vreeland, 227

U.S. 59, 72-73 (1913). These holdings are but an application

of the more general principle that “damages for a tort should

place the injured person as nearly as possible in the position

he would have occupied had the wrong not occurred.” C.

McCormack, Law of Damages 560 (1935). In implementing

this basic federal rule of damages, this Court has required

that inconsistent state court practices yield to the uniformity

required by the federal act.

Chesapeake & Ohio R. Co. v. Kelly, 241 U.S. 485 (1916), illus-

trates the point. There, a state trial court had refused to

instruct a jury to discount to present value an FELA

claimant's lost future pecuniary benefits, and the state appel-

late court affirmed, apparently on the ground that such com-

putations would be too difficult for juries. This Court

reversed unanimously. Because the jury had aggregated fu-

“{Is] the proper measure of damages for future lost wages

under the provisions of the Federal Employers’ Liability Act,

45 U.S.C. See. 1, et seg., { | to be an amount determined with-

out regard for the impact of federal and state income taxes on

said projected future lost wages and without regard for the

lack of any such impact on any verdict returned by the jury

for future lost wages.”

10

ture benefits ‘without taking account of the earning power of

the money that [was] presently [ ] awarded,” the plaintiff

there had received a verdict which was greater than the

“pecuniary benefits that would have resulted from the con-

tinued life of the deceased” and thus which was contrary to

the purposes of damages awards under the FELA. /d., at 489.

To ensure that plaintiffs would not be so overcompensated,

the Court held that all courts administering the FELA must

instruct juries that damages based upon lost future benefits

must be based on their present value only.’

The questions presented in this case raise the same basic

issue concerning the measure of damages under the FELA as

was involved in Chesapeake & Ohio R. Co. v. Kelly, supra. The

issue here, stated simply, ‘s whether the Illinois courts’ rul-

ings either impermissibly required—by excluding evidence of

net earnings after taxes—and impermissibly encouraged—by

refusing to give the cautionary instruction—jury verdicts

which overcompensated respondent in violation of the

FELA. Here, as in Chesapeake & Ohio R. Co. v. Kelly, supra,

federal principles are necessarily controlling.

2. There Is a Conflict Among Both the Federal Courts of

Appeals and the State Courts.

A. On the question whether income taxes should be

deducted in computing damages in FELA cases, many state

courts and several federal courts agree with the Illinois court

‘This Court’s treatment of the measure of FELA damages as a

matter of substantive federal law is consistent with a long line of

this Court’s other decisions under the Federal Employers’ Liability

Act. See, e.g., Dice v. Akron, Canton & Youngstown R. Co., 342 US.

359 (1952) (allocation of function between judge and jury is federal

question); Bailey v. Central Vermont R.R., 319 US. 350 (1943)

(sufficiency of evidence is federal question); see generally Hill, Sub-

stance and Procedure in State FELA Actions—The Converse of

the Erie Problem?, 17 Ohio St.L.J. 384 (1956).

11

that FELA claimants (and other federal personal injury

claimants) should be allowed to recover the entire amount of

the projected lost gross earnings, regardless of the fact that a

substantial portion of these earnings would have been paid

out in taxes. See, e.g., Boston & Maine R..R. v. Talbert, 360 F.2d

286, 291 (Ist Cir. 1966); Johnson v. Penrod Drilling Co., 510

F.2d 234, 236-237 (5th Cir. 1975) (en banc) (Jones Act);

Chicago & N.W. Ry. Co. v. Curl, 178 F.2d 497, 502 (8th Cir.

1949); Rediker v. Chicago, RJ. & P.R.R., supra; McGee v. Bur-

lington Northern Inc., Mont. , O71 P.2d 784,

790-91 (1977); see also Varlack v. SWC Caribbean, Ine., 550

F.2d 171, 177-178 (3rd Cir. 1977) (allows deduction for taxes

paid on past lost earnings but not for those paid on future

lost earnings); see generally Annot., 63 A.L.Fi.2d 1393, 1398

(1959) and later cases in A.L.R.2d Supp. Service.

However, an equal number of federal courts of appeals

and several state courts have rejected this view. Where, as

here, such taxes would have had a substantial and significant

effect on the amount of lost earnings,’ they require a reduc-

tion for income taxation. See, e.g., LeRoy v. Sabena Belgian

World Airlines, 344 F.2d 266, 276 (2d Cir. 1965), following

McWeeney v. New York, N.H. & H.R.R. Co., 282 F.2d 34 (2d

Cir. 1960); Petition of United States Steel Corp., 436 F.2d 1256,

1273-74 (6th Cir. 1970) (Death on High Seas Act); Cox v.

Northwest Airlines, Inc., 379 F.2d 893 (7th Cir. 1967) (federal

maritime law); Burlington Northern Inc. v. Boxberger, 529 F.2d

284, 287-95 (9th Cir. 1975); Sanchez v. Denver & Rio Grande

‘Here, decedent’s past lost earnings ranged from $13,000 to

$16,800 annually, and his projected future earnings were from

$16,800 to $36,000 per year. Moreover, the excluded evidence here

would have shown that taxation would have reduced decedent's

lost disposable income by some $57,000 and that the net pecuniary

loss therefore would have been reduced either $138,327 or

$115,325, depending upon the discount rate, See A35-A36.

12

W. R.R., 538 F.2d 304 (10th Cir. 1976); Geris v. Burlington

Northern Inc., 277 Or. 381, 561 P.2d 174 (1977). At least one

court has further suggested that there should be a deduction

for income taxes in all cases, not just those in which taxation

would have a substantial effect. See Burlinglon Northern Inc.

v. Boxberger, supra, at 294.

B. On the question whether juries should be given caution-

ary instructions concerning the nontaxability of damages

awards, there is also a deep division. A number of courts

take the position that the instruction is not required. £.g.,

McWeeney v. New York, N.H., & H.R.R. Co., supra, at 39; New

York Central R.R. Co. v. Delick, 252 F.2d 522, 527 (6th Cir.

1958); Annot., 63 A.L.R.2d 1393, 1398 (1959) and later cases

in A.L.R. Supp. Service; see Nichols v. Marshall, 486 F.2d 791,

794 (10th Cir. 1973); Elston v. Shell Orl Co., 481 F.2d 608 (5th

Cir. 1973). But at least two courts of appeals have held that

because of the dangers that exist when such cautionary in-

structions are not given, they are required. See Burlington

Northern Inc. v. Boxberger, supra, at 295-98; Domeracki v.

Humble Oil & Refining Co., 443 F.2d 1245, 1248-52 (3rd Cir.

1971) (federal maritime law).

3. The Decision Below Is Contrary to Applicable Decisions

of This Court and Is Erroneous.

Both aspects of the decision below are contrary to this

Court’s holdings in Chesapeake & Ohio R. Co. v. Kelly, supra,

and Norfolk & Western Ry. Co. v. Holbrook, supra, that

damages in a FELA wrongful death action is to be the

amount the decedent's beneficiaries could reasonably have

expected to have been applied to their benefit if the decedent

had lived, and no more.

A. First, by excluding all evidence relating to the taxes

that the decedent would have paid on the projected earnings,

13

the Illinois Courts assured that the damages awarded re-

spondent were substantially more than her due. If the ac-

cident had not occurred, Liepelt plainly would have paid a

substantial percentage of his gross earnings to state and

federal governments in taxes. These substantial sums could

never have been made available to Liepelt’s beneficiaries if

he had lived. However, by making gross earnings the basis

for the jury calculations, the evidéntiary rulings of the IIli-

nois courts required the jury to include the amounts that

would have been paid out in taxes in the damages award.

These rulings thus constituted a clear violation of federal

damages policy.

Although a number of justifications have been advanced in

support of the Illinois courts’ position, none are either per-

suasive on their own terms or sufficient to justify ignoring

the effect of income taxation where, as here, it would have

substantially reduced a decedent’s disposable income. The

primary objection to permitting juries to make adjustments

for future tax liability is that it involves too much specula-

tion and uncertainty. The rebuttal of Professors Harper and

James is unanswerable on this point.

“{T]he argument is weak. In the first place it has no

proper application to damages for past losses. In measur-

ing them theéstax can be computed and should be deduct-

ed. Moreover future taxes are no more speculative than

many other items that go into prophecies about future

losses in this uncertain world of ours—witness the future

earnings of a young child or the future trends in the dol-

lar’s value. As long as our system stays wedded to the

single lump sum recovery, our courts simply have to

speculate about the uncertainties of the future. With

anything as sure as “death and taxes” the courts are

avoiding their responsibilities when they decline to make

the best guess they can, once all the reasonably avail-

14

able evidence is brought before them.” II F. Harper &

F. James, Law of Torts §25.12 (1956) (footnotes omit-

ted).

