Thompson v. Weinberger

CourtUnited States Courts of Appeals. United States Court of Appeals (4th Circuit)
Citation548 F.2d 1122
Docket NumberNo. 75-1864,75-1864
PartiesAubrey H. THOMPSON, Appellee, v. Caspar WEINBERGER, Secretary of Health, Education and Welfare, Appellant.
Decision Date11 November 1976

Steven L. Jones, Atty., Dept. of HEW, Washington, D. C. (Rex E. Lee, Asst. Atty. Gen., Washington, D. C., William B. Cummings, U. S. Atty., Alexandria, Va., Morton Hollander and Leonard Schaitman, Attys., U. S. Dept. of Justice, Washington, D. C., on brief), for appellant.

Paul G. Turner, Richmond, Va. (R. Harvey Chappell, Jr., Christian, Barton, Epps, Brent & Chappell, Richmond, Va., on brief), for appellee.

Before RUSSELL, FIELD and WIDENER, Circuit Judges.

WIDENER, Circuit Judge:

In this case, there is no issue of fact. The question of law was decided on summary judgment, and is whether sums voluntarily paid by a member of the City Council of Richmond, Virginia, who is under 72 years of age, for office rent and secretarial service, are to be excluded from his gross income received from the City for his services as a council member in determining whether the amount so earned makes applicable the provisions for deductions from Social Security benefits in § 203(b) and (f) of the Social Security Act, 42 U.S.C. § 403(b) and (f). 1 The district court held that such sums paid for office and secretarial expenses were excludable, and we reverse.

In 1968, the Social Security Administration determined that plaintiff and his wife were entitled to retirement benefits since July 1967, under § 202 of the Act, 42 U.S.C. § 402. In 1970, plaintiff ran for the City Council of Richmond, Virginia and was elected. He took the oath of office July 1, 1970. As part of his campaign, plaintiff promised that, if elected, he would "plow back" enough of his councilmanic income to make himself available to the public. In compliance with this pledge, plaintiff rented an office and employed a part-time secretary. Admittedly, there was no requirement by the City of Richmond that plaintiff do this and no agreement by the City to reimburse him for the expenses entailed thereby.

Plaintiff's salary as a member of the Council is $400 per month, thus, he received $2400 for the balance of 1970 and $4800 a year thereafter. He paid $1284.22 in 1970 and $3918.89 in 1971 for such office rent and stenographic services. He was paid the full amount of Social Security benefits to which he claimed to be entitled until October 19, 1972, when he was notified by letter from the Social Security Administration that he and his wife had received more in social security benefits than they were entitled to. It was indicated in the letter that excess payments would be offset against future payments to which the Thompsons might otherwise be entitled. 2

Sections 203(b) and (f) 3 of the Social Security Act, as applicable to taxable years 1970 and 1971, provided that a beneficiary under age 72 could earn $1680.00 in a 12-month taxable year without suffering a loss of benefits. If the sums plaintiff expended for office rent and stenographic services be excluded from the total received form the City, his earned income for 1970 would be $1,284.22 and for 1971 it would be $881.11, both well within the maximum allowance, so he and his wife should receive their full social security benefits. If such expenditures cannot be excluded, the decision of the Social Security Administration was correct.

Plaintiff alleges in paragraph 5 of his Complaint that "In both 1970 and 1971 after extensive discussions plaintiff was advised by the (Social Security) Administration that he could deduct his office expenses from his Councilmanic income for the purpose of computing his retirement insurance benefits." The allegation is neither expressly admitted nor expressly denied by the Secretary's answer, but it argumentatively denies the allegation by making reference to the administrative transcript of the case which defendant attached as an exhibit to the answer. Plaintiff did testify that before renting the office he discussed the situation with both the Social Security Administration and the Internal Revenue Service. He was informed by both agencies that he might exclude his office expenses from salary. We have no question before us as to whether Thompson legitimately deducted his office rent and secretary's pay in making his income tax return. Representatives of the Social Security Administration did not refute plaintiff's testimony and the available records were not sufficiently complete to confirm it clearly.

The Administrative Law Judge of the Social Security Administration ruled that plaintiff should be allowed to exclude office and stenographic expenses from his salary from the City for the purpose of determining whether his earned income was too large to entitle him to full social security benefits. The Appeals Council reached the opposite conclusion; however, in view of plaintiff's good faith in the matter, all recoupment from the Thompsons for the years 1970 and 1971 was waived.

The basic issue in this appeal turns upon the validity and applicability of a regulation promulgated by the Social Security Administration pursuant to authority granted by § 205 of the Social Security Act. 4 The regulation, 20 CFR 404.1026(a)(8), provides as follows:

"(8) Amounts paid specifically either as advances or reimbursements for traveling or other bona fide ordinary and necessary expenses incurred or reasonably expected to be incurred in the business of the employer are not wages. Traveling and other reimbursed expenses must be identified either by making a separate payment or by specifically indicating the separate amounts where both wages and expense allowances are combined in a single payment." (Emphasis supplied).

It is uncontested that the payments by the City of Richmond to claimant were not segregated or itemized as between salary and reimbursement for "ordinary and necessary expenses" by either of the methods specified in the just-quoted regulation. Thus, if the regulation is valid and applicable, plaintiff's claim must fail.

