Sabbagha v. Celebrezze

• Decision Date: 15 June 1964
• Docket Number: No. AC-1096.,AC-1096.
• Citation: 231 F. Supp. 440
• Court: U.S. District Court — District of South Carolina
• Parties: Effie J. SABBAGHA, Plaintiff, v. Anthony CELEBREZZE, Secretary of the Department of Health, Education and Welfare, Defendant.

231 F. Supp. 440

Effie J. SABBAGHA, Plaintiff, v. Anthony CELEBREZZE, Secretary of the Department of Health, Education and Welfare, Defendant.

No. AC-1096.

United States District Court E. D. South Carolina, Columbia Division.

June 15, 1964.

Jack F. McGuinn, Columbia, S. C., for plaintiff.

Terrell L. Glenn, U. S. Atty. for the Eastern District of South Carolina, Columbia, S. C., for defendant.

HEMPHILL, District Judge.

Issues joined by the pleadings are now before the Court on cross motions for Summary Judgment in accordance with Rule 56 of the Federal Rules of Civil Procedure. Plaintiff seeks reversal of previous findings by the Secretary of Health, Education and Welfare; Defendant seeks affirmation of these findings which denied the relief Plaintiff seeks by her complaint.

This action is brought under section 205 of the Social Security Act as amended (hereinafter referred to as "the Act"), 42 U.S.C.A. § 405, to review a final decision of the Secretary of Health, Education and Welfare. Section 205(g) of the Act, 42 U.S.C.A. § 405(g), provides, inter alia, that "As part of its answer the Secretary shall file a certified copy of the transcript of the record including the evidence upon which the findings and the decision complained of are based," and that "The court shall have power to enter, upon the pleadings and the transcript of the record, a judgment affirming, modifying, or reversing the decision of the Secretary, with or without remanding the cause for a rehearing." It also provides that "The findings of the Secretary as to any fact, if supported by substantial evidence, shall be conclusive * * *." Section 205(h), 42 U.S.C.A. § 405(h), expressly restricts the judicial remedy to the manner in which judicial review is permitted by section 205(g), and contains a prohibition against any action under the general jurisdiction of the Federal district courts for a money judgment.¹

The proceedings leading to this request for judicial review are as follows. On January 22, 1962, Effie J. Sabbagha, the plaintiff herein, filed application with the appropriate division of the Social Security Administration for old-age insurance benefits. This claim was disallowed because it was determined that she lacked the necessary insured status and she was so notified on May 22, 1962. Upon reconsideration of her claim after a request by her, the Administration affirmed its original denial action. She then requested and was granted a hearing before a hearing examiner of the Bureau of Hearings and Appeals at which time she, her son, and her attorney appeared and were heard. The hearing examiner found in his decision issued on November 30, 1962 that a legal employer-employee relationship did not exist between plaintiff and her son, that amounts received from him under the color of wages were not taxable for social security purposes and consequently could not be considered in determining the total number of quarters of coverage earned by her. The hearing examiner held that she was not a fully insured individual within the meaning of the Act and therefore not entitled to old-age insurance benefits. The hearing examiner's determination became the final decision of the Secretary when, on January 23, 1963, the Appeals Council declined to review. Having thus exhausted all administrative remedies, the plaintiff commenced this action for judicial review on March 22, 1963.

The only issue before this court is whether there is substantial evidence in the record to support the decision of the Secretary that a valid employer-employee relationship did not exist between plaintiff and her son, that she was not an "employee" for social security purposes and thus did not earn the requisite quarters of coverage to entitle her to benefits. The basic evidentiary facts are as follows: Philip Sabbagha, the son of the plaintiff herein, is licensed by the State of South Carolina to and does operate a house and apartment rental agency known as the Philip Rental Agency in Columbia, South Carolina. He is not licensed, nor does he operate as, a real estate agent or broker, nor does he act as a rental agent for anyone other than himself. He owns a number of buildings containing low-rental units located in various sections of Columbia. He acquired his first unit in 1948 or thereabouts and gradually obtained additional units until at one time he had nearly fifty. His holdings have decreased to where he now has thirty-seven or thirty-eight units and he devotes his full working time to their rental, maintenance, and repair, and from the rentals of these units earns his livelihood.

