Hennessey v. Federal Security Administrator

• Decision Date: 29 April 1949
• Docket Number: Civ. No. 2493.
• Citation: 88 F. Supp. 664
• Parties: HENNESSEY v. FEDERAL SECURITY ADMINISTRATOR.
• Court: U.S. District Court — District of Connecticut

88 F. Supp. 664

HENNESSEY v. FEDERAL SECURITY ADMINISTRATOR.

Civ. No. 2493.

United States District Court D. Connecticut.

April 29, 1949.

Pouzzner, Hadden, Kopkind & Hadden, New Haven, Conn., for plaintiff.

Adrian W. Maher, U. S. Atty., Dist. of Connecticut, Edw. J. Lonergan, Asst. U. S. Atty., Dist. of Connecticut, Hartford, Conn., for defendant.

SMITH, District Judge.

The plaintiff brought this action pursuant to Section 205(g) of the Social Security Act, as amended, 42 U.S.C.A. § 405(g), to review a decision of the Appeals Council of the Social Security Administration affirming a determination by a referee disallowing the plaintiff's claim for old age insurance benefits under said Act. The action is presently before this Court on defendant's motion to dismiss or for summary judgment, and for the purposes of the hearing on said motions a certified copy of the record of the administrative proceedings in this case has been made a part of the court file.

There is no genuine issue as to any material fact. Sometime prior to September 15, 1947 the plaintiff, over sixty-five years of age, made inquiry as to her status under the Act. She was advised by a representative of the Social Security Administration that she needed two more quarters of coverage for a fully-insured status, and claims that she was told by the representative that all she had to do was to "make" at least $50 in a quarter to obtain a quarter of coverage.

Subsequently, on September 15, 1947, the plaintiff returned to work for a former employer with the express purpose of obtaining the additional quarters. She worked two weeks, during September, earning total wages of $60.74 for her hours of work, recorded by a time-clock. During the month of September, however, she received only the first week's earnings, $30.37, it being the custom of the employer, except in the case of discharge, to defer payment for wages earned at the conclusion of a work-week on Friday, one week, or the following Friday. Accordingly, wages earned during the last full week in September amounting to $30.37 were not paid to her until the regular pay-day, October 3, 1947. The plaintiff continued to render services through October 21, 1947 and was paid a further amount of $85.41 in that month.

On October 22, 1947 the plaintiff filed an application with the Bureau of Old Age and Survivor's Insurance, Social Security Administration, for the primary benefits provided in Section 202(a) of the Social Security Act, as amended, 42 U.S.C.A. § 402(a). The Bureau disallowed the plaintiff's application on the ground that she had acquired only fifteen quarters of coverage and needed one more quarter to be a fully-insured individual.

Acting pro se, the plaintiff requested a hearing before a referee of the Social Security Administration. The referee sustained the Bureau's ruling and found that the $30.37 paid to the plaintiff on October 3, 1947 was not constructively paid to her in September or the third quarter of 1947.

Plaintiff's request for review of the referee's decision was denied by the Appeals Council.

The requirements of eligibility for primary insurance benefits are not in dispute. The Act, as amended, clearly establishes that, in addition to other requirements, a claimant, to be entitled to its old-age benefits, must have been "paid" $50 wages in a specific number of calendar quarters. The sole question raised by this action for review is whether or not there was a constructive payment of plaintiff's wages earned during the last week of September and the third quarter of 1947 constituting "wages paid" within the meaning of the Act and of Regulation No. 3, Section 403.801(m), which reads as follows: "`Wages paid' means wages actually or constructively paid. Wages are constructively paid when they may be drawn upon by the employee at any time although not then actually reduced to possession. In such a case, a constructive payment can be found to have been made only where (1) the wages have been credited or set apart to the employee without any substantial limitation or restriction as to the time or manner of payment or condition upon which payment is to be made and are available to him so that they may be drawn at any time, and their receipt brought within his own control and disposition, or (2) there is an intention by the employer to pay or to set apart or credit, and ability to pay wages when due, and failure of the employer to credit or set apart the wages is due to clerical error or inadvertence in the mechanics of payment and because of such clerical error or inadvertence, the wages are not actually available at that time. However, where the employee has authority to withhold wages from himself in the interest of the employer, his failure to reduce any of his wages to possession shall be deemed to be in the interest of his employer and to establish the employer's intent not to pay such wages, unless there is a clear showing that such withholding was exclusively in the employee's interest."

It is apparent from the face of the Regulation that the principal requirement for constructive payment is the availability of the wages to the employee in that "they may be drawn upon by the employee at any time although not then actually reduced to possession." There has been no question raised here as to the employer's being in sufficient funds to make payment to the plaintiff had she requested such at any time during the relevant period.

The crucial phrases of the Regulation in the instant case, however, are found in the third sentence, purporting to impose in the alternative one of two stated limitations upon the broad principal requirement, — the first, objective; the second, subjective.

Clearly the plaintiff's case falls within the first or objective limitation upon the general requirement. Plaintiff's wages were credited to her account by means of a clock-card and were thus set apart within the language and apparent intent of the Regulation.

The referee, however, invoking the latter half of the objective limitation, denied plaintiff's claim on the grounds that the earnings credited to the plaintiff were set apart with a limitation as to the time of payment, that there was no intention of paying claimant the $30.37 in question until October 3, 1947, and it would not have been paid to her prior to such date under circumstances other than in the case of discharge.

This was plain error in two respects. First, the objective limitation says nothing about intent nor does the Regulation require that both the objective and subjective limitations be satisfied to find a constructive payment. Willis v. The Federal Security Administrator¹ (1947 D.C.Conn.) Unreported. Civil Action No. 2100. Having once found that the case fell squarely within the objective limitation, it was error to apply both the objective limitation and part of a clearly alternative limitation, the element of the employer's intent. As Judge Hincks said in the Willis case, — "* * * intent obviously is important...