Court Opinion

ID: 7068590
Source: CourtListenerOpinion
Date Created: 2022-07-24 07:29:34.984315+00
Date Added: 2024-06-11T16:12:30.823156
License: Public Domain

Caldwell, J.
Under the provisions of §57 of the Workmen’s Compensation Act (Acts 1915 p. 392, §80201 et seq. Burns’ Supp. 1918), as amended (Acts 1917 p. 227, §4), there was filed with the Industrial Board, November 7, 1917, a memorandum of compensation agreement, bearing date of October 27, 1917, executed by appellee Shiveley Brothers, a corporation, as employer, and by appellee Ever M. Shiveley, as surviving dependent, wife of Orestes E. Shiveley, a deceased employe of such corporation. The memorandum recited the necessary facts to entitle Ever M. Shiveley to an award of a definite amount of compensation under the act and in harmony with the recited facts, and fixed such compensation, including an allowance for burial expenses and doctor bills, in the gross sum of $4,070, to be paid in such installments as should thereafter be determined by the Industrial Board under the provisions of the act. The memorandum provided also that pending its consideration by the board, due notice should be given appellant as insurance carrier. November 10, 1917, the board by one of its members indorsed its approval on the memorandum.
December 5, 1917, appellant filed with the board its verified petition, naming appellees as defendants thereto, and praying thereby that the approval of the compensation agreement be set aside, and the cause heard on its merits. The petition alleged facts to the *624following effect: That appellant under the terms of its contract of insurance, and as insurance carrier, was directly liable for any claim that might be awarded on account of the death of Orestes E. Shiveley as an employe of Shiveley Brothers; that Orestes E. Shiveley was not such an employe as is contemplated or embraced by the compensatory provisions of the act; that his death was not the result of a personal injury by accident arising out of and in the course of the employment; and that such compensatory agreement and its approval were the fruits of collusion and fraud on the part of appellees. The petition alleged also that appellees collusively and fraudulently prepared, executed, and filed the memorandum, and caused it to be approved without appellant’s knowledge or consent. The petition contained no allegation respecting when appellant discovered that such a memorandum had been prepared, executed, filed or approved, and no reason was assigned by the petition' or otherwise, why appellant did not more promptly move to annul such approval. Appellee, Ever M. Shiveley, answered the petition denying the fraud and averring facts at length to meet and overcome its allegations.
The board heard the evidence, bearing not only on the quéstion whether the approval of the memorandum agreement should be set aside, but also respecting the merits of the claim, and made a finding of facts in part to the following effect:
The corporate stock of Shiveley Brothers corporation was owned in equal parts by Orestes E.- Shiveley, his brother Cortland W. Shiveley, and O. C. Wainscott. The stockholders constituted the board of directors, of which Cortland was president. The corporation operated the principal hotel at Peru.
On and prior to July 24, 1917, the routing of the proposed Range Line Dixie Highway from Indianapolis to *625South Bend, was in contemplation. This highway was to be built in part at the expense of the federal government, and in part at the expense of the local municipalities and political sub-divisions. A number of cities of north central Indiana were somewhat agitated respecting the route of the highway, each being desirous that the road extend through its confines. Among these cities was Peru. A meeting was to be held at Indianapolis July 24, 1917, to consider and determine the route of the highway. As a result of a consultation between Orestes and the president of the hotel corporation, it was arranged that the former should attend this meeting, together with certain other citizens of Peru, that he might use his influence to procure the location of the highway through that city, it being believed that should the highway extend through the city, the business of the hotel operated by the company would thereby be materially increased. Thereupon on the morning of July 24, 1917, a party of thirty-five citizens of Peru started for Indianapolis in automobiles for purposes aforesaid. Included in the number was Orestes E. Shiveley, driving his own machine and carrying three others of the party as his guests. While proceeding on the trip, a front wheel of his machine broke down, and as a consequence it overturned, whereby Orestes E. Shiveley suffered severe injuries resulting in his death in a few hours. His principal object in making the trip was to attend the meeting for purposes aforesaid. However, theretofore as manager of the hotel he had cashed several checks for patrons residing in Indianapolis, which checks had been dishonored on being presented for payment. He had these checks with him and intended as a secondary or incidental purpose of the trip to endeavor to collect them.
