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December 12, 1958

Towson PRICE, Plaintiff,
Marion B. FOLSOM, Secretary of Health, Education and Welfare, and Westinghouse Electric Corp., Defendants

The opinion of the court was delivered by: WORTENDYKE

Defendant Secretary moves for summary judgment in this declaratory judgment action brought by plaintiff to review an administrative decision requiring Price to refund $ 1,182 of Social Security benefits paid to him during the year 1955. Plaintiff further seeks an adjudication that he is entitled to Old Age Insurance Benefits without deduction for earnings from his self-employment in the practice of law.

Price's cause of action, if any, against Westinghouse Electric Corp., his former employer, for a declaration that his retirement pension payments be adjusted to compensate for any deficiency in past or future Social Security payments, was severed and stayed pending the final determination of the issues between Price and the Secretary.

 There are no genuine issues of material fact relevant to the questions presented on this motion. The uncontroverted facts are succinctly and comprehensively stated by the Referee of the Social Security Administration in his decision, as follows:

 'On July 1, 1954, the claimant, Towson Price, filed an application for Old Age Insurance Benefits with the Bureau of Old-Age and Survivors Insurance of the Social Security Administration, alleging that he was born June 14, 1889. On July 10, 1954, he was awarded monthly benefits of $ 85.00, which were subsequently increased to $ 98.50 as of September 1954. Deductions were imposed for all months of 1955 because claimant had earnings of over $ 2,080 (from his self-employment in the practice of law) and worked for 12 months in that year. Since no benefits had been withheld during the year, refund in the amount of $ 1,182 was requested of the claimant, which claimant refused.'

 Price had attained the age of 65 on June 14, 1954 and retired upon a pension from his employment as a patent attorney with Westinghouse on July 1, 1954. On June 1, 1955 he opened his own office to pursue the private practice of law, which practice he still maintains. During 1955 he performed legal services for some part of at least four days a week and for some part of at least 200 days in the year, and received an income in excess of $ 2,080 from such practice. The Social Security Administration determined that such income should be deducted from Price's Old Age Insurance Benefit payments for 1955. This resulted in the extinguishment of Price's rights to all benefits for 1955, and the determination that the benefits already paid to him during 1955 should be refunded by him to the Government.

 Price next contends that even if deductions are to be made from his benefits on the basis of income derived from his law practice during 1955, nevertheless, because he did not receive net income in excess of $ 80 in any of the months of April, June, July, August, October and November, 1955, no deductions should be imposed for those months. He asserts that a 'self-employed person should not be considered to have rendered substantial services unless he made more than $ 80 a month.'

 Further, claiming to have acquired vested rights under the Act as it was before the 1954 amendments, by virtue of the award of benefits on July 10, 1954, Price argues that a construction of the Act as amended to impose deductions for earnings from non-covered self-employment would impair his contractual constitutional rights.

 The Referee decided adversely to all of the foregoing contentions, and ruled that Price had received an overpayment of $ 1,182 for 1955, recovery of which should not be waived by the Government. The Appeals Council of the Social Security Administration denied plaintiff's request for review of the Referee's decision.

 The statute governing the case herein is 49 Stat. 623 (1935), as amended, 42 U.S.C.A. § 403, entitled 'Reduction of insurance benefits' and which, in pertinent part, provides:

 '(b) Deductions, in such amounts and at such time or times as the Secretary shall determine, shall be made from any payment or payments under this subchapter to which an individual is entitled, until the total of such deductions equals such individual's benefit or benefits under Section 402 of this title for any month --

 '(1) in which such individual is under the age of seventy-two and for which month he is charged with any earnings under the provisions of subsection (e) of this section.'

 Subsection (e) of Section 403 supra, entitled 'Months to which earnings are charged' provides:

 '(e) For the purposes of subsection (b) * * * of this section -- * * *

 '(2) if an individual's earnings for a taxable year of twelve months are in excess of $ 1,200, the amount of his earnings in excess of $ 1,200 shall be charged to months as follows: The first $ 80 of such excess shall be charged to the last month of such taxable year, and the balance, if any, of such excess shall be charged at the rate of $ 80 per month to each preceding month in such year to which such ...

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