The Value of an Individual

Newspapers and magazines are teaming with success stories - risk-takers who make something out of nothing. And with the bullish market of the Ô90s, the rise in entrepreneurship is astronomical.

But should one of these successful businesspersons be negligently killed, just how would a jury put a value on such a loss to the decedent's estate? How can the decedent's family ever begin to recoup the value of the singular and extraordinary abilities of that person? Surprisingly, just a few courts have even considered this issue.

Lost salary certainly is not sufficient. Often these people draw merely a nominal salary from a corporation, deciding that their dollar gets a bigger return in putting it back into the company.

Take, for instance, James and Ellen Hauser. In 1947 James worked in his father's feed store. Ellen was a schoolteacher. In 1951 he bought his father's interest in the feed business for $36,000. But with their above-average investment and management skills, they expanded and diversified the business over the next two decades into a company employing 15 people.

But on Aug. 28, 1975, a truck rammed their car, killing both of them instantly. They left three adult children. Although these children inherited the business, it wasn't worth the same had their parents run the business for the rest of their natural lives. Furthermore, rather than take a salary comparable to other executives running such a business, they drew nominal paychecks, leaving the money in the family corporation for expansion and growth.

The court held that evidence was admissible pertaining to their industriousness, intelligence and other personal characteristics that demonstrated their above-average earning power. The court found where the profits from a business enterprise result primarily from the personal endeavors, skill and attention of the owner, rather than from his investment of capital or from the labor of others, such business profits are a proper factor to consider in the determination of the business owner's lost earnings or earning capacity in personal injury and wrongful death actions. Iowa-Des Moines National Bank v. Schwerman Trucking Co., 288 N.W.2d 198 (Iowa 1980).

Accumulating assets of a million dollars or more certainly has become more commonplace today. In metropolitan Chicago last year, an estimated 203,728 households, or 7.2 percent of the total, had a net worth of more than $1 million, not including principal residences, according to PSI, a Tampa-based research and consulting firm.

Just two years earlier, the total was estimated at only 146,395, or 5.4 percent of all households. Nationwide, the number of millionaire households has grown at an annual compound rate of 14 percent over the past three years.

And when one of these millionaires or future millionaires is killed, the loss to the estate should be carefully calculated.

Such became the issue in Douglass v. Delta Air Lines, Inc., 897 F.2d 1336 (5th Cir. 1990). There, Michael Douglass was killed in the tragic airplane crash at the Dallas/Fort Worth International Airport in 1985. He left behind a wife and three minor children. A jury awarded them nearly $7 million for the family's lost inheritance.

Douglass, 40, was an up-and-coming entrepreneur in the burgeoning telecommunications business, amassing a net worth of more than $400,000, as well as several properties. Experts testified not only as to his employment history and likely prospects for advancement in this field, but also as to the growth expected in this industry over his expected lifetime.

In Illinois courts had been reluctant to consider such a loss. In Prendergast v. Cox, 128 Ill.App.3d, 470 N.E.2d (1st Dist. 1984), the court refused to allow the probable loss of accumulation to the estate as an element of damages, finding them too speculative.

Surely, all of these calculations involve a certain degree of speculation, but when is determining damages an exact science?

More recent courts, however, have recognized that future earnings that would augment the decedent's estate are allowable if they can be proven with a reasonable degree of certainty. In Lorenz v. Air Illinois, Inc., 168 Ill.App.3d 1060, 522 N.E.2d 1352 (1st Dist. 1988), the decedent had attained a high-level administrative position at a university and witnesses were allowed to testify as to his potential for advancement to the position of dean.

Similarly, in Exchange National Bank v. Air Illinois, Inc., 167 Ill.App.3d 1081 522 N.E.2d 146 (1st Dist. 1988), the decedent had been promoted through the ranks to the position of business agent of her union, and testimony was allowed that ultimately she would have become president of the local union.

And, again, in Valiulis v. Scheffels, 191 Ill.App.3d 775, 547 N.E.2d 1289 (2d Dist. 1989), testimony was allowed that decedent would have graduated college but for his injury. In each of these cases, there was an indication that the plaintiff or decedent was on a course of advancement and had the ability to attain his or her goal.

Call it what you will, the courts are to be commended for attempting to fairly and reasonably award the estate what would be just damages for the premature death of a particularly adept breadwinner.