PRYOR ET AL., APPELLANTS, v.
WEBBER, APPELLEE

No. 69-414

Supreme Court of Ohio

23 Ohio St. 2d 104; 263 N.E.2d 235; 1970 Ohio LEXIS 378; 52 Ohio Op. 2d 395.   September 23, 1970, Decided

PRIOR HISTORY:  

APPEAL from the Court of Appeals for Franklin County.

This is an action instituted in the Common Pleas Court of Franklin County to recover damages for personal injuries allegedly suffered by Ark E. Pryor and Joann M. Pryor, husband and wife, by reason of a collision between an automobile operated by Ark E. Pryor, in which Joann M. Pryor was a passenger, and an automobile operated by defendant, John J. Webber. The petition alleges three causes of action, two on behalf of Ark E. Pryor, to recover damages for his personal injuries and for medical and hospital expenses incurred by his wife and for loss of services and consortium, and a third cause of action by Joann M. Pryor to recover damages for her personal injuries, pain and suffering, loss of earnings and impairment of earning capacity.

The case was tried to a jury, and Mrs. Pryor testified as a witness on her own behalf. The following questions and answers were given on direct examination:

"Q. How long were you off work?

"A. Approximately 90 days.

"Q. Was this the result of this injury?

"A. Yes, it was.

"Q. How much were you earning per day?

"A. Approximately 1760 a day.

"Q. And how much does this total up to, if you know?

"A. Approximately $ 1,684.

"Q. So, in other words, then, you lost 1600 and how many dollars?

"A. Approximately 84."

On cross-examination of Mrs. Pryor, after preliminary questions reiterating the above testimony over the objection of her counsel, the following testimony was given:

"The Reporter: (Reading) Question: Well, now, my question is did you lose it -- as Mr. Volkema asked the question, did you lose that sum of money?

"A. I would say yes.

"Q. Well, now, Mrs. Pryor, you were paid during the time you were off, weren't you?

"A. Not all the time, no.

"Q. You were paid up until the time that your company's doctor said you were able to work, weren't you?

"Mr. Volkema: We'll object again. This is her own policy, her own money that is paid for any time that she's off.

"Mr. Graham: She said she lost the wages, and the fact is she did not.

"Mr. Volkema: If the Court please, we'll object. Anything she received was something that she had paid into the company under her own contract and is not to go to the benefit of the defendant.

"The Court: Of course, members of the jury, if this was a matter where -- of an insurance policy or some insurance between company and employee for loss of work due to injury or accident, she would be entitled to collect this money anyway, but, of course, the explanation -- she would be entitled to collect that because that's a collateral matter entirely, you see, but I'm permitting them to cross-examine her previous testimony because that is the duty of the attorney to do that. You may go ahead and proceed.

"Mr. Graham: Thank you, your Honor. I don't want to belabor this.

"The Court: That's all right.

"Q. (By Mr. Graham) The fact is that the witness testified she lost the money, and, Mrs. Pryor, isn't it the true fact that you received your regular salary during the time you were off right up until your company's doctor said you were able to work?

"Mr. Volkema: Object again.

"Q. (By Mr. Graham) Now, isn't that the truth?

"The Court: The objection will be overruled and the court has already explained to the jury the matter.

"A. I was paid so much, but I did not get my full pay.

"Q. All right. So the fact is you did not lose this sum of money that Mr. Volkema asked you about yesterday?

"A. Not all of it, no."

At the conclusion of all the evidence, the trial court instructed the jury that the defendant was negligent as a matter of law. The questions whether the collision was the proximate cause of plaintiff's injuries and the nature and extent of the injuries and damages were submitted to the jury.

The jury returned a verdict in favor of the defendant. Upon appeal, the Court of Appeals affirmed the judgment. The cause is now before this court pursuant to the allowance of a motion to certify the record.

DISPOSITION: Judgment reversed.

JUDGES: STEPHENSON, J. O'NEILL, C. J., HERBERT, DUNCAN and CORRIGAN, JJ., concur. n4 SCHNEIDER, J., concurs in paragraph one of the syllabus. STEPHENSON, J., of the Fourth Appellate District, sitting for MATTHIAS, J.  

