#### CRAIG v. COMPRESSED INDUSTRIAL GASES, Inc., et al.

No. 6354.

Court of Appeal of Louisiana. Second Circuit.

June 18, 1941.

On Rehearing March 8, 1942.

Writ of Certiorari and Review Denied March 30, 1942.

L. Y. Barnette and Isaac Abramson, both of Shreveport, for appellant.

Irion & Switzer, of Shreveport, for ap-pellee.

DREW, Judge.

Plaintiff was in the employ of the Compressed Industrial Gases, Incorporated, as a welder on and before June 14, 1937. He was receiving as wages $63 per week. On the above date, while performing the duties for which he was employed and in the course and scope of his employment, an accident happened and plaintiff’s leg was broken just above the ankle. Both bones were broken and it was described as a comminuted fracture. The fact that he was injured in the course and scope of his employment and that he was entitled to the maximum weekly compensation al*198lowed by law is not disputed by his employer.

Plaintiff was taken to the sanitarium where he remained for fifty-seven days and was then removed to a private residence in order to save expenses, but was at all times under the treatment of a physician designated by his employer. Plaintiff’s leg was placed in a cast which was not removed from the leg until September 29, 1937. From that date on plaintiff could not get around at all without the use of crutches.

On October 4, 1937, at the request of the attorneys and agents of his employer and its insurer, the doctor in charge gave to them a report on plaintiff’s condition. This report was as follows:

> “Mr. Val Irion,

> “Giddens-Lane Building,

> “Shreveport, Louisiana.

> “In re: H. F. Craig v. Compressed Industrial Gases

> “The cast on the injured leg on the above mentioned was removed on September 29, 1937 and an x-ray examination made of the injured ankle. X-ray report is as follows : ‘A fair amount of callous formation in the old comminuted fractures in the lower 3d of the bibia and fibula. A’ spicule of bone from the posterior lateral aspects of the inferior tibical fragment that is rotated slightly posterior and displaced laterally and upward about 1/2 inch in either direction. A marked atrophy of the distal fragment and bones of the foot, probably due to non-use.’ There is a fairly good amount of callous formation of this fracture and the fragments appear, under the flouroscope, to be firmly stuck together.

> “Daily massage and heat treatments in the office will now be instituted in order to hasten the return of function to this joint. There will probably be considerable permanent disability as a result of this fracture, however, at this time I cannot make any estimate as to what his disability will be.

> “Yours very truly,

> “W. P. Addison, Jr., M. D.”

On November 4, 1937, a joint petition of plaintiff, his employer and the compensation insurer was presented to the district judge of the Twenty-sixth Judicial Court of Louisiana in which it is set out that the employer and the insurer contend that plaintiffs injury has healed, while plaintiff contends that his leg is permanently injured. It further set forth that plaintiff had been paid compensation at the rate of $20 per week for 20 weeks, or $400, and that the insurer had expended $104.50 on plaintiff for medical attention and that, after considering their respective claims, balancing the chances of loss against the hope of gain in the event of litigation between them, they had agreed to settle their differences for an additional $104.50 to make a total medical bill of $250 and $1,394.20, making a total payment of $1,339.70 which, with the previous payments of $400 and $104.50 for this account, would make a total of $2,044.20. The petition prayed that the court approve the proposed settlement. On the same date the district judge signed a judgment approving the settlement after seeing and discussing same with plaintiff. At the time of this settlement, plaintiff was still on crutches and it is now admitted that he was at that time totally incapacitated from performing any labor and the attorney who represented the employer and insurer testified that it was not his intention to convey by the allegations that the injury had healed, that the leg was well or that plaintiff was able to perform labor at that time.

Instead of plaintiff’s leg getting better, it grew progressively worse and on February 1, 1938, the leg was amputated about four inches above the ankle. It continued to give much trouble and in April following, it was again necessary to amputate the leg, this time about four inches below the knee and finally on November 3, 1938, a third amputation was necessary, this time above the knee. At the time of the trial of this case below, plaintiff was totally incapacited from following his trade and it is not now seriously contested that he is totally and permanently disabled from following his trade as a welder.

