Celebrezze v. Wifstad

• Decision Date: 06 March 1963
• Docket Number: No. 17021.,17021.
• Citation: 314 F.2d 208
• Parties: Anthony J. CELEBREZZE, Secretary of Health, Education and Welfare, Appellant, v. Martin WIFSTAD, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

314 F.2d 208 (1963)

Anthony J. CELEBREZZE, Secretary of Health, Education and Welfare, Appellant, v. Martin WIFSTAD, Appellee.

No. 17021.

United States Court of Appeals Eighth Circuit.

March 6, 1963.

Jerry C. Straus, Atty., Dept. of Justice, Washington, D. C., for appellant and Joseph D. Guilfoyle, Acting Asst. Atty. Gen., Washington, D. C., John O. Garaas, U. S. Atty., Fargo, N. D., and John G. Laughlin, Atty., U. S. Dept of Justice, Washington, D. C., on the brief.

Fred E. Whisenand, Jr., of Davidson & Whisenand, Williston, N. D., and Wallace L. Herreid, Crosby, N. D., for appellee.

Before VOGEL, BLACKMUN and RIDGE, Circuit Judges.

RIDGE, Circuit Judge.

Appellee's application for old-age insurance benefits under the Social Security Act (42 U.S.C.A. § 401, etc.) based on a claim of self-employment income derived from farm land having been denied by the Secretary of Health, Education and Welfare, he commenced this action under Section 205(g) of the Act (42 U.S.C.A. § 405(g)) to have that administrative determination judicially reviewed. The District Court, by its opinion recorded at 198 F.Supp. 198, reversed the decision of the Secretary and ordered payment of appellee's old-age insurance benefits claim.

The Secretary has appealed therefrom, claiming that the District Court erred in failing to treat his determination — that appellee had not satisfied the requirements for "material participation in the production or management of production" as required by Section 211(a) of the Social Security Act (42 U.S.C.A. § 411(a)) — "as a conclusive factual determination, supported by substantial evidence." Hence the issue for our determination is whether under the undisputed facts here appellee established that he had an "arrangement" with the cultivator of his farm land which provided for appellee's "material participation" in the "management of the production of — agricultural — commodities" thereon and that he did in fact so participate. Hence "we have before us — a fully reviewable question of law," (Conlay v. Ribicoff, 294 F.2d 190, 194 (9 Cir. 1961) for the evidentiary facts and the reasonable inferences therefrom will provide an answer as to whether the Secretary has made a proper determination of the applicability of Section 211(a) (1) supra to the facts here involved.

In the light of the growing judicial decisions in the field of claims for old-age insurance benefits based on self-employment income from farm operations it would be superfluous for us to restate applicable law and the standards for our review of the Secretary's decision in the case at bar. Foster v. Celebrezze, 313 F. 2d 604 (8 Cir. 1963); Hoffman v. Ribicoff, 305 F.2d 1 (8 Cir. 1962); Conley v. Ribicoff, supra; Harper v. Flemming, 288 F.2d 61 (4 Cir. 1961); Henderson v. Flemming, 283 F.2d 882 (5 Cir. 1960); Boyd v. Folsom, 257 F.2d 778 (3 Cir. 1958). We think it sufficient to say that judicial review under the circumstances here depends upon whether the Referee's decision denying appellee's claim, which became the final decision of the Secretary, is supported by substantial evidence, as provided in Section 205(g) of the Act, supra. Judicial review under that section demands that a reviewing court satisfy itself "that the agency determination has warrant in the record, viewing that record as a whole, and a reasonable basis in law" therefor. Boyd v. Folsom, supra, l. c. 781. The performance of that judicial function can only be accomplished by a "case-to-case consideration." Hoffman v. Ribicoff, supra, l. c. 9; Universal Camera Corp. v. N. L. R. B., 340 U.S. 474, 71 S.Ct. 456, 95 L.Ed. 456 (1951).

