Thompson v. Knickerbocker Ice Co. — 25 N.Y. St. Rep. 581

Majority

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Philip B. Thompson, Jr., Pl’ff and Resp’t, v. The Knickerbocker Ice Company, Def't and App’lt.

(New York Common Pleas, General Term,

Filed June 3, 1889.)

Headnote

Evidence—Oe experts—Rule as to hypothetical questions.

The rule in regard to propounding hypothetical questions to witnesses in criminal cases, is that hypothetical questions are allowed to he put to experts, hut the hypothesis upon which they are examined must he based upon facts admitted or established by the evidence, or which, if controverted, the jury might legitimately find on weighing the evidence; and in civil actions it is sufficient if the facts stated upon which the hypothetical question is based are substantially and not literally the same as the facts proved, so long as neither the witness nor the jury is misled by the variation.

Appeal from a judgment entered upon a verdict awarding plaintiff $10,070.62 for legal services rendered and expenses incurred on behalf of the defendant in a matter before the treasury department, at Washington, in which the United States government sought to collect a tax of ten per cent upon the amount of certain pasteboard tickets issued by the appellant to its employees in payment of wages; the department claiming that the circulation of the tickets rendered the defendant liable under section 19 of the act of February 8, 1875, which enacts: “Every person, firm, association, other than national bank associations, and_ every corporation, state bank or state banking association, shall pay a tax of ten per cent on the amount of their notes used for circulation, and paid out by them.”

These tickets were in the following form:

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Good for Twenty-Five Cents.

KNICKERBOCKER ICE COMPANY,

Jolly Island.

Robert Maclay, President.

Some of these tickets found their way from the workmen to whom they were issued to the trades people in the neighborhood, and thence into the local banks, and were all paid by the defendant shortly after they were issued. The government claimed that these tickets were notes within the meaning of the said act.

_ A letter had been sent to the defendant by the commissioner of internal revenue, in which he expressed it to be his opinion that such tickets were liable to taxation under the above mentioned section of the -act, and requested it to make its return to the collector of taxes of the quantity of tickets issued by it.

The government could assess and summarily collect from the defendant without litigation only the tax which accrued during the fifteen months immediately preceding an assessment thereof. In regard to the tax which accrued prior to the fifteen months immediately preceding the making of an assessment, the government would have to bring an action and establish the defendant’s liability in the courts before it could collect any tax to which the defendant was liable.

The total amount of the tickets issued by the defendant during the fifteen months immediately preceding the ' government claim amounted to $189,868.84. The total amount of tickets issued by the defendant for the whole period of their issuance was $1,681,783.76.

The tax which the commissioner would have assessed for the fifteen months immediately preceding any assessment he might have made was to have been on the quantity of tickets which actually circulated irrespective of the quantity issued.

On December 20, 1887, the plaintiff was retained by defendant. On December 21, 1887, he presented a petition and brief to Internal Revenue Commissioner Miller, in which he requested him to transmit the matter to the head of his department, the secretary of the treasury, in order that the latter might obtain the opinion of the attorney-general of the United States on the question of the defendant’s liability to the tax. Which having been done, the plaintiff appeared before the attorney, general and argued the case before him; and subsequently the attorney-general gave it as his opinion that the ice tickets were not “ notes intended for circulation within the meaning of said act.”

The plaintiff theretipon rendered a bill to the defendants for $10,000 for his services in the matter. There was no

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agreement made between plaintiff and defendant as to what the plaintiff’s compensation should be.