OPINION BY: STEPHENSON

OPINION:   The principal contention of appellants in this appeal is that prejudicial error was committed by the trial court in allowing the defense to elicit, on cross-examination of plaintiff, over objection, that payments of money were made to plaintiff by her employer during the period she was unable to work as a result of the accident. It is urged that such was in violation of the collateral source rule.

The collateral source rule has been defined as "the judicial refusal to credit to the benefit of the wrongdoer money or services received in reparation of the injury caused which emanates from sources other than the wrongdoer." Maxwell, The Collateral Source Rule in the American Law of Damages, 46 Minn. L. Rev. 669, 670.

In Ohio, as elsewhere, it is a rule of universal application in a tort action, that the measure of damages is that which will compensate and make the plaintiff whole. Lawrence Rd. Co. v. Cobb, 35 Ohio St. 94; Mahoning Valley Ry. Co. v. DePascale, 70 Ohio St. 179. To such general rule,  the collateral source rule is a recognized exception. 25 Corpus Juris Secundum 1012, Damages, Section 99(1); Cunningham v. Rederiet Vindeggen, 333 F. 2d 308.

"* * * Thus the plaintiff who has been paid his salary or a pension during disability, or had his medical expenses paid for by another, or out of the proceeds of an accident insurance policy, may still recover full damages for these items from a defendant who is liable for the injury. To this extent, plaintiff may get double payment on account of the same items. The defendant wrongdoer should not, it is said, get the benefit of payments that come to the plaintiff from a 'collateral source' (i. e., 'collateral' to the defendant)." 2 Harper and James, The Law of Torts, 1343, Section 25.22.  

This court, without identification of the rule as such, has refused to allow a defendant tort-feasor the benefit of a surgeon's bill incurred as a result of the defendant's act, which bill was voluntarily paid by township trustees before trial. Klein v. Thompson, 19 Ohio St. 569. In Trumbull Cliffs Furnace Co. v. Shachovsky, 111 Ohio St. 791, this court allowed a plaintiff to recover damages for personal injuries from a third party tort-feasor, even though the plaintiff had previously received workmen's compensation benefits for his injuries. In the opinion, at page 796, it is stated:

"* * * the compensation provided by the workmen's compensation law is in the nature of an occupational insurance, and, like general insurance, cannot be deducted and treated as an offset for claims for damages for wrongful injury or death."

Lower courts in Ohio have also had occasion to consider and apply the rule, although the rule has not always been identified as such. ...

Since, by the collateral source rule, the receipt of collateral benefits is deemed irrelevant and immaterial on the issue of damages, it follows, as a necessary concomitant, that not only are the benefits not to be deducted but that the receipt of such benefits is not to be admitted in evidence, or otherwise disclosed to the jury....

This aspect of the collateral source rule is epitomized in Wolfe v. Whipple, supra (112 Ill. App. 2d 255), 267, wherein it is observed:

"* * * The entire theory of the collateral source rule is to keep the jury from learning anything about the collateral income so that it will not influence the decision of the jury. * * *"

At the outset, we are met with appellee's contention that this court should not consider, under the facts of this case, any application of the collateral source rule and the benefits received should be held admissible on the issue of damages. The reasoning advanced for this contention is that applicability of the rule is dependent upon the nature, the amount and the source of payments; that the state of the record herein is such that there is an insufficient factual basis for a determination as to whether the benefits received were within the scope of the collateral source rule and that the benefits may have been direct, such as services for the employer performed at home while  off work or the benefits may have been from a source which appellee created or to which he contributed, rather than collateral.

...

We can perceive no good reason why plaintiff, who affirmatively pleaded and presented evidence that she lost wages, should be required to disclose the receipt of benefits from her employer during the period she was off  work, and to present evidence that would bring those benefits within the scope of the collateral source rule. Adoption of such a rule would require disclosure of the receipt of collateral benefits in every case and would parade before the jury evidence having no relevance to the issues the jury must decide. Where a plaintiff seeks recovery for wages lost while unable to work due to a tort-feasor's negligent act, and the tort-feasor claims that benefits have been received and that such benefits are not collateral but are direct benefits, the burden of establishing that such benefits are direct benefits, and therefore are admissible on the issue of damages,  is on the tort-feasor.  In our view, the  benefits, as they stand in the record, were simply diminished wages. If such wages are within the collateral source rule, the rule prohibited their admission.  ...

