Puchnerv.Employers' Liability Assur. Corp.

Supreme Court of LouisianaDec 1, 1941
198 La. 921 (La. 1941)

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How cited

52 Citing cases

Summaries written by judges

Summaries

  • In Puchner v. Employers' Liability Assurance Corp., 198 La. 921, 5 So.2d 288 (1941), this court did not impose the penalty because of conflicting jurisprudence on the subject.

    Summary of this case from Gauthier v. General Acc. Fire Life

  • In Puchner, the employee and employer were operating under the erroneous belief that the employee's disability was temporary and would resolve within a reasonable time.

    Summary of this case from Trahan v. Coca Cola

No. 36,146.

May 26, 1941. On Rehearing November 3, 1941. Second Rehearing Denied December 1, 1941.

Certiorari and Review to Court of Appeal, Orleans.

Suit by Otto Puchner against the Employers' Liability Assurance Corporation to set aside proceedings and judgment whereby plaintiff compromised his claim for compensation and to recover for total and permanent disability, plus a fifty per cent. penalty. A judgment for defendant was affirmed by the Court of Appeal, 199 So. 799, and the plaintiff applies for writ of certiorari and review.

Judgments of the District Court and the Court of Appeal annulled and judgment awarded for plaintiff.

James G. Schillin, of New Orleans, for applicant.

Frank T. Doyle, of New Orleans, for respondent.

Fred G. Benton, Carlos G. Spaht, and Durrett Hardin, all of Baton Rouge, Leslie P. Beard, of New Orleans, Gist, Thornton Murchison, of Alexandria, Davidson Davidson and C.M. Horton, Jr., all of Lafayette, Pujo, Hardin Porter, of Lake Charles, Gordon Boswell, of New Orleans, Theus, Grisham, Davis Leigh, of Monroe, L.Y. Barnette and Isaac Abramson, both of Shreveport, Frederick J. Gisevius, Jr., and Carroll Montet, both of New Orleans, Cook, Cook Egan, of Shreveport, and L.R. Graham, of New Orleans, amici curiae.



This is a suit by an employee to set aside the proceedings and judgment whereby he compromised his claim for compensation with his employer and its insurer and to recover compensation against the insurer for total and permanent disability, plus a penalty of 50 per cent, to be paid in a lump sum, with legal interest, less the amount previously paid him.

For cause of action plaintiff alleges that the settlement was made in contravention of the provisions of the compensation act, Act No. 20 of 1914, as amended, in that there was no legal or valid basis for the compromise, the allegations of the joint petition to the effect that he was intoxicated at the time of the injury and that there was a bona fide dispute between him and his employer as to his disability being without any foundation in fact. He further alleges that the petition was prepared by defendant's attorneys upon the information furnished them by the defendant's physicians and agents and that he, plaintiff, relying upon their representations, being without counsel or physician of his own, was fraudulently induced to sign the petition.

The defendant denied the allegations of plaintiff's petition and pleaded the validity of the judgment of compromise as res adjudicata.

The matter is now before us for consideration on a writ granted the plaintiff to review the judgment of the Court of Appeal (199 So. 799) affirming the judgment of the lower court dismissing his suit.

The facts pertinent to the issues in this case have been stated by the Court of Appeal to be as follows:

"Otto Puchner, 61 years of age, by accident arising out of and occurring in the course of his hazardous employment by Jackson Brewing Company, on March 12, 1938, sustained injury consisting of `an intertrochanteric fracture of the right femur'. He was sent to a local hospital, where he remained 54 days, after which he went to his home, under treatment of his employer's physician. On February 22, 1939, the said physician concluded that he had practically recovered and could shortly return to work. Believing, however, that it might be some time before he could completely regain his strength and the normal use of his leg, the insurer of the employer sent its adjuster to discuss with him a compromise settlement. In addition to the amount already paid, a settlement for $500 was agreed upon and a joint petition was presented to the Civil District Court in which that court was asked to approve the compromise. Puchner was taken in person to the court and the district judge saw him and approved the settlement and thereafter the amount agreed upon was paid to him. In addition to the amount paid in settlement, Puchner, as we have said, had received the full compensation to which he was entitled during the period of admitted disability — that is to say, from the time at which the accident had occurred until the time at which the settlement was made, so that the $500 was paid him as consideration for the compromise and no part of it was paid as compensation for any of the period of admitted disability."

The Court of Appeal, however, despite its finding that "the record leaves no room for doubt that, at the present time [the time this suit was brought], Puchner is totally disabled and that there is no prospect that he will ever recover, and it is certain, therefore, that, had there been no compromise, he would have been entitled to a judgment for the maximum weekly amount and for the maximum period" (brackets ours), maintained the validity of the judgment of compromise and affirmed the judgment of the lower court refusing to set aside the same, being of the opinion that the compromise settlement was entered into in good faith and that there was a bona fide dispute between the plaintiff and his employer.

