A THEORY OF NEGLIGENCE

RICHARD A. POSNER*

NEGLIGENCE-the failure to exercise the care of an ordinarily prudent and

careful man-has been the dominant standard of civil liability for accidents
for the last 150 years or so, in this as in most countries of the world; and
accident cases, mainly negligence cases, constitute the largest item of business
on the civil side of the nation's trial courts. Yet we lack a theory to explain
the social function of the negligence concept and of the fault system of acci-
dent liability that is built upon it. This article attempts to formulate and
test such a theory, primarily through a sample of 1528 American appellate
court decisions from the period 1875-1905.

I
There is an orthodox view of the negligence concept to which I believe
most legal scholars and historians would subscribe that runs as follows:
Until the nineteenth century a man was liable for harm caused by his acci-
dents whether or not he was at fault; he acted at his peril. The no-fault
standard of liability was relaxed in the nineteenth century under the pres-
sure of industrial expansion and an individualistic philosophy that could con-
ceive of no justification for shifting losses from the victim of an accident
unless the injurer was blameworthy (negligent) and the victim blameless
(not contributorily negligent). The result, however, was that accident costs
were "externalized" from the enterprises that caused them to workers and
other individuals injured as a byproduct of their activities. Justification for
the shift, in the orthodox view, can perhaps be found in a desire to subsidize
the infant industries of the period but any occasion for subsidization has long
passed, laying bare the inadequacy of the negligence standard as a system
for compensating accident victims. The need for compensation is unaffected
by whether the participants in the accident were careless or careful and we
* Professor of Law, University of Chicago. Gary S. Becker, Owen M. Fiss, Morton J.
Horwitz, Stanley N. Katz, John H. Langbein, George J. Stigler, and Hans Zeisel made
helpful comments on an earlier draft of this article. Wendy Binder and Robert Schuwerk
rendered valuable research assistance. Financial support was provided by the National
Bureau of Economic Research under a grant from the National Science Foundation for
research in law and economics; however, my findings and conclusions have not been
reviewed or approved by the National Bureau.

29

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30 THE JOURNAL OF LEGAL STUDIES

have outgrown a morality that would condition the right to compensation

upon a showing that the plaintiff was blameless and the defendant blame-
worthy.'
There are three essential points here. The first, that the adoption of the
negligence standard was a subsidy to the expanding industries of the nine-
teenth century, is highly ambiguous. It is true that if you move from a
regime where (say) railroads are strictly liable for injuries inflicted in cross-
ing accidents to one where they are liable only if negligent, the costs to the
railroads of crossing accidents will be lower, and the output of railroad
services probably greater as a consequence. But it does not follow that any
subsidy is involved-unless it is proper usage to say that an industry is being
subsidized whenever a tax levied upon it is reduced or removed. As we shall
see, a negligence standard of liability, properly administered,is broadly con-
sistent with an optimum investment in accident prevention by the enterprises
subject to the standard. Since it does not connote, as the orthodox view im-
plies,2 an underinvestment in safety, its adoption cannot be equated with
subsidization in any useful sense of that term. We shall also see that many
accident cases do not involve strangers to the enterprise (such as a traveler
at a crossing), but rather customers, employees, or other contracting parties,
and that a change in the formal law governing accidents is unlikely to have
more than a transient effect on the number of their accidents. Finally,
whether the period before the advent of the negligence standard is properly
characterizedas one of liability without fault remains, so far as I am aware,
an unresolved historical puzzle.3
The second major point implicit in the orthodox view is that the dominant
purpose of civil liability for accidents is to compensate the victim for the
medical expenses, loss of earnings, suffering, and other costs of the accident.
Hence, if it is a bad compensation system, it is a bad system. Yet Holmes,
in his authoritative essay on the fault system, had rejected a compensation
rationale as alien to the system.4 People, he reasoned, could insure themselves
1 The various strands of the orthodox view are exemplified by P. S. Atiyah, Accidents,
Compensation and the Law ch. 19 (1970); Guido Calabresi, The Costs of Accidents, A
Legal and Economic Analysis pts. 4-5 (1970); Grant Gilmore, Products Liability: A
Commentary, 38 U. Chi. L. Rev. 103 (1970); Cornelius J. Peck, Negligence and Liability
Without Fault in Tort Law, 46 Wash. L. Rev. 225 (1971); Herman Miles Somers and
Anne Ramsay Somers, Workmen's Compensation-Prevention, Insurance, and Rehabil-
itation of Occupational Disability ch. 2 (1954).
2 And as is made explicit in Guido Calabresi, Some Thoughts on Risk Distribution and
the Law of Torts, 70 Yale L.J. 499, 515-17 (1961).
3 Holmes argued brilliantly that it was not. See Oliver Wendell Holmes, Jr., The
Common Law 100-05 (1881), and for the same argument in slightly different form, his
article Trespass and Negligence, 1 Am. L. Rev. (N.S.) 1, 15-20 (1880). Other historical
discussions are cited in Cornelius J. Peck, supra note 1, at 225-27.
4 See Oliver Wendell Holmes, Jr., The Common Law, supra note 3, at 96, 110.

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 A THEORY OF NEGLIGENCE 31

against uncompensatedaccidents,5 and there was accordingly no occasion for

a state accident-compensation scheme. Holmes left unclear what he con-
ceived the dominant purpose of the fault system to be, if it was not to com-
pensate. The successful plaintiff does recover damages from the defendant.
Why? Suppose a major function of the negligence system is to regulate
safety. We are apt to think of regulation as the action of executive and ad-
ministrative agencies. But the creation of private rights of action can also
be a means of regulation.6 The rules are made by the judges aided by the
parties. The burdens of investigation and of presenting evidence are also
shouldered by the parties. The direct governmentalrole is thus minimized-
a result highly congenial to the thinking of the nineteenth century. Such a
system cannot function unless the damages assessed against the defendant
are paid over to the plaintiff. That is the necessary inducement for the plain-
tiff to play his regulatory role of identifying violations of the applicable
judge-made rule, proving them, and when appropriate pressing for changes
in the rule.
The third essential point in the orthodox view is that negligence is a moral
concept-and, in the setting of today, a moralistic one. The orthodox view
does not explore the moral roots of fault, but contents itself with asserting
that such moral judgments as can be made in the usual accident case are an
anachronistic,even frivolous, basis for determining whether to grant or with-
hold redress. The rejection of moral criteria as a basis for liability follows
easily from the conception of the fault system as a compensationscheme and
nothing more: it would be odd to deny welfare benefits on the ground that
the recipient's misfortune was not the product of someone's wrongful con-
duct.
Characterization of the negligence standard as moral or moralistic does
not advance analysis. The morality of the fault system is very different from
that of everyday life. Negligence is an objective standard. A man may be
adjudged negligent though he did his best to avoid an accident and just hap-
pens to be clumsier than average.7 In addition, a number of the established
rules of negligence liability are hard to square with a moral approach.Insane
people are liable for negligent conduct though incapable of behaving care-
fully. Employers are broadly responsible for the negligence of their employ-
5 Life and accident insurance was apparently fairly common during our period, at least
among workers. See Gilbert Lewis Campbell, Industrial Accidents and Their Compen-
sation ch. III (1911). In 1907-1908, some 49 per cent of workers in New York State in-
volved in accidents carried some type of insurance. 1910 Rep't New York State
Employers' Liability Commission 101.
6 A book published by the Association of Railway Claim Agents exhorting railroad
personnel to observe safety rules laid down in the book illustrates the regulatory function
of private law. R. C. Richards, Railroad Accidents, Their Cause and Prevention (1906).
7 See Oliver Wendell Holmes, Jr., The Common Law, supra note 3, at 108.

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32 THE JOURNAL OF LEGAL STUDIES

ees. The latter example illustrates an immensely important principle. In less

than four per cent of the cases in our sample was the defendant accused of
actually being negligent. In all other cases the defendant was sued on the
basis of the alleged negligence of employees or (in a few cases) children.
The moral element in such cases is attenuated.
Moreover, to characterize the negligence concept as a moral one is only
to push inquiry back a step. It is true that injury inflicted by carelessness
arouses a different reaction from injury inflicted as the result of an unavoid-
able accident. We are indignant in the first case but not the second. The
interesting question is why. What causes us to give the opprobriouslabel of
careless to some human conduct but not other and to be indignant when we
are hurt by it? The orthodox view gives no answer.

II
It is time to take a fresh look at the social function of liability for negli-
gent acts. The essential clue, I believe, is provided by Judge Learned Hand's
famous formulation of the negligence standard-one of the few attempts to
give content to the deceptively simple concept of ordinary care. Although
the formulation postdates the period of our primary interest, it never pur-
ported to be original but was an attempt to make explicit the standard that
the courts had long applied. In a negligence case, Hand said, the judge (or
jury) should attempt to measure three things: the magnitude of the loss if
an accident occurs; the probability of the accident's occurring; and the
burden of taking precautions that would avert it.8 If the product of the
first two terms exceeds the burden of precautions, the failure to take those
precautions is negligence. Hand was adumbrating, perhaps unwittingly,9 an
economic meaning of negligence. Discounting (multiplying) the cost of an
accident if it occurs by the probability of occurrenceyields a measure of the
economic benefit to be anticipated from incurring the costs necessary to pre-
vent the accident. The cost of prevention is what Hand meant by the burden
of taking precautions against the accident. It may be the cost of installing
safety equipment or otherwise making the activity safer, or the benefit for-
gone by curtailing or eliminating the activity. If the cost of safety measures
or of curtailment-whichever cost is lower-exceeds the benefit in accident
avoidance to be gained by incurring that cost, society would be better off, in
economic terms, to forgo accident prevention. A rule making the enterprise
liable for the accidents that occur in such cases cannot be justified on the

8 United States v. Carroll Towing Co., 159 F.2d 169 (2d Cir. 1947); Conway v.
O'Brien, 111 F.2d 611 (2d Cir. 1940).
9 But it should be noted that Hand was no stranger to economic analysis. See especially
United States v. Corn Products Co., 234 Fed. 964 (S.D.N.Y. 1916).

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 A THEORY OF NEGLIGENCE 33

ground that it will induce the enterprise to increase the safety of its opera-
tions. When the cost of accidents is less than the cost of prevention,
a rational profit-maximizingenterprisewill pay tort judgments to the accident
victims rather than incur the larger cost of avoiding liability. Furthermore,
overall economic value or welfare would be diminished rather than increased
by incurring a higher accident-prevention cost in order to avoid a lower
accident cost. If, on the other hand, the benefits in accident avoidance ex-
ceed the costs of prevention, society is better off if those costs are incurred
and the accident averted, and so in this case the enterprise is made liable, in
the expectation that self-interest will lead it to adopt the precautions in order
to avoid a greater cost in tort judgments.
One misses any reference to accident avoidance by the victim. If the acci-
dent could be prevented by the installation of safety equipment or the cur-
tailment or discontinuance of the underlying activity by the victim at lower
cost than any measure taken by the injurer would involve, it would be un-
economical to adopt a rule of liability that placed the burden of accident
prevention on the injurer. Although not an explicit part of the Hand formula
this qualification, as we shall see, is implicit in the administration of the
negligence standard.
Perhaps, then, the dominant function of the fault system is to generate
rules of liability that if followed will bring about, at least approximately,the
efficient-the cost-justified-level of accidents and safety.1o Under this view,
damages are assessed against the defendant as a way of measuring the costs
of accidents, and the damages so assessed are paid over to the plaintiff (to be
divided with his lawyer) as the price of enlisting their participation in the
operation of the system. Because we do not like to see resources squandered,
a judgment of negligence has inescapable overtones of moral disapproval, for
it implies that there was a cheaper alternative to the accident. Conversely,
there is no moral indignation in the case in which the cost of prevention
would have exceeded the cost of the accident. Where the measures necessary
to avert the accident would have consumed excessive resources, there is no
occasion to condemn the defendant for not having taken them.
If indignation has its roots in inefficiency,we do not have to decide whether

lo The first systematic attempt to explain a portion of tort law by economic theory
was R. H. Coase, The Problem of Social Cost, 3 J. Law & Econ. 1 (1960) (English
nuisance law). The extension of the approach to negligence is suggested, but not developed,
in Harold Demsetz, Issues in Automobile Accidents and Reparations from the Viewpoint
of Economics (June 1968), in Charles O. Gregory and Harry Kalven, Jr., Cases and
Materials on Torts 870 (2d ed. 1969); and Guido Calabresi, in The Cost of Accidents, A
Legal and Economic Analysis (1970), and in his earlier articles, cited id. at 321, has used
economic theory to mount an attack on the negligence system. The utility of economic
theory in explaining the law of intentional torts is explored in Richard A. Posner, Killing
or Wounding To Protect a Property Interest, 14 J. Law & Econ. 201 (1971).

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34 THE JOURNAL OF LEGAL STUDIES

regulation, or compensation, or retribution, or some mixture of these best

describes the dominant purpose of negligence law. In any case, the judgment
of liability depends ultimately on a weighing of costs and benefits.
In order to explore the hypothesis that liability for negligence is designed
to bring about an efficient level of accidents and safety, I sampled American
appellate decisions in accident cases from the period 1875-1905. That was
the classical flowering of the negligence concept. Before 1875 the standard
was rather new (although most of its major doctrines had been announced)
and the reported decisions few. After 1905 the tort system entered a new
phase. The first Federal Employers' Liability Act was passed in 1906 and
the first workmen's compensation statute a few years later. These enact-
ments cut deeply into the domain of the traditional negligence doctrines
and, after initial constitutional difficulties, brought the classical period of
the negligence standard to an end."1The disadvantage of choosing such a
period is that it obscures the dynamics of legal change. The negligence sys-
tem may have reached maturity in 1875, but it did not begin then. The pro-
cess of selection and rejection by which earlier doctrines and procedureswere
woven into the coherent system that we will be examining in the following
pages is of the highest interest, but it is a study in itself.
The sample was constructed in the following manner. I read every pub-
lished accident opinion of an Americanappellate court (state or federal, final
or intermediate) issued in the first quarter of 1875, 1885, 1895, and 1905.12
A few categories of borderlinecases were excluded, primarily those involving
lost freight, nondelivery of telegrams, nuisances, and sales of liquor to drunk-
ards. I abstracted the information in the opinions and then tabulated that
information. The opinions in the sample constitute about one thirtieth of all
the appellate accident opinions issued during the period.13By taking such a
11 These developments are traced in Herman Miles Somers and Anne Ramsay Somers,
supra note 1, ch. 2. The texts of the early federal employers' liability acts are set forth
in W. W. Thornton, A Treatise on the Federal Employers' Liability and Safety Appliance
Acts 545-48 (3d ed. 1916).
12 Federal cases prior to 1895 are excluded because in the earlier periods there were
no federal appeals courts other than the Supreme Court, and the Court decided few
negligence cases (only one in the first quarter of 1885, for example). A problem with
the 1875 and 1885 cases in the sample is that decisions in these early periods were not
always dated, and some guesses had to be made. As a result, some of the cases included
in the sample for 1875 were probably decided in 1874 and 1876; and in order to cir-
cumvent the dating problem I went to the first quarter of 1887, by which time dates
can be found for all cases, for cases in a few of the jurisdictions in place of the first
quarter of 1885. A spot check indicated that these modifications of the sampling method
made no significant difference in the number and type of cases collected.
13 This is a rough estimate. The flow of appellate decisions is not even throughout the
year; in particular it tends to be thinner in the summer. In this respect, the sample may
represent more than /4 of the year's cases. But in two other respects the sample is in-
complete: (1) not all appellate decisions were reported or reported sufficiently completely

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 A THEORY OF NEGLIGENCE 35

sample, rather than following the conventional approach in legal scholarship

of analyzing "leading" cases, I hoped to obtain a representative view of the
actual functioning of the negligence system. The reader may wonder at the
use of appellate cases rather than trial-courtcases for this purpose. Since most
cases are never appealed a sample of appellate cases gives only a partial, and
perhaps distorted, glimpse of the operation of the negligence system. It would
have been impractical, however, to base this study on trial-court records. At
least in the period with which we are concerned,such records as are available
typically contain less information about a case, especially with regard to its
facts, than the typical appellate opinion. Furthermore, trial-court records
are neither published nor indexed, and are dispersed among thousands of
county and municipal court houses-circumstances that interpose formidable
obstacles to obtaining a proper sample. Finally, even a good sample of trial-
court cases would not solve the tip-of-the-icebergproblem. Nowadays at most
2 per cent of accident claims are actually tried;14 in a somewhat higher but
still small percentage a lawsuit is begun but settled in advance of trial.15
The vast majority of claims leave no trace in judicial records. Comparable
statistics for the period 1875-1905 are unavailable, but it would seem that
then, too, the majority of claims were settled without any litigation although
the ratio of litigated claims to all claims may have been higher than today.'6

to identify the nature of the case, although I believe that most were; (2) decisions were
sometimes reported long after they were rendered and some of these I must have missed
in my search of the reports.
14 See, e.g., H. Laurence Ross, Settled Out of Court-The Social Process of Insurance
Claims Adjustments 179, 216 (1970); Alfred F. Conard, et al., Automobile Accident
Costs and Payments, Studies in the Economics of Injury Reparation 237, 241 (1964);
Hans Zeisel, Harry Kalven, Jr., and Bernard Buchholz, Delay in the Court 40 (Table 14)
(1959); Marc A. Franklin, Robert H. Chanin, and Irving Mark, Accidents, Money and
the Law: A Study of the Economics of Personal Injury Litigation, in Dollars, Delay and
the Automobile Victim, Studies in Reparation for Highway Injuries and Related Court
Problems 39 (Walter E. Meyer Research Institute ed. 1968); Vernon K. Dibble, What
Is, and What Ought To Be: A Comparison of Certain Formal Characteristics of the
Ideological and of the Legal Styles of Thought 70 (Table 4) (Third Draft, July 1971,
unpublished).
15 See, e.g., H. Laurence Ross, supra note
14, at 216-17.
16 In one sample of 614 fatal accidents in Illinois, 281 families settled without court
proceedings, and there were 135 lawsuits. Report of the Ohio Employers' Liability
Commission, pt. 1, xxxi (1911). In a sample of 370 Ohio death cases in which compen-
sation was paid 285 were settled without litigation. Id. at xl; id. at xxxvii indicates a
lower ratio of litigated to all claims. In a sample of 125 New York death cases in which
some compensation was paid, 104 cases were settled without the filing of a suit.
Computed from New York State Employers' Liability Commission, supra note 5, at 30-
31, note 1. Another sample of New York death cases contains 111 cases in which
compensation was paid without any litigation and 73 lawsuits. Id. at 97. All of these
statistics involve industrial accidents only (i.e., accidents arising in the course of the
employment relationship), and relate to the period 1905-1910 (they were compiled as
part of the movement for workmen's compensation), which is somewhat later than the

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36 THE JOURNAL OF LEGAL STUDIES

Unfortunately, so far as I have been able to ascertain, the claims records of

railroads and other companies frequently involved in accidents and of liabil-
ity insurers no longer exist for the period.
A sample limited to appellate cases turns out to be more varied and ap-
parently representative than one might have expected. Negligence cases
appealed during our period were not limited to cases involving very large
sums of money or novel issues of law. Most of the cases in the sample involve
neither. Of the 64 cases involving damage to property in which the amount
of the judgment is reported, more than 25 per cent involve judgments of less
than $100 and more than 75 per cent judgments of less than $1000.17 And
only about 20 per cent of the cases in the sample involve pure questions of
law. The issues on appeal typically involve the sufficiency of the evidence,
the trial judge's rulings on admissibility, and the clarity and accuracy of his
instructions to the jury. Yet there must be some biases in a sample limited
to appellate cases. In an effort to identify and correct these a sample of 111
railroad and street-railway accident cases for the relevant period was drawn
from the records of Cook County, Illinois (the county in which Chicago is
located) and rural Du Page County to the west. I shall indicate at the ap-
propriate places where these cases require modification of conclusions drawn
from the appellate cases. The trial-court sample confirms that only a small
percentage of cases are appealed: of the 47 cases in the sample that went to
trial, only 6 were decided on appeal.