The ultimate question which this appeal presents is whether, under the facts herein, the receipt by plaintiff of diminished wages during the period she was off work due to her disability resulting from the accident is within the collateral source rule.

This court has not had a prior occasion to consider the question presented here.  The great weight of authority is that the payment of wages, whether the result of a contract between the employee and his employer or simply a gratuity on the part of the employer, does not reduce the damages otherwise recoverable.  

In an exhaustive annotation found in 7 A. L. R. 3d 520, Section 3(a), the following statement is made:

"Although the courts of different jurisdictions are not in entire agreement on the question, the rule followed in most jurisdictions is that the amount of recovery from a third person (defendant) who is responsible for a personal injury is not to be mitigated or reduced by the receipt by the plaintiff from his employer of wages, salary, or commissions during the period of plaintiff's disability regardless of whether such payments are made pursuant to a contractual obligation or as mere gratuities. * * *"

The American Law Institute, in 4 Restatement of the Law, Torts, 620, Section 920, comment (e), has adopted a position in accord with the majority view. It is therein stated:

"* * * Where a person has been disabled and hence cannot work but derives an income during the period of   disability from a contract of insurance or from a contract of employment which requires payment during such period, his income is not the result of earnings but of previous contractual arrangements made for his own benefit, not the tort-feasor's. Likewise, the damages for loss of earnings are not diminished by the fact that his employer or a third person makes gifts to him even though these have been given because of his incapacity."

The rationale of the majority rule is set forth in 22 American Jurisprudence 2d 286, Damages, Section 206, and also in 7 A. L. R. 3d 522, Section 3(b), wherein it is stated:

"The reason generally advanced in support of the general rule is that the wrongdoer can have no concern with the transaction between the employer and employee and there is no equitable ground to grant the tort-feasor a 'windfall' by allowing him a credit for payments made by the employer."

...

On reason, and in accord with the   majority rule, we are of the view that wages or other benefits paid to an employee by a private employer, whether gratuitously or by reason of contract, while he is unable to perform any work due to a disability caused by the negligent act of a third party, are collateral in nature and do not bar a recovery by the employee from such third party of the wages he would have earned had he been able to work and perform services for his employer.

 Where such payments by an employer are gratuities, the conclusion herein reached is clearly within the reasoning adopted by this court in Klein v. Thompson, supra (19 Ohio St. 569), that gratuitous payments by a third party are not intended to be in satisfaction of the injured party's claim against a wrongdoer.

Where such payments are made pursuant to a contractual provision of the employment contract between the injured party and his employer, the injured party, prior to his injury, has furnished the consideration making obligatory such payments by his promise, and the faithful performance of his duties. Wages, almost universally, are defined by the courts to be compensation paid a hired person for his labor or services rendered. See 44A Words and Phrases, 57. The compensation which an employee receives when he is off work and performing no services for his employer, is comparable to the proceeds of a policy of insurance to which he has contributed. As with insurance proceeds, generally, such payments should not inure to the benefit of the wrongdoer and diminish his liability.

We hold that the collateral source rule is applicable herein, and that the rule prohibits the introduction in evidence of the wages received by plaintiff during disability.

Appellee urges,  however, that irrespective of the collateral source rule, the controverted testimony was still admissible for credibility purposes and affected the plaintiff's credibility in two respects: (1) The testimony that wages were "lost" was false, was designed to elicit sympathy from the jury to defendant's prejudice and was admissible by an exercise of a sound discretion of the trial court to rebut such falsity, and (2) the controverted disclosure was properly admitted as bearing on plaintiff's testimony that she could not work because of her injury by presenting a motivation for not working other than her injury.

The Court of Appeals found that the evidence was properly admitted upon the first ground, stating in its opinion, after approval of the first four questions on direct examination set out separately above:

"However, counsel then elicited the testimony that the witness had lost $ 1,684. The statement simply was not true, inasmuch as the witness had been paid. Such a statement, in addition to being false, invokes the sympathy of the jury over loss of wages which, in fact, are not lost. It is true that at the end of the first series of questions and answers which  are perfectly proper for counsel to ask, the jury may incorrectly infer there has been a loss.