A related contention is that an average jury would find

calculation of tax liability unduly difficult. This argument

has even less force than did the claim, rejected in Chesapeake

& Ohio Railway Co. v. Kelly, supra, that the reduction of fu-

ture earnings to its present value required such a difficult

computation for the average juryman that it was better to

overcompensate FELA claimants than to impose the task on

the jury. Today’s jurors have had personal experience in de-

termining income tax liability, and with the aid of such com-

petent expert testimony as may be received, they would find

it far easier to perform that task than to, e.g., make many

liability determinations or perform other aspects of the

required damages computation. See Burlington Northern Inc.

v. Boxberger, supra, at 293.” /

Finally, it has been urged that failure to make adjust-

ments for income taxation is offset by two factors jurors do

not consider: future inflation and plaintiff's attorney fees.

As to inflation, its effects were implicitly included in the cal-

culation here because the jury was told that the expert’s cal-

culations included a 5% annual wage increase. As to plain-

tiff’s attorney fees, these simply have no relevance to the

measure of FELA damages. Moreover, were it an objective

of our law to compensate successful parties for the expense

of vindicating their rights—which it is not, absent an explicit

congressional directive, see Alyeska Pipeline Co. v. Wilderness

Society, 421 U.S. 240 (1975)—to refuse to allow deductions for

taxation would be an exceedingly clumsy means of achieving

it, as the amount of fee reimbursement would depend on the

decedent’s tax situation.’

*An additional argument that has been advanced is that the

jury’s deduction of income taxes would somehow nullify congres-

(footnote continued on next page)

15

In light of these and other considerations, numerous com-

mentators, in addition to the many courts already cited,

have disapproved the gross earnings measure of damages

adopted by the Illinois courts.’ In this connection, it bears

noting that, in 1955, the English House of Lords overruled

its longstanding rule that the income tax consequences are ir-

relevant to the measure of tort damages. See British Trans-

port Commission v. Gourley, [1956] A.C. 185.

B. Second, by refusing to require that the jury be given a

cautionary instruction that the damages award is not tax-

able, the Illinois courts created a significant, wholly indepen-

dent risk that the jury would overcompensate the bene-

ficiaries. In a tax-conscious modern world like ours, it is

probable that a jury will, in the absence of an instruction, er-

roneously assume that a personal injury judgment, like most

other receipts of money, is taxable to the recipient. A danger

clearly exists that the jury might proceed to award the plain-

sional intent to afford a tax benefit. See Rediker v. Chicago, RI. &

P.R.R., supra, 571 P.2d at 76. The only benefit Congress intended

was to make lump sum damages awards—which would have been

taxable in the tax year received—tax free. There simply is no basis

for a claim that 26 U.S.C. §104(a)(2) or any other provision was in-

tended to affect the measure of tort damages. Indeed, by making

the aggregated lost earnings tax free, Congress invited, if it did not

compel, the deduction of income taxes to ensure that the lost earn-

ings component of a damages award would not overcompensate the

plaintiff.

‘See II Harper & James, Law of Torts §25.12 (1956); Nordstrom,

Income Taxes and Personal Injury Awards, 19 Ohio St.L.J. 212

(1958); Burns, A Compensation Award for Personal Injury or

Wrongful Death is Tax-Exempt: Should We Tell the Jury?, 14

DePaul L.Rev. 320 (1965); Morris & Nordstrom, Personal Injury

Recoveries and the Federal Income Tax Law, 56 A.B.A.J. 274

(1960); Stripp & Rowland, Taking Account of the Impact of In-

come Taxes in Personal Injury and Wrongful Death Cases—

Recent Developments, 36 Ins.Counsel J. 231 (1969); Note, 50

Ky.L.Rev. 601 (1962).

16

tiff an additional amount to compensate for an imagined tax.

In the present case, there is every reason to believe that

precisely this occurred. Although respondent’s expert had

testified that the pecuniary loss resulting from decedent’s

death was $302,000, the jury returned a verdict of $775,000.

Respondent had, it is true, also sought damages for lost

guidance to decedent’s children, but it is difficult to imagine

a jury awarding $573,000 for the latter, while only $302,000

for the former. The likely explanation for the verdict is that

this jury settled on an award substantially less than $775,000

but, believing plaintiff would be taxed, inflated the award to

ensure full “after tax’ compensation.

Whether such a scenario is characterized as probable or

merely as reasonably likely, what should be dispositive is

that there was no reason whatsoever not to have given the

cautionary instruction that would have eliminated altogether

the risk of such a distortion in the size of the verdict. As

numerous commentators’ and at least two federal courts of

appeals have recognized, see Burlington Northern Inc. v. Boz-

berger, supra; Domeracki v. Humble Oil & Refining Co., supra,

the benefits of apprising the jury of the true tax con-

sequences are so clear and the burden in terms of time and

the possibility of confusion are so minimal that the caution-

ary instruction should be mandatory.

‘See II‘ Harper & James, Law of Torts §25.12, at 1327-28 (1956);

Burns, A Compensation Award for Personal Injury or Wrongful

Death is Tax-Exempt: Should We Tell The Jury’, 14 DePaul

L.Rev. 320 (1965); Feldman, Persona! Injury Awards: Should Tax

Exempt Status Be Ignored?, 7 Ariz. L.Rev. 272 (1965); Henderson,

Some Recent Decisions on Damages: With Special Reference to

Questions of Inflation and Income Taxes, 40 Ins.Council J. 423

(1973); Morris, Should Juries in Personal Injury Cases Be Instructed

that Plaintiff's Recoveries Are Not Income Within the Meaning of

the Federal Tax Law?, 3 Defense L.J. 3 (1958); Nordstrom, Income

Taxes and Personal Injury Awards, 19 Ohio St.L.J. 212 (1958);

(footnote continued on next page)

1"

4. The Questions Are Important.

Until recently, the question of the treatment of income

taxation in measuring FELA damages was largely an

academic one. In the half century following the enactment of

the FELA in 1908, it was the rare case in which the resolution

of these issues could have had a significant effect on the size

of a claimant’s judgment. Employees’ wages were generally

too low to be taxed, and even when subject to taxation, the

amounts involved were so minimal that it produced relative-

ly little interference with federal damages policy for courts

to preclude juries from considering the impact of taxation. In

the past several decades, however, these questions have ac-

quired enormous practical importance for FELA litigants.

Because wages have increased steadily, without any corre-

sponding upward adjustment in tax schedules, nearly every

wage earner now pays a substantial percentage of his income

in taxes. Because the income tax is progressive, that percent-

age can be projected to increase with every wage increase. In

consequence, in nearly every FELA case that is brought

today, the questions presented in this petition have a sig-

nificant and substantial effect on the exposure to liability of

those employers who are subject to the Act.

It is equally clear that if, as petitioner maintains, the

courts that prohibit consideration of taxation are impermissi-

bly inflating damages awards, only a decision from this

Court can afford relief. Indeed, because the FELA gives

Stripp & Rowland, Taking Account of the Impact of Income

Taxes in Personal Injury and Wrongful Death Cases, Recent

Developments, 36 Ins.Council J. 231 (1969); 26 Ford L.Rev. 98

(1957); 42 Geo.L.J. 149 (1953); 50 Ky.L.J. 601 (1962); 44 Ky.L.J.

384 (1956); 56 Minn.L.Rev. 503 (1972); 33 Ohio St.L.J. 972 (1973);

32 Tex.L.Rev. 108 (1953); 8 Tulsa L.J. 242 (1972); 4 U.C.L.A.

L.Rev. 636 (1957); 25 U.Cin.L.Rev. 395 (1956); 9 Vand.L.Rev. 543

(1956); 11 Wash. & Lee L.Rev. 66 (1954).

18

plaintiffs extraordinary forum shopping opportunities,’ which

are enhanced because removal of any case is prohibited,’ it is

predictable that most major lawsuits will, until this Court

acts, be tried in courts, like those of Illinois, which require

the inflated verdicts.

‘Under the Act, a plaintiff may institute suit in the district of

defendant’s residence, the district in which the cause of action

arose, or in any district in which defendant is “doing business,”

and the plaintiff may sue in either state or federal court. See 45 «

US.C. §56. Because railroads typically do business in a great many

states, a plaintiff may nearly always bring suit in a court where the

law concerning taxation is favorable.

"See 28 U.S.C. §1445(a).

19

CONCLUSION

For the same reasons that the writ was granted in Rediker

v. Chicago, Rock Island and Pacific R. Co., supra,—the conflict

in the lower courts and the inconsistency of the decision

below with the decisions of this Court—the petition for a

writ of certiorari should be granted.

Respectfully submitted,

Howarpb J. TRIENENS

Siptey & Austin

One First National Plaza

Chicago, Illinois 60603

Ropert L. LANDEss

Tosin M. Ricutrer

Ross, Harpiks, O’ KEEFE,

Bascock & Parsons

One IBM Plaza

Chicago, I[]linois 60611

February, 1979

A-l

APPENDICES

OPINION OF THE ILLINOIS APPELLATE COURT

FIRST DIVISION

JULY 5, 1978

77-677

KANDYTHE J. Lierect,

Administrator of the Estate of

De troy Lirere.t, Deceased,

Plaintiff Appetiee, APPEAL from the

Circuit Court of Cook

vs. County; the Hon.