The learned trial judge in his written reasons for judgment stated, and he is amply borne out by the record, "that the physician who made the report concerning the Plaintiff committed an error of fact; that the company, in settling for a temporary disability, committed an error of fact; that the Attorney who filed the petition and explained to the Plaintiff just what was being done committed an error of fact; and the very Judge of the Court, who saw the Plaintiff and judged from outward appearances, committed an error of fact." His comment with reference to this phase of the case is as follows: "We all thought that the Plaintiff was suffering from a temporary disability; and if a covenant such as a contract can be set aside, and considering the humanitarian purposes of the Workmen's Compensation Law, this Court feels that it should respectfully submit these facts for a consideration of their effect. The employer, in the presentation of his case utilizes the opinions of medical men and insurance specialists. The employee has no such advantages." The judge then expressed the opinion "that the Plaintiff should be entitled to recover for a total permanent disability as set out in the Act; and that the compromise entered into on an error of fact should be set aside," but he concluded that in view of his appreciation of the jurisprudence of the appellate courts of this state to the effect that a compromise entered into in good faith bound the parties thereto even though it might subsequently prove to have been based on errors of fact that he had no alternative but to dismiss the plaintiff's suit.

A thorough appreciation of the historical background of the workmen's compensation laws and the mischief sought to be remedied thereby is necessary for a proper solution of the issues presented in the instant case.

The legislative body of the State of Louisiana, conforming to a general movement prevalent throughout the country at the time, enacted the state's first compensation legislation, known then as the Burke-Roberts Employers' Liability Act, Act No. 20 of 1914, so that the social obligations existing between the employee and employer might be readjusted to meet the modern trend. This act, with its amendments, has come in time to be referred to as the Workmen's Compensation Act. The movement behind this legislation began first in Germany and spread to this country via England. A careful study and analysis will disclose that its purpose is primarily to "abolish the common-law system relating to injuries to employees as inadequate to meet modern conditions and conceptions of moral obligations, and substitute therefor a system based on a high conception of man's obligation to his fellow man * * *." By that system the loss incurred as a result of the employee's injury is recognized "as an element of the cost of production to be charged to the industry rather than to the individual employer, and liquidated in the steps ending with consumption, so that the burden is finally borne by the community in general. * * *" Vol. 1, Honnold's Workmen's Compensation 5, Section 2. See, also, Vol. 1, Schneider's Workmen's Compensation Law, Sections 1 and 2; 71 Corpus Juris 242, Section 15; and 28 Ruling Case Law 713, Section 2.

It is obvious from a mere reading of Act No. 20 of 1914 that it was the intention of our lawmakers by enacting this legislation to follow this general trend in social development and to thereby insure that an employee whose wages were discontinued as the result of an injury sustained during the course of his hazardous employment would be paid weekly compensation on which to subsist during the period of his disability, in accordance with the schedule outlined in the act. Under subsection 9 (formerly subsection 8) of Section 8 of Act No. 20 of 1914, as amended, by Act No. 242 of 1928, where there is no dispute, the parties, by agreement, may have the amounts payable as compensation commuted to a lump sum settlement provided (1) the approval of the court is secured, and (2) the amount due is not discounted at a rate greater than 8 per cent per annum. Another form of lump sum settlement has been developed in our jurisprudence under the guise of a compromise whereby the amount payable as compensation may be commuted to a lump sum settlement at a rate of discount greater than 8 per cent per annum. In such cases the parties at interest merely present a joint petition to the court for its approval alleging the existence of a dispute between them and their agreement to settle their difference as therein outlined.

A "compromise" is readily distinguishable from a "settlement" as may be seen from their definitions as stated by Corpus Juris Secundum: "A compromise is an agreement between two or more persons who, to avoid a lawsuit, amicably settle their differences on such terms as they can agree on. `Settlement' is a broader term than `compromise,' and, while a settlement may be the result of a compromise, it may also be arrived at which there is no dispute or controversy between the parties * * *." 15 Corpus Juris Secundum, Compromise and Settlement, 711, § 1. In the next section it is pointed out that: "Conflicting claims are essential to the validity of a compromise, one of its essential elements being the existence of a bona fide dispute or controversy between the parties, although it is immaterial what may be the real legal merits of the claim on either side. * * *" (Italics ours.)

Let us examine the record in the instant case to determine whether or not at the time the compromise proceedings were instituted there was a dispute in fact between the plaintiff and his employer relative to his (plaintiff's) right to recover compensation, first, because of his alleged intoxication at the time of the accident, and, second, as to his disability.