III
We begin by looking at the broad institutional and doctrinal frameworkof
the negligence system as revealed by the appellate cases. Both in this and
the next part (specific rules of liability) I have tried to report the informa-
tion revealed by the sample as fully as possible rather than simply mine it
for examples, although I have excluded a certain amount of redundant or
peripheral material.
It will be helpful to make an initial distinction between two broad cate-
gories of accident: accidents to strangers (for example, a streetcar running
down a pedestrian), and accidents to parties in a contractual or other bar-
gaining relationship (customers, employees, tenants, and the like). Of the

period of the present study. The higher ratio of litigated to all claims than today is in-
telligible when one reflects that the contemporary statistics relate primarily to automobile
accidents. The fact that a few liability insurance companies handle virtually all claims
and that most automobile accidents involve simple and highly recurrent factual situations
facilitate massive disposition outside of the judicial system. The accident picture in the
period covered by this study was more heterogeneous and therefore less susceptible of
routinized settlement.
17 See Table 9, infra.

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 A THEORYOF NEGLIGENCE 37

1494 cases in the sample for which the requisite information is available,
54 per cent involve accidents between strangers,30 per cent involve accidents
to employees, 12 per cent involve accidents to passengers (mostly railroad
and streetcar passengers), and 4 per cent involve accidents to other customers
and other contracting parties, mostly tenants. The regulatory function of
negligence liability is evident in cases involving accidents to strangers. Where
the costs of transacting are high, an unregulated market will not bring about
an optimum level of accidents and safety. More than 90 per cent of the cases
in this group involve types of accidents in which the costs of transacting are
probably very high-mainly cases involving railroad and streetcar crossing
accidents, railroad collisions with trespassing people and cattle, accidents to
pedestrians and other travelers involving defects in the sidewalk or street,
other road accidents, ship collisions, and dog bites.18 In such chance-en-
counter accidents it is unrealistic to expect much bargaining between the
parties in advance over the level of safety and the economic function of
liability is evident: it is to bring about the level of accidents and safety that
the market would bring about if transactions were feasible-the efficient
level. In the second group of cases, the parties already have a contractual
relationship and the impact of liability rules on accidents and safety is
more problematic. The parties are normally free to rearrange by contract
whatever liabilities are imposed by the law: the stagecoach company can
contract with its passengers for a lower or higher standard of care.
Even here, the costs of explicit agreement on safety may not be negligible.
Many transactions take place without a formal written contract. The costs
associated with specifying in detail the performance contracted for are too
high. When buying a train ticket, one doesn't receive a contract spelling out
the railroad's undertaking with respect to safety appliances and to the care-
ful selection and supervision of engineers, firemen, conductors, and dispatch-
ers. It is left to the courts to decide, should the need arise, what safety pre-
cautions the parties would have agreed upon if negotiations had taken place,
and this is doubtless on the whole a cheaper way of proceeding. The level of
safety that the parties would have negotiated would presumably have been
the efficient level, in the sense that the passenger would have demanded and
the company supplied that quantum of safety precautions at which the cost
of preventing an additional accident (in a higher price for the ticket, in less
comfort, more delay, etc.) would have just exceeded the cost of the accident,
if it occurred, discounted by the probability of its occurrence. In the event
of an accident and a consequent suit by the injured passenger, it is the
court's job to determine whether the company lived up to its bargain-
whether, that is, it supplied the optimum amount of safety. The inquiry is

18 See Tables 2 and 3, infra.

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38 THE JOURNAL OF LEGAL STUDIES

thus the same as in the case of an accident to a stranger and this, together
with the similarity in the type of injury that results, may explain why the
courts treat both stranger and contracting-party cases mostly without dis-
tinction under the negligence standard. They make some distinctions, how-
ever, with respect to cases involving accidents to employees, and in discussing
the elements of the doctrinal framework of the negligence system we will
therefore treat those cases separately.
Breach of the Defendant's Duty. The general rule is that the defendant
owes to those whom he might chance upon and injure a duty to exercise due
care-the care of an ordinarily prudent and careful man. The breach of that
duty is actionable negligence. However, a higher duty-the duty of the
highest practicable care, the duty to avoid the slightest negligence-is owed
by a common carrier (usually, in our period, a railroad) to its passengers
while they are on board. As an approximationto the likely understandingof
the parties to the contract of carriage, the exception seems a reasonable one.
Strictly speaking, it is nonsense to speak of a standard of care higher than
that of due care. An enterprise will not spend $100 in safety appliances to
avert a $90 accident when it can satisfy its legal obligations by paying a $90
judgment. The rule that common carriersowe a higher duty to their passen-
gers signifies that passengersexpect (and are willing to pay for) a high level
of safety-because the railroadhas a comparativeadvantage in accident pre-
vention (indeed, passengers are normally helpless to avert an accident) and
because a collision or derailment (like a plane crash today) is likely to kill
or seriously injure them. These factors are absent or attenuated in the case of
a passenger injured on the station grounds-say by a loose board in the
platform--or a passenger injured in a private vehicle, and, as we would pre-
dict, the standard of highest practicable care is not applied in those cases.
The second major exception to the ordinary-care standard concerns the
liability of land occupiers, in our period usually railroads, to uninvited en-
trants, usually trespassers using the track as a path. Here the duty (with
some exceptions discussed later) is a lesser one: not to use due care, but only
to avoid a knowing injury. The rule is a corollary of a system of property
law that is designed to protect rights of exclusive possession. Since it is
often difficult to exclude trespassers, the imposition of a duty to look out for
their safety would interfere with the landowner's use of his property. The
rule of no liability may also rest on a judgment that the utility of trespass-
ing, in general, is less than the cost that would have to be incurred to prevent
injury to trespassers along railroad rights of way and in other areas that
the general public is not invited to enter.
It is difficult to particularize the standard of ordinary care without dis-
cussing particular types of accident, a later inquiry, but there are two general

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 A THEORY OF NEGLIGENCE 39

principles relating to its implementation that are significant. The first is that
the violation of a statute prescribinga duty of care is negligence per se as to
a member of the class intended to be protected by the statute who is injured
as a result of the violation. The theoretical interest of this principle is that
it potentially displaces a good deal of the judicial function in negligence
cases, including the Hand formula. If the legislature fixes a speed limit of
10 miles per hour for trains at crossings, it is no longer open to the court to
decide, by a balancing of costs and benefits, what speed under what condi-
tions will optimize railroad crossing accidents. It would be comforting for the
economic theory of negligence liability to think that legislatures, too, used
a Hand-type formula in fixing statutory duties of care but as we shall see
the theoretical basis for expecting them to do so is much weaker than in the
case of courts.
Another critical element in applying the standard of due care is the weight
assigned customary practices. Can a plaintiff argue that the failure to have
air brakes is negligence, at a time when no railroad has them? Or is it a
defense that the railroad has the same safety appliances as every other rail-
road or as the average railroad of its class? If compliance with the average
or customary practice in the trade automatically discharged the defendant's
duty of due care, there would be cases where the negligence system failed to
optimize safety. Suppose the only benefit of a safety appliance is to a
stranger to the industry in our earlier sense-someone with whom the enter-
prise has no contractual relationship and will not enter into one because of
transaction costs. No firm in the industry will have an incentive to install
the appliance, for it will not be able to recover its cost by charging a higher
price to customers or setting a lower wage to employees (notice, however,
that air brakes are not that kind of appliance). Thus, the market will not
induce the adoption of such an appliance even if its benefits in accident
prevention exceed its costs-and neither would the negligence system if com-
pliance with industry custom were a defense. It is therefore interesting, in
terms of principle, to observe that the courts in our period held that custom
was not a defense, although, as we shall see, in practice a plaintiff faced an
uphill struggle to convince a court that failure to adopt an appliance nowhere
in use in an industry exhibited a want of ordinary care.
Contributory Negligence. Another fundamental principle of the common
law of negligence is that if the victim of the accident failed to exercise due
care, and his breach contributed to the accident, he is barred from recovery
even though the defendant was negligent. That the plaintiff has a duty of
care flows directly from our exegesis of the Hand formula. There are cases
where the cheapest accident preventer is the prospective victim himself and
so should be liable. But the principle of contributory negligence, as the name

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40 THE JOURNAL OF LEGAL STUDIES

implies, is commonly applied in cases where the defendant is also negligent

and the question arises, why bar recovery in those cases too? The answer, I
suggest, is that it is impossible, in general, to show that permitting recovery
in cases where either party could have avoided the accident (if the plaintiff
was negligent but the accident would have happened anyway the defense of
contributory negligence fails) would bring the level of safety and accidents
closer to the optimum point. If we make the defendant always liable in such
a case, defendants as a class will have more incentive to take safety pre-
cautions than if they are never liable, since in the latter instance the cost of
accidents to them would be lower. But correspondinglyplaintiffs as a class
would have less incentive to take safety precautions in the first case than
in the second, because the accident cost to them would be higher in the
second-more of their accidents would be uncompensated.If the effects are
thus symmetrical, there is no economic basis for attempting to shift the loss
from injured to injurer.
This analysis ignores, however, the case where, although either party,
victim or injurer, could have prevented the accident at a lower cost than the
accident cost discounted by the probability of its occurrence,the cost of pre-
vention to the injurer would have been lower than the cost of prevention to
the victim. The correct economizing rule here is to make the injurer liable,
even though the victim may be said to have been contributorily negligent.
This refinement is nowhere explicit in the cases, but it may have been im-
plicit. Glancing ahead for a moment at the specific rules of contributory
negligence discussed in the next part, one finds only rare instances where the
sacrifice required of the victim by the law to avert an accident is dispro-
portionate to that required of the injurer.
Causation. The courts require proof of a causal connection between the
breach of duty, either defendant's or plaintiff's, and the injury. Dispense
with such proof, and you are no longer talking about the costs of accidents.
If the defendant was negligent but the accident would have occurredanyway,
it would be incorrect to view the costs of the accident as the consequence of
his negligence since they would not have been avoided by the exercise of due
care. Yet the defendant was negligent: would not an award of damages serve
a useful purpose, therefore, by punishing him for his breach of duty, thereby
encouraginghim to comply in the future with the requirementsof efficiency?
This I question. Where the standard of care applied to a particular activity
is economically correct there will be incentive enough for firms to comply. If
they do not they face a judgment bill (for accidents occasionedby their failure
to comply with the standard) larger than the cost of taking the precautions
requiredby the standard. Punishment-an exaction that exceeds the costs to
society (here, accident costs) imposed by the particular violation being pun-

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 A THEORYOF NEGLIGENCE 41

ished-is necessary where the violator is frequently not apprehended, be-

cause a rational lawbreakerwill discount the gravity of any legal sanction by
the probability that it will be imposed.19There are hit-and-run accidents, and
if they are a more serious problem in the age of the automobile, there must
have been cases in the period covered by this study in which the injurer was
not apprehended,especially when trains killed livestock or lone walkers on the
track or engine sparks ignited crops or buildings. But such cases must have
been exceptional and it is unlikely that most victims of negligent injuries
failed to assert their claims because they couldn't identify the injurer. It is,
in contrast, quite likely that most price-fixingconspiracies (for example) are
never brought to bar, due to their covert character.2 One is therefore not
surprised to find that punitive damages are normally disallowed in negligence
cases and allowed in price-fixingcases. Moreover, an appropriatepunishment
component is built into the negligence system. If an injurer attempts to con-
ceal his identity and is sued, his efforts at concealment may be considered
evidence of willfulness justifying the imposition of punitive damages (how-
ever, the sample contains no such cases).
Punishment for negligence would close an important safety valve in the
negligence system. A standard of care is necessarily a crude approximation
to optimality. Allowing enterprises a choice whether to comply or pay the
social costs of violation may permit a closer approximation. Suppose there
is a rule that a dam owner is responsible for flood damage unless his dam is
at least 16 feet high. Presumably the rule reflects a judgment that the cost
of raising the dam is less than the cost of the floods that a lower dam would
fail to contain. One owner thinks the rule is incorrect. He estimates that the
only flood likely to occur is one that would swamp a 16-foot dam and there-
fore that he can save money by violating the rule. Courts are not infallible
and we give maximum play to individual judgment if we let the dam owner
act on his estimate. If he is wrong, he will have to pay a judgment, but if he
is correct an unnecessary expenditureon dam building will have been saved.21
One can reply that it is just as likely that a standard of care will be too lax
as too strict; and if the former a punitive sanction will tend to compensate
for the laxity. But this leads to the same stand-off as in our earlier discussion
of contributory negligence, and with the same implications. If the only recog-
nized basis for invoking legal processes to shift an accident loss from the,
victim to another party is the expectation of improving the efficiency of
resource use, then before we can recognize a right of action (in this case a
19 See Gary S. Becker, Crime and Punishment: An Economic Approach, 76 J. Pol.
Econ. 169 (1968).
2o See Richard A. Posner, A Statistical Study of Antitrust Enforcement, 13 J. Law
& Econ. 365, 401-11 (1970).
21 Cf. Gary S. Becker, supra note 19, at 199.

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42 THE JOURNAL OF LEGAL STUDIES

right to sue for injuries that would have occurred anyway) we must be able
to say that the shift will improve efficiency; and we cannot.
Foreseeability. Courts invoke the doctrine of "proximate cause" to ex-
cuse defendants from liability for unforeseeable consequences of negligence.
A train stops at a crossing and a group of rowdy passengers debark. A lady
driving a carriage waiting at the crossing for the train to move on is fright-
ened. After a delay the passengers reembarkand the train moves on but the
lady is now late, it is growing dark, her driving is erratic because of fright
and anxiety, she drives into a ditch and is injured. The railroad may have
been negligent in permitting the train to be delayed at the crossing and the
rowdy passengers to debark but the courts do not view its negligence as the
"proximate cause" of her accident. Such a result follows from the economic
standard of negligence. If negligence is a failure to take precautions against
a type of accident whose cost, discounted by the frequency of its occurrence,
exceeds the cost of the precautions, it makes sense to require no precautions
against accidents that occur so rarely that the benefit of accident prevention
approaches zero. The truly freak accident isn't worth spending money to
prevent. Moreover, estimation of the benefits of accident prevention
implies foreseeability.
Respondeat Superior. As mentioned earlier, in few cases in the period
covered by the sample was the defendant accused of being personally negli-
gent. Most suits are based on the doctrine of respondeat superior,
which makes an employer liable to third parties for the torts of his employees
committed in furtherance of their employment. The doctrine at first glance
seems inconsistent with the economictheory of negligence.A careless workman
is like a defective machine. A company should devote resources to screening
out careless workmen just as it should devote resources to inspecting its
machinery for defects but there comes a point where a further expenditure
on supervision of employees or on inspection of machinery would exceed the
accident costs that the expenditurewould save. The law recognizes this quite
clearly with respect to machinery. A firm was liable (in the period covered
by the sample at any rate) only for those defects that a reasonableinspection
would have discovered. But the law seemingly takes an inconsistent position
with respect to the careless workman. The employer is liable regardless of
his care in attempting to prevent carelessness.
The inconsistency is more apparent than real. A machine is inanimate and
undeterrable.A workman is not. But liability for negligence will not deter
a workman who has no money to pay for the accidents he causes. This
greatly complicates the formulation of an appropriate standard of care for
the employer. Suppose that a railroad in hiring locomotive engineers makes
a reasonable effort to screen out clumsy, irresponsible, accident-prone indi-

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 A THEORY OF NEGLIGENCE 43

viduals. A serious problem would remain. An engineer-let him be as pru-

dent and skillful as you want-is running behind schedule, so he opens the
throttle. The resulting speed is dangerous to pedestrians at crossings but
if the engineer is a coldly rational man the danger will not inhibit him. Being
judgment-proof, he is not answerable for the consequences to pedestrians.
Thus, a railroad not only must exercise care in hiring workers; it must im-
pose sanctions on them for carelessness, because tort law cannot deter the
judgment-proof. By making the railroad strictly liable for the torts of its
employees in the scope of their employment, which is the effect of respondeat
superior, the law creates a mechanism by which the railroad can decide for
itself how much to invest in preventing its workers from being careless. It
will invest until the last cent of its investment in worker safety saves one
cent in accident costs. There will be cases where no reasonable expenditure
would have averted the accident and where, therefore, the effect of respondeat
superior is to shift losses without affecting the level of safety. But the only
alternative would have been for the courts to regulate in great detail the
company's methods of selecting, supervising, and disciplining employees.
Our interpretation of respondeat superior derives additional support from
the distinction that the courts of the period made between employees and
independent contractors. If you hired a contractor to do a job and left the
manner of work entirely up to him, you were not liable for injuries caused
by his negligence or the negligence of his employees. But if you supervised
the details of his work you were liable. These distinctions are economically
defensible. If there is no supervisionof the work in which the accident occurs,
there is no basis for anticipating that the work will be done more safely if
the principal is liable. Nor is there a presumption that an independent con-
tractor is insolvent and therefore undeterrable by the threat of tort
liability from behaving, or permitting his employees to behave, carelessly.
But the principal has a duty to select a competent contractor and if the work
involves large risks to safety, such as bridge construction, this duty cannot
be discharged, the courts held, by perfunctory inquiry.
The principle of respondeat superior was not applied to the family. Par-
ents were liable for the torts of their children only if negligent in super-
vising them. Perhaps the reason for treating employers and parents
differently is that employers in fact have greater control over the behavior
of their employees on the job than do parents over their children. The em-
ployer can select his employees, discharge them, and prescribe rewards and
punishments to which rational beings will respond. Children tend to be un-
governable; natural parents do not choose their children; children cannot be
fired for having been careless. A rule of strict parental liability would have
little regulatory effect-and would thus violate what we have tentatively

