Before SWAN, AUGUSTUS N. HAND, and CLARK, Circuit Judges.
Plaintiff, the widow of a tugboat captain, sues under § 205(g) of the Social Security Act, as amended, 42 U.S.C.A. § 405(g), to review a final decision of the Social Security Board which had determined her widow's benefits under the Act to be less than as she had contended. She also seeks recovery of an additional sum of $40,50 as immediately due her under her interpretation of the law. The District Court denied the Board's motion for summary judgment in an opinion sustaining plaintiff's contention, 52 F.Supp. 424, and thereafter rendered judgment reversing the Board's order and directing the Board to recompute the payment due accordingly. The case involves the interpretation of §§ 209(a, b, e, f) of the Social Security Act, 42 U.S.C.A.§§ 409(a, b, e, f), and of Regulation No. 3, 20 CFR, 1940 Supp., 403.302; and the Board's appeal challenges the interpretation made below.
The deceased wage earner was born on April 27, 1871, and had been employed for many years in the New York Harbor area until his death July 23, 1942. But when the Social Security Act of 1935 became effective on January 1, 1937, he was not within the coverage of the Act because of his age (in excess of 65 years) and his occupation. Social Security Act of 1935, §§ 210(b)(4) and (c)(3), 49 Stat. 625; Regulation No. 3, 20 CFR, 1940 Supp., 403.802. Hence no social security taxes were paid on account of his earnings until January 1, 1940, when the Amendments of 1939 covering his employment became effective.
After Mr. Erickson's death, plaintiff filed an application under the amended Act, 42 U.S.C.A. § 402(g), for a lump-sum death payment. This lump-sum death payment is a sum equalling six times the so-called "primary insurance benefit." The "primary insurance benefit," in turn, requires a computation of the deceased's "average monthly wage";*fn1 and it is the method of making this last calculation which is the issue in this case. The Bureau of Old-Age and Survivors Insurance of the Social Security Board calculated the deceased's "average monthly wage" by dividing his earnings for 1940, 1941, and the first two quarters of 1942 (the years during which social security taxes were paid for his account) totalling $7,666.53 by 42 (three times the number of quarters elapsing between January 1, 1939, and June 30, 1942). This calculation yielded an average monthly wage of $182,54, and a primary insurance benefit of $34,25; and plaintiff's lump-sum death payment was thus determined to come to $205.50. The referee and the Social Security Appeals Council affirmed this computation. But the District Court upheld plaintiff's contention that deceased's remuneration received during 1939 should have been added to his total wages, even though no tax had been paid on account of it, if the 1939 quarters were included in the divisor, in order to arrive at a true average wage.
Even though this may be the correct method for calculating a "true" average wage, the District Court erred in concluding that that is what was required by the statute and Regulations. For these give a very definite meaning to the term "average monthly wage" as therein sued, a meaning which is in full accord with the Bureau's method of computation. Under the statute such wage can only be the quotient obtained by dividing the individual's total wages to the quarter in which he died by three times the number of quarters elapsing after 1936 until the quarter of his death, but excluding any quarter after the quarter in which he attained the age of sixty-five, occurring prior to 1939. 42 U.S.C.A. § 409(f), quoted note 1, supra; Regulation No. 3, 20 CFR, 1940 Supp., 403.302. This means simply that all quarters subsequent to January 1, 1939, must be included in the divisor, thus yielding 14, which, multiplied by 3, gives the figure of 42 used by the Board. As to the dividend of "total wages," while the steps are more, yet the result seems just as determined by the statute. Thus "wages" is defined in 42 U.S.C.A. § 409(a) as remuneration for "employment"; and "employment," in turn, is defined in the amended Act, § 409(b), as those services performed prior to January 1, 1940, which were employment under the orginal Act, plus "any service, of whatever nature, performed after December 31, 1939, * * * on or in connection with an American vessel under a contract of service which is entered into within the United States." Thus the deceased was not engaged in "employment," and was therefore not paid "wages" within the meaning of the Act, until after December 31, 1939. The Board therefore properly used his earnings from 1940 until the quarter of his death as the dividend.
The District Court, however, relied on Regulation No. 3, as defining "total wages" in more general terms. But that Regulation, while perhaps not too happily expressed, seems clearly intended not to include the special case of employees not covered under the employment provisions of the Act until after December 31, 1939.*fn2 Dertainly such an interpretation is more reasonable than one which would construe the term "total wages" in the regulation at variance with the statutory definition thereof, thereby throwing doubt on the validity of the regulation. Plaintiff asserts further that the Act should be construed liberally, rather than literally, and hence that this Regulation, as she views it, is the true embodiment of Congressional intent. But the legislative history is against her. It shows that in the 1939 amendments Congress had in mind the disproportionate benefits per contributions made which had theretofore been available to late comers under the Act, as compared to the receipts of those continuously under it. To make a fairer distribution, as well as to keep outgo more commensurate with income to the fund, Congress therefore intended the hidden decrement to the share of such late comers who had not paid taxes throughout the Act's life which would result in maintaining in its average monthly wage formula a divisor always weighted to include all quarters not specifically excluded, even though for periods not included in the wage recepts of the dividend.*fn3 Thus to expand the dividend equally with the divisor, as was done below, would defeat the very intent of the particular legislation. The motion for summary judgment should have been granted.
Reversed for judgment for ...