Amount of tickets issued in 1887............ $189,868 84

Amount of tickets issued in 1875 to 1886.---- 1,491,914 92

Total.................................. $1,681,783 76

Ten per cent on which is................... 168,178 37

Ten per cent for services on this is.......... 16,817 83

Of which the commissioner could only dis-train for issue of the year 1887, viz........ 18,986 88

And sue for the issues of 1875 to 1886....... 149,191 49

To prove the value of his services, the plaintiff examined as witnesses under a commission several experts, and propounded hypothetical questions, substantially in this form:

"If the defendant in this action, the Knickerbocker Ice Company, had retained you as counsel or attorney after Mr. Miller, the internal revenue commissioner had decided that the Knickerbocker Ice Company was liable for the amount of $168,178.27, and you had succeeded in reversing his opinion in that case, which, if adhered to, would have made the Knickerbocker Ice Company liable for the amount of $168.178.27, would you consider the sum of $10,000 as a fee exorbitant?

Maclay & Forrest, for app’lt; John J. Adams, for resp’t.

The action was brought by an attorney to recover for legal services rendered the defendant.

Several witnesses were examined in Washington under commission to prove the value of these services.

In order to do this, hypothetical questions were put tó them. Defendant contends that the answers to these questions were erroneously admitted in evidence under defendant’s objection, because the question involved assumptions at variance with the facts established on the trial. Although there were several of these questions, the substance in each, and the objections to each, were the same, and they may be considered together. The principal variances claimed are two:

First. It was assumed that the commissioner of internal revenue at Washington had decided the question of defendant’s liability to a tax, on certain evidences of debt issued by it to its workmen, known as ££ice tickets,” whereas, in fact, as is claimed by the defendant, no such decision had been made by him.

Second. The amount of defendant’s ££liability,” or the C£ amount involved,” was assumed to be $168,178.27, whereas, in fact, defendant claims it was less than $20,000.

The rule, in regard to such questions as' stated by Judge

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Rapallo, in People v. Augsbury ( 97 N. Y., 505 , 506), is: “Hypothetical questions aire allowed to be put to experts, but the hypothesis upon which they are examined must be based upon facts admitted or established by the evidence, or which, if controverted, the jury might legitimately find on weighing the evidence.” Although this was announced in a criminal case, we think the rule is no stricter in civil actions; indeed, in the latter class of actions we think it is sufficient if the facts stated are substantially and not literally the same as the facts proved (Williams v. Brown, 28 Ohio State, 547; Covey v. Campbell, 52 Ind., 158 ), so long as neither the witness nor the jury are mislead by the variation.

The questions put, however, contain a very material variation in both of the respects mentioned, if the facts proved on the trial are as claimed by the defendant.

It appears from exhibit D. in evidence, and the testimony of the commissioner of internal revenue, and of the respondent that the commissioner had decided that the “ ice tickets” issued by the Consumers’ Ice Company in all respects like those issued by the defendant, were subject to a tax of ten per cent and that the defendant was liable to such tax on the tickets issued by it as well as the Consumers Ice Company on their tickets, and on this evidence the jury might well have found that the commissioner had in effect decided defendant’s liability on these tickets, and therefore, we think the' evidence warranted the assumption in that respect in the hypothetical question. As to the extent of defendant’s “ liability ” or “ the amount involved ” in the controversy, the evidence before referred to together with defendant’s return to the government and Mr. Forrest’s testimony, would have abundantly justified the jury in finding that $168,178.27 was involved in the entire controversy, although only about $20,000 could have been obtained by distraint, leaving the rest to be recovered by action, in the event the commissioner’s decision had been adhered to. The question was not as to the remedy of the government, and for the purpose of that question enough had been shown in the evidence to warrant the assumption in that part of the hypothetical question.

The exceptions to the judge’s refusal to charge that no weight should be given to the testimony of experts based upon the hypothetical question, of course falls with the objections to the questions.

The other exceptions to the charge fall with these.

Appellant claims that the damages awarded were excessive. Although the verdict seems large, yet there was abundant testimony if relied on by the jury, to support it. Considering the condition of the controversy when plaintiff was retained, the delicacy required in its management, and the amount involved, we cannot say that the verdict was so clearly excessive as to warrant us to set it aside

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and send the case to another jury who must decide it on the same state of facts.

The judgment is, therefore, affirmed, with costs.

Larremore, Ch. J., and Daly, J., concur.