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44 THE JOURNAL OF LEGAL STUDIES

identified as the basic character of the negligence system-because in most

cases parents would be incapable at reasonable cost of preventing careless
behavior of their children.
Industrial-Accident Doctrine. In cases where the accident victim is a
worker suing his employer, the courts in our period applied a number of
special doctrines. The most fundamental was that respondeat superior was
inapplicable: with important exceptions to be noted, an employer was not
liable to his employees for injuries inflicted by their fellow employees. A
comparison between this principle and the contrary principle in the case of
accidents to strangers brings out clearly the essential economic logic of the
negligence system. A pedestrian at a crossing doesn't know the engineer or
fireman of any of the trains that pass and is in no position to play a role in
preventing accidents by identifying careless workers. In contrast, a fellow
employee is in the best position to identify a careless worker, at least if they
work in reasonable proximity. The fellow-servant rule, as the exception to
respondeat superior is known, provides, in principle at least, a powerful in-
strument for industrial safety when combined with the rule making the em-
ployer liable for injuries inflicted on an employee through the negligence of
a fellow employee if the employer was on notice of the fellow employee's
habitual neglect or incompetence. The effect of the two rules is to give
employees a strong incentive to report careless fellow workers to their super-
visors. Some incentive would exist anyway because people generally don't
like to be injured, but it is reinforced when an employee knows that if
he does not report his fellow's negligence and is injured he will have no
right to compensation from his employer. Any rational human being, but
perhaps especially a worker lacking assets or adequate insurance, private
or social, fears an uncompensated accident even more than a compensated
accident. The fellow-servant rule was evidently designed to direct that
fear into constructive channels.
The major question in implementing the rule is what criteria to use in
deciding whether one employee of a company is a fellow of another. To
deem all the workers of a company fellow servants would carry well beyond
the rationale of the rule, because an employee doesn't have the opportunity
to observe and evaluate the work habits of all the other employees of a
large firm. Several tests competed for judicial favor in our period. We shall
examine them later. For now it is enough to note the major limitation on
the scope of the rule: it did not immunize the employer from liability for
the negligence of those employees responsible for the conditions in which
the injured employees worked. The brakeman may be barred from recovery
if injured through the negligence of a locomotive engineer, but not if the
negligence is an employee's whose duty was to inspect the car for defective

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 A THEORYOF NEGLIGENCE 45

hand holds or clear the roadbed or repair the automatic couplers or install
a block system. Such work is not done in proximity to the operating em-
ployees and the latter will neither know who the responsible workers are
or have any basis for evaluating the care with which they have worked
until an accident occurs.
The rule of contributory negligence applied in cases where an employee
was suing his employer. A distinct although related doctrine, assumption
of risk, also applied and figures in many of the cases. Under this doctrine
an employee was barred from recovering damages where the accident was
the result of hazards known by or obvious to him. If a brakeman is em-
ployed on a train that is not equipped with the standard safety appliances,
he knows this, and he is injured in an accident that would not have oc-
curred had it been so equipped, the employer is not liable, even if the cost
of the appliances is less than the discounted accident cost. This result
is supported by economic logic. Attitudes toward risk are not distributed
uniformly among the population. Some people will pay a good deal more
than $1 for a lottery ticket that gives the holder a chance of 1 in 1000 to
win $1000; others won't pay anything. The former have a preference for
risk, the latter an aversion to it. Suppose in our train example that the
cost of the standard appliances would be $10 per worker per year and
they would produce a $15 saving in accident costs by reducing the likeli-
hood that the worker would sustain a $1000 injury from 1/50 to 1/200.
Since the brakeman knew that the train was not equipped with the stan-
dard appliances, and therefore that his chances of injury were higher than
normal, why was he willing to continue working? Presumably he was paid
to take the risk. We can draw the furtherinference that he was a risk preferrer.
Had he been risk neutral, and the going wage for brakemenon trains equipped
with the standard appliances was (say) $500 a year, the railroad would have
had to pay him $515 to compensate him for the increased risk; but it would
not have done so since it could have employed him at a lower net cost ($510)
by installing the devices. If a brakemanis willing to work for less than $510,
as our example assumes, the efficient (cost-minimizing) solution is for the
railroad to hire him and not install the safety appliances. This solution would
be frustrated if assumption of risk were not a defense, because then the rail-
road would have to install the safety appliances in order to avoid a judgment
bill larger than their cost.
The assumption of risk doctrine enables the risk preferrer to market
his taste for risk, but it also allows the risk averse to exploit their aversion.
Let the going wage for a locomotive engineer be $750 a year with a 1/1000
chance of sustaining a $3000 injury in the course of the year, and let the
cost of reducing that chance to 1/2000 be $2 per engineer per year in addi-

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46 THE JOURNAL OF LEGAL STUDIES

tional safety appliances. Since the cost of the additional appliances exceeds
the benefits, the railroad would not be guilty of negligence if it failed to
install them. But suppose that enough locomotive engineers to staff the
company's trains are highly risk averse. They are so eager to minimize the
likelihood of an accident that if the company will install the appliances
they will accept a wage reduction from $750 to $745 a year. The company
will install the appliances and save $3 a year per engineer. If the company
later removes the appliances without informing the engineers and one of
them is injured in an accident that would have been prevented by the
appliances, the company will be liable to him for the costs of the accident
under the rule that a company is liable to an employee for breach of its
customary safety standards.
Damages. For the Hand formula to optimize safety, the rules for deter-
mining damages once the defendant's liability has been established must
measure with reasonable accuracy the social costs of accidents. In cases
involving bodily injury short of death, an accident victim's economic loss
has the following components: (1) any damage to property; (2) any med-
ical and hospital expenses and other outlays necessitated by the accident;
(3) the present value of all earnings lost or likely in the future to be lost as
a result of any temporaryor permanentdisability caused by the accident; and
(4) any sufferingto the victim, his family, and in some cases perhaps others,
resulting from pain, disfigurement and impairment of ability to enjoy life.
In general the rules of damages during the period embraced by the sample
track the elements of economic loss. Damage to property is fully recover-
able, as are any outlays for medical or other expenses incurred in conse-
quence of the accident. Lost earnings,past and future, are compensable.Dam-
ages for "pain and suffering,"a category nearly coterminous with item (4)
above, are also allowable although the only one whose suffering may be con-
sidered is the victim himself. In two respects the courts evidenced some eco-
nomic sophistication.They allowed compensationfor loss of nonpecuniarybut
real earnings, such as a housewife's; and by providing for compensation in
a lump sum paid at the time of judgment rather than in periodic payments
during the period of disability they avoided the disincentive effects of tying
continued compensation to continued inability to work and economized on
administrative and policing costs.
The measurement of damages in death cases presents special problems.
It is difficult to discover the value that an individual places on his life. If
you ask someone how much money he would demand in exchange for
giving up his life on the spot, he is likely to reply that no price would be
high enough-his price is infinite. But that is because he would have only
an infinitesimal amount of time in which to enjoy the proceeds of his sale.

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 A THEORY OF NEGLIGENCE 47

Judging from how people risk their lives constantly for small gains in con-
venience, the average individual will, and in effect does, sell years of his
life quite cheaply so long as he expects to have some time in which to
enjoy the gains from the sales. The solution of the courts of our period
was to allow no damages to the victim's estate for the death itself (there
might, of course, be pain or suffering before death and they would be
compensable), but to compensate the pecuniary loss suffered by the vic-
tim's family. They measured this loss not by the amount of earnings that
the victim lost by his death but by the amount of contribution from his
earnings to the family's support that the family lost by his death, which is
the correct economic measure.
No damages were allowed for the survivors' grief. Since this is a real
cost, its exclusion seems economically unsound, even if we assume that
the family in working-class homes of the nineteenth century was a less
romantic institution than the family of today (we shall see that the work-
ing class were the main victims of accidents). Cases involving the death
or disability of children may seem especially anomalous in their exclu-
sion of sentimental factors. The basic measure of damages was the child's
contribution to his parents' income, which had two components: the child's
earnings until he reached his majority, which by law belonged to the
parents, minus the expenses of his upkeep; and the likely support that the
child would contribute in the parents' old age. This is correct so far as it goes,
and perhapsin an era of large families, high infant mortality, little knowledge
of contraception, and no social security, a child of working-classparents was
sometimes viewed by them as an income-producingasset whose destruction
could be compensated for in much the same way as the destruction of
property. That would be consistent with a notable study of working-class
families of the period.22The modern view of children is different and the
basis on which damages are computed in children's death cases has changed
greatly since the period with which we are concerned.23
A seemingly peculiar feature of the law of damages is that the defendant
is liable to the full extent of the victim's injuries, even if the extent could
not have been foreseen. A team accidentally runs down a man with a pre-
ternaturally thin skull and kills him. A normal man would not have been
injured seriously. The driver is nonetheless fully liable for the death if the
accident resulted from his negligence. The result seems at first glance incon-
sistent with the principle discussed earlier that one is not liable for the un-
foreseeable consequences of negligence. However, there is a good reason for

22 See Stephan
Thernstrom, Poverty and Progress-Social Mobility in a Nineteenth
Century City 155 (1964).
23 See, e.g., Wycko v. Gnodtke, 361 Mich. 331, 105 N.W.2d 118 (1960).

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48 THE JOURNAL OF LEGAL STUDIES

distinguishing in this regard between the fact of injury and its extent. We
want the total liability of negligent injurers to equal the total cost of their
accidents. If instead of attempting to determine damages in each case on an
individual basis, we used an average figure (the injury a man of average
strength and health would have sustained in an accident of the same type),
then we would be overcompensating some (those who are stronger or
healthier than average) as well as undercompensatingthe weaker. But over-
compensating for injuries may cause the accident rate to rise. Insurance
companies will not insure a building against fire for more than it is worth
lest arson be encouraged. Nor should the law of negligence encourage the
strong to court injury by overcompensatingthem when an injury occurs. But
then the weak must not be undercompensated,lest the total liability of
negligent injurers fall short of the total cost of their accidents.
We have considered the major substantive doctrines of the negligence
system as revealed by the sample. It remains to consider the institutional
framework of the system. The essence of the system in its institutional or
proceduralaspect is that it is adversary, decentralized, and nonpolitical in a
sense that I shall explain. The motive force of the system is supplied by the
economic self-interest of the participants in accidents. If the victim of an
accident has a colorable legal claim to damages, it pays him to take steps to
investigate the circumstances surrounding the accident; if the investigation
suggests liability, to submit a claim to the party who injured him or the
party's insurance company; if an amicable settlement cannot be reached, to
press his claim in a lawsuit, if necessary to the highest appellate level. The
other party has a similar incentive to discover the circumstances of the ac-
cident, to attempt a reasonable settlement, and, failing that, to defend the
action in court. By creating economic incentives for private individuals and
firms to investigate accidents and bring them to the attention of the courts,
the system enables society to dispense with the elaborate governmental ap-
paratus that would be necessary for gathering information about the extent
and causes of accidents had the parties no incentive to report and investigate
them exhaustively. The parties, of course, are not disinterested, but com-
petition between them to persuade a judge can be expected to produce a
reasonableapproximationto the underlying reality. And while most cases will
be settled, enough will not be settled to assure the courts a continuous and
voluminousstream of data. As mentioned earlier, the 1528 cases in our sample
probably represent about one thirtieth of the appellate negligence cases
decided between 1875 and 1905, from which we can infer that some 45,000
such cases were decided during the period. By 1905 the cases are apparently
running at a rate of almost 3000 a year. And these are only the appellate
cases.

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 A THEORYOF NEGLIGENCE 49

I have stressed the informationalrole of the adversary system as a counter-

weight to the frequently expressed view that common law adjudication, with
its focus upon the individual case, is an implausible method of obtaining
efficient general standards of safety. The common law method may be com-
pared with the economic market-also a highly decentralized, competitive
and largely private system that generates strong pressures for efficient per-
formance. The parties to a lawsuit are in competition for the favor of the
tribunal in much the same way that sellers compete for the patronage of
customers. Both systems create powerful incentives to furnish information.
The analogy must not be pressed too far; we shall consider some important
differences later. However, a rule based on an adversary presentation of in-
formation may be expected to correspond to reality at least as well as one
based on the self-serving declarationsof one of the accident participants, and
a hundred lawsuits based on rigorousadversary scrutiny of the parties' allega-
tions may be a firmer base for a rule of safe conduct than unverified con-
tentions by injured and injuring parties in legislative and administrative
rule-makinghearings. The point is illustrated by a case in the sample that the
plaintiff lost because, while alleging that he had been made a cripple for life
as the result of injuries to many vital organs, he proved only a minor injury
to his toe-a member omitted from his enumeration.
A common criticism of the negligence system as a method of regulation is
that standards of conduct are established after the accident has occurred.
However, the same is true, in practice, of legislative and administrativeregula-
tion as well: it is the shocking accident, rather than the expectation of an
accident, that evokes regulation. Whether the lags involved in negligence ad-
judication are markedly greater than those associated with legislative and
administrative processes is an empirical question. As shown in Table 1, the
mean duration from the accident to the appellate opinion for all cases in our
sample is 40 months; declines during the period; and in 1905 is only 37
months. The criticism of adjudicative regulation as post hoc also ignores
anticipation. Prediction of how courts will decide is of the essence of legal
training and expertise. A rule announcedby an appellate court will often have
been anticipated long in advance-possibly since before the accident. And
courts may in general be more predictable than legislative or administrative
bodies.
Another important characteristic of the adversary system of negligence
adjudication is that it is calculated to encourage the formulation and
application of safety principles that will be grounded in considerations of
efficiency. Because punitive damages, as mentioned, are not allowed in
negligence cases, evidence concerning the poverty, wealth, or other attractive
or repulsive characteristics of the parties unrelated to whether the accident

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 TABLE 1
DURATION OF CASES (MONTHS)

Frequency Distribution

o00
S01 0 a
I- o>
0a C4) - ?

r - C 0 wC

New England 1875 28 2 5 2

85 50 3 2 1
95 31 4
1905 33 5 6 5 2
Totala 34 7 18 9 2 1
Mid-Atlantic 1875 60 1 1 1 3 1 1
85 39 2 11 4 2 3
95 45 1 7 12 7 6 4 2 3
1905 36 1 19 17 10 8 4 1 2
41 2 29 41 21 17 14 4 6
Totala
South 1875 78 1 1 1
85 39 1 1
95 38 3 6 1 2 2
1905 28 18 11 4 2
Totala 34 22 18 6 4 3 1
North Central 1875 77 1 2
85 42 3 9 3 1 1 2
95 40 6 21 16 7 11 2 1
1905 44 13 25 27 11 2 2 3
Total" 43 22 56 46 19 14 4 8
Border 1875
85 107 1 1
95 41 1 3 3 2 1
1905 32 1 3 6 1
Totala 42 1 4 9 3 2 1 2 1
West 1875 39 1 4 1 1 1
85 47 2 5 1 3 1
95 44 1 8 19 12 12 7 1 5
1905 36 1 34 20 17 10 4 2 3
Totala 40 2 45 43 35 24 15 4 8
Federal Courts 1895 38 1 8 3 6 1 2 1
1905 41 3 10 6 2 2 1
Totala 40 1 11 13 12 3 4 2
Grand totala 40 6 140 198 132 71 47 18 27
Totalb--1875 49 5 11 3 2 5 1 4
Totalb-1885 45 7 24 24 4 7 2 4
Totalb-1895 42 2 25 65 39 29 16 5 9
Totalb-1905 37 3 92 85 63 33 19 6 8

Source: Judicial reports.

a Or average.
b Or average. Federal cases excluded.

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 A THEORYOF NEGLIGENCE 51

was brought about by a failure to take cost-justified precautions is excluded

at trial, although such characteristicscan often be inferred.
The division of functions between judge and jury is consistent with empha-
sis on efficiency.The heavy use of juries is a striking feature of the negligence
system during the period covered by the sample. Plaintiffs recovered judg-
ments in jury trials in 945 of the cases in the sample, but recoveredjudgments
in nonjury trials in only 59; defendants recoveredjudgments in jury trials in
98 cases, but recoveredjudgments in nonjury trials in only 23.24 In one sense
the use of the jury assures, insofar as possible, that the trial of the case will
not be tainted by evidence or argument involving the income or wealth of
the parties or other inadmissible grounds: such grounds are literally excluded
from the jury's consideration. On the other hand, formally excluded
considerations are often obvious and a jury is a less disciplined adjudicator
than a judge. The use of the jury does bring to bear on safety problems the
judgment and experience of a broader segment of the community than if
judgments of negligence were made by judges alone. Judges may not know a
great deal about driving a farm wagon, boarding a streetcar, operating a
ripsaw, or the other activities in which accidents were common during our
period. They were drawn from the professional class and most accidents did
not involve members of that class. As mentioned earlier, 30 per cent of the
cases in the sample involve accidents to employees, with only one exception
that I recall workers rather than executives. Although the occupation or in-
come group of the remaining plaintiffs usually cannot be determined from
the cases, of 145 cases in which the information is available 106-73 per cent
-are cases where the plaintiff is a workeror a memberof a worker'sfamily."5
If this proportion holds for the remaining nonemployee cases in the sample,
then 81 per cent of all the cases in the sample involve injury to members of
an economic class to which judges do not belong. Although we know little
about the composition of the juries of this period, they were probably more
representativeof the population of accident victims (and injurers) than the
judges, and may thereforehave had a better feel for the facts in many accident
situations.
The jury's function was not limited to finding the facts; it was also
responsible for deciding whether the facts found constituted negligence. It
was the jurors who applied, within certain broad limits set by the judge, the
Hand formula. It may seem paradoxical to entrust to laymen selected largely
by chance so much of the lawmaking function, but the paradox disappears

24 In our trial sample, however, the jury was waived about 25% of the time.
25 I exclude ship-collision cases tried in federal courts under the admiralty
jurisdiction.
These are cases where the plaintiff is invariably an enterprise, and where, it is interesting
to note, there is no right to trial by jury.

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52 THE JOURNAL OF LEGAL STUDIES

when we recall that the formula requiresa common sense lay judgment rather
than a technical lawyer's judgment. If due care is taking cost-justifiedprecau-
tions, panels of randomly selected laymen, operating with such guidance as is
afforded by the testimony of witnesses, the argument of counsel and the in-
structions of the judge, should be able to make roughly adequate judgments,
at least much of the time. The nature of the required judgment, after all,
should be familiar to anyone with experience of everyday life. We are con-
stantly reckoning in our minds, in most instances unconsciously to be sure,
the probability of an accident, the magnitude of the loss if it occurs, and the
cost of taking precautions to prevent it from occurring. These judgments are
implicit in the decision to climb a ladder, cross a street, step into the shower,
or fly in an airplane, and similar judgments were no less inescapable in the
period covered by the sample. Doubtless the cost judgments of juries are
very crude in comparison to those that would be made by a market were a
market in accidents feasible. But such a market does not appear to be
feasible. The meaningful comparison is therefore to decisions by judges or
administrators or legislators. And in that frame of reference juries may do
quite well.
The evidence thus far examined indicates that the basic formal structure
of the negligence system broadly supports an economic theory of negligence.
However, there is a danger of being fooled when all one is looking at is the
formal level of an institution, so the remainingportion of the article attempts
a closer examinationof the specific rules and results of the negligence system.