Prior to 1961 he owned a building in the 700 block of Main Street in Columbia and had his office located therein and the "Philip Rental Agency" was listed in the telephone directory at that address. Since 1961 he has maintained his office in his home where he lives with his mother, the plaintiff in this case. The "Philip Rental Agency" is not now listed in the telephone directory and any advertising is either done through newspapers or by placing a "For Rent" sign where an apartment may be vacant, with the telephone number of Mr. Sabbagha's home shown as the number to call. Mrs. Sabbagha has lived in the home of her son since 1955 and for the years 1956 through 1960 he claimed her as his dependent for Federal income tax purposes. Although she speaks English fairly well, she can neither read nor write with any facility. She is unable to write her full name; is able to write her first name only. Her only experience in the labor market was as a cashier for a few months in 1946. She alleges that in 1961 her son Philip began paying her $35 weekly for assisting him in some of the clerical details of his rental agency such as answering the telephone, accepting rental payments and giving receipts, paying bills, employing repairmen and making appointments and showing vacant apartments. In 1963 her weekly wages were reduced to $25, she alleges, due to illness.

It is the contention of the plaintiff that this alleged work activity by her for her son created a bona fide employer-employee relationship and as a result, she argues, she has earned at least the required quarters of coverage and is entitled to old-age insurance benefits.

The relevant provisions of the Act are set forth below. Section 202, 42 U.S. C.A. § 402, provides for old-age insurance benefits to:

"Sec. 202. (a) Every individual who —

"(1) is a fully insured individual (as defined in section 214(a),

"(2) has attained age 62, and

"(3) has filed application for oldage insurance benefits * * *

"shall be entitled to an old-age insurance benefit for each month, beginning with the first month after August 1950 in which such individual becomes so entitled to such insurance benefits * * *."

To be the "fully insured individual" called for by section 202(a) (1), the plaintiff would have had to have acquired six quarters of coverage. Section 214(a) (1), 42 U.S.C.A. § 414(a) (1). A "quarter of coverage" is defined by sections 213(a) (2), 42 U.S.C.A. § 413(a) (2), as a quarter (a period of three calendar months ending on March 31, June 30, September 30, or December 31) "in which the individual has been paid $50 or more in wages."

The term "wages" is defined in section 209, 42 U.S.C.A. § 409, in terms of remuneration paid for "employment" which in turn is defined, so far as is pertinent here, by section 210(a), 42 U.S.C.A. § 410(a):

"* * * any service, of whatever nature, performed after 1950 * * by an employee for the person employing him * * * except that, in the case of service performed after 1950, such term shall not include —

* * * * *

"(B) Service not in the course of the employer's trade or business, or domestic service in a private home of the employer, performed by an individual in the employ of his son or daughter;"

As shown in the Notice of Hearing, the sole issue of fact upon which findings were to be made was whether or not the plaintiff was an employee under the terms of the Social Security Act, as amended, which includes the usual common law rules applicable in determining whether an employer-employee relationship existed.

The term "employment" is defined in the Social Security Act (Section 210(a), 42 U.S.C.A. § 410(a):

"* * * Any service, of whatever nature, performed after 1950 * * * by an employee for the person employing him * * * except that, in the case of service performed after 1950, such term shall not include —" inter alia (Parent working for son)

Prior to 1961 services performed by a parent for her son was conclusively presumed not to be "employment". The 1960 amendment to the Act (Public Law 86-778, 86th Congress, Section 210(a)) (3) (B) modified this exclusion so as to permit a parent to work for her son.

The term "employee" is defined in Section 210(k) of the Act, 42 U.S.C.A. § 410 (k) as:

"* * * Any individual who, under the usual common law rules applicable in determining the employer-employee relationship, has the status of an employee."

Volume 81, Corpus Juris Secundum, page 15, "Social Security and Public Welfare", Section 5 states: "The Social Security Act and the related taxing statutes do not define the terms `employer,' or `employee,' but the term `employment' is defined in the statutes as `any service, of whatever nature, performed within the United States by an employee for his employer,' and such term should be interpreted in favor of the employment relationship in doubtful cases, because of the remedial nature of the statutory objectives." Citing in support Henry Broderick, Inc. v. Squire, CCA Wash., 163 F.2d 980 — Anglim v. Empire Star Mines Company, CCA Cal., 129 F.2d 914 — Hearst Publications v. United States, D.C.Cal. 70 F.Supp. 666, affirmed CCA 168 F.2d 751.

The next paragraph of this section goes on to state: "It is generally agreed, however, that the common-law test is the basis of determining an employer-employee relationship * * *," citing in support nine cases. The section...