Three questions are presented to this court:

(1) Is plaintiff self-employed so as to make 20 CFR 404.1026(a)(8) inapplicable to him?

(2) Did the Secretary have authority to promulgate the regulation?

(3) Is the limitation in the regulation arbitrary, as held by the district court?

The first of these questions we answer in the negative; the second in the affirmative; and the third in the negative.

That plaintiff is an employee of the City of Richmond, and is not a self-employed person, results from the fact that he is covered by the Social Security Act by virtue of an agreement between the City of Richmond and the Social Security Administration executed pursuant to §§ 210(a) and 218 of the Social Security Act, 42 U.S.C. §§ 410(a) and 418. 5 Since wages under 42 U.S.C. § 409 are defined as "remuneration paid . . . for employment," 6 the salary plaintiff received from the City of Richmond should be included as wages under 42 U.S.C. § 403(f)(5)(A) in determining excess earnings.

In answer to the second question posed above, we hold that under § 205 of the Social Security Act, 7 the Social Security Administration had authority to promulgate 20 CFR 404.1026(a)(8). It is well established that Congress may empower an administrative agency to issue regulations to implement legislative enactments. The statute itself here is in language too plain to warrant discussion. In most of the cases cited involving the validity of a regulation of a federal administrative agency promulgated pursuant to an Act of Congress, it is the Congressional Act itself that is attacked, as involving too broad a delegation of power. Here, plaintiff does not attack the validity of § 205, but contends that the administrative regulation is beyond the scope of the power delegated by the statute.

Both parties have cited district court decisions as supporting their respective contentions. The cases cited by both sides involve traveling salesmen who were regarded as employees and not as self-employed persons. The question in all cases was whether traveling expenses should be deducted from total compensation received for the purpose of determining whether a claimant for Social Security benefits received sums in excess of the maximum amount allowable. Plaintiff cites Sayer v. Richardson, 360 F.Supp. 199 (W.D.La.1973), Joyner v. Ribicoff, 206 F.Supp. 874 (W.D.Va.1962), and Miller v. Ribicoff, 195 F.Supp. 534 (W.D.S.C.1961), as cases in which traveling expenses were excluded from wages notwithstanding the employer's failure to segregate or identify reimbursement for expenses from wages. On the other hand, a contrary conclusion is reached in Ruddy v. Richardson, CCH, UIR, P 10,262.301 (N.D.N.Y.1971), Gillen v. Gardner, CCH, UIR, P 10,262.301 (W.D.Ky.1968), Warren v. Ribicoff, CCH, UIR, P 10,262.301 (S.D.Ia.1961), and Dearing v. Flemming, CCH, UIR, P 10,262.301 (W.D.Ia.1959). 8

Of course, these cases are persuasive only, and no appellate decision involving this very regulation was cited by either party. 9 The question presented is one of first instance in this court.

We are not persuaded by the traveling salesmen cases cited above which have held that travel expenses are excludable in the determination of whether the beneficiary of Social Security benefits has sufficient wages to reduce the benefit payments. All of those cases are based on the practical necessity of a traveling salesman traveling, and the resulting inevitable expense. Indeed, there cannot be other than a practical requirement by the employer that a traveling salesman travel. Here, it is admitted there was no requirement by the City of Richmond that the plaintiff maintain an office and secretarial service. Thompson acknowledges that other members of the council use their business offices and the like for such. It is also noteworthy that the expenses Thompson claims as reimbursed were not...

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5 cases
  • Orr v. Bowen, CV-R-85-538-ECR.
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. District of Nevada
    • December 5, 1986
    ...although it is entitled to great weight. Thompson v. Weinberger, 395 F.Supp. 1102, 1105 (E.D.Va. 1975), rev'd on other grounds, 548 F.2d 1122 (4th Cir.1976); Brooks v. Gardner, 276 F.Supp. 20, 22 (W.D.Va.1967). See also Kasey v. Richardson, 462 F.2d 757, 759 (4th Under 42 U.S.C. § 402(i) (1......
  • Montgomery Tp. v. Com., Bureau of Social Sec. for Public Employees
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    • September 1, 1982
    ...present, the remuneration involved is not excludible even if it is in fact spent for business related expenses. See Thompson v. Weinberger, 548 F.2d 1122 (4th Cir., 1976). In the present case, the record shows that the Petitioner paid its fire marshall a fixed amount twice a year regardless......
  • Colby v. Harris, 1108
    • United States
    • United States Courts of Appeals. United States Court of Appeals (2nd Circuit)
    • May 23, 1980
    ...authorized. Lower court authority is apparently divided on this issue, 3 and the two appellate decisions cited to us Thompson v. Weinberger, 548 F.2d 1122 (4th Cir. 1976) and Angell v. Flemming, 291 F.2d 72 (4th Cir. 1961) do not lead us to a contrary result. In Angell, the Secretary sought......
  • Ballard v. Sullivan, 88-3837
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • May 25, 1990
    ...the Fourth Circuit declared that the validity of the "traveling salesmen" cases was undecided in that circuit. See Thompson v. Weinberger, 548 F.2d 1122, 1127 (4th Cir.1976). ...
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