Counsel for defendant stated in his brief that plaintiff was strongly suspected of having been intoxicated at the time of the accident. He bases this suspicion on the report of a specialist called in by the attending physician that the plaintiff was suffering from delirium tremens on the day following the accident. But counsel frankly admits in his brief, as he did in his oral argument, that the defendant "was unable to obtain any definite proof showing that Plaintiff was intoxicated," and, consequently, compensation was paid him. It necessarily follows that when the compromise was effected eleven months later, that element of alleged dispute had passed out of the case.

The other alleged ground for dispute seems to us to be equally lacking in genuineness. The joint petition does contain allegations on the face of which would show the existence of a dispute between the plaintiff and his employer as to whether plaintiff was able to resume work at the time the compromise was effected. It is alleged in the petition that Puchner claimed that at that time he was totally disabled and unable to resume his work, and that as a result of the injury he believed he would remain permanently partially disabled, and was entitled to compensation accordingly. On the other hand, the petition contains the allegation that the employer and its insurer claimed the plaintiff's condition had satisfactorily and consistently improved, and that according to the final report received from the attending physician by the defendant insurance company, plaintiff was able to resume work and was therefore not entitled to further compensation. These allegations, however, have been disproved by the record. 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 insurance 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 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 Co., 183 La. 1013, 165 So. 185, 188.

Counsel for defendant contend that in the absence of fraud of misrepresentation a judgment compromising a compensation claim cannot be set aside, citing in support thereof two decisions of this court, namely, Musick v. Central Carbon Company, 166 La. 355, 117 So. 277, and Young v. Glynn, 171 La. 371, 131 So. 51, and the decisions of the Courts of Appeal of this state based thereon.

The Musick case is the leading case in the jurisprudence of this state on the subject matter of the compromising of compensation claims under the act. In that case J.P.H. Musick, who was injured while discharging the duties of his employment with the Central Carbon Company, died of pneumonia contracted some two weeks after he returned to his home from the hospital. His employer contended that Musick's death did not result from injuries sustained while in its employ. A compromise settlement was effected, with the approval of the court, whereby the widow was paid the sum of $3,000 for the common benefit of herself and minor children. Subsequently the widow, individually and on behalf of her minor children, instituted suit for the full amount of compensation due them under the act, with legal interest, on the ground that the settlement was nothing more than a lump sum settlement and was made in contravention of law for the reason that the discount was at a greater rate than 8 per cent per annum, as provided in subsection 8 of Section 8 of the act (now subsection 9). The defendant pleaded the judgment of compromise as a bar to the suit. The court found that there existed a bona fide dispute as to the right of the deceased employee's dependents to compensation and thus justified the compromise settlement, concluding that [ 166 La. 355, 117 So. 280]: "It was a substantial settlement, and one that cannot be said to be out of accord with the statute. * * *" (Italics ours.)

The sole issue raised in the case of Young v. Glynn was whether or not the compromise settlement had between the plaintiff and defendant had been obtained through fraud and misrepresentation, and the court, finding from the facts of the case that the plaintiff had failed to establish these charges, reinstated the judgment of the court of appeal, affirming the judgment of the lower court dismissing his suit.

As a result of certain expressions of the court in these two cases, an analysis of which show that they were not essential to the decisions, a jurisprudence has been established in the appellate courts of this state whereby the provision of the act prohibiting an amicable settlement of compensation claims in a lump sum at a greater rate of discount that 8 per cent per annum has been so limited and so modified that it is all but emasculated.

While the section under which compromises have been sanctioned (Section 17) specifically provides that the interested parties may "settle all matters of compensation between themselves," in the same section are also found the mandatory provisions that the settlement shall be reduced to writing, approved by the court, and "shall be substantially in accord with the various provisions of this act * * *." (Italics ours.)

In order to determine what was the intention of the legislators in incorporating Section 17 in the act, we must first examine the act as it was originally drawn. This section as it presently appears on our statute books is practically identical with the same section in the original act.

In Act No. 20 of 1914 we find subsection 8 of Section 8, the paragraph authorizing the lump sum settlement, reading as follows: "The amounts payable periodically as compensation may be commuted to a lump sum payment at any time by agreement of the parties; subject to the approval of the Court and upon the payment of such lump sum, the liability of the employer making such payment under this act, shall be fully satisfied."

The provisions of this subsection were first changed by the amendment and reenactment of Section 8 in Act No. 38 of 1918, where it was provided that the amounts payable as compensation could be settled in a lump sum "if approved by the court as solely and clearly in the interest of the employee or his dependent" (italics ours), and for the first time it prohibited the discounting of the amount due the employee at an amount greater than 6 per cent per annum and provided further that if the provisions of the act were violated the employee or his dependents "shall be at all times entitled to demand and receive from the employer such additional payments as may be due under this act."