August 31, 1916, appellant issued to Shiveley Broth*626ers the compensation insurance policy involved in this action, effective from that date and in force at the time of the death of Orestes E. Shiveley. The estimated annual premium on the policy was $33.43 based on a pay roll estimated as amounting to $8,200, with a provision that at the end of each year appellant should audit the pay roll to determine its actual amount, and that thereupon, the insured should pay an additional premium, or that the insurer should return a part of the premium that had been paid, proportional in each case, depending on whether the audit disclosed that the pay roll was more or less than as estimated. September 17, 1917, appellant audited the pay roll for the year ending September 1, 1917, which audit disclosed that for such year it amounted to $6,607 more than as estimated, and therefore collected from the insured an additional premium of $20.78 for that year, paid and received November 24, 1917. In determining such excess of the pay roll over the estimate, the said average weekly wage of Orestes E. Shiveley from September 1, 1916, to the time of his death, July 24, 1917, appearing thereon, was counted as a part thereof.
September 18, 1917, Ever M. Shiveley was informed by Cortland W. Shiveley that she was probably entitled to establish a compensatory claim against Shiveley Brothers, based on the death of her husband, and that appellant as insurance carrier was primarily liable for its payment. On the same day at Cortland’s suggestion, she executed to Robert J. Loveland, a lawyer, a power of attorney authorizing him to represent and act for her in the matter of such claim. On the same day by her attorney-in-fact, she notified appellant through its local representative, of the facts respecting her husband’s death and of her claim to compensation under the Workmen’s Compensation Act. Thereupon appellant, representing that it was investigating to determine *627the question of compensation liability, requested that action in the matter be deferred for two weeks, which request was granted. An additional delay of two weeks was procured by appellant on the representation that it was considering suggesting that the question of compensatory liability be submitted to the board on an agreed statement of the facts. Yet another delay was procured on the representation by appellant’s representative, that appellant had not fully arrived at a conclusion respecting, submitting controverted matter as above indicated.
October 27, 1917, the memorandum of compensation agreement was executed as above stated, appellant not being a party to it. November 6, 1917, claimant by attorney-in-fact mailed to appellant’s representative a copy of the memorandum together with an explanatory letter reciting that claimant at appellant’s request had delayed action for three successive periods, all of which had expired, and that the memorandum was then being forwarded to the board together with a request for favorable action thereon. The memorandum was filed with the Industrial Board on the morning of November 7, 1917. At about the same hour appellant by its Indianapolis representative received through the mail, the copy of the memorandum together with the explanatory letter forwarded by claimant’s attorney-in-fact the day before. Appellant’s Indianapolis office is situated very near the offices of the Industrial Board. Appellant’s representative on receiving such copy of the memorandum with the accompanying letter promptly communicated with the secretary of the board by phone, and informed him that appellant was opposed to the approval of the memorandum, whereupon the secretary informed such representative that the matter was pending before Mr. Hughes, a member of the board, and that objections should be presented to him. No objections *628to the approval of the memorandum having been presented, the board by Mr. Hughes approved it November 10, as above stated.
The matter of the approval of the compensation agreement was not formally set for hearing, or a time fixed for action thereon, and no notice of any kind was given appellant that, at any fixed time, action would be taken on the question of the approval of the agreement.
Soon after such agreement was approved, appellant by representative informed the board that it was objecting to such approval on the ground that Orestes E. Shiveley at the time of his death was not an employe of Shiveley Brothers, and that his death was not due to an accident arising out of and in the course'of his employment. As we have said, the petition to vacate the order of approval was filed December 5, 1917. At the time of the approval of the agreement, the board entered no order fixing the installments in which compensation should be paid.
