Gayheart v. Newnam Foundry Co., Inc.

• Decision Date: 27 August 1979
• Docket Number: No. 879S231,879S231
• Citation: 393 N.E.2d 163,271 Ind. 422
• Parties: Taylor GAYHEART, Appellant, v. NEWNAM FOUNDRY COMPANY, INC., Jon McCreery, American Mutual Liability Insurance Company, Appellees.
• Court: Indiana Supreme Court

Page 163

393 N.E.2d 163

271 Ind. 422

Taylor GAYHEART, Appellant, v. NEWNAM FOUNDRY COMPANY, INC., Jon McCreery, American Mutual

Liability Insurance Company, Appellees.

No. 879S231.

Supreme Court of Indiana.

Aug. 27, 1979.

Edgar A. Grimm, Grimm & Grimm, Auburn, for appellant.

Carl J. Suedhoff, Jr., Hunt, Suedhoff, Borror, Eilbacher & Lee, Thomas M. Moorhead, Shoaff, Keegan, Baird & Simon, Fort Wayne, for appellee Newnam Foundry Co., Inc.

Arthur A. May, Crumpacker, May, Searer, Oberfell & Helling, South Bend, for appellee American Mut. Liability Ins. Co.

Thomas M. Moorhead, Shoaff, Keegan, Baird & Simon, Fort Wayne, Daniel F. Diggins, Emerick & Diggins, Kendallville, for appellee Jon McCreery; Frank L. Nikolay, Nikolay, Jensen & Scott, Colby, Wis., of counsel.

ON PETITION TO TRANSFER

GIVAN, Chief Justice.

The record shows the following facts: On June 28, 1965, appellant Taylor Gayheart, an employee of Newnam Foundry Company, Inc., was injured in an industrial accident. For approximately two and one-half months thereafter, he received temporary total disability benefits under the workmen's compensation act. During this period of time, he was forced to undergo surgery to remedy the injury. He returned to work in September, 1965; however his physical condition began to deteriorate. The personnel manager of Newnam Foundry, Jon McCreery, referred appellant to Robert E. Bryan, M.D., of Kendallville, who in turn directed appellant to a specialist in Fort Wayne, Robert P. Lloyd, M.D. Dr. Lloyd performed surgery on appellant to correct the continuing problems he was experiencing. Following his recovery from this surgery, appellant returned to work and spoke with McCreery about receiving impairment compensation. McCreery informed appellant that he could receive no benefits until he was released by his physician. Dr. Lloyd released appellant from his care in December, 1968. Dr. Bryan then evaluated appellant on behalf of Newnam Foundry and determined that as a result of the initial injury, appellant had sustained a 25% Permanent partial impairment. A copy of this report was mailed to American Mutual Liability Insurance Company, the workmen's compensation carrier for Newnam. In February, 1969, the insurance company disallowed the claim on the basis that the statute of limitations for filing the claim had expired.

On April 24, 1970, appellant filed an application for modification with the Industrial Board requesting review because of a change of conditions. Following the filing of a special answer to the petition by American Mutual on the basis of the statute of limitations, appellant replied that the statute had been tolled because of fraud on the part of Newnam's personnel manager. The Industrial Board held that it was without jurisdiction to award compensation and therefore dismissed the claim.

Rather than appealing the Board's ruling to the Court of Appeals, appellant instituted a civil action for fraud in the trial court. Appellees moved for summary judgment on two grounds: (1) that appellant had failed to exhaust administrative remedies; and (2) that the issue of fraud had been decided against appellant in the Industrial Board proceeding and therefore was Res judicata in the trial court. Following the court's granting of summary judgment for appellees on these grounds, an appeal was prosecuted. The Court of Appeals held the Industrial Board was without jurisdiction to consider the issue of fraud as grounds for tolling the statute of limitations. Thus, the court stated, the doctrine of Res judicata could not operate to bar the trial court from considering the issue of fraud. Finally, notwithstanding its prior holding that the Board in the case at bar had no jurisdiction to determine fraud as tolling the statute of limitations, the Court of Appeals purported to set forth a rule for future application: "Accordingly, we further hold that upon this opinion becoming final the Industrial Board shall have jurisdiction to determine whether an employer is estopped from setting up, as a bar to a claim, the appropriate statute of limitations under the Workmen's Compensation Act because the employer, its agents or the employer's physician fraudulently induced the claimant to forbear filing a timely claim." Gayheart v. Newnam Foundry Co., Inc. (1978) Ind.App., 373 N.E.2d 178, 180. We disagree with the opinion of the Court of Appeals and hereby grant transfer.

The statute of limitations applicable in the case at bar is IC § 22-3-3-27 (Burns 1974):

"The power and jurisdiction of the industrial board over each case shall be continuing and from time to time, it may, upon its own motion or upon the application of either party, on account of a change in conditions, make such modification or change in the award . . ..

"The board shall not make any such modification upon its own motion, nor shall any application therefor be filed by either party after the expiration of two (2) years from the last day for which compensation was paid under the original award . . .."

The Court of Appeals relied on Keser v. U. S. S. Lead Refining, Inc. (1928) 88 Ind.App. 246, 163 N.E. 621, to support its position that the Board was without jurisdiction to consider appellant's claim since the Board had no authority to consider the effect of fraud. It is true that the court in the Keser case held that the Industrial Board, once the two-year statute of limitations for filing claims had expired, was without jurisdiction to consider the possibility of a tolling of the statute of limitations. The Court of Appeals has, however, in other circumstances permitted the Board to consider such fraud. "(T)he Industrial Board has the power in case of fraud, duress, or mistake to vacate its approval of (the) compensation agreement and to entertain an application for that purpose, when made by the employee, employer, or insurance carrier." Frankfort Ins. Co. v. Conduitt (1920) 74 Ind.App. 584, 594, 127 N.E. 212, 216. See also Ritman v. Wass (1955) 125 Ind.App. 348, 125 N.E.2d 33; E. J. Albrecht Co. v. Michaw (1940) 108 Ind.App. 407, 29 N.E.2d 334; Aetna Life Insurance Company v. Shively (1918) 75 Ind.App. 620, 121 N.E. 50.

In the case of Weil Packing Co. v. Cluck (1952) 123 Ind.App. 17, 106 N.E.2d 484, the injured worker filed a petition with the Industrial Board to set aside an award on the ground that it was procured by fraud. The Court of Appeals, quoting from Dearing v. Speedway Realty Co. (1942) 111 Ind.App. 585, 40 N.E.2d 414, properly held that "(w)here fraud is in issue the whole transaction from beginning to end may be scrutinized and circumstances shown as throwing light upon the intention of the party charged." 123 Ind.App. at...