Foster v. Flemming

Decision Date29 December 1960
Docket NumberCiv. No. 671.
Citation190 F. Supp. 908
PartiesLulu Nettie FOSTER, Plaintiff, v. Arthur S. FLEMMING, Secretary of Health, Education, and Welfare, Defendant.
CourtU.S. District Court — Northern District of Iowa

COPYRIGHT MATERIAL OMITTED

Lloyd B. Foster, Chicago, Ill., Allen Heald and W. Howard Smith, Cedar Rapids, Iowa, for plaintiff.

F. E. Van Alstine, U. S. Dist. Atty., and Philip C. Lovrien, Asst. U. S. Dist. Atty., Sioux City, Iowa, for defendant.

GRAVEN, District Judge.

This is an action brought pursuant to Section 205(g) of the Social Security Act, 42 U.S.C.A. § 401 et seq., whereby the plaintiff, after first exhausting all administrative remedies, seeks a review of the final decision of the defendant Secretary of Health, Education and Welfare denying her application for old-age benefits under Title II of that Act, as amended. The defendant has answered, filing a certified copy of the transcript of the record as required by the Act, and has moved for summary judgment. In the review of administrative decisions under the Social Security Act, it is customary for the Secretary of Health, Education and Welfare to move for summary judgment. The courts, in reviewing Social Security Act decisions, are limited to the record before the Referee. Irvin v. Hobby, D.C.N.D.Iowa 1955, 131 F.Supp. 851, 856; Holland v. Altmeyer, D.C.1945, 60 F.Supp. 954, 960. Therefore, the fact that the ruling of the reviewing court is cast in the form of a ruling on a motion for summary judgment is without legal significance.

The plaintiff, a widow, was 78 years of age at the time she applied for old-age insurance benefits in April, 1957. At this time and at the time of the commencement of this action, she resided in the city of Cedar Rapids, Linn County, Iowa. The record indicates that the plaintiff was reared on a farm and that following her marriage at age 23 she and her husband lived on various farms for many years. They began at first as tenants and eventually they acquired a 112-acre farm in Keokuk County, Iowa, near the town of What Cheer, Iowa. Plaintiff's husband died in 1946 and, at the time of the commencement of this action, she was the sole owner of this farm. The pivotal question to be decided upon this review is whether the plaintiff's income from the operation of this farm in the years 1956 and 1957 qualifies as "net earnings from self-employment" within the meaning of Section 211(a) (1) of the Social Security Act, as amended in 1956, 42 U.S.C.A. § 411(a) (1), and the corresponding section of the Internal Revenue Code 1954, 26 U.S.C.A. § 1402.

During 1956 and 1957, the plaintiff lived in Cedar Rapids and leased her farm on a combination crop-share and cash rent basis. She employed a farm management company during this period to perform certain managerial functions on her behalf. In the federal income tax returns which plaintiff filed with the Internal Revenue Service for 1956 and 1957, she listed the income from the farm in question as self-employment income and paid the corresponding self-employment tax thereon. On April 24, 1957, she filed her claim for old-age benefits at the Cedar Rapids, Iowa, district office of the Bureau of Old-Age and Survivors Insurance of the Social Security Administration. That office notified the plaintiff by a letter dated May 29, 1957, that she was not at that time entitled to benefits because her reported quarters of coverage had been reduced to none because of the Bureau's determination that they were all based upon rental income from real estate which is not includable as self-employment income under Section 211(a) (1) of the Act (42 U.S.C.A. § 411(a) (1)) or Section 1402 (a) (1) of the Internal Revenue Code. The letter informed the plaintiff that the District Director of Internal Revenue would be notified and asked to refund to her the tax in question. Plaintiff asked the Bureau to reconsider its determination and when it reaffirmed its position, she sought to have her claim reviewed at a Referee's hearing as she was entitled to do under the applicable regulations. 20 C.F.R. Sec. 403.709. Such a hearing was held and the Referee found that the plaintiff was not entitled to old-age benefits. The plaintiff was represented by counsel at the hearing. The reasons for the Referee's ruling were fully set forth in an elaborate opinion which will presently be discussed. The plaintiff's request that the Referee's decision be reviewed by the Appeals Council of the Social Security Administration was denied. The decision of the Referee thus becomes the final decision of the Administrator within the meaning of Section 205(g) of the Act (42 U.S. C.A. § 405(g)) providing for review of such final decision. See Goldman v. Folsom, 3 Cir., 1957, 246 F.2d 776, 778; Carqueville v. Folsom, D.C.1958, 170 F. Supp. 777, 779, affirmed sub nom. Carqueville v. Flemming, 7 Cir., 1959, 263 F.2d 875; Irvin v. Hobby, D.C.N.D. Iowa 1955, 131 F.Supp. 851, 856; Norment v. Hobby, D.C.1953, 124 F.Supp. 489, 490.