On October 27, 1939, plaintiff filed this suit alleging that the compromise settlement was brought about through fraud practiced upon him by the agents and representatives of his employer and its insurer. He prayed that the judgment approving the compromise settlement be annulled and set aside and that he be awarded compensation for one and one-half times the maximum compensation allowed by law, *199less the amount previously paid by defendants, and that the judgment be for a lump sum.

The lower court rejected plaintiff’s demands and sustained the judgment of compromise. Plaintiff is now prosecuting this appeal.

At the time the compromise settlement was made plaintiff had the same information as to his condition as did the defendants. The doctor who had attended him from the beginning .had informed all of them that plaintiff was totally disabled at that time and that he would be unable to tell the degree of permanency of his disability until at least after one year’s time had elapsed from October 4, 1937. He was unwilling to hazard a guess as to whether the disability was totally permanent or not although he did say he was sure there would be some degree of permanency of disability.

It is clear to us, therefore, that plaintiff’s condition was not concealed from him by the defendants and that no fraud in this respect was practiced upon him. It is likewise clear to us under the above facts that there was not and could not have been any dispute between the parties as to plaintiff’s condition at the time of the compromise settlement or as to the permanency of the disability. If there was it could not have been a true, bona fide dispute for there was nothing on which to base the difference of opinion.

 Subsection 9 of Section 8 of Act 242 of 1928, page 362, provides for settlement of compensation claims, where there is no dispute, by a lump-sum settlement, provided the amount due is not discounted more than eight per cent and the settlement is approved by the court. The settlement in this case is null and void under this Section since the discount was far in excess of eight per cent. This is the only Section of the Act under which the claim could have been settled since there was no legal bona fide dispute.

The settlement is also null and void under Section 17 of Act 20 of 1914, as amended by Act No. 38 of 1918, under the authority of the last decision of the Supreme Court of Louisiana, viz., Otto Puchner v. Employers Liability Assurance Corporation, 198 La. 921, 5 So.2d 288, 294, decided on May 26, 1941. In that case the Court said: “Compromises are not provided for in any of the various

provisions of the act and there is no room for them with respect to the mandatory provisions of the act, consequently they should not be sanctioned except where the letter or spirit of the law justifies them. For an example, where there is a serious and bona fide dispute as to the employer’s liability under the act.”

It also said: “The only possible matter which could have been uncertain was the duration of plaintiff’s disability, and in our opinion it would be in direct violation of the letter and spirit of the act to sanction speculation with respect to the duration of an employee’s disability, for the primary object of the act ‘was to provide. an employee, whose wages were discontinued as a result of an injury sustained while serving his master, with funds to subsist on until he could return to work. * * * ’ Barr v. Davis Bros. Lumber Company, 183 La. 1013, 165 So. 185.”

 That decision makes it clear that the only compromise settlement that could be legally made under Section 17 of the Act is where there is a legal and bona fide dispute as to whether any compensation is or was ever due under the Act and that a settlement by compromise, based on a dispute as to the duration of disability, is a nullity. It also makes it clear that fraud or error are no longer necessary allegations which must be proved to set aside a settlement under Section 17 of the Act.

Although this decision in effect overrules scores of decisions of the appellate courts of this State; as well as decisions of the Supreme Court, it is the last expression from the highest Court of the State and we are of the opinion it correctly sets forth the spirit and purpose of Act 20 of 1914, as amended.

Plaintiff is therefore entitled to have the .judgment of compromise and settlement set aside and is now entitled to recover at the rate of one and one-half times the rate fixed in the Act, which will be $30 a week for 400 weeks, and is entitled to receive this amount in a lump sum, less the amount already paid him in said settlement. Subsection 9 of Section 8, Act 242 of 1928; Puchner v. Employers’ Liability Assurance Corporation, supra.

