Brown & Bartlett v. United States
Decision Date | 16 April 1964 |
Docket Number | No. 15452.,15452. |
Citation | 330 F.2d 692 |
Parties | BROWN & BARTLETT, Plaintiffs-Appellees, v. UNITED STATES of America, Defendant-Appellant. |
Court | U.S. Court of Appeals — Sixth Circuit |
Joseph S. Gill, Columbus, Ohio, for appellant.
Robert A. Bernstein, Atty., Dept. of Justice, Washington, D. C., for appellees, Louis F. Oberdorfer, Asst. Atty. Gen., Lee A. Jackson, David O. Walter, Attys., Dept. of Justice, Washington, D. C., Merle M. McCurdy, U. S. Atty., John G. Mattimoe, Asst. U. S. Atty., Toledo, Ohio, on the brief.
Before PHILLIPS and EDWARDS, Circuit Judges, and McALLISTER, Senior Circuit Judge.
This case requires interpretation of the Social Security Act to determine whether or not Ohio school bus drivers are covered thereunder.
The appeal is brought by defendant, United States of America, from a judgment entered by the District Court for the Northern District of Ohio in favor of plaintiffs in the sum of $705.41.
Plaintiffs are partners who are engaged in the business of providing school bus transportation services under contract with the public schools of Huron, Ohio. The sum of money involved represents the amount of Federal Insurance Contribution taxes assessed by the Internal Revenue Service under Int.Rev.Code of 1954 § 3111 on the government's claim that plaintiffs' bus drivers are covered under the Social Security Act (42 U.S.C. Ch. 7).
Plaintiffs contended:
The Ohio law referred to is authoritatively set forth in a recent opinion of the Ohio Supreme Court in a case where it was required to determine whether or not school-bus drivers similarly situated were members of the Ohio School Employees Retirement System:
"The court is of the opinion that Sections 3327.01, 3327.03, 3327.10 and 4511.76, Revised Code, grant the ultimate control over these school-bus drivers to the board of education and place the obligation upon the board to exercise sufficient ultimate control over these school-bus drivers to make them, at least for purposes of membership in the retirement system and contributory payments thereto, employees of the board of education." State ex rel. v. Holt, 174 Ohio St. 55, 57, 186 N.E.2d 862, 864.
The opinion spelled this conclusion out in some particularity.1 Powerful as this language appears to be in support of plaintiffs' argument, it represents the beginning, not the end, of this litigation. Patently Ohio statutes and case law do not determine federal Social Security Act coverage, unless language in the federal Act so provides. Plaintiffs find federal statutory authority for their contention in the 1950 and 1954 amendments to the Social Security Act. The 1950 amendments first enabled employees of a state government who were not covered by state retirement systems to come under Social Security coverage. The 1954 amendments made it possible for state employees who were members of a state retirement system to come under Social Security by an affirmative vote on a referendum. The language plaintiffs rely upon in this regard will be quoted and discussed below.
Plaintiffs' principal argument on this appeal is that when the Ohio Supreme Court found that persons similarly situated to these bus drivers were members of the state retirement system, that they thereby became state employees for purposes of the Social Security Act.
The government's argument in response can be summarized under three points:
First, that basic coverage of the Social Security Act is determined by the "common law" definition of the term "employee" contained in 42 U.S.C. § 410, and that under this definition plaintiffs' bus drivers would be covered and plaintiffs would be liable for the contributions assessed.
Second, that Congress in the 1950 and 1954 amendments was concerned with expanding coverage of the Act, and never intended by these amendments to repeal provisions which already provided for coverage.
Third, that repeal by implication is not favored; and, further, if there is any ambiguity found in construction of the Social Security Act, that the courts have strongly supported the proposition that such ambiguity should be resolved in favor of coverage.
In resolving this dispute some history of Social Security legislation is helpful:
The Social Security Act (42 U.S. C. ch. 7) and the applicable provisions of the Internal Revenue Code of 1954, ch. 21, §§ 3101, 3111 and 3121, which provide for employer and employee contributions to finance the benefits provided were first adopted in 1935. The provisions of these enactments are mutually interrelated and must be read together.
The basic employer tax provision is found in the Internal Revenue Code of 1954 and is exceedingly broad:
Section 3121(b), defining "employment," provides in part as follows:
Absent any other provision, plaintiffs as an employer would, of course, be required to pay the tax with respect to the wages paid.
Congress, however, recognizing a constitutional barrier, specifically excepted from this broad coverage provision just quoted, service in the employ of a state:
Congress then provided further that the common law definition of "employee" be used to determine whose employee a particular party actually was:
In 1950 Congress amended the Social Security Act to provide for coverage under federal-state contract for employees of states (or their political subdivisions) who were not covered by state retirement systems.
Finally, (for purposes of this case) Congress in 1954 passed the amendments which allow state employees who were members of a state employee retirement system by affirmative vote on a referendum likewise to acquire Social Security coverage under federal-state contract.
The applicable 1950 and 1954 provisions from 42 U.S.C. § 418 are:
These 1950 and 1954 provisions then represent exceptions (in favor of coverage) from a general state employee exception (against coverage) from the general broad coverage provisions of the Social Security Act.
We particularly note in the 1950 amendments upon which plaintiffs rely the following language:
"No agreement with any State may be made applicable * * * to any service performed by employees as members of any coverage group in positions covered by a retirement system." 42 U.S.C. § 418(d) (1).
But this language sets forth no test for determining who are employees of the state. Nor does it or any other language in the Social Security Act (or the related provisions of the Internal Revenue Code) declare that members of a state retirement system are perforce state...
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