Early examples of economic expert witness testimony, the 1900s

 

Main link for search of 1900s cases:

 

http://caselaw.findlaw.com/search.html?search_type=text&court=us-supreme-court&text=damage+award+expert+testimony&subject=0&casenum=0&date_start=19001101&date_end=19101101

http://caselaw.findlaw.com/us-supreme-court/212/19.html

WILLCOX v. CONSOLIDATED GAS CO. OF NEW YORK

Real Estate $11,985,435 Plants 15,000,000

Both depend largely upon the opinions of expert witnesses as to the value of that kind of property. Where a large amount of the total value of a mass of different properties consists in the value of real estate, which is only ascertained by the varying opinions of expert witnesses, and where the opinions of the plaintiffs’ witnesses differ quite radically from those of the defendants,

– See more at: http://caselaw.findlaw.com/us-supreme-court/212/19.html#sthash.FKBg8iD3.dpuf

(Court also relied on special masters to determine asset values in the case)

EX PARTE YOUNG, (1908)

http://caselaw.findlaw.com/us-supreme-court/209/123.html

Questions of the cost of transportation of passengers and freight, the net earnings of the road, the separation of the cost and earnings within the state from those arising beyond its boundaries, all depending upon the testimony of experts and the examination of figures relating to these subjects, as well, possibly, as the expenses attending the building and proper cost of the road, would necessarily form the chief matter of inquiry, and intelligent answers could only be given after a careful and prolonged examination of the whole evidence, and the making of calculations based thereon. – See more at: http://caselaw.findlaw.com/us-supreme-court/209/123.html#sthash.tLF1cCTo.dpuf

 

WESTINGHOUSE ELECTRIC & MANUFACTURING CO v. WAGNER

http://caselaw.findlaw.com/us-supreme-court/225/604.html

The courts, ‘while recognizing the impossibility of reaching a conclusion that is mathematically exact,’ have, in addition to all the other evidence bearing on the question, received ‘the testimony of experts as to the relative costs of doing a local and through business.’ Chicago, M. & St. P. R. Co. v. Tompkins, 176 U.S. 178 , 44 L. ed. 422, 20 Sup. Ct. Rep. 336. The converse is true. What is permissible in an effort to separate costs may also be done in a patent case where it is necessary to separate profits. Root v. Lake [225 U.S. 604, 618]   Shore & M. S. R. Co. 105 U.S. 198 , 26 L. ed. 978. See also Providence Rubber Co. v. Goodyear, 9 Wall. 802, 19 L. ed. 570. In effect, this was attempted in the present case. Witnesses who had been in the employment of the defendant, and who had kept the books, purchased the material, superintended the construction, and fixed the price of the transformers, were not able to show that profits had been made, and consequently were not able to show what part of the profits was attributable to the patent and what to the additions, if found to be noninfringing and valuable improvements. – See more at: http://caselaw.findlaw.com/us-supreme-court/225/604.html#sthash.rpAGzT2J.dpuf

So that where, by general evidence, expert testimony, or otherwise, it is shown that his patent is of relatively small value, it will often be possible to prove that, at the utmost, it could not have contributed to more than a given amounts of the profits. Lupton v. White, 15 Ves. Jr. 432-440, 10 Revised Rep. 94, 2 Mor. Min. Rep. 430. In such cases, except possibly against one who had concealed or destroyed evidence or been guilty of gross wrong, the plaintiff’s recovery cannot exceed the amount thus proved, even though it be impossible otherwise more precisely to apportion the profits. – See more at: http://caselaw.findlaw.com/us-supreme-court/225/604.html#sthash.rpAGzT2J.dpuf

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COMMONWEALTH OF VIRGINIA v. STATE OF WEST VIRGINIA

http://caselaw.findlaw.com/us-supreme-court/238/202.html

There were published quotations of two sales, one in November, 1860, at 60, and another in January, 1861, at 57. The report does not give the number of shares sold [238 U.S. 202, 217]   or whether the sale was public or private. There is reference at various dates under ‘Quoted’ to ‘Last sales,’ but actual sales are not stated prior to 1863, except as mentioned above. The company was incorporated in 1847. The book value of the stock in 1860 (derived from the trial balance of 1856 and the later profits) was 137.37. The total stock was $1,981,197. 50. Apparently, only one dividend had been declared,-in 1859, at four per cent. But the profits were large. For six years they had been about 9 per cent, and in 1860 they rose to about 11 per cent. The average for five years, ending with 1860, was $179,782.12, which capitalized on a 6 per cent basis would give a stock value of $2,996,368.67. In view of this showing of profit the master allowed the book value, with a deduction of 5 per cent, or 132.37 per share, making for the 12,000 shares held by the state an allowance of $1,588,440.

