Brannon v. Pacific Employers Ins. Co.

• Decision Date: 23 November 1949
• Docket Number: No. A-2316.,A-2316.
• Citation: 224 S.W.2d 466
• Parties: BRANNON v. PACIFIC EMPLOYERS INS. CO.
• Court: Texas Supreme Court

224 S.W.2d 466

BRANNON v. PACIFIC EMPLOYERS INS. CO.

No. A-2316.

Supreme Court of Texas.

November 23, 1949.

Peter P. Cheswick, Houston, for petitioner.

Bryan & Kolius, Houston, Chilton Bryan, Houston, S. G. Kolius, Houston, for respondent.

GRIFFIN, Justice.

Petitioner, plaintiff below, filed this suit in the 113th District Court of Harris County, Texas, against respondent, defendant below, to cancel and set aside an alleged compromise agreed settlement between the parties for injuries sustained by petitioner in the course of his employment with Richard R. Olmsted Company. Respondent was the insurance carrier for Olmsted under the Workmen's Compensation Laws of Texas. Vernon's Ann.Civ.St. art. 8306 et seq.

Petitioner alleged an injury to "his back and all over his body, brought about indirect inguinal hernia, and other injuries to his body general in scope, which such injuries disabled him to such extent that he is now unable to earn money as before the injury thus entitling him to maximum compensation under the laws of State of Texas." Petitioner further alleged that as result of fraud or misrepresentations practiced on him by respondent and its agent he was induced to sign and deliver a compromise settlement release for all his injuries for the sum of $115 cash and $100 later to be paid by respondent, and other appropriate pleadings seeking to have said release set aside. Petitioner prays "* * * that upon final trial he have judgment setting aside the compromise agreement signed November 17, 1947, with defendant herein, and which had been approved by the Industrial Accident Board of Texas, and for such other and further relief that he may be entitled to in law and equity, general or special, as he will ever pray."

Respondent answered with a plea to the jurisdiction of the district court to hear and determine the cause, and contended that the suit could only be brought in the county court. Respondent also pleaded other defenses, but, since the trial court sustained its plea to the jurisdiction and dismissed the cause, such other pleadings are immaterial on this appeal. From the trial court's order sustaining the plea and dismissing the cause, petitioner duly appealed to the Court of Civil Appeals at Galveston, Texas, where such judgment was affirmed, 221 S.W.2d 554. The cause has regularly reached this court for its decision. Both parties agree there is only one point for decision, viz.:

Does the District Court have jurisdiction to hear this suit to set aside the compromise agreement, consideration for which agreement was only $215?

"This article (Art. 8306, Sec. 12d, Vernon's Annotated Civil Statutes) does not relate to the question of setting aside compromise settlement agreements or orders approving same. The only powers therein conferred upon the board are to review awards of compensation previously made and to change or revoke previous orders denying compensation. The board's approval of a compromise agreement is not an award of compensation. Lumbermen's Reciprocal Association v. Day, Tex.Com. App., 17 S.W.2d 1043. Neither is it an order denying compensation. In short, the board has no authority to set aside a compromise settlement agreement or its order approving same. Were the parties to such an agreement left to look alone to the Workmen's Compensation Law, there would be no way to avoid its binding effect. The power of the courts to set aside such an agreement for fraud is not derived from the Workmen's Compensation Law, but exists by virtue of the Constitution and general statutes defining their jurisdiction. Whenever a party to such contract claims to have been induced to execute same through fraud of the other party, the court is the forum and the only forum to which he may resort." Commercial Cas. Ins. Co. v. Hilton, 126 Tex. 497, 87 S.W.2d 1081, 1082, 89 S.W.2d 1116; (Italics ours); Traders & General Ins. Co. v. Bailey, 127 Tex. 322, 94 S.W.2d 134; Wood v. Traders & General Ins. Co., Tex.Civ.App., 82 S.W. 2d 421, writ ref.; Lumbermen's Reciprocal Ass'n v. Henderson, Tex.Com.App., 15 S.W. 2d 565; Gibson v. Employers Liability Assurance Corp., Tex.Civ.App., 131 S.W.2d 327, writ ref.

In the trial of a suit to set aside a compromise agreement in a Workmen's Compensation case, the trial court has no jurisdiction to pass upon a claim for compensation or to render judgment for such compensation. Texas Employers Ins. Ass'n v. Kennedy, 135 Tex. 486, 143 S.W.2d 583 (6, 7); Commercial Casualty Ins. Co. v. Hilton, 126 Tex. 497, 87 S.W.2d 1081 (4, 5), 89 S.W.2d 1116; Traders & General Ins. Co. v. Bailey, 127 Tex. 322, 94 S.W.2d 134; 45 Tex.Jur. Sec. 246, p. 711.

