Whitters & Sons, Inc. v. Karr

• Decision Date: 13 October 1970
• Docket Number: No. 54043,54043
• Parties: WHITTERS & SONS, INC. and Home Insurance Company, Appellant, v. David KARR, Appellee.
• Court: Iowa Supreme Court

Page 444

180 N.W.2d 444

WHITTERS & SONS, INC. and Home Insurance Company, Appellant, v. David KARR, Appellee.

No. 54043.

Supreme Court of Iowa.

Oct. 13, 1970.

Jones, Hoffman & Davison, Des Moines, for appellant.

Robert W. Matias and Robert F. Wilson, Cedar Rapids, for appellee.

BECKER, Justice.

Whitters & Sons, Inc., as employer and Home Insurance Company as Workmen's Compensation Insurance Carrier started this action in the district court to have a memorandum of agreement with employee-defendant expunged from the Iowa industrial commissioner's record. As grounds for such action they assert constructive fraud, unjust enrichment and mutual mistake of law and fact. The trial court held there was no fraud or mutual mistake such as would justify such action and dismissed the petition. We affirm.

There is no factual dispute. Defendant was employed by Whitters & Sons, Inc., as a sodlayer and foreman. On November 25, 1967 defendant was delivering sod from Fairfax to a job site in Coralville, Iowa. He and his fellow worker noticed two boat cushions lying on the edge of the highway. They decided they would pick them up if they were still there on their return trip. When they came back along the same route defendant stopped the truck and was struck by a passing motorist as he went to get one of the cushions. His injuries were serious. He was taken to a hospital. He states it was a couple of days before he knew what was going on.

Mr. Whitters, his employer, immediately went to the scene of the accident, had his truck taken care of and reported the incident to his insurance agent. The agent was told how the accident happened, including the fact defendant was struck while trying to pick up some boat cushions along the highway. This latter factor was omitted by the agent when he forwarded the report to Home Insurance Company.

The insurance carrier promptly filed employer's work injury report which showed a probable disability of six months. On December 27, 1967 the Industrial Commission sent a form post card to Home Insurance Company reminding them that no memorandum of agreement had been filed. On January 31, 1968, Home Insurance Company filed a memorandum of agreement, mailed its first check to defendant and continued payments until March 7, 1968. Defendant accepted and cashed the checks.

On March 15, 1968 a bill was received from University Hospital in the sum of $3600. Home Insurance Company then investigated more thoroughly, discovered defendant was injured while attempting to salvage boat cushions that someone had lost along the highway and stopped payments to defendant. The carrier also cancelled its draft to the hospital. Subsequently it started this action.

I. The Workmen's Compensation Law provides two ways for claimants to proceed to secure compensation; i.e., by the employer or insurance carrier filing a memorandum of agreement, section 86.13, Iowa Code, 1966, or by either party filing petition for arbitration. ¹ Otis v. Parrott (1943) 233 Iowa 1039, 1044, 8 N.W.2d 708, 712; Powell v. Bestwall Gypsum Co., (1963) 255 Iowa 937, 940, 124 N.W.2d 448, 449.

Filing of the memorandum of agreement is the usual and ordinary method used to make a claim and to give the industrial commissioner power to act. It is not surprising that the effect of the agreement, once filed, has been the subject of considerable litigation. The decisions have evolved some well-established principles.

First, the agreement shall be approved by said commissioner only when the terms conform to the provisions of chapters 85 and 87. Section 86.13, Iowa Code, 1966. Thus, if the agreement evidenced by the memorandum does not comply with the Workmen's Compensation Law it will be corrected so that it does comply. Forbes v. Ottumwa Sand Co., (1933) 216 Iowa 292, 249 N.W. 399; Cf. Comingore v. Shenandoah Art. Ice Co., (1929) 208 Oowa 430, 440, 226 N.W. 124, 129.

But these corrections have had to do with the degree of disability and the amount to be paid therefor. At an early date we said the filing of the memorandum settled two propositions which would not be subject to reopening; i.e., (1) the employer-employee relationship and (2) the injury as one arising out of and in the course of employment. In Tebbs v. Denmark L. & T. Corp., (1941) 230 Iowa 1173, 1176, 300 N.W. 328, 329, we said: '* * * With respect to the memorandum of agreement, the Commissioner stated:

"The department has heretofore, for many years last past, interpreted the memorandum of agreement as settling two propositions, the employment contractual relation and the injury as one arising out of and in the course of the employment, leaving the question with reference to extent of disability open for adjustment in accordance with the facts as the facts may be, providing that application therefor is made within the period of the statute of limitations as provided by section 1457. (Now section 86.34)." The commissioner's position was approved in Tebbs and again in Dietz v. Pioneer Hi-Bred Co., (1941) 231 Iowa 220, 226, 1 N.W.2d 235.

The commissioner's policy is sustained by our cases whether the memorandum is treated as the agreement itself or simply as notice that an agreement has been consummated. The memorandum, treated as a written agreement, does not require the signature of both parties. The parties have acted on the agreement by offer of payment of compensation and acceptance thereof, plus the filing of the memorandum. 'Where a written agreement signed by one party is accepted and adopted by the other, and acted upon, it becomes their contract in the same sense as though both parties had signed. (Cases cited).' McDermott v. Mahoney, (1908) 139 Iowa 292, 298, 115 N.W. 32, 35; Reynolds v. Johnson, (1925) 199 Iowa 1055, 202 N.W. 881; Cf. I Corbin on Contracts, § 31, p. 114.

If the second approach is accepted; i.e., the memorandum is not the contract but merely notification that a contract has been entered into by the parties, the result is the same. The employer or carrier, by paying the compensation checks, and the employee, by accepting payment, have evidenced an agreement by their actions that the Iowa Workmen's Compensation Law applies and to be bound thereby. The memorandum is the statutory notice to the commissioner, who must approve for the agreement to be binding under section 86.13.

A careful reading of the statute indicates the memorandum is not the agreement itself but notice an agreement has been reached: 'If * * * (they) reach an agreement * * * A memorandum thereof shall be filed * * *.' (Emphasis supplied). Section 86.13. Only a memorandum that the agreement has been made is required. This court has held that it will not give effect to oral agreement to toll the statute of limitations unless it has been acknowledged by a statutory memorandum. Rankin v. National Carbide Co., (1962) 254 Iowa 611, 118 N.W.2d 570. In so holding we considered the...