Flemming v. Huycke

• Decision Date: 30 November 1960
• Docket Number: No. 16822.,16822.
• Citation: 284 F.2d 546
• Parties: Arthur S. FLEMMING, Secretary of Health, Education and Welfare, Appellant, v. Marcelle H. HUYCKE, Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

284 F.2d 546 (1960)

Arthur S. FLEMMING, Secretary of Health, Education and Welfare, Appellant, v. Marcelle H. HUYCKE, Appellee.

No. 16822.

United States Court of Appeals Ninth Circuit.

November 30, 1960.

George C. Doub, Asst. Atty. Gen., Samuel D. Slade, Donald H. Green, Attys., Department of Justice, Washington, D. C., C. E. Luckey, U. S. Atty., Portland, Or., for appellant.

Hutchinson, Schwab & Burdick, Dwight L. Schwab, Samuel B. Weinstein, Portland, Or., for appellee.

Before STEPHENS, JERTBERG and KOELSCH, Circuit Judges.

STEPHENS, Circuit Judge.

The sole question raised on this appeal is whether pursuant to 42 U.S.C. A. § 405(g), the District Court was correct in deeming unsupported by substantial evidence the decision of the Referee of the Social Security Administration that appellee's decedent, Dr. Austin H. Huycke, was not an employee of Dr. Lowell S. Devoe, Jr. from February 1, 1955 until July 17, 1956, the date of Dr. Huycke's death. Appellant, citing Walker v. Altmeyer, 2d Cir., 1943, 137 F.2d 531 and United States v. LaLone, 9 Cir., 1945, 152 F.2d 43, contends that the Referee's determination was reasonably reached upon the evidence presented and should not have been disturbed. Since the Referee's finding was predicated upon his judgment of the facts of the case rather than upon an interpretation of the law, the substantial evidence test is indeed applicable. See Irvin v. Hobby, D.C. N.D.Iowa 1955, 131 F.Supp. 851, 863.

The pertinent statutory provision is 42 U.S.C.A. § 410(k) (2), which declares that "any individual who, under the usual common law rules applicable in determining the employer-employee relationship, has the status of an employee" is also an employee insofar as federal old age and survivors insurance benefits are concerned. See also Internal Revenue Code of 1954, § 3121(d) (2), 26 U.S.C.A. § 3121(d) (2), (setting out an identical definition of "employee" for purposes of the Federal Insurance Contributions Act). We doubt if much would be gained by here attempting to analyze the confusing treatment given to the employer-employee relationship under the social security laws by both Congress and the courts. A penetrating and exhaustive analysis can be found in Broden, General Rules Determining the Employment Relationship Under Social Security Laws: After Twenty Years an Unsolved Problem, 33 Temple L.Q. 307 and 381 (1960). Suffice it to say that we have heretofore applied what we still think is the proper test, a test in which the totality of the situation, in contradistinction to the single factor of control of the alleged employee by the alleged employer, is governing. Westover v. Stockholders Publishing Co., 9 Cir., 1956, 237 F.2d 948, 951. See also United States v. Silk, 1947, 331 U.S. 704, 719, 67 S.Ct. 1463, 91 L.Ed. 1757; Ringling Bros.-Barnum & Bailey Combined Shows, Inc. v. Higgins, 2 Cir. 1951, 189 F.2d 865, 869. The pertinent administrative regulations can be viewed either as in accord with our position or as placing conclusive emphasis on the factor of control. In any event, these regulations indicate some of the variety of factors which should be examined in determining whether an employment relationship exists for social security purposes. Both 20 C.F.R. § 404-1004(c) (2) (1949 ed., 1960 Supp.), apropos of benefits and 26 C.F.R. § 31.3121(d)-1(c) (2) (1960 Revision), apropos of contributions, provide:

"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 is 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. * * *"

Among additional factors to be considered are the opportunities of the alleged employee for profit or loss and his investment in the work facilities. Westover v. Stockholders Publishing Co., supra, 237 F.2d at page 951. With this broad scope of inquiry in mind, we turn to the facts in the instant case.

By agreement dated January 31, 1955, Dr. Huycke transferred his practice to Dr. Devoe, a younger physician who was and had for some time been the employee of Dr. Huycke. The agreement is not long, and the interpretation placed on it by the Referee weighed heavily in his decision. We set it out in full at this juncture for easy reference:

"Agreement of Transfer of Practice

"Agreement of Transfer of my Practice to Lowell S. Devoe, Jr., M.D., on February 1, 1955, shall be under the following conditions:

"I. You will assume full business management of the office and have free use of all equipment, supplies, etc.

"II. All accounts receivable for professional services rendered prior to February 1, 1955, are to remain as my property. The secretary will continue to send out my statements on these accounts as usual. Likewise you shall collect and receive all payments for and be the owner of all accounts receivable on professional services rendered by either of us after January 31, 1955.

"III. I will continue to work with you and cooperate in the provision of service to our patients, except that I will take more time off when it is convenient.

"IV. This agreement shall terminate on January 1, 1958. On this date in consideration of payments as described in item V, below, I shall transfer all equipment, medical records, office furnishings, etc., which are now in this office to your ownership, and free from any debt, lien, title or mortgage and from any claim on my part.

"V. In consideration of the above stated you will pay me as follows:

"A. To be considered as purchase of my medical practice, to include its good will, rights to office location, and aforementioned furnishings and equipment; $100.00 per month from February 1, 1955, to January 1, 1958.

"B. To be considered as salary for the professional services, as follows: $600.00 per month from February 1, 1955, to January 1, 1956. $500.00 per month from January 1, 1956, to January 1, 1957. $400.00 per month from January 1, 1957, to January 1, 1958.

"VI. If any occasion arises before January 1, 1958, in that I will be unable to work, you will pay me or my estate $300.00 per month until January 1, 1958, on which date, all equipment, x-ray, instruments, etc., I will donate to you entirely and free from any claim on my part or that of my heirs.

"VII. If any misfortune should happen

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