Burger v. Social Security Board

• Decision Date: 15 May 1946
• Docket Number: No. 355.,355.
• Citation: 66 F. Supp. 619
• Parties: BURGER et ux v. SOCIAL SECURITY BOARD et al.
• Court: U.S. District Court — Southern District of California

66 F. Supp. 619

BURGER et ux v. SOCIAL SECURITY BOARD et al.

No. 355.

District Court, S. D. California, N. D.

May 15, 1946.

W. H. Stammer, of Fresno, Cal., for plaintiffs.

Charles H. Carr, former U. S. Atty., and Ronald Walker and Mildred L. Kluckhohn, Asst. U. S. Attys., all of Los Angeles, Cal., for defendants.

Arthur L. Johnson, of San Jose, Cal., amicus curiae.

Clarence A. Linn, of San Francisco, Cal., amicus curiae appearing on behalf of California State Federation of Labor.

MATHES, District Judge.

This proceeding is brought to review a final decision of the Social Security Board holding that remuneration received by plaintiff James F. Burger subsequent to January 1, 1940, was for "agricultural labor," as defined in the Social Security Act as amended in 1939, 53 Stat. 1373, c. 666, Title II, § 209, 42 U.S.C.A. § 409, and cannot for that reason be included in his "total wages" for the purpose of computing benefits payable to plaintiffs under the Act.

Section 205(g) of the Act provides for judicial review of the record made before the Board, and grants the District Court power "to enter, upon the pleadings and transcript of the record, a judgment affirming, modifying, or reversing the decision of the Board, with or without remanding the cause for a rehearing," subject to the condition that "findings of the Board as to any fact, if supported by substantial evidence, shall be conclusive." 42 U.S.C.A. § 405(g).

Both plaintiffs and defendants have presented motions for summary judgment under Federal Rules of Civil Procedure, Rule 56, 28 U.S.C.A. following section 723c, each claiming to be entitled to prevail as a matter of law.

There is no genuine issue as to any material fact. Plaintiff James F. Burger was employed by Rosenberg Brothers and Company at its Fresno, California, packing plant during the packing season of 1927, and was re-employed each year thereafter up to and including 1940, starting each season's work in July and finishing late in the year.

The Rosenberg Company buys, sells and processes dried fruit. While the Company's largest business is in raisins, it also handles apricots, peaches, nectarines, figs and prunes. The Company claims to be the largest packer and distributor of dried fruit in the world and to handle one-third of all dried fruit business in the United States.

The Company neither owns nor operates any farms or orchards, but purchases fruit outright from growers for processing at one of its numerous packing plants. The Fresno plant is one of the largest, employing during the peak of each season between 1,500 and 2,000 persons to grade, process, pack, and ship dried fruit purchased from growers in the San Joaquin Valley. Employees required for these operations include weighers, graders, maintenance and repairmen, electricians, truck drivers, fruit rollers, box paperers, box makers and fibre printers.

The Company makes all sales from its head office at San Francisco. Most sales are through brokers to wholesalers and jobbers, but numerous sales are made directly to the Government, and to various chain stores and bakeries. Orders received at the San Francisco office are transmitted to the Company's various packing plants to be filled.

After an order is received at the packing plant, the dried fruit is processed, packed, and shipped to the buyer. Fruit is not processed ahead of order, but is stored in the packing plant and in various receiving stations throughout the San Joaquin Valley until sales orders call for processing and packaging. Dried fruit will keep from one to two years in the condition in which it is sold by the grower to the packing company, without further processing.

As noted in the decision of the Board, "the grower of fruit who packs his own product is a rarity in the dried fruit industry and * * * the ordinary farmer, whose average is from 20 to 40 acres, performs none of the packing house functions. After growing the fruit and harvesting it, the typical farmer hauls it to his cutting shed where his cutters slice the fruit, remove the pits, and then place the halves on drying trays which are then set in the sun. In the case of peaches, apricots, and nectarines, the grower-dryer also sulphurs them. The dried fruit is then packed into sweat boxes or sacks and is delivered and sold to the packing company. Apparently prior to the establishment of modern methods of merchandising, the dried fruit was marketed by the grower to the consumer in substantially the same state of preparation in which it is now when delivered and sold to the packing company."

The packing company's function is "to receive that fruit, grade it, clean it, wash it, sulphur it, fumigate it, and package it" — and sell it. This processing and packaging is "for appearance sake and for keeping qualities."

Throughout his employment by the Rosenberg Company, plaintiff James F. Burger's principal duty was to empty boxes or sacks of dried apricots or peaches into the hoppers of grading and processing machines.

