Dean's Address

In Canada, where by Statute since November 25, 1977, prejudgment interest has been available on tortious claims at prime rate, this is defined at "the prime rate existing for the month preceding the month on which the action commenced" and an unliquidated claim is calculated "from the date the person entitled gave notice in writing of his claim to the person liable therefor to the date of the judgment." The prime rate as set out in the periodic publication, Bank of Canada Review, is admissible as conclusive proof of the prime rate as set out therein. Since prejudgment interest in Canada is discretionary with the judge, it was allowed originally only on the principle of fault where the defendant caused the delay, but now it is considered as nothing more than causing the defendant to account for the money earned on the money not paid the plaintiff during the period the plaintiff was entitled to compensation, but did not receive it. The law had been found eminently efficacious in the early and sensible settlement of claims which might otherwise proceed a long distance in terms of litigation before settlement according to our esteemed Canadian Fellow Kenneth E. Howie.²⁴

In keeping with the modern tendency of courts to award prejudgment interest, at least in death cases, even where not provided for by Statute; our esteemed Fellow John J. Kennelly, persuaded the Federal District Court in Chicago to follow this line in re Air Crash Disasters, by arguing that, "it is incomprehensible that under Illinois law the owner of personal property would by entitled to prejudgment interest in a suit against a common carrier, but that the family of a killed passenger would not,” and asking, "Upon what logical foundation can human beings be treated differently from personal property?" The court thereupon held:

“…we believe that fair and just compensation must include interest on a judgment in a wrongful death case from the date of death. The losses suffered by the decedent's survivors arise at the moment of the decedent's death; the award of judgment in a subsequent wrongful death suit is merely an expost facto determination of a pre‑existing obligation. Unless prejudgment interest is available, the survivors suffer the additional loss of the income from the damages they incurred on the date of death."²⁵

reasoning that if two were killed in the same accident and one wins judgment a year later than the other, due to the court delay, he would receive less for the same injury, and only that by awarding prejudgment interest from the time the cause of action accrues, the time that a plaintiff is entitled to be made whole, can such a miscarriage of justice be avoided.

The court estimated that the damages in that air crash, involving 275 deaths and injuries was between 115 and 500 million and the interest that the defendants may earn, and the plaintiffs may lose based on current average rate of 10% on short term United States Treasury notes (despite the fact that interest as high as 14 or 15 % was being paid on certificates of deposit) was between 11.5 and 50 million dollars per year, or $31,800 and $137,000 per day. What an incentive for delay! Defendants would gain this interest and plaintiffs would lose it and because the total amount of damages involved in those cases was so large and the interest accumulating on it was so substantial there was no real incentive for the defendants to settle. Although these amounts are only in one unusual case, the many thousands of yearly casualty claims aggregating even a much greater gain for the defendants and loss to the plaintiff, would make it appear that the injured and the widowed, and the orphaned are subsidizing the defendants and underwriting the casualty business.

Prejudgment interest at prime rate will urge all litigants toward earlier settlement or trial. Most judges and attorneys interviewed by the National Center of State Courts felt that only the reality of immediate trial produced fast and sure settlements Under the present system, many defendants are literally dragged kicking and howling to the conference tables. Yet, the efficacy of our judicial system is readily apparent when we realize that settlements do result in most cases. Making the advantageous use of delay expensive to both sides can only result in hurrying the process along.

CONCLUSION

Our adversary system of trial by jury is the result of many centuries of trial and error by other methods. Admittedly it is ponderous and costly, but then, too, so is our democratic system. Admittedly, too, it is the only system so far devised that, except for the court delay, leaves a feeling of fairness and justice in two opposing litigants who knew their case was heard and considered by twelve of their peers, and not by administrators, arbitrators, judges, or others who may be jaundiced by repetitious similar experiences or influenced by political or personal considerations, not so readily persuasive with a jury of twelve.

Before abandoning our present system, why not at the same time right a long neglected injustice and within this very system at no cost to the courts, adopt as a remedy for the delay, prejudgment interest in tort cases on the full extent of the verdict and make both this prejudgment interest and the post judgment interest thereon subject to simple interest at prime rate. Only after this obvious and simple expedient has been fairly tried need we consider other more radical recommendations that may ultimately threaten to destroy our adversary and jury trial system.