In a suit to set aside a compromise settlement on the grounds of fraud, the rules of common law applicable to suits for rescission and cancellation are applicable; Texas Employers Ins. Ass'n v. Kennedy, 135 Tex. 486, 143 S.W.2d 583; Traders & General Ins. Co. v. Bailey, 127 Tex. 322, 94 S.W.2d 134; Wood v. Traders & General Ins. Co., Tex.Civ.App., 82 S.W.2d 421, writ ref; Gibson v. Employers' Liability Assurance Corp., Tex.Civ.App., 131 S.W.2d 327, writ ref.

In order for a plaintiff to have the release cancelled he must show, among other things, the false representations and that they were made by the defendant or his duly authorized agents; that plaintiff relied upon such representations; that he has been injured, that is, that he has a meritorious claim for compensation, and he must make a tender or show that his injury is greater than the amount paid or other facts which excuse a return of the amount plaintiff received when he executed the release sought to be set aside.

The pleading of the facts with regard to plaintiff's right to compensation are incidental to the relief sought by the cancellation and go to show the injury suffered by the plaintiff by virtue of the execution of the release. If plaintiff should show only that he would be entitled to receive as compensation on a trial of his cause for compensation a smaller amount, or the same amount, as that already paid him, of course, he could not have the release cancelled. To so cancel the release would be a vain and useless thing which the courts would not do.

This brings us down to the question as to what is put in issue by the suit to cancel the release. Article 8306, section 10, Vernon's Ann.Civ.St., as amended in 1947, fixed a maximum compensation for total and permanent disability of $10,025. The amount that the petitioner asserts that the respondent owes him is the difference between the total amount he says he is entitled to, $10,025, and the amount he has already been paid, $215, which difference is $9,810. This is the amount that the petitioner is trying to recover from the respondent, and this is the claim that the respondent is denying. The sum of $215 which was paid as the consideration for the release is in no sense the amount in controversy between the parties. The petitioner is not claiming that he is entitled to this sum; he obviously could not do so because it has already been paid to him. On the other hand, the respondent is not denying that the petitioner properly received this sum under their agreement; what respondent contests is petitioner's claim to an additional sum.

It is a fundamental rule that in determining the jurisdiction of the trial court, the allegations of the petition made in good faith are determinative of the cause of action. Booth v. Texas Employers' Ass'n, 132 Tex. 237, 123 S.W.2d 322; Standefer v. Aultman & Taylor Machinery Co., 34 Tex.Civ.App. 160, 78 S.W. 552; Lubbock Oil Refining Co. v. Bourn, Tex.Civ.App., 96 S.W.2d 569, loc. cit. 571(3); Johnson v. Universal Life & Accident Ins. Co., Tex. Com.App., 127 Tex. 435, 94 S.W.2d 1145, loc. cit. 1146, middle 2d col.; Berkman v. Levy, Tex.Civ.App., 129 S.W.2d 397, dism. cor. judgm., loc. cit. 399, 1st col. top; Cleckler v. American Motor Finance Co., Tex. Civ.App., 24 S.W.2d 514, writ ref.; Abilene & So. Ry. v. Bagwell, Tex.Civ.App., 70 S.W. 2d 480, writ dism.; 11 Tex.Jur. sec. 26, p. 739, sec. 27, p. 741; 21 C.J.S., Courts, § 33, p. 42.

The difficulty in the present case seems to arise out of the unusual character of the suit. Since the compromise agreement has been approved by the Industrial Accident Board, it has been held that the claimant must first file a suit in court to set aside the agreement, that in such a suit the court cannot grant judgment for the claimant for compensation but can only grant him the relief of cancellation, that the claimant must then go back to the Industrial Accident Board and there prosecute his claim, and that if either party is then dissatisfied with the Board's award, an appeal can be taken to the court. Lumbermen's Reciprocal Ass'n v. Henderson, Tex.Com.App., 15 S. W.2d 565; Commercial Casualty Ins. Co. v. Hilton, 126 Tex. 497, 87 S.W.2d 1081, 89 S.W.2d 1116. As the court said in the latter case, "the effect of such holding may be to require a case to be tried by piecemeal, but it must be tried that way or not at all." See 126 Tex. at page 502, ...