Cody v. Ribicoff

• Decision Date: 25 April 1961
• Docket Number: No. 16649.,16649.
• Citation: 289 F.2d 394
• Parties: William E. CODY, Appellant, v. Abraham A. RIBICOFF, Secretary of Health, Education and Welfare, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

289 F.2d 394 (1961)

William E. CODY, Appellant, v. Abraham A. RIBICOFF, Secretary of Health, Education and Welfare,^* Appellee.

No. 16649.

United States Court of Appeals Eighth Circuit.

April 25, 1961.

Louis S. Goldberg, Sioux City, Iowa, for appellant.

Donald H. Green, Atty., Dept. of Justice, Washington, D. C., for appellee, William H. Orrick, Jr., Asst. Atty. Gen., Francis E. Van Alstine, U. S. Atty., Sioux City, Iowa, and Alan S. Rosenthal, Atty., Dept. of Justice, Washington, D. C., were with him on the brief.

Before JOHNSEN, Chief Judge, and SANBORN and MATTHES, Circuit Judges.

MATTHES, Circuit Judge.

Dr. William E. Cody filed application for social security benefits on the theory that he had been an employee of Doctors Bettler and Beye from June 1, 1955 until August 1, 1957, thereby qualifying for such benefits under the Social Security Act, as amended, Title 42 U.S. C.A. § 401 et seq. The Bureau of Old-Age and Survivors Insurance of the Social Security Administration ruled adversely to appellant, and a referee of the Appeals Council, after a hearing, found that appellant was not an employee of Doctors Bettler and Beye and that he was not entitled to old-age insurance benefits. Upon request, the Appeals Council reviewed the findings of the referee and affirmed his ultimate decision. The decision of the Appeals Council is the final decision of the Secretary of Health, Education and Welfare for the purpose of judicial review, as authorized by Title 42 U.S.C.A. § 405(g). Crooks v. Folsom, D.C.E.D.N.Y., 156 F.Supp. 631, 635; Pirone v. Flemming, D.C.S.D.N.Y., 183 F. Supp. 739, 740, affirmed Pirone v. Flemming, 2 Cir., 278 F.2d 508.

Following exhaustion of administrative processes, Dr. Cody instituted an action under § 405(g), supra, in the United States District Court to obtain a review of the decision of the Secretary. As provided therein, and as part of its answer, the Secretary filed a certified copy of the transcript of the record, including the evidence upon which the findings and decision complained of were based. From the judgment granting the Secretary's motion for summary judgment and affirming the decision of the Secretary, the appeal was timely taken.¹

At the outset, we observe that by the provisions of § 405(b) the Secretary is directed to make findings of fact as to rights of any individual applying for payments of benefits under the Act. Section 405(g) provides that "(t)he findings of the Secretary as to any fact, if supported by substantial evidence, shall be conclusive, * * *." The courts have consistently recognized that the scope of review in the district court as well as in the court of appeals is limited to determining whether, upon review of the record as a whole, there is substantial evidence to support the findings of the Secretary. Kohrs v. Flemming, 8 Cir., 272 F.2d 731; Gainey v. Flemming, 10 Cir., 279 F.2d 56, at page 58; Ferenz v. Folsom, 3 Cir., 237 F.2d 46, 49, certiorari denied 352 U.S. 1006, 77 S.Ct. 569, 1 L.Ed.2d 551; Henderson v. Flemming, 5 Cir., 283 F.2d 882, 884; Goldman v. Folsom, 3 Cir., 246 F.2d 776, 778; Flemming v. Huycke, 9 Cir., 284 F.2d 546. "And the conclusive effect of findings of fact made by the secretary includes inferences from the evidence if there was substantial basis for them. Folsom v. O'Neal, 10 Cir., 250 F.2d 946; Carqueville v. Flemming, 7 Cir., 263 F.2d 875." Gainey v. Flemming, supra, 279 F.2d at page 58.

In a leading and oft cited case dealing with the scope of judicial review of findings by an administrative agency, the Supreme Court, in Universal Camera Corp. v. National Labor Relations Board, 340 U.S. 474, at page 477, 71 S.Ct. 456, at page 459, 95 L.Ed. 456, stated:

"This Court read `evidence\' to mean `substantial evidence,\' Washington, V. & M. Coach Co. v. Labor Board, 301 U.S. 142 57 S.Ct. 648, 81 L.Ed. 965, and we said that `substantial evidence is more than a mere scintilla. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.\' Consolidated Edison Co. v. National Labor Relations Board, 305 U.S. 197, 229 59 S.Ct. 206, 217, 83 L.Ed. 126. Accordingly, it `must do more than create a suspicion of the existence of the fact to be established * * * it must be enough to justify, if the trial were to a jury, a refusal to direct a verdict when the conclusion sought to be drawn from it is one of fact for the jury.\' National Labor Relations Board v. Columbian Enameling & Stamping Co., 306 U.S. 292, 300 59 S.Ct. 501, 505, 83 L.Ed. 660."

and in the same opinion at page 488 of 340 U.S., at page 464 of 71 S.Ct.: "The substantiality of evidence must take into account whatever in the record fairly detracts from its weight."

