Court Opinion

ID: 9466677
Source: CourtListenerOpinion
Date Created: 2023-08-05 01:22:59.970662+00
Date Added: 2024-06-11T17:39:52.308836
License: Public Domain

NEWMAN, Circuit Judge,
concurring:
I concur fully in Judge Oakes’ opinion for this Court. I write only to emphasize the importance of that opinion’s substantive-procedural distinction as both the explanatory and the limiting principle for our decision upholding estoppel against the Government. Judge Friendly’s vigorous dissenting opinion concludes that the case law has generally opposed estoppel of the Government, and that the substance-procedure distinction cannot be maintained in this context. My review of the authorities persuades me that estoppel of the Government enjoys considerable support and that the substance-procedure distinction makes the doctrine especially appropriate in the circumstances of this case.
In Federal Crop Insurance Corp. v. Merrill, 332 U.S. 380, 68 S.Ct. 1, 92 L.Ed. 10 (1947), the Supreme Court declared that, as a general rule, the Government would not be bound by the incorrect and misleading statements of its agents. See Utah Power & Light Co. v. United States, 243 U.S. 389, 37 S.Ct. 387, 61 L.Ed. 791 (1917). The principal thrust of this decision was that the rules governing the estoppel of private parties were not applicable to the Government, 332 U.S. at 383-84, 68 S.Ct. at 2-3, see Utah Power & Light Co., supra, 243 U.S. at 409, 37 S.Ct. at 391, not that an estoppel against the Government was impermissible under any circumstances. The latter point was made explicit in Montana v. Kennedy, 366 U.S. 308, 81 S.Ct. 1336, 6 L.Ed.2d 313 (1961), where the Court said: “we need not stop to inquire whether, as some lower courts have held, there may be circumstances in which the United States is estopped to deny citizenship because of the conduct of its officials.” Id. at 315, 81 S.Ct. at 1341 (footnote omitted). Moreover, in INS v. Hibi, 414 U.S. 5, 8, 94 S.Ct. 19, 21, 38 L.Ed.2d 7 (1973), the Court cited Montana as recognizing one possible circumstance, affirmative misconduct, that might justify estoppel, although it continued to reserve decision on the resolution of this issue.
Thus, the principle of these decisions is that courts must not apply the private law notion of estoppel to the Government and that the more restrictive circumstances under which estoppel of the Government might arise remain to be articulated. The response of the lower courts, while uncertain at times, has been generally consistent with this view.1 While emphatic rejections *959of estoppel against the Government occasionally appear in passing phrases, see Dix v. Rollins, 413 F.2d 711, 716 (8th Cir. 1969); Udall v. Oelschlaeger, 389 F.2d 974, 977 (D.C.Cir.), cert. denied, 392 U.S. 909, 88 S.Ct. 2056, 20 L.Ed.2d 1367 (1968), no court of appeals has ruled that estoppel would be unavailable in all circumstances. On the contrary, no fewer than eight circuits, including this one, have stated that there are some circumstances in which the Government will be estopped.2 Corniel-Rodriguez v. INS, 532 F.2d 301 (2d Cir. 1976); Walsonavich v. United States, 335 F.2d 96 (3d Cir. 1964); Tuck v. Finch, 430 F.2d 1075 (4th Cir. 1970); Simmons v. United States, 308 F.2d 938, 945 (5th Cir. 1962); United States v. Fox Lake State Bank, 366 F.2d 962 (7th Cir. 1966); United States v. Wharton, 514 F.2d 406 (9th Cir. 1975); Massaglia v. Commissioner, 286 F.2d 258, 262 (10th Cir. 1961) (dictum); Semaan v. Mumford, 335 F.2d 704, 706 (D.C. Cir. 1964). The principle is particularly well-established in this Circuit. See Corniel-Rodriguez, supra; Miller v. United States, 500 F.2d 1007 (2d Cir. 1974); Podea v. Acheson, 179 F.2d 306 (2d Cir. 1950) (conclusion that plaintiff’s waiver of citizenship was not binding for reason of duress supported by erroneous nature of Government advice to plaintiff);3 Tonkonogy v. United States, 417 F.Supp. 78 (S.C.N.Y.1976). These decisions have not purported to evolve a standard for determining when the Government is estopped. That task requires further analysis of the cases, those that have upheld an estoppel and those that have not.
In Merrill the Supreme Court refused to apply the private law notion of estoppel to the Government because the Government’s policies, unlike those of a private party, have general social significance. These policies, the Court reasoned, should not be at the mercy of an errant government official. When a private organization is involved, the only consideration in deciding an estoppel question is the relative equities between that organization and the party whom it has misled. But society has an overarching interest in the substantive policies established by its government. That interest justifies (though reasonable minds might differ as to whether it compels) adherence to those policies, even when the reason a person finds himself outside the scope of the pertinent policy stems in part from conduct of a government official. Even then, estoppel might be available, as the Supreme Court indicated in Montana and we held in Corniel-Rodriguez, if the governmental conduct on which the claimant relied was affirmative misconduct. See United States v. Lazy FC Ranch, 481 F.2d 985 (9th Cir. 1973); cf. Semaan v. Mumford, supra (Government estopped from denying employee permanent status after having misled him to believe that such status had been granted). The maintenance of governmental policies need not be so absolute as to perpetuate the myth that the king can do no wrong.