The same sub-section was again amended by Act No. 247 of 1920 where the provisions for the settlement are in the main substantially the same, with the exception that the penalty was changed to read as follows: "If such lump settlement be made without the approval of the Court, or at a discount greater than six per centum per annum, even if approved by the Court, the employer shall be liable for compensation at three times the rates fixed in this act, and the employee or his dependent shall, at all times within ten years after the date of the payment of the lump sum settlement, and notwithstanding any other provisions of this act, be entitled to demand and receive in a lump sum from the employer such additional payment as together with the amount already paid will aggregate three times the compensation which would have been due under this act but for such lump sum settlement." (Italics ours.)

By Act No. 43 of 1922 the penalty was reduced from three times the amount due under the act to twice the amount and the rate of discount at which compensation could be made was increased from 6 per cent to 8 per cent. The time within which the employee or his dependents could exercise his rights was reduced from ten to five years. Otherwise paragraph 8 is substantially the same as when amended by the act of 1920.

By Act No. 216 of 1924 Section 8 was amended and reenacted, leaving subsection 8 thereof substantially the same as under the 1922 amendment.

In the amendment and reenactment of this section by Act No. 85 of 1926, paragraph 8 was made paragraph 9 and it remained substantially the same, the only change made being to reduce the penalty from twice the amount due to one and a half times the amount fixed in the act and to limit the time within which the employee or his dependents could exercise his rights from five to two years.

While the section was again amended and reenacted by Act No. 242 of 1928, paragraph 9 of Section 8 remained identically the same as amended in 1926.

In the light of the foregoing, as well as the history of the compensation law and the mischief sought to be remedied thereby, we are of the opinion that Section 17 was intended to fix the procedure which was to be followed in making settlements under the act when there was no dispute or disagreement between the parties and was intended to complement subsection 8 of Section 8 (now subsection 9), which merely made provision for lump sum settlements without prescribing the procedure. We are fortified in this view because the section immediately following (Section 18) provides the procedure to be followed in cases where there is a dispute or disagreement between the parties.

Matters relative to compensation claims being governed exclusively by the provisions of the workmen's compensation act, as amended, are sui juris; consequently, any settlements made in contravention of the statute or the policy thereof are unenforceable and may be set aside. 15 Corpus Juris Secundum, Compromise and Settlement, p. 760, § 38. See, also, Articles 1764, 1892, and 1963 of the Revised Civil Code.

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 necessarily follows that a settlement, such as was made in this case under the guise of a compromise, at a greater discount than 8 per cent per annum is not in accord with the provisions of the act and is not binding. The defendant company is therefore not protected and is liable for compensation at the rate of "one and one-half times the rate fixed in this Act, and the employee * * * shall * * * be entitled to demand and receive in a lump sum from the employer such additional payment as together with the amount already paid will aggregate one and one-half times the compensation which would have been due under this Act, but for such lump sum settlement. * * *" Subsection 8 of Section of Act No. 20 of 1914, as amended. See, also, Fluitt v. New Orleans, T. M.R. Co., 187 La. 87, 174 So. 163; and Taylor v. Lock, Moore Co., Ltd., 164 La. 577, 114 So. 163.

It is argued in this case, however, that the plaintiff has failed to show that his disability is traceable to the original injury sustained by him while in the employ of the defendant. There is some suggestion that his disability is the result of another injury subsequently sustained when he slipped and fell on the premises of his employer some six months after the compromise and injured his arm, or that it is due to what one of the doctors described as a general degenerative process. A review of the testimony of all of the medical experts shows that there remained around the fracture sustained by Puchner in his right hip an excess callous condition which operated as a functional limitation. This callous would ordinarily be absorbed by a young and healthy person, but to a person of Puchner's age and organic condition, this would not improve. Consequently, the plaintiff is totally permanently disabled, as was found to be the case by both the trial and appellate courts.

We realize that there is jurisprudence by the Courts of Appeal of this state in several cases where the contrary result has been reached, but it is our opinion that the decisions in these cases are contrary to the letter and spirit of the compensation law, and in so far as they conflict with the views herein expressed, they are hereby overruled.

The plaintiff according to the evidence was entitled to receive the maximum of $20 per week compensation, exclusive of the mandatory penalty and therefore, with it, $30 per week.

For the reasons assigned the judgments of the district and appellate courts are annulled and set aside and it is now ordered and adjudged that there be judgment in favor of the plaintiff, Otto Puchner, and against the defendant, The Employers' Liability Assurance Corporation, Ltd., decreeing that the defendant pay to the plaintiff in a lump sum an amount to be computed at $30 a week for a period of 400 weeks, with legal interest on each weekly installment as it should have been paid, less a credit of $1,480 previously paid by the defendant to the plaintiff; the defendant to pay all costs.