IV
Tables 2 and 3 categorize the accidents (other than industrial accidents)
involved in the cases in our sample and indicate their relative frequency.
Railroad Crossings. Although cases involving accidents at railroad cross-
ings constitute almost 9 per cent of the cases in the sample, more than any
other type of accident case except suits against municipal authorities for
highway and sidewalk defects, we find few particularized rules of common
law governing the standard of care of railroads at crossings. The reason for
this paucity seems to be legislative preemption. The cases contain repeated
references to statutes and ordinances prescribing, often in great detail, the
duties of a railroad at a crossing. The enactments fix speed limits, prescribe
signals (bell or whistle) to be given at specified distances before reaching
the crossing, require flagmen or gates at some crossings, and obligate the
railroad to build and maintain safe crossings. On the whole, the statutory
provisions seem appropriate from an economic standpoint. There are two
kinds of cost that must be considered in designing optimum accident pre-
vention measures for railroad crossings. The first is the cost to the railroad of

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 TABiLE2
RAILROADACCIDENTS

O'n (U (
(U cl0
0 ~0 u
oc
&.0
Q01 ,0
( Q)
0

n
0 cd 0
d K0
-

P
O
o

-Ca

bO
0
C
cl Cd
to
Ca cd 0

0 "0W
~0~ ~
aCa ~
n .- o%
U=
0E
co0o
0
a
S
0
.~-~
0 C(d ~
;5d
Cd w
o E
cS CCa0Ca
En C
(C>
p ~
Ca *
-e Cc l
0
u Ccl
0C(
.o
0 U0W
o
Cd
a
$-IO
* Ca~- l
00
or
New England 1875 20 1 1 1 1
85 17 4 4 1 1 2
95 34 9 9 1 1 3 1 3
1905 68 9 8 2 2 2 2 1 2
Total 139 23 22 5 5 2 7 1 1 5
Mid-Atlantic 1875 13 3 2 1 1 1 1
85 53 16 15 6 1 7 1 1 5
95 105 38 37 9 1 10 4 7 4 4 1
1905 153 31 30 14 3 17 1 1 4 6
Total 324 88 84 29 5 34 6 10 9 5 26
South 1875 8 3 2 1 1
85 7 7 7 3 3 1 2 2
95 41 27 17 4 2 6 2 2 2 8
1905 99 54 43 7 5 12 1 10 3 5 12
Total 155 91 69 11 10 21 1 13 7 8 23
North Central 1875 33 21 15 6 2 8 2 1 5
85 51 29 24 6 6 1 4 4 10
95 119 68 56 11 5 16 3 6 3 8 25
1905 186 61 54 16 1 17 8 5 8 21
Total 389 179 149 39 8 47 3 15 14 21 61
Border 1875 1
85 7 6 4 1 1 1 1 2 2
95 24 27 21 8 3 11 1 2 6
1905 36 19 17 2 2 4 1 4 2 5
Total 78 52 42 11 5 16 2 6 2 4 13
West 1875 17 14 7 1 1 1 2 2 4
85 35 20 10 2 2 4 1 2 2
95 122 71 60 13 3 16 4 16 9 9 25
1905 194 97 78 15 5 20 4 17 5 7 28
Total 368 202 155 31 10 41 9 36 16 18 59
Federal Courts 1895 37 19 19 3 1 4 1 1 6 2 11
1905 38 15 13 2 2 1 3 3 7
Total 75 34 32 5 1 6 1 2 9 5 18
Grand total 1528 669 553 131 39 170 24 89 58 62 205
Totale-1875 92 42 27 8 2 10 1 2 5 4 11
Totale-1885 170 82 64 16 6 22 2 8 6 7 21
Totale-1895 455 240 200 46 14 60 11 35 19 25 81
Totale-1905 736 271 230 56 16 72 9 42 19 21 74
Source: Judicial reports.
a Excluding cases involving private railroads (last column).
b Injured other than in a train collision or derailment.
eExcluding federal cases.

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 TABLE 3
ACCIDENT
OTHERPRINCIPAL TYPES

Street Railway Accident Cases -,4 4-C

T Ed ~M
(U
0(uS

bo
Cud Cd (( =
bM >1 CS
3 -o
d
-o W
Cd d '

CdMC
0
P~PC~U~ Cd
0 'TCd*8?
21X""Cd 0
0(u0-

U)
0 U)
cn t- bo
O'
0o
dob
00

New England 1875 12 1 1 2 1

85 7 1 2 1
95 1 3 3 3 1 3 2 1
1905 6 1 13 6 5 4 4 1 3 3
Total 7 1 16 28 10 7 8 2 7 2 3
Mid-Atlantic 1875 1 1 4 2 2 1 1
85 3 7 6 1 4 2
95 14 2 19 7 15 3 1 6 1 1
1905 19 11 49 10 6 7 7 3 1
Total 36 14 74 28 29 13 8 2 14 1 4
South 1875 1 1 2 1
85
95 1 3 1 1
1905 8 2 12 5 7 1 1 1
Total 9 2 14 7 10 2 2 2
North Central 1875 4 1 1 1
85 1 1 3 9 2 1 1
95 5 2 12 12 4 3 1 1 1
1905 15 8 31 18 9 3 4 1
Total 21 11 46 43 16 7 6 1 2 2
Border 1875 1
85 1
95 1 1 2 2 1
1905 1 3 4 2 3 2 1
Total 2 4 6 5 4 3 1
West 1875
85 2 6 3
95 8 5 16 14 6 1 1
1905 5 8 23 17 11 1 1 1 3
Total 13 13 39 33 23 5 1 1 4
FederalCourts 1895 1 1 2 12 12
1905 1 3 1 1 9 13
Total 2 4 1 3 21 25
Grandtotal 90 45 199 145 95 34 28 26 44 5 10
Totale-1875 1 1 2 22 2 3 3 2 3 1
Totale-1885 4 1 8 26 15 6 1 1 4 1 3
Totale-1895 29 10 53 38 33 9 5 11 2 2
Totale-1905 54 33 132 58 41 16 19 2 10 1 5

Source: Judicial reports.

a Not included in columns 4 or 5.
b Not included in column 4.
e Excluding federal cases.

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 A THEORY OF NEGLIGENCE 55

stopping, slowing, or warning of a train's approach. It would be very difficult

(costly) for railroad trains to stop at crossings to permit vehicles and
pedestrians to cross, so railroads are never required to stop. It is relatively
costless for the train to blow a whistle or ring a bell (the major cost, it ap-
pears from the cases in the sample, is the occasional frightening of a horse
approachingthe crossing), and it is not too costly for the train to slow down,
although the cost rises as the speed limit is reduced. Somewhere in between
stopping and signalling is the cost of manually or (rare in this period) elec-
trically operated warning gates.
The second kind of cost is the delay, inconvenience, and sometimes danger
to pedestrians and vehicles (in our period mostly horse-drawn wagons and
carriages) of stopping to let the train pass. This cost will normally be low in
sparsely populated areas and high where the road crossing the tracks is a
busy thoroughfare. Accordingly, we would expect to find rules that require
the railroad to give warning signals and slow down slightly at infrequently
used crossings-thereby compelling the traveler to listen for the signals and,
if necessary, stop before proceeding-but to go very slowly or, better, install
warninggates at busy, particularlyurban, crossings so that trafficcan proceed
in a smooth flow without constant stopping to check for approaching trains.
Judging from the cases, that is just the pattern one finds in the statutes
and ordinances. The only mystery is why the courts were not left to work
out these rules on their own without legislative intervention. It is not as if
the courts were likely to have formulated inefficient standards, for in those
cases where there was no applicable legislative standard of care the courts
created standards difficult to distinquish from the legislative. Thus, we find
the courts ruling that it is for the jury to decide, depending on the circum-
stances, what kind of warning signal must be given at a particular crossing;
that the permissible speed of a train at a crossing is a jury question; and
that at a busy thoroughfarethe duty to warn may not be discharged simply
by a signal-there may have to be gates and a gateman. Other rulings in-
clude: a speed of 35-45 miles per hour is not negligent per se in a sparsely
populated area; when backing across a crossing, a train must have a lookout,
because people aren't on guard for a backing train; it is grossly negligent to
"kick" a car across a busy thoroughfare without a warning; wholly apart
from the requirementsof any statute or ordinance,it is negligence per se for
a train to approacha crossing without giving a warning. The last is the same
rule as the legislative, for, as was pointed out earlier, the violation of a
statutory standard of care is ordinarily treated as negligence per se.
We find much more judicial rulemakingwith respect to the duties imposed
upon the traveler-pedestrian, horseman, or wagon or carriage driver-at
railroad crossings. The basic rule is that it is contributory negligence per se

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56 THE JOURNAL OF LEGAL STUDIES

not to look and listen when crossing a railroadtrack. But there are exceptions.
Although ordinarily a crossing accident can be prevented at small cost, no
matter how careless the train crew has been, by the traveler's looking and
listening as he approachesthe track, that is not so true of the busy thorough-
fare, where the constant slowing of vehicles could cause considerable traffic
delays and increase the likelihood of traffic accidents. A different rule is
therefore applied when there is a gate at the crossing-we noted previously
that gates are requiredprecisely at the busy crossings. The traveler may rely
on the open gate as an assurance of safety. Correlatively, it is contributory
negligence per se to pass a closed gate.
The courts are alert to the special difficulties involved in controlling
teams of horses. Where the view of an approaching train is limited, it is
contributory negligence per se to approach the crossing at a fast clip (10
miles per hour). In contrast, where a road descends steeply to the crossing
so that it is difficult to control a team, it is not contributorynegligence per se
to be unable to stop the team before it collides with an approaching train.
In the first case, the accident can be prevented at low cost by the driver's
moderating the speed of his team. The only practicable way of eliminating
the second accident is by improving the grade of the crossing or by creating
an unobstructedview of sufficientextent that the travelercan see an approach-
ing train from the crest of the road before the descent to the crossing.
There are anomalies. In one case a traveler was held to have been con-
tributorily negligent because he was struck while standing between two
tracks on which trains were passing in opposite directions, although the
evidence indicated that there was a clearanceof only a few inches between the
trains. A more important anomaly is the rule made famous by Mr. Justice
Holmes many years later that it is contributorynegligence per se not to stop,
look, and listen at a crossing.26During our period the rule was followed in
only one state, Pennsylvania (it was called the Pennsylvania rule). Even as
applied by the Pennsylvania courts, the rule admitted of at least one ex-
ception. Where there were several parallel tracks, the traveler was barred
from recovery if hit by a train after he failed to stop before the first track,
but not if, having stopped before the first track, he was hit crossing a
subsequent track before which he had not stopped. Once on the tracks, it is
prudent to proceed quickly across them and not stop before each one; this
much the Pennsylvania courts could perceive. Nonetheless the Pennsylvania
rule was quite wooden and its rejection by the other states showed a sound
instinct for the economicsof railroadcrossing accidents. The cumulative delay,
inconvenience,and danger-in a word the cost-of making a full stop at every
crossing would be considerable,especially at busy thoroughfares,and it would
26 Baltimore & Ohio R.R. v. Goodman, 275 U.S. 66 (1927).

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 A THEORY OF NEGLIGENCE 57

not be offset by the gain in safety. That gain would be trivial at busy crossings
guarded by gates or flagmen, the very places where the costs of stopping are
greatest, and even at many rural crossings. Often a driver has a better view of
approaching trains when he is still some distance from the crossing. If he
stops at the crossing he may actually reduce his chances of getting safely
across, especially if the view at the crossing is obstructed by buildings or
weeds. This is so even if he dismounts from his horse or gets out of his car-
riage for a better look: during the period required to get back into the car-
riage, start up the team, and cross the track, he may be helpless.
I have concentrated thus far on collisions at railroad crossings, but other
crossing accidents-vehicles upset by defects in the crossing and horses
frightened by train whistles-were also common and the courts formulated
rules of conduct for them. One finds the courts ruling, uniformly and sensibly,
that it is not negligence per se to blow a train whistle even if a horse is
frightened by it and throws his rider. It is more important that the whistle be
blown to warn travelers at the crossing and the horse's rider should know
whether the horse has a skittish disposition and should govern him ac-
cordingly. (If the whistle is blown without any reason, the courts find
negligence toward someone injured by the frightened horse.) The courts also
hold that the railroad must maintain a safe crossing. In urban areas the
full width of the crossing must be made safe for use by vehicles, in rural areas
just the center of the crossing-a distinction that can again be referred to the
heavier traffic at urban crossings.
Trespassers on the Track. The courts in our period were careful to
distinguish between trespassers and licensees, the latter a term meaning
essentially frequent users. Where people use railroad tracks as a path in
great number and without any effort by the railroad to keep them off, the
railroad is required to watch out for and warn them. Frequency of use not
only increases the accident cost but is also evidence that the use of the
track for a footpath may, like a crossing, involve significant benefits. The oc-
casional walker on the track, however, is a trespasser entitled, as mentioned
earlier, to nothing more than the duty to avoid knowing injury. This is so
even when the train crews have previously noticed trespassers on the track
and especially when they have erected fences or otherwise tried to keep
trespassers off the right of way. (Only in Texas, it seems, was a different
rule applied; there train crews were required to watch out for trespassers.)
With the no-duty-to-trespassers rule almost everywhere in force, one
might expect few cases to arise. The significant number in the sample can
be ascribed to an important qualification of the rule-the doctrine (applied
also in other contexts) of "last clear chance." Although the train crew had
no duty to watch out for trespassers and hence was not negligent in failing

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58 THE JOURNAL OF LEGAL STUDIES

to see them, if it did see them in time it had to warn them or if necessary
stop the train. This can be viewed as an alternative formulationof the principle
that the land occupier owes trespassersa duty of avoiding a knowing injury
to them.
The doctrine of last clear chance is a logical application of the Hand
formula. Let it be assumed that the cheapest accident avoider in the usual
railroad-trespassercase is the trespasser: he has only to avoid trespassing,
which may be assumed to be less valuable than freedom from the interruption
of railroading. The no-duty-to-trespassersrule places the prospective tres-
passer on notice of the risk he takes. But there will still be-we want there
to be27-some trespassing, and at the moment when the train crew sees the
trespasserand realizes that if it does not blow the whistle or stop the train he
will be killed it is the railroad rather than the trespasser that at trivial cost
can avoid an accident. The engineer has only to blow the whistle or apply
the brakes.
The principal victims of accidents to trespassers appear to have been
drunks and children. The courts ruled that if the train crew see a man stag-
gering toward the track, obviously drunk, they must not assume that he
will watch out for his own safety although this would be a proper assump-
tion were he not visibly impaired. On the other hand, where a drunken man
goes to sleep on the tracks and is run over, the no-duty-to-trespassersrule is
invoked. It is held in a case involving a child that the engineer must not
wait to see whether that object on the tracks is really animate. But where
parents let a child play near the tracks, they, not the railroad,are responsible
if the child is run over, assuming the train crew did not actually see it in time
to stop.
TrespassingLivestock. Collisions between trains and trespassing livestock
were another common type of accident in our period. And it is here that we
find the other great burst of legislative activity in setting standards of care.
At common law, the railroad owed a duty of care to trespassing stock. The
train crew had to keep a reasonablelookout for stock ahead on the track, to
avoid excessive speed, and to signal, or if necessary and possible stop the
train, if it spotted stock ahead. At first glance it is paradoxical, if not re-
volting, that the law should have recognized a higher duty to trespassing
animals than to trespassingchildrenbut the paradox is superficial.Trespassing
animals are more helpless than trespassing people. Even young children
generally know enough to get out of the way of an approaching train, while
truly helpless infants as a rule lack the mobility required to get as far as the
tracks. Trespassinganimals are also more dangerous.A collision with a human

27 See, e.g., Ploof v. Putnam, 81 Vt. 471, 71

Atl. 188 (1908), discussed in Richard A.
Posner, supra note 10, at 225-26.

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 A THEORY OF NEGLIGENCE 59

being will not derail a train; a collision with a 1200 lb. cow may. As we would
expect, the law imposed reciprocal duties on the owners of animals, just as
it did (as mentioned earlier) on the parents of children. If the owner negli-
gently allowed his animal to stray onto the tracks, he was barred from re-
covering damages. At the same time, it was not assumed that there was an
absolute duty to enclose domestic animals securely; it would be very costly to
prevent all straying.
The contribution of the legislatures was to require the railroads to fence
certain portions of their rights of way. Judging from the cases, statutes of
this kind were common throughout the country during the period covered by
our sample. Because the duty to fence was usually limited to areas where the
right of way passed through enclosed or cultivated fields, and because it
naturally did not apply at crossings, cases continued to arise in which the
common law rules were applied, even in states that had fencing statutes. But
many cases were brought under those statutes, which generally dispensed
with proof of negligence although not to the point where strict liability was
imposed. It was usually open to the railroad to show that a hole in the fence
had appeared, without fault on the part of the railroad, so recently that it
could not have been discoveredby a reasonableinspection before the accident.
The reason that the common law did not require railroads to build fences
against trespassing animals is illuminated by considering a parallel instance
where the land occupier (usually a railroad) is required to fence against a
trespasser. The doctrine of "attractive nuisance," applied in several cases in
the sample, requires that where a condition is at once peculiarly dangerous
and peculiarly attractive to young children (the usual example is a railroad
turntable), the owner must fence it. It is cheaper for land occupiers to fence
the occasional structure or piece of equipment presenting this special hazard
than for parents to pen their children. It would be much more costly for rail-
roads to fence the entire length of their rights of way; and farmers enclose
their livestock anyway and probably have a comparativeadvantage in build-
ing livestock fences.
It is unlikely that the statutes reflect dissatisfaction with the accident
level brought about by the common law rules. We may take it for granted
that agricultural land along railroad rights of way would have been fenced
whenever there was a substantial danger of cattle straying onto the tracks.
The question was who should pay for the fence and its maintenance. Under
the common law, it would normally have been the farmer. The fencing
statutes shifted the cost to the railroads. The result was modestly to enrich
farmersat the expense of railroadshippers (many of them farmersof course),
stockholders, and employees. We observed earlier that redistribution of
wealth is not likely to be an independent objective (it may of course be an

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60 THE JOURNALOF LEGALSTUDIES

incidental effect) of the judicial application of the negligence standard.

Neither in principle nor in practice is redistributionof wealth excluded as a
major goal of legislation. Much legislation is in fact intended to redistribute
income, and farmers have long been a favored class.28
Engine Sparks. The other important class of accidents involving damage
to farmers'property by railroads in our period is that of fires set by sparks
emitted from locomotive engines. The rule applied by the courts was that
proof that a fire had been started by an engine spark created a prima facie
case of the railroad's liability but that the railroad could rebut by showing
that the engine was equipped with the latest and best spark-arrestingequip-
ment, properly maintained, and that the train was being operated in a
careful manner. The last condition is important. The spark-arresting
equipment of the time was not foolproof and an engine would emit more
sparks when moving at a high rate of speed. If the railroad could show no
reason why the train had been moving so rapidly as to increase the spark out-
put greatly (benefit), then it would be held liable for the resulting crop or
building damage (cost). The railroad was also responsible for keeping its
right of way clear of highly combustible material, and reciprocallythe farmer
was responsible for not stacking ricks and other highly inflammablematerial
too near the tracks during the dry season.
Railroad Passenger Accidents. We discussed earlier the high duty of care
owed by railroads and other common carriers to their passengers. One basis
for the rule, we noted, is that the passengeris rarely in a position to avert an
accident, so we are not surprised to find that where a passenger is in a good
position to avert an accident, the railroad is held to owe him a duty of
ordinary rather than extraordinary care. The rule was applied mainly to
passengers injured boarding or alighting from trains (and also, as we shall
see in a moment, streetcars); here the passenger is usually in as good a
position as the carrier to avoid an accident. The parties' reciprocal duties in
the boarding and alighting situations were rather particularized.The railroad
had to provide the passenger a safe method of ingress and egress and the
train had to remain stopped long enough for the passengerto get to (or from)
his seat. The passenger, in turn, had to wait for the train to stop, or at least
slow considerably, before getting on or off; he had to watch where he was
stepping; and he had to use the route to and from the train provided by the
company. He was not to lean out of the car while the train was in motion.
He was free to walk about in the car, but in a mixed train (passenger and

28 See George J. Stigler, Director's Law of Public Income Redistribution, 13 J. Law

& Econ. 1 (1970); George J. Stigler, The Theory of Economic Regulation, 2 Bell J. Econ.
& Management Sci. 3 (1971).

