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HEIKES v. FLEMING

December 23, 1958

SHIRLEY L. HEIKES, NEXT FRIEND OF MICHAEL K. HODGES, A MINOR, PLAINTIFF,
v.
ARTHUR S. FLEMING, SECRETARY OF HEALTH, EDUCATION AND WELFARE, DEFENDANT.



The opinion of the court was delivered by: Mercer, Chief Judge.

This is an action to review a decision of the Appeals Council of the Social Security Administration disallowing plaintiff's claim for child benefits under the provisions of Section 202(d) of the Social Security Act, 42 U.S.C.A. § 402(d).

Plaintiff, Shirley L. Heikes, married Edwin Hodges, the deceased wage earner, on March 12, 1952. A son, Michael K. Hodges, was born of this union on January 15, 1953. In the meantime, plaintiff and Hodges were separated and the child never lived with his father. The plaintiff obtained a divorce from Hodges on February 8, 1955 and, thereafter, on April 2, 1955, was married to George Heikes. Hodges died on October 17, 1955. On January 13, 1956, plaintiff, on behalf of Michael, filed an application under Section 202(d) of the Act for child's insurance benefits.

Section 202(d)(3) of the Act provides in pertinent part, that a child who has not attained the age of eighteen is deemed dependent upon his natural father, and, therefore, entitled to insurance benefits upon the death of the natural father, (Section 202(d)(1)(C), unless at such time the father was not living with or contributing to the support of the child, and such child was living with and was receiving more than one-half of his support from his stepfather. Other exclusionary conditions of that subsection have no application to this case.

On April 30, 1956, the Bureau of Old-Age and Survivors Insurance of the Social Security Administration denied plaintiff's application for child's benefits on the ground that the child, Michael, was, at the time of the death of Hodges, the natural father, living with and receiving more than one-half of his support from his stepfather, Heikes. Thereafter, upon plaintiff's request, a hearing was had before a Referee, who, on October 23, 1957, reversed the Bureau's determination and allowed plaintiff's claim. The Appeals Council on its own motion then reviewed the Referee's decision and on January 21, 1958 reversed the decision and disallowed the claim. This proceeding followed.

Plaintiff prays a summary judgment reversing that decision of the Appeals Council and reinstating the decision of the Referee. The cause is an appropriate one for summary decision, there being no questions of fact before the court for decision. Rule 56, F.R.Civ.P., 28 U.S.C.A.

The Social Security Act provides that upon judicial review of administrative agency decisions, the findings of the agency are conclusive if supported by substantial evidence. 42 U.S.C.A. § 405(g). That conclusive restriction upon the courts extends as well to the inferences drawn by the agency if they have a substantial basis upon the record evidence. Rosewall v. Folsom, 7 Cir., 239 F.2d 724.

Unfortunately, that guiding principle of judicial review of administrative decisions is much more easily stated than applied. "Support by substantial evidence" is not a term of art admitting of precise definition. As the Court of Appeals for the Eighth Circuit so aptly said in Osceola County Co-Op Creamery Ass'n v. N.L.R.B., 251 F.2d 62, 64, "no definite formula for judicial review" of administrative decisions can be devised and "much must be left to the sound judicial discretion of the reviewing court." In the sense here used however, "sound discretion" must be read in the light of existing judicial pronouncements which point the way to a happy balance between the seemingly irreconcilable concepts of finality of administrative decision and the exercise of judicial discretion on review thereof.