It is at least impliedly conceded that the finding is in harmony with the evidence. On the votes of Mr. Hughes and Mr. Perkins, Mr. Artman, the third member dissenting, the board denied the petition. Mr. Hughes grounded his vote on his judgment that under the finding, decedent at the time of his injury and death, was an employe of Shiveley Brothers, and that his injury and death were due to an accident arising out of and in the course of his employment. Mr. Perkins was of the opinion that decedent was an employe of Shiveley' Brothers, but he differed from Mr. Hughes on the proposition of decedent’s death being due to an accident arising out of the employment. He based his vote on his judgment that under the Workmen’s Compensation Act an employer and his employe, or the dependents of the latter, have an absolute right to enter into a compensation agreement without regard to the desires of the *629insurance carrier, and that the latter is bound by any such agreement so made. Mr. Artman was of the opinion that decedent under the finding was an employe of Shiveley Brothers at the time of his injury and death, but that his death was not due to an accident arising out of his employment. He differed from Mr. Perkins respecting the binding effect of a compensation agreement entered into by an employer and an employe or dependents of the latter, in its relation to the insurance carrier of the former. Mr. Artman was of the opinion that an insurance carrier is entitled to be heard on that question. Each member of the board rendered a written opinion disclosing the above facts.
From the finding and the opinions of the respective members of the board, it seems that a consideration of the substantial phases of the claim was rather more potent in the determination of the petition, than an inquiry whether such illegality or irregularity attended the execution, filing and approval of the agreement as required that such approval be annulled on application if seasonably made, and the cause assigned to be heard on its merits.
The shape in which the record comes to us requires that we consider three questions: First, the rights of an insurance carrier in such a situation; second, the petition to set aside the agreement; third, the merits of the claim.
1. The statute upon which the agreement was based is to the effect that an employer and an injured employe, or dependents of the latter in case of his death, may agree respecting compensation to be paid under the act, and that any such agreement becomes binding and enforceable when a memorandum thereof in an indicated form, and harmonizing with the act, is filed with, and approved by, the board. (§4, Acts *6301917 p. 227, amending §57, Acts 1915 p. 392, supra.)
An agreement entered into by the parties and approved by the board, pursuant to the terms of the statute, has the force and effect of an award. In re Stone (1917), 66 Ind. App. 38, 117 N. E. 669.
Subject to certain exceptions, every employer operating under the act is required to keep insured his liability thereunder, in some association authorized to transact the business of workmen’s compensation insurance in this state, §68 (Acts 1915 p. 392, supra).
The insurer is in all things bound by and subject to the awards, judgments or decrees rendered against the insured. ' §73 (Acts 1915 p. 392, supra). The policy of insurance must be construed as the direct promise of the insurer to pay to the person entitled to compensation, all benefits awarded under the act. §74 (Acts 1915 p. 392, supra). All policies of insurance issued under the act must contain a provision that as between the employer and the insurer, notice to or knowledge of the former that a workman has been injured, shall be deemed notice to or knowledge of the- latter. §73, Acts 1915 p. 392, supra. In case of an injury to a workman it is the duty of him or his representative, subject to certain exceptions, to notify the employer of the occurrence, in writing, §22, Acts 1915 p. 392, supra.
2. Section 57 (Acts 1915 p. 392, supra) neither in its original nor in its amended form, requires that the insurance carrier be a party to an agreement authorized by that section. Neither that section nor any other provision of the act demands that notice of such an agreement or of its approval be served on the insurance carrier. It follows that an agreement executed and approved under that section, or under that section as amended, is binding as between the insurer and the injured party or his dependents, as long-as it *631stands unrevoked, even though such insurer had no actual notice of its execution or approval. If the insurance carrier desires to be notified of the successive steps in the adjustment of a claim, in the absence of a rule of the board on that subject, it must look to the insured to perform that service. We find no provision of the act that prohibits the insurance carrier from exacting from the insured an obligation respecting notice, binding and enforceable as between them. Section 74, supra, seems to contemplate such a notice.
From what we have said, it follows that under the act an insurance carrier is not a necessary party to such an agreement as is involved here or to a proceeding looking to its approval by the board. Indeed, the act does not contemplate the insurance carrier as a necessary party to any proceeding before the board involving a claim to compensation. By this statement we mean to say that an injured workman or his representative may file such a claim, and push it until it terminates in an award, and in so doing ignore the insurance carrier without hazarding defeat or embarrassment through an objection that there is a defect of parties.
. But as we have said, the act provides that the policy of insurance contain a stipulation in effect, that the insurer shall be bound by all awards rendered against the insured, and a further stipulation which must be construed as the direct promise of the insurer to the person entitled thereto, that it will pay all installments of compensation that may be awarded, or agreed on under the act. §§73 and 74, supra.
