SSR 73-33c: Rescinded 1984

20 CFR 404.1050 and 404.1051(f)

SSR 73-33c

Ross v. Richardson, U.S.D.C., N.D., Miss., No. WC 71-33-K (8/10/72)

(CCH, UIR, Vol. 1A, Fed. para. 16,837)

Plaintiff entered verbal agreement with firm to serve as self-employed

commissioned agent. Services were performed at home with assistance of his

wife. Payment for services was to plaintiff only, earnings were reported

in his name for tax purposes, and wife had no social security number. All

federal tax returns listed her as housewife. Plaintiff, alleging the

business arrangement was a joint venture with his spouse, appealed from

Secretary's denial of his claim for lump-sum death payment and surviving

child's insurance benefits resulting from lack of wife's insured status

for social security purposes. Held, substantial evidence supports

Secretary's finding that plaintiff was sole proprietor of business

arrangement; his wife's relationship to his duties was in nature of

"family arrangement" and gave rise to no self-employment income creditable

for social security purposes; therefore, no lump-sum death payment nor

child's insurance benefits are payable on her earnings record.

KEADY, Chief Judge: This action was brought by Winston Ross, plaintiff,

pursuant to 42 U.S.C. §405(g) to obtain judicial review of the final

decision of the Secretary of Health, Education, and Welfare denying

plaintiff's claim to a lump-sum death payment and surviving child's

insurance benefits under the Social Security Act, 42 U.S.C. §301 et

seq.

Defendant having moved for summary judgment on the record below, we are

required to affirm if the Secretary's findings are supported by

substantial evidence on the record as a whole. McCarty v.

Richardson, —F.2d—5 Cir. 1972); Richardson v.

Perales, 402 U.S. 389, 28 L. Ed. 2d 842 (1971); Cross v. Finch, 427 F. 2d 406 (5 Cir. 1970). Review of the record discloses the following

relevant facts.

endant having moved for summary judgment on the record below, we are

required to affirm if the Secretary's findings are supported by

substantial evidence on the record as a whole. McCarty v.

Richardson, —F.2d—5 Cir. 1972); Richardson v.

Perales, 402 U.S. 389, 28 L. Ed. 2d 842 (1971); Cross v. Finch, 427 F. 2d 406 (5 Cir. 1970). Review of the record discloses the following

relevant facts.

Plaintiff's wife died on July 4, 1969, at the age of 35. On October 1,

1969, plaintiff applied for a social security number for his wife as a

deceased wage earner. On the following day, plaintiff applied to the

Social Security Administration for a lump-sum death payment, pursuant to

42 USC §402(i), and surviving child's insurance benefits, pursuant to

42 USC §402(d), on behalf of their four minor children. In

conjunction with his claims, plaintiff filed a statement alleging that he

had entered into a verbal business agreement with Kimmel Aviation Company,

Inc., Houston, Mississippi, to serve as a part-time commissioned agent and

to perform such additional services as needed, including bookkeeping,

setting flight schedules, and depositing monies. Plaintiff stated that the

services were performed at home and that, since he was frequently away,

his wife assumed the major part of the work. Plaintiff further stated that

he and his wife considered the business arrangement to be a joint venture

from which each was to share equally on a 50-50 basis. The gravamen of

plaintiff's claim was that his wife was entitled to insurance coverage

from 1966 until the time of her death in 1969 because of the nature of the

business relationship.

his wife assumed the major part of the work. Plaintiff further stated that

he and his wife considered the business arrangement to be a joint venture

from which each was to share equally on a 50-50 basis. The gravamen of

plaintiff's claim was that his wife was entitled to insurance coverage

from 1966 until the time of her death in 1969 because of the nature of the

business relationship.

On November 10, 1969, plaintiff was notified by the Social Security

Administration that his wife had acquired none of the statutory minimum

quarters of social security coverage at the time of her death, thus no

survivor benefits were payable.1 Plaintiff requested reconsideration of

the administration's adverse ruling and submitted a statement by the

president of Kimmel Aviation Company, Inc. that the company had entered

into the business agreement with the understanding that plaintiff's wife

would perform the duties of bookkeeping and billing. Upon reconsideration

on January 19, 1970, the administration declined to overturn its original

decision and concluded that the facts did not support plaintiff's claim

that the enterprise was operated as a joint venture or a partnership. On

the contrary, the administration noted that the aviation firm honored its

verbal contract by paying plaintiff only; the earnings from the agreement

were reported to the Internal Revenue Service as plaintiff's alone with no

mention of the alleged partnership or joint venture; indeed, no

application for a social security number for plaintiff's wife had ever

been filed until after her death.

he contrary, the administration noted that the aviation firm honored its

verbal contract by paying plaintiff only; the earnings from the agreement

were reported to the Internal Revenue Service as plaintiff's alone with no

mention of the alleged partnership or joint venture; indeed, no

application for a social security number for plaintiff's wife had ever

been filed until after her death.