It therefore follows that the judgment of the lower court is reversed and there is now judgment for plaintiff annulling and setting aside the judgment of compromise *200and settlement rendered by the Twenty-sixth Judicial District Court on November 4, 1937, on the joint petition of plaintiff and defendant.

It is further ordered, adjudged and decreed that plaintiff have and recover judgment against the defendants, Compressed Industrial Gases, Inc., and the Indemnity Insurance Company of North America, in solido, in the sum of $12,000, with 5% per annum interest thereon from judicial demand until paid, less a credit of $1,794.20 heretofore paid plaintiff by defendants. This credit is the amount paid less the $250 medical and doctor’s bills. Costs of both courts to be paid by defendants.

TALIAFERRO and HAMITER, JJ., concur.

On Rehearing.

TALIAFERRO, Judge.

In our original opinion and judgment we annulled the pui-ported act of compromise between the plaintiff and the defendants, his employer and the employer’s insurer, for the reason, obvious from a study of the record, that there was in reality no serious dispute concerning the character and duration of plaintiff’s disability which at the time was total and is now conceded to be total and permanent. We said therein:

> “At the time the compromise settlement was made plaintiff had the same information as to his condition as did the defendants. The doctor who had attended him from the beginning had informed all of them that plaintiff was totally disabled at that time and that he would be unable to tell the degree of permanency of his disability until at least after one year’s time had elapsed from October 4, 1937. He was unwilling to hazard a guess as to whether the disability was totally permanent or not although he did say he was sure there would be some degree of permanency of disability-

> “It is clear to us, therefore, that plaintiff’s condition was not concealed from him by the defendants and that no fraud in this wise clear to us under the above facts that respect was practiced upon him. It is like-there was not and could not have been any dispute between the parties as to plaintiff’s condition at the time of the compromise settlement or as to the permanency of the disability. If there was it could not have been a true, bona fide dispute for there was nothing on which to base the difference of opinion.”

We further held that the settlement with plaintiff under the guise of compromise was in flagrant violation of Subsection 9 of Section 8 of Act 242 of 1928, amending the Workmen’s Compensation Law, in that the amount he was entitled to receive as compensation, when the nature and duration of his injuries are properly considered, was discounted largely in excess of eight per cent per annum. These findings of fact and conclusions of law impelled us to give judgment for the full amount to which plaintiff was entitled, plus the penalty of fifty per cent authorized by the act, less amounts paid him.

The opinion of the Supreme Court in the case of Otto Puchner v. Employers Liability Assurance Corporation at the time our opinion was rendered, had not become final. It is now. 198 La. 921, 5 So.2d 288, 294, 300. We referred to that case in our opinion and stated that under the court’s holdings therein, the act of compromise in the case at bar was clearly subject to annullment for additional reason. We quote the following positive announcement by the court in the Puch-ner case to support what we said, to-wit: “Compromises are not provided for in any of the various provisions of the act and there is no room for them with respect to the mandatory provisions of the act, consequently they should not be sanctioned except where the letter or spirit of the law justifies them. For an example, where there is a serious and bona fide dispute as to the employer’s liability under the act.”

In the Puchner case the joint petition asking the court’s approval of the terms of the compromise, on its face, disclosed a dispute as to whether Puchner was able to resume work at the time the compromise was effected. He contended that he was not, and that he believed ‘he would remain permanently partially disabled and for that reason was entitled to compensation accordingly. On the other hand, the employer and its insurer claimed that plaintiff’s condition had progressively improved and that according to the final report of the attending physician he was able to resume work, and, therefore, not entitled to further payments of compensation. The Supreme 'Court found that these allegations were untrue. It then said: “A review of the entire transcript unmistakably shows, as was found by the trial judge, that the attending physician informed the plaintiff, as he did the defendant insur-*201anee company, of his improvement and the belief that he would be able to return to work within a reasonable time, and that the, plaintiff himself at that time believed he would shortly recover. The only possible matter which could have been uncertain was the duration of plaintiff’s disability, and in our opinion it would be in direct violation of the letter and spirit of the act to sanetion speculation with respect to the duration of an employee’s disability, for the primary object of the act ‘was to provide an employee, whose wages were discontinued as a result of an injury sustained while serving his master, with funds to subsist on until' he could return to work. * * * ’ Barr v. Davis Bros. Lumber Co., 183 La. 1013, 165 So. 185, 188.”