ReGinaLp J. Houzer,

NorFo_k AND WESTERN RAILWAY Judge, presiding.

ComPaANy, a corporation,

Defendant- Appellant.

Mr. PresipinG Justice Go_tpBerG delivered the opinion of

the court:

Kandythe Liepelt (plaintiff), as administrator of the estate

of her husband, Delroy Liepelt, deceased, brought this action.

under the Federal Employers’ Liability Act to recover

damages from his employer, Norfolk and Western Railway

Company (defendant), for his death in the course of duty. A

jury awarded plaintiff $775,000. Defendant appeals.

Defendant contends that the trial court erred: in denying

defendant’s motion to dismiss the action on the ground of

forum non conveniens; in allowing the jury to consider an In-

diana statute as evidence of negligence since that statute had

been preempted by federal action; in directing a verdict for

plaintiff on the issue of contributory negligence; in refusing

its instructions on sole proximate cause; in deeming certain

A-2

facts admitted and in prohibiting the defendant from ex-

plaining those facts at trial; in refusing to allow the jury to

consider the impact of federal income taxation on the issue

of damages; in instructing the jury that it could award

damages for loss of care and guidance for the children of the

deceased when no evidence of the value of these services was

presented; and that the damages are excessive.

The evidence shows that on November 22, 1973, the

decedent was working as a fireman on a freight train owned

and operated by the defendant. On that day, decedent was

on board defendant’s train, Extra 2917, travelling from

Montpelier, Ohio, to Chicago. The train was made up of 140

cars and was approximately 1% to 2 miles long. It was

pulled by three diesel locomotives. The decedent rode in the

cab of the lead locomotive with the engineer, Owen Perkins.

The decedent sat on the left side of the cab and Perkins sat

on the right. The remaining members of the crew were

Macadoo Maynard and Terry Northrup, brakemen; Clayton

Manly, flagman, and Roger Shepard, conductor. Maynard

and Northrup rode in the second locomotive and Manly and

Shepard rode in the caboose.

Defendant’s rules require that whenever a third seat is

available in the lead locomotive a brakeman is required to

ride there. One of his duties is to act as an additional look-

out. There was no third seat available in the lead locomotive

of Extra 2917. Decedent and the engineer were alone in the

cab.

The entire train had been inspected by defendant’s person-

nel before it left Montpelier. It was found to be in good con-

dition. However, there is testimony that all three diesel

locomotives “were old and worn out.’ The diesel engines

operate an air compressor which supplies air pressure to

A-3

operate the brakes. At the head of the train the pressure was

approximately 75 pounds. At the rear of the train the pres-

sure dropped off. A minimum of 60 pounds is required

throughout the train for the brakes to operate effectively.

Shortly prior to the occurrence Perkins, the engineer, had

radioed the caboose concerning “trouble with the air.”

Each locomotive has two 200-watt headlights. The beams

from these lights must be capable of illuminating the image

of a man at least 800 feet in from. of the train. There is

evidence that the fireman, as well as the engineer, has a duty

to keep a jookout as the train proceeds. Levers for applying

the brakes are at the right of the cab in front of the engineer.

The fireman also has an emergency brake lever on his side of

the cab. ;

The track on which, Extra 2917 travelled is a single, main

line, maintained and operated by the defendant. In order for

two trains travelling in opposite directions to pass each other

it is necessary for one of them to enter a parallel track,

called a “siding” or “passing track.” The train on the passing

track is obliged to wait until the other train has passed

before re-entering the main track. Entry to these sidings is

made possible by a switch at either end of the siding. The

switch must be opened manually to permit entry to the sid-

ing from the main track.

Between Montpelier and Chicago one such siding is locat-

ed near Wyatt, Indiana. This siding runs east/west for ap-

proximately 4000 feet. It is immediately to the south of the

main line track. In addition to being used as a passing track,

this siding is connected to an auxiliary track called a “spur.”

This spur runs adjacent to a grain elevator, enabling grain

cars (hopper cars) to be positioned directly under the eleva-

tor for loading.

A-4

The defendant's rules prohibit the storing of cars on a sid-

ing unless “authorized by the superintendent or in emer-

gency. When so obstructed, the train dispatcher must be no-

tified.” On November 22, 1973, the siding at Wyatt contained

seven loaded hopper cars weighing 690 tons. No authoriza-

tion had been issued and no emergency existed. The defen-

dant’s dispatcher in Montpelier stated that he was aware the

Wyatt siding was used to store loaded hopper cars during the

busy season. The cars were positioned so that their eastern

most end was 198 feet west of the east switch. Thus, there

were 198 feet of track separating the east end of these parked

hopper cars and the main track.

All switches are equipped with a position indicator or ban-

ner from which the train operators can determine whether

the switch is open or closed. The testimony concerning the

number of banners employed on the east switch at Wyatt is

somewhat contradictory. However, it appears from the ex-

hibits and the testimony of Maynard, a brakeman, that the

signal consisted of two aluminum banners positioned one

above the other on a pole over the switch. The top banner

was oblong, 15% inches wide and 6 inches high. It was

covered with red reflectorized paint and stood approximately

7 to 9 feet in the air. The lower banner was 15 inches square

and was also red, though not reflectorized.

Both banners faced in the same direction. When the switch

was closed the banners would be parallel to the main track

and therefore not visible to trains approaching on that track.

When the switch was open the banners would turn to face

trains approaching from the east. A red signal, therefore, in-

dicated that the switch was open.

There was testimony that the banners on the east switch

were dirty from smoke and dust. Maynard testified that he

A-5

visited the site of the occurrence “a couple of days’’ there-

after. The banners were “really dirty” and, in daylight, they

could hardly be seen from a distance of 700 feet. The ban-

ners had also been partially damaged, apparently by shotgun

blasts. Northrup, a brakeman, testified that there were high

weeds and brush in the area which made the switch position

indicators “hard to see.”

The switch itself was padlocked. The lock could not be

located the night of the occurrence but was found the follow-

ing day in a ditch adjoining the track. The lock was jammed

in a partially open position and bore marks of an attempt to

force it open. The switch itself had been opened and the red

banners were facing the westbound traffic. A witness for the

defendant testified that he had operated the switch some 3

days prior to the occurrence and found both the lock and the

switch to be in good working order. He had locked the switch

after its use. é

The track in the immediate area o: the occurrence was de-

scribed by witnesses as “rough” and “run down.” The ties

“were in bad condition” and ‘many or most” of them were

“old, rotten, splitting and cracked.” Many spikes were loose.

The ballast, which is made up of crushed stone and covers

the ties, was in poor condition causing the train to rock

“severely” from side-to-side. The speed limit on this stretch

of track had been reduced from 50 to 40 miles per hour.

Defendant’s track supervisor testified that he inspected

the track the day after the occurrence and took no exception

to the condition of the track or the visibility of the signal. A

brakeman employed by defendant stated that he found no

vegetation in the area of the switch when he operated it 3

days prior to the occurrence.

A-6

As Extra 2917 approached the Wyatt siding, it was travel-

ling at approximately 32-37 miles per hour. It was early

evening, between 5:30 and 6 p.m. There was little light ex-

cept for a faint glow in the western sky. Terry Northrup, a

brakeman, testified that he heard the brakes go into emer-

gency operation. He saw the first locomotive veer sharply to

the left and then saw 7 or 8 hopper cars directly in front of

it. There was a terrible crash At the moment of impact the

train was travelling at approximately 30 miles per hour. The

first hopper car was forced on top of the lead locomotive,

shearing the cab. The decedent and the engineer were killed

instantly.

The trial court denied defendant's motion to dismiss based

upon forum non conveniens. Defendant is a Virginia corpora-

tion with its principal office in that state. It conducts busi-

ness in Illinois only as a part of its line running from various

points in Ohio to Chicago. The decedent lived in Ohio and

his estate is being probated there. The occurrence took place

near Wyatt, Indiana, some 90 miles from Chicago.

Defendant’s motion was properly supported by affidavit.

The affidavit showed that the proposed witnesses lived in

Ohio, Indiana, Michigan or Virginia. No occurrence wit-

nesses lived in Illinois. Defendant shows in its brief that 21

witnesses testified of which only 2 lived in Illinois. All other

witnesses were obliged to travel to Chicago.

Plaintiff filed an answer to the motion attacking its

sufficiency and asserting her right to choice of forum and to

trial counsel practicing there. Briefs were filed in the trial

court by both sides.

In our opinion, this issue is decided by Saunders v. Norfolk

& Western Ry. Co. (1977), 54 Ill. App. 3d 307, 369 N.E. 2d 518.

That case presents many facts which coincide with the

A-7

situation at bar and the doctrine of forum non conveniens is

given comprehensive treatment. (Saunders, 54 Ill. App. 3d

307, 309-12.) It is unnecessary for us to repeat the principles

and authorities noted there.

