Novak v. C. J. Grossenburg and Son

• Decision Date: 28 August 1975
• Docket Number: No. 11521,11521
• Citation: 89 S.D. 308,232 N.W.2d 463
• Parties: Frank NOVAK, Claimant and Appellant, v. C. J. GROSSENBURG AND SON, Employer, et al., Insurers and Respondents.
• Court: South Dakota Supreme Court

Page 463

232 N.W.2d 463

89 S.D. 308

Frank NOVAK, Claimant and Appellant, v. C. J. GROSSENBURG AND SON, Employer, et al., Insurers and Respondents.

No. 11521.

Supreme Court of South Dakota.

Aug. 28, 1975.

Rehearing Denied Sept. 30, 1975.

J. W. Grieves, Winner, for claimant and appellant.

Acie W. Matthews, of Willy, Pruitt, Matthews & Jorgensen, Sioux Falls, for C. J. Grossenburg & Son and Iowa Mut. Ins. Co.

J. B. Shultz, of Woods, Fuller, Shultz & Smith, Sioux Falls, for C. J. Grossenburg & Son and Federated Mut. Implement and Hardware Ins. Co.

J. M. Grossenburg, of Day & Grossenburg, Winner, for C. J. Grossenburg & Son and John Deere Ins. Co.

DUNN, Chief Justice.

The claimant, Frank Novak, filed a proper claim on June 12, 1972, seeking to recover further compensation under the Workmen's Compensation Act for an injury to his back which occurred on January 15, 1969, while in the employ of C. J. Grossenburg and Son's Shop (Grossenburg) of Winner South Dakota. The Commissioner for the South Dakota Department of Labor and Management Relations (Commissioner) denied the claim on the grounds that the injury occurred in January 1969, and on December 11, 1969, the claimant signed a final receipt and release of Grossenburg and also of Federated Mutual Implement and Hardware Insurance Company (Federated), the employer's insurer at that time, which was filed with the Commissioner pursuant to SDCL 62--7--5 and after 20 days became final under that statute. The circuit court affirmed the Commissioner and the claimant has appealed to this court. We reverse.

The claimant began his employment with Grossenburg in 1957 and except for a period of eight months in 1958 when he worked for the State Highway Department he had been employed steadily by Grossenburg up until March 17, 1972, the date of his disability.

On July 29, 1967, claimant injured his back in loading a baler while in the course of his employment. Iowa Mutual Insurance Company (Iowa Mutual), the employer's insurer at that time, paid medical expenses resulting from this injury and the claimant returned to work on September 2, 1967, with no loss of pay.

On January 15, 1969, claimant sustained a further injury to his back while lifting repair parts for a combine. This injury resulted in hospitalization and eventually in surgery when a laminectomy and diskectomy were done on February 6, 1969, by Dr. Jackson. Federated, which had been the employer's insurer since November 1, 1967, paid the medical expenses and compensation under the Act for this injury. On December 11, 1969, claimant signed a full receipt and release of Federated and of Grossenburg, which was duly filed with the Commissioner, for the injuries received from the January 15, 1969 accident.

Meanwhile, claimant returned to work on or about June 1, 1969, with the employer. He experienced great pain which became progressively worse, and the claimant was forced to quit work and seek hospitalization in March of 1972. During this period there was no further injury that could be pinpointed to a particular time and place. Dr. Jackson testified that claimant's condition was a '(p)rogressive phenomenon from the operation three years previously and the degeneration takes place gradually.' At this time Dr. Jackson performed a spinal fusion on claimant's back which resulted in a permanent, partial disability of 20% Of the back and 10% Of the whole man. This present claim is for compensation for loss of time, medical expenses and for this permanent, partial disability.

Iowa Mutual declined payment on the grounds that the statute of limitations had run and for the further reason that it was not the insurer at the time of the most recent injury that bears a causal relation to the disability.

Federated refused to pay on the grounds of the statute of limitations and for the further reason that it held a full release from the claimant for the January 15, 1969 injury which was the most recent injury that bore a causal relation to the disability.

John Deere Insurance Company, employer's present insurer, declined to pay because their coverage did not begin until July 1, 1971.