ODOM, J., dissents, being of the opinion that the opinion and decree of Court of Appeal are correct.

On Rehearing.


A rehearing was granted in this case upon the application of counsel for the Employers' Liability Assurance Corporation, Ltd., the defendant, out of an abundance of precaution for the reason that counsel for the defendant seriously contended that our holding in this case was of such far reaching effect that it should be reconsidered. Various attorneys filed briefs as amici curiae urging a rehearing.

At the time the rehearing was granted, we were of the opinion that the facts were correctly stated in our original opinion. After again reviewing the facts, we have reached the same conclusion. The two questions we had in mind when we granted the rehearing were the interpretation to be placed on Section 17 of Act 20 of 1914, as amended, and whether or not under the circumstances in this case the penalty should be imposed.

The principal contention advanced by counsel for the defendant and the various attorneys is to the effect that there is no connection between Section 17 and subsection 9 of Section 8 of the Act. Counsel takes the position that subsection 9 of Section 8 covers settlements of claims where there is no dispute and Section 17 has its own specific purpose and was enacted for a specific situation, viz., to permit the compromise of compensation claims where there was a dispute between the parties concerning questions involved in the claims. Counsel suggests that in making settlements under Section 17 that the Articles of the Civil Code dealing with compromise are applicable and that a compromise made under Section 17 cannot be set aside because of an error of fact.

As stated in our original opinion, the primary object of the Act is to provide an injured employee with funds to subsist during his disability until he is able to return to work. Barr v. Davis Bros. Lumber Company, 183 La. 1013, 165 So. 185, 186. The Compensation Act was admittedly passed, not only in the interest of the employer and the employee, but in the interest and general welfare of the public as well. Craft v. Gulf Lumber Company, 151 La. 281, 91 So. 736. The manifest purpose of the statute intends weekly benefits and not lump sum payments. Ford v. Fortuna Oil Company, 151 La. 489, 91 So. 849. The interest and general welfare of the public being involved the parties cannot settle a compromise claim in contravention of the statute. As stated in our original opinion, matters relative to compensation claims are governed exclusively by the Workmen's Compensation Act and any settlement made in contravention of its provisions and its policies are unenforceable and may be set aside. Such being the case the Articles of the Civil Code are not applicable. For the same reason the contention that the compromise or settlement cannot be set aside because of an error of fact is unavailing. The plaintiff in this case is permanently disabled. The statute provides that compensation shall be paid for injuries producing total permanent disability 65% of the wages during the period of disability not to exceed 400 weeks. This provision is mandatory. Subsection 9 of Section 8 permits lump sum settlements of compensation claims under certain restrictions. A lump sum settlement as provided for in the Act means nothing more or less than that the entire amount of compensation due the employee is paid at one and the same time, as distinguished from weekly payments provided for in the Act. We cannot accept the contention that there is no connection between Section 17 and subsection 9 of Section 8 for the reason that it is provided in Section 17 that settlements made thereunder shall be substantially in accord with the various provisions of the Act. This very provision in our opinion connects Section 17 with any other provision of the Act that is pertinent. Otherwise, the provision would be meaningless. Undoubtedly the lawmaker intended that a settlement made under Section 17 in the form and nature of a lump sum settlement was to be made substantially in accord with the provision dealing with lump sum settlements. The only reasonable interpretation is that settlements should be substantially in accord with the provisions that are relative and pertinent thereto. The provision was put in Section 17 for some purpose and it is only reasonable to believe that the settlement should conform to the other provisions of the Act that are pertinent in order to carry out the spirit as well as the letter of the statute. We see no reason to disturb our holding in respect to Section 17 for the reason that the interpretation placed thereon is in conformity with the purpose of the Act and its policy.

To permit speculation on the duration of an employee's disability would defeat the very purpose of the Act. It is to be borne in mind that not only the interest of the employee and employer is involved, but also the interest and general welfare of the public. The settlement attempted to be made in this case, wherein the employee received less than one-fourth of the amount that he was entitled to, is an ample illustration of just how far the letter and spirit of the Act can be destroyed by the sanction of speculation as to the duration of an employee's disability. It is clear that it was intended that the injured employee should receive compensation during his disability in an amount with a degree of certainty. Hence the Act provides a schedule fixing the amount to be paid. Under any interpretation that could be given to Section 17 the settlement in this case is so far out of line that we would be compelled to set it aside. After carefully reviewing our original opinion, the briefs filed herein and the arguments advanced, we are more than ever convinced that the conclusions reached therein are correct and in accord with the letter and spirit of the Workmen's Compensation Act.