The facts in the case at bar may be tersely stated as follows: Appellee, a bachelor 76 years of age, owned 480 acres of land in North Dakota which he had dry-farmed for many years prior to 1951 or 1952. At that time, because of a heart condition, he made an "arrangement" with Merle Gunlock, his adjoining neighbor, to farm his (appellee's) farm. That arrangement was oral and has always remained so. Although appellee and Gunlock "never did talk about a contract" it is manifest that the "meeting of minds" was that Gunlock would furnish the seed, do the seeding and cultivation and would pay one-half the combining, spraying and harvesting expense, appellee would pay the other half of such expense, maintain the two granaries on the farm; that they would talk over the farm operations, but appellee would have final say as to decisions thereon; and the crop would be split three-fourths to Gunlock and one-fourth to appellee. However, that "arrangement" was changed in 1956. Appellee then agreed to, and did thereafter, select and furnish all the seed, pay fifty per cent (50%) of the combining, spraying and harvesting and the cost of hauling the grain to the elevator where the crop was divided fifty-fifty. In Gunlock's own language:

"— we then started renting that way. — He (appellee) had to look after his interest then, you see — like he had to furnish the seed and he told me what he wanted summer fallowed, and he had to hire me to haul his share of the grain. He had to pay half the combining — spraying — and more or less I was from then on — working for him (i. e. for appellee)."

When the original arrangement was first made between appellee and Gunlock — appellee was at his farm every week in the summertime and talked over with Gunlock the farm operations, i. e. about the seed to be sown, the planting thereof, the cultivation of the soil, spraying, weeding, what land was to be summer fallowed, and he was always present at harvesting. In 1956-1957, appellee visited his farm less often as he was required to give up his automobile on advice of his doctor who told him he should not drive alone with his heart condition. Yet he did visit the farm six to eight times during the planting and growing season, inspected the crops and talked over with Gunlock the cultivation, weeding and spraying for grasshoppers, and harvesting activities on the farm. Between visits to the farm he had a telephone available to discuss farm conditions with Gunlock, and did so.

One issue here is whether there was an "arrangement" between appellee and Gunlock which provided for "material participation" by appellee "in the production of agricultural — commodities" on his farm, within the ambit of 211(a) (1) supra. The Referee, in his decision which was adopted verbatim by the Secretary, concluded, "there is no evidence here of an `arrangement' calling for material participation" by appellee. In this connection, the Referee said:

"It is difficult for the hearing examiner to piece together from the alleged oral agreement under which the parties operated, any evidence that the parties had any `arrangement\' providing for material participation by the claimant. Of course, the oral agreement did not spell out any `arrangement\' for material participation. In the absence of any `arrangement\' the issue of actual material participation does not arise, Secondly, as aforestated, in the absence of any `arrangement\' activities which are purely voluntary on the part of the landlord do not count. However, for the sake of discussion, we will presume, without conceding, the existence of an `arrangement\' to materially participate, if we find actual material participation."

Since the final decision of the Hearing Examiner was solely premised in a finding "that claimant did not materially participate in the production or management of production of farm commodities in either 1957 or 1958" and there was no specific finding either way that appellee had an "arrangement to materially participate" in the production, we think the only legal conclusion to be reached from the facts is that there was such an "arrangement" between appellee and Gunlock, within the ambit of Section 211(a) (1) of the Act supra.

It is manifest from the record here that throughout the existence of the "arrangement" between appellee and Gunlock they conferred on all farming operations, that they never had any misunderstanding in respect thereto, that Gunlock considered his farming was to be in accordance to appellee's desires and that he considered appellee had to be satisfied in respect to his (Gunlock's) farming operations. This is made evident by Gunlock's testimony when he said:

"Q. Who would have the final say on spraying?

"A. Well____

"Q. Let\'s assume that you and he didn\'t agree. He saw a few grasshoppers and — let\'s say, the whole thing\'s going to cost $75 to spray them — `let\'s not\'. And you thought `Let\'s.\' Suppose that situation — who would — whose decision would control?

"A. Well, we\'ve never come to any understanding like that. I know — I know when we were infested with grasshoppers there, why — why Martin (appellee) was the first one to suggest spraying, and, of course, I agreed upon it. And, of course, it was done by____

"Q. It was a joint decision in other words.

"A. Not necessarily. He\'s the one that wanted to do the spraying, you see."

As a consequence, the Referee in his report stated:

"When they did consult on this question they were in agreement, and a joint agreement was made to spray by airplane. The tenant conceded that in case of conflict the final decision in this area was with the claimant."

Appellee's positive testimony is: "I do all the inspecting and management necessary on my farm. I have the right to and do make all final management decisions." Although by his other testimony he did not spell out in detail all the directions and control of a managerial character performed by him, the only reasonable inference to be made from all the facts appearing in the record is that he did act in a managerial capacity. From a consideration of the record as a whole it appears that appellee and Gunlock did discuss and talk over all matters relating to the farm operations; that they always agreed thereon, but appellee very apparently had the final decision in all areas of such operations under the "...