SSR 64-61c: SECTION 210(j)(2). -- EMPLOYER-EMPLOYEE RELATIONSHIP -- PERFORMANCE OF HOUSEHOLD TASKS AND GENERAL MAINTENANCE WORK ON FAMILY PREMISES BY MEMBER OF FAMILY

20 CFR 404.1104(c)

SSR 64-61c

DOMANSKI v. CELEBREZZE, 323 F.2d 882 (6th Cir., 1963), cert. denied, 84 S.Ct. 980, March 23, 1964

Where plaintiff, who was supported by and lived in the home of his son-in-law, had been performing various odd jobs around the home for a number of years without receiving any cash remuneration; where for a period of 12 quarters during which he rendered the same services the son-in-law paid the plaintiff $5 a week and after such period stopped payments in the belief that plaintiff had earned sufficient quarters of coverage to qualify for social security benefits; where after such payments stopped plaintiff nevertheless continued to perform the same services; where the son-in-law did not deduct FICA tax and did not report the alleged wages until after the plaintiff had filed an application for social security benefits; and where the son-in-law listed the plaintiff as his dependent on his income tax returns; held, there was substantial evidence to support the Secretary's decision that no genuine employer-employee relationship existed and that the payments to the plaintiff did not constitute wages within the meaning of the Social Security Act.

WEICK, Circuit Judge:

This appeal is from an order of the District Court setting aside a decision of the Secretary of Health, Education and Welfare denying old-age insurance benefits, under the Social Security Act, to appellee Domanski and directing the Secretary to allow and pay his claim.

The Secretary had denied the claim on the ground that no genuine employer-employee relationship existed between Domanski and his son-in-law, who was his alleged employer.

Upon denial of his claim, Domanski filed an action in the District Court to review the decision of the Secretary. Motions for summary judgment were filed by both parties. The District Court adopted findings of fact and conclusions of law and granted Domanski's motion for summary judgment. The District Court ruled as a matter of law, on the facts found by the Secretary, that Domanski was an employee of his son-in-law during the period involved and ordered that he be paid social security benefits. The Secretary filed his appeal.

The basic facts were not in dispute.

Domanski, a native of Germany, came to the United States in 1949 with his wife, his daughter, and his son-in-law, William M. Gougeon. Gougeon met and married Domanski's daughter while Gougeon was on duty in Germany as an American soldier. Domanski had, for a while, been a shoemaker in Germany, but for most of his adult life was a postal employee there. He was in his late fifties when he came here in 1949, and became 65 years old on April 14, 1957.

Gougeon and his wife provided a home for and supported the senior Domanskis after their arrival here. In 1950, the Gougeons and the Domanskis moved to Onaway in Michigan's upper peninsula. Gougeon acquired some land on the shores of Black Lake and originally planned to construct and operate a resort camp there. The commercial plan was not carried out. Through the years 1950 to 1954, the land owned by Gougeon was, by the efforts of Gougeon, Domanski and some contracted help, cleared and a house and cabin built thereon. Until the cabin was built, the Domanskis shared the house with the Gougeons. Thereafter, they lived in the cabin. Domanski performed needed chores in and about the Gougeon premises. In his statement to the agency, he stated that he "helped with clearing and filling the land, construction, painting, shingling, building fences, etc." There was evidence of other work done by Domanski -- cutting logs for and aiding in the construction and maintenance of a breakwater, wheeling with a wheelbarrow many truck loads of sand for a road, and like work.

Gougeon, the son-in-law and alleged employer, was himself employed as a representative of an insurance company. He worked along with his father-in-law in the general maintenance of his property. In 1956, the increase in his insurance work prevented his giving as much time to his property as he had, up to that time, been accustomed to give. More work then fell to the father-in-law, Domanski. Domanski and Gougeon both testified that at this time in 1956, Domanski felt that he should have some money in addition to his keep and it was agreed that thereafter he should be paid $5.00 per week. Until July 1, 1959, he received these cash payments. At that time, the involved application for old-age benefits was made. The payments were then stopped, as it was assumed that he would begin receiving the payments for twelve quarters, the minimum number required to make him eligible for such social security benefits.

At no time prior to the application for social security benefits were any deductions for social security tax taken from the money paid to Domanski. Likewise, neither Domanski nor Gougeon applied for a social security account number. Domanski and wife were both claimed as dependents by Gougeon for income tax purposes.

Domanski, during the period from 1955 through 1959, had a small income of less than $400 from other sources such as shoe repairing and odd jobs. The alleged payments for wages made by Gougeon to Domanski during the twelve quarter period amounted only to $780.00.

Domanski's duties after July 1959 when the $5.00 payment for weekly wages ceased were no different than they were during the twelve quarter coverage period. Gougeon continued after July 1, 1959 to furnish food, free rent and utilities to Domanski and his wife as he had during the coverage period and prior thereto since 1949. Domanski took care of his spending money from his small income for shoe repairing and odd jobs.