Counsel contend that our holding in this case is contrary to the holding in the cases of Musick v. Central Carbon Company, 166 La. 355, 117 So. 277, and Young v. Glynn, 171 La. 371, 131 So. 51. The same argument was advanced in the original hearing on review and as pointed out in our original opinion there is no conflict between these decisions. We stated in our original opinion that certain expressions in the last two mentioned cases, not essential to the decision, had resulted in a jurisprudence in the appellate courts contrary to the views we hold. We have carefully reviewed the decisions and our discussion of them in our original opinion and find that our interpretation of these decisions is correct.

The question which has given us most concern is whether or not under the circumstances in this case the penalty should be imposed. 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 Company, supra; Young v. Glynn, supra 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 defendant 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 mislead by the confusion caused by the various decisions aforementioned.

Our decree is amended so as to order the defendant to pay the plaintiff in a lump sum an amount to be computed at $20 a week for a period of 400 weeks, with legal interest on each weekly installment, less a credit of $1,480. As amended the decree is affirmed.

Plaintiff's right to apply for rehearing reserved.

ODOM, J., dissents and hands down reasons.

McCALEB, J., recused.

O'NIELL, C.J., concurs in the decree rendered originally in this case, and hands down an opinion.


Otto Puchner, the relator, complains of the amendment to our decree rendered on the original hearing, the effect of which is to reject the penalty of fifty per cent claimed by him, and he has petitioned the Court to grant him a rehearing to the end that the original decree may be reinstated and made the final judgment of the Court. In connection with his petition for a rehearing, relator has filed a supplemental plea asserting that he has a vested interest in the penalty and that to deny him the penalty violates his rights under the Fourteenth Amendment of the Federal Constitution.

Relator strenuously argues that the penalty is mandatory under the statute and that this Court has so stated in its opinion.

While it is true that the penalty provided by subsection 9 (formerly subsection 8) of section 8 of Act 20 of 1914, as amended, is mandatory, obviously it is mandatory only in proper cases. Thus, it is mandatory only in cases where admittedly an attempt has been made to effect a lump sum settlement commuted on the term agreed upon, or in cases where a lump sum settlement has been made in bad faith in the guise of a compromise under section 17 of the legislative act. Since all the Courts have found that the parties were in good faith and attempted to compromise a disability which they thought they had a right to do under section 17 and the prior jurisprudence, the penalty prescribed in subsection 9 of section 8 is not applicable.

Penalties and forfeitures are not favored by law and should always be strictly construed. The respondent should not be penalized because the settlement, which was carried out in good faith upon a compromise basis under section 17 and not upon a lump sum settlement under section 8, was set aside because the parties thereto were in error as to the duration of relator's disability.

There is no merit in relator's plea that our decree denies him any right guaranteed by the Fourteenth Amendment to the Federal Constitution.

The application for rehearing is refused.

O'NIELL, C.J., adheres to his opinion.

McCALEB, J., recused.

ODOM, J., adheres to his dissenting opinion.


I concur in the decree rendered originally in this case, allowing the plaintiff, under the provisions of subsection 9 of section 8 of the Employer's Liability Act, one and one-half times the compensation which would have been due under the act, but for the lump sum settlement. But there are some expressions in the original opinion, and in the opinion rendered on rehearing, which seem contrary to the provisions of subsection 9 of section 8, and the provisions also of section 17 of the act.

On the 6th page of the original opinion, 5 So.2d 292, it is said that an employer may make a lump sum settlement with an injured employee, under the provisions of subsection 9 of section 8 of the statute, where there is no dispute. My understanding of this is that the parties may make a lump sum settlement in any case where the disputes or disagreements between them have been eliminated, either by effect of a final judgment or by effect of an amicable settlement made between the parties under the provisions of section 17.

On the 9th page of the original opinion [5 So.2d 292, 293] it is said that the only matter that could have been uncertain when the parties in this instance made their lump sum settlement was the duration of the plaintiff's disability, and that it would be in direct violation of both the letter and the spirit of the statute to sanction speculation with respect to the duration of an employee's disability. That expression is repeated, substantially, on page 4 of the opinion rendered on rehearing [5 So.2d 296], thus:

"To permit speculation on the duration of an employee's disability would defeat the very purpose of the Act."

In the closing sentence in subsection 9 of section 8 of the act, it is declared:

"But upon the payment of a lump sum settlement commuted on a term agreed upon by the parties, discounted at not more than eight per centum per annum and with the approval of the Court, the liability under this Act of the employer making such payment shall be fully satisfied; provided, that for injuries scheduled in paragraphs 1-d and 2 of this section, no shorter term than therein set forth have [has] been agreed upon."