We have been unable to find where South Dakota has passed on the question of the liability of successive insurance companies in Workmen's Compensation cases. 3 Larson's Workmen's Compensation Law, § 95.00 sets out two rules used in various jurisdictions:

'When a disability develops gradually, or when it comes as the result of a succession of accidents, the insurance carrier covering the risk at the time of the most recent injury or exposure bearing a causal relation to the disability is usually liable for the entire compensation. In some jurisdictions apportionment has been worked out by judicial decision, or provided for by express statute, when events within the coverage periods of successive insurers contribute causally to the final disability.'

The majority rule (Massachusetts-Michigan rule) provides that in successive injury cases full liability is placed upon the insurance carrier covering the risk at the time of the most recent injury that bears a causal relation to the disability. Rock's Case, 1948, 323 Mass. 428, 82 N.E.2d 616, and Brinkert v. Kalamazoo Vegetable Parchment Co., 1941, 297 Mich. 611, 298 N.W. 301.

In view of the difficulties that are inherent in apportionment and the inequity involved in holding a carrier partially liable when it was not on the risk, this majority rule seems to be the most logical and practical method of handling this type of case and we would adopt it in South Dakota.

Assuming for the moment that it was the January 15, 1969 accident that caused all of the successive injuries and present disability of the claimant, Federated would bear full liability under this rule. There was never a clear finding by the Commissioner that the present disability was caused by the 1969 accident, although there is testimony, and especially medical testimony from Dr. Jackson, that the 1969 accident and resulting surgery caused the disability in 1972. The Commissioner did not make a finding either way on this point, presumably because his decision turned on the finality of the December 11, 1969 release.

We now turn to what seems to be the major issue in this case, and that is the validity of the final receipt and release of Federated and of Grossenburg, which was executed by the claimant on December 11, 1969, as it applies to the present disability. Actually, this release, if valid, would bar recovery from any carrier as it extends to the employer Grossenburg and his heirs and assigns.

Even though the Commissioner relied almost entirely on the release in his decision, and made the statement that the validity of the release was for the circuit court to decide, the court did not pass on this question. This may have been because the claimant did not challenge the validity of the release as is indicated by his brief and argument in this court.

The question of whether a later discovered disability for a compensable injury could reopen the claim in spite of a full release given on the basis of known injuries at the time of the signing of the release has not been clearly decided in this state. Does the release cover only the injuries and disabilities discoverable on December 11, 1969, when claimant signed the release, or does it extend to disability which is later discovered that is causally connected to the January 15, 1969 accident?

There is South Dakota authority on both sides of the question of the validity of a release in Workmen's Compensation cases. SDCL 62--3--18 provides as follows:

'Obligation created by title not waived by contract.--No contract or agreement, express or implied, no rule, regulation, or other device, shall in any manner operate to relieve any employer in whole or in part of any obligation created by this title except as herein provided.'

This statute was interpreted in the case of Vodopich v. Trojan Mining Co., 1921, 43 S.D. 540, 180 N.W. 965. There the claimant sprained an ankle while working for his employer. He received compensation under the Act from his employer and subsequently signed a complete release from further claims as a result of such injury. Later, however, complications developed as a result of the sprain and further medical attention was needed. Claimant moved to have the release set aside. This court ruled that the release should be set aside, even though the claimant could show no fraud or misrepresentation in the procurement of the release. The court quoted the above statute from the Code of 1919 and then stated:

'We are of the opinion that it is the plain intent of the Workmen's Compensation law that, while fraud or misrepresentation in obtaining the release would be a ground for setting it aside, yet an injured employee is not required to establish the fact that an agreement for release of further liability was entered into by reason of the fraud or misrepresentation of the employer before he can have the cause reopened. Where such an agreement is signed and approved by the Industrial Commissioner under the provisions of section 9467, Rev.Code 1919, equitable grounds for setting aside the release must be established before the cause can be reopened. Foley v. Detroit United Ry., 190 Mich. 507, 157 N.W. 45. If in this case the employee believed the results of the sprain were ended at the time he signed the release, but it afterwards developed that further pain and suffering were attributable to the sprain, that would justify the reopening of the case. Bradbury, Workmen's Compensation (3d Ed.) pp. 1137--1149.' 43 S.D. at 545--546, 180 N.W. at 966.

In the present case, claimant Novak not only had further pain and suffering, but there is evidence that he suffered from a degeneration of the vertebrae in his back as a result of his accident. This resulted in the 1972 operation which fused his vertebrae and caused at least a partial disability. On the strength of ...