279 A.2d 806 (N.J. 1971), Essex County Welfare Bd. v. Philpott

Citation:279 A.2d 806, 59 N.J. 75
Opinion Judge:[10] Hall
Party Name:ESSEX COUNTY WELFARE BOARD, a corporate entity of the State of New Jersey, Plaintiff-Appellant, v. Doris PHILPOTT, et al., Defendants-Respondents.
Attorney:[6] Mr. Ronald Reichstein argued the cause for plaintiff-appellant (Mr. John A. Matthews, Jr., attorney; Mr. Reichstein, on the brief).
Case Date:July 12, 1971
Court:Supreme Court of New Jersey
 
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Page 806

279 A.2d 806 (N.J. 1971)

59 N.J. 75

ESSEX COUNTY WELFARE BOARD, a corporate entity of the State

of New Jersey, Plaintiff-Appellant,

v.

Doris PHILPOTT, et al., Defendants-Respondents.

Supreme Court of New Jersey.

July 12, 1971

Argued Dec. 21, 1970. [59 N.J. 76]

Ronald Reichstein, Montclair, for plaintiff-appellant (John A. Matthews, Jr., Newark, attorney; Reichstein, on the brief).

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George Bruno, Newark, of the Newark Legal Services Project, for defendants-respondents Doris Philpott and William Wilkes (Richard N. Tilton of the Newark Legal Services Project, of counsel).

No appearance entered or brief filed on behalf of defendant-respondent Fidelity Union Trust Company.

The opinion of the Court was delivered by

HALL, J.

The question in this case is whether a state welfare agency, which had advanced monthly disability assistance to a person under N.J.S.A. 44:7--38 to --42, may recoup, out of a subsequent, retroactive, lump sum federal social security disability insurance benefits payment to him, an amount representing the duplication of benefits thereby received.

The federal payment in the sum of.$1864.20 to defendant Wilkes, the recipient of both sets of benefits, was deposited [59 N.J. 77] and constitutes the balance in a bank account under the name of defendant Philpott (as a matter of convenience only and concededly held in trust for Wilkes) in defendant Fidelity Union Trust Company. 1 The state agency, plaintiff Essex County Welfare Board, brought suit in the Essex County Court to reach the bank account for reimbursement from the duplicated federal payments. 2 On the return of defendant's motion for summary judgment, it was agreed that the trial court would determine the matter without a jury on a stipulation of facts as if on final hearing. The sparse stipulation 3 was designed to present to the court only the basic legal question of whether plaintiff is barred from recovering any amount from the account by reason of a provision of the federal social security law, 42 U.S.C. § 407, which reads:

The right of any person to any future payment under this subchapter (Subchapter II--Federal Old-Age, Survivors, and Disability Insurance Benefits--of Chapter 7--Social Security--of Title 42--Public Health and Welfare--of the United States Code) [59 N.J. 78] shall not be transferable or assignable, at law or in equity, and none of the moneys paid or payable or rights existing under this subchapter shall be subject to execution, levy, attachment, garnishment, or other legal process, or to the operation of any bankruptcy or insolvency law.

The trial court held, 104 N.J.Super. 280, 249 A.2d 639 (Co.Ct.1969), that plaintiff was barred from any recoupment as a matter of law by reason of a literal reading of section 407 regardless of the policies and equities involved. The Appellate Division affirmed 'essentially for the reasons expressed'

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in the trial court opinion. 109 N.J.Super. 48, 262 A.2d 227 (1970). We granted plaintiff's petition for certification. 56 N.J. 480, 267 A.2d 62 (1970).

In August 1966 defendant applied to plaintiff 4 for benefits under the state program of assistance, provided for by N.J.S.A. 44:7--38 to --42 and administered by the county welfare boards, to any needy person who has attained the age of 18 but is less than 65 years of age and is permanently and totally disabled by reason of any physical or mental defect, disease or impairment other than blindness.