It is sufficient for us to note that although the states have

power to apply the doctrine of forum non conveniens to ac-

tions arising under the Federal Employers’ Liability Act,

there are strong considerations of policy which confer on

plaintiffs in these cases the right and privilege to choose any

forum in which the defendant railway is doing business.

Furthermore, “[t]he trial court’s decision on the motion will

be overturned only if the reviewing court finds an abuse of

discretion.” Saunders, 54 Ill. App. 3d 307, 311.

Attempting to weigh and balance all of the factors on both

sides, we conclude that the trial court did not abuse its dis-

cretion in denying the motion. This result is supported by a

review of the record in this case. Able counsel for the defen-

dant presented a spirited and thorough defense. We cannot

find any evidence of handicaps or problems arising which

hampered the defense because of the choice of forum. We ap-

prove the ruling of the trial court in this regard.

The second issue raised by defendant concerns the doc-

trine of federal preemption. (U.S. Const., art. VI, el. 2.) At

the time of this occurrence, section 1 of the Indiana Switch

Light Act (Ind. Code § 8-8-10-1 (Burns 1976) (amended 1977,

P.L. 106, § 2)), read:

“Every steam railroad company operating wholly or

partly in the state of Indiana shall place and maintain

upon each switch in said state that is connected with the

main track a signal light, attached in such manner to the

moving panel of such switch that it will indicate safety

when such switch is set to such main track, and that will

indicate danger when such switch is not set to the main

A-8

track. Said light shall be kept brightly burning constant-

ly between the hours of sunset and sunrise, and on such

days or parts of days as are dark and foggy.”

At trial, plaintiff was allowed to introduce the existence of

the Switch Light Act over defendant’s objection. Also, as we

will later discuss, the trial court included this Act in one of

the jury instructions.

In 1970, Congress passed the Federal Railroad Safety Act

(45 U.S.C. §§ 421-441 (1972)) (FRSA). Under the FRSA the

Secretary of Transportation (Secretary) is authorized to

promulgate rules, regulations and standards for all areas of

railroad safety. (45 U.S.C. § 431 (1972).) Section 205 of the

FRSA (45 U.S.C. § 434 (1972)), concerns the preemption of

state laws. That section reads:

“The Congress declares that laws, rules, regulations,

orders, and standards relating to railroad safety shall be

nationally uniform to the extent practicable. A State

may adopt or continue in force any law, rule, regulation,

order, or standard relating to railroad safety until such

time as the Secretary has adopted a rule, regulation,

order, or standard covering the subject matter of such

State requirement. A State may adopt or continue in

force an additional 01 more stringent law, rule, regula-

tion, order, or standard .2lating to railroad safety when

necessary to eliminate or reduce an essentially local safe-

ty hazard, and when not incompatible with any Federal

law, rule, regulation, order, or standard, and when not

creating an undue burden on interstate commerce.”

The Secretary adopted a series of rules on track safety

standards. (49 C.F.R. § 213 (1976).) Standard 213.135 is enti-

tled “Switches.” It contains performance standards for eight

distinct aspects of a switch. Subpart (g) of Standard 213.135

states, “‘[e]ach switch position indicator must be clearly visi-

ble at all times.” There is no specification of the type of in-

dicator that is to be used.

d-

A-9

The doctrine of preemption has been the subject of two

recent United States Supreme Court decision. (Ray v. Atlantic

Rich field Co. (1978), US. , 09 L. Ed. 2d 179, 98S. Ct.

988; Jones v. Rath Packing Co. (1977), 480 U.S. 519, 51 L. Ed.

2d 604, 97 S. Ct. 1305.) In both of these cases the court began

its analysis of the preemption issue “ ‘with the assumption

that the historic police powers of the States were not to be

superseded by the Federal Act unless that was the clear and

manifest purpose of Congress.’ ” (Ray, 98 S. Ct. 988, 994;

Jones, 430 U.S. 519, 525, both quoting from Rice v. Santa Fe

Elevator Corp. (1947), 331 U.S. 218, 230, 91 L. Ed 1447, 67 8.

Ct. 1146.) In Ray, the court further stated that the Congres-

sional purpose may be evidenced in a number of ways, one

being where the “ ‘scheme of federal reguiation [is] so perva-

sive as to make reasonable the inference that Congress left

no room for the States to supplement it.’ ” (98 S. Ct. 988,

994, quoting from Rice, 331 U.S. 218, 230.) Both Ray and

Jones point out that even where a particular area is not total-

ly foreclosed to the States, no state law may stand where it

would be impossible to comply with both the state and fed-

eral regulations or where the state law would frustrate the

Congressional purpose. Ray, 98 8S. Ct. 988, 994, Jones, 430 U.S.

519, 525-26.

In the present case we are faced with the explicit declara-

tion of Congress that no state rail safety law shall remain

valid after promulgation of a federal regulation covering the

same subject matter as that covered by the state law. (45

U.S.C. § 434 (1972).) The limited exception for purely local

safety hazards has not been claimed to apply to the Indiana

statute. Therefore, the narrow question with which we are

faced is whether the Switch Light Act and Standard

213.135(g) cover the same subject matter.

On its face Standard 213.135(g) simply imposes a general

requirement of visibility for switch position indicators. It

A-10

does not specify the type of indicator that must be used nor

does it indicate any design specifications that must be fol-

lowed.

Thus, in many respects this case is similar to Chrysler

Corp. v. Tofany (2d Cir. 1969), 419 F.2d 499. That case con-

cerned the National Traffic and Motor Vehicle Safety Act of

~ 1966 (f5-U.SC. §§ 1381-1431 (1972) (Traffic Safety Act)),

and Federal Motor Vehicle Safety Standard No. 108 (49

C.F.R. § 371.21 (1969)).! Paragraph $3.1.2? of Standard 108

provided that “[n]o additional lamp,***shall be installed [on

an automobile] if it impairs the effectiveness of the required

equipment.”

In 1969, Chrysler sought to introduce an additional head-

lamp, which it called “Super Lite”, as optional equipment on

certain models of its Dodge line of automobiles. Prior to do-

ing so it had obtained assurance from the National Highway

Safety Bureau that the addition of Super Lite did not violate

Standard 108. Officials of the States of New York and Ver-

mont, however, sought to prevent the sale in their States of

Dodge automobiles equipped with Super Lite. Chrysler ob-

jected on the ground that section 103(d) of the Traffic Safety

Act (15 U.S.C. § 1392(d) (1972)), precluded all states from

enacting auto safety standards which were not identical to

existing federal standards covering the same ‘aspect of per-

formance.” Chrysler argued that Standard 108, paragraph

53.1.2 covered the same aspect of performance as the officials

of New York and Vermont wished to regulate. Chrysler also

argued that the Congressional objective sought to be at-

tained by the passage of the Traffic Safety Act was national

‘Standard No. 108 has been recodified and amended as 49 C.F.R.

§ 571.108 (1976).

‘Paragraph $3.12 has been redesignated and amended as para-

graph 84.1.3 (1976).

—_,

A-11

uniformity of auto safety standards and that this objective

would be defeated by allowing New York and Vermont to set

their own standards in regard to Super Lite.

The Second Circuit held that the purpose of the Trafhic

Safety Act was to promote highway safety and that national-

ly uniform safety standards were a means to that end rather

than the end itself. (Tofany, 419 F.2d 499, 508.) The court felt

the need to construe the aspect of performance clause nar-

rowly so as to provide states the opportunity to regulate new

products that might be placed on the market before the

federal agency had time to certify their safety. The court

therefore concluded that paragraph 83.1.2 of Standard 108

covered a different aspect of performance than the standards

of New York and Vermont. Accordingly the court held that

the state regulations were not preempted by che Traffic Safe-

ty Act. Tofany, 419 F.2d 499, 511.

Similar reasoning can be applied to the facts before us.

Section 101 of the FRSA declares the purpose of that Act to

be: ‘‘to promote safety in all areas of railroad operations and

to reduce railroad-related accidents, and to reduce deaths

and injuries to persons***.” (45 U.S.C. § 421 (1972).) Al-

though Congress was also concerned with national uniform-

ity of railroad safety standards, the primary legislative con-_

cern was safety. In the case before us, as in Tofany, a narrow

construction of the coverage of the preemption provision will

aid in achieving safety by enabling the States to continue in

force regulations covering aspects of rail safety not yet

covered by the Secretary’s regulations.

Standard 213.135(g), the federal regulation before us, is

concerned only with visibility, while the Switch Light Act

covers indicator design. The Secretary, while authorized to

go further in his regulation of rail switches, has chosen not to

A-12

do so. There may come a time when the Secretary will

choose to enact detailed specifications on all aspects of rail

switches in which event the state laws on this subject must

give way. “But it will be time to consider such asserted con-

flicts between the State and Federal Acts when and if they

arise. Any such objections are at this stage premature.” Rice,

331 U.S. 218, 237.

Considerations of time and space make it impossible for us

to comment upon each of the many authorities cited on this

issue by defendant and the amici Railroads. We will, how-

ever, comment upon the authorities which we regard as those

upon which greatest reliance is placed.