However, when a claimant is within the substantive scope of the pertinent legislative policy, but ineligible because of a procedural default attributable in part to conduct of a government official, the rationale for rejecting estoppel or limiting it to cases of affirmative misconduct disappears. In that situation, public policy favors the granting of the benefit, not its denial. Persons' within the class for whom benefits are intended are, of course, normally obliged to follow procedural requirements to establish their entitlement. Procedural requirements, like the written application rule at *960issue in this case, serve important interests. But when the failure to observe the procedural requirement is caused by conduct of a government official, an estoppel to prevent the Government from asserting procedural noncompliance means that the substantive legislative policy will be carried out. On the other hand, permitting the Government to precipitate the procedural default and then to assert it as a defense means that the substantive legislative policy will be frustrated.
The decided cases have implicitly observed this distinction. Courts have refused to estop the Government, frequently in circumstances more compelling than those of Mrs. Hansen, when the relief would have conflicted with substantive policies established by Congress. In Merrill, two farmers, misinformed by an official that spring wheat planted on reseeded winter wheat acreage was insurable, planted their spring wheat on the winter acreage and were denied crop insurance. In Montana, supra, an alien, born abroad when his pregnant mother was incorrectly denied return to the United States, was denied citizenship. In Goldberg v. Weinberger, 546 F.2d 477 (2d Cir. 1976), cert. denied, 431 U.S. 937, 97 S.Ct. 2648, 53 L.Ed.2d 255 (1977), a woman, incorrectly told by a Social Security official that she could remarry before her sixtieth birthday without losing widow’s benefits, did remarry before age 60 and was denied widow’s benefits. In each of these cases the consequences confronting the plaintiffs were to some extent attributable to conduct of a government official. But none of the plaintiffs was substantively entitled to the claimed benefit. The Merrills planted unin-surable wheat, Montana was born abroad, and Mrs. Goldberg remarried before age 60. Moreover, in each instance the basis of ineligibility was related to a substantive public policy. In Merrill the policy concerned the reseeding of winter wheat acreage. In Montana the policy concerned foreign citizenship resulting from birth abroad. In Goldberg the policy concerned the economic needs of widows who remarry before age 60.
In contrast, when conduct of a government official has precipitated a procedural default, courts have refused to permit the Government to assert that default as a defense.4 In Miller v. United States, supra, this Court held that the merits of a taxpayer’s refund suit must be considered despite its late filing when the lateness was attributable to erroneous information from a government official. Congress had authorized Miller to contest the merits of his tax dispute, and estopping the Government from relying on procedural default for which it shared some responsibility carried out the Congressional purpose. See Tuck v. Finch, supra (Government estopped from denying Social Security benefits for failure to file tax returns showing self-employment income); Brandt v. Hickel, 427 F.2d 53 (9th Cir. 1970) (Government estopped from rejecting application for lack of temporal priority); Walsonavich v. United States, supra (Government estopped from denying tax refund for failure to file timely refund claim); Smale & Robinson, Inc. v. United States, *961123 F.Supp. 457 (S.D.Cal.1954) (same); cf. United States v. Fox Lake State Bank, supra (Government estopped from penalizing bank from submitting inadequate claim forms).
The Congressional policy pertinent to this case is that a divorced mother of minor children, whose former husband dies after reaching insurable status under the Social Security system, should receive benefits.5 Mrs. Hansen is indisputably within the class for whom the benefits were intended. Whether or not the conduct of the Social Security official was in breach of an internal office manual,6 it was conduct that precipitated her procedural default. There is room for reasonable dispute as to what actually happened when Mrs. Hansen visited the Social Security office. But regardless of how this panel might have found the facts, the ALJ, who heard the witnesses, found that when Mrs. Hansen asked if she should file a written application, the Social Security employee “responded” by advising her she was not eligible. Even if he honestly but mistakenly believed she was ineligible, his response was the cause of her not filing.7 The ALJ, after hearing all the evidence, found facts that would justify an estoppel. He declined to apply one only because he did not believe that the applicable legal principles made an estoppel available.