"However, the collateral source rule cannot, and does not, protect a witness from cross-examination following the utterance of a statement which is false. * * *"

Here, we are not persuaded that there exists such a distinction between the questions and answers found proper and the answer that wages were "lost" to merit a conclusion of falsity. The "lost wages,  concerning which Mrs. Pryor testified, clearly referred to the wages she would have received had she been working and rendering a service to her employer rather than to the benefits she received from her employer while disabled and not working. In our view, the claimed prejudice of jury sympathy over the loss of such wages would be just as great if the loss is established indirectly by the questions deemed proper as by direct testimony that they were "lost." That such testimony would arouse the sympathy of a jury, whether such loss of wages is established by direct evidence or by inference, is extremely questionable, since the recipient is a married woman whose husband is employed. The prejudice, if it exists at all, exists because the rule exists and not because of the manner of presentation of the testimony.

The exclusionary feature of the collateral source rule, the purpose of which is to prevent prejudicial disclosures,  should not depend upon what is to us, in this case, a matter of semantics.

Neither do we find, under the facts of this case, that the second ground urged by appellees, i. e., that the evidence was admissible as bearing on plaintiff's credibility by demonstrating a motive other than injury for staying off work, justified the admission of such benefits herein. The receipt of collateral benefits by the plaintiff was irrelevant on the issue of damages. Cross-examination upon matters irrelevant to the issue for the purpose of discrediting a witness's testimony rests within the sound discretion of the trial court. ...

The exercise of that discretion necessarily involves a weighing of the probative value of such evidence against its potential misuse by the jury. See Garfield v. Russell, 251 Cal. App. 2d 275, 59 Cal. Rep. 379. Here, defendant sought and, over objection, was permitted to disclose such benefits. No attempt was made nor was the amount of such benefits disclosed so that the jury could reasonably relate the benefits received to the amount plaintiff would have earned if she had worked. Under such circumstances, the simple disclosure that benefits were received had little, if any, probative value in assisting the jury in weighing plaintiff's testimony as to why she did not work and should have been excluded.

...

We hold that insofar as the extent of the cross-examination upon collateral issues was within the discretion of the trial court, the admission of the controverted testimony constituted an abuse of discretion.

We conclude that the admission in evidence of the receipt of collateral benefits was error, and conclude, also, that the error was prejudicial. In 77 A. L. R. 2d 1156, the following has been stated with respect to disclosure of workmen's compensation benefits:

"Generally, it has been held to constitute error, requiring a reversal or new trial, to bring to the jury's attention the fact that the plaintiff in a personal injury or death action is entitled to workmen's compensation benefits. The courts have reasoned that such information would tend to prejudice the jury and influence their verdict, either as to liability or damages, as such information is ordinarily immaterial and irrelevant." (Emphasis added.)

 The reasoning that juries may be prejudiced by disclosure of collateral benefits may have a foundation in fact. See 19 Ohio St. L. J., 158, 169. The Jury, The Law and The Personal Injury and The Damage Award.

The admission in evidence of the receipt of collateral benefits, after the testimony as to lost wages, strongly suggested to the jury that Mrs. Pryor had lied to the jury and was, in fact, attempting to collect twice as to that item of damage. The injury claimed by Mrs. Pryor was such that acceptance by the jury of her testimony as to subjective symptoms was extremely critical to her case. Additionally, it appears from the record that her credibility was also important in the establishment of liability. We note also that, based upon the disclosure of such benefits, the credibility of Mrs. Pryor was attacked in argument to the jury.

We are of the view that the error can be corrected only by the granting of a new trial on all issues. See Palandro v. Bollinger, supra (409 Pa. 296); Garfield v. Russell, 251 Cal. App. 2d 275, 59 Cal. Rep. 379; Powers v. Temple, 250 S. C. 149, 156 S. E. 2d 759.

Since this case must be retried, we deem it unnecessary  to consider the remaining claim of error wherein attack is made upon the correctness of the jury finding as it relates to the evidence of liability.

The judgment is reversed and the cause is remanded to the Court of Common Pleas for a new trial.

Judgment   reversed.