The nature and scope of review of such decisions will be first considered. Section 205(g) of the Act (42 U.S.C.A. § 405(g)) provides, in part: "The findings of the Secretary as to any fact, if supported by substantial evidence, shall be conclusive, * * *." The plaintiff has the burden of proving that the required conditions of eligibility for benefits have been met. Carqueville v. Flemming, 7 Cir., 1959, 263 F.2d 875, 877; Fuller v. Folsom, D.C.1957, 155 F. Supp. 348, 349; Norment v. Hobby, D.C. 1953, 124 F.Supp. 489, 491. The Social Security Act should be liberally construed in favor of those seeking its benefits, Carroll v. Social Security Board, 7 Cir., 1942, 128 F.2d 876, 881; Carqueville v. Folsom, D.C.1958, 170 F.Supp. 777, 779, affirmed sub nom. Carqueville v. Flemming, 7 Cir., 1959, 263 F.2d 875. However, judicial review of the final decision of the Administrator is circumscribed by statutory and case law.

The reviewing authority of a district court is limited in that it may not substitute its own factual findings for those of the Referee. Boyd v. Folsom, 3 Cir., 1958, 257 F.2d 778, 781. The present action is not a trial de novo of the plaintiff's claim. Thompson v. Social Security Board, 1946, 81 U.S. App.D.C. 27, 154 F.2d 204; Ayers v. Hobby, D.C.1954, 123 F.Supp. 115, 116; Morgan v. Social Security Board, D.C. 1942, 45 F.Supp. 349, 350. The findings of the Administrator in this case as to any fact, if supported by substantial evidence, are binding upon this Court. 42 U.S.C.A. § 405(g); Folsom v. O'Neal, 10 Cir., 1957, 250 F.2d 946; Rosewall v. Folsom, 7 Cir., 1957, 239 F.2d 724; Ferenz v. Folsom, 3 Cir., 1956, 237 F.2d 46, certiorari denied 1957, 352 U.S. 1006, 77 S.Ct. 569, 1 L.Ed.2d 551; Teder v. Hobby, 7 Cir., 1956, 230 F.2d 385; Thompson v. Social Security Board, supra; United States v. LaLone, 9 Cir., 1945, 152 F.2d 43, 44; Social Security Board v. Warren, 8 Cir., 1944, 142 F.2d 974; Carroll v. Social Security Board, supra, 128 F.2d at page 881. The finality accorded to administrative findings of fact also extends to inferences and conclusions drawn by the Administrator if there is a substantial basis for them. Rosewall v. Folsom, supra; Ferenz v. Folsom, supra; Livingstone v. Folsom, 3 Cir., 1956, 234 F.2d 75; Walker v. Altmeyer, 2 Cir., 1943, 137 F.2d 531; Carqueville v. Flemming, supra, 263 F.2d at page 877; Folsom v. O'Neal, supra, 250 F.2d at page 947; United States v. LaLone, supra, 152 F.2d at page 44. See Irvin v. Hobby, D.C.N.D.Iowa 1955, 131 F.Supp. 851, 863.

The Administrative Procedure Act, 5 U.S.C.A. § 1001 et seq., also provides for judicial review of the action of administrative agencies. Section 10(e) of that Act (5 U.S.C.A. § 1009) declares:

"So far as necessary to decision and where presented the reviewing court shall decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning or applicability of the terms of any agency action. It shall * * * (B) hold unlawful and set aside agency action, findings, and conclusions found to be (1) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law; * * * (3) in excess of statutory jurisdiction, authority, or limitations, or short of statutory right; * * * (5) unsupported by substantial evidence in any case * * * reviewed on the record of an agency hearing provided by statute; * * *. In making the foregoing determinations the court shall review the whole record or such portions thereof as may be cited by any party, and due account shall be taken of the rule of prejudicial error."

The provisions of Section 10 of the Administrative Procedure Act have been construed to be in pari materia with those of the Social Security Act. See Goldman v. Folsom, 3 Cir., 1957, 246 F.2d 776; Rafal v. Flemming, D.C.1959, 171 F.Supp. 490; Julian v. Folsom, D.C. 1958, 160 F.Supp. 747.

By reason of the provisions of Section 205(g) of the Act as well as the Administrative Procedure Act, it is the duty of this Court to ascertain whether, on the record as a whole, there is substantial evidence to support the Administrator's findings of fact. See Universal Camera Corp. v. National Labor Relations Board, 1951, 340 U.S. 474, 71 S.Ct. 456, 95 L.Ed. 456; O'Leary v. Brown-Pacific-Maxon, Inc., 1951, 340 U.S. 504, 71 S.Ct. 470, 95 L.Ed. 483; Goldman v. Folsom, supra, 246 F.2d at page 778. In discharging that duty, a Court "must take into account whatever in the record fairly detracts from its weight * * *", and "is not barred from setting aside a Board decision when it cannot conscientiously find that the evidence supporting that decision is substantial, when viewed in the light that the record in its entirety furnishes, including the body of evidence opposed to the Board's view." Universal Camera Corp. v. National Labor Relations Board, supra, 340 U.S. at page 488, 71 S.Ct. at page 464.

With respect to questions of law and statutory construction, this Court may...

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