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 A THEORYOF NEGLIGENCE 61

freight cars) he had to watch out for the frequent jolts of this type of train
especially during coupling.
We find few particularized rules dealing with railroad collisions, probably
because there was usually nothing to argue about. A passenger cannot do
anything to avert a collision between trains, so there are no interesting ques-
tions involving the duties of passengers.On the other hand, because a collision
or derailment involving a passenger train tends to be a very serious matter
(the cost of the accident is very high), the fact of the accident will by itself
often be strong evidence of a failure to take cost-justified precautions. There
will be some "unavoidable"accidents in the sense that the cost of preventing
the accident would have been prohibitive, but these were apparently rare.
Typical, evidently, is the case where one passenger train parked across the
track of another railroad and was hit by one of the other railroad's trains.
The second train was not expected, but the court pointed out that in view of
the danger of a serious collision the crew of the first train should have sent
a flagman down the track of the second railroad to warn any approaching
train of the danger of a collision.
It is interesting that although the literature on railroading of the period
is full of grisly stories of passenger-train collisions and derailments,29
only 24 of the 669 railroad-accidentcases in the sample involve injuries to
passengers in collisions or derailments and in only two of these do I recall
any indication of multiple deaths. Here is an interesting clue to another con-
stitutional difference between the adjudicative and legislative modes of rule-
making. Legislative rulemakingis very little shielded from the emotional im-
pact of sensational and calamitous but perhaps isolated events. Judicial
rulemakingis more insulated. There is the famous story of the legislature that
was in session when a disastrous train wreck occurredand immediately passed
a unique and thoroughly unsound law intended to prevent a recurrence.30
This kind of thing was less likely to occur in the courts of our period. To
begin with, the disaster would usually reach the courts after public recollec-
tion of the accident had faded. It might never reach them, either because the
law was clear cut-as was generally true in collision cases-or because the
railroad,which always had the option of settling the case out of court, decided
it would be an inauspicious vehicle for persuading the courts of the merits of
its position. Furthermore, since most railroad deaths and injuries occurred

29 See, e.g., Charles Francis Adams, Jr., Notes on Railroad Accidents (1879); cf. Robert
C. Reed, Train Wrecks-A Pictorial History of Accidents on the Main Line (1968).
30 See Charles Francis Adams, Jr., supra note 29, at 94. A train had fallen into an open
draw and the statute required all trains to make a full stop before entering any draw-
bridge.

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62 THE JOURNAL OF LEGAL STUDIES

other than in passenger train wrecks,81that particular type of calamity would

not, and as we have seen did not, bulk large in a judge's experience of the
railroad-accidentproblem. He would have a more balanced impression of the
problem of railroad accidents than a legislator who concerned himself with
the problem only in rare moments of public uproar over a well-publicized
catastrophe.
Street Railway Crossing Accidents. Streetcars-horse-drawn and, later in
our period, electrically powered cars running on tracks laid in city streets-
arrived on the scene much later than the steam-poweredrailway. The explo-
sive growth of this mode of transportation is indicated in Table 4, which
shows that street railway cases grew from 2 to 18 per cent of the cases in
the sample between 1875 and 1905 while the percentage of steam railway
cases was declining. The courts must have felt tempted to carry over the
extensive body of law developed in steam railway litigation to the emerging
problems of street railway accidents, and to some extent they did so, but
with modifications that bring out clearly the basic economic character of the
negligence standard.
Crossing accidents presented striking although superficial similarities to
railroad crossing accidents. The street railway owned a right of way, usually
running down the center of the street, where its tracks were laid, and the
courts could have held that the railway owed no duty to other travelers who
might happen to be using the right of way as a path or roadway, except at
crossings. In fact they held that the street railway did not have a "paramount"
right to use the streets even between crossings, which translated means that
other vehicles were entitled to drive on the tracked portion of the street
and that the streetcar's crew was required to maintain a constant lookout for
vehicles and pedestrians. A persuasive basis for these rulings is that street
railways, unlike steam railways, were occupying substantial swathes of major
thoroughfares; to deny the use of these areas to other vehicles would have
greatly constricted urban traffic arteries. Also, a streetcar can be stopped
much more quickly than a train, partly because it is lighter, partly because
it travels more slowly. Moreover, it appears that wagons and carriagesin this
period were not equipped with rear-viewmirrorsand frequently did not have
an unobstructed rear view; the motorman in contrast always had a clear
front view.
We find the courts making numerous careful distinctions that illuminate
the economic foundations of negligence law. A pedestrian may not walk
on the tracks if there is room to walk on the side (rarely are streets soi
31 See, e.g., Interstate Commerce Commission, Statistics of Railways in the United
States, Fifteenth Annual Report 97-99 (1903), which discloses that of 8,588 persons
killed in railway accidents in 1902, only 170 were passengers killed in collisions or de-
railments.

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 A THEORY OF NEGLIGENCE 63

TABLE 4
OF ALL CASES IN SAMPLE
PRINCIPALACCIDENTTYPES AS PERCENTAGES

Other
highway
Highway and
and sidewalk
sidewalk defect
defects- and
actions obstruction Workers
Street- against cases, and caught in
Railroad railway munic- unsafe ma- All
Region Date accidents accidents ipalities premises chinery other
New England 1875 5 60 5 30
85 24 41 6 29
95 26 9 9 9 12 35
1905 13 19 9 7 13 39
Totala 17 12 20 7 9 35
Mid-Atlantic 1875 23 8 31 15 23
85 30 9 13 11 6 31
95 36 18 7 14 25
1905 20 32 7 4 2 35
Totala 27 23 9 9 2 30
South 1875 38 13 25 24
85 100 0
95 66 2 7 25
1905 55 12 5 7 5 16
Totala 59 9 5 6 3 18
North Central 1875 64 12 3 21
85 57 6 18 4 4 11
95 57 10 10 3 6 14
1905 33 17 10 5 6 29
Totala 46 12 11 4 5 22
Border 1875
85 86 14 0
95 80 6 6 3 5
1905 53 11 6 8 22
Totala 67 8 6 5 14
West 1875 82 18
85 57 6 17 3 17
95 58 13 11 5 1 12
1905 50 12 9 6 5 18
Totala 55 11 9 6 3 16
Federal Courts 1895 51 3 5 3 38
1905 39 8 3 3 3 44
Totala 45 5 1 4 3 42
Grand totala 44 13 9 6 4 24
Totalb-1875 46 2 24 2 26
Totalb-1885 48 5 15 9 4 19
Totalb-1895 53 12 8 7 3 17
Totalb-1905 37 18 8 6 5 26
Source: Judicial reports.
a Or average.
b Or average. Federal cases excluded.

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64 THE JOURNAL OF LEGAL .STUDIES

congested that pedestrians must walk in the middle of the street, where the
tracks are located, to avoid being seriously inconvenienced). The motorman
need not slow down just because he sees people standing at the corner
or on the sidewalk; he can assume they will wait for him to pass. How-
ever, if he sees a darting child, he cannot indulge that assumption. Parents
must make reasonable efforts to keep their young children off streets where
streetcars run, as by keeping their yard fenced if they abut a street that is
on the streetcar's route, or by entrusting care of the child, when it is playing
in the vicinity of streetcar tracks, to a responsibleolder child.
This is a convenient place at which to note that the much criticized com-
mon law rule imputing the negligence of the parents to the injured child had
a plausible basis in economic analysis, however distasteful to modern
sensibilities. In a period when, as mentioned earlier, children may sometimes
have been valued largely as income-producingassets, one could not rely on
parental affection alone to protect them against unreasonablehazards. There-
fore it was appropriate to condition compensation on the parents' taking
reasonable precautions to prevent accidental injuries to their children. A
mixture of (1) careful lookouts, well maintained brakes, and moderate
speeds on the part of the street railway,32and (2) parental supervision, must
have seemed a cheaper method of obtaining an efficient level of accidents
than imposition of all of the responsibilityfor accident avoidance on the street
railway. A rule of imputed negligence, which barred the parents from suing in
respect of an injured child if their own negligence contributed to the accident,
was necessary to achieve this mixture.
Street Railway Passenger Accidents. Collisions in which streetcar pas-
sengers were injured were not, it seems, a frequent subject of litigation. The
standard of high care followed in railroad-collision cases was followed in
streetcar-collisioncases for the same reasons, and was not followed-again
as in the railroad context-with regard to other kinds of passenger accident.
Thus, the sample contains many cases where a passenger is injured by a sud-
den jolt, rather than by a collision, and the rule is that a mild jolt is not
evidence of negligence but a severe one is. The danger to passengersposed by
slight jolts is small while the cost of making streetcar rides absolutely smooth
would have been very high. The balance tends to be reversed in a severe jolt.
In a number of cases injury occurredonly because the passengerwas standing
on the platform of the car rather than sitting down in the car. The rule
applied here was that if there was room to sit down in the car, it was con-
tributory negligence per se to remain standing on the platform, where the

32 We find some legislation specifying street railways' duties with respect to other
vehicles and pedestrians, primarily speed limits, but the pattern of regulation is less
pervasive than in the case of railroads' duties at crossings.

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 A THEORY OF NEGLIGENCE 65

danger from sudden jolts was much greater. The street railway in turn was
obligated to avoid overcrowding.
A number of cases involve accidents to passengers boarding or alighting
from streetcars. Typically the issue is whether the accident resulted because
the streetcar started up too quickly, before the passenger had a chance to get
on (or off), or because he was trying to board (or alight) before the car had
come to a full stop. In the judicial considerationof this issue, once again we
find the attention to relevant if fine distinctions that seems characteristic of
the common law method of rulemaking.It is not contributory negligence per
se to board a car with one's arms full of packages-how else does one get
one's shopping home? When a car is stopped and the doors open, the
motorman or conductor must look out for boarding or alighting passengers
and must not start the car until he sees that no one is trying to get on or off.
If an oiling box is so placed on the running board of a car that it is likely to
trip a descending passenger,the street railway is negligent; the running board
was improperlydesigned.
Highway and Sidewalk Defects. Injuries to drivers (usually of wagons
or carriages) caused by defects or obstructions in highways, and to
pedestrians caused by defects or obstructions in sidewalks, were a staple of
negligence litigation in the period embracedby the sample. The city or other
public authority responsible for road and sidewalk maintenance is the most
common defendant but we also find frequent actions against abutting owners
who have obstructed the sidewalk. Where the city is a defendant, it is com-
mon for the action to be brought under a statute. But the statute usually
does not establish a standard of care. The purpose is either to waive the
city's sovereign immunity (although there was authority that no waiver was
necessary because the maintenance of streets was a proprietary rather than
governmental function) or, more commonly it would seem, to impose a re-
quirement unknown at common law that anyone injured as the result of a
street or sidewalk defect must notify the city immediately,in advance of filing
suit.33
The courts ruled that the city was liable if, and only if, (a) there was a
defect apparent to reasonable inspection, and (b) either the city actually
knew of the defect or the defect had existed for so long that the city should

33 Again, we find some statutes specifying the standard of care-for example, one re-
quiring the city to use hemlock planks in its sidewalks. This statute exemplifies a charac-
teristic of tort legislation that I have discussed elsewhere-its tendency to be more
categorical and less flexible in the duties imposed than common law rules. Cf. Richard A.
Posner, supra note 10, at 233. Speed limits are another good example of this. We find
many cases in which the courts of our period say that, in the absence of a legislative
speed limit, no speed is negligent per se or non-negligent per se; it is for the jury to
decide whether, in the circumstances, the defendant was traveling at a safe or an unsafe
speed.

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 66 THE JOURNAL OF LEGAL STUDIES

have known about it. A defect in this context was a condition that posed a
substantial danger of injury to a passerby. A hole so small that it would not
catch a foot but might catch a crutch was said not to be a defect, and the
unarticulated premise of the distinction, we may speculate, is that, since
crutches are an uncommon means of locomotion, the total accident cost
created by the small hole is likely to be slight, while to discover so small a
hole would require a much more careful (costly) inspection than if it were
larger. The courts were properly impressed by evidence that thousands of
people had traversed a defective area without incident before the accident
giving rise to the suit; such experience would suggest that the benefits of
accident prevention, and hence the maximum cost-justifiable effort to dis-
cover and remove the defect, were small.
In an era when sidewalks were frequently made of wood and streets were
often unpaved, an absolute duty to keep highways and sidewalks free from
defects, implying as it would constant inspection, could not have been justified
by its benefits in preventingaccidents, especially when we consider the ability
of the pedestrian or driver to protect himself against a defective roadway or
sidewalk. No such duty was imposed. The city's duty was reasonably diligent,
reasonably frequent inspection. At a busy intersection, where expected acci-
dent costs would be high due to the frequency of use, the city might be held
negligent if a defect discoverable by a reasonable inspection remained un-
repaired for a day or even a shorter period. The standard was less exacting
when the defect was in a less frequented thoroughfare.The sliding scale ac-
cords with the economic approach to negligence.
Cases frequently arose involving the duty of the city to keep the sidewalks
clear of snow and ice, and the courts made some interesting distinctions. In
areas where the winter is severe, such as Illinois, cities were held not to be
responsiblefor accidents caused by snow or ice on the sidewalks unless it had
been permitted to remain for an unreasonable length of time, liberally
construed, or unless the accumulation was due to a defect for which the
city was responsible. In areas of mild climate the courts ruled that the city
must clear the sidewalks promptly. Why the distinction? In areas of normally
severe climate people are accustomed to snow and ice under foot and
routinely equip themselves against their hazards, so the risk of injury to
them is small. Moreover, the cost of removing large accumulations is great,
especially if one can anticipate that the ground will again be covered in a few
days or weeks. In a mild climate, people are less prepared to cope with
dangerous conditions created by ice or snow. The danger is therefore greater
at the same time that the costs of removal are less.
An important group of highway-defect cases involves the safe design of
highways. Rulings such as that highways with steep embankments must be

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 A THEORY OF NEGLIGENCE 67

railed and that sidewalks need not be built along country roads are significant
in view of the charge that the fault system in dealing with road accidents
looks myopically only among the drivers for the cheapest accident avoider
and ignores the possibility that the accident could have been avoided at least
cost by a safer design of the road.
Contributory negligence was frequently invoked as a defense in actions
involving highway and sidewalk defects. The courts held that the pedestrian
does not have to scrutinize every foot of the sidewalk in front of him; the
driver who is watching for vehicles approaching at an intersection is not
expected simultaneously to be searching the street for potholes; a passerby
need not cross the street to avoid a defect, although he must exercise care in
traversing the defective portion. These rulings reflect the considerable costs
in inconvenience and delay that would be incurred if travelers took every
possible precaution to avoid defects. Because highway and sidewalk defects
in our period caused relatively few serious injuries, the same degree of caution
that one might demand of a man driving an automobile could not have been
cost justified, especially since there were dangers in devoting all of one's
attention to skirting potholes (one might get hit while crossing to the other
side of the street).
I forgo discussion of any other accident types involving injuries to third
persons in order to turn my attention to industrial accidents. The categories
we have discussed comprise approximately58 per cent of the cases, other than
industrial-accidentcases, in the sample, and while it would be interesting to
discuss the rules that the courts evolved for dealing with dog-bite and hunt-
ting and ship-collision and malpractice and (especially) electrical-shock ac-
cidents, it would extend this paper unduly to do so and the additional
evidence would only be cumulative.
Industrial Accidents (Table 5). The courts in our period gave much at-
tention to the problem of separating conduct covered by the fellow-servant
rule from conduct not covered. A number of criteria for determiningthe scope
of the rule competed for judicial favor. Under the "superiorservant" doctrine,
the employer was liable for an accident caused by the negligence of an
employee superior in rank and empowered to give orders to the injured
employee. Under the "different department" rule, the employer was liable
for the negligence of an employee in a different department of the company
from the one in which the injured man worked. Under the "common employ-
ment" rule, fellow servants were those who worked in reasonable proximity-
on the same line of the railroad, the same building project, in the same
plant-although they might belong to different trades and be foremen as well
as common workers. In terms of the economic considerationsanalyzed in our
previous discussion of the fellow-servantrule, the common-employmenttest is

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 TABLE 5
ACCIDENTSTO EMPLOYEES

Cases Type
U)
4) Cl ol 4)
-w 0a
Qj)
>brl
t?
0o
09
a 0 0,
)4
bo
0dht
Cd Cd a
4)0oae ? CA, ~l=
C En 1 O.

~ )f)
5 -l C~ ,u CdJ a0
93
d
0C.0
0o
-4 -n U) 0 N

~0
=1

0
1. - 5
0

4-j4-,
0
bedoc 4
E4
d 0
>Cd Ed OLd
z~>
C1Y 1.4
93CdCd
d
0
)d V--4
E
o
4-
0
0
En
U
.eO
4)
1-0
Q
U. 04
e U 0C) QCA
c30
New England 1875 3 15 67 60 3
85 1 6 0 47 1
95 15 44 43 35 12 4 2 1
1905 24 35 42 47 22 9 2 7
Total& 43 31 43 46 37 13 5 8
Mid-Atlantic 1875 4 31 0 69 3
85 13 25 31 45 8 3 1
95 26 25 38 54 12 2
1905 43 28 55 50 37 3 2 5 15
Totala 86 27 44 51 60 6 2 6 17
South 1875 1 13 0 13
85 2 29 50 43
95 10 25 20 41 2
1905 27 27 67 59 15 5 5 1 1
Totala 40 26 53 51 17 5 5 1 1
North Central 1875 7 21 50 45 5 1
85 13 25 38 51 3 2 1
95 43 36 40 49 18 7 2 2 1
1905 77 41 49 58 56 11 7 11
Totala 140 36 45 53 82 20 11 13 1
Border 1875 0
85 2 29 0 29
95 7 21 57 44 1
1905 8 22 38 58 3 1 1
Totala 17 22 41 48 4 1 1
West 1875 4 24 67 41
85 3 9 100 51 1 1 1
95 31 25 48 54 6 1 3 2
1905 62 32 45 55 34 9 6 1
Totala 100 27 48 54 41 11 10 3
FederalCourts 1895 14 38 64 73 3 1
1905 15 39 53 61 8 1 1
Totala 29 39 59 67 11 2 1
Grand totala 455 30 47 52 252 57 34 25 27
Totalb-1875 33 36 41 48 11 1
Totalb-1885 34 20 37 48 12 6 3 1
Totalb,1895 132 29 42 49 51 12 7 4 4
Totalb--1905 241 33 50 54 167 38 23 19 23
Source: Judicial reports.
a Or average.
b Or
average. Federal cases excluded.

