Flemming v. Nestor

Decision Date20 June 1960
Docket NumberNo. 54,54
Citation363 U.S. 603,80 S.Ct. 1367,4 L.Ed.2d 1435
PartiesFLEMMING, Secretary of Health, Education, and Welfare, Appellant, v. Ephram NESTOR
CourtU.S. Supreme Court

Mr. John F. Davis, Washington, D.C., for appellant.

Mr. David Rein, Washington, D.C., for appellee.

Mr. Justice HARLAN delivered the opinion of the Court.

From a decision of the District Court for the District of Columbia holding § 202(n) of the Social Security Act (68 Stat. 1083, as amended, 42 U.S.C. § 402(n), 42 U.S.C.A. § 402(n)) unconstitutional, the Secretary of Health, Education, and Welfare takes this direct appeal pursuant to 28 U.S.C. § 1252, 28 U.S.C.A. § 1252. The challenged section, set forth in full in the margin, 1 provides for the termination of old-age, survivor and disability insurance benefits payable to, or in certain cases in respect of, an alien individual who, after September 1, 1954 (the date of enactment of the section), is deported under § 241(a) of the Immigration and Nationality Act (8 U.S.C. § 1251(a), 8 U.S.C.A. § 1251(a)) on any one of certain grounds specified in § 202(n).

Appellee, an alien, immigrated to this country from Bulgaria in 1913, and became eligible for old-age benefits in November 1955. In July 1956 he was deported pursuant to § 241(a)(6)(C)(i) of the Immigration and Nationality Act for having been a member of the Communist Party from 1933 to 1939. This being one of the benefit-termination deportation grounds specified in § 202(n), appellee's benefits were terminated soon thereafter, and notice of the termination was given to his wife who had remained in this country.2 Upon his failure to obtain administrative reversal of the decision, appellee commenced this action in the District Court, pursuant to § 205(g) of the Social Security Act (53 Stat. 1370, as amended 42 U.S.C. § 405(g), 42 U.S.C.A. § 405(g)), to secure judicial review.3 On cross-motions for summary judgment, the District Court ruled for appellee, holding § 202(n) unconstitutional under the Due Process Clause of the Fifth Amendment in that it deprived appellee of an accrued property right. 169 F.Supp. 922. The Secretary prosecuted an appeal to this Court, and, subject to a jurisdictional question hereinafter discussed, we set the case down for plenary hearing. 360 U.S. 915, 79 S.Ct. 1433, 3 L.Ed.2d 1532.

The preliminary jurisdictional question is whether 28 U.S.C. § 2282, 28 U.S.C.A. § 2282, is applicable, and therefore required that the case be heard below before three judges, rather than by a single judge, as it was. Section 2282 forbids the issuance, except by a three-judge District Court, of any 'interlocutory or permanent injunction restraining the enforcement, operation or execution of any Act of Congress for repugnance to the Constitution * * *.' Neither party requested a three-judge court below, and in this Court both parties argue the inapplicability of § 2282. If the provision applies, we cannot reach the merits, but must vacate the judgment below and remand the case for consideration by a three-judge District Court. See Federal Housing Administration v. The Darlington, Inc., 352 U.S. 977, 77 S.Ct. 381, 1 L.Ed.2d 363.

Under the decisions of this Court, this § 205(g) action could, and did, draw in question the constitutionality of § 202(n). See, e.g., Anniston Mfg. Co. v. Davis, 301 U.S. 337, 345 346, 57 S.Ct. 816, 820, 81 L.Ed. 1143. However, the action did no more. It did not seek affirmatively to interdict the operation of a statutory scheme. A judgment for appellee would not put the operation of a federal statute under the restraint of an equity decree; indeed, apart from its effect under the doctrine of stare decisis, it would have no other result than to require the payment of appellee's benefits. In these circumstances we think that what was said in International Ladies' Garment Workers' Union v. Donnelly Garment Co., 304 U.S. 243, 58 S.Ct. 875, where this Court dealt with an analogous situation, is controlling here:

'(The predecessor of § 2282) does not provide for a case where the validity of an act of Congress is merely drawn in question, albeit that question be decided, but only for a case where there is an application for an interlocutory or permanent injunction to restrain the enforcement of an act of Congress. * * * Had Congress intended the provision * * *, for three judges and direct appeal, to apply whenever a question of the validity of an act of Congress became involved, Congress would naturally have used the familiar phrase 'drawn in question' * * *.' Id., 304 U.S. at page 250, 58 S.Ct. at page 879.

We hold that jurisdiction over the action was properly exercised by the District Court, and therefore reach the merits.