Under such circumstances it is our judgment that in all proceedings before the board, the insurance carrier is a proper party, where its interests are likely to be affected by reason of its obligation under its policy. Moreover, in view of its primary and direct liability as above indicated, it seems to us apparent that where an *632insurance carrier, for sufficient cause shown, seasonably petitions to be admitted as a party to any such proceeding, the plainest principles of justice demand that it be admitted and heard.
3. It results from what we have said that the mere fact that an insurance carrier is not a party to the execution of such an agreement as is involved here, or to a proceeding directed to its approval, does not invalidate it even as against such insurance carrier. It does not follow, however, that an employer and an injured employe, or dependents of the latter in case of his death, may, over the opposition of the insurance carrier, bind the latter by such an agreement, regardless of the good faith of the parties or the merits of the involved claim. Where such an agreement is the result of mistake or is tinctured with fraud or characterized by gross irregularity affecting substantial rights, or has no meritorious foundation in fact, or the like, we do not regard it as binding on the insurance carrier, either before or after its approval, as against a proper proceeding seasonably made to right the consequent wrong.
4. It has been intimated by this court In re Stone, supra, and we now hold that in any proceeding pending before the board involving either the determination or the administration of a claim, the board has the power on the application of any interested party, including an insurance carrier, to vacate its own order on application seasonably and diligently made, where it appears that any such order is the result of fraud, duress, mistake, gross irregularity, affecting substantial rights and the like. See the following: Wilcox v. Clarage Foundry, etc., Co. (1917), 199 Mich. 79, 165 N. W. 925; Carpenter v. Detroit Forging Co. (1916), 191 Mich. 45, 157 N. W. 374,
*6335. *632In so holding we recognize that the Industrial Board *633is a body created primarily to administer the Workmen’s Compensation Act, and that incidentally only, it exercises quasi-judicial powers. In re Stone, supra; Borgnis v. Falk Co. (1911), 147 Wis. 327, 37 L. R. A. (N. S.) 489.
6. The board possesses only powers expressly granted, together with those arising from implication because necessary to the full exercise of the granted powers. In re Levangie (1917), 228 Mass. 213, 117 N. E. 200.
7. 8. Directing our attention more particularly to the petition and its disposition, it will be observed that the finding is silent respecting the issue of fraud. The burden of that issue rested on appellant. There being no finding on that issue and the facts found, not being sufficient by any means to force an inference of fraud, we are required to consider the case on the assumption of the absence of fraud on the part of appellees, in their relation to the agreement and its approval. Raynes v. Staats-Raynes Co. (1918), 68 Ind. App. 37, 119 N. E. 809.
9. There is a finding that the matter of the approval of the agreement was not formally set for a hearing at any definite time, and that no notice was served on appellant that action would be taken on such agreement at any fixed time. We regard these findings as unimportant in the absence of a rule of the board that such a proceeding must be definitely assigned, and notice served on the insurance carrier. In the absence of a finding to the contrary, we must conclude that no such rule exists. For purposes of carrying out the provisions of the act, the board is authorized to make rules not inconsistent with it, §55, Acts 1915 p. 392, supra.
*63410. *633The board is not expressly authorized to vacate an order approving such an agreement as is involved here. *634It is expressly authorized to approve such an agreement fairly made, and conforming to the act. It necessarily follows that as an incidental power the board is authorized to determine whether such an agreement was fairly made and whether it does conform to the act. But when the board’s approval has been procured by fraud or is the result of mistake or the like, and where as a consequence the agreement and its approval have no just foundation upon which to • stand, it seems to us apparent that in any pending proceeding the board as an incidental power has a right to determine such fact, and if found to exist, annul the order approving the agreement. Here the proceeding based on the agreement and its approval was pending before the board, not only for general administrative purposes, but also as indicated by the fact that the board, had not entered an order fixing the installments in which compensation should be paidv
2. 11. *63512. *634We have indicated that under the act, a compensation agreement properly executed by the employer and the employe or dependents of the latter in case of his death, is binding on the insurance carrier, although not a party to it or to the proceeding resulting in its approval. That is to say, the mere fact that the insurance carrier is not a party does not invalidate the agreement or its approval. We have indicated also, however, that the insurance carrier is entitled to be admitted as a party to the proceeding, looking to the ápproval of such an agreement, and also that he-may under some circumstances move to vacate such an order. There should, however, be some finality in the action of the board. Where an insurance carrier has had reasonable opportunity to be heard on the proposition of the approval of such an agreement, but has failed to avail himself thereof, his motion to vacate such order should not be entertained *635unless he clearly excuses the failure. Where he has not had reasonable opportunity to be heard, and has not been heard, or in case of causes subsequently discovered, he should acquit himself of negligence, move with reasonable promptness, or excuse the delay. In any such case, it occurs to us, that where he claims that the action of the board is the result of error, or has been induced by improper conduct, he should not unreasonably delay action, and in all such cases we believe that he should be required to make at least an ex parte prima facie case on the merits, in order that he may procure the vacating of such an order.
