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Morris NEWMAN, Plaintiff-Appellant, v. Anthony J. CELEBREZZE, Secretary of Health, Education and Welfare, Defendant-Appellee

United States Court of Appeals for the Second Circuit1962-11-23No. No. 107, Docket 27716
310 F.2d 780

Summary

Holding. The District Court properly dismissed the complaint because the hearing examiner's determination that the claimant continued to render services and receive compensation in excess of the statutory limit was supported by substantial evidence in the record. The judgment is affirmed.

Morris Newman claimed entitlement to old-age retirement benefits effective March 15, 1959, but the Social Security Administration suspended his payments after determining he had not actually retired. A hearing examiner found that Newman continued working in his family corporations as president, maintained significant stock ownership, spent time in corporate offices, provided business advice, and transacted business on behalf of his brother. Although Newman's former salary was nominally paid to his son Stanley (a part-time attorney), the examiner concluded this arrangement masked compensation Newman himself was receiving. The examiner found Newman's testimony and that of his witnesses unconvincing and determined his earnings exceeded the statutory threshold for benefit suspension.

Newman challenged the agency's decision in district court, which dismissed his complaint. On appeal, the court reviewed whether the examiner's credibility determinations and factual inferences were supported by substantial evidence in the record. The court found they were, noting that while the nominal payments to Stanley might initially appear as non-wage income that would not affect retirement benefits, the record supported an inference that these payments actually concealed services Newman rendered and compensation he received. The court affirmed the dismissal but preserved Newman's right to apply for benefits based on changed circumstances after the hearing record closed.

Summary generated by law.co from the public-domain opinion. The opinion text itself is public domain.

Key issues

  • Whether substantial evidence supported the finding that claimant continued rendering services despite alleged retirement
  • Whether nominal salary payments to claimant's son constituted a device to mask actual services and compensation by claimant
  • Standard of review for Social Security Administration factual findings and credibility determinations
  • Claimant's right to retire and receive benefits independent of non-wage income

Procedural posture

Plaintiff appealed the District Court's dismissal of his complaint seeking judicial review under Section 205(g) of the Social Security Act of the final agency decision suspending his old-age retirement benefits.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion

majority opinion

PER CURIAM.

Plaintiff sought old-age retirement benefits based upon his claim of retire ment on March 15, 1959. After suspension of his payments, hearings were held and evidence submitted through January 23, 1961, resulting in a determination that plaintiff had not in fact retired and was rendering services in his prior employment and receiving compensation therefor in excess of $2,080.00 per an-num, the amount at which payment was to be totally suspended under Section 203 (b, e) of the Social Security Act, 42 U.S. C. § 403 (b, e). The Hearing Examiner’s decision of March 6, 1961 became a final decision of defendant upon denial of review by the Appeals Council of the Social Security Administration. Plaintiff then sought review under Section 205 <g) of the Social Security Act, 42 U.S.C. § 405(g). We hold that the District Court properly dismissed the complaint.

The evidence showed that after his alleged retirement plaintiff continued to retain substantial stock ownership in and his position as President of one of the two employing family corporations; that plaintiff continued to spend time in the offices of said corporations and admitted that he occasionally gave advice in the conduct of the business and transacted business in the absence of his brother, Herman, who continued his full time activities in the business; that plaintiff’s former salary of $300 to $400 per month was paid to his son, Stanley, even though the son, a practising attorney, admitted that he had limited experience in the field of real estate management and that, unlike plaintiff who had devoted his full time to the business, he devoted only about one day per week thereto; that after this date Stanley commenced payment of plaintiff’s monthly rental of $90.80; and that plaintiff’s condition of health was not sufficiently impaired to preclude him from rendering substantial services.

During the years in question Section 203(e) (3) (B) (ii) of the Social Security Act, 42 U.S.C. § 403(e) (3) (B) (ii), required that a claimant show “to the satisfaction of the Secretary” that he was not receiving wages in excess of the statutory limit. Section 205(g) of the Act, 42 U.S.C. § 405(g) provides that the findings of the Secretary shall be conclusive if supported by substantial evidence. The testimony of plaintiff and his witnesses explaining his presence in the office as being only for social purposes and denying any services or compensation, was found by the Examiner to be “not convincing.” Whether or not, upon initial consideration, we would have held that plaintiff’s evidence was sufficient to overcome the statutory presumption standing alone, we cannot say that the Examiner’s determination as to credibility and the inferences drawn by him from the facts were without substantial support on the whole record. N. L. R. B. v. Walton Mfg. Co., and N. L. R. B. v. Florida Citrus Canners Cooperative, 1962, 369 U.S. 404, 405, 82 S.Ct. 853, 7 L.Ed.2d 829 (joint opinion); Sherrick v. Ribicoff, 7 Cir., 1962, 300 F.2d 494; Gooding v. Willard, 2 Cir., 1954, 209 F.2d 913, 916. While we recognize that plaintiff had the right to choose to retire and receive his old-age benefits irrespective of any dividend or other non-wage payments he might receive, the record supports the inference that the payments nominally made to the son constituted a mere device to mask services actually rendered and compensation received by plaintiff.

While the Examiner properly ordered continued suspension of payments in 1961 under Section 203(g) of the Act, 42 U.S.C. § 403(g), on the reasonable expectation that the compensation received in previous years would continue, the proceedings hitherto had are without prejudice to a new application by plaintiff based on a new set of facts arising after January 23, 1961.

Affirmed.