Judge Friendly argues in dissent that there is no real distinction between substantive and procedural ineligibility because Congress did not want to grant the benefit to a person who fails to file in the manner prescribed by the agency any more than it wanted to grant the benefit to a person who fails to qualify. But there is surely a real difference between these two Congressional commands. The substantive qualifications are the very purpose of the legislation, motivated by major social policy considerations. The procedural requirements are simply a means of implementing that purpose. They are designed to identify eligible individuals and deliver the benefits to them as fairly and efficiently as possible. To reject a qualified applicant because of a procedural defect for which a government official is responsible is to frustrate the purpose of the statute, not to uphold it.
Another objection of Judge Friendly’s is that the substantive-procedural distinction is inappropriate in the context of this case because, in the language of Guaranty Trust Co. v. York, 326 U.S. 99, 109, 65 S.Ct. 1464, 1470, 89 L.Ed. 2079 (1945), the application requirement concerns substance in the sense that “it significantly affect[s] the result,” and does not concern “merely the manner and the means by which a right to recover . is enforced.”8 Even in the terms
*962of Guaranty Trust, a requirement that benefits be applied for in writing seems closely analogous to the “means by which a right to recover ... is enforced.” But more significantly, the most enduring teaching of Guaranty Trust is that the terms “substance” and “procedure” do not have constant meanings in all contexts. “Each implies different variables depending upon the particular problem for which it is used.” Id. at 108, 65 S.Ct. at 1469. In the context of determining when it is appropriate to consider the Government estopped by the conduct of its agents, the distinction can sensibly be drawn between substantive policy, whicli concerns definition of the class to whom benefits are extended, and procedure, which concerns the method by which any one person establishes eligibility. There may well be reasons why Congress would not want benefits extended to those not substantively eligible, even if governmental conduct contributed to ineligibility, but it is hard to imagine why Congress would want benefits denied to a person for whom the benefits are intended when governmental conduct has been a cause of that person’s failure to make proper application.
Judge Friendly also voices the concern that permitting estoppel in these circumstances will create a drain upon the public treasury. Perhaps this would be true if estoppel were permitted to provide benefits to those who fail to meet the substantive requirements of the statute, but the rule applied in this case entirely avoids that danger. The only people who will gain from this decision are those who are substantively qualified: those whom Congress intended to receive the benefit. Such people cannot truly be a drain upon the public treasury, since they should have received the money in the first place. The actuarial estimates that determine the funding levels of the Social Security trust funds are based primarily on demographic facts. The rate at which Mrs. Hansen’s deceased former husband and his employer made social security payments was set at a level sufficient to provide benefits for those like Mrs. Hansen who are substantively eligible for them. It is possible to imagine, though difficult to believe, that the actuarial estimates took into account the anticipated percent of eligible persons who would fail through ignorance, laziness or other cause unrelated to the conduct of Social Security personnel to file written applications.9 But it is not even imaginable that an estimate was made of the number of eligible persons who would appear at Social Security offices inquiring about the filing of written applications only to be deterred by an employee’s misinformation as to their eligibility and his failure, contrary to office instructions, to encourage the filing of a written application. The point is that this decision does not drain the public fisc of one dollar that is being spent either in excess of anticipated benefit levels or contrary to a substantive policy decision of the Congress.
Of course impact upon the public fisc is not irrelevant to this or any other case where monetary claims are asserted against *963the Government. The dissent’s apprehension about the cost of ascertaining the facts of eligibility in the absence of a written application has undeniable force as a general principle. But it has no application to this case. To establish her eligibility Mrs. Hansen needed proof that she married and later divorced her former husband, that he is dead, that he has minor children who are the offspring of that marriage, and that he had insured status. The last-mentioned fact is entirely within the knowledge of Social Security, and the first three, properly to be proved by her, are not in dispute, nor has any claim been made that the Government has been put to any expense to verify these facts. Mrs. Hansen is indisputably a member of the class for whom the benefits were intended and paid for, and no hardship or expense has been sustained by the Government in determining that fact.10
Estopping the Government from reliance on a procedural default is especially appropriate in the context of a program like Social Security. It is designed to confer benefits to millions of people who are not expected to need legal advice to present their claims. Moreover, the system is administered by a vast network of local offices for the very purpose of assisting individuals to obtain their benefits. I concur not because the amount of money Mrs. Hansen seeks is small, but because it is only fair that it be paid.