It will be observed that the deductions of the members of the board from the facts found, entirely ignore the question whether appellant’s diligence was such, in view of its knowledge, as entitled it to be heard respecting the annulling of the order. The negative vote of one member of the board was controlled entirely by his judgment that decedent’s dependents were entitled to compensation. The negative vote of another member was grounded solely on his judgment, which we hold to be erroneous; that the employer and employe or dependents of the latter, have an unqualified right to enter into a compensation agreement, and that the insurance carrier may -not challenge the result of their action. This member’s judgment was that the facts did not establish a right to compensation. The third member’s dissenting vote was controlled by his belief that under the facts the right to compensation did not exist, and that an insurance carrier is not bound, at all events, by such an agreement as is involved here.
Such being the situation, we are impressed that through inadvertence this proceeding did not receive that careful consideration that usually characterizes action by the board. Under circumstances such as are presented here,-an application to set aside an approval *636of such an agreement should be considered and determined independent of the merits of the main cause. However, in any such proceeding where the applicant acquits itself of negligence and sufficiently excuses delay, an inquiry into the merits is proper to the extent necessary to determine whether there is enough of doubt respecting the validity of the claim to compensation to justify full investigation. If there is no question respecting the right to compensation or its amount, it would be folly to set aside the approval of an agreement even though delay was excusable and diligence shown.
13. The application here presented a question primarily for the determination of the board. To some extent it was an appeal to the board’s discretionary power. It appears affirmatively that the board in denying the application, did not in fact consider it. It also appears affirmatively that had it not been for the erroneous views of a member of the board on a legal proposition, the application would not have been denied. We are unable to determine what would have been the fate of the application had it been considered from the proper view point. If we were able to say as matter of law that the application should have been denied, then we would have a case where we could say that a proper result was reached, and affirm the action of the board notwithstanding the apparent irregularities. We cannot say as matter of law, however, that a proper result was reached. The application presented a question of fact, and such questions are primarily for the board.
If from the facts found, we were able to hold as matter of law that decedent was such an employe, and the circumstances of his injury and death were such as to entitle his widow to compensation, then also it would appear that a proper result had been reached by the *637board though by a procedure somewhat irregular, and it would be our duty to affirm. But we cannot hold as matter of law that under such facts the claimant is entitled to compensation. The enterprise in which de,cedent was engaged at the time of his injury was, at best, but remotely- connected with the enterprise in which he was employed. The one was a trip to attend a public meeting; the other was the management of a hotel. It was believed that the location of the highway as desired would result in financial benefit to the hotel enterprise, but it does not appear whether such fact, rather than his general interest in the city of Peru, was the inducing cause of decedent’s endeavor to attend the meeting. At any event, it is our judgment that the question of the right to compensation here involves questions of fact which should be determined by the board.
The cause is reversed with instructions to the board to consider first, the question whether under this opinion, appellant is entitled to have annulled the order approving the agreement. Should the board be required to consider the cause on its merits, we suggest the following for the consideration of the board: At the time of decedent’s injury and death was he on a mission authorized by the company ? Did he and the proper representatives of the company believe that such mission might reasonably be expected to result in financial benefit to the latter? That is, did it hold out reasonable prospects that thereby the company’s business might be increased? Did the fact of such prospective benefits induce the trip? As bearing on these suggestions, attention is directed to In re Raynes (1917), 66 Ind. App. 321, 118 N. E. 387, and Raynes v. Staats-Raynes Co., supra.
Dausman, C. J., Batman, P. J., Ibach and Hottel, J.J., concur.
Felt, J., dissents.