Sherlin v. Liberty Mut. Ins. Co.

• Decision Date: 23 July 1979
• Citation: 584 S.W.2d 455
• Parties: Johnny E. SHERLIN, Appellant, v. LIBERTY MUTUAL INSURANCE COMPANY, Appellee. 584 S.W.2d 455
• Court: Tennessee Supreme Court

Page 455

584 S.W.2d 455

Johnny E. SHERLIN, Appellant, v. LIBERTY MUTUAL INSURANCE COMPANY, Appellee.

584 S.W.2d 455

Supreme Court of Tennessee.

July 23, 1979.

Richard H. Winningham, Chattanooga, for appellant.

Phillip A. Fleissner, Chattanooga (Chambliss, Bahner, Crutchfield, Gaston & Irvine, Chattanooga, of counsel), for appellee.

OPINION

BROCK, Chief Justice.

This is a workmen's compensation case in which the plaintiff employee sued the insuror of his employer to recover benefits for an alleged injury arising out of and in the course of his employment resulting in disability to his hand. After the complaint was filed in court, the attorneys for the parties reached an agreement in writing to settle the plaintiff's claims for workmen's compensation in a lump sum, subject to approval of the Chancellor. However, after this written agreement was entered into but before its submission to the court for approval, the employee died from a gunshot wound unrelated to his employment. At this point the defendant insuror filed a petition before the Chancellor praying that the court determine the following question, to wit:

"Under the terms of the settlement agreement calling for a lump sum settlement, does the defendant remain liable for the full amount of the lump sum settlement including that portion of the settlement that had not accrued upon the workman's death, or should the settlement be modified in view of the workman's death to pay the estate only those portions that had accrued at the date of death?"

All the facts pertinent to this issue were stipulated by the parties and the matter was submitted to the Chancellor upon the stipulation, pleadings and briefs. The learned Chancellor concluded that the lump sum settlement agreement never became binding on any of the parties because it was not approved by the court prior to the death of the employee.

We have concluded that the Chancellor has correctly decided the controversy and, accordingly, we adopt the opinion of the Chancellor as the opinion of this Court with respect to the issues discussed and decided in that opinion.

CHANCELLOR'S OPINION

"The undisputed facts are as follows:

"1. On or about July 11, 1978, plaintiff was an employee of Abilities, Inc., and received an injury in the course and scope of his employment to his right hand. There is no question with respect to notice.

"2. Abilities, Inc. has its workmen's compensation coverage with defendant, Liberty Mutual Insurance Company.

"3. Defendant paid and plaintiff received 7 weeks of temporary total benefits for a sum total of $513.31. (The compensation rate based upon plaintiff's earnings was $73.33).

"4. In due time, defendant's adjuster and plaintiff's attorney reached an agreement to compromise and settle this claim on a lump sum basis, subject to court approval.

"5. The defendant and the plaintiff settled this claim for (a) the medical benefits relating to the treatment of the hand, (b) 24 weeks of temporary total disability benefits and (c) 135 weeks of permanent partial disability based upon an agreed rating of ninety (90%) percent to the hand.

"6. It was contemplated that the defendant's attorneys would draw up the papers to seek Court approval of the foregoing settlement. The defendant's attorneys did draw up a Final Decree for presentation to the court, and the check was ordered from the Home Office and was received in the lump sum uncommuted amount of Nine Thousand Eight Hundred Ninety-Nine and 55/100 dollars ($9,899.55), which sum represents $10,412.86 less $513.31 previously paid as temporary total benefits. The check was to be held by the defendant's attorneys while the arrangements were made to present this settlement to the court for court approval.

"7. The parties were to appear before the court on December 28, 1978 to see about getting the settlement approved.

"8. On or about December 23, 1978, plaintiff, Johnny E. Sherlin, met his death by a non-industrial accident and when he was shot to death during an encounter with an armed assailant.

"Candor compelled the admission from the defendant that the above recited agreement was in fact agreed to between the parties, but, by virtue of these extraordinary circumstances, defendant questions whether or not this claim survives plaintiff's death and whether defendant now remains obligated to the agreement and if so, to what extent.

"Plaintiff maintains that the parties entered into a binding contract and that the defendant should be compelled to comply with its terms by paying the sum of $9,899.55 to the personal representative of the deceased's estate. Plaintiff insists that court approval as provided in T.C.A. 50-1006 was not necessary to finalize or validate the agreement between the parties and that the agreement was binding on both parties even though court approval had not been sought or obtained.

"The pertinent part of T.C.A. 50-1006 is in the following words and phrases:

" 'The interested parties shall have the right to settle all matters of compensation between themselves, But all settlements, before the same are binding on either party, shall be reduced to writing and shall be approved by the judge of the circuit court or of the chancery court or criminal court of the county where the claim for compensation is entitled to be made. It shall be the duty of the judge of the circuit court or of the chancery court or criminal court to whom any proposed settlement shall be presented for approval under this law, to examine the same to determine whether the employee is receiving, substantially, the benefits provided by the Workmen's Compensation Law. To this end he may call and examine witnesses. Upon such settlement being approved, judgment shall be rendered thereon by the court and duly entered by the clerk . . . .' (emphasis supplied).

" From all of which the court concludes that the agreement between the parties was not 'binding on either party' since the proposed agreement was not approved by the court during the life time of the plaintiff. In other words, the court respectfully rejects plaintiff's binding...