Home/W.D. Michigan/Pierce Ex Rel. Pierce v. New York Central Railroad

Pierce Ex Rel. Pierce v. New York Central Railroad

304 F. Supp. 44, 1969 U.S. Dist. LEXIS 9419
CourtDistrict Court, W.D. Michigan
DecidedJune 30, 1969
DocketCiv. A. 4813
StatusPublished
Cited by14 cases

This text of 304 F. Supp. 44 (Pierce Ex Rel. Pierce v. New York Central Railroad) is published on Counsel Stack Legal Research, covering District Court, W.D. Michigan primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Pierce Ex Rel. Pierce v. New York Central Railroad, 304 F. Supp. 44, 1969 U.S. Dist. LEXIS 9419 (W.D. Mich. 1969).

Opinion

SUPPLEMENTAL OPINION

FOX, District Judge.

An ancient rule of the Michigan Supreme Court requires a five per cent *45 reduction of future damages as determinative of present worth. 1 Rivers v. Bay City Traction & Elec. Co., 164 Mich. 696, 708, 128 N.W. 254, 259 (1910), reh. denied 164 Mich. 696, 710, 131 N.W. 86, 87 (1911). However, the same Supreme Court has also stated that inflation and the resulting diminution of a dollar may be considered. Knights of Equity Memorial Scholarship Comm. v. University of Detroit, 359 Mich. 235, 238, 102 N.W.2d 463, 465 (1960); Norman v. Thomas Theatre Corp., 349 Mich. 50, 61-62, 84 N.W.2d 451, 456-457 (1957); 2 Miller v. Miller, 320 Mich. 43, 46, 30 N.W.2d 509, 510 (1948). Therefore, the problem is how to offset these two competing factors. Must one “jack up” a verdict to compensate for inflation or can present worth be merely offset by a consideration of inflation? The court deems these cases to be a mandate for the trier of the facts to consider “not only” a reduction to present worth, but also “countervailing” factors of inflation and resulting diminution of dollars value.

Defendant in its appellate brief, urged that the district court “despite its awareness of the Michigan rule requiring reduction of future damages to their present worth, did not so reduce the damages,” citing * * * Gowdy v. United States, 271 F.Supp. 733 (W.D.Mich.), rev’d. on other grounds, 412 F.2d 525 (6th Cir. June 20, 1969); Pierce, Jr. v. New York Central R. R. Co., 409 F.2d 1392 (6th Cir. April 21, 1969).

In Gowdy, supra, 271 F.Supp. at 752, the court observed:

Under Michigan law, future damages should be reduced to present worth. Professor Henderson testified that according to information obtained from the Bureau of Labor Statistics of the U. S. Department of Labor, future wages are reasonably expected to increase at the rate of 5% per annum. This balances out the 5% formula for reduction of future damages to present worth. Future wage increases that would reasonably be expected by Gowdy would be equal to the adjustment of his future damages to present worth. 3

This court can take judicial notice of the publications of the Bureau of Labor Statistics of the United States *46 Department of Labor. See Fed.R.Civ. Proc. 44(a) (1); Comm, on Rules of Practice & Procedure, Preliminary Draft of Proposed Rules of Evidence for the United States District Courts and Magistrates 8-03(8).

Simply stated, the five per cent per annum increase in wages is an inflationary factor which was considered in both Gowdy and Pierce.

The appellate court mandated this court to make a “clear statement of whether and how the Michigan rule requiring reduction of damages was applied.” In the oral opinion rendered, the court attempted to show that it was offsetting a consideration of inflation against the present worth rule. At page 14 of the oral opinion it was said:

“Now, we have in Michigan a rule that future damages should be brought down to present worth. But we do also know that inflation and the ever-climbing gross national product has pretty well balanced out reduction of damages of future earnings, or loss of future earnings to present worth.”

This same principle was applied to the damages awarded for future pain and suffering as well as future loss of life’s enjoyments.

The mathematics of the computation are quite simple. Using the element of loss of earning capacity, which the court concluded to be $2,500 4 for 35 years, or $87,500, a reduction to present worth would have resulted in a figure of $49,775. See Appendix A.

However, assuming an average inflationary trend of five per cent a year, any reduction to present worth was offset. See Appendix B. Therefore, the court, fully mindful of the Michigan present worth rule, took into consideration the inflationary trend of our nation’s economy and merely made an appropriate offset. The amount of damages should remain the same.

In Gowdy, supra, 271 F.Supp. at 748, it was stated that a party is entitled to receive full compensation for his damages:

“[A party] is entitled to compensation which adequately, and fully flows from the injuries he has sustained as a result of the defendant’s negligence. Fair compensation is that which puts the plaintiff in as good a condition as he would have been if the injuries had not occurred. Anything short of this is inadequate. A person who causes an injury to another should not be allowed to cast any portion of the actual or appreciable loss on the party whom he has injured.”

The computations illustrate that the factoring in of an inflationary figure effectively cancels out the present worth figure. This court made precisely this calculation when it determined the damages in this case. Thus, to calculate inflation on a dollar and then reduce it to present value or vice-versa would result in identical amounts.

For example, if one assumes that an invested dollar will earn five per cent interest per annum then that dollar will increase to $2.30 after 26 years. However if the purchasing power of a dollar is reduced five per cent per annum, 26 years hence it will require $2.30 to purchase what it presently costs $1.00 to buy.

Therefore, plaintiff is still entitled to the original amount of damages awarded —$132,500, together with interest as provided in the original judgment of July 7, 1967.

*47

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Bluebook (online)
304 F. Supp. 44, 1969 U.S. Dist. LEXIS 9419, Counsel Stack Legal Research, https://law.counselstack.com/opinion/pierce-ex-rel-pierce-v-new-york-central-railroad-miwd-1969.