The phrase "commuted on a term agreed upon by the parties" means that the parties must agree upon a term, or period, or number of weeks, by which the weekly compensation shall be multiplied, and on which the discount, at a rate not exceeding eight per cent per annum, shall be calculated, in order to arrive at the lump sum to be paid. This meaning of the word "term" is verified by the proviso that for injuries scheduled in paragraphs 1 (d) and 2 of section 8 no shorter term than the term therein set forth shall be agreed upon. That means that, for injuries scheduled in the paragraphs in which the term for the payment of compensation is not fixed but is declared merely to be during the period of disability, not beyond 300 weeks or not beyond 400 weeks, as the case may be, the lump sum settlement must be computed on a term of period of weeks agreed upon by the parties. Paragraphs 1 (d) and 2 of this section of the act are the only paragraphs in which the term or period of weekly payments is fixed. Paragraph 1 (d) has reference to the loss of a limb or member of the body, such as a thumb, finger, toe, hand, arm, foot, leg or an eye. For any one of these injuries the term of payment is fixed absolutely as a definite number of weeks, because the disability is, essentially, permanent. Paragraph 2 has reference to an injury causing death; in which case the term for the payment of compensation to the dependent or dependents of the deceased employee is fixed definitely at 300 weeks. But, for all other injuries, other than those scheduled in paragraphs 1 (d) and 2 of section 8 of the statute, the term for the payment of compensation is declared, in subsections (a), (b) and (c) to be during the period of disability, not beyond 300 weeks for an injury producing temporary total disability or a partial disability, or not beyond 400 weeks for an injury producing permanent total disability. In such cases, even when the disability is adjudged to be a permanent disability, it is recognized that in time the disability might disappear. Hence, in such cases, the term for the payment of the weekly compensation is declared to be merely "during the period of disability" — not beyond 300 weeks for a temporary total disability, under subsection (a), and not beyond 400 weeks for a permanent total disability, under subsection (b), or not beyond 300 weeks for either a permanent or temporary partial disability, under subsection (c). In any case coming under any one of the three subsections (a), (b) or (c), if the employer and the injured employee prefer to make a lump sum settlement, according to the provisions of subsection 9 of section 8, they must make the settlement "on a term agreed upon by the parties"; that is to say, they must agree upon the number of weeks, by which the weekly payments are to be multiplied, and on which the discount, at a rate not exceeding 8 per cent per annum, must be computed, in order to arrive at the amount which is to be paid in a lump sum. This so-called "term agreed upon by the parties" is, necessarily, an estimate of the period of disability — agreed upon by the parties. No such estimate, or "term agreed upon by the parties", is allowed to be substituted in the cases where the term is fixed definitely in the 8th section of the statute; that is, "for injuries scheduled in paragraphs 1-d and 2 of this section". But, for all other injuries, it is impossible to reduce the amount of the weekly payments to a lump sum, or to calculate the discount on the weekly payments at a rate per annum, without "a term agreed upon by the parties" — or an estimate of the period of disability. The term agreed upon by the parties, or estimate of the period of disability, of course, must be approved by the judge.

An amicable settlement, made under the provisions of section 17 of the statute, does not mean, necessarily, a cash settlement, or lump sum settlement. The provisions of this section do not supersede or affect the provisions of subsection 9 of section 8. Section seventeen means exactly what it says: "That the interested parties shall have the right to settle all matters of compensation between themselves." When they make an amicable settlement under this section it must be confirmed by a judgment of the court, on a joint petition of the parties; but it need not be a lump sum settlement. If, after the amount of each weekly payment is agreed upon by the parties, there is also "a term agreed upon by the parties", they may then convert their settlement into a lump sum settlement, provided they comply with the provisions of subsection 9 of section 8. Or they may make a lump sum settlement, under the provisions of subsection 9 of section 8, after the amount of the weekly compensation has been fixed by the court at the end of a lawsuit, provided there is "a term agreed upon by the parties", for it is not possible otherwise for a term to be fixed in the judgment of the court, except in cases coming under the provisions of paragraphs 1 (d) and 2 of section 8.

The lump sum settlement made in this case was made in violation of subsection 9 of section 8 of the statute, because it was not "commuted on a term agreed upon by the parties", and the payments were not "discounted at not more than eight per centum per annum".

The following paragraph, which I quote from the opinion of the Court of Appeal in this case, 199 So. 800, leaves no doubt that if the plaintiff is entitled to a judgment at all he is entitled to the amount which he is claiming, viz.:

"At the outset let us say that the record leaves no room for doubt that, at the present time, Puchner is totally disabled and that there is no prospect that he will ever recover, and it is certain, therefore, that, had there been no compromise, he would have been entitled to a judgment for the maximum weekly amount and for the maximum period."

According to the decision rendered in Taylor v. Lock, Moore Co., 164 La. 577, 114 So. 163, and in Fluitt v. New Orleans, T. M.R. Co., 187 La. 87, 174 So. 163, and according to the precise words of the statute, "if such lump sum settlement be made * * * at a discount greater than eight per centum per annum, even if approved by the court, the employer shall be liable for compensation at one and one-half times the rate fixed in this Act". [The italics are mine.]

