Nelson v. Travelers Insurance Co. , 102 Wis. 2d 159 ( 1981 )

COFFEY, J.

(dissenting). This case involves nothing more than the application of sec. 814.04(4), Stats., which provides:

“When the judgment is for the recovery of money, interest at the rate of 7 % per annum from the time of ver-diet, decision or report until judgment is entered shall be computed by the clerk and added to the costs.”

The majority applies this statute so as to allow interest running from the date of the first verdict in this case, even though the amount of recovery on which the interest is allowed is determined by the second verdict, and is greater than the amount which could have been recovered under the first verdict. I think the majority has departed from our previous decisions construing the statute. However, that disagreement is not the reason for my dissent. I am disturbed by the majority’s suggestion that pre-verdict interest be allowed on a claim for personal injuries. The effects of this dictum are impossible to predict, but I fear that they may be catastrophic.

In the case at bar, the second trial was had not only on the issue of negligence, but also on the issue of contributory negligence. The difference is important. The amount of recovery was not fixed by the first verdict, with the question of liability to be determined by the second. The second trial determined not only the issue of liability, but also how much the plaintiffs were to recover. Under Zeidler v. Goelzer, 191 Wis. 378, 211 N.W. 140 (1926), and Fehrman v. Smirl, 25 Wis.2d 645, 131 N.W. 2d 314 (1964), as quoted by the majority, interest runs on a verdict which has the effect of liquidating damages, even though liability is determined by a second verdict. In this case the amount of recovery was determined by the second verdict, because the apportionment of negligence, 80 percent to the defendants and 20 percent to the plaintiffs, increased the recovery over that which would have been allowed under the first verdict where negligence was apportioned 25 percent to plaintiffs and 75 percent to defendants.

Our prior cases have construed sec. 814.04, Stats., to permit the recovery of interest from the date of a verdict which fixes the amount of recovery. A new interpretation of the statute amounts to an amendment by this court. The proper forum in which to amend the statute is the legislature. Having construed the statute, the court ought to adhere to the construction made. If the court claims the power to amend the statute as a rule of practice and procedure, case law is not the way to do it. Sec. 751.12, Stats., requires notice and hearing before a court rule amending a statute relating to pleading, practice or procedure may be adopted. The effective date for all such rules must be January 1 or July 1st. The opinion of the majority has circumvented these requirements.

The majority does not restrict its consideration to the statutory question upon which the case is decided. The majority goes out of its way to question the rationale of City of Franklin v. Badger Ford Truck Sales, 58 Wis.2d 641, 207 N.W.2d 866 (1973), and Wyandotte Chemicals Corp. v. Royal Electric Mfg., 66 Wis.2d 577, 225 N.W.2d 648 (1975), stating the rationale is suspect. The majority states that both cases involve “middle ground decisions” illustrating a departure from the requirement of liquidated damages for pre-verdict interest, and adopting the concept that interest was recoverable in some cases where the exact amount due was capable of determination. The majority concedes that damages associated with personal injury “epitomize the concept of unliquidated damages,” but places a higher value on “compensation” to the injured party than fairness to the alleged tort-feasor. The majority has not pointed to any case where pre-verdict interest has been allowed in a personal injury case. There is a very good reason why such interest should not be allowed. In a personal injury case the jury is typically asked to place a value on the damages suffered up to the time of verdict, and those which will be suffered in the future, following the verdict. If pre-ver-diet interest were allowed in a personal injury case, based on the amount of recovery which the jury awarded in the verdict, interest would be allowed on items such as pain and suffering before they occurred. Moreover, it would not be equitable to permit interest before a verdict on the amount of a hospital bill which had not yet been paid. At the very least, the jury should be instructed that interest will be allowed going back to sometime prior to the verdict on all damages which it finds, so that the defense can argue that the damage award should be reduced by the amount of that interest.

In Congress Bar & Restaurant v. Transamerica Ins. Co., 42 Wis.2d 56, 165 N.W.2d 409 (1969), the court denied pre-judgment interest on a claim for property damage, stating:

“Respondent’s claim was for an amount substantially in excess of the amount finally determined to be due. To award respondent interest when it was able to establish just over half of its claim would encourage the overstatement of claims.” Id. at 71.

Overstatement of claims in personal injury cases is already a serious matter, resulting in the trial of many cases which might have been settled if a more reasonable demand were made. The majority opinion will encourage the overstatement of claims and lead to unnecessary litigation, greatly increasing the burden of defense on insurance companies and the portion of the premium dollar which must be allocated to that purpose. Further, the allowance of pre-verdict interest in cases which come on for trial seven years after the accident occurs, and such cases are not uncommon, could add 50 percent to the amount of recovery against the insurance company. This unexpected and unjust drain on their reserves might cause many insurers now doing business in this state to cease doing business here, or might make them insolvent.

The majority opinion is wrong even if its only purpose is to force insurance companies to settle out of court so as to give plaintiffs more leverage in questionable damage claims or where damages are large but liability is in doubt. The right to defend an honestly debatable damage or liability issue should not be taken away without a much better reason. The insurance companies defend such cases in a quasi-fiduciary capacity for all, because ultimately it is the premium-paying public which bears the cost.

The sophisticated trial techniques now employed on behalf of plaintiffs in personal injury cases include interest calculations, allowances for inflation, testimony of economists projecting future loss of earnings and similar items. After taking this evidence into account, a jury is asked to return its verdict as to what amount will compensate the plaintiff for the injuries suffered. The majority now proposes to increase the verdict by awarding pre-verdict interest so as to increase the compensation paid to the plaintiff. I believe this is an invasion of the province of the jury in personal injury cases, unfairly penalizes defending insurance companies and encourages overstatement of claims.

The court of appeals held, in accordance with established case law, that interest in this matter was to run from the date of the second verdict. I would affirm the court of appeals. Moreover, I disassociate myself from the views of the majority with respect to pre-verdict interest for the reasons stated.

I am authorized to state that Mr. Chief Justice Bruce F. Beilfuss joins in this dissent.