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 A THEORYOF NEGLIGENCE 69

the most appropriate, and is in fact the one most frequently applied in our
period. From the standpoint of encouraging employees to monitor the safety
of each other's activities and to report dangerous conduct to the employer on
pain of being barred from compensationin the event of injury, it is inessential
whether the other employees are of the same rank or belong to the same
department but crucial that they be working in reasonable proximity: other-
wise there is no opportunity for observation. Reasonable proximity is not a
sufficient condition, however; this the courts also recognized. An employee
who may sometimes be a superintendent or a foreman but need not be may
have superior knowledge that invites reliance and precludes effective evalua-
tion by other workers. This situation arises again and again in cases involving
defective scaffolds, apparently a common problem in this period. The scaffold
is built by a crew of carpentersand then a bricklayer, employed by the same
employer on the same job and, probably, a member of the same department,
is injured working on the scaffold because of a knot in the wood or because
the scaffold was improperly buttressed. The courts usually hold the employer
liable.
The attempt to differentiate between those situations, within the common-
employment test, where employees can monitor each other's safety and those
where they cannot produceda spate of "nondelegable"duties of the employer
to the employee. The employer must provide the employee with a safe place
to work, as in the scaffold case. He must furnish and reasonably maintain the
safety appliances common to the trade. He must warn the employee of defects
or hazards that the employer can discover by the exercise of reasonable
diligence but the employee cannot. He must promulgate reasonable safety
rules. He must not hire or retain incompetent employees. The combined effect
of these rules was to limit the application of the fellow-servant rule to ap-
proximately those areas where the employee was reasonably competent to
discover and report negligent conduct endangering him. The pattern that
emerged with respect to railroad collisions is illustrative. If a member of the
operating crew is injured through the negligence of another operating em-
ployee, a brakeman, fireman, switchman, or engineer, whether on his train
or another train of the employer on the same line, the employer is not liable.
But if the cause of the accident is that the railroad failed to install the block
system for preventing collisions that is used on most railroads,or didn't have
enough telegraph offices, or hired an 18-year-old boy with a record of falling
asleep on the job for the sensitive position of telegraph operator, or failed to
inspect foreign cars for defective parts, or did not check the rails at reason-
able intervals, or failed to dischargea drunken engineer after his drunkenness
had been reported to a supervisory employee, then the railroad is liable.
The sample also contains many rulings elaborating the assumption of risk

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70 THE JOURNAL OF LEGAL STUDIES

doctrine. Their effect is to give the worker the level of safety for which
he bargained. If the hazards of unguarded moving parts in machinery are
obvious to an employee in view of his previous experience with machinery,
the company has no duty to warn him of those hazards; he may be assumed
to know them and to be compensated for assuming them in his wage. If a
person is hired for hazardous duty, such as making the roof of a mine safe
against the danger of cave-ins, the employer's normal duty to provide a safe
place to work does not apply; the employee is being paid to make the place
safe for other employees. If the employee is a child, less knowledge about
the hazards of unguarded machinery will be presumed.
An interesting and recurrent problem involves promises to repair. An em-
ployee notices a defect in machinery that he is working with and reports it to
a supervisor.The supervisoreither promises to repairit or assures him that it
is in fact safe. Unless the danger of continuing to work at the machine is
patent and extreme, the employee will not be deemed to have assumed the
risk if he is injured as a result of the defect's not being repaired despite the
supervisor'spromise or proving defective despite the supervisor's assurance.
The promise or assurance is an inducement to continue working upon which
the employee relies and will be enforced by requiring the employer to com-
pensate him for any injury.
The courts in these cases are simply enforcing the employment contract.
The employee is paid to take certain risks, those known or obvious to him.
If he is injured as the result of a risk that he did not know about (or was told
would be eliminated) and therefore did not bargain for, the employment
understandinghas been breached and he is entitled to damages. A brakeman
who works on a logging railroad that runs on wooden rails assumes a higher
risk of being injured by a derailment than if he were working on a regular
railroad--but he does not assume the risk, in the absence of an explicit warn-
ing, that the rails are not only wooden but rotten.
In one area, however, the reasoning of the courts was inconsistent with an
economic theory of industrial-accidentliability. There are several cases where
an employee, injured on the job, sustained further injury as a result of
negligent treatment by the company doctor. The courts hold that where the
company made no profit from providing medical service to its employees, it is
liable only if negligent in having originally hired (or failing to fire) the
doctor. The fact that the services were provided "free" or "at cost," however,
is beside the point. They were a part of the employee's compensationand the
only question should be, what was his reasonable understandingwith regard
to the level of care that the company doctor would furnish him if he were
injured? The courts-which ignored that question--were misapplying the
doctrine of the immunity of charitable institutions from tort liability. That

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 A THEORY OP NEGLIGENCE 71

doctrine, itself an anomaly in a system of law concerned with achieving an

efficient level of safety, may be understood as a subsidy for charitable ac-
tivity. The provision of a company doctor, in contrast, is a term in an em-
ployment contract.
If the courts in the industrial-accidentcontext seem in the main to have
been following the precepts of economic efficiency, the picture changes
when we turn to the considerablelegislative activity in the field of industrial
accidents that is reflected in the cases in our sample. Many states enacted
employers' liability acts for railroad employees that modified the common
law in material respects, such as by abrogating the fellow-servant rule, cur-
tailing or eliminating assumption of risk as a defense, and providing that
conformity to the lawful order of a superior servant excuses an employee
from the duty to act carefully. Similar provisions were sometimes enacted
for other industries. In addition, a number of specific safety measures were
enacted. Railroads are required to give engineers and firemen eight hours
rest out of 24; if a crew has served more than 16 hours consecutively and
there is an accident the railroad is strictly liable to any injured employee.
Fenders or guards must be placed on machinery. Employers are strictly liable
for accidents to children under 16 who are put to work with dangerous
machinery. Coal operators must hire pit bosses to maintain safe conditions in
the mine and are liable for accidents resulting from a pit boss's mistake.
There are statutes prescribingfire escapes for factories and creating liability
when workmenare injured by a defective scaffold.
The effect of the statutes is to whittle away at the fellow-servant rule and
at the doctrine of assumption of risk; later statutes were to abolish both
rules completely. It is unlikely that the purpose in modifying the common
law rules was to bring about a better approximationto the efficient level of
safety and accidents. Any marked inefficienciesin the common law approach
would have been self-correcting. Were there little taste for working in
hazardous conditions, we would expect to find employers voluntarily up-
grading the safety of employment conditions in order to economize on wages.
Similarly, if the fellow-servant rule did not accomplish an efficient division
of safety policing functions between employer and employee, we would expect
to find the parties abrogating the rule by contract. Yet the sample contains
only one case in which the basis of a suit for injuries sustained by an employee
was an agreement by the employer to indemnify him for accidental injury
regardlessof fault, rather than the employer'scommon law or statutory duty.
It would appear that the purpose of the legislation was to improve the lot
of the risk-neutral or risk-averse worker at the expense of risk-preferring
workers (and of consumers). No longer could a company hire a man at a
lower net cost than the other applicants for the job because he was willing to

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72 THE JOURNAL OF LEGAL STUDIES

work for a risk premium that was smaller than the cost of a safety appliance
that would eliminate the risk.
Regional Diferences in Liability Rules. I have been discussing the rules
of liability as if the United States were a single jurisdiction for accident-law
purposes, but of course it is not. States were free to experiment in matters
of accident law. In an effort to test the importance of regional differencesto
the negligence system, I classified the data collected in the study by region-
New England, Mid-Atlantic, South, North Central, Border, and West. The
federal courts were classified as a separate jurisdiction since the tort law
applied in the federal courts was federal common law, not the common law
of any state. The regional boundaries differ slightly from those of the con-
ventional regions whose names were borrowed,because I wanted them to be
politically homogeneous.
Using as my touchstone how a state's vote for the People's Party Presi-
dential candidate in 1892 and the Democratic Presidential candidate (William
Jennings Bryan) in 1896 comparedwith the national average I came up with
three "radical" regions-South, Border, and West-and three "conservative"
regions-New England, Mid-Atlantic, and North Central.34These regions
would seem to correspond to economic and cultural as well as political dif-
ferences.
One finds significant regional differences,mainly in the mixture of accident
types and in the per capita rate of litigation,35but not in the rules of liability
applied,36 either common law or statutory. Nor do such variations as one
finds in the level of damages award in different regions37 correlate with
political differences. Perhaps, then, the negligence system operated without
very much political interference during our period.
34 The composition of the regions is as follows: New England-Connecticut, Maine,
Massachusetts, New Hampshire, Rhode Island, and Vermont; Mid-Atlantic-Delaware,
Maryland, New Jersey, New York, Pennsylvania, and West Virginia; South-Alabama,
Arkansas, Florida, Georgia, Louisiana, Mississippi, North Carolina, South Carolina, and
Virginia; North Central-Illinois, Indiana, Iowa, Michigan, Minnesota, Ohio, and Wis-
consin; Border-Kentucky and Tennessee; West-Arizona, California, Colorado, Idaho,
Kansas, Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota, Oklahoma,
Oregon, South Dakota, Texas, Utah, Washington, and Wyoming.
35 See Table 4, supra, and Tables 12 and 13, infra.
36 To be sure, where there are relevant economic differences among regions, we expect
to and do find corresponding differences in the rules of liability; liability for sidewalk
snow and ice is a good example. The fact that there are rather few such examples is not
surprising when we reflect that although the proportion of urban and rural areas and
the mixture of industry varied widely among the regions, thus resulting in a quite dif-
ferent mixture of accident case types from region to region, it does not follow that
within a type of activity (walking down a city street, boarding a streetcar, etc.) there
would be economically significant regional variations that should lead, under our theory,
to different rules of liability.
87 See Tables 6-9, infra.

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 A THEORY OF NEGLIGENCE 73

Particularizationof the Standard of Care. In conclusion of our discussion

of the rules of liability, it is interesting to observe the number of particular
rules of liability that may be found during our period. The reader should
bear in mind that the rules we have discussed are based on only a small
fraction of the total number of accident cases decided by appellate courts
between 1875 and 1905. The frequent criticism of the fault system as the
unpredictable product of the caprices of individual juries ignores the con-
tinuous and pervasive rulemaking, some statutory and some common law,
that went on. The set of negligence rules constituted not an ambiguous moral
imperative but a comprehensive code of safety regulation, lending point to
Holmes' comment, made with specific reference to accident liability, that the
tendency of the common law is to become more certain and to precipitate
specific rules of conduct from general principles.38

V
To summarize the evidence thus far discussed, I discern no systematic
bias in the law of negligence as it was applied between 1875 and 1905 in
favor of industrial growth and expansion, except insofar as the efficient use of
resources may be thought to foster, or perhaps to be the equivalent of, eco-
nomic development. The common law seems to have been fairly evenhanded
in its treatment of the claims of victims and injurers. The rules of liability
seem to have been broadly designed to bring about the efficient (cost-justified)
level of accidents and safety, or, more likely, an approximationthereto. The
tendency of legislatures in safety matters, in contrast, was to retard in-
dustrial expansion by enacting statutes protecting farmers and workers. The
rhetoric of the protectionist movement portrayed the common law courts
as indifferent to safety. But this characterizationis imprecise. One can think
of many rules, common law and legislative, that would have reduced the
accident bills of railroads and other industries below an efficient level (and
thereby have stimulated more rapid industrial growth), but we do not find
such rules.
Our examination of the evidence, however, is not complete. Rules of
liability and general organizing principles are not the only components of a

38 Oliver Wendell
Holmes, Jr., The Common Law, supra note 3, at 111-129. A number
of treatises were written during our period on or relating to specific areas of
negligence,
and setting forth specific duties of care in great profusion, such as Wharton on
Negligence,
Campbell on Negligence, Bishop on Noncontract Law, Addison on Torts, Cooley on
Torts, Keasberg on Electric Wires, Baldwin on Railroad Law, Elliott on Railroads and
Street Railroads, Beach on Law of Railways, Dillon on Municipal Corporations, Labatt
on Master and Servant, Nellis on Street Surface Railroads, Beach on Contributory Negli--
gence, Bailey on Master's Liability for Injuries to Servants. These works are much cited
by the courts in the cases in our sample.

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74 THE JOURNAL OF LEGAL STUDIES

legal system. Even if we were confident that the thrust of the system was
toward achieving an efficient level of accidents and safety, we would want
to explore how far it had carried. We need to look more closely at the
practical operating level of the system. Unfortunately the data are frag-
mentary and only the most tentative conclusionspossible.
The Economic Adequacy of the Common Law Negligence Rules. In
principle, we have said, the negligence system should bring about the cost-
justified level of investment in safety, but what about in practice? We lack
sufficient information about the actual costs of alternative safety methods
and appliances in the period between 1875 and 1905 to go much beyond the
general appraisal of liability rules attempted in the preceding part of the
paper. But there is important indirect evidence. Almost half the cases in the
sample involve accidents arising in the course of a contractual relationship
between the participants. The costs of contracting specifically with reference
to safety need not be negligible merely because the parties have contracted
with reference to some other term of their relationship, but neither should
they be completely prohibitive. If, therefore, the common law rules were
markedly inefficient we would expect to find numerous cases in which the
participantsin the accident had specified in advance their respective liabilities
yet we find almost none. Nor do we find much statutory activity that can
plausibly be interpretedas having been evoked by the inability of the common
law to bring about efficient levels of safety.
But in one respect there are both analytical and empirical grounds for
thinking the common law probably did not do a very good job. We referred
earlier to the relevanceof customary practices in defining the standardof care
and to the significance, for an economic analysis of the negligence concept, of
the courts' rejection of compliance with custom as a defense to a negligence
action. The sample contains no case in which an enterprise was held to
have been negligent for having failed to introduce a safety method or ap-
pliance not generally in use in the industry. All kinds of safety appliances
were introduced during the period embraced by the sample: in railroading
alone, there were the automatic coupler, the air brake, the steel car, steel rails,
the electric block system for preventing collisions, and many others."9The
safety standard is higher at the end of the period than at the beginning but
there is no evidence that the law of negligence had anything to do with rais-
ing it. On reflection this is not surprising. A plaintiff who before the first
railroad had installed the Westinghouse air brake tried to prove that the
cost of the appliance was less than its benefits in accident prevention faced a
terribly uphill struggle. There was a natural reluctance to permit a jury or

39 See Charles Francis Adams, Jr., supra note 29; Carl S. Vrooman, American Railway
Problems in the Light of European Experience 182-204 (1910).

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 A THEORY OF NEGLIGENCE 75

even a series of juries to decide that the railroad industry, not just one back-
ward line, should be investing very substantial sums in an unproven and in-
evitably controversial new appliance: the air brake was much derided in
railroadingcircles when it was first invented.40
If the law is not responsible for major innovations in safety methods,
what is? Although the question lies somewhat outside of the scope of this
paper, I shall venture an answer. There are few areas, certainly in railroading,
where the introduction of a safety appliance would benefit only third parties,
whose injuries an enterprise will take account of only if forced to do so by
the state. Spark-arrestingequipment is one, and it is perhaps significant that
the courts required railroads to install the "best and latest," not merely the
customary, such equipment. But the air brake, for example, protected not
only, or even primarily, trespassers on the track and travelers at crossings.
It protected passengers, thereby increasing the demand for railroad travel;
the railroad's equipment, thereby reducing its repair and replacement bill;
and the railroad's employees, thereby reducing the risk premium that it
had to pay its workers and the loss of human capital invested in injured
workers. Industry had strong incentives, wholly apart from liability, for
introducing air brakes and this is true of most other safety appliances.
I remarkedearlier the affinity between the economic market and common
law adjudication as methods of allocating resources. Our discussion of the
difficulties faced by courts in compelling adoption of major safety innova-
tions points to a fundamental difference between the methods. A market is
strongly conducive to an honest valuation of goods. If you say that something
is worth a dollar, and then actually buy it, I will be inclined to believe what
you said; you put your money where your mouth was. The credibility con-
ferred by a demonstrated willingness to pay is wanting in negligence suits.
The plaintiff may argue that the expenditure by the railroad industry of $X
million on safety appliances will prevent $2X million in accident losses,
properly discounted, but since he is not about to make any such investment
himself, his statement will be greeted with a measure of skepticism. The
cost of overcomingthat skepticism is likely to exceed his stake in the outcome
of the case.
For the same reason we should not expect the courts to attempt interin-
dustry safety comparisons, although the Hand formula, followed literally,
would require them to do so. Suppose the cost of installing air brakes would
exceed the cost of the accidents that they would prevent; that does not con-
clude the analysis. If a system of canals and roads provides nearly as fast
and cheap a method of transportation as the railroads, and one that is a
good deal safer, the economically optimizing solution may be neither to re-
40 Charles Francis Adams, Jr., supra note 29, at 204.

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76 THE JOURNAL OF LEGAL STUDIES

quire the installation of air brakes nor to countenance the accidents resulting
from their absence, but, rather, by making the railroads liable, to induce the
substitution of canals for railroads.
The displacement of one industry by another is a common result of the
operation of the market, but one can understand why courts would be un-
willing to attempt to determine analytically whether such a displacement was
justified. This is a serious limitation of the negligence system as a method
of optimizing the allocation of resources to safety. Yet the courts did not
brush the problem under the rug entirely. They carved an important excep-
tion to the standard of negligence for ultrahazardous activities, such as
blasting. Those are by definition activities where unavoidable accident costs
are great, and therefore where one is most likely to find that an alterna-
tive method of achieving the same result (digging instead of blasting) is
cheaper when unavoidable accident costs are taken into account. A rule of
strict liability-the rule applied to activities classified as ultrahazardous-
compels them to be taken into account.
Railroads are dangerous, but the danger is mostly to passengers and em-
ployees,41who are presumably compensatedby the railroads for any danger.
The social benefits of railroad transportationin the late nineteenth century
greatly exceeded any reasonableestimate of the costs of unavoidable railroad
accidents to strangers and enable us to conclude that railroads would not
have been displaced by canals and roads if railroads had been made liable
for those costs.42
The problem of the honest valuation also plagues the negligence system in
computing damages. If I testify in a negligence suit that the loss of my little
finger was a source of unbearable psychological agony, for which $100,000

41 In
1891, for example, of 40,910 people reported to have been killed or injured by
railroads, 32,065 were passengers or employees (and some of the others also had a con-
tractual relationship with the railroad). United States Department of Commerce, Bureau
of the Census, Historical Statistics of the United States-Colonial Times to 1957, 437
(1960).
42 The social saving resulting from the existence of railroads has been estimated, for
the year 1890, as somewhat more than $400 million. See Introduction to Part III, in
The Reinterpretation of American History 98, 101-02 & n.4 (Robert William Fogel and
Stanley L. Engerman eds. 1971). If we assume that under the negligence standard rail-
roads would not have been liable to one half of the 8,845 killed or injured in railroad
accidents to strangers in 1891 (see note 41 supra; statistics for 1890 not available), and
we assume an average cost of $3944 per fatal and $4227 per nonfatal accident (see
Table 7 infra), then strict liability would have increased the costs of railroading by a
little more than $18 million that year. And this ignores the fact that the substitute modes
of transportation, especially roads, were not accident-free. To be sure, railroads probably
could not capture in their rates the full social saving from railroading. But if we compare
our estimate of unavoidable accident costs to strangers with total railroad operating
revenues in 1890, we find that the former is only 1.7%o of the latter. See Historical
Statistics of the United States, supra note 41, at 434.

