Courmier v. Superior Oil Co. , 160 F.2d 127 ( 1947 )

McCORD, Circuit Judge.

On November 17, 1944, Percy L. Courmier brought action to set aside a judgment entered in 1938 on a compromise settlement of a claim under the Workmen’s Compensation laws of the State of Louisiana, Act No. 20 of 1914, as amended. Courmier contended that the judgment on the compromise was invalid under the Louisiana law as announced in 1941 in the case of Puchner v. Employer’s Liability Assurance' Corp., 198 La. 921, 5 So.2d 288. From a final judgment of dismissal entered November 28, 1945, Courmier has appealed.

The pertinent facts and background of the action are fully detailed in the reported opinion of the district judge. Courmier v. Superior Oil Co., D.C., 60 F.Supp. 542, 549.

In the 1938 judgment Courmier received $3,000 by way of a compromise settlement of his action. In deciding the present case to’ set aside that judgment, the district judge required Courmier “to return the amount of $3,000 to the defendant, or, in default thereof, the Court will sign a judgment then sustaining the motion to dismiss, because the complaint of plaintiff does not set out a case upon which relief can be granted.” Courmier did not tender the $3,000, and the court dismissed his action. It was error for the trial judge to condition a dismissal upon a return of the money paid in compromise. Cf. Neyland v. Maryland Casualty Co., La.App., 28 So.2d 351.

Prior to the Puchner decision in 1941, it was generally accepted that cases arising under the Louisiana Workmen’s Compensation laws could validly be the.subject of court approved compromise settlements.¹ In the Puchner case the Supreme Court of Louisiana construed the statutes and held that no valid compromise could be entered into and made the subject of a judgment where the extent or duration of a compensable disability was in dispute. It was stated [198 La. 921, 5 So.2d 298] that it would be “in direct violation of the letter and the spirit of the [act] to sanction speculation with respect to the duration of an employee’s disability.”² The case recognized, however, that certain types of compromises were within the letter and spirit of the law, “For example, where there is a serious and bona fide dispute as to the employer’s liability under the act.’’ Cases of Louisiana courts subsequent to the Puchner decision also recognize that compromise settlements in cases of disputed liability are valid, but hold that where a compromise is based on speculation as to the extent or duration of disability, a trial on the merits is necessary to determine the true facts; that is, to determine whether the compensable injury was in fact temporary or permanent and the true extent of its duration. Langston v. Hanbury, La.App., 11 So.2d 415, 418; Stewart v. Brown Paper Mill Co., La.App., 11 So.2d 627; Craig v. Compressed Industrial Gases, La.App., 7 So.2d 197; Smith v. Maier, La.App., 16 So.2d 682.

The case at bar may be distinguished from those cited cases where there was no serious dispute or denial of coverage or liability. Here it is exceedingly clear from the record that in 1938 there was a serious and bona fide dispute as to the employer’s liability. When Courmier filed his action in 1938, he asserted a compensable injury and the defendants denied liability. Before his action reached trial, Courmier, who was at all times represented by counsel, reached a compromise agreement with the defendants. A joint petition, signed by Courmier and by his attorneys and attorneys for defendants, was filed praying for entry of a judgment on the agreed compromise. This joint petition alleged that the case was “one of disputed liability” and that the defendants denied that plaintiff’s condition was the result of? the accident as alleged, “but claim that it results from an entirely different cause, and one that was in no wise connected with the employment * * Attached to this joint petition was the report of a reputable and competent examining physician in which it was stated that Courmier’s disability was due to arthritis and not to the claimed accidental injury. In this report the doctor stated, “I do not connect this illness with trauma either directly or indirectly.”

The primary dispute concerned liability, vel non, of the defendants; and any issue as to the extent or duration of the alleged injury was incidental and wholly subordinate to this primary and controlling issue. This record leaves no doubt but that a compromise was agreed to for the reason that there was a “serious and bona fide dispute” as to the employer’s liability. The judgment entered on the joint petition of the parties should, therefore, remain undisturbed.

The judgment of dismissal will be reformed by striking therefrom all reference to the required return of the $3,000 paid under the original compromise. The judgment will then stand simply as an unconditional and unqualified judgment of dismissal. As reformed, the judgment is affirmed.

1 Musick v. Central Carbon Co., 166 La. 355, 117 So. 277; Young v. Glynn, 171 La. 371, 131 So. 51.

2 Following the Puchner decision, the Louisiana Legislature, by Act No. 96 of 1942, amended the law to expressly permit compromise settlement of compensation disputes involving the extent or duration of a compensable disability.