Indemnity Ins. Co. of North America v. Sterling

• Decision Date: 17 June 1932
• Docket Number: No. 2243.,2243.
• Citation: 51 S.W.2d 788
• Parties: INDEMNITY INS. CO. OF NORTH AMERICA v. STERLING.
• Court: Texas Court of Appeals

51 S.W.2d 788

INDEMNITY INS. CO. OF NORTH AMERICA v. STERLING.

No. 2243.

Court of Civil Appeals of Texas. Beaumont.

June 17, 1932.

Rehearing Denied June 22, 1932.

Appeal from District Court, Jefferson County; J. D. Campbell, Judge.

Suit by Dee W. Sterling against the Indemnity Insurance Company of North America. Judgment for plaintiff, and defendant appeals.

Reversed and remanded.

Barnes & Barnes, of Beaumont, for appellant.

Fred A. White, of Port Arthur, for appellee.

WALKER, J.

On September 29, 1929, appellee, Dee W. Sterling, while discharging the duties of his employment with Gulf Refining Company in the city of Port Arthur, Jefferson county, Tex., fell from a scaffold and was injured very seriously in his spine and in other parts of his body. At the time of his injury he was receiving an average weekly wage of about $44. His employer, being within the provisions of our Workmen's Compensation Act, carried its compensation insurance with appellant. Appellant recognized its liability to appellee under its contract of insurance, and on account of his injuries paid him the maximum compensation of $20 per week for a period of twenty-five weeks, and then, on or about the 2d day of April, 1930, paid him a lump sum of $1,500 in a compromise settlement duly approved by the Industrial Accident Board, in full satisfaction of all claims accruing to him by reason of his injuries, received at the time and in the manner just stated. This suit was instituted by appellee in the district court of Jefferson county to set aside the compromise settlement. For grounds of relief he pleaded his injuries, as just stated; that his injuries resulted in his total, permanent incapacity to labor; that at the time he made the compromise settlement he did not know his true physical condition, but that appellant, through its local agent, W. Hilton Berger, did know his true condition but concealed that fact from him; that appellant, through its local agent, represented to appellee that he would recover from his injuries; that he believed these representations and relied upon them in making the settlement; that, as a further inducement for the settlement, appellant, through its said agent, represented to appellee that, if he did not recover, appellant would reopen his case and resume payment of the statutory compensation. It was further alleged that the representations made by appellant's agent to appellee, as an inducement for the settlement, were false when made, and were fraudulently made by appellant for the purpose of inducing him to settle his claim for much less than he was entitled to. It was further alleged that, though appellee's physical condition did not improve, appellant refused to reopen his case and to pay him any additional compensation. The prayer was only that the compromise settlement be set aside and for general relief. Though appellee did not tender into court the money paid him by appellant in the compromise settlement, or any part thereof, he pleaded that it had been expended in the support of his family and in an effort to be cured of his injuries, and further that he was "unable to work and earn a livelihood and is unable to refund to the defendant herein such sums of money paid to him by it for compensation and, therefore, cannot place the parties in status quo, and in lieu thereof, this plaintiff agrees and tenders to the defendant credit for all money paid him by it." The trial was to a jury upon the following special issues, answered as indicated:

"Special Issue No. 1. Do you find that the injury received by the plaintiff Dee W. Sterling resulted in the total incapacity of the said Dee W. Sterling?" Answer: "Yes."

"Special Issue No. 2. Do you find that the injury received by the plaintiff resulted in the permanent incapacity of the plaintiff?" Answer: "Yes."

"Special Issue No. 3. Do you find that at the time of making the compromise settlement involved in this case, that the said Dee W. Sterling knew his own true physical condition?" Answer: "No."

"Special Issue No. 4. Do you find that at the time of making the said compromise settlement, that the said W. Hilton Berger knew the true physical condition of the said Dee W. Sterling?" Answer: "Yes."

"Special Issue No. 5. If you have answered Special Issue No. 4 `yes,' then do you find that the said W. Hilton Berger concealed from the said Dee W. Sterling the knowledge of his, Sterling's, true physical condition?" Answer: "Yes."

"Special Issue No. 6. Do you find that Dee W. Sterling would have made the compromise settlement mentioned if he had known his true physical condition?" Answer: "No."