Donelon v. New Orleans Terminal Co. (5th Cir. 1973), 474

F.2d 1108, cert. denied, 414 U.S. 855, concerned an attempt by

local parish officials to regulate railroad safety. The finding

of preemption in that case was limited to preemption of local

government regulation. The question of the preemptive effect

of the FRSA on state legislation was expressly reserved. 474

F.2d 1108, 1113.

National Association of Regulatory Utility Commissioners v.

Coleman (3d Cir. 1976), 542 F.2d 11, involved the standards

for reporting railroad accidents. (49 C.F.R. § 225 (1976).)

The court held that the States were preempted from adopt-

ing their own reporting systems. There, however, the federal

standards were very specific in their requirements, unlike the

general federal standard on switches involved here. In addi-

tion, the Secretary expressly stated in Standard 225.1 of the

accident reporting standards that the issuance of the federal

reporting requirements “preempts States from prescribing

accident/incident reporting requirements.” (49 C.F.R. §

225.1 (1976).) The absence of any corresponding language in

the Track Safety Standards indicates that the Secretary

A-13

recognized that these standards did not cover all possible

aspects of track safety.

This is further evidenced by Track Safety Standard 213.1

which states that this section contains initial minimum stan-

dards covering isolated track conditions. “[A] combination of

track conditions, none of which individually amounts to a

deviation from the requirements in this part, may require

remedial action to. provide for safe operations over that

track.” (49 C.F.R. § 213.1 (1976).) This language indicates to

us that the Secretary not only contemplated but encouraged

remedial state action in certain areas of rail safety.

We conclude, therefore, that Standard 213.135(2) does not

cover the same subject matter as covered by the Switch

Light Act and that the latter was not preempted by the

former. Consequently, the trial court committed no error in

receiving evidence of the Switch Light Act.

Defendant also contends that the trial court erred in read-

ing section 3 of the Switch Light Act to the jury. Section 3

provided for liability for violation of the Act (Ind. Code

§ 8-8-10-3 (Burns 1976) (repealed 1977, P.L. 106, § 3)):

“For any violation of or failure to comply with any of

the provisions of this act such company shall be liable to

all persons and employees injured by reason thereof, and

no employee shall, in any case be held to have assumed

the risk incurred by reason of such violation or failure.”

The defendant contends that this was error in that the

FELA preempts section 3 of the Switch Light Act. It cites

Seaboard Air Line Ry. v. Horton (1914), 233 U.S. 492, 58 L. Ed.

1062, 34S. Ct. 635, in support thereof.

Also, the trial court instructed the jury that if it found the

defendant “violated the [Act] on the occasion in question,

A-14

then [it could] consider that fact together with all the other

facts and circumstances in evidence in determining whether

or not [the defendant] was negligent before and at the time

of the occurrence.” (From Illinois Pattern Jury Instructions,

Civil, No. 60.01 (2d ed. 1971) (hereinafter cited as IPI

Civil).) The defendant claims, citing Northern Trust Co. v.

Chicago Rys. Co. (1925), 318 Ill. 402, 149 N.E. 422, that it was

“reversible error to réad the preempted portion of the statute

to the jury coupled with an instruction that the jury could

consider the void statute as a basis for liability.

We agree with defendant that the FELA has preempted

the liability portion of the Switch Light Act. However, in our

opinion, the defendant’s reliance on Northern Trust is mis-

placed. That case held that it was reversible error to cite a

void statute to the jury coupled with a peremptory instruc-

tion. (318 Ill. 402, 414.) A peremptory instruction is one

“given by a court to a jury, which the latter must obey im-

plicitly, as an-instruction to return a verdict for the defen-

dant, or for the plaintiff, as the case may be.” (Martin v.

Kralis Poultry Co, (1973), 12 Ill. App. 3d 453, 466-67, 297

N.E.2d 610.) In the present case, no peremptory instruction

was given on this point. The judge merely instructed the jury

that it might consider section 3 along with “all the other

facts and circumstances in evidence in determining whether

- or not [the defendant] was negligent***.” IPI Civil No.

60.01.

Furthermore, .it is evident from the pleadings that the

plaintiff brought her action under the FELA. The trial judge

instructed the jury on the issue of liability by reading to

them the Illinois Pattera Instruction on liability in FELA

cases. (IPI Civil No. 160.02.) We do not believe that by read-

ing section 3 to the jury the trial judge erroneously led the

jury to believe that liability could be based on that section

A-15

rather than on the FELA. Therefore, even if it was error to

cite the preempted section of the statute to the jury, the

error was harmless. /

The next point raised by, defendant concerns the trial

court’s action in directing a verdict for plaintiff on the issue

of contributory negligence. Under the FELA a finding of

contributory negligence does not bar recovery as it would in

an ordinary negligence action. If the jury makes a finding of

contributory negligence, it is required to reduce the damages

in proportion to the degree of negligence attributable to the

injured party. (45 U.S.C. § 53 (1972).) Also, under the FELA,

the burden of establishing contributory negligence is on the

defendant. (Fisher v. Chicago, Rock Island & Pacific Ry. Co.

(1919), 290 Ill. 49, 56, 124 N.E. 831.) “In FELA cases there is

a presumption that the deceased was engaged in the perform-_.~

ance of his duty and exercised due care for his own safety at

the time of his death.” Moore v. Atchison, Topeka and Santa Fe

Ry. Co. (1960), 28 Ill. App. 2d 340, 355, 171 N.E.2d 393.

The evidence relied on by the defendant to show contribu-

tory negligence consists of the results obtained from a reen-

actment of the accident conducted 6 days later by employees

of the defendant. The results of these tests were made the

subject of requests for admissions which plaintiff served on

defendant. The tests showed:

(1) At a point 2,879 feet east of the east end switch

the reflectorized banner was barely visible;

(2) At a point 1,777 feet east of the east end switch

the reflectorized banner was distinctly visible;

(3) At a point 966 feet east of the east end switch, in

the opinion of the observers, the engineer of Extra 2917

would have realized something was definitely wrong and

would have placed the train brakes in emergency;

A-16

(4) Under normal conditions, Extra 2917 would have

been stopped by emergency application of the air brakes

in 1,478 feet;

(5) The loaded hopper cars were parked on the siding

198 feet west of the east switch;

(6) The brakes of Extra 2917 were not applied until

569 feet east of the switch.

The defendant also points to evidence that the decedent

had a duty to maintain a lookout and to apply the emer-

gency brakes if necessary. One of the emergency brake levers

was located on decedent’s side of the cab.

The trial judge, however, had much more evidence to con-

sider in deciding this issue. There was testimony by the flag-

man, Clayton Manly, that the track near Wyatt was “rough

and not [in] too good a shape.” Terry Northrup, a brake-

man, testified that this ‘condition caused a rocking motion

and made braking more difficult than on a smooth, well-kept

roadbed. Clayton Manly further stated that 15 or 20 minutes

prior to the accident the engineer called him and complained

of “having trouble with the air.” This condition would also

affect the braking ability of the train.

Also there was testimony by at least two witnesses that

the banners on the switch were dirty from dust and smoke

and there were high weeds and bushes near the switch which

made the banners difficult to see. Furthermore, the decedent

was not primarily responsible for keeping a lookout. As a

fireman he was required to keep a lookout only when he was

not preoccupied with other duties. It was the engineer who

was primarily responsible for operating the train. The

decedent had a right to rely on proper performance of this

duty by the engineer particularly while the decedent was oc-

cupied with his other duties. Knierim v. Erie Lackawanna R.R.

Co. (2d Cir. 1970), 424 F.2d 745, 747.

A-17

In Taylor v. Atchison, Topeka and Santa Fe Ry. Co. (1937),

292 Ill. App. 457, 465-66, 11 N.E.2d 610, cert. denied, 304 U.S.

560, the court stated:

“The fireman is merely an assistant acting under the

direction of the engineer, and from the character of his

duties in keeping up steam by firing, it cannot be said

that it is his paramount duty to be on the lookout all

the time. As was said in St. Louis & S. F. R. Co. v.

Bishard, 147 Fed. 496, ‘other duties of moment may have

demanded his attention elsewhere.’ ”’ )

Fireman are no longer required to shovel coal to maintain

steam, but there are other duties which demand their atten-

tion. Terry Northrup testified that about an hour before the

accident the decedent left the lead locomotive to inspect the

electrical systems of the second and third locomotives.

Northrup stated that there was an inadequate amount of

electricity to power the drive wheels and that the cab and in-

strument lights were dim. Decedent made an effort to correct

this situation but, according to Northrup, the condition per-

sisted up to the time of the accident. In addition to the elec-

trical problem, there was testimony from Clayton Manly,

flagman in the caboose, that the engineer contacted him con-

cerning trouble with the air pressure about 15 to 20 minutes

prior to the accident.