At the hearing Domanski testified in part as follows:

Q.

In 1956 did you start to get money?

A.

I told Mr. Gougeon I have no money.

Q.

You said you wanted a little money?

A.

Yes.

Q.

And what did he say, okay? He said okay? Your son-in-law say 'All right I give you money?'

A.

Yeah, he said he would give me few dollars.

Q.

How much did he start giving you?

A.

Five dollars a week at no regular day.

Q.

For the same work?

A.

Yes.

Q.

Exactly five dollars, you got five dollars exactly?

A.

Yes. . . ."

Q.

Who brought up the question of you getting the $5 a week, or extra money, you or your son-in-law?

A.

I tell him I need little bit money. I do too much work. I tell him, I need a little bit money. I needed a little money for shaving and what not. . . ."

The District Judge in his findings of fact quoted in part from the findings of the Secretary as follows:

'By 1955 the claimant's son-in-law found that his insurance work had increased and had become more competitive, and he was thus required to put more time in his usual calling. Accordingly, he was unable to perform as many services about the house as he did previously and the claimant assumed more duties. At his [plaintiff's] request, he was paid $5.00 each Saturday for these services. There were no deductions for Social Security or income tax in connection with these payments.'

'. . . The weekly payments were discontinued in July 1959 when it was thought that claimant was eligible for Social Security benefits; but the son-in-law continued to support the claimant and his wife. If the claimant did not perform the chores about the home, it would have been necessary to hire another for this purpose. The son-in-law also considered the claimant as his employee.'

In addition to the findings quoted by the District Judge, the Hearing Examiner also found:

'In late 1955 the claimant (Domanski) asked his son-in-law for some payments in addition to the room and board, to have some spending money, and the son-in-law agreed to pay him $5.00 per week. This situation continued from 1956 into 1959 when the payments were stopped on the theory that the claimant was then eligible for social security benefits.' (Italics ours.)

The District Judge in his findings of fact also quoted the following from the findings of the Hearing Examiner:

'From the facts in this case it does not appear that a genuine employer-employee relationship existed between the claimant and his son-in-law. . . . There is nothing in the record to establish that an employment relationship was contemplated between the parties; that the claimant expected to receive compensation for his efforts; that the son-in-law expected to pay wages in this connection.'

We should first point out that in an action to review the decision of the Secretary the case is not tried de novo in the District Court. The review is limited to the record of the proceedings before the Secretary. In reviewing this record the Court is not authorized to adopt findings of fact of his own, but must accept the Secretary's findings of fact if they are supported by substantial evidence. When so supported, they are conclusive. 42 U.S.C. § 405; Hobby v. Hodges, 215 F.2d 754 (C.A. 10). The finality of the Secretary's findings extends also to inferences drawn by him from the evidence. Walker v. Altmeyer, 137 F.2d 531 (C.A. 2); Sherrick v. Ribicoff, 300 F.2d 494 (C.A. 7).

Whether Domanski was an "employee" receiving "wages" for the requisite period was not, in our judgment, a question of law, but of fact to be determined from all the evidence in the case. Irvin v. Hobby, 131 F.Supp. 851, 863.

The Hearing Examiner found from the evidence that "no genuine employer-employee relationship existed between claimant and his son-in-law." We think there was ample basis in the record to support this finding of fact. This may be gleaned from the family relationship between the parties; from the fact that Domanski and his wife were members of the household of the son-in-law receiving free board and lodging from 1949 to 1956; from the nature of the service rendered; from the fact that the payments were not wages but an allowance in cash for spending money; from the fact that the payments were made only during the twelve quarter qualifying period and ceased upon its expiration although presumably Domanski continued to render his alleged services for nothing; from the fact that the son-in-law took his father-in-law and mother-in-law as dependents on his income tax returns; from the fact that no social security return was made and the alleged wages were not reported until after Domanski made his claim for benefits.

The District Court could reach the conclusion which he did only by giving no effect to the inferences drawn by the Secretary from the evidence, but as we have shown, the Court is bound by such inferences. The District Court was also bound by the finding of the ultimate fact that no genuine employer-employee relationship existed as this was, in our opinion, supported by substantial evidence.

This case is similar to Folsom v. O'Neal, 250 F.2d 946 (C.A. 10) which reversed the judgment of the District Court overturning the decision of the Secretary involving an alleged employment of a brother by his sister. In that case the brother was paid $300 a month for duties performed at the sister's hotel. See also: Stevenson v. Ribicoff, 297 F.2d 811 (C.A. 2).

The judgment of the District Court is reversed and the cause is remanded with instructions to dismiss the complaint.

Judge O'Sullivan dissenting in a separate opinion.

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