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 A THEORY OF NEGLIGENCE 77

would barely compensate me, I am likely to be disbelieved; not so if I refuse

a bona fide offer of $100,000 for my little finger. Yet the variance in the
values that people attach to avoiding pain and disfigurement is doubtless
great. A market in accidents would recognize and reflect this diversity of
tastes; the judicial surrogate for the market tends to suppress it.
The Collectibility of Judgments. Among other points at which a neg-
ligence system might operate less well in practice than in theory, there is the
problem of injurers who, because they have no assets out of which to pay a
tort judgment, will not be induced by the threat of liability to take cost-
justified precautions. The defendants in most of the cases in the sample are
substantial enterprises-railroads, street railways, other business establish-
ments, public authorities. But there may have been other injurers who were
not sued because a judgment would have been uncollectible.The obvious place
to look for such injurersis in highway accidents; and it is a striking fact that
only 2 per cent of the cases in the sample grow out of such accidents. Since
automobiles were virtually unknown during our period, it may seem plausible
to conjecture-I have found no statistics-that highway accidents, at least
ones involving serious injury, were rare. But I am inclined to be skeptical.
The fact that there were many suits against cities for highway accidents
caused by defective roadways indicates that people did get seriously hurt in
wagon and carriage accidents and many of these accidents must have been
collisions.
The Prosecution of Negligence Claims. Injurers might avoid liability if
victims of negligence were frequently unable or unwilling to press their claims.
Most accidents in our period ranged a working man or a memberof a working
man's family against a railroad or other large enterprise. The level of educa-
tion and income was lower than today and the proportion of recent, non-
English-speakingimmigrantshigher. It is widely assumed, moreover,that the
taste for litigation is unevenly distributed: some people or groups are sup-
posed to be highly litigious and others reluctant to enforce even meritorious
legal claims. Most important is the cost of legal services, perhaps prohibitive
for poor people.
We are remitted once again to indirect evidence. Let us begin with cost.
An accident victim will not spend more money on litigation than he can
reasonably hope to obtain in damages. If, therefore, we find many cases
being litigated where the amount of damages is small, we may be able to infer
that the cost of litigation is also small. More than 25 per cent of all
property cases in the sample involve judgments of less than $100. There
is some evidence that $100 or so was the rock-bottom claim worth suing on.
Many states in our period permitted recovery of double the actual dam-
ages in stock-killing cases. The average price of a horse at this time was

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78 THE JOURNAL OF LEGAL STUDIES

TABLE 6
NATURE OF INJURY

Death cases
as a per-
Amputation centage of
and other Nonserious all bodily-
Death very serious bodily Property injury cases
Region Date cases injuries injury damagea in sample
New England 1875 1 1 0
85 1 2 7
95 6 1 18
1905 9 4 11 16
Totalb 16 6 14 13
Mid-Atlantic 1875 2 3 3 20
85 6 8 1 8 13
95 20 15 7 20
1905 34 15 1 11 24
Totalb 62 41 2 29 21
South 1875 1 3 20
85 3 1 1 50
95 5 1 1 16 20
1905 21 10 18 26
Totalb 30 12 1 38 26
North Central 1875 10 4 8 40
85 8 14 1 11 20
95 22 15 17 22
1905 34 31 3 13 20
Totalb 74 64 4 49 22
Border 1875 1 100
85 2 1 1 33
95 4 6 9 16
1905 11 6 2 33
Totalb 18 13 12 27
West 1875 1 1 11 17
85 4 6 11 17
95 23 20 1 17 22
1905 24 38 20 14
Totalb 52 65 1 59 17
Federal Courts 1895 8 5 9 29
1905 5 7 11 19
Totalb 13 12 20 24
Grand totalb 265 213 8 221 20
Totalce-1875 15 10 35 26
24 30 2 34 18
Totale--1885
Totale-1895 80 58 2 66 21
Totalc!-1905 133 104 4 75 20
Source: Judicial reports.
a Note that the first four columns do not sum to the total cases in the sample, owing to lack of infor-
mation about the gravity of many of the bodily-injury cases.
b Or average.
cOr average. Federal cases excluded.

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 TABLE 7
BODILY-INJURY CASES I

v" Adm.
0
?
0?4
00 4.a) cis 00 cis% Ca0 J C~a
caOUW0 aoa
o0
0 0
Cd
cd -5
Cd.0
4.)
0)a
0 .0

dCda
a C Z
C?"o 0 UL) 0 '(') V o
New England 1875
85
95 6000 1 6000 1
1905 2252 10 3077 4
Totala 2593 11 3662 5
Mid-Atlantic 1875 8000 1 8000 1 5800 1
85 5000 1 2515 9 1275 2
95 3667 6 4000 3 6268 20 8762 6
1905 6190 10 6667 6 2928 21 7333 3
Totala 5383 18 6000 10 4221 51 7011 11
South 1875 6750 2
85 6430 2 6430 2 2000 1
95 3200 2 3500 1 1050 6 1500 3
1905 5788 12 4486 4 2666 19 3183 9
Totala 5545 16 4900 7 2588 28 2762 12
North Central 1875 2047 3 2047 3 2850 5 5000 1
85 2400 2 3500 1 2429 10 3750 2
95 3656 8 4875 4 3822 23 5368 11
1905 3475 18 4338 9 3476 64 4582 31
Totala 3314 31 4011 17 3421 102 4746 45
Border 1875
85 1500 1
95 3100 2 3556 9 4125 2
1905 3583 6 4500 2 1612 10 1250 1
Total" 3462 8 4500 2 2346 20 3167 3
West 1875 9600 1 9600 1
85 4000 1 7170 10 10,917 3
95 4739 9 6833 3 4017 39 4900 8
1905 6061 14 4900 5 3807 54 6106 21
Totala 5479 24 5625 8 4265 104 6357 33
Federal Courts 1895 4625 4 8000 1 6644 9 6757 7
1905 13,750 1 5239 8 7400 5
Totala 6450 5 8000 1 5983 17 7025 12
Grand totala 4704 102 4920 44 3471 333 4640 121
Totalb-1875 3535 4 3535 4 4794 9 7300 2
Totalb-1885 4443 6 5453 3 3940 31 6114 7
Totalb-1895 3944 27 5045 11 4227 98 5470 31
Totalb-1905 5004 60 5019 26 3252 178 4847 69
Source: Judicial reports.
a Or average.
b Or
average. Federal cases excluded.

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 TABLE 8
BODILY-INJURY CASES 11

Frequency
Frequency distribution-verdicts in death cases only
o
C
0 00 n
o0o o 00 o a0

v, a
o0~') ~_ 'C>
a.•
0>o
• 0 -Ca
.E
0

0
0

o'
oo••• a- 0,
av- *0- a)
C C
b 06>0C0 > C: ao 0 0
06-"a '1q 6.
a-a

New England 1875

85
95
1905 2 4 3
Total" 2 4 3
Mid-Atlantic 1875 1 1
85 1 1 2 5 1
95 2 3 1 6 1 7 5
1905 1 5 3 1 10 1 4 9
Totala 3 9 5 1 18 4 16 15
South 1875
85 1 1 2 1
95 2 2 6
1905 2 5 3 1 1 12 11 6
Totala 2 8 3 2 1 16 18 6
North Central 1875 2 1 3 1 1 3
85 1 1 2 1 5 3
95 3 4 1 8 2 14 2
1905 2 5 8 3 18 4 34 12
Totala 2 11 14 3 1 31 8 54 20
Border 1875
85
95 1 1 2 5 2
1905 1 5 6 1 7 2
Totala 2 6 8 1 12 4
West 1875
85 1 1 5
95 3 3 1 2 9 4 15 9
1905 2 2 7 3 14 3 30 10
Totala 2 5 11 1 2 3 24 7 50 19
Federal Courts 1895 3 1 4 2 3
1905 1 1 1 2 2
Totala 3 1 1 5 1 4 5
Grand totala 4 23 51 7 11 6 102 23 158 72
Totalb--1875 2 1 1 4 1 1 3
Totalb--1885 1 4 1 6 3 16 4
Totalb-1895 9 13 1 4 27 7 47 18
Totalb-1905 4 11 30 6 4 5 60 11 90 42
Source: Judicial reports.
a Or average.
b Or average. Federal cases excluded.

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 TABLE 9
Property-Damage Cases
Frequency distribution-verdicts in property-d

Mean
Region Date verdict ($) Below $100 $101-500 $501-1000 $1001-5000 Abov

New England 1875 498 1 1

85 4000 1
95
1905
Totala 1665 1 1 1
Mid-Atlantic 1875
85
95 1002 2 1
1905 329 3
Total' 666 5 1
South 1875 220 1
85
95 145 2 2
1905 953 2 2 1
Totala 557 2 5 2 1
North Central 1875 518 1 1
85 124 1 2
95 2713 1 1 1
1905 428 2 4 1
Totalt 954 5 7 1 2
Border 1875
85
95 1698 1 2
1905 750 1
Totala 1461 1 1 2
West 1875 146 3 4
85 195 1 1
95 199 2 2 1
1905 934 3 2 4
Totala 470 9 9 1 4
Federal Courts 1895 2150 1
1905 19,381
Totala 10,766 1
Grand totala 1846 17 27 6 12
Totalb- 1875 273 5 5 1
Totalb--1885 794 2 3 1 1
Totalb--1895 1080 5 8 1 4
Totalb-1905 716 5 11 3 6
Source: Judicial reports.
a Or average.
b Or average. Federal cases excluded.

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82 THE JOURNALOF LEGALSTUDIES

about $100 and of a cow or sheep considerably less, so the effect of these
laws was to raise the minimum stake in most cases to somewhere between
$100 and $200. There were also statutes providing for simplified proceedings
before justices of the peace in stock cases, much like our small claims pro-
cedures today. But the party who lost in such proceedingshad a right to a
trial de novo before a jury in a regular court and the sample contains many
cases in which that right was exercised. The average recovery is higher in
bodily-injury cases but small damage awards remain common. Table 7 in-
dicates that damages of less than $500 were recoveredin 7 per cent of bodily-
injury (excluding death) cases and of $2500 or less in 55 per cent of such
cases. Our trial-court sample provides additional evidence. The average award
in cases of property loss is an astonishingly low $78 (however, the sample
contains only six cases of property damage). In more than a third of the
bodily-injury (including death) cases the award was $500 or less. The fre-
quency of small awards in bodily-injury cases is corroboratedby a study of
industrial-accidentlitigation in Michigan in 1910.43
In most small-award cases, perhaps, the plaintiff and his attorney had
expected to do much better and would never have instituted suit for the
amount actually recovered; they might nonetheless defend, and the other
side attack, the award on appeal because the cost of an appeal is only a
small part of the total cost of a lawsuit. But this does not explain the fre-
quency of stock-killing cases, a type of case where the maximum damages
are known in advance to be small.
If we can assume that the cost of litigating the small claim was not large,
we have every reason to think that the cost of litigating the large claim was,
relatively, even smaller. The cost of litigation does not increase at the same
rate as the size of the stakes. A defendant will expend greater resources in
defending against a larger claim, which will compel the plaintiff to expend
greater resources in prosecuting it, but one would be surprised to find a
lawyer spending three times as much time on a $3000 as on a $1000 claim. If
victims of $100 property losses or $500 personal injuries were able to retain
counsel we have all the more reason to expect that the victim of a $3471
bodily injury or $1846 property loss, or the estate with a death claim worth
$4704, was able to defray the expenses of prosecuting the claim: these are
the average recoveries in the cases in the (appellate) sample. It is important
to note, furthermore, that the claimant could borrow against his claim by
hiring a lawyer on a contingent-fee basis. Apparently then as now the con-
tingent fee was the typical mode of compensating the plaintiff's lawyer in a

43 See Report of the Michigan Employers' Liability and Workmen's Compensation

Commission 16-22 (1911).

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 A THEORY OF NEGLIGENCE 83

negligence case.44 The lawyer's fee is not the only cost of litigation, and
lawyers are supposed not to advance witness fees and other litigation ex-
penses to clients. However, such expenses were probably not large in our
period.45Judging from the cases in the sample, expert witnesses were rarely
used, probably because the rules of evidence severely limited their utility in
cases not involving complex technical processes. Elaborate physical evidence
was also rare. And most claims never went to trial anyway.
The expenses of litigation reduce the accident victim's net recovery. But
from the standpoint of a system concerned with bringing about an efficient
level of accidents it is not crucial whether a small or large portion of the
ultimate recovery ends up in lawyers' or witnesses' or court clerks' pockets
so long as the plaintiff retains a sufficiently large portion of the award that
victims have an incentive to assert meritoriousclaims.
The sample contains other evidence that bears on the question of disposi-
tion to prosecute negligence claims. A glance at Table 7 reveals that the
average judgment in death and bodily-injury cases, but particularly the latter,
is substantially higher in cases where the victim is an employee. This relation-
ship holds pretty consistently for different periods and regions. To some ex-
tent it can be explained by the fact that employees are by definition able-
bodied while many of the other accident victims are children and old people
where the loss-of-earningscomponent in the damage award is normally small.
It is unlikely, however, that this is a complete explanation. If it were, we
would expect a greater disparity in death than in other bodily-injury cases,
because nondeath cases are more likely to involve medical expenses and pain
and suffering, which are independent of earning power; in fact the disparity
is greater in nondeath cases. Perhaps, then, employees did not often sue their
employers unless a quite serious injury was involved.
We get a glimpse of a possible explanation in the cases in the sample
where the defendant pleads a release from liability in defense to an action.
Evidently it was the practice of large employers, such as railroads, to provide
medical treatment to injured employees free of charge and to compensate
them, during a limited period of disability, for lost wages; in exchange the
employee would agree not to bring a tort action. Defendants could and doubt-
less to some extent did make similar arrangementswith other accident victims
but on what little evidence we have these were less common. Thus, 11 out
of the 19 cases in the sample in which it appears that a release was

44 See New York State Employers' Liability Commission, supra note 5, at 31; Ohio
Employers' Liability Commission, supra note 16, at 28. The limitations of these sources
are discussed in note 16, supra.
45 See id. at 28-29 for some data on court costs.

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84 THE JOURNAL OF LEGAL STUDIES

pleaded-58 per cent-involve injuries to employees, although employee

accident cases are only 30 per cent of the cases in the sample. The existence
of a close and continuing relationship between the parties, predating the
accident, explains why extrajudicial redress for minor accidents was more
common in employee than in nonemployee accidents.46
One can compute from Table 7 that the average recovery in a bodily-injury
case not involving death was 74 per cent of the average recovery in a death
case-which seems high. To be sure, one would expect (and finds) that very
serious, disabling injuries-amputation or the equivalent-involve on average
a larger loss than the typical death case ($9107 versus $4704). There tend
to be greater pain and suffering (many deaths are instantaneous) and higher
medical expenses; also, the victim is no longer able to produce but his con-
sumption needs are unaffected. But most accidents-even excluding minor
accidents-are much less serious than fatal accidents; yet, if we exclude the
cases where the opinion discloses that the accident caused the loss of a limb
or an injury of equivalent gravity, the average recovery in a nondeath case
is still 52 per cent of the average recovery in a death case. Furthermore,al-
though accidents to railroad passengers were much more frequent than rail-
road crossing accidents, we find more cases in the sample involving the latter
than the former,perhaps because crossing accidents are so much more serious.
Deaths at crossings exceeded passenger deaths although the total number
of passengers killed and injured exceeded the total number of persons killed
and injured in crossing accidents by about 4 to 1.47Finally, the ratio of cases
in the sample in which the opinion discloses a not very serious bodily injury
to cases where the opinion discloses a death, amputation or other serious
injury is only one to 60.
Although these data suggest that there may have been cost barriers to
prosecuting claims for redress of minor injuries, there is evidence the other
way. The ratio of railroad nonemployee death cases to all railroad nonem-
ployee bodily-injury cases in the sample (26 per cent) is roughly the same as
the ratio of nonemployee deaths to total nonemployee bodily injuries in
46 There is some corroboration in statistics showing that employers frequently paid

compensation to injured employees in cases where the employer had no legal liability.
See New York State Employers' Liability Commission, supra note 5, at 97-98; cf.
Michigan Employers' Liability and Workmen's Compensation Commission, supra note
43, at 10.
47 Interstate Commerce Commission, Statistics of Railways in the United States, Fifth
Annual Report 69 (1893), Fifteenth Annual Report 99 (1903). Here is a good place to
mention that whenever cases in the sample are compared to statistics of accidents or of
population or of other factors that might influence the bringing of the cases, those statis-
tics are lagged in recognition of the fact that a case decided in 1875 (or 1885 or 1895 or
1905) involves an accident that occurred several years earlier. The length of the lag is
determined, as nearly as possible, by the average elapsed time between accident and
decision for the relevant region and period as shown in Table 1.

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 A THEORY OF NEGLIGENCE 85

railroad accidents of the period48(however, nonfatal accidents may be under-

reported). The ratio of railroademployee death cases to all railroademployee
injury cases-35 per cent-is several times the ratio of railroad employee
deaths to railroad employee injuries (5-6 per cent) during the period,4"
which is consistent with our previous conjecture that employees were more
likely to settle out of court with regard to the less serious accidents.
A phenomenon with possible if ambiguous relevance to the question of
ability or disposition to prosecute negligence claims is the enormous increase
in the volume of appellate negligence litigation during our period, reported in
Table 10. It is doubtful whether the increase can be ascribed to a change in

TABLE 10
INCREASEIN APPELLATEACCIDENTCASESa

Percentage Increase
Period Number of Cases Over Previous Period
1875 92 88
1885 170 85
1895 455 168
1905 736 62
Source:JudicialReports.
a Excludingfederalcases.

the rules of law, a rise in the number of accidents, a general expansion of

economic activity that might be a proxy for the number of accidents (since
accident statistics for the period are incomplete), or any combination of
these. The first explanation can be rejected. Any change in law that tended
to make rights less certain, either by creating a right of action where formerly
the defendant's nonliability had been clear or by qualifying what formerly
had been a certain right, would have tended to increase the amount of
litigation; but the sample discloses no important development of this kind
during our period. As to the second, the railroad cases in the sample increased
more than eight times between 1875 and 1905 and more than trebled between
1885 and 1895 alone,50 and although we lack adequate statistics it seems
unlikely that there was a correspondingincrease in railroad accidents.5' In
48 See Historical Statistics of the United States, supra note 41, at 437.
49 See ibid.
5o Computed from Table 2, supra; bodily-injury cases only.
51 See Table 11. In interpreting Table 11, which does show some sharp increases over
time in number injured (not killed), it should be borne in mind that the completeness
with which non-fatal accidents were reported probably increased substantially through-
out our entire period. See, e.g., Interstate Commerce Commission, Fifteenth Annual
Report, supra note 47, at 97. Also, prior to 1888 the statistics on railroad accidents are
fragmentary. We know that the number of persons killed or injured in railroad accidents
rose from 31,170 in 1888 to 43,799 in 1892 (ibid.), although it is probable that some of

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 TABLE 11
RAILROAD
AccmENTS-1871-1903
Date Region
Massachusetts Missouri New York Texas W
Killed Injured Killed Injured Killed Injured Killed Injured Kille

1871 157 123 342 395

1872 187 134 291 107
1881 184 231 72
1882 181 481 345 670
1883 191 333 149 429 322 660 88
1891 269 557 215 789 721 1728 194 1975 173
1892 267 833 187 834 480 1432 153 1512
1893 187
1901 179 432 241 2642
1902 235 671 762 1868 251 3827
1903 884 1726
Sources: State railroadcommissionannual reports; Historical Statistics of the United States, supra note 41, at 437.

