an employer-employee relationship did not exist.
Throughout the history of the Social Security Act much judicial consideration has been given to the question as to what constitutes an employee under this Act. It was generally held that the common-law test was the basis of determining an employer-employee relationship. Benson v. Social Security Board, 10 Cir., 1949, 172 F.2d 682. In the case of United States v. Silk, 1947, 331 U.S. 704, 67 S. Ct. 1463, 91 L. Ed. 1757, the Supreme Court indicated that a somewhat more liberal rule should be employed in spelling out such a relationship under a remedial statute, such as the Social Security Act. The Supreme Court held that the same rule should be applied to the application of Social Security legislation as was applied to the National Labor Relations Act, 29 U.S.C.A. § 151 et seq., in National Labor Relations Board v. Hearst Publications, 322 U.S. 111, 64 S. Ct. 851, 88 L. Ed. 1170, wherein the Court said that 'employees' included workers who were such as a matter of economic reality. Apparently this was not the concept that Congress had in mind, because thereafter on June 14, 1948, Congress enacted P.L. 642, 62 Stat. 438, 42 U.S.C.A. § 1301, amending the statutory definition of who are employees, and restricted it to individuals who are employees 'under the usual common law rules'. This amended definition was given a retroactive effect back to August 14, 1935. The new section of the Act, 42 U.S.C.A. § 410(k)(2), effective January 1, 1951 again defines an employee to include 'any individual who, under the usual common law rules applicable in determining the employer-employee relationship, has the status of an employee'.
The real question, therefore, is whether claimant was an employee under the usual common-law rules and the applicable Regulations of the Federal Security Administrator, particularly that regulation appearing in Title 20 C.F.R. 403.804, entitled 'Who are employees'. It reads as follows:
'(a) Every individual is an employee if the relationship between him and the person for whom he performs services is the legal relationship of employer and employee.
'(b) Generally such relationship exists when the person for whom services are performed has the right to control and direct the individual who performs the services, not only as to the result to be accomplished by the work but also as to the details and means by which that result is accomplished. That is, an employee is subject to the will and control of the employer not only as to what shall be done but how it shall be done. In this connection, it is not necessary that the employer actually direct or control the manner in which the services are performed; it is sufficient if he has the right to do so. The right to discharge is also an important factor indicating that the person possessing that right is an employer. Other factors characteristic of an employer, but not necessarily present in every case, are the furnishing of tools and the furnishing of a place to work to the individual who performs the services. In general, if an individual is subject to the control or direction of another merely as to the result to be accomplished by the work and not as to the means and methods for accomplishing the result, he is an independent contractor. An individual performing services as an independent contractor is not as to such services an employee.
'(f) The measurement, method, or designation of compensation is also immaterial, if the relationship of employer and employee in fact exists.'
Under both the common-law and the Regulation above, the important question to decide is whether or not the Company controlled or directed, or had the right to control and direct, not only the result of the work but also the means and manner of the performance thereof. Vaughan v. Warner, 3 Cir., 1946, 157 F.2d 26; Benson v. Social Security Board, 10 Cir., 1949, 172 F.2d 682, supra.
The record shows that the Company did not and could not legally direct or control the claimant as to the result to be accomplished or as to the means and manner in which he performed his functions as inspector. For example, the Company had no right to tell the inspector what animals he should pass or condemn. If the Company was dissatisfied with the decision of the inspector, its only recourse was to appeal to the inspector's superior.
As pointed out by the Referee, it is true that certain factors are present in the relationship which may indicate an employer-employee relationship, such as substantially fixed hours of work, payment for the services by the payroll method, and performance of all of the services on the employer's premises. However, premises. However, these factors are overcome by the lack of control and direction over the claimant. Another important indicia of the employer-employee relationship mentioned in the Regulation above, and in numerous cases, is the right of the alleged employer to discharge the alleged employee. In this case, the Company had no right to discharge claimant.
It is the opinion of this Court that an employer-employee relationship did not exist between the claimant and either of the companies.
Nor can claimant be given credit under old-age and survivor's insurance on the ground that he performed his services as an 'independent contractor'. If he were an independent contractor and therefore self-employed, he could not be given any credit with respect to his income derived prior to 1951 because self-employment income before that date was not 'covered employment' for purposes of old-age and survivors insurance. As to self-employment income since 1951, claimant was deriving his income from the practice of his profession as a veterinarian and, as such, the income would be excluded by sub-section 211(c)(5) of the Social Security Act, 42 U.S.C.A. § 411(c)(5).
Having found that John P. Schmidt was not entitled to old-age insurance benefits, the claim of Maude L. Schmidt for wife's insurance benefits must also fail.
The Court finds that defendant is entitled to judgment as a matter of law. An appropriate order granting defendant's motion for summary judgment, and denying plaintiff's motion for summary judgment will be filed herewith.