Scheel v. Superior Mfg. Co.

• Decision Date: 09 April 1958
• Docket Number: No. 49361,49361
• Parties: Clarence J. SCHEEL, Appellee, v. SUPERIOR MANUFACTURING CO. and Bituminous Casualty Corp., Appellants.
• Court: Iowa Supreme Court

Page 377

89 N.W.2d 377

249 Iowa 873

Clarence J. SCHEEL, Appellee, v. SUPERIOR MANUFACTURING CO. and Bituminous Casualty Corp., Appellants.

No. 49361.

Supreme Court of Iowa.

April 9, 1958.

Kopf & Christiansen, Davenport, for appellants.

McDonald & McCracken, Davenport, for appellee.

GARFIELD, Justice.

The question presented is whether an application for commutation of workmen's compensation payments filed with the industrial commissioner, together with his approval thereof and order for lump sum payment, should be set aside as fraudulently procured by the employer's compensation insurance carrier. Following trial the district court granted such relief.

The facts are virtually undisputed. March 24, 1955, plaintiff Clarence J. Scheel sustained a personal injury arising out of and in the course of his employment by defendant Superior Mfg. Co. Two fingers on his left hand were partially amputated. He was laid up and paid workmen's compensation by Superior's compensation insurance carrier, defendant Bituminous Casualty Corp., until April 18 when he returned to work. However his hand was still bandaged and there was infection in it. This condition continued until the papers herein sought to be set aside were signed and filed with he industrial commissioner and for some time thereafter.

April 25 (1955), an adjuster for the casualty company, without request from plaintiff and apparently without prior discussion or arrangement, presented to plaintiff a prepared application for commutation of payments and asked him to sign it. The adjuster said the papers were for having his fingers off. Plaintiff hesitated to do as requested and asked the adjuster, Mr. Ruefer, 'What if something else sets in?' to which Ruefer replied 'Oh we'll take care of that.' The purpose stated in the application in support thereof was 'to pay bills.' Plaintiff insists he did not need a lump sum settlement to pay bills and said nothing to the adjuster to warrant the written statement to that effect.

Aside from plaintiff and Ruefer there were three witnesses to the transaction just referred to. Mr. Belser testifies that before plaintiff signed the application he asked, 'If I have any trouble with my fingers what'll happen?' to which Ruefer replied 'It'll be taken care of.' Witness Myers says plaintiff held up his hand and asked, 'What if something comes on? You know I've got infection in them,' and Ruefer replied 'I'll take care of it. This is just for your compensation check.' Also that plaintiff said nothing about having some bills to pay.

The third witness to the transaction aside from plaintiff and Ruefer was Mr. Wolfe, president of defendant manufacturing company. He testifies he thinks Mr. Ruefer asked plaintiff to sign the papers so he could bring him a check for loss of his fingers, plaintiff said to Ruefer, 'My fingers still have infection in them,' Ruefer replied that this settlement was merely for loss of the fingers, if anything came out of the infection in the fingers the casualty company would take care of the medical expenses, plaintiff said nothing about needing the money in a lump sum to pay bills, before plaintiff signed the papers he asked the witness if he should do so and Wolfe replied 'I don't know.'

Mr. Ruefer, defendants' only witness, says he asked plaintiff to read and sign the papers, plaintiff held up his bandaged hand and said, 'I still have some infection in these two fingers and I'll have to go to a doctor for it,' the witness told him to go to the doctor for the infection in his fingers and 'we'd take care of it,' plaintiff then signed the papers. On cross-examination Mr. Ruefer admitted he supposed there's the probability infection in any part of the body may spread to any other part, the commutation agreement says nothing about the medical expense but tells about paying plaintiff 50 per cent loss of the fingers, he did not tell plaintiff the commutation agreement was a full and final disposition of his compensation claim, 'I explained to plaintiff he was being paid for the 50 per cent loss of two fingers and that's what the $718.73 was for. Further I explained nothing.'

The fair inference is the casualty company sent the industrial commissioner the application for commutation, containing a form for his approval and order for lump sum settlement, together with acceptance of service, waiver of presentation to the district court and consent that the commissioner may pass upon it, all signed by both defendants. See section 85.46, Code 1954, I.C.A.