In making determination of whether Dr. Cody occupied the status of an "employee" for the purposes of the social security laws, our decision is to be governed by § 410(k) (2), Title 42 U.S.C.A. which defines an employee as "any individual who, under the usual common law rules applicable in determining the employer-employee relationship, has the status of an employee * * *." (Emphasis supplied.) Just what these "usual common law rules" may be has been the subject of some dispute within the courts, both before and after the 1947 decisions of the Supreme Court in United States v. Silk, 331 U.S. 704, 67 S.Ct. 1463, 91 L.Ed. 1757, and Bartels v. Birmingham, 332 U.S. 126, 67 S.Ct. 1547, 91 L.Ed. 1947.² For an interesting and comprehensive review of this area of the law, see Broden, "General Rules Determining the Employment Relationship Under Social Security Laws: After Twenty Years an Unsolved Problem," 33 Temp.L.Q. 307, 381.³ Regulation No. 404.1004(C) of Title 20, Code of Federal Regulations, gives further guidance by defining "employee" in this language:

"(2) Generally such relationship exists when the person for whom services are performed has the right to control and direct the individual who performs the services, not only as to the result to be accomplished by the work but also as to the details and means by which that result is accomplished. That is, an employee is subject to the will and control of the employer not only as to what shall be done but how it shall be done. In this connection, it it not necessary that the employer actually direct or control the manner in which the services are performed; it is sufficient if he has the right to do so. The right to discharge is also an important factor indicating that the person possessing that right is an employer. Other factors characteristic of an employer, but not necessarily present in every case, are the furnishing of tools and the furnishing of a place to work, to the individual who performs the services. In general, if an individual is subject to the control or direction of another merely as to the result to be accomplished by the work and not as to the means and methods for accomplishing the result, he is an independent contractor. * * *." (Emphasis supplied.)

From our review of the cases, it seems clear that the factor of control, if not determinative, is of considerable importance in applying common law standards, considered in conjunction with, and in addition to, other factors which may be present in each individual case. See Dimmitt-Rickhoff-Bayer Real Estate Co. v. Finnegan, 8 Cir., 179 F.2d 882, certiorari denied, 340 U.S. 823, 71 S.Ct. 57, 95 L.Ed. 605, and United States v. Kane, 8 Cir., 171 F.2d 54, where various factors were considered.

With the foregoing controlling principles in mind, and in order to determine whether the Secretary's findings are supported by substantial evidence, we turn to the pertinent facts, which were established from uncontroverted evidence in the form of documents, statements, letters and the oral testimony of Dr. Cody adduced at the hearing before the referee.⁴ In summary, Dr. Cody, born in 1888, was a medical doctor, specializing in surgery, and he had practiced his profession in Sioux City, Iowa, for about forty years. In 1945 he formed a partnership with Dr. Phillip L. Bettler, also a surgeon, and then or sometime later sold a half interest in his equipment to Dr. Bettler. In 1950 Dr. Cyrus L. Beye, also a surgeon, became associated with the partnership.⁵ This arrangement continued until June 1, 1955. Prior to that date and because of a heart attack previously suffered, coupled with general failing health and a "worn spirit" following many years of "heavy surgery," Dr. Cody had indicated a desire to be relieved of his duties as an active surgeon and the responsibilities imposed upon him as a member of the partnership. Negotiations resulted in an employment agreement being entered into on June 1, 1955, between "the medical partnership of Drs. Bettler & Beye * * * of the one part, and Dr. Wm. E. Cody * * * of the other part." Since the agreement, in toto, appears in the opinion of the district court, 187 F.Supp. at pages 750, 751 and 752, we shall forego incorporating the same in this opinion. In substance, it recites the reason for appellant's retiring from the partnership, the formation of the new partnership of Doctors Bettler and Beye, the desire of the firm to engage the services of Dr. Cody as "associate physician" and his acceptance of such engagement; the effective period of the agreement, which was from June 1, 1955 to July 31, 1957; a provision requiring Dr. Cody "to devote a reasonable measure of his time to serve the professional practice of the firm. Dr. Cody shall himself determine the extent of his activity;" it contains a provision with regard to fees and Dr. Cody's compensation, the latter being fixed on a percentage basis with the amount decreasing from a maximum of 20% to a minimum of 10% of the net income which was to be computed in the manner provided in the contract. Paragraph 6 provided that Dr. Cody's compensation "shall be subject to the customary payroll deduction for withholding and other taxes," and paragraph 7, that "this contract is not and...