Francis H. Monek
Henslee, Monek & Henslee
30 N. La Salle St., Suite 2100
Chicago, IL 60602

FOOTNOTES

1. Memorandum of T. F. Bridgman and Philip H. Corboy to the Illinois Committee to Study Caseflow‑ Management in the Law Division, Circuit Court, Cook County, Ill., January 8, 1982 ‑Introduction.

2. Id.

3. Id., p. 2.

4. Los Angeles Herald Examiner, May, 1981.

5. Memorandum, supra, p. 2.

6. H. Zeisel, H. Halven and B. Bucholz, "Delay in the Court," Boston, Little Brown & Co., 1959, p. XXIII.

7. J. B. Jennings, "Evaluation of the Manhattan Criminal Courts Master Calendar Project," Phase 1, Feb. 1. June 30, 197 1, (New York Rand Corp. 1972), p. 111

8. Yankelovich, Skelly & White, Inc., "The Public Image of Courts, Highlights of a National Survey of the General Public, judges, Lawyers and Community Leaders," as cited in National Center for state courts, 1978, Table 111, 6, p. 25.

9. Id. I Table IV. 1. p. 29.

10. Id. I Table 111, p. 22.

11. Yankelovich, et. al., supra, P. 52.

12. Pelarsor v. Crown Financial Corp., 661 F2287, (1981).

13.Moore‑McCormick Lines, Inc. v. Richardson, 295 F 2d 583 (2 Cir 1961).

14.28 USC #1961. Schneider v. Lockheed Aircraft, 658 F2835. (1981).

15. Mocomber v. State of California, 250 Cal App2 391.

16.State v. Phillips, 470 P. 2., 266, (Alaska 1970) See also National Airlines Inc., V.Stiles, 268 F2 00 (1959) and First National Bank of Chicago v. Material Service Corp., 597 F2 1110 (7th Cir 1979): Moore‑McCormick Lines Inc., v. Richardson 295 F2 583 (2nd Cir 1961).

17.Procter and Gamble Distributing Co., v. Sherman, 2 F2 165, (1924).

18. In Re Air Crash Disaster near Chicago, etc., 480 F. Supp 1280 (1979).

19. State v. Philips, 470 p. 2nd, 266 (1970).

20.

1. Colorado: Col. Review. Stat 1973 #13‑21‑101
2. Louisiana: LSA‑R.S. 13 4203
3. Michigan: MCLA #600 6013
4. New Hampshire: N.H. R.S.A. #524‑1‑6 (Supp)
5. North Dakota: ND. 32‑03‑05
6. Oklahoma:12 Okla. St. Ann #727 1
7. Rhode Island: R.I. Gen Laws #9‑21‑10
8. South Dakota: S.D.C.L. 1967 Ann. #21‑1‑11
   All have prejudgment interest statutes regarding death and personal injury cases
9. NewJersey: Rule of Civil Procedure 4:42‑11 has a judge made rule.
10. Pennsylvania: Rule of Civil Procedure 238

21. Loudenberger v. Port Auth of Allegheny City, 436 A2d 147 (Oct 29, 1981).

22. Biesk v. Levine 63 N.J. 351 307 A 2d 571 (1973).

23. See Kuenzel Calvin: "The Attorney's Fee: Why Not a Cost of Litigation" 49 Iowa L. Rev 75 (1963).

24. Howie, Kenneth R., "Prejudgment Interest Payments into Court and Advance Payments." WP (Official journal of Ontario Insurance Adjusters' Ass'n) Vol. 45, No. 2, Oct. 1980.

25. In Re Air Crash Disaster Near Chicago, 480 F. Supp. 1280, (1979) Although on appeal the U.S. Circuit Court in 644 F. 2nd 633 (1981) disallowed the prejudgment interest as contrary to the laws of Illinois, it nevertheless allowed interest given as being "the present value at trial" and therefore the true compensatory damage amount.

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