. Judge Friendly’s dissent, in discussing some of the leading cases that have imposed estoppel on the Government, suggests that the authority of these cases is limited by the unusual nature of their factual situations, supra, at 950-951 (discussing Comiel-Rodriguez), supra, at 954 n. 4 (discussing Tuck). This proves that the cases do not support estoppel of the Government in all possible circumstances, a fact that no one contests. But it also proves that there are some circumstances, varying from circuit to circuit at the present time, in which the *959Government will be estopped. The issue in this case is to determine what those circumstances should be.

. See K. Davis, Administrative Law Text, § 17.01 at 343 (3d ed. 1972) (sounder position is “that the doctrine of equitable estoppel may apply to the government when justice so requires”); F. Newman, Should Official Advice Be Reliable? — Proposals as to Estoppel and Related Doctrines in Administrative Law, 53 Co-lum.L.Rev. 374 (1953).

. Though Pode a did not explicitly mention estoppel, as Judge Friendly’s dissent points out, the Supreme Court has viewed the case as an instance in which “the United States is es-topped.” Montana v. Kennedy, supra, 366 U.S. at 315 & n.11, 81 S.Ct. at 1341.

. Of course, even procedural defaults cannot be excused unless the conduct of a government official bears at least some causal relationship to the procedural non-compliance. INS v. Hibi, supra, can be considered to be a case involving a procedural default, the filing 17 years late of a claim for naturalization. But Hibi’s claim was that the Government should have undertaken positive steps to inform him of his rights, such as publicizing his rights in the Philippines or stationing an INS official there. In rejecting this claim, the decision did not reject the principle that the Government may be estopped from asserting procedural default; it simply noted the total absence of any conduct on the part of the Government that would have justified an estoppel even against a private party. The Government risks estoppel by deterring procedural compliance, not by failing to guaranty compliance.
Determining what conduct will suffice to support an estoppel will understandably precipitate various conclusions, as evidenced by the difference between the results in this case and that in Cheers v. Secretary of HEW, 610 F.2d 463 (7th Cir. 1979), and Leimbach v. Califano, 596 F.2d 300 (8th Cir. 1979). Differing assessments of the significance of particular governmental conduct should not, however, obscure the principle that estoppel is available against the Government in cases involving procedural default.

. The fact that Congress prescribed an application procedure surely does not detract from the substance of the policy to extend benefits to all who meet the demographic criteria. Congress did not make these benefits available in the secret hope that few of those eligible would apply, much less that some, like Mrs. Hansen, would attempt to apply only to be deflected from that objective by the conduct of a Social Security employee. In a very real sense Congress wants those who meet the substantive criteria to receive their benefits. Why else would it provide funds for an elaborate network of local Social Security offices and spend additional funds to inform the public of Social Security benefits?

. I agree with Judge Friendly that Connelly’s noncompliance with the internal office manual is not a dispositive factor in favor of Mrs. Hansen’s claim. Nevertheless, his conduct, however characterized, is sufficient to estop the Government from denying Mrs. Hansen her benefit on the basis of her resulting procedural default.

. The dissent expresses some concern about the ease with which a claimant may assert that governmental conduct contributed to procedural default, noting the difficulty a bureaucracy will have in rebutting allegations concerning one of many thousand indistinguishable events. But the claimant makes the allegation under oath and subject to cross-examination. Testimony thus given, if accepted by the fact-finder, is sufficient to send people to prison, even when the witness stands to gain far more than a Social Security benefit. No fact-finding process can preclude error, but the risk of occasionally failing to detect a lie should not deny benefits to those who tell the truth.

. It is somewhat surprising to see matters classified as substantive because they significantly affect the result. That outcome-determinative test, subsequently applied by the Supreme *962Court to decide the reach of the Federal Rules of Civil Procedure in diversity cases, e. g., Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 69 S.Ct. 1221, 93 L.Ed. 1528 (1949); Ragan v. Merchants Transfer & Warehouse Co., 337 U.S. 530, 69 S.Ct. 1233, 93 L.Ed. 1520 (1949), has since been modified, Byrd v. Blue Ridge Rural Electric Cooperative, Inc., 356 U.S. 525, 78 S.Ct. 893, 2 L.Ed.2d 953 (1958), and later substantially eroded, Hanna v. Plumer, 380 U.S. 460, 85 S.Ct. 1136, 14 L.Ed.2d 8 (1965), even in the context of choosing between federal and state law. As Professor Wright has observed, “It is difficult to conceive of any rule of procedure that cannot have a significant effect on the outcome of a case.” C. Wright, Handbook of the Law of Federal Courts 273 (1976).

. In fact, the basic document of the Social Security Administration describing the actuarial methodology for the entire Old-Age, Survivors, and Disability Insurance System omits any reference to an estimate of eligible beneficiaries who fail to apply for benefits. “Methodology Involved in Developing Long-Range Cost Estimates for the Old-Age, Survivors, and Disability Insurance System,” Actuarial Study No. 49, U.S. Department of Health, Education, and Welfare, Social Security Administration, Division of the Actuary (May 1959).

. If a case arises where the absence of a written application, even though attributable to conduct of the Government, would necessitate considerable expense to ascertain the facts concerning eligibility, the appropriateness of an estoppel might be tenuous indeed.