Viewing the evidence as a whole, it is impossible to deter-

mine exactly what the decedent was doing immediately prior

to the accident. However, the evidence strongly suggests that

the decedent was occupied with at least two mechanical

problems and was therefore unable to maintain a lookout.

The defendant did not carry its burden of presenting any

evidence to negate this inference and therefore any contrary

conclusion would necessarily be pure speculation and conjec-

ture. A finding of negligence cannot be based on such ten-

uous grounds. (Tompkins v. Twin Oaks Dairy, Inc. (1968), 91

A-18

Ill. App. 2d 88, 94, 234 N.E.2d 403, leave to appeal denied, 38

Ill. 2d 630.) Reviewing all of the evidence presented we con-

clude the trial court was correct in directing a verdict on the

issue of contributory negligence.

Defendant raises an issue on refusal of the trial court to

give defendant’s tendered instruction on proximate cause.

Defendant tendered IPI Civil No. 12.04 which states:

“More than one person may be-to blame for causing

an injury. If you decide that the defendant was neg-

ligent and that his negligence was a proximate cause of

injury to the plaintiff, it is not a defense that some third

person who is not a party to the suit may also have been

to blame.

“[However, if you decide that the sole proximate

cause of injury to the plaintiff was the conduct of some

person other than the defendant, then your verdict

should be for the defendant.]”

*The trial court rejected this instruction and gave plaintiff’s

version of No. 12.04 which omitted the bracketed language.

The defendant claims that the trial court thus precluded it

from having the jury instructed on one of its theories of the

case, namely that the sole cause of. the accident was the con-

duct of. some third person who broke the switch lock and

threw the switch.

The Notes on Use accompanying IPI Civil No. 12.04

state that the bracketed language “should be used only

where there is evidence tending to show that the sole

proximate cause of the occurrence was the conduct of a third

person.”

Even if we assume arguendo that there was sufficient

evidence to show that an unrelated third party broke the

lock and tampered with the switch, the defendant still could

A-19

not claim that this was the sole proximate cause of the ac-

cident. Defendant parked seven loaded hopper cars on the

Wyatt siding in violation of its own rules and failed to notify

the crew of Extra 2917 of this fact. Thus, despite other

evidence adduced by plaintiff regarding other possible prox-

imate causation, the evidence shows that if the hopper cars

had not been parked on the siding the mishap would not

have occurred. The defendant’s conduct in failing to keep the

siding clear of obstruction and in failing to notify the crew of

Extra 2917 of the obstruction created reasonably foreseeable

dangers. The record demonstrates that the intervening act of

a third party was not the sole cause of the accident. (See

Drell v. American National Bank & Trust Co. (1965), 57 Ill.

App. 2d 129, 139, 207 N.E.2d 101.) The jury was properly in-

structed in this regard.

Defendant next urges error in the trial court in ruling that

the plaintiff's requests to admit certain matters were deemed

admitted because of defendant’s improper responses. Prior to

trial, on December 1, 1975, the plaintiff served upon defend-

ant a request for admissions of certain facts pursuant to Su-

preme Court Rule 216. (Ill. Rev. Stat. 1975, ch. 110A, par.

216.) The facts sought to be admitted were those obtained by

the defendant as a result of its investigation of the accident.

An investigation was also conducted by the Federal Railroad

Safety Board (FRSB) and certain of the facts sought to be

admitted were contained in the FRSB report.

The plaintiff moved to strike the defendant’s initial re-

sponses because they did not contain the detailed answers

required by Rule 216(c). (Ill. Rev. Stat. 1975, ch. 110A, par.

216(c).) The defendant withdrew these responses and filed a

second set on March 15, 1976. Nothing further was done con-

cerning these responses until November 16, 1976, the second

day of trial, at which time the trial court granted plaintiff's

A-20

motion to declare the matters contained in five of the

requests as admitted by defendant because’ of defendant’s

failure to give proper responses.

Rule 216(c) provides in part:

“Each of the matters of fact***of which admission is

requested is admitted unless, within 28 days after ser-

vice thereof, the party to whom the request is directed

serves upon the party requesting the admission either

(1) a sworn statement denying specifically the matters of

which admission is requested or setting forth in detail

the reasons why he cannot truthfully admit or deny

those matters or (2) written objections on the ground

that some or all of the requested admissions are

privileged or irrelevant or that the request is otherwise

improper in whole o- in part.”

The defendant did not deny or object to the plaintiff’s

requests, therefore it was incumbent upon defendant to set

forth in detail the reasons it could not admit or deny the

matters. This it failed to do.

in Banks v. United Insurance Co. of America (1975), 28 IIl.

App. 3d 60, 328 N.E.2d 167, this court stated that “[u]nless

the party, to whom a notice to admit is directed, conforms

his response to the framework provided by the Rule,***” the

requested matters are admitted.

In the case before us, the defendant began its investigation

immediately after the accident occurred, almost 3 years prior

to trial. Its employees had performed numerous observation

tests the results of which were readily available to it. Yet in

spite of this the defendant continued to maintain at all ma-

terial times that it could not admit these matters because its

investigation was not completed.

A-21

Actually, the facts sought consisted of basic measure-

ments, weights, braking distances, equipment used and re-

sults of the observation tests. The defendant’s response to

each of these requests wag that its investigation was not

complete and therefore it had “insufficient information to ad-

mit or’ deny the facts set forth***.” The contention that

these matters were not in the defendant’s knowledge is in-

comprehensible. One of the requests asked the defendant to

admit the stopping distance of Extra 2917 which fact had

been stated in the FRSB report. Another request sought the

admission of the results of defendant’s observation tests

which were also contained in the FRSB report. Still another

request asked the defendant to admit that it did not have a

derail device on the passing track at Wyatt. Each of these

facts was within the defendant’s knowledge.

We conclude that the defendant failed to conform its re-

sponses to Rule 216(c) and therefore the requested matters

were properly admitted.

In its brief, defendant urges that the court erred in exclud-

ing additional testimony from Charles Bagby, defendant’s

engineer*who had’ conducted the tests above described. The

first point raised is an attempt to modify the distance stated

in the tests above described as to the point at which the

emergency brakes of the train should have been applied. As

above shown, this was an improper attempt by defendant to

modify its response to the admissions of fact. (West Central

Utilities Service Co. v. Central Illinois Public Service Co. (1976),

42 Ill. App. 3d 5, 355 N.E.2d 349, leave to appeal denied, 65 III.

2d 580.) Secondly, defendant urges in its brief that the court

erred in excluding evidence by the engineer regarding the

distance from the point of impact at which the normal brak-

ing capacity of the engine should have been exerted. How-

ever, without considering the importance of this point, if

A-22

any, we reject this contention. The record shows that defend-

ant made no offer of proof in this regard. We find no indica-

tion in this record that the court would have prevented the

engineer from testifying about this matter. The court simply

excluded testimony from the witness regarding matters al-

ready admitted. Thus, the question sought to be raised by

defendant regarding application of the ordinary brakes .was

never presented to the witness or to the court.

Defendant also claims as error the trial court’s refusal to

instruct the jury as to the nontaxability of a damage award;

to allow cross-examination of plaintiff’s economist as to the

nontaxability of an award; and, to allow defendant to in-

troduce evidence as to the effects of income taxes on the

decedent’s future earnings. Numerous federal cases have

been cited by defendant and amicus American Trial Lawyers

Association. From a review of these cases it is apparent that

the Courts of Appeals differ on the question of whether it is

proper to instruct the jury as to the nontaxability of an

award or to allow evidence as to the effects of taxation on fu-

ture earnings. Compare Burlington Northern, Inc. v. Boxberger

(9th Cir. 1975), 529 F.2d 284, with Johnson v. Penrod Drilling

Co. (5th Cir. 1975), 510 F.2d 234, cert. denied, 423 U.S. 839.

The Supreme Court of the United States has not spoken

on this issue. Absent an authoritative pronouncement by

that Court we will follow the decisions of our own supreme

court in Raines v. New York Central R.R. Co. (1972), 51 Ill. 2d

428, 430, 283 N.E.2d 230, cert. denied, 409 U.S. 983, and Hall v.

Chicago & North Western Ry. Co. (1955), 5 Ill. 2d 135, 149-52,

125 N.E.2d 77, cited in Saunders v. Norfolk & Western Ry. Co.

(1977), 54 Ill. App. 3d 307, 316, 369 N.E.2d 518. These deci-

sions hold that it is not error to refuse to instruct a jury as to

the nontaxability of an award. Based on these decisions we

also conclude that it is not error to exclude evidence of the

Fe

A-23

effect of income taxes on future earnings of the decedent.

These contentions are therefore rejected.

een

We next turn to the issues raised by defendant concerning

damages. The decedent is survived by his wife and four

minor children, two of whom are from a previous marriage.

These latter two are twin girls and were 16 years old at the

time of the occurrence. The remaining two children are both

boys, one 3 years old and the other 4% months old at the

time of decedent’s death.

