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Patrick Mahoney vs. Boston Elevated Railway Company

Massachusetts Supreme Judicial Court1915-05-20
221 Mass. 116

Summary

Holding. The court sustained the defendant's exceptions and ordered a new trial limited to the issue of damages, holding that evidence of actual business profits is inadmissible in a personal injury case where the profits derive substantially from capital investment, inventory, and employee labor rather than primarily from the plaintiff's personal service.

A plaintiff who operated a tailoring business sued for damages after suffering a personal injury caused by the defendant's negligence. At trial, the plaintiff presented evidence showing that his business profits declined significantly following the accident—from $1,200 in the six months before the injury to $500 in the six months after. The defendant objected to the admission of evidence regarding these business profits.

The court established that while a tort victim may recover for lost earning capacity and diminished income resulting from physical disability, not all income losses are compensable. The critical distinction turns on whether the plaintiff's personal service is the dominant factor producing the income, or whether the income depends substantially on other elements such as capital investment, goods inventory, or the labor and skill of employees. In professional contexts—such as physicians, authors, or lawyers—personal expertise is the essential factor, and income loss may be shown. However, in a commercial business like tailoring, where profits derive from multiple sources including inventory, employee labor, and business management, the uncertain profits of the enterprise are too speculative and remote to serve as a measure of damages. The court concluded that the evidence regarding actual business profits should have been excluded because it reflected business profits rather than the plaintiff's personal earning capacity.

Summary generated by law.co from the public-domain opinion. The opinion text itself is public domain.

Key issues

  • Admissibility of business profit evidence in personal injury damages
  • Distinction between personal earning capacity and business profits
  • Whether tailoring business profits are recoverable as earnings
  • Application of damage principles to self-employed plaintiffs

Procedural posture

The defendant appealed by exception to the trial judge's evidentiary ruling admitting evidence of business profit losses, following a jury verdict in the plaintiff's favor.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion

majority opinion

Rugg, C. J.

The only question presented relates to evidence as to damages recoverable for a personal injury arising out of a tort. The plaintiff introduced evidence, without objection, tending to show physical inability to do his usual work consequent upon the injury. He conducted on his own account a tailoring business consisting of both making and repairing clothes. Previous to the accident, he worked at the business himself, doing the cutting needed in the making of new clothes and sometimes assisting in the repairing. He received the customers, took their measurements, and did the marking for repairs. Both before and after the accident, he always had working for him at least two people, sometimes more, and part of the work was done by outside tailors. After the accident, he was able to do none or little of his work for a considerable time. He was unable to grasp his business as before. His memory failed him and trade fell off. Upon this state of the evi dence the presiding judge admitted testimony, against the exception of the defendant, tending to show that the profits of his business for the six months before the accident were $1,200, and for the corresponding period after the accident were $500. The point to be decided is, whether this evidence was competent.

The principles upon which damages for personal injury caused by tort are to be assessed are settled. In general the plaintiff is entitled to such sum of money as will compensate him for the loss actually sustained by the injury to his person. It is personal and not property damage which may be redovered. As bearing upon the question of compensation, disability and impaired capacity are to be considered. If one receives wages or salary, the amount lost in this regard from the enforced inability to work is a proper element to be considered in assessing damages, but it is not strictly recoverable as wages or salary. The loss of time and the diminution of earning power in the past and in the future are to be considered in estimating the damages. Sibley v. Nason, 196 Mass. 125,131. Profits hoped to be derived in the future from a business are too remote and uncertain to be regarded as an element in estimating damages. Ballou v. Farnum, 11 Allen, 73, 76. That is not a personal injury, but a property damage. Decrease in income is an element to be weighed, when it arises from inability to exercise personal effort or especial efficiency directly producing the income; but not when it is interwoven with profits derived from a business in which capital is employed and to the success of which the service, skill and zeal of others contribute. Personal earnings may be considered, but the more or less uncertain profits from a business venture arising from an investment and from ability in employing and managing labor cannot be taken into account. Where the element of personal expertness is the essential and dominant factor and the capital invested is insignificant as compared with the earnings and merely incidental to the individual capacity which is the fundamental cause of the income, then the income stands on the same basis as wages or salary and may be shown. On this ground the income of the physician or other professional man or author may be shown, although there may be some money invested in a library, instruments and similar collateral necessaries. Conklin v. Consolidated Railway, 196 Mass. 302, 307. Nebraska v. Campbell, 2 Black, 590. Gray v. Boston Elevated Railway, 215 Mass. 143. One is not precluded from recovering loss of earning capacity because he happens to be engaged in business for himself; but he cannot prove what is in substance profits from a business under the semblance of earnings. The business man may show the nature and extent of the business conducted by him, the part actually performed by him, and the compensation usually paid to those performing a like service for others. These are circumstances which may be helpful in determining the value of the time he has lost, in order to reach the ultimate result of just compensation for the injury sustained. But the uncertain profits of a commercial undertaking dependent for its success upon other essential factors beside his personal service are too remote to be of assistance in this respect. These principles are generally recognized. They are the same whether the commercial venture involved is on a large or a small scale. Stynes v. Boston Elevated Railway, 206 Mass. 75, and cases there collected. Weir v. Union Railway, 188 N. Y. 416. Walsh v. New York Central & Hudson River Railroad, 204 N. Y. 58, 68, 72. Silsby v. Michigan Car Co. 95 Mich. 204. Bierbach v. Goodyear Rubber Co. 54 Wis. 208. The difficulty arises in their application to the diverse facts of different cases.

Tailoring is a well known branch of trade. It involves the carrying of some stock and, in the case at bar, the employment of two or more persons all the time. Its profits must have been derived to a substantial extent in the nature of things from gain on the sale of goods and employment of labor. It partakes more of the nature of business than personal service.

The evidence to which exception was taken related definitely and unequivocally to the profits derived from the business of the plaintiff. This was something more than the earning capacity of the plaintiff. It was not confined to the value of the plaintiff’s service according to the standard of wages paid to others employed to do similar work, nor limited to a description of the nature and extent of the business conducted by him. It therefore should have been excluded in accordance with the principles stated.

As the only error relates to the matter of damages, the new trial is to be confined to that issue. Simmons v. Fish, 210 Mass. 563, 567.

J. T. Hughes, for the defendant.

E. Field, (C. C. McCarthy with him,) for the plaintiff.

Exceptions sustained.

Fox, J. The jury returned a verdict for the plaintiff in the sum of $1,515; and the defendant alleged exceptions.