Any review of judicial decisions pertinent to this question must begin with the decision in Universal Camera Corp. v. N.L.R.B., 340 U.S. 474, 71 S.Ct. 456, 95 L.Ed. 456, the first definitive ruling as to the permissible scope of judicial review under the "substantial evidence" principle. In that case, a trial examiner assigned to hear a petition for reinstatement of certain discharged employees recommended that the petition be dismissed. The Board overruled the examiner and ordered reinstatement. On review the Court of Appeals for the Second Circuit held that substantial evidence supported the Board's order and that the court, under the substantial evidence principle could attach no significance to the Board's rejection of the findings of its trial examiner. National Labor Relations Board v. Universal Camera Corp., 179 F.2d 749. The decision of the Court of Appeals was reversed and the cause remanded, the Court holding that the findings of the examiner were relevant to a determination whether the administrative order was supported by substantial evidence. In pertinent part, the Court said, 340 U.S. at pages 496-497, 71 S.Ct. at page 169:

    "We do not require that the examiner's findings be
  given more weight than in reason and in the light of
  judicial experience they deserve. The `substantial
  evidence' standard is not modified in any way when
  the Board and its examiner disagree. We intend only
  to recognize that evidence supporting a conclusion
  may be less substantial when an impartial,
  experienced examiner who has observed the witnesses
  and lived with the case has drawn conclusions
  different from the Board's than when he has reached
  the same conclusion. The findings of the examiner are
  to be considered along with the consistency and
  inherent probability of testimony. The significance
  of his report, of course, depends largely on the
  importance of credibility in the particular case. To
  give it this significance does not seem to us
  materially more difficult than to heed the other
  factors which in sum determine whether evidence is
  `substantial.'
    "The direction in which the law moves is often a
  guide for decision of particular cases, and here it
  serves to confirm our conclusion. However halting its
  progress, the trend in litigation is toward a
  rational inquiry into truth, in which the tribunal
  considers everything `logically probative of some
  matter requiring to be proved.' * * * It would
  reverse this process for courts to deny examiners'
  findings the probative force they would have in the
  conduct of affairs outside a courtroom.
    "We therefore remand the cause to the Court of
  Appeals. On reconsideration of the record it should
  accord the findings of the trial examiner the
  relevance that they reasonably command in answering
  the comprehensive question whether the evidence
  supporting the Board's order is substantial."

While a court, within the scope of the principle announced in the Universal case, may not circumscribe the power of an administrative agency to reverse the findings of its referee or examiner within the narrow confines of the "clearly erroneous" concept established by the Federal Rules of Civil Procedure, F.C.C. v. Allentown Broadcasting Co., 349 U.S. 358, 75 S.Ct. 855, 99 L.Ed. 1147, it is the duty of a court in reviewing an administrative decision to consider both the evidence supporting and the evidence opposed to that decision. Universal Camera Co. v. N.L.R.B., supra, 340 U.S. at page 497, 71 S.Ct. at page 169; Local No. 3, etc. v. N.L.R.B., 8 Cir., 210 F.2d 325, certiorari denied Local No. 3 etc. v. Wilson & Co., 348 U.S. 822, 75 S.Ct. 36, 99 L.Ed. 648. In the latter case the court said that the Universal Camera decision requires "this court in cases here on petition for review of an order of the National Labor Relations Board to consider the conflicting evidence and if it is our duty to consider it then we must pass upon its weight." 210 F.2d at page 330. In Southern Stevedoring Co. v. Voris, 5 Cir., 218 F.2d 250, 254, the court interpreted the Universal Camera principle as imposing upon a court reviewing an administrative decision "the duty * * * to determine, on the basis of the entire record, whether there is substantial, reliable and probative evidence to support the findings of the administrative agency." In National Labor Relations Board v. Pacific Intermountain Express Co., 8 Cir., 228 F.2d 170, 171, the court said, inter alia, interpreting the Universal Camera doctrine:

    "The court is justified in setting aside the
  Board's decision when it cannot conscientiously find
  that the evidence supporting the Board's decision is
  substantial when viewed in the light of the record in
  its entirety including the evidence opposed to the
  Board's view."

Finally, in In re United Corporation, 3 Cir., 249 F.2d 168, the court reviewed an order of the Securities and Exchange Commission which was based upon the agency's rejection of its trial examiner's findings on certain questions as to compensation allowable for services rendered in the ...


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