"Special Issue No. 7. Did the said W. Hilton Berger tell the plaintiff Dee W. Sterling that if he, Sterling, would settle his claim for the sum of $1500, and his physical condition should not improve, or should become worse, that he, said W. Hilton Berger, would reopen his case and resume payment of compensation to said Sterling?" Answer: "Yes."

"Special Issue No. 8. If you answer Special Issue No. 7 `yes', then do you find that said Dee W. Sterling believed such statement to be true?" Answer: "Yes."

"Special Issue No. 9. If you have answered Special Issue No. 7 `yes', then do you find that the said W. Hilton Berger at that time intended to reopen said case and resume payment of compensation in said case, if the said Sterling did not improve, or should become worse?" Answer: "No."

"Special Issue No. 10. If you have answered Special Issue No. 9 `no', then do you find that the said Dee W. Sterling ratified the compromise settlement agreement, after he discovered that said Berger did not intend to re-open the case and resume payment of compensation in case he, Sterling, did not improve or should become worse?" Answer: "No."

"Plaintiff's Specially Requested Issue No. 1. If you have answered Special Issue No. 5 `yes', and only in that event, do you find that the said W. Hilton Berger concealed from the said Dee W. Sterling the knowledge of his, Sterling's, true physical condition for the purpose of obtaining the compromise settlement agreement?" Answer: "Yes."

On the jury's verdict, judgment was rendered in appellee's favor canceling the compromise settlement agreement.

Opinion.

On the undisputed evidence, the jury's findings that W. Hilton Berger knew the true physical condition of appellee and concealed that fact from him, at the time of the settlement, and that appellee did not know his true physical condition and would not have made the compromise settlement if he had known the nature and extent of his injuries, did not constitute actionable fraud. This is so because, on the undisputed evidence, appellee did not deal with W. Hilton Berger on this phase of his case, on a confidential basis. He did not rely upon Berger to furnish him information as to his true physical condition, but employed a doctor for this purpose and a lawyer to advise him of his legal rights, and on their advice made the settlement. The judgment of the court, therefore, has no support in the jury's answers to questions 4 and 5, and plaintiff's specially requested issue No. 1. However, the evidence clearly raised the issues, and was sufficient to support findings to the effect that, as a condition of the settlement, W. Hilton Berger, appellant's duly authorized agent, promised appellee, in the event his physical condition did not improve or should become worse, to reopen his case and resume payment of compensation; that appellee believed that Berger would keep this promise, but that Berger, at the time he made the promise, did not intend to keep it; that, though appellee was represented by an attorney who lived at Houston, W. Hilton Berger conducted this phase of the settlement personally with appellee, and that the compromise settlement, to this extent, was made by appellee and W. Hilton Berger, and was not referred to appellee's attorney for approval; that this phase of the compromise settlement originated with Berger himself and was the principal inducement offered to appellee for the compromise settlement. The jury's verdict in appellee's favor on these issues constituted actionable fraud, sufficient to vitiate the compromise settlement. Appellant does not attack the jury's findings on these issues, but asks relief against the judgment on the following grounds:

After the settlement was made, and at a time when appellee had in his possession about $1,000 of the settlement money, he was fully advised of his true physical condition and of the extent of his incapacity; that is, from a further examination by competent physicians and surgeons he was led to believe that his incapacity was both total and permanent. After acquiring this information, he did not tender back to appellant the $1,000 of the compromise money held by him at that time, nor did he, when this suit was filed, make a tender of the unexpended portion of the compromise money, but used all of his money in the support of his family and in payment of doctor bills and hospital bills, in an effort to get well. He did not spend any of the money for property or in gambling. Appellee testified that about five months after his injuries he learned that Mr. Berger "didn't aim to keep his promise"; until that time he had believed Mr. Berger would keep his promise. After discovering the true nature of his injuries, he talked to Mr. Berger and learned that the compromise agreement was all fraud, that he had been defrauded. Mr. Berger refused to pay him, though he promised to pay him his compensation and doctor bills if he became disabled, but "he refused to do that. I went to him for treatment and they refused me treatment." Appellant pleaded against appellee the issues of ratification, estoppel, and waiver of "all rights to deny the binding effect of the settlement agreement."

The contention was made in the trial court, and renewed here, that the failure of appellee to tender back to appellant the unused portion of the...