The exception of West Virginia in this instance merely relates to the deduction of 5 per cent. The master treated the book value as virtually a ‘liquidation value,’ and held that to arrive at a fair estimate of the actual value there should be some deduction for the expense of realization, and this, upon the testimony of the expert for West Virginia, he fixed at 5 per cent.

– See more at: http://caselaw.findlaw.com/us-supreme-court/238/202.html#sthash.Ef5iUwlr.dpuf

This is the case that illustrates how courts were starting to think about and consider the admissibility of expert witness evidence:

SPILLER v. ATCHISON, T. & S. F. RY. CO.

– See more at: http://caselaw.findlaw.com/us-supreme-court/253/117.html#sthash.rO9BqA6g.dpuf

http://caselaw.findlaw.com/us-supreme-court/253/117.html

 

The opinion of the Circuit Court of Appeals severly criticizes the evidence on which these conclusions were based, characterizing it as hearsay. It is not to be disputed that much of the evidence-including essential parts of it-is properly so characterized. The only witness sworn was Mr. Williams, assistant secretary of the Cattle Raisers’ Association, who had gathered the data upon which the claims were based, mostly from commission merchants, in some instances from the cattle shippers. He had prepared the claims, had spent much [253 U.S. 117, 130]   time and pains in investigating them, and in the course of his duties had visited several of the points of destination and examined the books and records of the commission merchants to ascertain the method in which their business was conducted and records kept. It was he who testified as to the customaryc ourse of business of cattle shippers and commission merchants. He had been connected with the Cattle Raisers’ Association for about eight years, and might be presumed to have some general familiarity with the business in addition to that gained in the special study he had made of it while investigating the claims. His explanation of the method of business and the details of the claims was accepted, and accepted without objection, very much as the testimony of an expert witness might have been accepted. Whether he had shown such special knowledge as to qualify him to testify as an expert was for the Interstate Commerce Commission to determine; and its decision thereon is not to be set aside by the courts unless clearly shown to have been unfounded, which cannot be said in this case. Stillwell Mfg. Co. v. Phelps, 130 U.S. 520, 527 , 9 S. Sup. Ct. 601; Montana Ry. Co. v. Warren, 137 U.S. 348, 353 , 11 S. Sup. Ct. 96 34 L. Ed. 681.

The evidence was not objected to as hearsay when introduced, nor, indeed, at any time during the hearing before the commission. Counsel did in some instances assert that there was a failure of proof, and suggest that the proceedings ought to be dismissed. But the objections came too late, and were too general in character, to be equivalent to an objection to the reception of the evidence because hearsay. Even in a court of law, if evidence of this kind is admitted without objection, it is to be considered, and accorded its natural probative effect, as if it were in law admissible. Diaz v. United States, 223 U.S. 442, 450 , 32 S. Sup. Ct. 250, Ann. Cas. 1913C, 1138; Rowland v. St. Louis & S. F. R. R. Co., 244 U.S. 106, 108 , 37 S. Sup. Ct. 577; Damon v. Carrol, 163 Mass. 404, 408, 40 N. E. 185. And it is clear that the verification of the details of the [253 U.S. 117, 131]   claims by the carriers after full investigation by their auditing departments constituted primary evidence against them, and went far towards showing that the facts as disclosed by the hearsay evidence might be depended upon.

We are not here called upon to consider whether the commission may receive and act upon hearsay evidence seasonably objected to as hearsay; but we do hold that in this case, where such evidence was introduced without objection and was substantially corroborated by original evidence clearly admissible against the parties to be affected, the commission is not to be regarded as having acted arbitrarily, nor may its findings and order be rejected as wanting in support, simply because the hearsay evidence was considered with the rest.

– See more at: http://caselaw.findlaw.com/us-supreme-court/253/117.html#sthash.rO9BqA6g.dpuf

 

 

 

 

 

J.R. Randall

J.R. Randall is an economist who resides in the Bay Area. He focuses his interest on range of economic topics. He has interest in deep sea fishing and art.