What is the test for determining the liability of an employer under section 4663 of the Rehabilitation and Accident Compensation Act for an employee's permanent disability as a result of an industrial injury?

Thus, as expressed in Edson v. Industrial Acc. Comm. (1928), 206 Cal. 134, 138-139, 273 P. 572, 'If the employee has suffered permanent disability by injury or disease prior [44 Cal.2d 608] to the injury for which compensation is sought the statute requires that the percentage of disability on account of the latter injury be computed without reference to any injury previously suffered or any permanent disability caused thereby, except that in the case of aggravation of a pre-existing disease such proportion of the disability due to the aggravation of the prior disease as may be reasonably attributed to the later injurt may be considered. * * *'

It follows from these rules that the Fund is correct in its position that its liability should not be fixed by rating the preexisting disability alone and apart from the subsequent industrial injury. On the other hand it would seem that neither does the statute, when its several pertinent parts are read together, contemplate that in a case such as this (where the later disability is a product of prior disease, an industrial injury aggravating the prior disease, and surgical treatment for the condition growing out of the combination of prior disease and industrial injury) the commission must attempt to rate the disability caused by the later industrial injury entirely independently of the prior existing disease and so fix the employer's liability without respect to either the combined disability or the previously existing disability or impairment. Rather, the more reasonable and workable practice, and one conforming with the intent of the statute, appears to be that which the commission seems to have consistently followed in aggravation cases, viz.: to rate the combined disability (whether it be 70 per cent, 80 per cent, 100 per cent, or some other percentage) and then (as provided by section 4663) assign a proportion (such as 1/2, 2/3, 80 per cent, etc.) of the combined disability to the later injury and a correlative proportion to the pre-existing disability or impairment. See, e. g., 19 Cal.Comp. Cases (1954) 29-30, 143, 149, 166-167, 173-175; 18 Cal.Comp. Cases (1953) 242-243; 17 Cal.Comp. Cases (1952) 131; 16 Cal.Comp. Cases (1951) 308-309; 15 Cal.Comp. Cases (1950) 169; 11 Cal.Comp. Cases (1946) 225-226, 238-239; 3 Cal.Comp. Cases (1938) 77-78; 2 Cal.Comp. Cases (1937) 67-68. This was also the method followed by the commission and approved by this court in Tanenbaum v. Industrial Acc. Comm. (1935), 4 Cal.2d 615, 616, 52 P.2d 215, in which the employe's permanent disability, rated at 32 3/4 per cent, was found to have been 'partly caused by preexisting dormant disease (arthritis) and partly by said (industrial) injury,' and an [44 Cal.2d 609] apportionment was made of 33 1/3 per cent to pre-existing disease and 66 2/3 per cent to the industrial injury.