The deputy industrial commissioner who approved the application on April 29 testifies he then had no information plaintiff still had an active infection in his fingers and if he had known this he could not legally approve the application, also that if he had reason to believe plaintiff did not need the money to pay bills he would have made further inquiry before signing the approval. Evidently this testimony is largely based upon the witness' interpretation of Code section 85.45, I.C.A., hereafter referred to.

May 3 the casualty company issued to plaintiff its check for $718.73 which, with the few weekly benefits previously paid (about $800 in all), he admits is the correct compensation on a lump sum basis for 50 per cent loss of use of the two fingers. Plaintiff cashed the check and has never offered to restore any part of the proceeds.

In the meantime, on May 1, plaintiff was taken to a Davenport hospital for three weeks for terrific headaches and the infection in his fingers. Before that he stayed home from his work three or four days for the same reason. From the Davenport hospital plaintiff was taken to a hospital in Iowa City for two weeks for the same difficulty. After he returned to his home he was again in the Davenport hospital a total of nine days because of the same trouble.

When the casualty company was called upon to pay the medical expense incurred for the treatment just referred to it disclaimed responsibility therefor and refused to pay any additional amount evidently on the ground the application for commutation, when approved by the deputy commissioner and lump sum payment ordered, released it from all liability. This action was brought August 8, 1956.

I. Section 85.45, Code 1954, I.C.A., previously mentioned, provides:

'Commutation. Future payments of compensation may be commuted to a present worth lump sum payment on the following conditions:

1. When the period during which compensation is payable can be definitely determined.

'2. When the written approval of such commutation by the industrial commissioner has been filed in the proceedings to commute.

'3. When it shall be shown to the satisfaction of the court or a judge thereof that such commutation will be for the best interest of the person or persons entitled to the compensation, or that periodical payments as compared with a lump sum payment will entail undue expense, hardship, or inconvenience upon the employer liable therefor.'

Section 85.46 states that a petition for commutation may be made to the district court or judge and shall have indorsed thereon the approval of the commissioner. Notice of the petition shall be served upon the opposite party in the manner required for original notices. The court or judge shall hear and determine the matter as a proceeding in equity and render such decree, granting or denying the commutation, as equity will warrant on the facts presented. The parties may waive presenting the petition to the court and, if this is done, governed by the law applicable to the court, the commissioner may order the commutation, with the same force and effect as if done by the court. This is the procedure followed here.

Section 85.47 provides that when commutation is ordered, upon payment of the required amount, 'the employer shall be discharged from all further liability on account of such injury or death, and be entitled to a duly executed release, upon filing which the liability of such employer * * * shall be discharged of record.'

It should be kept in mind the approval of the commissioner is a necessary condition to any valid petition or order for commutation. (The petition here was designated 'application.') See in this connection Code section 85.18, I.C.A. Other such conditions are that 'the period during which compensation is payable can be definitely determined' and, as applied to the facts here, a showing to the satisfaction of the court or judge, or of the commissioner where court approval is waived, that the commutation will be for the best interest of the person entitled to compensation. There has been no suggestion here that periodic payments as compared with a lump sum payment would 'entail undue expense, hardship, or inconvenience upon the employer.'

The deputy commissioner who approved this commutation testifies no one could definitely determine the period during which compensation is payable where, as here, there was an active infection in the injured hand. Evidently the commissioner's interpretation of 84.45 is that the law does not permit approval of a commutation where the injured part of the body is still actively infected. This interpretation, although not binding upon us, is entitled to our respectful consideration. See in this connection Lever Brothers Co. v. Erbe, 249 Iowa ----, 87 N.W.2d 469, 479-480. We think it is a reasonable construction of the statute and concur in it.

It may be well to observe that section 86.34, providing for review of an award or agreement for settlement and, if 'the commissioner finds the condition of the employee warrants such action, he may end, diminish, or increase the compensation,' applies, according to its terms, only 'where the amount has not been commuted.' This section is the one under which the injured employee proceeded in Bousfield v. Sisters of Mercy, 249 Iowa ----, 86 N.W.2d 109; Rose v. John Deer Ottumwa Works, 247 Iowa 900, 76 N.W.2d 756; Stice v. Consolidated Indiana Coal Co., ...