The decedent was 37 years old and was earning approx-

imately $13,000 per year. Increases would have raised his

earnings to about $16,800 per year by 1977. The plaintiff's

economist fixed the present value of the future loss to the

decedent’s family at $302,000. He used a life expectancy of

roughly 34 years for the decedent. The economist was unable

to value the elements of rearing, training, instruction, advice

and guidance of the decedent’s children. He knew of no sta-

tistics for placing a monetary value upon these elements.

The defendant claims that it was error for the trial court

to instruct the jury that it could award damages for the

pecuniary value of any loss to the children of “care, atten-

tion, instruction, training, advice and guidance” (IPI Civil

No. 160.15), when no evidence of the value of such factors

had been introduced. The defendant cites only one case in

support of this proposition, Petition of United States Steel Corp.

(6th Cir. 1970), 436 F.2d 1256, cert. denied, 402 U.S. 987. That

case, however, was not concerned with the amount of

evidence produced. The question there was whether any

award for loss of guidance could be granted to the wives and

adult children of the decedents. In that sense it is distin-

guishable from the case at hand.

A-24

The law in Illinois as to the sufficiency of the evidence to

support an award for care and guidance is stated in Allendorf

v. Elgin, Joliet and Eastern Ry. Co. (1956), 8 Ill. 2d 164, 180,

133 N.E.2d 288, cert. denied, 352 U.S. 833:

“***we are of the opinion that it i Nasiealess to un-

dertake to prove the value of the financial loss of such

care, etc., any more than it would be necessary to prove

the value of pain and suffering or of inconvenience and

annoyance when they are elements of damages. The jury

should assess the value of such loss in the exercise of

their best judgment based upon the facts of each case.”

This decision has been followed in this court. Lambdin v.

Walter (1968), 91 Ill. App. 2d 273, 233 N.E.2d 435; Dodson v.

Richter (1962), 34 Ul. App. 2d 22, 180 N.E.2d 505.

The jury was presented with ample evidence of the care

and guidance rendered by the decedent to his children prior >

to his death. There was evidence that the decedent was a

family man who neither drank nor gambled. The record con-

tains numerous references to his relation to his family. These

indicate that the decedent spent a great»part of his free time

helping around the house and teaching the children needed

skills. In addition, since the sutvivors of the decedent are his

lineal kinsmen, a “presumption of pecuniary loss qbtains

from the relationship, alone, sufficient to sustain a verdict

and judgment awarding substantial damages, without proof

of actual loss.” (Baird v. Chicago, Burlington & Quincy R.R. Co.

(1976), 63 Ill. 2d 463, 471, 349 N.E.2d 413, quoting from How-

lett v. Doglio (1949), 402 Ill. 311, 316, 83 N:E.2d 708.) The trial

court properly left the determination of the value of these

services to the jury.

The defendant’s final assignment of error concerns the size

of the award. The defendant claims that $775,000 is excessive

in light of the testimony by plaintiff’s econumist that the

A-25

present value of the decedent’s lost earnings only amounted

to $302,000. We do not agree.

The Illinois Supreme Court has stated that the “amount of

damages to be assessed is peculiarly a question of fact for the

jury, and if the jury was properly instructed on the measure

of damages, a reviewing court should not substitute its judg-

ment for that of the jury as to the sum to be awarded.”

(Baird, 63 Ill. 2d 463, 472-73.) A reviewing court must “care-

fully scrutinize the record to determine [if the award] is so

large as to indicate passion and prejudice.” Baird, 63 Ill. 2d

463, 473.

As above stated, we believe the jury was properly instruct-

ed on the issue of damages, therefore our only task is to

review the record to determine if the award was the result of

passion and prejudice. After a thorough review of the record

we do not believe it was.

Plaintiff’s economist testified that he based the computa-

tion of lost earnings on a “conservative” estimate of future

increases in the decedent’s salary. Also, the projection by the

economist did not include any amount for the loss of care

and guidance to decedent’s four children. Two of these chil-

dren were under 5 years of age and will require substantial

attention throughout the years of their minority. Each of

these factors may have carried considerable weight in the

deliberations of the jury. See Allendorf, 8 Ill. 2d 164, 179-80.

Furthermore, the trial court denied the defendant’s motion

for a new trial, or, in the alternative, for a substantial remit-

titur. Defendant had urged that the verdict was so grossly

excessive as to indicate that the “deliberations of the jury

were tainted by improper or prejudicial consideration.”’ The

trial court was in a better position that is this court on

4

A-26

review to determine whether the jury was moved by passion

and prejudice. Scully v. Otis Elevator Co. (1971), 2 Ill. App. 3d

185, 201, 275 N.E.2d 905.

This court has previously upheld verdicts of similar mag-

nitude. In Scully, this court upheld an award of $600,000 to a

widow and two minor children. The testimony in that case

showed the present value of the decedent’s lost earnings in

1962—the year of the accident—to be $209,000. In the case

before us, the present value of decedent’s lost earnings was

almost $100,000 more than in Scully; there are two more chil-

dren here than in Scully; and almost 7 years have gone by

since Scully was decided during -which time inflation has

greatly reduced the value of the dollar. Given these differ-

ences, we cannot say that this award is excessive absent any

specific indication of passion and prejudice in the record.

For the foregoing reasons the judgment of the trial court is

affirmed.

Judgment affirmed.

O’Connor, Jr., and Bucktey, JJ., concur.

a san:maemmareenaranst

A-27

ORDER AND MANDATE OF THE ILLINOIS

SUPREME COURT

United States of America

STATE OF ILLINOIS

DS.

SupreEME Court

At a Term or THE Supreme Court, begun and held in

Springfield, on Monday, the thirteenth day of November in

the year of our Lord, one thousand nine hundred and seven-

ty-eight, within and for the State of Illinois.

Present: Danies P. Warp, Cuter Justice

Justice Ropert C. UNpbERWoop

Justice Joseph H. GoLtpeENHERSH

Justice Howarp C. Ryan

Justice Wittiam G. Ciark

Justice THomas J. Moran

Justice Tuomas E. Kiuczynsk1

Wituiam J. Scorr, ATToRNEY GENERAL

Lovie F. Dean, MarsHar

Arrest: Crett L. Woops, CLerK

Be Ir Rememberep, that, to-wit: on the 30th day of

November 1978, the same being one of the days of the term

of Court aforesaid, the following proceedings were, by said

Court, had and entered of record, to-wit:

KaANbDYTHE J. LIEPELT,

Administratrix of the Estate of

Delroy Liepe!t, Deceased,

Respondent

Petition for Leave to

Appeal from Appellate

+ Court First District

No. 51115 vs.

77-677

Norro.tk AND WesterN RalLway

ComPANy, a corporation,

Petitioner

A-28

And now on this day the Court having duly considered the

Petition for Leave to Appeal herein and being now fully ad-

vised of and concerning the premises, doth overrule the

prayer of the petition and denies Leave to Appeal herein.

And it is further considered by the Court that the said Re-

spondent recover of:and from the said Petitioner costs by her

in this behalf expended, to be taxed, and that she have execu-

tion therefor.

I, Ciett L. Woops, Clerk of the Supreme Court of the

State of Illinois and keeper of the records, files and Seal

thereof, do hereby certify that the foregoing is a true copy of

the final order of the said Supreme Court in the above enti-

tled cause of record in my office.

In Witness Wuereor, I have

‘ hereunto subscribed my name

and affixed the Seal of said

Court this 26th day of Decem-

ber, 1978.

(Sra) | /s/ Crett L. Woops,

Clerk, ~

Supreme Court of: the State of

Illinois.

, EXCERPTS FROM THE TRIAL RECORD

(R 664) MR. FLEISHER: Your Honor, the Plaintiff is

called an economist and I would like to make an oral motion

in limine at this time.

Y-am certain Mr. White knows there can be no mention of

income tax under Illinois law and I refer specificaliy to the

/

‘2

~-

A-29

ease of Hall vs. The Chicago & North Western Railway

Company.

THE COURT: May I suggest, sir, that you examine your

witness first. Then after I have a chance to digest what his

testimony has been, I will entertain your motion in limine

with regard to Mr. White’s cross-examination.

I don’t know what you’re going to bring out, so I can’t

anticipate what his cross will be. |

MR. FLEISHER: All T am going to bring out, nothing as

to any type of State or i'vderal law income tax, which is the

Illinois law, and I know Mr. White is aware of it.

(R 665) THE COURT: If you’re not going to bring out

anything along those lines, of course you can’t cross-examine

on anything you haven’t touched upon, but let’s see what his

testimony is going to be first, please.

* * *

So your next question, Mr. White.

(R 711) MR. WHITE: Well, any questions, I would like to

be heard on. It will be along the lines that Counsel made the

motion on before he put the witness on the stand.

THE COURT: The jury will be excused for a moment.

(Where pon, the following proceedings were had in

open court, out of the presence of the jury.)