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 A THEORY OF NEGLIGENCE 87

the only other industry where statistics of accidents are available, coal mining,
we similarly find the cases increasing at a much faster rate than the ac-
cidents.52 The gross national product (in constant dollars) approximately
quadrupled during our period,53but this does not explain the eightfold in-
crease in the number of accident cases. The advent of dangerous new activi-
ties such as the electric street railway may explain some of the increase-but
not the increase in railroad accidents.
The increase in cases is a phenomenon of all regions. It cannot be ex-
plained by reference to better reporting of decisions. And it appears to be a
matter of cases and not merely of appeals.54 Our period witnessed the
creation of new intermediate appellate courts and a striking increase in the
number of lawyers55but these are more likely to have reflected the same
this rise is due simply to more accurate reporting of accidents. If we assume that they
had been growing at the same rate since 1882, then we would be led to estimate the
number of accidents in that year as 19,562 and this would indicate a 124 per cent growth
in the number of accidents between 1882 and 1892, the average dates when accidents
decided in 1885 and 1895 occurred; this is substantially less than the growth in rail-
road accident cases in the sample. Charles Francis Adams, Jr., supra note 29, at 262-63,
estimates that railroad accidents killed and injured 10,000 people a year in the United
States during the 1870's. By 1902 the yearly toll had risen to about 73,000. Interstate
Commerce Commission, Fifteenth Annual Report, supra note 47, at 97. The number of
railroad accident cases in the sample increased 8y2 times between 1875 and 1905, which
isn't too disproportionate, but unfortunately the accuracy of Adams' estimate is highly
questionable. He assumed the per capita rate of railroad accidents in the United States
was the same as in Massachusetts, the only area for which he had statistics, yet as
Table 12, infra, indicates this is an unwarranted assumption.
52 Compare Table 5 with Albert H. Fay, Coal-Mine Fatalities in the United States
1870-1914, 10-11 (Dep't of Interior, Bur. of Mines, Bull. 15, 1916), bearing in mind
that his accident statistics for the earlier years cover less than half the industry.
53 Computed from Historical Statistics of the United States, supra note 41, at 139.
54 See Francis W. Laurent, The Business of a Trial Court-100 Years of Cases 163,
275 (1959); also compare the statistics on federal appellate cases in Table 2, supra, with
American Law Institute, A Study of the Business of the Federal Courts, Part II, Civil
Cases 34-35, 111 (1934).
A count was made of all cases filed in the Circuit Court of Cook County in 1872,
1882, 1892, and 1902 in which the plaintiff was an individual and the defendant either
a railroad or a street railway; a spot check had indicated that most such cases are negli-
gence cases. The figures show a tenfold increase, concentrated between 1882 and 1892-
much like the increase in the railroad cases in our appellate sample.

Date Number of Cases

1872 78
1882 69
1892 322
1902 755
55 The number of lawyers (including judges, abstracters, and notaries) increased as
follows:

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88 THE JOURNAL OF LEGAL STUDIES

increase in the demand for litigation that produced the rise in the number of
appeals than to have been independent causal agents. That is especially clear
with respect to the new courts. Had they been created in advance of the flood
of new appeals one would expect the duration of the average case to have
increased during the period; it decreased.56This suggests that the flood of
litigation came first and the new courts were created to cope with it.
Perhaps the increase in negligence litigation is related to the rising hostility
to big business that marked the period.57 Railroads were a focus of radical
political hostility and one effect could have been to make accident victims
more eager to press their claims and less willing to settle out of court: distrust
complicates bargaining. This hypothesis has some support in the regional
analysis presented in Tables 12 and 13. The reader will recall that the
regions are drawn on political lines. New England, Mid-Atlantic, and North
Central are the conservative regions and South-Border58and West the
radical ones. Litigation per capita is substantially higher in one of the radical
regions, the West, than in any of the conservative regions. Although it is low
in the other radical region, South-Border, this may simply reflect the gen-
erally lower level of economic activity in that region during the relevant
period. If we look at a class of accidents for which regional statistics are
available (railroad accidents involving death or bodily injury) we find a
consistently higher rate of litigation in the radical regions. The contrast is
brought out sharply in the detailed comparison between the Mid-Atlantic
and Western regions in Table 13; the evidence for South-Border is less
striking. The political hypothesis is not supported by a regional comparison

Percentage Increase Over

Period Number of Lawyers Previous Period

1870 41,791
1880 64,137 53
1890 89,630 40
1900 114,460 28
the Census, Sixteenth
Source: United States Department of Commerce, Bureau of
Census of the United States: 1940, Population, Comparative Occupation Statistics of
the United States, 1870-1940, 111 (1943).

Judges, abstracters, and notaries were apparently only a very small percentage of the
total. See ibid.
56 See Table 1, supra.
57 As evidenced by the passage of the Sherman Act in 1890. On the temper of the
times see John D. Hicks, The Populist Revolt, A History of the Farmers' Alliance and
the People's Party (1931).
58 The Southern and Border regions were merged for the sake of comparability with
the ICC's regional accident statistics.

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 TABLE 12
REGIONAL VARIATIONS IN FREQUENCY OF APPEALS I

As percentage Percentage of Pe
of all cases national ra
Region Date Total cases during period populationa du
New England 1895 34 7.5 7.5
1905 68 9.2 7.4
Mid-Atlantic 1895 105 23.1 23.3
1905 153 20.8 23.4
South-Border 1895 75 16.5 24.4
1905 135 18.3 23.8
North Central 1895 119 26.2 26.5
1905 186 25.3 26.2
West 1895 122 26.8 18.0
1905 194 26.4 18.8
Sources: Table 2; Historical Statistics of the United States, supra note 41, at 7, 12; ICC, Fifth Ann. Rep., supra note 4
note 47, at 98-115.
a Lagged; see note 47 supra. Population of Continental U.S. only.
b Bodily injury or death only.
e Bodily injury or death only. Lagged; see note 47 supra.

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 TABLE 13
REGIONALVARIATIONSIN FREQUENCYOF APPEALSII:
RAILROADCASES-MID-ATLANTIC AND WEST

Type of Railroad Case Type

Region Date Crossing Trespasser Passenger Employee Crossing Tres
Mid-Atlantic 1895 9 1 7 14 389 2
1905 14 3 1 6 442 2
West 1895 13 3 16 25 154
1905 15 5 17 28 163 1
Sources: Table 2; ICC, Fifth and Fifteenth Ann. Reps. (see Table 12).
a Lagged; see note 47 supra.

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 A THEORY OF NEGLIGENCE 91

of cases and accidents in the coal-mining industry,59but the number of cases

is too small to be particularly significant.60
The litigiousness of the West may reflect the youth of its legal institutions
compared to those elsewhere in the country. Rules and proceduresmay have
been relatively unsettled, and uncertainty fosters litigation and appeals. The
growth of the West was very rapid during our period, and this would help
explain the overall rise in litigation. But litigation in the other regions grew
very rapidly also.
The explanation for the overall increase may lie in a combinationof factors
--greater economic activity, growing hostility to big business, the population
movement to the West-including some that we have not discussed, such as
the rising level of education,6"which may have made individuals more aware
of their legal rights.62What we cannot begin to assess with existing data is
whether the relative paucity of negligence litigation at the outset of our
period indicates that the practical access of accident victims to the courts was
inadequate then.
The Prospects at Trial for the Negligence Claimant. If the victim got
into court, his prospects were reasonably good. Competenceof counsel cannot
generally be determined from judicial reports, but occasionally we find the
court remarkingthat counsel for one of the parties is disabled from urging a
perfectly good ground because he failed to present it in the prescribedmanner
in the court below. It is a remarkablefact that in 40 of the 50 cases in the
sample in which the court found such a default it was defendant's, not plain-
tiff's, counsel who had committed it. At the least, it seems unlikely that plain-
59 Compare Table 5, supra, with Albert H. Fay, supra note 52, at 47.
6o The litigation rate may be affected by the percentage of foreign-born in a region,
immigrants tending perhaps to be docile and unassertive with respect to their legal rights.
In fact, the percentage of foreign-born was highest in the West-the most "radical"
region-throughout our period. Computed from Historical Statistics of the United States,
supra note 41, at 11-12. But they may have been the more venturesome immigrants. I
should mention here that a spot check of state statutes fixing filing fees and other court
costs indicates no basis there for explaining regional or temporal variations in the liti-
gation rate during our period.
61 As documented in Historical Statistics of the United States, supra note 41, at 207.
62 Another possible explanation for the rise in litigation during our period is rising
militancy of workers as evidenced by the growth of trade unions. However, while total
union membership grew from 175,000 in 1882 to almost 2 million in 1903, and while
membership in railway workers' unions grew from 7,000 to more than 200,000 during
this period, neither employee cases in general nor railway employee cases in particular
grow faster during this period than the sample as a whole. (See Tables 2 and 5, supra;
the figures on union membership are estimated from Leo Wolman, The Growth of
American Trade Unions-1880-1923, 32-33 (1924).) And while employee cases in the
West and South rise faster than cases as a whole in these regions, it is not at all clear
that unions in these areas (especially in the South) were on average more militant than
North Central and North Eastern unions. Cf. 2 John R. Commons, et al., History of
Labour in the United States, pts. 5-6 (1936).

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92 THE JOURNAL OF LEGAL STUDIES

tiffs' lawyers in accident cases were systematically overmatchedby defendants'.

The trial process in accident cases favored the plaintiff. He could get to
the jury on his own testimony of what had happened unless contradictedby
indisputable physical evidence. The hardest case for the plaintiff was a death
case, especially when there had been no eyewitnesses to the accident. The
plaintiff's problems in such a case were alleviated to some extent, however,
by a presumption (in jurisdictions where the plaintiff had the burden
of proving freedom from contributory negligence) that in the absence of
evidence to the contrary the victim had been exercising due care for
his safety, and by permitting evidence (inadmissible otherwise) that the
victim had had the habits of a prudent and careful man. Also, we find con-
siderable use of the doctrine of res ipsa loquitur, which permits the plaintiff
to get to the jury on the question of the defendant's liability with little more
evidence than that the accident occurred when it is the kind of accident
that is unlikely to occur in the absence of negligence. On the question of
damages, the rather primitive state of medical knowledge seems to have made
the victim's self-serving testimony as to his pain and the extent of his dis-
ability difficult to refute. There is one case in the sample where, on motion
to set aside the judgment for the plaintiff on the ground of newly discovered
evidence, it was proved that the plaintiff, a lady who had convinced her doctor
and the jury that she was totally paralyzed, had been seen walking about
completely recovered the day after the conclusion of the trial; and there are
other cases where, to a moderneye, the injury seems wholly or partly feigned
but the plaintiff succeeded.
Juries appear to have been disposed to favor accident plaintiffs. The sample
contains 945 jury verdicts for plaintiffs and only 98 for defendants.63But an
appellate sample may be misleading in this respect. In the sample of trial
cases from Cook and Du Page Counties, Illinois, plaintiff prevailed in 19
jury cases and defendant in 13. Perhaps a plaintiff who failed to convince the
jury of the merits of his case was discouraged from appealing, knowing that
even if he prevailed on appeal he would have to convince another jury of
the merits of his claim before he could obtain a judgment.
Adequacy of Damages. For the negligence system to bring about an
efficient level of accidents and safety the damage awards must be equal to
the costs of accidents resulting from negligent conduct. Were they? Only a
rough answer is possible from the available data. The average award disclosed
in cases in the sample where an employee lost a limb or suffered an injury
of equivalent severity is $10,138.64Railroad workers, the commonestaccident

63 Excluding 14 jury verdicts for plaintiffs that were set aside by the trial judge and
11 jury verdicts for defendants set aside by the trial judge.
64 See Table 7, supra. This is after any reduction of the award by either trial or ap-

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 A THEORYOF NEGLIGENCE 93

victims in the sample, earned on average a little more than $11 weekly during
the last half of our period where the cases are concentrated;65 allowing for
some time sick or laid off, this is equal to $500 per year. Most injured workers
were apparently young. Child labor was common and the young worker, like
the young driver today, is apt to lack prudence and experience and hence to
have more accidents. The average age in the 43 cases in the sample where the
age of the injured employee is given is in fact only 25. Assume that at the
time of the accident the average injured employee had a working-life expec-
tancy of 30 years. The present value of an income of $500 per year for 30
years, figured at 4Y2 per cent interest, is $8100. An award of $10,138 would
thus compensate the injured employee for lost earnings and for the cost of
medical treatment (which was very low by modern standards), with some
money left over for pain and suffering.Although the residue allocable to pain
and sufferingseems small, it must be rememberedthat the disabled employee,
in losing a limb and receiving compensation for lost future earnings, gained
a surcease from long, hard, and dangerouslabor.
There are two omissions. Awards for damages in most jurisdictionsincluded
interest only from the date of the judgment entered at the conclusion of trial.
The exclusion of interest from the date of accident may be justifiable as a
method of spurring the plaintiff to prosecute his claim promptly, while the
memories of witnesses are fresh, but the omitted interest represents a real
cost of the accident. However, since the average elapsed time from accident
to appellate decision is only 40 months, some of that consumed of course
by the appellate proceedingswhich follow the trial judgment, the lost interest
would not be a very large amount in most cases. And most cases are never
tried at all.
The other omitted item is the plaintiff's litigation expenses. These are
real costs of the accident but it is doubtful whether their exclusion from
the award of damages has serious economic consequences. The impor-
tant point, viewing the negligence system as a system for bringing about
an efficient quantum of safety and accidents, is that the total costs of the
accidents in which the defendant is negligent be made costs to the defen-
dant. Those costs include not only the injury to the victim but the expenses
of both plaintiff and defendant in processing the claim. However, while the
defendant avoids having to pay an element of those costs-the plaintiff's
litigation expenses-neither can he recoup his expenses in defending against
unmeritorious claims. The total cost to him, therefore, is not necessarily

pellate court, and excludes cases where the court concluded that the damages had been
incorrectly assessed.
65 Historical Statistics of the United States, supra note 41, at 91.

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94 THE JOURNAL OF LEGAL STUDIES

smaller than under a system where the winning party recovers his litigation
expenses from the losing.
The average award in employee death cases, $4920, is smaller than the
price of the annuity. But in reckoning the cost to survivors, the amount
that the victim was accustomed to retain for his personal expenses must be
subtracted from his earnings.
It might be argued that the awards reported in appellate cases are likely
to exceed those in equally meritorious cases that are not appealed or that
are settled without any litigation. It is not obvious why this should be
so. The cost of an appeal is small relative to the total expenses of litigation,
so it is doubtful that nontrivial cases would be abandoned because of the
expense of appealing from an adverse judgment at trial. Nor does it ap-
pear that the cost of trying a serious accident case could have been pro-
hibitive during our period. Nonetheless there is some evidence from which
it might be inferred that our appellate sample exaggerates the size of awards.
The average award in the 45 bodily-injury (including death) cases in the
trial-courtsample in which the amount of the awardis disclosed is only $1939,
considerably less than that for the cases in the appellate sample from the
North Central region.66 And studies of industrial-accident cases, albeit
they relate to a slightly later period (1905-1910), show average awards,
for example, of $958 (death cases, Ohio), $948 (bodily-injury cases ex-
cluding death, settled out of court, Michigan), and $923 (death cases, New
York).67 However, all of these figures are misleading, because they must
include numerous settlements of dubious claims drastically discounted to
reflect the unlikelihood that the plaintiff can prove his case. If we limit
our attention to cases actually decided at trial, the average award in
the bodily-injury cases in our trial-court sample rises to $2731, which is
about 80 per cent of the comparable figure for North Central cases in the
appellate sample. New York statistics indicate that the average recovery in
death cases that went to trial in that state was $5029,68 which is more
than 80 per cent of the correspondingfigure in Table 7.
Outcome on Appeal. Plaintiffs appear to do less well at the appellate
level than they did at the trial level. From Table 14 we see that plaintiffs
in the cases in the sample had won better than 70 per cent of the time
at trial69 but at the appellate level they prevail only a little better than
50 per cent of the time. The disparity may indicate only that accident
66 See Table 7, supra.
67 Ohio Employers' Liability Commission, supra note 16, pt. 3, p. 26; Michigan
Employers' Liability and Workmen's Compensation Commission supra note 43, at 18;
New York State Employers' Liability Commission, supra note 5, at 97.
68 Ibid.
69 The percentage is the same in our trial-court sample.

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 TABLE 14
OUTCOMES

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New England 1875 5 4 6 10 4 2 6 4 10 6

85 10 2 11 6 9 3 5 14 3
95 10 7 10 24 7 3 19 5 19 8
1905 35 2 43 25 28 17 22 4 50 21
Totala 60 15 70 65 48 25 52 13 93 38
Mid-Atlantic 1875 6 9 4 6 3 1 3 7 6
85 29 2 32 21 15 17 12 9 27 26
95 63 2 73 32 43 30 18 14 61 44
1905 94 5 112 45 49 55 26 27 71 82
Totals 192 9 226 102 113 105 53 53 166 158
South 1875 2 4 4 4 3 1 3 5
85 6 1 6 1 2 3 1 1 3 4
95 17 2 24 15 10 15 8 7 18 22
1905 62 11 73 27 47 26 17 9 64 35
Totala 87 14 107 47 59 48 29 18 88 66
North Central 1875 20 2 23 10 12 11 7 3 19 14
85 36 3 40 12 20 20 5 6 25 26
95 67 13 80 38 45 35 25 13 70 48
1905 144 6 147 39 88 60 20 19 108 79
Totala 267 24 290 99 165 126 57 41 222 167
Border 1875 1 1 1
85 2 2 3 4 1 2 3 1 4 3
95 20 4 22 12 11 11 8 4 19 15
1905 20 3 22 15 14 7 8 7 22 14
Totala 42 9 48 31 26 21 19 12 45 33
West 1875 13 1 16 2 7 8 2 9 8
85 23 32 1 18 14 1 19 14
95 85 9 95 25 58 39 17 7 75 46
1905 141 16 155 39 90 64 22 18 112 82
Totala 262 26 298 67 173 125 42 25 215 150
FederalCourts 1895 22 30 8 25 5 5 2 30 7
1905 13 1 24 14 17 7 8 6 25 13
Totala 35 1 54 22 42 12 13 8 55 20
Grand totala 945 98 1093 433 626 462 265 170 884 632
Totalb--1875 46 7 59 30 29 29 19 11 48 40
106 10 124 45 65 59 27 17 92 76
Totalb--1885 272 183
262 37 304 146 184 133 95 50
Totalb--1895 417 313
Totalb-1905 496 43 552 190 316 229 111 84

Source: Judicial reports.

a Or average.
b Or average. Federal cases excluded.

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96 THE JOURNAL OF LEGAL STUDIES

defendants as a class are more selective in deciding which cases to con-

test at the appellate level. Most accident defendants in our period were
enterprises with recurrent accident litigation. They had, accordingly, an
interest in the development of doctrine that transcended the individual
case and they could afford to bide their time for a better case-a strategy
that for a plaintiff unlikely to have a second accident case in his lifetime
would make no sense.
An interesting result in Table 14 is the consistent preponderance,in vir-
tually all regions and periods, of affirmances over reversals. One might
expect the number of affirmances and reversals to tend toward equality,
on the ground that the only time a case is likely to be appealed rather than
settled is when the parties estimate the probabilities of a favorable decision
differently or have different attitudes toward risk and that in a reasonably
large sample, with appellants drawn from the ranks of both plaintiffs and
defendants (and note further that the percentage of affirmancesis roughly
the same whether plaintiff or defendant won below), such factors are likely
to be distributed randomly. Is it that appellants either are consistently
overoptimistic or consistently prefer to gamble on further litigation? There
is a simpler explanation. It is not obvious that once the major costs of litiga-
tion have been incurred in trying a case, an appeal is a more costly method
of final resolution than settlement negotiations. It may sometimes be less
costly. If so that would explain why a lawyer who has lost in the trial court
may prefer pressing an appeal that he is unlikely to win to hammering out
with opposing counsel a settlement appropriately discounted to reflect the
unlikelihoodof an appeal's succeeding.

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