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Schatz v. Abbott Laboratories

MARCH 5, 1971.




APPEAL from the Circuit Court of Lake County; the Hon. HARRY D. STROUSE, JR., Judge, presiding.


Rehearing denied May 25, 1971.

Defendant appeals from judgments entered in favor of the plaintiffs: (1) the sum of $3750.00 to Sidney Schatz and Lois Schatz, for the loss of use of their residence; (2) the sum of $15,000.00 to Sidney Schatz and Frances Klein, co-partners, for damages sustained in the operation of their theatre.

The damages were found to arise from pervasive nauseating odors produced by fermentation processes in the production of the antibiotic Erythromycin. Defendant is a major manufacturer of this product. Defendant established its pharmaceutical plant in North Chicago in 1920. Fermentation procedures were first started about 1947 in the making of pencillin. The record indicated that any odor incident to this process was confined to the premises. Production of penicillin stopped in 1961. In 1958 commercial production of erythromycin commenced. Between 1958 and 1967, the physical facilities for fermentation of the antibiotic were enlarged by 30 per cent and the actual production was doubled. It is agreed that the odor at issue arises from this process. The trial court found that the residence was acquired in 1936, and is 750 feet distant from the plant. The theatre was acquired in 1948, and is 670 feet distant from the plant.

The cause of action as to the theatre is stated in Counts II and IV of the complaint. Each of these counts prays both an injunction and damages. The trial court found that by 1968, defendant had installed pollution controls which were then adequate as long as production was not increased, and he denied the injunction.

Interference in the operation of the theatre business is alleged in the following: The odor invades the theatre so that the air-conditioner must be used for ventilating purposes, though no cooling is desired; that the plaintiffs have been unable to circulate fresh air in the theatre, but can only recirculate stale air; that employees complain of the odor and that one became ill and left plaintiffs' employ; that upon approximately a dozen occasions patrons have become ill from the odor and have vomited in the theatre; that on numerous occasions patrons have complained of the odor and demanded refunds and that as a proximate result there has been a substantial decline in patronage resulting in a loss of profits. It is further alleged that as a result of the smell plaintiff's theatre has been depreciated in its market value.

The court's judgment order included a finding of "* * * damages to their business, taking into consideration expenditures made, refunds and loss of business * * *" in the sum of $15,000.00. This judgment must be reversed for failure of proof of damages.

While there is evidence which would sustain a finding that noxious odors entered the building and caused unpleasant conditions, the finding as to expenditures made is not supported by any evidence in the record. The testimony as to the extraordinary operation of the ventilating and air-conditioning system shows nothing concerning the cost resulting and there is no evidence of expenditures made.

While the prayer for damages is made in terms of loss of profits, we can find no evidence in the record demonstrating what profits were lost. Plaintiffs' evidence is limited to showing the number of patrons in the years 1959 through 1967, and ten months in 1968, together with certain gross receipts for each year. No costs of doing business are shown.

Damages for a tortious injury of a regular and established business are measured by the loss of profits. (Meyer v. Buckman, 7 Ill. App.2d 385; 129 N.E.2d 603.) The diminution of gross income is not a measure of loss of profits or injury to business. (25 C.J.S. 978, Damages, par. 90(b); 22 Am.Jur.2d 253, Damages, 178.) The actual receipts in evidence cannot be measured in terms of lost profits in the absence of evidence showing the costs of doing business.

Again, there is no evidence of the profits in years when no tort conduct was operative. Thus, we have no standard by which to determine what profit the going business might be expected to produce absent interference.

Plaintiffs argue that the cost of operating the theatre is the same whether the attendance is ten or capacity. We are not, however, advised as to what that cost is. The proposition argued indeed seems doubtful in the light of Schatz's testimony that he booked pictures by making "bids" of a percentage of the gross receipts to the distributor. Again, it is necessary to know the contingencies which might affect profits. (Chapman v. Kirby, 49 Ill. 211.) We have no evidence as to possible changes in wages paid, tax rates or other costs of doing business. There is no evidence as to what pictures were shown during the period at issue and to what extent such pictures were patronized in comparable theatres. Orbach v. Paramount Pictures Corporation (Mass.), 123 N.E. 669.

The record suggests that the trial court questioned the sufficiency of the evidence introduced, and that counsel stated his theory that it was sufficient to show the patronage count and gross receipts. Upon such evidence it is impossible to obtain a measure of damages which can be sustained as loss of profits.

Peripheral to this inquiry, we note that while the testimony is that the odor was most offensive in 1967, the patronage in that year was 61 per cent greater than in the preceding year. In the view of the conclusion that the judgment must be reversed, it is not ...

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