Upon plaintiff's timely request, a hearing on his claim was held on August

11, 1970. After consideration of the testimony and the evidence of record,

the hearing examiner concluded that plaintiff's wife had acquired no

self-employment income creditable for social security purposes and thus

lacked the required quarters of coverage at the time of her death. The

hearing examiner found that the evidence was conclusive that plaintiff

alone had agreed with Kimmel Aviation Company, Inc., to serve as a

commissioned agent and that his wife's relationship to his duties and

responsibilities was in the nature of a "family arrangement" whereby

plaintiff was the sole proprietor of the enterprise and the wife merely

assisted in the work. The hearing examiner based his decision on the

following relevant facts:

Claimant's wife performed at least half or more of the work required in

connection with this business operation. She considered herself a

housewife, and preferred assisting her husband in working at home rather

than being employed outside the home. The children also assisted to a

limited extent. Mrs. Ross did not apply for a Social Security Account

Number during her lifetime, but such was secured after her death. All of

the checks made in payment for the services of the claimant in the form of

commissions were made in claimant's name only. Wage and tax statements

(Form W-2) for 1966 through 1968 were made in claimant's name only. All

tax returns filed with Internal Revenue Service for the years 1966 through

1968 listed Mrs

ccount

Number during her lifetime, but such was secured after her death. All of

the checks made in payment for the services of the claimant in the form of

commissions were made in claimant's name only. Wage and tax statements

(Form W-2) for 1966 through 1968 were made in claimant's name only. All

tax returns filed with Internal Revenue Service for the years 1966 through

1968 listed Mrs. Ross' occupation as housewife, no Social Security Account

Number was given for her, and no partnership returns were filed. It was

common knowledge or belief among the people in the local community that

the claimant was the manager in the crop dusting activity while his wife

performed most of the work. Hearing Examiner's Decision, p. 7 (Sept. 18,

1970).

The hearing examiner's decision was approved by the Appeals Council,

Social Security Administration, on April 26, 1971.

Initially, we note that the burden was on plaintiff in the administrative

proceedings below to prove the existence of a partnership between himself

and his wife by a preponderance of the evidence. Williams v.

Gardner, 359 F. 2d (5 Cir. 1966). The Social Security Act, 42 USC

§411(d), provides that the terms "partnership" and "partner" shall have

the same meaning as recognized by the Internal Revenue Code.

In Commissioner of Internal Revenue v. Culbertson, 337 U.S. 733,

742, 93 L. Ed. 1659, 1665 (1949), the Supreme Court said that whether a

family partnership exists for income tax purposes depends on the true

intent of the parties as shown by the facts surrounding their agreement.

The Court there stated:

and "partner" shall have

the same meaning as recognized by the Internal Revenue Code.

In Commissioner of Internal Revenue v. Culbertson, 337 U.S. 733,

742, 93 L. Ed. 1659, 1665 (1949), the Supreme Court said that whether a

family partnership exists for income tax purposes depends on the true

intent of the parties as shown by the facts surrounding their agreement.

The Court there stated:

The question is . . . whether, considering all the facts—the

agreement, the conduct of the parties in execution of its provisions,

their statements, the testimony of disinterested persons, the relationship

of the parties, their respective abilities and capital contributions, the

actual control of income and the purposes for which it is used, and any

other facts throwing light on their true intent—the parties in good

faith and acting with a business purpose intended to join together in the

present conduct of the enterprise.

Similarly, the rule expressed in Culbertson is applicable to

determine whether a partnership exists in social security cases. Wright

v. Celebrezze, 262 F. Supp. (N.D.N.Y. 1965), aff'd, Wright v.

Gardner, 370 F.2d 332 (2 Cir. 1966).

After a careful review of the record, including the evidence adduced in

the proceedings below, the court concludes that there is substantial

evidence to support the Secretary's findings that plaintiff was the sole

proprietor of the business enterprise with Kimmel Aviation Company, Inc.,

and plaintiff's wife had no self-employment income creditable for social

security purposes at the time of her death. The court concludes,

therefore, that the Secretary's decision that neither plaintiff nor his

children were entitled to insurance benefits based upon their applications

filed on October 2, 1969, must be sustained and upheld.

Therefore, defendant's motion for summary judgment is sustained and the

complaint is dismissed with prejudice.

for social

security purposes at the time of her death. The court concludes,

therefore, that the Secretary's decision that neither plaintiff nor his

children were entitled to insurance benefits based upon their applications

filed on October 2, 1969, must be sustained and upheld.

Therefore, defendant's motion for summary judgment is sustained and the

complaint is dismissed with prejudice.

1. USC §402(d) and (i) provide for lump-sum death payment and child's

insurance benefits only if the wage earner dies as a "fully or currently

insured individual." 42 USC §414 defines a fully insured individual

as one with at least 6 quarters of coverage and a currently insured

individual one "who had not less than six quarters of coverage during the

thirteen-quarter period ending with (1) the quarter in which he died. . .

."