N.J.S.A. 44:7--39 prescribes that the assistance to be extended under this program shall in all other respects be governed by the provisions of the statutory sections dealing with old age assistance; I.e. assistance to persons who have attained the age of 65 years who lack adequate support, are unable to support themselves and are without relatives or other persons able or willing to support them. See N.J.S.A. 44:7--5. Defendant met all pertinent eligibility requirements.

Assistance to the aged needy, and so to the permanently and totally disabled as well, is granted solely on the basis of and only to the extent of need. N.J.S.A. 47:7--12 states that the county welfare board shall extend, to eligible persons, [59 N.J. 79] assistance 'adequate to provide for their reasonable maintenance and well-being * * * with due regard to the conditions existing in each case, in accordance with the rules and regulations' of the state Division of Public Welfare in the Department of Institutions and Agencies. See also N.J.S.A. 44:7--6. This requires a determination by the board of the amount needed by the particular eligible applicant to reasonably maintain himself, which is commonly referred to as the individual's budget. See New Jersey Categorical Assistant Budget Manual, § 608, 'Budgeting Procedures.' It further requires that, in fixing the dollar sum of assistance to be extended to him, allowance must be made for any actual (see New Jersey Categorical Assistance Budget Manual, § 402, 'Available Resources'), but not potential (see New Jersey Categorical Assistance Budget Manual, § 407, 'Potential Resources'), income from other sources received by him. The assistance then advanced is the difference between the budget and such income. See New Jersey Categorical Assistance Budget Manual, §§ 401.1 to 401.7, 'Resources--General Considerations.' See also N.J.S.A. 44:7--5(e). Once that figure is determined, the direction to pay it is mandatory, subject to future adjustment depending on changing circumstances. In this case plaintiff fixed defendant's need at $108 per month, with no offsetting other income. While we are not certain from the information furnished exactly when assistance payments in this amount were commenced or exactly how long they continued, it is apparent that they were made at least as of January 1, 1967 and continued until some month in the middle of 1968.

Such old age and disability assistance is not an outright grant or gift to the recipient, but only an 'advance' subject to repayment. Thus N.J.S.A. 44:7--14 provides:

(a) Every county welfare board shall require, as a condition to granting assistance in any case, that all or any part of the property, either real or personal, of a person applying for old age assistance be pledged to said county welfare board as a guaranty for the reimbursement [59 N.J. 80] of the funds so granted as old age assistance pursuant to the provisions of this chapter. The county welfare board shall take from each applicant a properly acknowledged

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agreement to reimburse for all advances granted, and pursuant to such agreement said applicant shall assign to the welfare board, as collateral security for such advances, all or any part of his personal property as the board shall specify.

See also New Jersey Division of Public Welfare, Manual of Administration § 2272, which details the mechanics of the reimbursement requirement. The section, along with N.J.S.A. 44:7--15, also provides that the filing of a notice of such agreement with the county recording office has the same force and effect as a judgment of the County Court, law division. The obvious purpose is to enable the board to obtain reimbursement for assistance advanced out of subsequently discovered or acquired real and personal property of the recipient. Defendant gave plaintiff such an agreement to reimburse under date of September 13, 1966.

At the time of defendant's application for state disability assistance, plaintiff obviously believed defendant was entitled to federal disability insurance benefits under the social security act and, according to the stipulation of facts, referred him to the Social Security Administration for the purpose of filing for such benefits. The record does not show either the date of such referral or the date of filing of the application. The exact situation is confusing because defendant had previously been receiving such federal benefits probably until May 1966. It is not clear why they ceased at that date. In any event, on August 20, 1968 he received from the Social Security Administration a check in the amount of.$1864.20 (of which plaintiff promptly learned) representing retroactive social security disability insurance benefits, apparently for the period from May 1966 through January 1968 at the rate of $69.60 monthly and from February 1968 through June or July 1968 at a $78.70...

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