Commencing with the advent of the tax in 1937 and continuing until termination of his employment in 1940, plaintiff James F. Burger paid all taxes imposed upon employees by the Act. 42 U.S.C.A. § 1001, 26 U.S.C.A. Int.Rev.Code, § 1400. And during the same period the Rosenberg Company likewise paid all taxes imposed by reason of having Burger in its employ. 42 U.S.C.A. §§ 1004, 1101, 26 U.S.C.A. Int.Rev.Code, §§ 1410, 1600.

In 1940, both Burger and his wife became 65 years of age. Following termination of his employment in November of that year, Burger made application for primary insurance benefits under § 202(a) of the Act, as amended, and his wife, plaintiff Maude L. Burger, filed application for the wife's insurance benefits under § 202(b). 42 U.S.C.A. §§ 402(a) and 402(b).

Primary insurance benefits — the amount payable each month to an individual after he becomes entitled to such benefits — are based upon the "average monthly wage" of the one-time wage earner. 42 U.S.C.A. § 409(e). Under a formula set out in the Act the "average monthly wage" is the quotient found upon dividing, by a specified number of quarters, the "total wages" paid an individual before he became entitled to receive primary insurance benefits. 42 U.S.C.A. § 409(f).

Since the primary benefit payable monthly to the former wage earner depends upon his "average monthly wage" which in turn depends upon his "total wages," manifestly the amount of the monthly benefit is diminished by the exclusion from total wages of any payments made for services performed prior to his becoming entitled to such insurance benefit.

The exclusion of any such earnings from total wages likewise affects the wife's benefit, which is half that to which her formerwage-earner husband is entitled under the Act. 42 U.S.C.A. § 402(b).

The Social Security Board refused to include in Burger's "total wages" any of the payments made to him for services performed as an employee of the Rosenberg Company subsequent to January 1, 1940. Thus the monthly benefits awarded plaintiffs are less than they would have been if Burger's 1940 wages had been counted.

The Board's refusal to treat such 1940 earnings as part of Burger's "total wages" in computing plaintiffs' insurance benefits is grounded upon the contention that such 1940 wages were paid for "agricultural labor" and hence for services specifically excepted from the coverage of the Act.

As amended in 1939 53 Stat. 1373, the Act defines "wages" to include "all remuneration for employment" and states that the term "employment" means "any service performed after December 31, 1936, and prior to January 1, 1940, which was employment as defined in § 410(b) 42 U.S.C.A. § 410(b) * * * prior to January 1, 1940 * * * and any service, of whatever nature, performed after December 31, 1939, by an employee for the person employing him * * * except —

"(1) Agricultural labor * * * 42 U. S.C.A. § 409(a), (b) (1); 26 U.S.C.A. Int. Rev.Code, §§ 1426, 1607."

The Board considered Burger's services to the Rosenberg Company prior to January 1, 1940, as not being "agricultural labor" within the meaning of the Act. Thus the Board held such pre-1940 services to constitute "employment" and the remuneration therefor "wages" to be included in computing Burger's insurance benefits.

At the same time the Board decided that the identical services performed for the identical employer by the identical employee after January 1, 1940, did constitute "agricultural labor" within the meaning of the Act, as amended. Thus Burger's services after January 1, 1940, were held not to constitute "employment" and the remuneration therefor not to be included as "wages" in computing plaintiffs' benefits.

The facts standing beyond dispute, the issue for decision is one of law: whether or not, after January 1, 1940, Burger's work of emptying containers of dried fruit into hoppers of grading and processing machines at the packing house of the Rosenberg Company was "agricultural labor" within the meaning of the Act, as amended.

From the time the legislation was originally enacted in 1935 until the 1939 amendment became effective January 1, 1940, Congress had made no attempt to define the term "agricultural labor" in either the Social Security Act or applicable provisions of the Internal Revenue Code. Congress had, however, empowered the Social Security Board and the Secretary of the Treasury to make and publish administrative and enforcement regulations, not inconsistent with the statute. 42 U.S.C.A. §§ 1008, 1108, 1302; 26 U.S.C.A. Int.Rev.Code, §§ 1429, 1609.

Regulations thus promulgated prior to the 1939 amendments declare that the term "agricultural labor" includes "all services performed —

"(a) By an employee, on a farm, in connection with the cultivation of the soil, the raising and harvesting of crops * * *; or

"(b) By an employee in connection with the processing of articles from materials which were produced on a farm; also the...