lump sum

On February 11, 1977, Ruth Wengler, wife of appellant Paul J. Wengler, died in a work-related accident in the parking lot of her employer, appellee Dicus Prescription Drugs, Inc. Her husband, appellant Paul J. Wengler, filed a claim for death benefits under Mo. Rev. Stat. § 287.240 (Supp. 1979). Under the statute a widower is not entitled to death benefits unless he either is mentally or physically incapacitated from wage earning or proves actual dependence on his wife’s earnings. In contrast, a widow qualifies for death benefits without having to prove actual dependence on her husband’s earnings. Wengler stipulated that he was neither incapacitated nor dependent on his wife’s earnings. He argued that the statute’s disparate treatment of similarly situated widows and widowers violated the Equal Protection Clause of the Fourteenth Amendment to the United States Constitution. The claim was administratively denied. The Circuit Court of Madison County reversed, holding that § 287.240 violated the Equal Protection Clause because the statutory restriction on a widower’s recovery of death benefits did not also apply to a surviving wife. Dicus and its insurer, appellee Druggists Mutual Insurance Co., were ordered to pay death benefits to appellant in the appropriate amount. The Missouri Supreme Court, distinguishing cases in this Court, reversed the Circuit Court’s decision. The equal protection challenge to § 287.240 failed because the substantive difference in the economic standing of working men and women justifies the advantage that the statute administratively gives to a widow. Because the decision of the Supreme Court of Missouri arguably conflicted with precedents, the Supreme Court of the United States noted probable jurisdiction. The Supreme Court reversed.

Isaac Boggs began working for South Central Bell in 1949 and remained employed until his retirement in 1985. He was married to Dorothy Boggs from 1949 until her death in 1979, and the couple had three sons. After Dorothy died, Isaac married Sandra Boggs in 1980, and they remained married until Isaac's death in 1989. Upon retirement, Isaac received a lump-sum distribution of $151,628.94 from the Bell System Savings Plan, which he rolled over into an Individual Retirement Account worth $180,778.05 at his death. He also received 96 shares of AT&T stock from the Bell South Employee Stock Ownership Plan and a monthly annuity of $1,777.67 from the Bell South Service Retirement Program. Dorothy's will bequeathed one-third of her estate to Isaac outright along with a lifetime usufruct in the remaining two-thirds, with naked ownership passing to the sons. A 1980 Louisiana judgment of possession ascribed to Dorothy's estate a community property interest in Isaac's Savings Plan account valued at $21,194.29. After Isaac's death, Sandra began receiving a survivor annuity and other benefits. The sons filed suit in Louisiana state court claiming a portion of the retirement benefits under Dorothy's will and Louisiana community property law. Sandra then filed a declaratory judgment action in the United States District Court for the Eastern District of Louisiana asserting that ERISA preempts the sons' claims. The District Court granted summary judgment against Sandra. The Fifth Circuit affirmed. The Supreme Court granted certiorari.

The Social Security Act was enacted on August 14, 1935. Title VIII of the Act imposes an income tax on employees measured by wages paid during the calendar year and an excise tax on employers with respect to having individuals in their employ, also measured by wages. Both taxes start at one percent for 1937 to 1939 and increase by one-half of one percent every three years thereafter up to three percent. It exempts agricultural labor, domestic service, government service, and persons over age 65. Wages in excess of $3,000 per year are excluded from the computation. Title II of the Act creates an Old-Age Reserve Account in the Treasury and authorizes annual appropriations to it beginning with the fiscal year ending June 30, 1937. The amount is determined on a reserve basis using actuarial principles and a three percent interest rate. It provides for monthly pensions beginning in 1942 to persons who have attained age 65, worked at least one day in each of five separate years since December 31, 1936, earned at least $2,000 since that date, and are not receiving wages from regular employment. Benefits do not exceed $85 per month and are measured by a percentage of wages that decreases as wages increase, as well as certain lump sum payments in specified contingencies. A shareholder of the Edison Electric Illuminating Company of Boston brought suit in the United States District Court for the District of Massachusetts to enjoin the corporation from making the payments and deductions required by the Act. The bill alleged that the corporation had decided to obey the statute despite the shareholder's protests. Compliance would cause employee unrest, demands for increased wages, and irreparable loss to the corporation and its shareholders from which recovery would be impossible as a practical matter. The corporation appeared and answered without raising any issue of fact. The United States Commissioner of Internal Revenue and the United States Collector for the District of Massachusetts intervened as defendants. The District Court held that the tax upon employees was not properly at issue and that the tax upon employers was constitutional. It denied the injunction and dismissed the bill. The Circuit Court of Appeals for the First Circuit reversed the decree. The intervening defendants petitioned for a writ of certiorari. The petition presented two questions: whether the tax imposed upon employers by section 804 is within the power of Congress under the Constitution, and whether the validity of the tax imposed upon employees by section 801 is properly in issue and if so whether that tax is within the power of Congress under the Constitution. The Supreme Court granted certiorari.