It is conceded in both of the prevailing opinions rendered in this case that the allowing of "one and one-half times the rate fixed in this Act" is mandatory. The question of good or bad faith on the part of the contracting parties is eliminated by the expression in the statute "even if approved by the court".

The case of Musick v. Central Carbon Co., 166 La. 355, 117 So. 277, is distinguished from the present case in that there was a serious dispute and doubt whether the claim of the dependents in the Musick case was governed by the Employer's Liability Act. The case of Guillot v. Louisiana Ry. Navigation Co. 166 La. 467, 117 So. 558, is distinguished from the present case by the fact that the court held that Mrs. Guillot's case was governed by the Federal Employer's Liability Act, 45 U.S.C.A. § 51 et seq. and not by the State statute, and that the plaintiff had recognized that fact by bringing her suit under the Federal Employer's Liability Act after the defendant had excepted to a previous suit brought under the State Employer's Liability Act. It was held that the plaintiff had judicially admitted that her case was governed not by the state statute but by the Federal statute, which does not contain any such provision as the provisions of subsection 9 of section 8 of the State Employer's Liability Act. It is not so easy to reconcile the decision rendered in the present case with the decision rendered in Young v. Glynn, 171 La. 371, 131 So. 51. That decision was merely an incorrect interpretation of the decision rendered in the Musick case. The decisions rendered in those cases, however, had been superseded by the subsequent decisions in the Taylor case and in the Fluitt case, when the lump sum settlement was made by the defendant in the present case.

There should not be any more objection to the making of amicable settlements of claims for workmen's compensation than there is for the making of an amicable settlement of any other claim, provided, of course, that the amicable settlement of a claim for a workman's compensation must be made in conformity with section 17 of the Workmen's Compensation Law. And there should not be any objection to the reducing of such a settlement to a cash settlement, or lump sum settlement, provided it is done in conformity with subsection 9 of section 8 of the statute. In fact there are cases where amicable settlements in a lump sum are very advantageous to the injured employee, or to the dependents of a deceased employee, as well as being desired by the employer or his insurer.

On Application for Second Rehearing.


The court has sustained the plaintiff's plea that the settlement which he entered into with his employer be set aside. I dissent from that ruling.

The settlement was authorized by Section 17, Act 20 of 1914, as amended by Act 38 of 1918. That section provides that the interested parties "shall have the right to settle all matters of compensation between themselves". That section further provides that all agreements of settlement shall be reduced to writing and shall be "substantially in accord with the various provisions of this act, and shall be approved by the Court". It further provides that the agreement between the employer and the employee "shall be presented to the Court upon joint petition of employer and employee", and that the settlement so approved "shall be immediately entered as the judgment of the Court, and such judgment shall have the same force and effect and may be satisfied as other judgments of the same Court".

In making this settlement, the parties proceeded in exact accord with the provisions of this section. The settlement agreed upon was approved by the district judge, and judgment was rendered accordingly.

It is not contended that the employer was guilty of any fraud, ill practice, or deceit in dealing with its employee. On the contrary, it is conceded that the settlement was made in good faith. In fact, it is stated in the majority opinion on rehearing:

"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 record shows, and this is not disputed by anyone, that, at the time the settlement was made, the duration of plaintiff's disability was uncertain. On that point there was reasonable and substantial ground for dispute. Because of this uncertainty as to the duration of plaintiff's disability and because there was a dispute between the parties touching that point, they agreed to settle their differences and presented a joint petition to the court, asking that the settlement which they had reached be approved. This was done. The plaintiff was paid the amount which he voluntarily agreed to take.

In Musick v. Central Carbon Co., 166 La. 355, 117 So. 277, and in Young v. Glynn, 171 La. 371, 131 So. 51, it was held that, where there is a real dispute, and substantial ground therefor, between an employer and his employee concerning a matter of this kind, a binding compromise settlement may be entered into under the provisions of the section of the Compensation Act. In Guillot v. Louisiana Ry. Nav. Co., 166 La. 467, 117 So. 558, the court cited with approval the ruling in the Musick case. These cases have been consistently followed by the Courts of Appeal of this state.

To hold that the settlement made between the parties in this case is not binding upon them is tantamount to holding that no settlement made between an employee and his employer under Section 17 of the Compensation Act can be binding. In my opinion, the effect of the ruling in this case is to strike down the provisions of that section. In other words, the ruling in this case, in effect, wipes out that section of the statute. Judgments rendered by courts of competent jurisdiction, approving settlements made between the parties in accordance with that section of the act, will hereafter have no stability whatsoever.

I dissent.