We think that the District Court erred in holding that § 202(n) deprived appellee of an 'accrued property right.' 169 F.Supp., at page 934. Appellee's right to Social Security benefits cannot properly be considered to have been of that order.

The general purposes underlying the Social Security Act were expounded by Mr. Justice Cardozo in Helvering v. Davis, 301 U.S. 619, 640—645, 57 S.Ct. 904, 908—911, 81 L.Ed. 1307. The issue here, however, requires some inquiry into the statutory scheme by which those purposes are sought to be achieved. Payments under the Act are based upon the wage earner's record of earnings in employment or self-employment covered by the Act, and take the form of old-age insurance and disability insurance benefits inuring to the wage earner (known as the 'primary beneficiary'), and of benefits, including survivor benefits, payable to named dependents ('secondary beneficiaries') of a wage-earner. Broadly speaking, eligibility for benefits depends on satisfying statutory conditions as to (1) employment in covered employment or self-employment (see § 210(a), 42 U.S.C. § 410(a), 42 U.S.C.A. § 410(a)); (2) the requisite number of 'quarters of coverage'—i.e., three-month periods during which not less than a stated sum was earned—the number depending generally on age (see §§ 213—215, 42 U.S.C. §§ 413—415, 42 U.S.C.A. §§ 413—415); and (3) attainment of the retirement age (see § 216(a), 42 U.S.C. § 416(a), 42 U.S.C.A. § 416(a)). § 202(a), 42 U.S.C. § 402(a), 42 U.S.C.A. § 402(a).4 Entitlement to benefits once gained is partially or totally lost if the beneficiary earns more than a stated annual sum, unless he or she is at least 72 years old. § 203(b, e), 42 U.S.C. § 403(b, e), 42 U.S.C.A. § 403(b, e). Of special importance in this case is the fact that eligibility for benefits, and the amount of such benefits, do not in any true sense depend on contribution to the program through the payment of taxes, but rather on the earnings record of the primary beneficiary.

The program is financed through a payroll tax levied on employees in covered employment, and on their employers. The tax rate, which is a fixed percentage of the first $4,800 of employee annual income, is set at a scale which will increase from year to year, presumably to keep pace with rising benefit costs. I.R.C. of 1954, §§ 3101, 3111, 3121(a), 26 U.S.C.A. §§ 3101, 3111, 3121(a). The tax proceeds are paid into the Treasury 'as internal-revenue collections,' I.R.C., § 3501, 26 U.S.C.A. § 3501, and each year an amount equal to the proceeds is appropriated to a Trust Fund, from which benefits and the expenses of the program are paid. § 201, 42 U.S.C. § 401, 42 U.S.C.A. § 401. It was evidently contemplated that receipts would greatly exceed disbursements in the early years of operation of the system, and surplus funds are invested in government obligations, and the income returned to the Trust Fund. Thus, provision is made for expected increasing costs of the program.

The Social Security system may be accurately described as a form of social insurance, enacted pursuant to Congress' power to 'spend money in aid of the 'general welfare," Helvering v. Davis, supra, 301 U.S. at page 640, 57 S.Ct. at page 908, whereby persons gainfully employed, and those who employ them, are taxed to permit the payment of benefits to the retired and disabled, and their dependents. Plainly the expectation is that many members of the present productive work force will in turn become beneficiaries rather than supporters of the program. But each worker's benefits, though flowing from the contributions he made to the national economy while actively employed, are not dependent on the degree to which he was called upon to support the system by taxation. It is apparent that the noncontractual interest of an employee covered by the Act cannot be soundly analogized to that of the holder of an annuity, whose right to benefits is bottomed on his contractual premium payments.

It is hardly profitable to engage in conceptualizations regarding 'earned rights' and 'gratuities.' Cf. Lynch v. United States, 292 U.S. 571, 576—577, 54 S.Ct. 840, 842, 78 L.Ed. 1434. The 'right' to Social Security benefits is in one sense 'earned,' for the entire scheme rests on the legislative judgment that those who in their productive years were functioning members of the economy may justly call upon that economy, in their later years, for protection from 'the rigors of the poor house as well as from the haunting fear that such a lot awaits them when journey's end is near.' Helvering v. Davis, supra, 301 U.S. at page 641, 57 S.Ct. at page 909. But the practical effectuation of that judgment has of necessity called forth a highly complex and interrelated statutory structure. Integrated treatment of the manifold specific problems presented by the Social Security program demands more than a generalization. That program was designed to function into the indefinite future, and its specific provisions rest on predications as to expected economic conditions which must inevitably prove less than wholly accurate, and on judgments and preferences as to the proper allocation of the Nation's resources which evolving economic and social conditions will of...

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