The court agreed with the trial judge in the finding that the attending physician who made the report, the insurer in settling with plaintiff on the basis of temporary disability, the attorney who prepared the joint petition, and the judge who approved the compromise, committed an error of fact as all thought the plaintiff was only temporarily disabled. The proof showed that he was permanently and totally disabled and had been so since injured. Notwithstanding the error was one of fact, the court annulled the compromise agreement.

Rehearing in the present case was granted in order to have the benefit of the Supreme Court’s final judgment in the Puch-ner case; especially did we wish to have that court’s final expression anent the demand for the infliction of the penalty, thinking it would perhaps aid us in a just and equitable solution of the same question now before us.

On rehearing, the Supreme Court amended its former judgment by disallowing the penalty, notwithstanding, as held by it, the mandatory character of the provisions of the act concerning the same. The court justified its action in this respect in the following language, to-wit [198 La. 921, 5 So. 2d 296] : “We are not unaware of the mandatory provision of the statute with respect to the penalty and were it not for the circumstances in this case we would be compelled to invoke it. The parties attempted to make the compromise believing they were complying with the Compensation Act. It is not disputed that they were acting in good faith. The defendant herein was relying upon certain expressions contained in the cases of Musick v. Central Carbon Com pany, supra [166 La. 355, 117 So. 277]; Young v. Glynn, supra [171 La. 371, 131 So. 51], and various decisions of the Courts of Appeal to the effect that compromises of the nature involved herein were authorized. There is no question that the defendant was of the impression that Section 17 of the Act authorized the compromise and that it was in no way connected with the provisions of the Act authorizing lump sum settlements. Owing to the fact that there are certain expressions in Musick v. Central Carbon Company, supra; Young v. Glynn, supra, and decisions of the Courts of Appeal that would lead the deferidant to this belief it would seem harsh to impose a penalty under such circumstances. We have, therefore, concluded to amend our decree so as to eliminate the penalty on account of the defendant being misled by the confusion caused by the various decisions aforementioned.”

We think the court’s action on rehearing in the Puchner case in disallowing the penalty, not controlling of the issue in the case at bar. The two cases differ at least in one material and controlling respect, to-wit:

In the Puchner case there was bona fide error of fact concerning the duration and the extent of disability, which issue, under existing jurisprudence, could be foreclosed by compromise; whereas, in the present case there was in reality no dispute as to the extent and duration of disability, nothing to base such upon, and, therefore, no error of fact nor of law contributed to the confection of the compromise. In view of these established facts, we are unable to perceive what influence the former jurisprudence of the Supi-eme Court and the courts of appeal of this state could have had upon the parties in arriving at the terms of compromise. Without any exception, so far as our research reveals, acts of compromise upheld by the Supreme 'Court and courts of appeal have had as their primary basis a serious dispute of some sort between the parties thereto, cases involving fraud, etc., excepted.

Defendants urge their good faith in connection with the compromise. Our original opinion exonerated them and their agents from the charge of fraud and imposition; but good faith will not always save from annullment a settlement consummated in violation of Subsection 9 of Section 8 of the Workmen’s Compensation Law. It did influence the Supreme Court in the Puchner *202case when finally considering the demand for the infliction of the penalty, but for the reasons above assigned, should not have the same influence in this case.

For the reasons herein assigned, our former opinion, judgment and decree are now reinstated and made the final action of this court in this case.