Social Security Board v. Warren, 12693.

• Citation: 142 F.2d 974
• Decision Date: 07 June 1944
• Docket Number: No. 12693.,12693.
• Parties: SOCIAL SECURITY BOARD v. WARREN.
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

142 F.2d 974 (1944)

SOCIAL SECURITY BOARD v. WARREN.

No. 12693.

Circuit Court of Appeals, Eighth Circuit.

June 7, 1944.

Paul A. Sweeney, Atty., Department of Justice, of Washington, D. C. (Francis M. Shea, Asst. Atty. Gen., Victor E. Anderson, U. S. Atty., of St. Paul, Minn., David L. Kreeger, Sp. Asst. to the Atty. Gen., Linus J. Hammond, Asst. U. S. Atty., of St. Paul, Minn., Jack B. Tate, Gen. Counsel, Social Security Board, and Hubert H. Margolies, Cecelia H. Goetz, and Phyllis Jane Campbell, Attys., Department of Justice, all of Washington, D. C., on the brief), for appellant.

R. L. Mayall, of Duluth, Minn. (Holmes, Mayall, Reavill & Neimeyer, of Duluth, Minn., on the brief), for appellee.

Before STONE, WOODROUGH, and THOMAS, Circuit Judges.

THOMAS, Circuit Judge.

The controlling question for determination on this appeal is whether the District Court erred in substituting its own conclusion for the finding of the Social Security Board, affirmed by its Appeals Council, that compensation for services rendered by Warren as a member of the executive committee of the Duluth Morris Plan Company of Minnesota constituted wages within the meaning of the Social Security Act, as amended, 53 Stat. 1360, 1363, 42 U.S.C.A. § 402 et seq.

The facts giving rise to the controversy are not in dispute. Subsequent to his retirement from active employment with the Duluth-Superior Transit Company, Warren had applied for and was receiving old age or primary insurance benefits under the Act at the rate of $32.50 a month. At the same time he was a member of the board of directors and of the executive committee of the Morris Plan Company of Duluth, Minnesota. During an eight-month period from January 1, 1941, to August 31, 1941, he received not less than $15 in each month for his services on the executive committee. Pursuant to the provisions of § 203(d) (1) of the Act, 42 U.S.C.A. § 403(d) (1)¹, the Social Security Board determined that eight monthly benefit payments should be deducted from his insurance benefits for the months during which he received such fees or compensation for services as a member of the executive committee. The decision of the Board was affirmed by the Appeals Council, and Warren then brought this suit for review of the ruling.

Upon review the district court reversed the decision of the Board, adjudged that Warren is entitled to primary insurance benefits for the months for which the deductions were taken, and remanded the cause with directions to the Board to compute the benefits to which Warren is entitled under the judgment and to certify the amount to the Managing Trustee for payment pursuant to § 205(1) of the Act, Amendment of 1939.

Section 205(g) of the Act (42 U.S.C.A. § 405(g) provides that upon review by the court "The findings of the Board as to any fact, if supported by substantial evidence, shall be conclusive."

In the proceedings before the Board Warren's claim, at his request, was heard before a referee who took evidence and upon the evidence adduced found that "the services of the claimant Warren from January to August, 1941, inclusive, as a member of the executive committee of the Duluth Morris Plan Company were services in employment, that the remuneration paid him was wages, and that the deductions of eight months' benefits under section 203(d) (1) were properly made."

At Warren's request the decision of the referee was reviewed by the Appeals Council where his contentions were considered at length and the findings and decision of the referee were affirmed. The Council concluded that the remuneration paid to Warren for services rendered as a member of the executive committee was wages.

It is the contention of the appellant that the finding of employment is supported by substantial evidence and that, therefore, the decision of the Board is conclusive.

Regulation No. 3 of Regulations of the Social Security Board, 20 C.F.R., 1940 Supp., § 403.804, provides in part as follows:

"Every individual is an employee if the relationship between him and the person for whom he performs services is the legal relationship of employer and employee.

"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, * * * 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.

* * * * *

"* * * An officer of a corporation is an employee of the corporation, but a director as such is not. A director may be an employee of the corporation, however, if he performs services for the corporation other than those required by attendance at and participation in meetings of the board of directors."

Section 1 of Article III of the by-laws of the Duluth Morris Plan Company provides that the board of directors shall elect an executive committee from their own members. Section 3 reads: "Powers and Duties. During the intervals between the meetings of the Board of Directors the Executive Committee shall possess, and exercise, so far as it lawfully may, all the powers of the Board of Directors in the management of the business and affairs of the Company in all cases in which specific instructions shall not have been given by the Board of Directors."

At the hearing before the referee Warren testified that the Duluth Morris Plan Company is a finance company engaged in loaning money to the public payable in installments; that the executive committee meets weekly; and that they perform the same duties as the board except that "they handle things a little more in detail." At their weekly meetings they approved loans, determined whether or not loans should be made, passed bills for miscellaneous expenses and authorized payment of bills. He thought the board could have changed the membership of the committee at any time.

The president of the company testified that the executive committee determines matters of policy requiring action prior to the next monthly meeting of the board of directors. The board passes on loans before they are made. The committee approves loans already made, establishes credit for borrowers, and passes bills for expenses. The board does not pass on loans after they are made because the officers are entirely competent to handle this end of it, and, if they are not, it would be better to get some $18-a-week clerk to handle it. The board has never given instructions to the committee as to what should be done.

The executive committee held its weekly meetings at 8:30 in the morning, and the members were paid five dollars each for their services at such meetings.

Under these circumstances we are of the opinion that the finding of the Board is conclusive that the compensation paid Warren for his services as a member of the executive committee constitutes "wages". To hold otherwise requires a revaluation of the evidence.

In Gray v. Powell, 314 U.S. 402, 62 S.Ct. 326, 86 L.Ed. 301, the Supreme Court said: "In a matter left specifically by Congress to the determination of an administrative body * * * the function of review placed upon the courts * * * is fully performed when they determine that there has been a fair hearing, with...