MR. WHITE: I think this should be outside the presence

of the witness.

A-30

THE COURT: You are excused, sir.

Henry, do you want to show the Professor back to my

chambers and make him comfortable.

(Whereupon, the witness left the witness stand.)

MR. WHITE: If the court .please, Dr. Friedman men-

tioned in the course of his testimony Something about in-

come tax. I forget exactly what it’ was,

At any rate, the—I propose to and ask leave to ask him if

he’s taking into account (R 712) the fact that any amount

recovered, either for death benefits or fer injury, damages, is

not subject to any income tax, which is a big difference.

THE COURT: That has been. frowned upon consistently

by Illinois Courts, as has reference to insurance.

A reference to insurance giving rise to motions for non-suit

and references to freedom from income. tax responsibility

cases of recovery for injuries and death® such as this are

each entitled to swift response by way of granding of a mo-

a

tion for mistrial.

°

I am delighted that you asked your question and made

your comment out of the presence of the jury, and I com-

mend you for that, Mr. White.

However, if your objection in going into the area of income

tax deals with the amount of tax that might be recoverable

by the Government from the verdict amount, if one is re-

turned in this cause, then the motion in limine is sustained.

MR. WHITE: I wasn’t going to put it exactly that way. I

was going to ask him if he took into (R 713) account in his

computations that any amount paid in damages is not sub-

ject to income tax.

nae eel

ae

A-31

THE COURT: And that would give rise to an immediate

motion for mistrial and I would have to grant it.

And consequently the motion in limine is sus‘ ained.

MR. WHITE: May it stand as an offer of proof?

THE COURT: Of course. It isn’t necessary.

Let the record show that if you were to ask this man

whether he knows if any recovery granted by the jury herein

was subject to income tax or not, his answer would have to

be that there will be no tax paid on any recovery.

I think that all parties here would stipulate that that is

what his answer would be.

MR. WHITE: That is the law.

THE COURT: Yes, that is the law.

* * *

(R 738) THE COURT: Mr. White, you got a motion?

MR. WHITE: Yes. If the Court please, the Defendant

wishes to make another motion to... declare a mistrial.

This one—

THE COURT: I don’t know that you had made such a

motion heretofore, Counsel.

This one is that the Court erred in allowing Plaintiff's mo-

tion in limine, and in not permitting to ash the economist

yesterday with reference to income taxes.

A-32

(R 751) MR. LANDESS: . . . (R 752)

Counsel has referred to the I.P.I. Instructions that apply

to cases of this nature, and cited 160 and those following. My

recollection of the appropriate instructions refers to the fact

that a jury may take into consideration in finding an award

of damages or amount of damages, deductions that would

have been taken from the earnings or the income of the

Decedent. They mention deductions specifically in that

instruction.

So on the one hand Plaintiff is allowed to put on an econ-

omist who can testify and project into the future what the

earnings of the Decedent may be. On the other hand, the

Defendant is precluded from showing what the deductions

from those gross earnings would be.

(R 753) We can’t show with any certainty what those

deductions are. We’re precluded. It’s really not a fair posi-

tion of. the Plaintiff in this case.

I submit that the jury would have no reasonable rationale

basis to arrive at an award here unless they are able to hear

both sides of the story, not just one, not what he would earn

but what he would have to pay out of that.

When Counsel says this may be insignificant or small, that

is not true. That is what Boxberger is telling us here. They

do make a decision. This may not be true in all cases.

(R 754) If a man has an income of only a thousand dollars,

well, income taxes are going to be insignificant, and I think

the McQueen Case decision, as mentioned in Boxberger, this

A-33

knowledge, this will have no impact, but Boxberger and Cox

say when you're getting into the $15,000 area, which we are

in this case, as I understand from the testimony and as |

have learned from the economist, that this will have a sub-

stantial impact, and our calculations show that it will have a’

substantial impact as to what they would actually realize.

I think that the Defendant is seriously prejudiced if he

cannot, and we have not had that opportunity to show what

deductions are. When a jury’s given an instruction to say

that they can consider deductions from this, and yet isn’t

giyen any evidence to show what those deductions may be, I

submit that we have been prejudiced, Judge.

2 «+ (Rt 788)

MR. FLEISHER: Your Honor, there are a couple of

things that seem to be changing here. First of all, the items

under I.P.I. that a jury may consider are those of personal

use or consumption, those that are expenditures.

There's nothing in I.P.I. that allows the jury to consider

the effect of income tax, (R 756) Federal, State, by being any

type of deductions.

Secondly, Mr. White’s objection, when he asked to ques-

tion this economist, was what the effect would be on taxation

on this award, whatever it may be.

Now, as I understand Mr. Landess, they are going one

step beyond that. Now they are asking that the economist be

allowed under Illinois law to be questioned and testify as to

the man’s deductions for income tax.

MR. LANDESS: No, no, no, no, no, Counsel.

A-34

I—I don’t mean to interrupt, but that was not my point at

all.

May I proceed?

MR. FLEISHER: Why, sure.

MR. LANDESS: When I said: “deductions,” my under-

standing of the I.P.I. is that the jury may consider what

deductions—not tax deductions, Mr. Fleisher, but what

deductions may be taken from the overall—from the gross,

and obviously one of the deductions that would be taken

would be the income tax.

I didn’t mean to imply what deductions (R 757) he would

under the income tax.

MR. FLEISHER: That is specifically another element, as

opposed to what Mr. White raised in his objection.

Mr. White asked that he be allowed to question the econ-

omist in regard to what effect if any, taxation would have on

an award by this jury, whether any of this money was sub-

ject to a taxation that a jury might give, or they might

receive.

Today’s objection is that this money from his earnings will

be or would have been in the future is subject to going into

the question of taxation. So that what we’re doing specifical-

ly, is overruling Illinois law, specifically overruling I.P.I. and

allowing a whole new area of questioning every single poten-

tial litigant who has a future wage loss as to what taxes

would have been on those wages, or that wage loss.

The reason that it has never been allowed under Illinois

law, and in the number of Federal jurisdictions, and other

states as well, you get into complete and total speculation.

A-35

(R 758) Who knows? In yesterday’s paper, President-elect

Carter is considering a major tax cut to take effect in 1977

right after he takes office.

THE COURT: All right. All arguments must end some-

where, and I’m about to have an end. And the ruling of yes-

terday will stand.

* * *

(R 1091) THE COURT: It seems the defense had a mo-

tion?

MR. WHITE: If the Court please, on behalf of the de-

fendant I wish to make an offer of proof.

THE COURT: Proceed.

MR. WHITE: If we called an actuary by the name of

Robert Barns (sic) he would qualify as trained, experienced

actuary and that using work life expectancy tables with the

decedent’s age at death of 37.51 years, a period of calculation

to date, 12-1-76, 3.02 years, period of further earnings 22.42

years, and he would deduct income taxes, State and Federal,

amount to $57,000. In his computations and if he used a six

percent interest rate the pecuniary interest of the survivors

would be, total a hundred—present value would be $115,325.

THE COURT: A hundred fifteen thousand what?

MR. WHITE: $325.

Two, that he could use or he could (R 1092) testify that he

worked primarily with pension funds, eighty-one and-a-half

percent interest and including a five percent increase in fu-

ture earnings, his present pecuniary value to survivor would

be $138,327.

A-36

THE COURT: In other words, that’s eight and three-

quarters percent as opposed to eight percent?

MR. WHITE: Yes, that’s right.

THE COURT: That figure came to what?

MR. WHITE: $138,327.

THE COURT: Thank you.

MR. WHITE: The reason I am making this as an offer is

because of your Honor’s previous ruling with reference to in-

come tax.

THE COURT: Thank you, sir.

Anything else, gentlemen?

MR. WHITE: We would ask that he would also testify

that fringe benefits should not be computed because they are

continuing.

THE COURT: All right.

MR. FLEISHER: Your Honor, if I may, is this offer of

proof being made in lieu of the testimony of this witness?

(R 1093) THE COURT: Apparently so. I understand it to

be that way in light of the Court’s ruling with regard to in-

come taxes.

Mr. White has very properly made this statement for the

record by way of an offering of proof as opposed to attempt-

ing to bring it out before the Jury which would not be possi-

ble in light of my prior ruling.

ele net

A-37

(R 1262) THE COURT: .... (R 1263) Now, we'll go to 19

and, of course, 19 will be rejected for reasons argued at

length in the earlier part of the trial.

MR. WHITE: What’s that?

MR. LANDESS: Taxes.

THE COURT: Income tax.

(RC 200) If your verdict is in favor of plaintiffs, your

award will not be subject to any income taxes, and you

should not consider such taxes in fixing the amount of your

award.

DEFENDANT’s INSTRUCTION No. 19 (REJECTED)

Dempsey v. Thompson, 363 Mo. 339, 251 S.W.2d 42

(1952)

Burlington Northern, Inc. v. Boxberger, 529 F.2d 284

(CA 9, 1975)